ET v Rocky Mountain Play Therapy Institute Inc, 2015 ABQB 824

Court of Queen ’ s Bench of Alberta Citation: ET v Rocky Mountain Play Therapy Institute Inc, 2015 ABQB 824 Date: 20151222 Docket: 1201 07908 Registry: Calgary Between: E.T. Plaintiff - and - Rocky Mountain Play Therapy Institute Inc. and Ken Kwan Defendants - and - I.T. Third Party _______________________________________________________ Memorandum of Decision

of the Honourable Mr. Justice P.J. McIntyre _______________________________________________________ Appeal from the Decision by J.T. Prowse, Master in Chambers I. Introduction [1] Kwan made an application for

summary dismissal. He abandoned this application before hearing. E.T. sought $57,000 incosts thrown away in preparation for the application, and $20,000 punitive costs. Master Prowse awarded E.T. $13,000 in costs. E.T.appealed. [2] Master Prowse had heard E.T.’s costs application at a special application on January 12, 2015 (the “costs special”). [3] Master Prowse gave detailed written reasons: see ET v Rocky Mountain Play Therapy Institute Inc, 2015 ABQB 61. [4] Master Prowse awarded E.T. enhanced costs for Kwan’s abandoned

summary dismissal application. Rather than awardingE.T. $650, the amount payable under column 4 of

Schedule C for abandonment, he awarded E.T. a lump sum of $5000, plus $1250 perhalf day for each half day attendance on cross-examination, plus all reasonable disbursements (including disbursements for transcripts).This totalled $13,000. He made no award for the costs special. [5] E.T. appealed Master Prowse’s cost award. I dismissed the appeal from the Bench. Counsel offered written submissions oncosts.

In those submissions, Kwan seeks enhanced costs for the costs special before Master Prowse, for this appeal, and indemnity costsfor second counsel fees before Master Prowse and me paid by Kwan’s counsel, Scott Venturo LLP, to Rose LLP. E.T. says that Kwanshould receive no costs for the costs special or appeal because it was Kwan’s abandoned application that caused the costs. Alternatively,E.T. submits that costs be in the cause, limited to item 7(1) under column 2 of

Schedule C. [6] Scott Venturo LLP says it retained Rose LLP to argue the costs special before Master Prowse because of allegations made byE.T. against Kwan’s lawyers at Scott Venturo LLP. James Rose, Q.C. argued the costs special and the appeal. [7] Kwan says the conduct of E.T. and his counsel throughout, and E.T.’s refusal to accept settlement offers are grounds forenhanced and indemnity costs. [8] E.T. argues neither his actions nor those of his counsel warrant enhanced or indemnity costs. [9] E.T. also seeks $800.89 for a disbursement for a transcript of proceedings before Master Prowse on April 28, 2014.

He seekseither a lump sum or a set-off from any costs awarded against him. Kwan submits that this amount is not recoverable because E.T.ordered the transcript for an appeal that E.T. abandoned after the parties entered into a consent order. Master Prowse excepted thisdisbursement from his January 23, 2015 Order. The parties asked me to rule on its payment. [10] The lawsuit between these parties is ongoing. No trial has yet taken place. I will not make findings of fact on the issues thatwill be the subject of the trial. II.

Discussion [11] This decision is limited in scope to the conduct of parties during the costs special and appeal: Huerto v Canniff, 2015 ABCA316 at para 15. Both parties’ submissions for this appeal were much longer than I requested.

It was not helpful to refer the Court to themerits of the parties’ cases. [12] While costs are generally awarded on a party-party basis to the successful party, determination of costs is at the discretion ofthe judge: Court of Queen's Bench Act, RSA 2000, c C-31, s 21 and Alberta Rules of Court, Alta Reg 124/2010, rules 10.29, 10.30,10.31, 10.33; Hogarth v Rocky Mountain Slate Inc, 2013 ABCA 116, 87 Alta LR (5th) 108 at para 5. A.

Costs for second counsel fees [13] Partial indemnity or full indemnity costs may be awarded in cases that involve “reprehensible, scandalous or outrageousconduct” on the part of one of the parties: Young v Young, (SCC), [1993] 4 SCR 3, [1993] 8 WWR 513; College ofPhysicians & Surgeons (Alberta) v H(J), 2009 ABQB 48 at para 48; Rule 10.31(a)(b)(i). I do not find the conduct of either partysufficiently egregious in respect of the costs special and this appeal to merit full indemnity costs.

The trial judge will have a perspectiveon the entire conduct of this litigation to decide if indemnity costs are warranted against either party. [14] E.T.’s Notice of Application for this costs special alleged misconduct by Kwan. Other documents filed with the court –including E.T.’s brief filed February 23, 2015 – alleged numerous illegalities including child abuse, fraud, perjury and conspiracy.

[ 15 ] E.T. also alleged that counsel for Kwan used “ploys” and other misconduct in court and chambers to obtain favourable outcomes. In E.T.’s December 12, 2014 Brief and in the costs special, counsel for E.T. described Scott Venturo LLP’s retainer of Rose LLP as a ploy to get an adjournment of the costs special. [ 16 ] Mr. Rose and Scott Venturo LLP asked E.T.’s Counsel whether the plaintiff was seeking punitive costs against Mr. Venturo personally. If not, Mr. Rose told E.T.’s counsel his retainer with Scott Venturo LLP would not be necessary. E.T.’s counsel replied that it was not seeking costs against Mr.

Venturo. Nevertheless, Scott Venturo LLP retained Rose LLP. The letter to E.T.’s counsel confirming the retainer of Rose LLP specified that, despite the assurance that no personal costs were being sought, the exhibits to the affidavit in support of the application implied that the only conduct on which the claim for aggravated or punitive costs were sought was that of counsel. Scott Venturo LLP concluded that the only reasonable assumption was that personal conduct was at issue. [ 17 ] Second counsel fees reimburse a party for costs of using a second lawyer on the file.

The factors to consider in rewarding second counsel fees are set out in Alberta Productions Corp v Canada Lands Co CLC Ltd , 2004 ABCA 25 at para 2 , and include the general importance of the issue or issues to the parties or to others, the value of the case, the complexity and scope of the issues, the size of the trial record, the manner in which opposing counsel conducts the case and whether second counsel addressed the Court.

See also Seidel v Kerr , 2004 ABCA 157 at para 11 . [ 18 ] When Master Prowse adjourned the costs application to an afternoon special contrary to E.T.’s wishes, he commented that Scott Venturo LLP’s retainer of Rose LLP was entirely appropriate for the costs special. I do not consider his comment to fetter my discretion whether Rose LLP’s retainer costs should be payable in full. [ 19 ] Here Scott Venturo LLP did not retain Rose LLP because of the complexity of the case, but because of E.T.’s allegations against Scott Venturo LLP. But E.T. alleged a “ploy” by both Scott Venturo LLP and Rose LLP.

So Rose LLP, as alleged participants in a ploy, could not be categorized as being independent from the fray. Rose LLP’s original retainer to act for Scott Venuro LLP because costs might be sought against Mr. Venturo personally would justify independent counsel whose account might be paid in full by E.T. However, counsel for E.T. confirmed he was not seeking costs against Mr. Venturo personally. [ 20 ] Mr. Rose’s brief and argument in this application persuaded me to dismiss E.T.’s appeal.

But were I to award to Scott Venturo LLP the cost of retaining Rose LLP this would amount to Kwan getting indemnity costs for the appeal, which I am not prepared to award. B. Enhanced costs for the special application and appeal [ 21 ] Enhanced costs are a discretionary increase of the guideline amounts set out in

Schedule C of the Rules . Kwan seeks enhanced costs for the costs special and appeal based on E.T.’s misconduct and his refusal of two settlement offers. I will first address the allegation of misconduct. [ 22 ] E.T., through his counsel, has taken an aggressive stance throughout this litigation, but not before me. As noted above, I would leave it to the trial judge whether the general conduct of this litigation should result in indemnity or enhanced costs. The allegation to Master Prowse, however, that retaining independent counsel was a ploy to get an adjournment was over the line.

The costs application before me could never have been completed within the 20 minute limit in morning chambers, nor could E.T.’s original request for costs. A special application was necessary no matter who was conducting the argument. [ 23 ] I turn now to the refused offers. [ 24 ] If a party is offered settlement and refuses, and the final result is less than the offer, costs against that party ought to be increased; Rule 4.29.

The proportion of the increase is at the discretion of the judge: Buchanan v Lamoureux , 2011 ABQB 256 , [2011] AWLD 2789 at paras 14 , 18 and 30. [ 25 ] Kwan made two offers to settle the costs of his abandoned application: the November Offer for $15,000 and the Calderbank Offer for $17,500. Both were “with prejudice” and were well in advance of the costs special. By the amount offered they appear to have been made in good faith and each exceeded the $13,000 E.T. ultimately received.

Kwan will receive enhanced costs for this special application and appeal because he beat E.T.’s award. [ 26 ] Considering Kwan’s two offers to settle, and the “ploy” allegation, I triple

Schedule C. Kwan will receive $4500 for the costs special and $4500 for the appeal. [ 27 ] The enhanced costs award is therefore $9000.00. C. The “Disputed Disbursement” [ 28 ] E.T. paid $800.89 for a transcript of proceedings before Master Prowse on April 28, 2014, to consider an appeal of an order made that day by Master Prowse. The parties later entered a consent order without agreeing on the cost of this disbursement. They have asked me to rule on it. [ 29 ] E.T. needed the transcript to assess whether an appeal of the April 28 order was appropriate.

That the transcript became unnecessary is no reason to deny the disbursement. E.T. is entitled to this disbursement to be set off against this costs award. III. Conclusion [ 30 ] Whether the alleged misconduct of the parties in this litigation will warrant indemnity costs will be for the trial judge to

decide. In the specific costs matter before me, the “ploy” allegation, and E.T.’s failure to beat the offers warrants an enhanced costs award. [ 31 ] I award Kwan $9000.00 in enhanced costs for the costs special and this appeal, plus disbursements. The disputed disbursement of $800.89 will be set off against this award. Heard on the 19 th day of August, 2015. Dated at the City of Calgary, Alberta this 22 nd day of December, 2015. P.J. McIntyre J.C.Q.B.A. Appearances: R. Jadusingh Code Hunter LLP for the Plaintiff J.W. Rose, QC Rose LLP for the Defendant, Ken Kwan A. Bracco-Callaghan Scott Venturo LLP for the Defendant, Ken Kwan