Mikkelsen v Truman Development Corporation, 2016 ABQB 255

Court of Queen’s Bench of Alberta Citation: Mikkelsen v Truman Development Corporation, 2016 ABQB 255 Date: 20160506 Docket: 1201 04099 Registry: Calgary Between: Wayne Mikkelsen, Colin Wade Mikkelsen, Meghen Anine Mikkelsen and Alana Denise Mikkelsen Plaintiffs/Defendants by Counterclaim - and - Truman Development Corporation Defendant/Plaintiff by Counterclaim _______________________________________________________ Supplemental Memorandum of Decision of the Honourable Madam Justice M.C.

Erb _______________________________________________________ [ 1 ] This decision is supplementary to the trial decision dated February 3, 2016, reported at 2016 ABQB 23 (the “Trial Decision”) regarding anticipated issues arising from the original reasons for judgement. The dispute decided at trial was between the owners of a family farm located near Langdon, Alberta (the Mikkelsens), and a residential development corporation (Truman Development Corporation, referred to as “Truman Development”) over whether the developer had an interest in the farmland (the “Langdon Land”).

The facts are set out in the Trial Decision and are not repeated here. References to the “Agreement” have the meaning defined in the Trial Decision.

[ 2 ] The Trial Decision concluded that there was no binding agreement between Truman Development and Wayne Mikkelsen. At best, there was an agreement to negotiate an agreement. It also concluded that even if there had been an agreement, it would have been set aside on the basis that it was unconscionable. The Plaintiffs had argued that the Agreement should also be set aside because it was entered into under duress and as a result of fraudulent misrepresentations of the president and chief executive officer of Truman Development, Geojko (George) Trutina. The Trial Decision concluded that although Mr.

Trutina’s conduct was aggressive but it did not amount to coercion. It also found that there was insufficient evidence that Mr. Trutina’s statements to the Plaintiffs were fraudulent or that Mr. Mikkelsen was induced to enter into the Agreement because of them.

The Plaintiffs’ claim for damages of $1 million was dismissed due to lack of evidence, and their claim for punitive damages of $200,000 was dismissed because the conduct of Truman Development was not so malicious and high handed as to support such an award. [ 3 ] In its pleadings, Truman Development counterclaimed for specific performance of the Agreement, or in the alternative, it sought $38.5 million in damages. It also claimed recovery for planning and pre-development costs expended for the proposed development that the parties agreed totalled $438,368.06, which included the land in issue between the parties.

The claims for specific performance and, alternatively, for damages of $38.5 million were dismissed on the basis that no binding agreement was concluded between the parties. With respect to the amounts sought for planning and pre-development costs, the Trial Decision held that the Langdon Land was not the only land subject to the work completed and that the Mikkelsens benefitted to the extent of the work related to the Langdon Land.

It was also held that Truman Development was entitled to recover a percentage of those pre-development costs representing the Plaintiffs’ proportionate share, calculated in accordance with the number of landholders affected by the pre- development work. [ 4 ] As a result of these findings, the following judgement was given at paragraph 176 of the Trial Decision: (

i) The Plaintiffs’ application for a declaration that no binding agreement of a contractual nature exists between the parties with respect to the Langdon Land is granted. (ii) The Registrar of the Alberta Land Titles Office, South District is directed to discharge the Caveats registered by the Defendant from the Langdon Land forthwith.

If there is any impediment affecting such direction, the Defendant is directed to discharge all caveats it caused to be placed on the Plaintiffs’ land forthwith. (iii) The Defendant’s claim for specific performance or, in the alternative damages, is dismissed, subject to subparagraph [iv] herein. (iv) The Defendant is entitled to recover the Plaintiffs’ proportionate share of the $438,368.06 expended on preliminary development work attributable to the Langdon Land. (

v) The Plaintiffs’ claims for compensatory and punitive damages are dismissed. [ 5 ] The parties now seek a decision on costs and the Plaintiffs’ proportionate share of the $438,368.06 attributable to the Langdon Land. The parties made extensive submissions on these two issues arising from the original judgement. Issues [ 6 ] The issues for determination in these supplemental reasons concisely stated are these: 1. What is the Plaintiffs’ proportionate share of the pre-development costs of $438,368.06? 2. What is the appropriate costs award in this case?

Proportionate Share of Preliminary Development Costs [ 7 ] In the agreed statement of facts entered as an exhibit at trial and accepted into evidence, Truman Development spent $438,368.06 on pre-development costs.

Arising from this agreement between the parties, the Trial Decision concluded at para 172: ... [Truman Development] is entitled to recover from the Defendants by Counterclaim a percentage of those pre-development costs representing their proportionate share, calculated in accordance with the number of landholders affected by the pre-development work. ... [ 8 ] Truman Development now submits that the proper amount should have been $441,308.06 due to errors in its original calculation.

With respect to apportionment, Truman Development argues that the number of landowners to benefit from the pre- development work varied from time to time, depending on the work carried out. For example, in June 2007, the pre-development work benefitted three landowners, including the Langdon Land as well as land owned by Mr. Jessey and Ms. Whiteside. At other times, the work benefitted two or four landowners, or just the Mikkelsens. [ 9 ] Truman Development provided a calculation of individual pre-development costs, divided by the number of landowners at the particular time that cost was incurred.

This includes invoices totalling approximately $120,000 from various service providers, and invoices totalling $321,368.88 for obtaining a Langdon Strategic Servicing Plan prepared for the Langdon Water Works Ltd. (the “Strategic Servicing Plan”). The Strategic Servicing Plan was marked as Tab 71 of Exhibit 2 at trial. [ 10 ] The Plaintiffs accept Truman Development’s allocation of $50,504.97 to them of the approximately $120,000 in work completed, other than work related to the Strategic Servicing Plan.

The dispute between the parties is over how to allocate the cost of $321,368.88 to complete the Strategic Servicing Plan.

[ 11 ] Truman Development seeks an allocation of the entire $321,368.88 for the Strategic Servicing Plan to the Mikkelsens on the basis that it completed this work solely to the Langdon Land. In contrast, the Plaintiffs argue that the Strategic Servicing Plan relates to 35 quarter sections of land, of which the Mikkelsens held only four.

The Mikkelsens submit that the Strategic Servicing Plan costs went beyond what they could reasonably have expected to form part of any Agreement, and they should not be required to pay all of those costs. [ 12 ] In support of its argument, Truman Development refers to its trial evidence, namely invoices in support of the $321,368.88 relating directly to the Mikkelsens’ four quarter sections.

Truman Developments entered into the Strategic Servicing Plan Agreement dated August 25, 2011 with Langdon Waterworks Limited (the “SSP Agreement”) that specified that the cost of the Strategic Servicing Plan would be allocated to the four quarter sections comprising the Langdon Land, as well as one quarter

section owned by Ms. Whiteside and one quarter

section belonging to Mr. Jessey. According to Truman Development, each landowner was charged its proportionate share in invoices directed to Truman Development. There is no evidence that the Mikkelsens were aware of the SSP Agreement or that a Strategic Servicing Plan had been requested. [ 13 ] The Trial Decision contemplated that the pre-development costs would be allocated to the owners who benefitted from the work on a per owner basis.

Despite the fact that Truman Development may have agreed with Langdon Waterworks Limited to allocate the cost of the Strategic Servicing Plan to six quarter sections, that agreement is not binding on the Mikkelsens. Any obligation owed by the Mikkelsens to Truman Development for this expense arises only out of an order in the Trial Decision, not the SSP Agreement. [ 14 ] Logically, the Strategic Servicing Plan would benefit more land owners interests than just those referenced in the invoices. The Strategic Servicing Plan sets out the background to its preparation in

section 1.1 (in part) as follows: Area landowners and developers wish to take the lead in preparing a strategic servicing plan for lands surrounding the Hamlet of Langdon (referenced in this strategy as the plan area). This action is intended to facilitate the development of the plan area lands in concert with an [sic] efficient and cost effective servicing strategy. ...

In order to consider the needs of affected stakeholders, support new water licensing initiatives, avoid incremental infrastructure upgrades and facilitate the orderly, efficient and sustainable expansion of infrastructure; [sic] a common vision for future growth in the plan area with attendant management and servicing strategies is required. [ 15 ] The Strategic Servicing Plan is clearly beneficial to landowners beyond the Langdon Land.

As a result, the Strategic Servicing Plan costs should be allocated in the aggregate among the four parties who could benefit from the pre-development work completed by Truman Development: Mr. Jessey, Ms. Whiteside, the Mikkelsens and Truman Development itself. Even if some planning relates to one part of the land, it benefits the developer and all the landowners whose property is moved towards development.

It advances a common vision for the development of the land as a whole. [ 16 ] As a result, the Plaintiffs share of the total cost of the Strategic Servicing Plan is $80,342.22 and the $50,504.97 towards other expenses resulting in its share of pre-development costs of $130,847.19. Costs [ 17 ] The Plaintiffs seek full indemnity costs for the actual amount paid in legal fees and disbursements of $483,531.12. Alternatively, they seek a lump sum cost award of $300,000, representing approximately 60% of the actual amount they paid.

They also have filed a Bill of Costs that includes double costs from the date their formal offer to settle was served, in the amount of $118,294.06. It includes a second counsel fee for trial and is calculated based on Column 5 of the Tariff at

Schedule “C” to the Alberta Rules of Court , Alta Reg. 124/2010 (the “ Rules ”). [ 18 ] The Defendant submits that the parties should bear their own costs. [ 19 ] The Plaintiffs seek costs approaching full indemnity or a lump sum as indicated, for the following reasons: 1. The Plaintiffs are the successful party. 2. The Court’s judgement is equal to the formal offer of settlement made by the Plaintiffs on August 27, 2013, where the Plaintiffs offered to settle the dispute with Truman Development for: (

i) an Order declaring that the Caveats are invalid and instructing the Registrar of Land Titles to remove them from the affected titles; (ii) an Order declaring that the Joint Venture Agreement has been terminated by the parties as of December 10, 2011; and (iii) interest and costs are not included in the amount of the offer. 3. They say the Defendant engaged in misconduct, including: (

i) improperly denying discovery records on critical issues; (ii) changing pre-discovery evidence given under oath after hearing the Plaintiffs’ case; (iii) forcing the Plaintiffs to prove countless facts at trial that should have been admitted; and

(iv) forcing the Plaintiffs to exhaust legal proceedings to obtain that which was obviously theirs. [20] The Defendant disputes that the Plaintiffs did not meet or exceed their offer to settle, and were not wholly successful at trialbecause they did not receive any of the damages sought. Rather, they were ordered to make partial payment to the Defendant for pre-development costs pursuant to the counterclaim, although the principal relief the Defendant sought was dismissed. The offer to settle didnot include any payment to Truman Development.

Further, the Defendant argues that any costs awarded to the Plaintiffs should bereduced (or no costs awarded) because they advanced an unproven allegation that Mr. Truman made fraudulent misrepresentations. Inthese circumstances, Truman Development argues the parties should each bear their own costs. (

a) General Principles [21] Costs are discretionary, subject to any specific requirement in the Rules about who is to pay costs and what costs are to bepaid: r 10.31(6). This includes the discretion to award costs on an indemnity basis for a party’s lawyer’s fees and disbursements or on alump sum basis rather than or in addition to assessed costs: r 10.31(1)(b). [22] In making a costs award, the Court may take into account factors including the result of the action and the degree of successof each party, the amount claimed and the amount recovered, and any other matter related to a determination of reasonable and propercosts that the Court considers appropriate: Rules, r 10.33(1)(a), (

b) and (g). In deciding an appropriate costs award, the Court mayconsider all or any of the following: the conduct of a party that unnecessarily lengthened or delayed the action; a party’s denial of orrefusal to admit anything that should have been admitted; a contravention of or non-compliance with the Rules or an order; and whether aparty has engaged in misconduct: r 10.33(2)(a), (b), (

f) and (g). [23] The court has the jurisdiction to award costs on a higher scale than provided for in the Tariff: Freyberg v Fletcher ChallengeOil and Gas Inc, 2006 ABCA 260 at para 17. Although the court has that jurisdiction, solicitor and client costs are awarded only in “rareand exceptional” circumstances: Jackson v Trimac Industries Ltd (1993), (AB KB), 138 AR 161 (QB) at 172. (

b) Successful Party [24] The Plaintiffs submit that they are entitled to costs as the successful party at trial. [25] The Defendant does not dispute that the Plaintiffs were successful in the main action, but notes that it succeeded in

part in itscounterclaim. Truman Development submits that where a counterclaim is advanced, the Court should examine the success the Plaintiffshad in their action, as well as the success they had in defending the Defendant’s counterclaim. Truman Development argues that successwas divided because each party was successful to some degree. [26] In that regard, the Plaintiffs were successful to the extent this Court found the Agreement was invalid and directed theRegistrar of the Alberta Land Titles office to discharge the caveats on title of the Langdon Land.

However, the Plaintiffs were notsuccessful in their claim for damages of $1 million or in their claim for punitive and exemplary damages. [27] Truman Development did not succeed in its principal claim for specific performance of the Agreement or alternatively, fordamages of $38.5 million due to the fact that this Court found there was no binding agreement.

However, the counterclaim wassuccessful to the extent of Truman Development’s claim that the Plaintiffs pay its share of the pre-development costs. [28] The Alberta Court of Appeal has considered Rule 10.29 in the context of regarding when a successful party will be entitled tocosts in Mahe v Boulianne, 2010 ABCA 74 at para 6: The general rule is that the successful party on appeal is entitled to costs of the appeal. It is rare for any successful party on appeal to besuccessful on each and every argument that is made.

Where several forms of relief are requested on appeal, it is also relatively rare forthe successful party to succeed on each item of relief. Further, the parties often make arguments on points that the court does not have todeal with, because of the way the decision unfolds. The general rule contemplates that the party who achieves substantial success on theappeal will receive costs, even if that party is not totally successful, nor successful on every issue or argument.

Generally the costsfollow the ultimate result, and costs are not usually apportioned on an issue-by-issue basis, a claim-by-claim basis or on a head-of-damages basis, although there is a discretion to do that in proper cases. … [citations omitted] [29] Although the discussion in Mahe relates to costs of an appeal, the discussion is helpful here. [30] Overall, I find that the Plaintiffs succeeded on the most important issue between the parties, the validity of the purportedagreement for a joint venture to develop the Langdon Land.

Truman Development in effect took the position that the value of thisagreement was $38.5 million, the quantum of damages sought in its counterclaim, in the alternative to specific performance. Asdiscussed earlier, Truman Development was granted judgement for $130,847.19 on its counterclaim for a portion of its pre-developmentexpenses attributable to the Plaintiffs. In comparison to the relief sought, that success is minimal for the purpose of determining costs. (

c) Offer to Settle [31] Where a plaintiff makes a formal offer to settle that is not accepted, and subsequently obtains a judgement or order that isequal to or more favourable than the offer, the plaintiff is entitled to double the costs to which the plaintiff would otherwise have beenentitled, excluding disbursements: Rules, r 4.29(1).

This rule does not apply if costs are awarded on an indemnity basis or on a lump sumbasis pursuant to r 10.31(1)(b): Rules, r 4.29(4)(a). [32] In the Plaintiffs’ offer to settle, one of the terms was that the parties agree the Agreement had been terminated by the partiesas of December 10, 2011. In the Trial Decision, I found there was no binding agreement, and concluded:

The Agreement was not a valid contract so there was no need for a termination agreement. That said, I agree with the plaintiffs that theparties’ mutual release of obligations under the Agreement could be valid consideration. I find the termination agreement reflected Mr.Trutina’s acknowledgement that the Caveats should not have been maintained: Trial Decision at para 156. [33] The offer to settle leads to the same result as the Judgement in the principal action – a direction that the caveats be removedand a finding that the Agreement is unenforceable.

The Plaintiffs’ offer to settle was as favourable as the Judgement in the main action.However, the offer to settle did not address the counterclaim or any payment to the Defendant for pre-development expenses. At trial,Truman Development was awarded Judgement for partial payment of its pre-development expenses that now fixed at $130,847.19. [34] In FJ McDaniel Ltd v F & F Holdings Ltd (1987), (AB KB), 92 AR 280 (QB), this Court considered theappropriate scale of costs where the plaintiff made two offers to settle a claim and counterclaim. The first offer was for an all-inclusiveamount that was not accepted.

A second offer, made the morning of trial, was broken down into specific areas, including separatepayments to the plaintiff and the defendant as well as applicable interest and party and party costs. Both offers were for less than the totalamount awarded at trial. The issue for the Court was whether double costs would start to run from the date of the first offer or from thedate of the second offer.

The defendant took the position that because the counterclaim was partly successful at trial, the first offer wasnot effective to trigger the rule regarding double costs because it did not address any recovery for the counterclaim. Justice Veitdisagreed, concluding that double costs commenced from the date of the first offer because the plaintiff recovered a net amount in excessof its offers.

She held that “it is not whether the plaintiff was absolutely successful, but whether the amount recovered exceeds theamount offered”: at para 14. [35] In another decision of this Court, Alberta Wheat Pool v Fieldberg, in which the plaintiff was awarded $41,770 against thedefendant and the defendant (plaintiff by counterclaim) was successful in one of three counterclaims in the nominal amount of $611.36.The plaintiff had served an offer to settle whereby it would discontinue its action without costs and the defendant (plaintiff bycounterclaim) would discontinue its three counterclaims without costs.

Justice Lee concluded that it was clear that the plaintiff bested itsoffer to settle, in that rather than both parties being awarded no costs, the defendant owed the plaintiff a net judgement of slightly over$41,000: at para 36. He awarded double costs to the plaintiff after the date of service of the offer to settle and no costs to either party inrespect of the counterclaims. [36] In the present case, in addition to ordering essentially the same relief set out in the offer to settle in the principal action,judgement was granted on the counterclaim for pre-development costs in an amount now fixed at $130,847.19.

Unlike the decisions inFJ McDaniel and Alberta Wheat Pool, the net judgement does not exceed the offer to settle because the Plaintiffs made no monetaryoffer and received no monetary award. [37] This Court has the discretion to consider informal offers to settle that do not satisfy the Rules: Botan v St Amand, 2012 ABQB260 at para 79, aff’d 2013 ABCA 227; Mahe at para 10.

Recently in Chisholm v Lindsay, 2015 ABCA 179, the Court of Appeal declinedto reconsider Mahe and commented, at para 44: As we see it, the purpose of the Rules of Court is to provide a means by which claims can be fairly, justly and expeditiously resolvedeither by a Court process in a timely and cost-effective way or in some other fashion, as the Rules contemplate. In every case, therelevant inquiry will be whether there was a legitimate attempt to settle given the issues in dispute and mindful of the conduct of thelitigation.

Such an approach encourages settlements without derogating from that referred to as the foundation of the formal Rules. Maheasserts that notwithstanding strict compliance with the formal Rules of Court, a trial judge must be permitted to take account, in thecontext of other factors, of non-compliant offers made in good faith to settle litigation. [38] Here, the Mikkelsens’ offer to settle addressed the principal issue between the parties.

Truman Development sought specificperformance of the Agreement, or alternatively more than $38.5 million in damages in its counterclaim, and was successful only inrecovering a portion of its pre-development costs in the amount of $130,847.19. Rule 4.29(1) is not triggered because the Plaintiffs’formal offer to settle did not equal or exceed the Judgement. However, it is open to this Court to consider, as a factor in determiningcosts, a formal offer to settle that fell marginally short of the Judgement, if it was a legitimate attempt to settle the issues in dispute. (

d) Scale of Costs / Lump Sum Award [39] The Plaintiffs seek an award to fully indemnify them for their legal costs in the amount of $483,531.12. Alternatively, theyseek a lump sum cost award of $300,000 representing approximately 60% of the actual amount they have paid. Both of these proposalsare in excess of the standard party and party costs. [40] While costs are discretionary, as a general rule the Court should only depart from party and party costs in rare and exceptionalcircumstances: Sidorsky v CFCN Communications Ltd, 1997 ABCA 280 at para 28.

Examples of such circumstances were outlined inJackson at 172, including: ... 3. where there is evidence that the plaintiff did something to hinder, delay or confuse the litigation, where there was no serious issue offact or law which required these lengthy, expensive proceedings, where the positively misconducting party was “contemptuous” of theaggrieved party in forcing that aggrieved party to exhaust legal proceedings to obtain that which was obviously his (Sonnenberg); 4. an attempt to deceive the court and defeat justice, an attempt to delay, deceive and defeat justice, a requirement imposed on theplaintiff to prove facts that should have been admitted, thus prolonging the trial, unnecessary adjournments, concealing materialdocuments from the plaintiffs and failing to produce material documents in a timely fashion (Olson); 5. where the defendants were guilty of positive misconduct, where others should be deterred from like conduct and the defendants shouldbe penalized beyond the ordinary order of costs (Dusik v.

Newton);

... [ 41 ] In Jackson , there was a lengthy trial that resulted in a judgement of $7,212,375. In that case, the Court found that it was proper to award costs on an indemnity basis because there was an individual within the defendant organization who was contemptuous of the plaintiff’s rights and was guilty of positive misconduct.

The Court also found that the individual’s testimony at trial was unreliable which affected the conduct of the action: at 174. [ 42 ] Courts have also granted enhanced costs for the purpose of satisfying the objectives of deterrence and punishment that would otherwise be served by a punitive damage award: Evans v Sports Corp, 2011 ABQB 616 at para 12 , aff’d 2013 ABCA 14 .

In addition, where discovery records on a material point were improperly denied and the trial judge found that a party was not telling the truth at examinations for discovery and at trial, solicitor and client costs were ordered from the date of trial onward (although only party and party costs were awarded leading up to trial): Polar Ice Express Inc, v Arctic Glacier Inc , 2009 ABCA 20 at paras 23 and 24 .

In Polar Ice , the Court declined to award solicitor and client costs throughout because a precise appraisal of the consequences of the misconduct alleged could not be determined. [ 43 ] The Plaintiffs submit that there were exceptional circumstances in this case. Specifically: (

a) As a result of Truman Development’s pre-trial discovery evidence, the Plaintiffs were forced to call witnesses and prove facts that the Plaintiffs say should have been admitted by Truman Development, including: (

i) having to prove that the Mikkelsens were on a family holiday in September and October 2006 to disprove Mr. Trutina’s insistence that he met with the Mikkelsens in Langdon and reviewed a draft of the Agreement on September 5, 2006; (ii) having to call witnesses to discredit Mr. Trutina’s claim that he removed one of the caveats on the Langdon Land to accommodate an RV business; (iii) having to call a witness to establish that Mr. Trutina was publicly claiming an interest in the Langdon Land, as well as land owned by Mr. Jessey and Ms. Whiteside; (iv) having to call Ms. Whiteside and Mr.

Jessey as witnesses to prove Truman Development was improperly claiming an interest in her land and his land, respectively; (

v) having to call Meghan Fowler as a witness to prove that Mr. Trutina had never met her and that she was not present at the alleged September 5, 2006 meeting; (vi) entering as an exhibit a receipt for breakfast to prove that the December 10, 2007 meeting between Mr. Trutina and the Mikkelsens was a breakfast meeting when he insisted it was a lunch meeting where he had been drinking; and (vii) having to prove that Mr. Trutina had his own original copy of the December 10, 2007 Termination Agreement in his possession, contrary to Mr.

Trutina’s claim that he had signed it without reading it and did not have a copy in his possession until after the litigation began. The first time Mr. Trutina admitted to having an original was at trial. (

b) The Trial Decision concluded that there were “many inconsistencies in Mr. Trutina’s evidence which gave the Court the clear impression he had changed his pre-trial Questioning evidence after he listened to the Plaintiffs’ evidence at trial”: Trial Decision at para 128. These inconsistencies included: (

i) Mr. Trutina recanting his pre-trial evidence that he met with Mr. and Mrs. Mikkelsen in their home in Langdon, Alberta, on September 5, 2006 to review a draft of the Agreement: para 129; (ii) Mr. Trutina recanting his pre-trial evidence that there was only one original signed copy of the December 10, 2007 Termination Agreement: para 132; (iii) Mr. Trutina’s insistence that Truman Development’s reason for removing the caveat from the southwest quarter

section was to accommodate a plan for an RV storage business: paras 130 and 131; and (iv) Mr. Trutina’s insistence that the December 10, 2007 meeting was a lunch meeting where he drank alcohol and took pills, and his judgement may have been impaired: para 141. (

c) Several of the experts called to testify by Truman Development were ultimately found to be unnecessary and unhelpful to the Court: para 122 and 123. The Plaintiffs argue that the examination and cross-examination of this evidence unnecessarily lengthened the trial. [ 44 ] The Defendant relies on Evans for the principle that a finding that one of the witness’s testimony is not credible in some areas does not result in an award of solicitor and client costs: at paras 49-54.

However, the Court specifically noted that “there is a difference between finding someone not credible, and finding that someone is deliberately lying, or fabricating evidence, or attempting to mislead the Court”: at para 50. In this case, the findings in the Trial Decision about Mr. Trutina’s evidence go beyond strictly an assessment of credibility and a preference for the Mikkelsens’ recollection of matters. The Court found that he changed his evidence at trial. [ 45 ] It is a significant factor for the determination of costs that this Court found that Mr.

Trutina’s evidence contained many inconsistencies, and gave the Court “the clear impression that Mr. Trutina changed his pre-trial Questioning evidence as he listened to the Plaintiffs’ evidence at trial”: Trial Decision at para 128. [ 46 ] This Court acknowledges that solicitor and client costs are to be awarded only in extraordinary circumstances.

While this was not a lengthy trial, lasting only one week with written final submissions concluding in August, 2015, and the parties filed a Statement of Admitted Facts in an effort to streamline the trial, the circumstances of this case support a cost award beyond the usual party and party

costs. This conclusion is based on the Court’s stated concerns at trial about Mr. Trutina’s evidence. In addition, the Plaintiffs had torespond to arguments that should not have been pursued: proving that they were not in Alberta in September and part of October thatyear thereby disputing successfully Mr. Trutina’s insistence that there was a meeting on September 5, 2006 at Mr. and Mrs. Mikkelsens’home; disproving that Mr. Trutina met the Mikkelsen’s at breakfast not at a lunch meeting in December 2007 proved at trial withrestaurant receipts and time taken up in viva voce evidence; disproving Mr.

Trutina’s claim that he did not have an original copy of theDecember 10, 2007 Termination Agreement, something he recanted in cross examination; insisting an independent witness had beenpresent for signing the agreement at the Mikkelsen home necessitating the calling of the purported witness to refute the claim. Thesethings among others put the Plaintiffs to unnecessary extra expense and effort in proving their case.

In awarding costs beyond the partyand party scale, this Court has taken into account the Plaintiffs’ offer to settle and the fact the Plaintiffs made efforts before trial toresolve the dispute, despite the fact that they did not achieve a comparable or better result at trial. [47] In these circumstances, costs awarded pursuant to the Tariff are not adequate.

At the same time, this is not a case that requirescomplete indemnity for the Plaintiffs’ costs. [48] When costs awarded pursuant to the Tariff would be inadequate, the Court has numerous options available, as discussed bythe Court of Appeal in Caterpillar Tractor Co v Ed Miller Sales & Rentals Ltd, 1998 ABCA 118 at para 4, leave to appeal to SCCrefused, 25594 (1 May 1997): …There are different ways to adjust

Schedule C when its product seems inadequate: higher column, multiples of a column, a multiplierfor inflation or otherwise, extra lump sums, some fraction of solicitor-client costs, and so forth. Several modes of adjustment may bereasonable; indeed several different modes may amount to much the same thing. The ultimate question is whether the final total isreasonable or not. [49] Pursuant to Rule 10.31(1)(b)(ii), this Court may award a lump sum instead of or in addition to assessed costs. [50] The Plaintiffs seek a lump sum cost award of $300,000, which is approximately 60% of their solicitor-client costs.

In TrizecEquities Ltd v Ellis-Don Management Services Ltd, 1999 ABQB 801, aff’d 1999 ABCA 306, Mason J., stated that in the usual course inAlberta there is an “attempt by the Courts to award costs which achieve indemnity in the range of 40% to 50% in a typical case”: at para21 (QB).

An award of 60% indemnity is outside the typical case. [51] The Defendant submits that a lump sum as a percentage of solicitor and client costs is inappropriate in this case because lumpsums should be reserved for complex and protracted proceedings where exceptional circumstances exist, relying on Monco Holdings Ltdv BAT Development Ltd, 2005 ABQB 851 at paras 26-32 and EAD Property Holdings

(103) Corp v Greyhound Canada TransportationULC, 2015 ABQB 425 at paras 21 and 22. These decisions do not assist the Defendant, rather, they support this Court’s discretion toaward a lump sum for costs in exceptional circumstances. As discussed earlier, this case involved exceptional circumstances becauseproceedings were lengthened and made more complicated by Mr.

Trutina, who changed his evidence at trial, and because the Defendantrequired numerous facts to be proved that should not have been in issue. [52] As a result, the Plaintiffs are awarded a lump sum of $300,000 for costs in the circumstances of this case, representing thetotal amount for costs that would otherwise be awarded pursuant to the Tariff is not reasonable. This award is subject to the Court’sfindings on the issue of unproven allegations of fraud. (

e) Unproven Allegations of Fraud [53] In their pleadings and at trial, the Plaintiffs alleged that Mr. Trutina made fraudulent misrepresentations. The Trial Decisionconcluded that while Mr.

Trutina was aggressive and exerted pressure on the Mikkelsens to quickly sign the Agreement, there wasinsufficient evidence that his statements amounted to fraud: Trial Decision at para 167. [54] Often, a successful plaintiff who alleges but fails to prove fraud should be deprived of costs or have its costs reduced.However, this is not a general rule: Conway v Zinkhofer, 2007 ABQB 2 at paras 21 and 23; aff’d 2008 ABCA 392: 21 The Applicants have pointed out that solicitor-clients costs or increased costs are generally awarded where there has been anunsuccessful allegation of fraud.

Actual damage to one’s reputation need not be proven. Coe v. Sturgeon General Hospital District No.100, [2001] A.J. No. 1037 (Alta. Q.B.). … 23 The Respondents correctly point out that unsuccessful allegations of fraud do not necessarily result in a costs sanction or anincreased costs award. There are many factors that the court must review. Some include whether the allegations are completelyunfounded or only partially unfounded, the nature of the allegations, whether the allegations were simply technical or significant,whether they were made recklessly or intentionally. Canada (Attorney General) v.

Bourassa (Trustee of), 2002 ABCA 205 (Alta. C.A.);Belzil v. Bain, 2002 ABQB 388 (Alta. Q.B.) ; Mitran v. Guarantee RV Centre Inc., 1999 ABQB 276 (Alta. Q.B.); 599291 Alberta Ltd. v.Luff, 2005 ABQB 892 (Alta. Q.B.). [55] In Mitran v Guarantee RV Centre Inc, (1999), 1999 ABQB 276 , 251 AR 77 (QB), the Court considered whethercosts against the plaintiff could be limited or refused because of the unsuccessful allegations of fraud against him. There, the Courtreduced the plaintiff’s costs from double costs to single costs because of an allegation of fraud that was not withdrawn until the secondday of trial.

In reducing its cost award, the Court explained at para 23: In many cases where an unsuccessful allegation of fraud has been made against a party, the party who made the allegation will not beawarded costs even if successful on other grounds at trial. This is not a general rule, … as the court has to consider the nature of theallegations and the circumstances of each case before arriving at a conclusion. … [citation omitted]

[ 56 ] It was further explained in Botan (QB) at paras 61-63 that a failure to prove fraud does not automatically have cost consequences unless the allegations “were made recklessly or oppressively, or were obviously unfounded”: at para 62. [ 57 ] In this case, the Plaintiffs maintained through the trial their allegation that Mr. Trutina (on behalf of the Defendant) had made fraudulent misrepresentations, which although not outrageous, might have a negative effect on Mr. Trutina’s reputation in the development industry, although to a lesser degree in some cases. While the Trial Decision impugned Mr.

Trutina’s credibility, found that he changed some of his evidence at trial (para 128), and concluded that Mr. Trutina was prepared to do or say whatever it took to get what he wanted from Mr. Mikkelsen (para 157), his representations to the Mikkelsen’s leading up to the signing of the purported Agreement were aggressive and vague but were not fraudulent (para 167).

The failure to prove fraud in all the circumstances here, requires a reduction in the costs award, and costs will be reduced by $100,000 as a result. [ 58 ] Accordingly, the Plaintiffs are awarded costs of $200,000, representing a lump sum of $300,000 reduced by $100,000 for their unproven allegation that the Defendant made fraudulent misrepresentations.

Conclusion [ 59 ] The amount of the pre-development costs payable by the Plaintiffs to the Defendant is fixed at $130,847.19. [ 60 ] Trial costs are awarded to the Plaintiffs in the amount of $200,000 plus disbursements of $8,072.95, as claimed in their Bill of Costs, subject to confirmation that the photocopying charges are in accordance with the Tariff. If a higher per page amount has been claimed for photocopying, the disbursement award should be adjusted accordingly. [ 61 ] Since success on these issues is divided, the parties shall bear their own costs of this attendance.

Heard on the 10 th day of March, 2016. Dated at the City of Calgary, Alberta this 6th day of May, 2016. M.C. Erb J.C.Q.B.A. Appearances: J.D. Murphy/J. Selnes for the Plaintiffs/Defendants by Counterclaim R.J. Simpson, QC/J.W. Rose, QC for the Defendant/Plaintiff by Counterclaim