Praxis Earth Works Ltd (Re), 2016 ABQB 494

Court of Queen’s Bench of Alberta Citation: Praxis Earth Works Ltd (Re), 2016 ABQB 494 Date: 20160902 Docket: 1503 05046 Registry: Edmonton In the matter of the PersonalProperty Security Act, R.S.A. C. P-7 as amendedC And in the matter of Praxis Earth Works ltd. _______________________________________________________ Memorandum of decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] Although it arises out of a relatively detailed factual matrix, by the date of the hearing on August 3, 2016, only one issue remained to be decided: as a result of the successful application by the Verbeek litigants to lift what used to be the implied undertaking, and is now the explicit undertaking set out in the R. 5.33(1) of the Rules of Court, with the result that information and records from other actions – including a separate Verbeek action against Canadian Western Bank and other defendants - were imported into this action, can CWB claim its costs in those other actions as costs in these proceedings? [ 2 ] The short answer is, Yes. [ 3 ] Calvin Verbeek and Verbeek Sand & Gravel Inc. resist CWB's application for costs in their action against the bank; they say that the objective of their Rule 5.33 application was to minimize costs, and their success on that application should not now be used by CWB as a means of increasing its fees in these proceedings. [ 4 ] Case law has established that once the implicit or explicit undertaking not to use material filed in one lawsuit for another purpose has been lifted, the information and documents which are then imported into another lawsuit become available for use in that lawsuit according to standard legal principles.

As the Rules themselves say, the information transferred to the other lawsuit becomes relevant and material in that other lawsuit. Therefore, insofar as CWB is concerned, because all of the information and all of the records

in the Verbeek lawsuit have become relevant on this application, it stands to reason that CWB must assess everything in the Verbeeklawsuit to determine if it applies in this proceeding. The link between the proceedings has been highlighted by the Verbeeks themselves;the Rule 5.33 order merely formalizes that link.

It follows, therefore, that CWB is entitled to its costs in this proceeding for undertakingwork in the Verbeek lawsuit. [5] Invoking a Calderbank offer made to CWB on July 14, 2016, the Verbeeks claim costs of the August 3, 2016 application. [6] The Verbeek’s application for costs of the August 3, 2016 hearing is denied. Their offer does not equal or better the outcomein these proceedings in at least two important ways: first, their offer does not equal or better the court’s decision: for the reasons set outabove, the court allows CWB its costs of the Verbeek proceedings.

Second, CWB is contractually entitled to solicitor and own clientcosts, or an indemnity of costs, whereas the Verbeeks’ offer deals only with a lower level of costs, i.e. solicitor/client costs. [7] Overall, the Verbeeks have no status to challenge CWB’s costs claim. The Verbeeks have no direct claim to the machinerywhich was sold and which produced the net proceeds to be divided; they have no registered security on the equipment that was sold.

Allthe Verbeeks have is a statement of claim in which they allege wrongdoing by CWB; indeed, the Verbeeks sensibly concede that, shouldthey be successful in their action against CWB, CWB has the financial means to pay any resulting judgment. In light of the amount andthe priority of CRA’s Enhanced Requirement to Pay in addition to the CWB claim, the Verbeeks have, realistically, no potential claim toany of the proceeds from the auction. [8] The Verbeeks’ email of July 15, 2016 to all the other litigants on this application is not sufficiently clear to be considered aCalderbank offer.

Cases and authority cited: [9] By CWB: DaimlerChrysler Financial Services (Debis) Canada Inc. v Mega Pets 2002 BCCA 242; Minister of NationalRevenue v Schwab Construction Ltd. 2001 SKQB 151, 2002 SKCA 6 [10] By CRA: Toronto Dominion Bank v Canada 2010 FCA 174, 2012 SCC 1; Harrison v McDougall 2007 ABCA 176; AlbertaSecurities Commission v Institute for Financial Learning Group 2005 ABCA 268; The Point on the Bow Development Ltd. v WilliamKelly & Sons Plumbing Contractors Ltd. 2004 ABCA 53; Prue (Re) 2014 ABQB 363; Maroukis v Maroukis (SCC), [1984] 2 SCR 137; Hryniak v Mauldin 2014 SCC 7; Income Tax Act RSC 1985 c.

I (5th Supplement) [11] By the court: Juman v Doucette 2008 SCC 8; Mayer v 1474479 Ontario Inc. 2014 ONSC 2622 1. Background

a) Factual [12] The factual context of this application is somewhat involved. What follows is only a

summary of the steps and the actionswhich form the structure around which the proceedings have been built; the court suggests that this outline is adequate for the purposesof this application. [13] When it originally brought this application, Canadian Western Bank asked the court to approve the payment out to it of all ofthe money paid into court to the credit of this action by Ritchie Bros. Auctioneers.

Subsequently, CWB reduced its claim and maintainedthat it was entitled to the amount which represented that part of the equipment sold at auction that was not owned by Praxis EarthWorks, but was, rather, subject to a conditional sales agreement and therefore owned by 0855778 B.C. Ltd, with respect to whom CWBhad security. Invoking the language of its General Security Agreement which allowed it to claim costs both of enforcing its security andof defending that security and the action of the Verbeeks in obtaining a Rule 5.33(1)(

a) order that would allow, inter alia, theinformation and costs of the Verbeek action to be used on this application, CWB also asked for approval of its costs in the Verbeekaction [14] As a result of discussion immediately preceding the hearing, Canada Revenue Agency recognized CWB's priority to most ofthe proceeds of the June 25 auction but claimed priority with respect to the proceeds from the April 9, 2015 auction and to the proceedsfrom that part of the June 25 auction which represented non-conditional sales contract equipment.

Prior to the auction and pursuant to s.224(1.2) of the Income Tax Act, CRA had issued an Enhanced Requirement to Pay in respect of payroll indebtedness of Praxis; thecurrent amount claimed by CRA under that demand is a little over $1.7 million. [15] Praxis Earth Works Ltd. essentially took no position on CWB's application. [16] An outline of the factual context which preceded the application follows. [17] 0855778 B.C. Ltd. borrowed money at the Kelowna branch of CWB and granted to CWB a General Security Agreementdated August 14, 2009.

That agreement secured all of 0855’s present and after-acquired personal property and, by way of schedule,specifically identified certain serial-numbered equipment within that property.

A good deal of the equipment, such as crushers and mills,that was covered by the gsa is not serial number equipment; nonetheless, all of 0855’s present and after-acquired personal property wascovered by the gsa. [18] In addition to security over personal property, the gsa executed by 0855 includes an obligation on that company to pay CWB'scosts of both pursuing and defending that security COVENANTS OF THE DEBTOR The Debtor covenants:

. . . (

h) to pay all costs and expenses on a full indemnity basis (including legal fees as between a solicitor and his own client) incidental to: . . . (ii) maintaining, protecting and defending the Collateral, the Security Interest, and all of the Bank’s rights and interest arising pursuant to this Agreement, and (iii) the exercise of any rights or remedies of the Bank pursuant to this Agreement, including but not limited to the costs of the appointment of a Receiver and all expenditures incurred by such Receiver, the cost of any sale proceedings (whether the same prove abortive or not), and all costs of inspection, and all other costs and expenses incurred by the Bank in connection with or arising out of, directly or indirectly, this Agreement, all without limitation.

All such costs and expenses shall be payable by the Debtor immediately upon demand from the Bank and until paid shall bear interest from the date incurred by the Bank at the highest rate of interest then chargeable by the Bank to the Debtor on any of the Indebtedness.

The amount of all such costs and expenses shall be added to the indebtedness and shall be secured by this Agreement. [ 19 ] That agreement was registered at the British Columbia Personal Property Security Registry on August 14, 2009 where it has been continuously registered since then. [ 20 ] On August 25, 2009, CWB registered its gsa security interest, including the serial-numbered equipment mentioned above, at the Alberta Personal Property Registry.

CWB’s interest has been continuously registered in Alberta since August 25, 2009. [ 21 ] On September 12, 2009, without the knowledge of CWB, 0855 sold equipment, by way of conditional sales contract, to Asnee Suk Management Corporation which was located in Grande Prairie. The majority of the equipment which is the subject of this conditional sales contract is equipment which is specifically listed in CWB’s August 14, 2009 gsa. 0855 registered its interest in the equipment against Asnee Suk. On October 15, 2010, Asnee Suk and 0855 assigned the conditional sales contract to 1554002 Alberta Ltd.

On October 26, 2011, 155 changed its name to Praxis Earth Works Ltd. We can say, therefore, that Praxis became the purchaser of the equipment under the conditional sales contract. [ 22 ] The Kelowna branch of CWB was not initially aware that 0855 had sold equipment to Asnee Suk nor that the 0855 /Asnee Suk conditional sales agreement had been assigned to Praxis. In December 2012, when the bank became aware of those arrangements, CWB asked Praxis to guarantee the obligations of 0855 to the bank. Praxis executed such a guarantee on December 14, 2012. Mr. Verbeek had guaranteed the Asnee Suk – i.e.

Praxis obligation. On the same date, Praxis also executed a General Security Agreement in favour of CWB, granting to the bank security over all of its present and after acquired personal property.

On December 18, 2012, the bank registered the Praxis security interest at the Personal Property Registry for the province of British Columbia; that registration has been continuous since December 18, 2012. [ 23 ] On September 12, 2013, CWB added Praxis as an additional debtor on the bank’s original registration against 0855. [ 24 ] On March 17, 2015, CRA issued an Enhanced Requirement to Pay pursuant to ss 224(1.2) of the Income Tax Act in respect of payroll indebtedness of Praxis.

As of March 16, 2016, the amount claimed by CRA is $1,772,780.91. [ 25 ] On April 9, 2015 and June 25, 2015, by court order Praxis caused equipment to be sold at public auction by Ritchie Bros. Auctioneers. Some of the equipment sold was equipment that was subject to the conditional sales contract between 0855 and Praxis and subject to CWB’s security granted by 0855. The net proceeds of the two auctions – after deductions of commissions and costs – from the equipment sold by Ritchie Bros. is $481,984.81.

The net proceeds from the sale of equipment that was subject to the conditional sales contract between 0855 and Praxis and subject to CWB’s security is $340,780.33..

At the time of the auctions, the Verbeeks did not have any security registered against Praxis in the Alberta Personal Property Registry. [ 26 ] Calvin Verbeek was one of the directors, and Verbeek Inc. is a shareholder, of Asnee Suk. [ 27 ] In 2014, the Verbeeks sued a number of defendants, including CWB, in relation to what the Verbeeks allege are wrongful dealings relating to the equipment which is the subject of these proceedings; this action has been described as the fraudulent preferences action even though the main allegation against CWB appears to be misrepresentation.

The Verbeeks have not filed any evidence on the application in these proceedings. However, in October 2015, pursuant to Rule 5.33(1)(

a) of the Rules of Court, the Verbeeks obtained an order from ACJ Rooke to the effect that the information and records from Action 1403-03248 and Action 1403-12381 may be used in the carrying on of Action 1503-05046 (i.e. this action) by any of the parties to Action 1503-05046. The order also stated that the parties to this action should file a consent litigation plan by November 20, 2015 and that if the parties were unable to agree on a litigation plan they should set the matter down before ACJ Rooke for the purpose of determining a litigation plan.

No consent litigation plan has been filed and no application has been brought before ACJ Rooke to determine such a plan. A copy of ACJ Rooke’s order has now been placed on this file. [ 28 ] Action 1403-12381 is the action mentioned above which was commenced in 2014 and in which the Verbeeks are suing Praxis, many other defendants, and CWB, alleging fraudulent preferences in relation to the equipment that is the subject of this application. One of the allegations the Verbeeks make against CWB is that the bank misrepresented to them what they were receiving from an assignment the bank gave to them.

However, the evidence on this application establishes that the assignment document executed by the bank and the Verbeeks contains an “entire agreement” clause which states that the Verbeeks accept the assignment without any representations or warranties.

When the assignment was granted, a search of the Registry by the Verbeeks would have disclosed that the bank had a separate charge against the equipment from the charge that Asnee Suk had. [ 29 ] Action 1403-03248 is an action commenced by 0855 and Tryphena Holdings Inc. against the Verbeeks. [ 30 ] For completeness of the background, I add that, in action 1004-00938, CWB sued Asnee Suk, the Verbeeks, and others for

failure to pay CWB loans; in December 2010, CWB recovered judgment in that action. [ 31 ] The Verbeeks have not adduced any evidence specifically on this application. The evidence which has been filed establishes that, the Verbeeks did not, at the time of the issuance of the Enhanced Order to Pay, or on the dates of the auctions, have any security registered against the equipment with which we are dealing.

That this absence of security by the Verbeeks was intentional is established by the fact that, at one time in the past, the Verbeeks did have security registered against the equipment, but that the security was either discharged or was allowed to lapse. [ 32 ] The Verbeeks acknowledge that if they are successful in their lawsuit against CWB, CWB will be able to pay any damages awarded. [ 33 ] On July 14, 2016, the Verbeeks sent the following letter to CWB: Without Prejudice Save as to Costs Further to our discussions consider this a Calderbank Offer.

My client offers to resolve the priority application your client has scheduled for August 3, 2016 as follows: My client will consent to an order as follows: 1. From the proceeds in trust your client will be paid principal and interest owing to CWB together with solicitor and client costs of the Second Action to today’s date to be taxed (i.e. Not with respect First Action); 2. The Order in the Second Action Priority Action shall be Without Prejudice to the merits of the First Action which will be decided by the Trial Judge in the First Action.

We will advise the court that this is our position and on the 3 rd cross apply for further production and a litigation plan.

I take it that the reference in this offer to the “Second Action” is a reference to this action, or to what some litigants have referred to as the “priorities application” I also take it that the reference in the offer to the “First Action” is the action in which the Verbeeks are suing a number of defendants, including CWB, in what has been referred to by other litigants as the “fraudulent preference action”. [ 34 ] The offer itself is, of course, somewhat confusing in that it says that it is made without prejudice but the body of it suggests that it is made with prejudice with respect to costs. [ 35 ] On July 15, 2016, a second email was sent by the Verbeeks to CRA and to Praxis with a copy sent to CWB.

Perhaps because it was addressed to all of the “applicants”, the second email does not refer to a Calderbank offer. Nor does it address the issue of prejudice. Nor does it say, if it was intended to be a settlement offer, whether the offer is global or severable. The email says, in part: Our position with respect to the WCB application on the 3 rd is that we consent to an order allowing the following: 1.

Payment of the Principal and Interest owing to WCB on the 085 loan together with solicitor and client costs certified by Kent or an officer of WCB to be solely with respect to the Priority Action being paid to WCB; 2. That this order be without prejudice to the merits of the second action; 3.

A direction that the issue of costs relating to the main action be decided in the main action. [ 36 ] After the filing of the offers, the Verbeeks examined a CWB bank officer and referred to the transcript of that examination on this application. [ 37 ] Immediately prior to the hearing, Praxis filed an affidavit from one of its former directors swearing that Praxis owed $1,258,046. 76 plus accrued interest on the conditional sales contract for the purchase of equipment. [ 38 ] At the hearing, the Verbeeks observed that CRA did not have a motion before the court to be paid out from the proceeds. [ 39 ] Shortly prior to the commencement of the hearing, based on material presented late, CWB and CRA agreed that the Mega Pets decision resolved any priority dispute between them; in that context, they refer specifically to the title reservation clause as being one of the material factors in their agreement.

CRA recognizes CWB's priority to most of the proceeds of the June 25 auction but claims priority with respect to the proceeds from the April 9, 2015 auction and to the proceeds from that part of the June 25 auction which represented non-conditional sales contract equipment, i.e. the net proceeds from the sale of Lot 704A. (At the hearing, CWB and CRA agreed that the sale report from Ritchie Bros. was a touch confusing with respect to the attribution of costs; nevertheless, as between them, they were satisfied that they would be able to agree on precise numbers.) Overall then, CWB and CRA agree that CWB is entitled to $340,770.30 from the proceeds of the auction sales of the equipment and that CRA is entitled to the remainder. [ 40 ] The Verbeeks maintain that there is an issue about who owns the equipment; they may be right, at least in terms of the right in equity to demand transfer of title.

However, as the Maroukis decision points out, the Verbeeks have already lost the right to the equipment itself; the equipment has been sold by auction; those new owners have an indefeasible title. What the Verbeeks have is a money claim, not an in rem claim. In any event, in his own affidavit filed by Mr. Verbeek in his action against the bank, Mr. Verbeek speaks of the equipment that was sold to Asnee Suk as being the equipment that was legally owned by 0855.

The Verbeeks may be right when they claim that they have an interest in the equipment as a result of what they describe as fraudulent preferences, or, in the case of the bank, conspiracy and misrepresentations. But those are claims which have yet to be tried. What is clear is that the Verbeeks have no right which supercedes the priorities of CWB and CRA to the equipment that was sold at auction. If 0855 doesn’t own the equipment,

then CRA gets the proceeds from the auction sales. There is no conceivable way in which the Verbeeks get priority to the proceeds from the auction sales. That is not to say that the Verbeeks may not have valid claims in equity against some or all of the defendants in the action they launched in 2014. If the Verbeeks are successful in their fraudulent preference/ misrepresentation claim against CWB, they will obtain a judgment against CWB and CWB will be able to pay that judgment.

Presumably because the Verbeeks are well aware that CWB is “good for” any judgment that might be found against it that the Verbeeks have not brought any application for pre-judgment relief directed to these proceeds. [ 41 ] Similarly, the Verbeeks may be right when they say that it is unclear on the basis of the material that is currently before the court whether it was Asnee Suk or Praxis which made some payments on the conditional sales contract.

For the purposes of this application, it simply does not matter; it is obvious that the bank’s loan has not paid out in full. [ 42 ] As amongst Asnee Suk, Praxis and CWB, there may well be matters which have to be clarified, and perhaps dealt with according to equity, but the priorities in relation to the items of equipment that were sold at auction, are based on registered security and the Verbeeks simply have none. [ 43 ] The court authorizes the agreement which has been concluded between CWB and CRA; that agreement is based on the evidence before the court and on the applicable law.

Even though CRA has no application to be paid out from the net proceeds of the auctions, the court is satisfied from the materials and submissions, including the very late material filed by Praxis, that the only two parties who have any claim to the net proceeds of sale are CWB and CRA. In any event, CWB’s application was, essentially, to set the priorities to this fund; by implication if not explicitly, all the parties therefore had notice that the court would be asked to pay out the proceeds of the auctions. The court therefore hereby authorizes the payout to CRA.

It would be needlessly expensive to require CRA to bring a separate application, perhaps before yet another judge, for the payout to which it has established an entitlement. [ 44 ] The only formal application that was before the court on August 3, 2016 was CWB’s application filed on July 5, 2016. ACJ Rooke’s order in October, 2015, makes it clear that he is the case manager of these proceedings. While a case manager might deal with issues without the necessity of a formal application, that option is not available to judges who do not have the required familiarity with the file.

Moreover, I do not understand that I have authority to deal with any other matter except the bank’s application. For that reason, I do not propose to deal with the informal request by the Verbeeks to cross-examine either CRA’s affiant or Praxis’ affiant. [ 45 ] However, if it might assist the parties in deciding on what future applications to bring or what future matters to raise with the case manager, I agree with the position of CRA to the effect that case law such as Hryniak encourage all of us not to undertake process which has essentially no chance of success.

In that context, as the CRA observes, there is no absolute right to cross-examine on an affidavit. Although I am not the case manager, I cannot discern any useful purpose that could be served by any Verbeek cross- examination of the CRA affiant. [ 46 ] Similarly, no useful purpose can be served by adjourning this application to allow the Verbeeks to cross-examine Mr. Bromley-Browne on his affidavit on behalf of Praxis about the amount still owing on the equipment.

For the purposes of this application, the court is satisfied that 0855 still has not repaid its loan to the bank and that, legally, or facially, 0855 is the owner of the equipment that is the subject matter of this application. [ 47 ] As to the Verbeeks’ interest in cross-examining Mr. Bromley-Browne generally on his affidavit, the lawyer who is appearing for Mr. Bromley-Browne indicates that Mr. Bromley-Browne can be cross-examined but some health issues will delay that event. I leave to the case manager the issue of the collateral effects arising out of the personal bankruptcies of the two directors of 0855.

The timing of the various steps which the Verbeeks intend to take in their lawsuit against the bank, and others, is, clearly, part of what ACJ Rooke was attempting to solve with his direction to prepare a litigation plan. The Verbeeks should get back to the Associate Chief Justice for a ruling on a litigation plan.

b) Legislative [ 48 ] Rule 5.33(1)(

a) reads:

Part 5 Disclosure of Information . . . Subdivision 3 Questions to Discover Relevant and Material Records and Relevant and Material Information . . . Confidentiality and use of information 5.33(1) The information and records described in subrule (2) must be treated as confidential and may only be used by the recipient of the information or record for the purpose of carrying on the action in which the information or record was provided or disclosed unless (

a) the Court otherwise orders, (

b) the parties otherwise agree, or (

c) otherwise required or permitted by law.

(2) For the purposes of subrule (1) the information and records are: (

a) information provided or disclosed by one party to another in an affidavit served under this Division; (

b) information provided or disclosed by one party to another in a record referred to in an affidavit served under this Division; (

c) information recorded in a transcript of questioning made or in answers to written questions given under this Division. 2. CWB is entitled to costs both of this action and of the Verbeek action [ 49 ] When the Verbeeks applied for an order pursuant to Rule 5.33, they were undoubtedly attempting to minimize costs; they say that this objective has been turned on its head by the bank’s application for costs which include work done in the Verbeek lawsuit.

In granting the order requested, ACJ Rooke undoubtedly applied the Juman principles: see, for example, para. 35 of that decision The fact is that, even in relation to this very application, the Verbeeks have been successful in minimizing their costs: had they not had the benefit of that order, they would have had to instruct their lawyers to provide relevant records a second time for this application, and they would have had to pay their lawyers to support them in a second round of examinations in connection with this application. [ 50 ] As to the effect of the lifting of the undertaking, case law establishes that once lifting has been authorized, the information and documents which are then imported into another lawsuit are then available for unrestricted use in that lawsuit.

In this context, when I say “unrestricted”, I mean that such material is only restricted in exactly the same way that material which had been originally filed in the lawsuit would have been restricted; for example, not every answer which may be properly compelled at discovery is necessarily admissible at trial.

It would perhaps, therefore, be more correct to say that once an order pursuant to Rule 5.33 is granted, the material which is the subject of the order is treated as if it had been produced in the second lawsuit. [ 51 ] As to the importance of the material which is transferred, the Rules themselves say, the information transferred to this lawsuit becomes relevant and material in this lawsuit. (Parenthetically, during the course of the hearing, CWB would have made reference to some of the material in the other action, but because the Verbeeks objected, the bank desisted; that is an issue that will presumably be resolved by the case manager.) Therefore, insofar as CWB is concerned, because all of the information and all of the records in the Verbeek lawsuit have become relevant in this application, it stands to reason that CWB must assess everything in the Verbeek lawsuit to determine if it has any application in this proceeding.

Indeed, by their very position on this application, the Verbeeks assert close, necessary and determinative connections between the security instruments that constitute the framework of this action and the dealings which they had with some of the parties including the bank in relation to at least some of this machinery. In other words, even without the Rule 5.33 order, the bank’s position that its work in the Verbeek lawsuit should properly be accounted for in this proceeding would probably have been accepted; the Verbeek Rule 5.33 order merely makes that connection explicit.

How could the bank reasonably ignore the allegations made in the Verbeek lawsuit with respect to the equipment sold at auction when the Verbeeks themselves insist upon a close, in fact a necessary, connection between themselves and the equipment? [ 52 ] ACJ Rooke’s order does not deal with the treatment of legal costs as a result of the order. I agree with the Verbeeks that CWB has the onus of establishing that they are entitled to costs of approximately $70,000.00 from the sale of the machinery.

On the basis of the evidence before me, I have concluded that, without making a comment intended to have application to Rule 5.33 orders in general, in this proceeding, it would be impossible for the bank to parse out costs on the Verbeek action separately from their costs in this proceeding. The Verbeek lawsuit deals with the equipment that is the subject of this application.

One example is the Verbeeks’ request in their lawsuit of the bank to provide by way of undertaking a complete loan history from the bank on the three loans that involve this equipment, including how much was paid on each loan and how much is outstanding. As another example of the inter-connectedness of these issues twining around the equipment is the Verbeek examination of the bank’s officer MacInnes. The transcript of that examination was tendered by the Verbeeks on this application in support of their argument about the lack of clarity concerning who paid the bank, amongst other issues.

That examination dealt both with the issues in the Verbeeks’ lawsuit against the bank, including the review of extensive documentation from the bank including its risk assessment of 0855 and the circumstances of the bank’s dealings with Asnee Suk in Grande Prairie as well as the undertakings provided in that lawsuit, and the affidavit that Mr. MacInnes swore in support of the bank’s position on this application. The Verbeeks say that their examination of the bank’s officer was legitimate; no doubt that’s true.

But the issues which are legitimately explored are connected with the issues on this application as the reference by the Verbeeks to the content of the examination demonstrates.

The issues which the Verbeeks are raising in their lawsuit against the bank are so intimately intertwined with the issues raised in this proceeding that they cannot be separated. [ 53 ] Although they agree that it is not usually the way matters are dealt with, as a practical solution to the costs issue on today’s application, the Verbeeks have suggested that the court’s determination about the bank’s entitlement to costs be made subject to the decision of the trial judge in the Verbeek lawsuit against the bank to make a different decision. With respect, I will not adopt that suggestion.

The evidence before me justifies the bank’s costs position on this application. As has been indicated, the 2015 order from ACJ Rooke required the parties to try to agree on a litigation plan. No such plan has yet either been agreed or ordered; a trial is therefore presumably on some rather distant horizon.

The order today will at least fix CWB’s costs as of today; because the trial judge in the Verbeek action has complete discretion in the matter of costs, today’s order is merely additional information available to that trial judge. [ 54 ] As to any suggestion that today’s substantive decision relative to the ownership of the equipment sold at auction be subject to a different decision by a trial judge in a different proceeding, that suggestion simply cannot have traction in our civil justice system. [ 55 ] It follows from the foregoing that CWB is entitled to its costs for undertaking that work. 3.

The Verbeek Calderbank offer does not shield them from costs of this application [ 56 ] Because the July 15, 2016 Verbeek email to all of the other parties on this application does not refer to the issue of costs, does not say whether it is with or without prejudice, and does not say whether, if it is an offer, the offer is global and non-severable or severable, I have concluded that the July 15 email from the Verbeeks is not sufficiently clear to be considered as a Calderbank-type offer: Mayer at para. 115.

[ 57 ] Dealing then with the offer made by the Verbeeks to CWB on July 14, 2016, that offer simply does not equal or better the court’s decision on the application; their offer would have deprived CWB of its costs in relation to the Verbeek proceedings. That offer cannot, therefore, shield the Verbeeks from costs of the August 3, 2016 hearing. [ 58 ] In addition, the form of the offer to settle was not an offer to settle, but only to make a decision that would be up for grabs again before the trial judge in the Verbeek lawsuit.

That is not a settlement offer; it is merely an offer to adjourn the issue. [ 59 ] Moreover, the Verbeeks’ offer would have allowed CWB only solicitor/client costs whereas CWB is contractually entitled to solicitor and own client costs or an indemnity of costs. [ 60 ] Finally, it appears from their brief that the Verbeeks were not actually approving the payment out to CWB of the proceeds from the sale of all of the equipment that was subject to the conditional sales contract, but only to 4 pieces of that equipment.

That limitation is not, in fact, found within the Calderbank offer itself, but was made in writing and at the hearing by the Verbeeks. The position taken by the Verbeeks at the hearing is that CWB only needed the proceeds from the sale of 4 pieces of equipment to be fully repaid; that position does not accord with the evidence. CWB’s position is that, as of August 3, they are owed $212.404.32 with a per diem of $41.30; that exceeds the net proceeds from the sale of 4 pieces of equipment which the Verbeeks themselves have estimated as amounting only to $187,000.00.

The court’s decision at the hearing extends to equipment beyond the 4 pieces of equipment identified by the Verbeeks. [ 61 ] Finally, the Verbeeks have no status to take a position on CWB’s costs of this application: 0855 is paying those costs, and 0855 is not opposing the amount of CWB’s claim. [ 62 ] Overall, therefore, the August 3, 2016 hearing was necessary to determine the issues on which the Verbeeks and the bank were not agreed. [ 63 ] In the result, the Verbeeks are not shielded from the costs effects of the August 3, 2016 hearing. 4.

Costs [ 64 ] If the parties are not agreed on costs of the August 3, 2016 hearing, I can be spoken to within 30 days of the delivery of this decision. Heard on the 3 rd day of August, 2016 Dated at the City of Edmonton, Alberta this 1 st day of September, 2016. J.B. Veit J.C.Q.B.A. Appearances: Kentigern A. Rowan, QC Ogilvie LLP for the Plaintiff/Applicant Canadian Western Bank Daniel Segal

Department of Justice Canada for Canada Revenue Agency Allan W. Damer Mintz Law For Praxis Earth Works Ltd. Jeffrey D. Poole Poole Lawyer for Calvin Verbeek and Verbeek Sand & Gravel Inc.