Nordstrom v Stenco Incorporated, 2016 ABQB 45

Court of Queen ’ s Bench of Alberta Citation: Nordstrom v Stenco Incorporated, 2016 ABQB 45 Date: 20160121 Docket: 1203 12109 Registry: Edmonton Between: Derek Nordstrom and Derek B. Nordstrom Professional Corporation Plaintiffs - and - Stenco Incorporated, Tim Stensrud and Tim Stensrud Design Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Peter B.

Michalyshyn _______________________________________________________ Introduction [ 1 ] This is a decision on the merits, and costs consequences, of an ill-conceived claim of a conflict of interest. [ 2 ] In an earlier decision, Nordstrom v Stenco Incorporated , 2015 ABQB 184 , I noted the defendants’ then-limited progress in their cause to have counsel for the plaintiff removed owing to an alleged conflict of interest. In the months that followed little further progress was made. And now a full year later, the cause is finally at an end.

The defendants’ application is dismissed, with costs in the plaintiff’s favour, on a solicitor-client basis.

Background The initial allegations [ 3 ] The plaintiff Dr. Nordstrom’s Statement of Claim issued on August 14, 2012 through Court & Company, and co-counsel Peter Court QC and David Stults. The defendants’ (hereafter “Mr. Stensrud”) Statement of Defence and Counterclaim was filed soon after, on September 12, 2012 through Mr. Stensrud’s counsel, Blair Falconer. [ 4 ] The litigation unfolded toward a trial scheduled for January 6-9, 2015. Except as noted, the course of that litigation is not relevant to this decision. [ 5 ] On December 8, 2014 Mr.

Falconer for the defendants gave notice of an alleged conflict of interest on Mr. Court’s part. Put briefly, Mr. Stensrud alleged that Mr. Court had, for years and in relation to multiple matters, acted previously for him and/or his wife and his company. [ 6 ] That alleged conflict was brought to the court’s attention on December 12, 2014, then before Mr. Justice Clackson. Mr. Court strenuously denied the alleged conflict.

The defendants were unrelenting, and so they were admonished to bring forward evidence of the alleged conflict, and to do so in a timely fashion given the impending trial dates. [ 7 ] Nothing was resolved by the time the parties appeared on December 19, 2014, then before Madam Justice Yungwirth. [ 8 ] Nor was anything closer to being resolved by the time of the January 6, 2015 appearance before me, for the commencement of trial. [ 9 ] Over the plaintiff’s objections, I adjourned the trial. The adjournment was primarily to resolve the alleged conflict of interest.

The rest of January 6, 2015 was turned into a case conference to manage the conflict of interest allegation to resolution. [ 10 ] As of January 6, 2015 the only sworn evidence in support of the alleged conflict of interest was Mr. Stensrud’s affidavit sworn December 17, 2014. Mr. Stensrud alleges amongst other things that: - Mr. Stensrud and his wife had used the plaintiff’s lawyer Mr. Court for roughly 7-8 years, seeing Mr.

Court 1-2 times a year for “various legal matters”; - These matters included legal services and advice regarding international real estate transactions, business interests, international business operations, corporate commercial advice, Mr. Stensrud’s landed immigrant card and immigration issues, road abandonment issues, personal loans, and “potentially other matters including notary work”; - Mr. Stensrud and his wife and their companies considered Mr. Court to be their lawyer; - In the course of these years of representation, Mr. Court had come into possession of the defendants’ confidential information that Mr.

Stensrud believed could be used to his disadvantage in the current litigation; - Mr. Stensrud could not say for sure, but he doubted that Mr. Court had ever “billed us or opened a file for every legal matter that we approached him on”. - It was only in the fall of 2014, when he learned that Mr. Court would examine him in the current dispute with Dr. Nordstrom, that Mr. Stensrud – pleading ignorance of the rules for lawyer conflicts – came alive to the alleged conflict of interest of Court and Company acting against him. [ 11 ] Mr. Stensrud’s affidavit contains some hearsay evidence attributed to wife.

No affidavit of the wife has since been filed. No one has asked for an adverse inference per se . Nevertheless it is impossible to attach any weight to the hearsay attributed to the wife. And at least doubt surrounds Mr. Stensrud’s evidence when he says that he and his wife observed anything regarding the alleged conflict. [ 12 ] The plaintiff questions Mr. Stensrud’s late awakening to the alleged conflict. I will deal with that in due course. For now it is worth asking how, on Mr. Stensrud’s own evidence, he was not aware of the law firm’s involvement from the time pleadings issued in 2012? He alleges that Mr.

Court had been his lawyer for years before. Yet within weeks of being sued in August, 2012 he retained Mr. Falconer to file a defence and counterclaim. No issue there, but how is it then that more than two years later, and just weeks before the January, 2015 trial, Mr. Stensrud can say, as he does in his December 17, 2014 affidavit, that: Dorothy and I feel betrayed and embarrassed that Court and Company would sue us and our companies after years of us using his firm to assist us with various legal matters and to provide advice. [ 13 ] All of Mr. Stensrud’s allegations are denied by Mr.

Court, either as an officer of the court or in sworn affidavits. [ 14 ] Uncontradicted evidence is before me that no law firm files were opened, and no billings invoiced, to the defendants. That is, with the exception of evidence of one or more notarized documents – and the defendants do not seriously argue that notarized documents are at the root of their conflict of interest allegations. [ 15 ] Uncontradicted evidence is also before me of law firm conflict searches which betray no conflict.

Likewise, there was my own inspection, on a page-by-page basis of numerous law firm files, suspected by the defendants as being evidence of the alleged conflict. There was nothing in those files that assists the defendants. [ 16 ] As will be apparent from what follows, nothing alleged in Mr. Stensrud’s affidavit of December 17, 2014 is proven on the

required balance of probabilities. The events after January 6, 2015 [17] After the initial case conference of January 6, 2015 the defendants were directed, by January 23, 2015, to swear by affidavitall further evidence they intended to rely on in support of the alleged conflict of interest.

They were directed also to have conducted anydesired questioning on affidavits. [18] The deadline of January 23, 2015 was set mindful of the serious allegations at issue, the ample time available to thedefendants owing to the many days of trial avoided by the January 6, 2015 adjournment, and the need to have the issue resolved toenable the trial to be re-booked. [19] Without explanation the defendants failed to abide by the January 23, 2015 deadline. [20] Over the plaintiff’s objection I nevertheless ordered a further affidavit of Mr.

Stensrud, sworn February 11, 2015, to be filedin support of the conflict of interest allegation. [21] Nevertheless, I concluded that no good reason existed to justify or excuse the delay in filing Mr. Stensrud’s second affidavit,or for that matter any other evidence the defendants intended to adduce on the alleged conflict of interest application. I also concludedthat no good reason existed to justify or excuse the fact that a scheduled examination on affidavit of the plaintiffs’ witness did notproceed. [22] The plaintiff sought solicitor-client costs to this point, citing Young v.

Young, (SCC), [1993] 4 S.C.R. 3,1993 SCC 34, for what he alleged was the defendants’ reprehensible, scandalous or outrageous’ conduct. I stopped short of finding thatlevel of misconduct. I confined my finding in that regard to the record on the narrow points then before me – the issue of late filing ofMr. Stensrud’s affidavit, and of the defendants’ failure to examine on a plaintiff’s witness affidavit by January 23, 2015, as had beenordered.

Enhanced costs were nevertheless ordered, of $2,400, reflecting a four-fold increase in the usual tariff amount. [23] I specifically observed that I was not addressing, and would leave for another day, the question of whether the record viewedmore broadly would similarly fall short, mindful of all of the circumstances including the outcome of the merits of the application. [24] It was hoped, frankly, that the costs award and these comments would signal to the defendants the need to look closely at thereality of their claims, to ensure that going forward they were not unwisely assuming the risk of even higher costs.

Unfortunately, thedefendants clearly missed that wake-up call. The second Stensrud affidavit of February 11, 2015 [25] Plaintiff’s co-counsel Mr. Stults has been actively involved in the litigation throughout. [26] Mr. Stults is not mentioned once in Mr. Stensrud’s December 17, 2014 affidavit as a source of the alleged conflict of interest. Nor is Mr. Stults mentioned at all in the court proceedings of December 12 and 19, 2014, wherein Mr. Falconer outlined his clients’concerns for a conflict of interest. The expressed concern was solely Mr.

Court and his alleged prior representation. [27] It was only on the first day set for trial that Mr. Stults was first implicated, by Mr. Falconer, as possibly being in conflictowing to his alleged involvement as counsel in one or more real estate transactions long before trial. This allegation was broadened,again by Mr. Falconer, in a case management meeting on January 14, 2015. The allegation only came into full view in the secondStensrud affidavit of February 11, 2015. [28] Mr. Stensrud’s affidavit sworn February 11, 2015, alleges in great detail that he was advised by Dr. Nordstrom for examplethat Mr.

Stults would be a “team lawyer” in a certain land and/or commercial transaction that involved both the plaintiff and thedefendants. Mr. Stensrud goes on to allege that he was advised on numerous issues to talk to the “team lawyer” Mr. Stults; and that Mr.Stults as “our counsel” was engaged in various ‘team’ activities that impacted on the defendants’ own interests. These are but examplesof the many more such allegations made in Mr. Stensrud’s second affidavit. [29] All of these allegations are denied both by Mr. Stults and by Dr. Nordstrom. [30] I note that regarding Mr. Stults, Mr.

Stensrud has sworn no evidence – as he did regarding Mr. Court’s involvement – that hemisunderstood the nature of a lawyer’s obligation not to be or act in conflict. Mr. Stensrud then offers no explanation why he did notobject sooner to Mr. Stults’ involvement. Neither does Mr. Stensrud explain why Mr. Stults’ alleged conflict of interest was not raised atleast at the very same time the conflict of interest was raised against Mr. Court. [31] As will again be apparent from what follows, nothing alleged in Mr. Stensrud’s second affidavit, of February 11, 2015, isproven on the required balance of probabilities.

The events following the initial Stensrud affidavits [32] In the weeks and months of the spring through fall of 2015, much litigation followed including examinations onaffidavits/dealing with undertakings, and preparing for/attending case management applications.

As to case management, I made severalorders: some of them compelling the plaintiff, over his objections, to produce records; some records were ordered into my possession foran initial review for relevance and/or privilege; hundreds of pages of records were reviewed; none were remotely relevant and they werethus not produced; in other instances records were ordered produced to the defendants from the plaintiff; none of those records have nowcome back as relevant to the alleged conflict of interest

The abandoned viva voce hearing [ 33 ] As early as mid-February, 2015 the defendants first raised the spectre of at least a two-day hearing, with some 4-7 witnesses, to give viva voce evidence relevant to the alleged conflict of interest. [ 34 ] Ultimately the date of November 25, 2015 was set for an application to determine whether viva voce evidence would be necessary – that is to say, whether on a review of all of the evidence by then generated in the conflict of interest litigation, there were indeed facts significantly in dispute that justified a viva voce hearing. [ 35 ] And so it came as a surprise that in a letter to the court of November 6, 2015 – coincidentally on the very day of his Special Chambers filing deadline – Mr.

Falconer wrote to advise that his client was abandoning the November 25, 2015 application to call viva voce evidence. [ 36 ] As the case had unfolded to that time, Mr. Falconer’s November 6, 2015 position could mean only one thing. It could mean only that the defendants had decided to forego any reliance on their own evidence, foregone to the extent that it significantly and materially conflicted with other evidence before the court. Which is to say, that the defendants were abandoning virtually all of their evidence relevant to the alleged conflict of interest.

Because it was all denied by the plaintiff, and by his counsel. [ 37 ] That is not to say that I can necessarily prefer the plaintiff’s evidence, or that of his counsel, where it conflicts with the evidence of the defendants. Without a trial or viva voce hearing I can reach no such conclusion on conflicting evidence concerning essential facts: R Floden Services Ltd v Solomon , 2015 ABQB 450 at paras 18-24 .

But this is the defendants’ application, and as of the viva voce abandonment on November 6, 2015 it was an application with virtually no uncontradicted evidence before me to support their cause. [ 38 ] Not that the defendants’ or their counsel acknowledged any particular such weakness in their position leading up and including attending court November 25, 2015. [ 39 ] Indeed, in his November 6, 2015 letter Mr.

Falconer offered the following rationale for abandoning the viva voce evidence application: that some recent information had put to rest his clients’ concerns that documents in Court & Company’s possession could only have come from that firm’s earlier representation of Mr. Stensrud et al. The recent information, Mr. Falconer said, was that those documents had come into Court & Company’s possession not from Mr.

Stensrud and/or any alleged prior representation, but rather through a third-party law firm, in November, 2014, shortly before the January, 2015 trial. [ 40 ] As he put it in the same November 6, 2015 letter, Mr. Falconer wrote that his clients’ “basis for …suggesting a conflict of interest” was their belief that the same documents had come from the plaintiff’s lawyers.

He further wrote, unequivocally: My clients will not be pursuing an application for a viva voce hearing to address the conflict of interest now that they see that the records did not come from the Courts & Stults law firm or the Internet or the said firms [sic] prior involvement with the Stensruds . [emphasis added] [ 41 ] In response to this letter, I inquired of Mr. Falconer whether or not he was now withdrawing the entire conflict of interest allegation. [ 42 ] This straightforward inquiry was never answered. It was not answered in writing, not after Mr. Stults reminded Mr.

Falconer twice that he had failed to answer the inquiry, and not after my own repeated inquiries of Mr. Falconer in court on November 25, 2015. [ 43 ] Accordingly, on November 25, 2015 I had to conclude that indeed the conflict of interest allegations had not been withdrawn, but remained to be resolved. And given that no viva voce evidence was going to be heard, and given the passage of almost a year since the allegations were first raised, I directed deadlines for written submissions on the merits of the conflict of interest application.

The defendants’ written submissions on the merits were to be provided by November 30, 2015. The defendants were also to make written submissions regarding costs in the event of the application’s success, or its failure, as the case may be. In particular, I called on the defendants by November 30, 2015 to respond to the plaintiff’s materials filed November 16 and 19, 2015 which had already dealt compendiously with the merits, and with costs.

The balance of the November 25, 2015 hearing [ 44 ] Before turning to the November 30, 2015 submissions, it is necessary to expand on what also occurred on November 25, 2015. [ 45 ] Coming into court on November 25, 2015 Mr. Falconer had provided written submissions of November 16, 2015, supported by Mr. Stensrud’s sworn affidavit of the same date. In both they expanded on the position briefly taken by Mr. Falconer in his November 6, 2015 letter. [ 46 ] The essence of Mr. Stensrud’s affidavit, and of Mr. Falconer’s written submissions, was to accuse and blame Mr.

Stults for intentionally misleading them about the origins of the defendants’ documents. He alleged that counsel for the plaintiff “intentionally delayed” releasing certain information “to cause financial harm to the defendants”. Mr.

Falconer further stated in his written submission that: Considerable time, delay and expense through questioning has been unnecessarily spent trying to address what appears to be a strategy to obfuscate the origin of the records to prevent their exclusion. [ 47 ] (I pause to note that any issue around the production of/exclusion of records in this case is for the trial, and has nothing to do with the conflict of interest allegation.)

[ 48 ] Mr. Falconer went so far as to blame Mr. Stults for: …forcing the Defendants into extensive questioning to determine whether there was a potential conflict of interest. [ 49 ] And Mr. Falconer went on to say that: The clients would have acted differently on the conflict of interest issue as the documents showing prior involvement did not originate from the Court & Stults law firm, but from [the third party law firm’s] file. [ 50 ] The defendants thus blamed Mr.

Stults’ alleged intentional lack of disclosure of certain documents for the significant costs of litigating the conflict of interest issue. [ 51 ] Nowhere in Mr. Stensrud’s November 16, 2015 affidavit, or in Mr. Falconer’s written submissions of the same date, is there any mention of how or why the initial bases for the alleged conflict of interest – that is to say, the alleged prior representation by Mr. Court, and of Mr.

Stults, all as outlined above – simply up and disappeared. [ 52 ] Likewise, there is nothing in the defendants’ evidence or submissions that explains how or why the alleged conflict of interest had evolved by the fall, 2015, to being one rooted in the defendants’ search for the origins of certain documents. [ 53 ] In any event, it was apparent that the defendants were now satisfied that no conflict of interest had ever existed. The area code controversy [ 54 ] So it was a further revelation that Mr. Falconer then raised an issue around a CV of Mr.

Stensrud’s, one with a “780” area code on it, as distinct from the CV in the plaintiff’s production with a “403” area code. This “780” CV, Mr. Falconer said, was some evidence to support an inference of Court & Company’s prior representation of the defendants. With this submission, which came to dominate the balance of the November 25, 2015 hearing and the days that followed, the defendants were back arguing squarely the alleged conflict of interest. [ 55 ] At the outset it must be noted that neither in Mr. Falconer’s November 16, 2015 written submissions, nor in Mr.

Stensrud’s affidavit of the same date, is there a single reference to Mr. Stensrud’s CV and the alleged significance of an area code noted on this or that version of it. [ 56 ] No one disputed that the version of Mr. Stensrud’s CV in the plaintiff’s production refers to a “403” area code. Yet Mr. Falconer raised in court on November 25, 2015, for the first time, the alleged existence of Stensrud CV with an area code “780”. [ 57 ] On this supposition, Mr. Falconer then returned to the issue of prior representation.

How could the “403” area code CV be in the law firm’s possession but for Court & Company’s representation of the defendants? Mr. Falconer called on the plaintiff and his counsel to clarify the point, failing which he urged that an inference be drawn that the “403” CV was some evidence of a prior lawyer- client relationship and thus supported the now-resurrected allegation of a conflict of interest. [ 58 ] For his part, Mr. Stults repeated what he had said on many occasions regarding the “403” Stensrud CV in the plaintiff’s production.

That is, that in preparation for trial, in July or August, 2014, he downloaded from Mr. Stensrud’s internet web page a copy of his CV, amongst other things. Examined on his own affidavit, Mr. Stults testified that he believed that the CV in the plaintiff’s production was the CV he downloaded from the internet. (Dr. Nordstrom has also sworn that he viewed the CV on Mr. Stensrud’s website as early as July, 2012, and as recently as December, 2014 took screenshots from this website, in preparation for trial.) The defendants brought forward information that Mr.

Stensrud’s CV could not be located on a .zip file of his now-defunct internet web page. This information is not evidence and in any event the efforts made by a computer analyst to search the .zip file for the CV are, in my view, inconclusive. [ 59 ] Unlike the conflicting evidence around the first two grounds for the alleged conflict of interest, on this ground I accept the affidavit evidence of Mr. Stults and of Dr. Nordstrom regarding what they viewed on Mr.

Stensrud’s web site and what was downloaded from it, and when. [ 60 ] The evidence before me on this alleged ground is not significantly or materially in conflict on these points, if at all. Mr. Stensrud’s affidavit of November 16, 2015 is mostly argument, or a review of the evidence of others. His review of the evidence of the plaintiff and of Mr. Stults takes statements and facts from here and there, often out of context, and leads to inaccurate and misleading conclusions. I give Mr. Stensrud’s “evidence” on these points no weight at all. [ 61 ] I do note that inexplicably Mr.

Stensrud has sworn no evidence before me to explain how or when or why, by the alleged prior representation by Court & Company, he provided or made available to that law firm a copy of any version of his CV, or of any other impugned document. [ 62 ] I accept as accurate the review of evidence laid out in Mr. Stults’ comprehensive reply of November 19, 2015, itself prepared on short-notice to respond to the Stensrud affidavit of November 16, 2015 and brief filed the same date. [ 63 ] At court on November 25, 2015, Mr. Stults denied any knowledge of an “area code 780” CV. I accept that representation by Mr.

Stults as an officer of the court. The whereabouts of the “780” CV [ 64 ] Remarkably, having raised the “780” CV as critical and material evidence touching on the still-alleged conflict of interest, Mr. Falconer was then unable to produce a copy of it in court on November 25, 2015. He then represented that it could be found in one of

the party’s sworn, filed affidavits. And so the proceedings were adjourned briefly to allow Mr. Falconer to find it on the court file. Atthe end of the day Mr. Falconer was unable to find any “780” CV in any filed affidavit. [65] Out of an abundance of caution, I gave Mr. Falconer one more chance to produce this apparently critical document. If itexisted, it was to be produced by the next day, November 26, 2015. Mr.

Falconer was also given until November 30, 2015 to makewritten submissions with regard to the significance of any such CV that was produced. (These directions were in addition to those notedabove regarding the defendants’ opportunity to address the merits of the alleged conflict of interest, and costs.) [66] On November 26, 2015 Mr. Falconer provided an email attaching a .pdf consisting of two CVs. They are different in style ifnot content, both featuring area code “780”. Neither is dated. The text of the email represents that they are “as at 2012”.

Nothing elsewas provided, for example, to explain the attachments’ origin, or on what basis they were declared to be ‘as at 2012’. [67] Noting the absence of that further context, and again out of an abundance of caution, I directed an inquiry of Mr. Falconer fora further explanation. [68] A further email arrived November 27, 2015, not from Mr. Falconer but rather from his assistant. This email purported torespond to my earlier inquiry, relaying information that Mr. Falconer had apparently provided to his assistant. [69] A few days later, on November 30, 2015, Mr.

Falconer did personally make further written submissions to the courtaddressing the merits of the alleged conflicts of interest overall. These written submissions do not clearly adopt or incorporate theNovember 27, 2015 email information attributed to Mr. Falconer by his assistant. [70] These submissions do go on to argue the alleged significance of the “403” CV and the “780” CVs. Amongst other things theyrefer, without evidence, to when these area codes came into effect in the province of Alberta.

These submissions were all again made insupport of the contention, under the heading Prior Representation, that it “… seemed possible that the area code (403) resume of Tim Stensrud and related documents may have come from prior involvementwith [the plaintiff’s] law firm. [71] I pause to note that something that ‘seems possible’ is an exceedingly thin thread on which to hang an allegation that lawyersare or have acted in a conflict of interest.

Yet this appears to be the defendants’ strongest argument on the merits. [72] More to the point, this argument hinges on no satisfactory evidence proving the existence of two CVs with different areacodes. [73] The only CV in evidence is from the plaintiff’s production. It is the CV with the 403 area code. As I have noted, theevidence of the plaintiff and of Mr. Stults regarding the 403 area code CV is clear and unequivocal and uncontradicted by any othercredible evidence.

There is nothing in that evidence that leads to the conclusion the CV came into the plaintiff’s lawyers’ possession byway of prior representation. [74] By comparison, the documents attached to Mr. Falconer’s assistant’s email of November 26, 2015 are not in evidence. Nor isthe purported explanation of their origins, or of any context as requested by the court. It cannot even be said that the purportedexplanation/context information was provided by an officer of the court, as Mr.

Falconer failed to adopt or incorporate his assistant’sNovember 27, 2015 explanation into his own November 30, 2015 written submissions. [75] In the end, if only because they are based on no evidence, Mr. Falconer’s November 30, 2015 submissions do nothing toadvance the defendants’ cause on the CV issue, or at all. Conclusion on the merits [76] The law is not in dispute. As was recently noted in Statesman Master Builders Inc. v. Bennett Jones, 2015 ABCA 142, leavedenied (SCC), Canadian National Railway Co v. McKercher LLP, 2013 SCC 39 remains the leading authority. The McKercher case then cites R. v.

Neil, 2002 SCC 70 at para 29 for the following ‘bright line’ rule: The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to theimmediate interests of another current client – even if the two mandates are unrelated – unless both clients consent after receiving fulldisclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each clientwithout adversely affecting the other [emphasis in original]. [77] The court in Statesman goes on to note however that as stated in McKercher the ‘bright line’ rule is not one of unlimitedapplication.

At paras 22-23 in Statesman the court says: [22] [The rule] applies only where the immediate interests of clients are directly adverse in the matters on which the client is acting. Itapplies only when clients are adverse in legal interest. It cannot be successfully raised by a party who seeks to abuse it by relying on it ina manner that is tactical rather than principled.

And, most importantly for the purposes of this appeal, the bright line rule only applies incircumstances where it is reasonable for a client to expect that its law firm will not act against it in unrelated matters. [emphasis inoriginal] [23] As noted in McKercher at para 37, sometimes “it is simply not reasonable for a client to claim that it expected a law firm to owe itexclusive loyalty and to refrain from acting against it in unrelated matters.” McKercher set out a number of factors for courts to considerwhen assessing whether the bright line rule ought to be set aside in a case where it appears the client could not reasonably expect itsapplication...

[78] Those factors are (

a) the nature of the relationship between the law firm and the client; (

b) the terms of the retainer and (

c) thetypes of matters involved. [79] In the application before me there is no uncontradicted evidence of a relationship between the defendants or either of them, orof anyone connected to them, and the plaintiff’s lawyers/law firm. That the lawyers/law firm may have notarized documents at somepoint, without more, does not give rise to a finding of ‘the immediate interests of clients being directly adverse’ to paraphrase fromStatesman, and the defendants do not seriously suggest otherwise.

As noted, the spectre of a more immediate, more directly adverserelationship was raised but never established. [80] The defendants’ application is accordingly dismissed. The Claim for Costs [81] It is extraordinary that the defendants have declined every reasonable opportunity to make any submissions as to their liabilityeither for tariff, enhanced, or solicitor-client costs. [82] A measure of my own surprise at the defendants’ silence was my follow-up correspondence of December 7, 2015 to bothcounsel which, amongst other things, stated: To be quite specific, I am surprised that I have received nothing from Mr.

Falconer in response to Dr. Nordstrom’s submissions in favourof tariff or solicitor-client costs. If the November 30, 2015 deadline imposed at the recent case management conference has been an obstacle for Mr. Falconer, he has notsaid so. ... It is for Mr. Falconer to decide if in light of this, he wishes to ask for a further opportunity to make written submissions outside of thedeadlines already set by the court. Failing that, I will consider that I am at liberty to decide both the merits of the conflicts of interestallegations, and costs, without more. [83] Mr.

Falconer acknowledged receipt of this correspondence. In an email to the court of December 9, 2015 he stated that he hadasked his clients for instructions and was hopeful that he would have their reply by the end of that business day. Nothing further hasbeen heard or received. [84] The case for solicitor-client costs is outlined comprehensively in the plaintiff’s written submissions of November 16, 2015, asupdated November 30, 2015.

The claim is for $82,730.56. [85] The plaintiff’s submissions note, amongst other things, the last-minute assertion of the conflict of interest; the ninequestionings on affidavits, including questionings of both plaintiff’s counsel; the seven case management hearings over an 11-monthperiod; the many, many written submissions on issues large and small; the many court reviews of disputed documents; the multipledeadlines missed by the defendants and/or adjournments given to allow the defendants to attempt to perfect submissions and/or evidence;the changing nature of the alleged conflict of interest – including that the defendants’ first named Mr.

Court, then only later added Mr.Stults, and still later after appearing to abandon the claims, then resurrected them in mid-stride based on CVs with “780” area codes thatwere unaccountably never put in evidence, and which were no evidence of a conflict of interest in any event. [86] The plaintiff argues that the conflict of interest allegations were nothing more than a device intended to force a trialadjournment in January, 2015. [87] Again, the defendants did not bother to argue otherwise. Except to argue, as I have quoted from Mr. Falconer’s November 16,2015 written submission, that it was Mr.

Stults who forced them to allege a conflict of interest. And so it is the defendants who areentitled to costs. [88] These submissions are just nonsense and appallingly misleading. It is hard not to agree with Mr. Stults that the submissionsare also disingenuous and made in bad faith. [89] I cannot disagree that in all of the circumstances the defendants’ were motivated to make the baseless conflict of interestallegations to avoid the January, 2015 trial.

Without more, that is improper and blameworthy conduct. [90] That motive must be viewed alongside the manner in which the conflict of interest allegations first surfaced, long after thedefendants knew or ought to have known of the allegations they raised only a month before trial. The allegations were then continuedthrough most of 2015 until by early November, 2015 it appeared they were withdrawn. But that appearance was deceiving, given thespurious “area code” issue raised on the fly in court on November 25, 2015.

I find that this manner of proceeding, outlined above ingreat detail, amounts also to blameworthy conduct. [91] I agree entirely with the plaintiff’s characterization, in written submissions to which the defendants’ did not reply, that: The Defendants … repeatedly altered the basis for their allegation that there was a conflict of interest, making one self-serving statementafter another without any corroborative evidence, as each previous basis was proven to be false, in order to prolong and hinder thedetermination of this issue. [92] I find that the defendants’ conduct is positive misconduct which, as noted in Jackson v.

Trimac Industries Ltd., (AB QB), [1993] A.J. No. 218, at para 28, justifies heightened costs to deter others from like conduct.

[93] Finally, and not least, I find misconduct in these long-standing allegations which have impugned the honesty and integrity ofboth counsel for the plaintiff, each of whom are officers of the court, and for each of whom a reputation for honesty and integrity is ofthe utmost value. [94] In the face of these allegations, I find that both plaintiff’s counsel Mr. Court and Mr.

Stults have conducted themselvesthroughout with restraint and professionalism, proverbially ‘in the finest traditions of the bar’. [95] On the whole I do not hesitate to conclude that the defendants’ conduct has been “reprehensible, scandalous or outrageous” asunderstood in Young v. Young, (SCC), [1993] 4 S.C.R. 3, 1993 SCC 34. [96] What’s more, there is no basis upon which I would question the amounts claimed, either as to hourly rates or time billed. Ontheir face the hourly rates are reasonable.

Plaintiff’s counsel has explained sufficiently the many hours spent responding to thedefendants’ often confusing, ill-founded but unrelenting claims. In response to this, the defendants failed to make no submissions, afterbeing invited repeatedly to do so. As such, solicitor-client costs are quantified, as claimed, at $82,730.56. This award is net of the earliercosts of $2,400 awarded on March 18, 2015. [97] I am mindful of the fact that in some minor respects these costs include preparation for the adjourned January 6-10, 2015trial.

I am reminded too that on January 6, 2015 I was not convinced that sufficient time was set for the trial, in any event of the allegedconflict of interest. Nevertheless, the trial could not proceed in the face of the unresolved conflict issue. It was the main reason for theadjournment. It was the main reason the plaintiff incurred thrown-away costs for the trial adjournment that are now perhaps onlypartially compensated by the trial preparation costs included in this decision. Heard on the 25th day of November, 2015, and with various further written submissions.

Dated at the City of Edmonton, Alberta this 21st day of January, 2016. Peter B. Michalyshyn J.C.Q.B.A. Appearances: Peter Court, Q.C. and David Stults Court & Company for the Plaintiff C. Blair Falconer Barrister & Solicitor for the Defendants