Gault Estate (Re), 2016 ABQB 102

Court of Queen ’ s Bench of Alberta Citation: Gault Estate (Re), 2016 ABQB 102 Date: 20160218 Docket: 1401 09603 Registry: Calgary Between: James Emsley Thomas Hooton, as Litigation Representative of the Estate of Carol Mary Lascelles Gault Plaintiff/Defendant by Counterclaim - and - Sebastian Gault as Trustee for the Estate of Leslie Gault Defendant/Plaintiff by Counterclaim _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Bryan E.

Mahoney _______________________________________________________ Introduction [ 1 ] The Estate of Carol Gault (“the Carol Estate”) claims for unjust enrichment and seeks a declaration that the Estate of her late husband Leslie Gault (“the Leslie Estate”) holds property for her under a resulting or constructive trust as a result of a joint family

venture. [2] In response to that claim, the Leslie Estate filed a defence and counterclaim denying the unjust enrichment claim and seekingenforcement of a written marriage contract. In the alternative, the Leslie Estate claims that it was the Carol Estate who was unjustlyenriched from a joint family venture. The Leslie Estate seeks a declaration that the Carol Estate holds property for him under aconstructive trust. [3] The Leslie Estate has filed an Application for

Summary Dismissal scheduled to be heard in March 2016. Prior to thatapplication, the Leslie Estate applied for procedural orders which were opposed by the Carol Estate. [4] In reasons reported at 2016 ABQB 53, I ruled on the procedural application. The parties cannot agree on costs for thatproceeding. Costs [5] It is well established that Court awarded costs are premised on the assumption that a winning party is deserving of somecompensation for legal costs incurred in establishing or defending its position.

It is also well established that full indemnity of legal feescan significantly hamper a party's access to justice in some cases.

Alberta Law Reform Institute, Alberta Rules Project, ConsultationMemorandum No. 12.17 February 2005. [6] Typically, if a party is only successful in part of its application, that party recovers costs in proportion to the value of thesuccessful part of the application and the respondent is entitled to costs proportionate to the value of the unsuccessful portion. [7] It is also well established in the decided cases that costs consequences are an effective mechanism for controlling litigationand discouraging frivolous claims.

Not all unsuccessful cases are without merit, however, and parties should not be unduly punished forbringing a losing action.

Nonetheless, a successful party on an application should be entitled to some level of recovery of lawyers’ fees,as they were required to appear in court and successfully claim or defend their rights. [8] In Jacobi v Newell (County No. 4) (1994), (AB KB), 19 Alta LR (3d) 394 at para 27, O’Leary J wrote: A trial judge has a wide discretion when awarding costs among parties to litigation, provided that the discretion is exercised judicially,that is, by the application of established principles: Jackson v. Trimac Industries Ltd. (1993), (AB KB), 138 A.R. 161[8 Alta. L.R. (3d) 403, [1993] 4 W.W.R. 670] (Q.B.).

In exercising that discretion, a trial judge must keep in mind the purpose of anaward of costs and the policy considerations involved in setting the level of recovery. These matters were summarized by McDonald J. inReese v. Alberta (1992), (AB KB), 5 Alta. L.R. (3d) 40 [[1993] 1 W.W.R. 450] (Q.B.), at p. 44: While the allocation of costs of a lawsuit is always in the discretion of the court, the exercise of that discretion must be consistent withestablished principles and practice.

It is traditionally accepted in Canada's common law provinces that as a general rule the successfulparty recovers its costs from the unsuccessful party. However, such recovery is normally on a party-and-party basis. That is, the costsrecoverable are those fees fixed for the steps in the proceeding by a

schedule of fees (Sched. C in Alberta's Rules of Court), plusreasonable disbursements. It is not intended that the successful party receive full indemnification of those fees and disbursements whichit would be charged by its counsel. In England the degree of indemnification appears to be considerably higher than is normal in Canada.In almost all jurisdictions of the United States of America the rule is that no costs are recoverable by the successful party. The Canadian practice reflects an attempt to balance two conflicting interests.

On the one hand, it is argued that if a party is successfuland there are no circumstances constituting blameworthiness in the conduct of the litigation by that party, it is unfair to require thesuccessful party to bear any costs incurred by his counsel in prosecuting or defending the action. On the other hand, it is argued that ifthe unsuccessful party is required to bear all the costs of the successful party, citizens will be unduly hesitant to sue to assert their rights(even valid ones) or to defend their rights when sued.

The partial indemnity practice as it exists in Canada is a compromise intended togive some scope in practice for each of the conflicting policy considerations. [9] In Jacobi, O’Leary J went on to state at para 30: Costs on an indemnification basis should be awarded only in rare and exceptional cases: Canada Deposit Insurance Corp. v. CanadianCommercial Bank (1987), (AB KB), 50 Alta. L.R. (2d) 1, 76 A.R. 271 [[1987] 3 W.W.R. 160] (Q.B.).

In Jackson v.Trimac Industries Ltd., supra, Hutchinson J. said at p. 172: In order for costs to be awarded on an indemnity basis or even on a solicitor-client basis, as opposed to a party-party basis, the court mustconclude that the case fits within the parameters of a rare and exceptional or unusual case. Ruling on Costs Costs claimed by the Carol Estate [10] This was not a rare and exceptional application where costs on an indemnification basis are justified on the grounds ofcomplexity or novelty. Nevertheless, it also was not a run of the mill special chambers application.

Argument, as can be evidenced by thelegal briefs and the time it took to hear the application, did require more extensive research. [11] The Carol Estate was successful in defending the application to have Carol’s accountant, Richard Gilbert, attend forquestioning and produce documents covered by litigation privilege. It was also successful in defending the application to have her

lawyer, Bennett Jones LLP, attend for questioning and produce documents covered by solicitor-client privilege. [ 12 ] The Leslie Estate was successful at the hearing of the application to have the Carol Estate concede that the Leslie Estate was entitled to historical documents and financial records given to the accountant and the lawyer. [ 13 ] The Carol Estate will have its costs as claimed in the draft Bill of Costs that totaled $5,118.75 less 1/3 for the partial success of the applicant, the Leslie Estate and less the second counsel fee with an adjusted amount for GST. [ 14 ] I reject the claim for second counsel because given the comparatively narrow scope of the issues argued, this was not an extraordinary complex application notwithstanding the larger legal briefs and the length of the hearing.

The need for second counsel in the courtroom in case something unexpected happens is less likely in a special application than at trial. I find second counsel may have been something that a cautious lead litigator might wish to have, but the other side should not be forced to pay for it. [ 15 ] I accept the Carol Estate’s submission that the application was complex and that s 8(1) of

Schedule C, relating to an appearance to argue before the Court of Appeal should apply here. [ 16 ] I also award costs as claimed of $2,525.67 to Richard Gilbert and costs as claimed of $2,172.75 to Bennett Jones LLP. The filing of briefs and the presence of counsel at the application was justified given the importance of the issues faced by these professionals and by the Carol Estate.

While I accept that the Carol Estate’s counsel did the “heavy lifting” in conducting the defence of the application, I conclude these parties should be compensated to some degree as they had no choice but to participate in the application to defend unsuccessful allegations. [ 17 ] Costs to the Carol Estate, Richard Gilbert and Bennett Jones LLP are payable forthwith in any event of the cause.

Disclosure of Legal Fees [ 18 ] On the case management issue of whether or not the legal fees paid by the Leslie Estate should be disclosed in the Leslie Estate’s reporting accounts, I direct that the gross amount of legal fees should be disclosed. I find that for those accounting reports to be accurate, the amount the estate is paying in legal fees is material and ought to be disclosed. [ 19 ] The Leslie Estate cited Maranda v Richer , 2003 SCC 67 .

In Maranda the RCMP conducted an improperly executed search of a lawyer's office in an attempt to find information regarding the lawyer's client who was suspected of money laundering and drug trafficking. Included in the information sought in the search warrant was all documents relating to fees and disbursements billed to or paid by the client.

The Supreme Court reiterated that an application for information concerning defence counsel's fees in connection with a criminal prosecution involves the fundamental values of criminal law and procedure, such as the accused's right to silence and the protection against self-incrimination. Those are not issues in this case. [ 20 ] I find there is no reasonable possibility that disclosure of the amount of fees paid by the Leslie Estate will directly or indirectly reveal any communications protected by privilege.

Maranda did not do away with the distinction between communications, which are privileged, and facts, which are not: Donell v GJB Enterprises Inc, 2012 BCCA 135 . [ 21 ] If the fact that the lawyer has been retained, sent bills, or been paid is not prima facie confidential, then the fact of the retainer and the flow of funds should not be protected under this head of privilege. The gross amount of legal fees paid by the Leslie Estate will be disclosed in the estate’s accounts. [ 22 ] As for the party and party costs of this contested costs hearing, I award costs under s 7(1) of

Schedule C of the Rules of Court , payable forthwith, as follows:

a) The Carol Estate $1,500.00 less 1/3 or $1,000.00 plus disbursements and GST;

b) Bennett Jones LLP $1,500.00 plus disbursements and GST; and

c) Richard Gilbert $1,500.00 plus disbursements and GST. Heard on the 1 st day of February, 2016. Dated at the City of Calgary, Alberta this 18 th day of February, 2016.

Bryan E. Mahoney J.C.Q.B.A. Appearances: Daniel J. McDonald, Q.C. and Joanne Luu, Burnet, Duckworth & Palmer LLP for the Plaintiff/Defendant by Counterclaim Ariel Z. Breitman and Jonathan J. Bourchier, MacPherson Leslie & Tyerman LLP for the Defendant/Plaintiff by Counterclaim Michael A. Waite, Carbert Waite LLP for Richard Gilbert and 1512873 Alberta Ltd. Perry R. Mack, Q.C., Peacock Linder Halt & Mack LLP for Bennett Jones LLP and Lexy Wong