Milavsky v Milavsky Estate, 2016 ABQB 347

Court of Queen ’ s Bench of Alberta Citation: Milavsky v Milavsky Estate, 2016 ABQB 347 Date: 20160624 Docket: 4801 139446; FL01 10034 Registry: Calgary

Action No. 4801 139446 Between: Marilyn Theresa Milavsky Plaintiff/Respondent - and - Dwayne Lashyn, Charlene Molotsky and Gregory Milavsky, Executors of the Estate of Harold Philip Milavsky, Deceased Defendant/Applicant Action No. FL01 10034 And Between: Marilyn Theresa Milavsky Plaintiff/Respondent - and - Dwayne Lashyn, Charlene Molotsky and Gregory Milavsky, Executors of the Estate of Harold Philip Milavsky, Deceased; 353396 Alberta Inc.; and Gregory Milavsky, Dwayne Lashyn and Charlene Molotsky, Each as Trustees of Each of the Harold Milavsky Family Trust; H.

Milavsky Residential Trust, The Harold Milavsky Grandchildren’s Trust and Harold P. Milavsky Descendants’ Trust Defendants/Applicants _______________________________________________________ Reasons for Judgment on Costs of the Honourable Mr. Justice Bryan E. Mahoney _______________________________________________________

I. Introduction [ 1 ] This is a decision on the issue of costs. The Applicant/Defendants applied for

summary judgment dismissing the Respondent, Marilyn Theresa Milavsky’s (“Marilyn”) matrimonial property and unjust enrichment actions against the H. Milavsky Residential Trust (“HMRT”) and the trustees of the HMRT. Companion applications were brought by Gregory Milavsky and Charlene Molotsky, as well as Dwayne Lashyn. As a preliminary point, Marilyn asked this Court to dismiss the

summary judgment application because it was an abuse of process. She submitted that the application was a re-litigation of issues already decided by the Court of Appeal at Milavsky v Milavsky , 2011 ABCA 231 (“Milavsky 2011”). [ 2 ] In January, 1990, Harold Milavsky (“Harold”) and Marilyn began living together in a condominium in the Eau Claire district of Calgary. They married on 14 February, 1999 and separated on 20 February, 2009. Marilyn, within days of the separation, filed a divorce and matrimonial property action against Harold.

Harold became incompetent in October 2009 and died December 4, 2012. [ 3 ] In 2010, Marilyn filed an unjust enrichment and constructive trust action against certain of the Defendants. This action claims that Harold set up trusts and advanced property for the purpose of defeating any claims Marilyn had that arose from their relationship. [ 4 ] The Application was heard on January 22, 2015, and February 2, 2015. With written reasons found at 2015 ABQB 395 , 29 Alta LR (6th) 410, I found that Defendants had failed to establish that this was a suitable case for

summary judgment and therefore the Defendants’ application for

summary judgment dismissing the claims against the HMRT and the trustees was denied. II. The Respondent/Plaintiff’s Claim for Costs [ 5 ] Marilyn asks this Court to order the Defendants to pay a lump sum costs award of $158,000 which they say is 60% of the $262,930 actually incurred by her. She submits that an award of costs pursuant to

Schedule C of the Rules of Court would be inadequate because, under Column 5 Marilyn is only entitled to $13,000 in fees - less than 5% of her actual fees. [ 6 ] Marilyn further argues that cost awards are generally intended to reimburse the successful party for approximately 50% of their legal fees ( Trizec Equities Ltd. v Ellis-Don Management Services Ltd. , 1999 ABQB 801 , 251 AR 101 at para 30 ). Referring to Trizec , Marilyn submits that, while 50% indemnity is the goal under

Schedule C, "the level of indemnity will vary" with reference to a non-exhaustive list of factors, including: (

a) the merits of the case; (

b) the respective relationship between the parties; (

c) the risks faced as a consequence of the litigation; (

d) the length and complexity of the matter; and (

e) the preparation, presentation, and submissions made to the court. Where appropriate, it is open to a court to increase the percentage of recovery. In Trizec , 60% recovery was awarded. [ 7 ] Marilyn argues that in her case, an award of 60% is appropriate because: a. the Application raised complex issues regarding the intersection of family law, trust law, and limitation periods; b. this litigation is, at its core, a dispute between two former spouses.

If successful, the Application would have effectively terminated Marilyn’s claim to the matrimonial home - a home she and Harold resided in for almost 20 years; c. while this Court noted that the Application was not an abuse of process, it did observe that the Court of Appeal's comments in Milavsky 2011 indicated that the Application was of "questionable merit” (Reasons for Judgment at para 31); d. as Marilyn’s legal counsel, Laurie Allen, argued that the manner in which the Defendants advanced the Application amounted to a "war of attrition." The Defendants filed 185 pages of argument and three affidavits (sworn by Harold’s former assistant) in support of the Application; and e. the Estate alleged but did not prove that the Application was necessary because "Ms.

Milavsky lied to the Court of Appeal" (Reply Submissions of the Estate, filed February 17, 2015, at para 24) in connection with Milavsky 2011. III. The Defendant Estate’s (Applicant) Response [ 8 ] The Defendant Estate (“the Estate”) submits that a cost ruling on the

summary judgment application ought to be adjourned and determined by the trial judge following the trial for the following reasons: a. Since Marilyn alleges that the Estate has engaged in fraudulent transfers and fraudulent concealment then, if the fraud claims are unsuccessful, the result could be a large increase in special costs awarded against her. With five parties named in Marilyn’s lawsuit, those combined costs, the Estate suggests, could be in the seven figures. The Estate is concerned that there may be insufficient funds for Marilyn to pay a costs order.

b. Formal settlement or Calderbank offers could have the effect of an even higher costs order for failing to accept a reasonable offer ofsettlement, thus forcing an unnecessary trial. c. In July 2011, the Court of Appeal allowed the Respondent’s appeal from Hawco J.’s

summary judgment ruling: Milavsky vMilavsky, 2011 ABCA 231, 513 AR 282. The Court of Appeal judgment does not mention costs but the Estate says in its writtensubmissions that the Court of Appeal found that Column 5 was the appropriate

schedule for payment of costs. d. Marilyn flagrantly breached Rules 6.6 and 6.7 of the Rules of Court during the

Summary Judgment proceeding as she failed to giveproper notice of the affidavits upon which she intended to rely and deprived the Estate of an opportunity to cross-examine upon thatmaterial, which material was largely rife with inaccuracies and which contained inflammatory allegations and speculation. Marilyn oughtto be rebuked for this conduct and there ought to be a meaningful financial consequence. e. There is a set-off for costs that Marilyn owes to the Estate.

In May 2014, she brought a special application with briefs before JusticeMcIntyre, in which she unsuccessfully sought an order compelling the Defendant Lashyn to respond to questions and provide additionalrecords. According to a draft Bill of Costs the amount totaled $3,234.27. [9] In

summary the Estate seeks an order that the cost consequences of the

summary judgment application be deferred until afterthe determination of this matter at trial scheduled for Fall 2016. In the alternative, should the Court order the Estate to pay costs toMarilyn forthwith, it says that the costs ought to be paid into Court pending the outcome of this litigation and a final determination fromthe trial judge regarding costs. The Estate further says, if costs were to be awarded, they ought to be in accordance with the Bill of Costsproposed by counsel for the HMRT in the amount of $14,000.00. IV. Joint Submissions of the Trustees of the HMRT [10] The HMRT submits that costs of the application for

summary judgment should be in the cause. In the alternative, the HMRTsubmit that costs should be awarded in accordance with

Schedule C, Column 5, Item 8(1), and that only one Bill of Costs should beawarded with respect to the HMRT Trustees. [11] The HMRT argues that there is no basis for the Court to depart from the normal rule, that costs are normally recovered on aparty-party basis in accordance with

Schedule C of the Rules of Court. HMRT points out that the application was for

summary judgmentwas based on cross-examination transcripts and affidavit evidence that involved narrow questions of law relating to the H. MilavskyResidential Trust. [12] According to the HMRT, Marilyn is not entitled to costs approaching full indemnity, which are only granted in rare andexceptional circumstances. Costs should not be awarded to an otherwise successful party who has brought unfounded allegations of fraudor improper dealings. Additionally, the Marilyn’s application to have the

summary judgment applications dismissed on the grounds ofabuse of process was also dismissed and should be accounted for accordingly in any costs award that is made. V. Ruling on Costs [13] 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. [14] 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. [15] 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. [16] In Jacobi v Newell No. 4 (County) (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 and Parkview Holdings Ltd. v. Trimac Industries Ltd. (1993), (AB KB), 138 A.R. 161 (Q.B.).

In exercising that discretion, a trial judge must keep in mind the purpose of an award of costs andthe policy considerations involved in setting the level of recovery. These matters were summarized by McDonald, J. in Reese v. Alberta(1992), (AB KB), 5 Alta. L.R. (3d) 40 (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), plus

reasonable 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 found 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.” [17] 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 (Q.B.). In Jackson et al v.

Trimac IndustriesLtd., et al, 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 courtmust conclude that the case fits within the parameters of a rare and exceptional or unusual case.” [18] 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. [19] Marilyn was unsuccessful in her application to have this

summary judgment application denied on the basis of abuse ofprocess. She was successful in defending this more complex and voluminous application for

summary judgment. [20] Marilyn shall have her costs payable forthwith and calculated by using the draft Bill of Costs prepared by Marilyn’s counsel,Caroline Smith, except for Column 5 amount will be doubled to $26,000.00 for fees. Disbursements are set at $2,734.52. GST is alsopayable. Heard on the 5th day February, 2016 with written submissions provided. Dated at the City of Calgary, Alberta this 24th day of June, 2016. Bryan E. Mahoney J.C.Q.B.A. Appearances: Laurie E. Allen/Keith D. Marlowe/Caroline Smith for Marilyn Milavsky Robert W. Calvert, Q.C. for the Estate of Harold Milavsky Daniel J.

McDonald, Q.C. for the Trustees Gregory Milavsky and Charlene Molotsky J.P. Peacock, Q.C. for the Trustee Dwayne Lashyn and 353396 Alberta Inc.