Mraz v Herman, 2016 ABQB 14

Court of Queen ’ s Bench of Alberta Citation: Mraz v Herman, 2016 ABQB 14 Date: 20160108 Docket: 1101 12270 Registry: Calgary Between: Gary Lawrence Mraz and Deborah Ann Mraz Plaintiffs - and - William Anthony Herman, Herman Kloot & Co., and Michael Rory Waite Defendants _______________________________________________________ Endorsement on Costs of the Honourable Mr. Justice W.P. Sullivan _______________________________________________________ [ 1 ] The trial of this matter was heard on the 1 st and 2 nd day of June, 2015. I issued my reasons on the 30 th day of September, 2015 ( Mraz v Herman , 2015 ABQB 573 ).

The claims of the Plaintiffs and the counterclaim for fees were dismissed. [ 2 ] The relevant facts in this case are set out in my decision. Leave was granted for submissions regarding costs to be made in writing. I have received those submissions and this is my decision with respect to costs. The Position of the Parties

[ 3 ] The Defendant in their submissions claim they are entitled to double costs pursuant to Rule 4.29(2) of the Rules of Court . [ 4 ] The claims against the Defendants filed by Mr. and Mrs. Mraz are dated September 6, 2011. On September 30 th the lawyer Waite files and serves his Statement of Defence and Offer to Settle. On October 24 th , 2011, Herman and the Herman firm (Herman) file and serve their Statement of Defence. [ 5 ] In the action for the Herman fees, in Provincial Court of Alberta Court Civil, the Statement of Claim was filed August 15, 2011. The actions were consolidated on December 21, 2011.

On October 28, 2014, Herman served on the Plaintiffs their formal Offer to Settle. [ 6 ] Both Offers to Settle agreed to accept a Discontinuance of Claim on a without cost basis in full and final settlement of the Plaintiffs claims against each of the Defendants.

It is noted that there was no reference in the Herman offer to settle with respect to the claim for fees. [ 7 ] The Defendants seek double costs for all tariff items following service of their respective offers. [ 8 ] The Plaintiffs take the position that the only substantial issue before me on the question of costs is, were the Defence Offers “genuine” given that no money was offered to the Plaintiffs by way of compromise. Just an abandonment of costs. [ 9 ] The Plaintiffs take the position that the Waite and Herman offers to settle were not genuine and cite Solis v del Rosario , 2014 ABQB 651 .

Stated simply under the principal of Solis , that in order to be a Genuine Offer the offer must be one that is reasonable and realistic on all of the circumstances at the time it was served and must include an element of compromise. [ 10 ] The Plaintiffs say the Waite Offer was made at the time Waite’s Statement of Defence was served on the Plaintiffs. It did not include an element of compromise nor was it a reasonable or realistic offer in all of the circumstances. [ 11 ] The Plaintiff say it was a “mere litigation tactic” and was never meant to be accepted.

They also objected in the same basis (the offer was not genuine) to the Offer from Herman. The Plaintiffs also object that the Waite Bill of Costs includes fees for the preparation of an Affidavit of Records and for a second round of questioning. The Affidavit of Records from Waite contained no documentation and there was a second round of Questioning regarding Waite as a result of his refusal to answer questions at the first Questioning. [ 12 ] The Plaintiffs also claim costs with respect to the Provincial Court Civil action for fees that was dismissed.

Analysis [ 13 ] In Solis : 4 The Plaintiffs argue that the "special circumstances" provisions of Rule 4.29(4) apply because the formal offer was not a "genuine" offer to compromise. 5 In that regard Allen (Next Friend of) v Muellor, 2006 ABCA 101 at paragraphs 14-17 provides the applicable test: 14 In every case where double costs are claimed under

Part 12 on the basis of an unaccepted offer of settlement, the court must determine if the offer was genuine. As a general rule, for an offer of settlement to qualify as a genuine offer it must have been one that was reasonable and realistic in all the circumstances current at the time it was served and remained open… The nature of the issue or issues in dispute may, however, be one of the circumstances relevant to the question of whether an offer is genuine. 15 To be genuine, an offer of settlement made pursuant to

Part 12 must include an element of compromise: Re Blue Range Resources Corp . (2000), 281 A.R. 351 (C.A.), 2001 ABCA 177 at para. 1 .…Where a settlement offer does not contain an element of compromise, the court may nevertheless consider it to have been reasonable in the circumstances and exercise its discretion to award enhanced costs. 16 An offer of settlement that does not realistically reflect the relative merit of the parties' positions at the time it is made is not a genuine offer…. 17 The assessment of an offer's genuineness is not confined to a consideration of whether it was made honestly and in good faith. ...

The genuineness of an offer must be assessed as at the time it was served and remained open and its character cannot be decided by simply comparing it to the result of the trial or appeal. [ 14 ] At trial I accepted Mr. Waite’s evidence as being accurate and I quoted from his evidence at para 68 of my Mraz v Herman decision : Q All right. Do you recall if you provided any legal advice during that phone call? A Well, I’m not sure what you mean by legal advice.

As I’ve already explained, my advice to her was I’m incompetent to give you legal advice concerning the actual issue that you’re dealing with and I advised her that she should talk to the Law Society if she had a problem with her lawyer and that she should get a second independent opinion and take all the documents with her in order to deal with the problem that she felt she had. [ 15 ] Waite’s counsel would have been aware of Mr. Waite’s position at the time he made the offer and be aware of Mr. Waite’s advice to Ms. Mraz that he:

1) advised her that she should talk to the Law Society if she had a problem with her lawyer; 2) that she should get a second opinion; and 3) take all of the documents with her in order to deal with the problem that she felt she had and talk to a lawyer in her area. [ 16 ] With regards to Herman and his special circumstances, it is to be noted that Herman filed his offer of settlement October 28, 2014. This would be after there was substantial costs incurred and the last step in the matter before the matter proceeded to trial in June of 2015.

The positions of the parties would be well known to all counsel at this point in time and the waiver of costs would be a substantial consideration on the part of Herman. “A waiver of costs can constitute a genuine offer of settlement. In H. (S.G.) v. Gorsline , 2001 ABQB 671 , 2001 CarswellAlta 1009, 292 A.R. 329, 96 Alta. L.R. (3d) 88, one of the defendants prior to trial made an offer of settlement of $1.00 inclusive of all taxable costs. At that point, those costs amounted to $10,000. The action was allowed as against one defendant, but dismissed as against the defendant that had made the offer.

When that defendant sought double costs under rule 174, the plaintiff contended that the offer was not a genuine offer of compromise. McMahon J. disagreed, and said at p. 92: The plaintiff argues that the Board’s first offer was not genuine [$1.00 inclusive of all taxable costs] and so double costs should run only from the date of the second offer. However, the first offer did include a waiver of its costs to that date which the Board said would have been in the Order of $10,000 based on

Schedule C. A waiver of costs is a real and serious offer sufficient to trigger the consequences of Rule 174. In Jama v. Bobolo , 2002 ABQB 216 , 2002 CarswellAlta 435, 311 A.R. 362, 2 Alta. L.R. (4th) 186, Clark J. said, after reviewing cases including H. (S.G.) v. Gorsline , supra , at p. 190: On the basis of the above decisions, it appears that if the $1.00 settlement offer represents a genuine offer to settle, it may be considered a “bona fide” offer for the purposes of Rule 174.

If the offer is made for the purpose of gaining costs advantage or without a reasonable expectation that it will be accepted, then it may not be a “bona fide” offer of settlement.

In the present case, I find that the Defendants’ $1.00 settlement offer also included a waiver of costs to the date of the offer and, the waiver of costs was a real and serious offer sufficient to trigger the consequences of Rule 174.” [See Fradsham, Alberta Rules of Court p.366] [ 17 ] I find that the Herman Offer served on October 28, 2014 offering to accept a discontinuance of claim without costs, was a considered and substantial offer. The action had been underway since September 30, 2011. I also find that is similar for the Waite Offer.

Although it was made at the very commencement of the action, it was reasonable for counsel being informed of the circumstances of his client (Waite) regarding the issues in this matter and the fact that Waite only spoke on the phone with the Plaintiff Ms. Mraz. Making the offer of discontinuance of action without costs was reasonable in the circumstances known at the time. [ 18 ] Therefore I apply the principals set out by Mr. Justice McMahon in Gorsline , and by the Alberta Court of Appeal in Allen . [ 19 ] However, there are some circumstances here that call for some mitigation of full Double Column Costs.

Waite at first Questioning refused to answer certain questions that required an appearance before the Master and a re-attendance after the Master’s Order to continue with questioning. [ 20 ] Regarding the fees, the separate claim by Herman with respect to fees was disallowed. [ 21 ] The double column costs claim with respect to the Defendant Waite totals $8,525.76. That is inclusive of all fees and disbursements.

Keeping in mind the nature of the disclosure regarding records, the application before the Master and the requirement of a second attendance for questioning, I order that the fees portion of the Waite Bill of Costs will be reduced by the amount of $2,500.00. [ 22 ] The Bill of Costs with respect to Herman totals $27,572.24 including double column costs from the date of service of the offer to settle.

In keeping in mind that there should be some appropriation regarding costs stemming from the dismissal of the Provincial Court Civil claim, I am reducing the amount of the Herman Bill of Costs by the sum of $2,500.00. [ 23 ] Both the reductions with respect to Waite and Herman Bill of Costs will be applied to fees only and any necessary adjustment with respect to GST. Written submission received on the 18 th day of December, 2015. Dated at the City of Calgary, Alberta this 8 th day of January, 2016.

W.P. Sullivan J.C.Q.B.A. Appearances: Jeffrey D. Poole for the Plaintiffs Ivan J. Derer, Q.C. for the Defendants