Jones v Gerosa, 2016 ABQB 614

Court of Queen’s Bench of Alberta Citation: Jones v Gerosa, 2016 ABQB 614 Date: 20161102 Docket: 0103 24943 Registry: Edmonton Between: Robert Martin Jones Plaintiff - and - Mary Gerosa and Jack Phan Defendants _______________________________________________________ Memorandum of Decision on Costs of the Honourable Mr. Justice Robert A.

Graesser _______________________________________________________ Introduction [ 1 ] In my decision in Jones v Gerosa , 2016 ABQB 207 , I stated at paragraph 282 “If the parties are unable to agree on pre- judgment interest and costs, or either of them, they may address any disputes over these subjects in writing within 60 days from the date of this decision”. [ 2 ] I also indicated that the parties could address any “E & O” issues within 60 days from the date of the decision. [ 3 ] Drs. Jones and Gerosa were able to come to terms. Dr. Jones and Dr.

Phan have been unable to agree on either pre-judgment interest or costs. My decision herein follows receipt of written submissions from counsel. [ 4 ] In my decision, I awarded Dr. Jones $90,000 against Dr. Phan (see paragraph 241). I awarded Dr. Phan $12,852.19 on his counterclaim against Dr. Jones. Setting that amount off against the amount owed to Dr. Jones left a net judgment against Dr. Phan for $77,147.81. [ 5 ] I received submissions from Mr. Feehan on behalf of Dr. Jones dated June10, 2016. Mr. Wakefield responded with submissions on June17, 2016, and Mr.

Feehan responded with submissions on June 24, 2016. [ 6 ] Regarding E & O issues, Mr. Wakefield noted that I had not dealt with two payments made to Dr. Phan that he did not share with Dr. Jones. Those payments totalled $164.14. Dr. Jones’ 60 percent share equals $98.48 such that his judgment against Dr. Phan

should be increased by that amount. [7] Mr. Wakefield also pointed out that $2,219.73 worth of cheques remitted to Dr. Jones were received by Dr. Jones before Dr.Phan countermanded the bank directions permitting Dr. Jones to deposit those cheques. Those cheques were ultimately stale-datedbecause the parties could not come to terms on a mechanism to negotiate the cheques. I assume that Dr. Phan seeks his 40 percent shareof that amount, namely $887.89. Position of Parties Pre-judgment interest [8] Dr.

Jones seeks pre-judgment interest at the prescribed rates from the date monies were due to him under the DentalAssociate Agreement, which was dated August 31, 2001. He calculates the pre-judgment interest to be $31,697.65 to the date of mydecision, April 8, 2016. [9] He relies on and 321665 Alberta Ltd. v Exxon Mobil Canada Ltd., 2012 ABQB 76, 216927 Alberta Ltd. v Fox Creek(Town), 1990 ABCA 29 , [1990] AJ No 156 (ABCA), and Skrepnek Estate v Krochak, 2014 ABQB 699, to support hisposition. [10] Dr. Phan opposes the award of pre-judgment interest on the basis that I should exercise a discretion under

section 2 of theJudgment Interest Act, RSA 2000 c J-1, to deny interest for all or some of the time because of the delay by Dr. Jones in pursuing hisclaim. [11] He cites Rayani v Yule & Co. (Hong Kong) Ltd., 1996 ABCA 35 , 1996 CarswellAlta 491 (ABCA); A & LPlumbing & Heating Ltd. v Ridge Tool Co., 2008 SKQB 77; 321665 Alberta Ltd. v ExxonMobil Canada Ltd., 2012 ABQB 76;Meehan v Holt, 2011 ABQB 110; Pittipas v Klingbeil, 2000 ABQB 988; and Patterson v Hryciuk, 2005 ABQB 136, being cases wherethe plaintiff was awarded something less than full pre-judgment interest. [12] Dr.

Phan seeks pre-judgment interest on the amount determined by me to be a set-off against Dr. Jones’ judgment, namely$12,852.19. Costs [13] Dr. Jones seeks costs on Column 3 including second counsel fees. He seeks double costs pursuant to Rule 4.24 from April 27,2012, the date a Formal Offer to Settle in the all-inclusive amount of $100,000 was served on Dr. Phan’s counsel. He relies on Chapell vCPR, 2011 ABQB 74, regarding second counsel fees and Spartek v Brown, 2015 ABQB 190, regarding double costs for beating an offerof settlement. [14] Dr. Phan opposes Dr. Jones’ cost claim, advancing many arguments.

Firstly, Dr. Phan takes issue with some of the items inDr. Jones’ draft bill of costs. [15] Those issues are: (

a) Item 3(1) Affidavits of Records: Dr. Jones should only be entitled to this item once, and not seven times as claimed, despitethe number of affidavits of records filed; (

b) Item 5(2) questioning: the questioning was in relation to an application where the Court directed that neither party shouldhave costs; (

c) Item 7(1) Amendment of Pleadings application: Dr. Phan argues that this item should be disallowed because Dr. Jones knewof the added claims at the time of the original statement of claim and that some of the amendments were later abandoned. Master Smart,on the application, directed that costs were to be determined by the trial judge. (

d) Item 8(1) Applications: Dr. Phan argues that two of the items here claimed should be disallowed because on one of theapplications, Master Wacowich gave the Defendants costs in any event of the cause, and the other directed that no costs were to beawarded to either party. (

e) Second counsel fees: these should be disallowed following an analysis of the factors described in Clancy v Gough, 2011ABQB 778; Alberta Productions Corp. v Canada Lands Co. CLC Ltd., 2004 ABCA 25; Alberta Mortgage & Housing Corp. vStrathmore Investments Ltd., (1995), 1995 ABCA 266 , 169 AR 286 (ABCA); and Watts v Wakerich, 2001 ABCA 207. [16] Dr.

Phan also argues that Rule 10.33 requires me to look at any unnecessary conduct of a party or conduct that unnecessarilylengthened or delayed the action or any stage of the action, any denial of or refusal to admit “anything that should have been admitted”and whether any application, proceeding or step in an action was unnecessary, improper or a mistake. [17] Dr. Phan points to Dr. Jones’ failure or unwillingness to produce relevant and material documents (namely, information as tobillings and collections of Dr. Phan’s work in progress, which were key factors in Dr. Phan’s counterclaim). [18] Dr.

Phan argues that he should be compensated by way of costs for the “inefficient manner that the plaintiff conducted thisaction”.

[ 19 ] With respect to double costs, Dr. Phan argues that such an award should be denied because of Dr. Jones’ conduct as described above. For these latter issues, Dr. Phan cites Canada Deposit Insurance Corp. v Canadian Commercial Bank , 1987 CarswellAlta 314 (ABQB) ; Bellatrix Exploration Ltd. v Penn West Petroleum Ltd. , 2013 ABCA 10 ; and Leonardis v Leonardis , ABCA 577. [ 20 ] Dr. Phan also argues that Dr.

Jones only beat his second offer of judgment, noting that an offer of judgment for $178,000 was made on March 24, 2009, and a third offer of judgment was made on February 25, 2016 (the eve of trial) for $140,000. Dr. Phan argues that none of the offers was beaten (having regard to his submission on costs and interest). Alternatively, he argues that a subsequent offer “extinguishes” an earlier offer. [ 21 ] Dr.

Phan further submits that none of the offers to settle were a genuine offer of compromise, and they did not address or disregarded the Defendants’ counterclaims “in circumstances which the Plaintiff knew would not be acceptable to the Defendants”. [ 22 ] Finally, regarding double costs, Dr. Phan argues that double costs should not be awarded because all relevant documents had not been produced so “the Defendants could not make a fully informed decision”. [ 23 ] Next, Dr. Phan argues that he should be awarded costs on his counterclaim.

His draft bill of costs is based on Column 1, but for items referred to above which he submits should attract Column 3. Curiously, he seeks second counsel fees in his own bill of costs. His bill of costs totals $41,751.11 including $20,012.96 in disbursements. [ 24 ] Both parties provided chronologies in their written submissions to support their arguments concerning delay and responsibility for delay. Analysis [ 25 ] I will deal with the issues in reverse order. E & O [ 26 ] I am satisfied that the issue over the cheques deposited by Dr. Phan was one that was overlooked by me. He is correct that Dr.

Jones should be awarded $98.48. [ 27 ] With respect to the cheques Dr. Jones had and did not deposit to his account before Dr. Phan countermanded the directions to the TD Bank, I do not consider that falls within the category of E & O. The specific point was not argued before me, but if I understand Dr. Phan’s position now, it is that Dr. Jones was negligent in not immediately depositing these cheques and should be solely responsible for the consequences of them eventually becoming stale-dated. [ 28 ] There was no evidence as to exactly when Dr.

Jones received the cheques or why they were not immediately deposited. They did not go stale-dated before Dr. Phan countermanded the directions to the bank. [ 29 ] The cheques became stale-dated because of the silliness that ensued between the parties. My decision had each of them bear their proportionate share of the loss resulting from their failure to act reasonably regarding the collection of these funds. Dr. Jones had no reason to believe that Dr. Phan would countermand the directions to the bank. I do not think he was negligent in not immediately depositing the cheques.

That would have been a good business practice, but failing to follow good business practices does not automatically equate to negligence. [ 30 ] The loss of these cheques should remain shared between Dr. Jones and Dr. Phan, and I make no change to my decision on this issue. Costs [ 31 ] In Schwartz Estate v Myron , 2013 ABQB 147 , I discussed the principles relating to cost awards in Alberta at para 111: The minutia of the evidence is rarely the deciding factor in a claim for costs. Courts will normally take a bigger picture view of costs, following the basic principles that: 1. Costs follow the event; 2.

Usual costs are those provided for in

Schedule C of the Rules of Court; 3. The Court has a wide discretion (to be exercised judicially) as to the awarding of costs in any matter; 4. A successful party may be denied costs, or awarded costs on a lesser scale, because of his or her conduct during the course of the litigation, or because of the magnitude of the award in comparison with the costs calculated on the usual column. [ 32 ] I repeat what I said in Schwartz Estate at paras 251 and 252 : [251] In my view, the courts need to take care to avoid cost proceedings being as lengthy and costly as the underlying litigation.

It is not an appropriate use of scarce judicial resources, whether it be review or assessment officers, masters or judges, to have them pore over lawyers’ time records, pleadings, questioning transcripts, briefs and trial proceedings to determine whether a particular party misconducted itself during some step in the litigation.

Hindsight always provides clarity, and looking back, it may be relatively easy to say that a particular position was ill conceived, a particular application was unnecessary, it was not necessary or helpful to have third counsel involved at an application or proceeding, a brief was too long and detailed, a witness was not necessary, and the like.

[252] It is not the intent of cost proceedings to retry cases or revisit each hour of lawyer time logged on the file to determine whether thetime was well spent and proportionate to the nature and magnitude of the litigation. [33] I also commented at paragraph 203: [203] I do not view the principle regarding denial of costs because of misconduct during the litigation as a basis to review every step inthe action and every position being taken by counsel throughout the course of litigation. The intent of the cost rules and

Schedule C inparticular is to make the assessment of costs routine other than in exceptional circumstances. [34] It is also not the focus of a cost hearing to relitigate the case. I would also add that no authority needs to be cited for thegeneral principle in Alberta that the loser pays. [35] I would also observe that when assessing costs when there is a claim and a counterclaim, the Court generally “nets” the two todetermine who the ultimate winner is. That is clear from cases such as Wilde v. Archean Energy Ltd., 2008 ABCA 132.

There, the Courtstated at paragraph 9: Generally the costs follow the ultimate result, and costs are not usually apportioned on an issue-by-issue basis, a claim-by-claim basis oron a head-of-damages basis, although there is a discretion to do so in proper cases: Sutherland v. Canada (Attorney General), 2008BCCA 27 at para. 7; British Columbia v. Worthington (Canada) Inc., (BC CA), [1989] 1 W.W.R. 1, 29B.C.L.R. (2d) 145, 32 C.P.C. (2d) 166 (B.C.C.A.); Portugal Cove-St. Phillips (Town) v. Willcott, (1997), (NL CA),150 Nfld. & P.E.I.R. 183, 20 C.P.C. (4th) 237 (Nfld.

C.A.) at paras. 13-19. [36] That is not automatic, as there are circumstances where it may be appropriate to award costs on each of the claim andcounterclaim, or on an issue-by-issue basis, as was done in Clarke v Syncrude Canada Ltd., 2014 ABQB 430. [37] In Herman v Delong (#2), 1999 ABQB 745, Veit J observed at paragraph 5: [5] Success in legal proceedings, at least as a measure of costs, is to be determined objectively. The main purpose of costs is to serve asdiscipline. A subjective test, self-satisfaction, is the antithesis to discipline. [38] Here, on any objective view, Dr. Jones was successful. While Dr.

Phan succeeded in establishing that after he breached theprovisions of the Associate Agreement by failing to pay Dr. Jones the agreed-to compensation for competing locally, Dr. Jones collectedfunds to which Dr. Phan was entitled to a share. [39] Dr. Phan’s counterclaim arose out of the Associate Agreement itself, and I cannot think that Dr. Jones was anything butentitled to retain any funds collected from Dr. Phan’s receivables at least until Dr. Phan’s share exceeded the compensation Dr. Joneswas entitled to. [40] While Dr.

Phan pled his claim by way of a counterclaim, it might just as easily have been raised in his defence as a set-off.His counterclaim sought some $50,000, and apart from recovering perhaps a third of what he claimed by way of fees owed to him, hewas otherwise unsuccessful on his counterclaim. [41] Had his success on the counterclaim been close to the amount of Dr. Jones’ successful claim, there would be a strongerargument for a set of costs payable to Dr. Phan to offset costs that Dr. Jones would be entitled to.

If the costs were assessed under thesame column, they might fully offset each other. [42] Here, at best, Dr. Phan could argue that he should be awarded costs on the basis of Column 1. He was awarded less than$13,000 on his counterclaim, and pre-judgment interest would not bring the total award up to $50,000. [43] Dr. Jones is entitled to costs on Column 2. I arrive at Column 2 by noting the net amount of Dr. Jones’ judgment, $77,147.81,plus pre-judgment interest, which I estimate to be between $28,000 and $30,000 (as discussed below and to be calculated in accordancewith my direction).

These amounts do not reflect the adjustment above arising out of the additional collection of accounts receivable byDr. Phan. Such recalculation will only marginally increase these amounts and would certainly not put the recovery into a higher column. [44] I recognize that there I have the jurisdiction and discretion to award Dr. Phan costs on Column 1 and direct that the two sets ofcosts be offset. I decline to exercise that direction. As discussed above, Dr. Phan’s counterclaim was always at best a set-off againstmonies he otherwise owed Dr. Jones. [45] Dr.

Phan’s counterclaim was initially for $50,000, and from the evidence at trial, I do not think that there was ever anyreasonable prospect that Dr. Phan would recover more than the $90,000 he owed to Dr. Jones. [46] If the realistic amount of his counterclaim was closer to the amount of Dr. Jones’ claim, or if Dr. Phan had recovered anamount much closer to the amount awarded to Dr. Jones, my views might be different. [47] Or if the real fight between the parties had been over the counterclaim and litigating the counterclaim had been the main effortin the litigation, my approach might be different. But here, Dr.

Jones wholly succeeded in his claim. Dr. Phan recovered approximately40 percent of the amount of his original counterclaim. [48] I might have been inclined to award something to Dr. Phan in relation to the cost of expert witnesses, but the expert witnessescalled by Drs. Phan and Gerosa testified in relation to Dr. Jones’ claim and not on the counterclaim. [49] Ultimately, I conclude that Dr. Jones is entitled to one set of costs on Column 2 against the Defendants, jointly and severally.Dr.

Jones was the real winner here, and it is not appropriate in the circumstances of this case to award the Defendants any costs on theircounterclaims, even though they were partly successful.

[50] There is nothing about this case to warrant any increase in the Column 2 amounts, or to apply any multiplier. I recognize thatSchedule C costs have not been adjusted for many years, but many of the steps in this litigation were taken many years ago beforeinflation had significantly eroded the value of the amounts specified in

Schedule C. [51] Even if I were to have awarded Dr. Phan any measure of costs, I would not have awarded anything for expert fees. The expertsused by Dr. Phan were for the purpose of defending the claim by Dr. Jones. Dr. Phan was wholly unsuccessful in defending that claim.The experts did not testify in relation to the receivable issue. Specific cost issues [52] Dr. Phan raises a number of objections to various items of costs claimed by Dr. Jones. [53] Item 3(1) Affidavits of Records: I agree that Dr.

Jones should not be entitled to this item seven times as claimed, despite thenumber of affidavits of records filed. The intention of the Rules of Court is that the production of records is to be done early in the action,and it is intended to be done right. Additional production of records occur generally because of incomplete or inadequate production inthe first place. It is not unreasonable in document-intensive cases for an updated affidavit of records to be filed in anticipation of trial, soa second affidavit of records (if comprehensive) might well attract a second affidavit of records fee.

Here, it is appropriate to award Dr.Jones the costs of filing two affidavits of records. [54] Item 5(2) Questioning: the questioning was in relation to an application where the Court directed that neither party shouldhave costs: I agree with Dr. Phan’s position. Dr. Jones is not entitled to costs for that application nor steps in relation to it, includingquestioning. [55] Item 7(1) Amendment of Pleadings application: Dr. Phan argues that this item should be disallowed because Dr. Jones knewof the added claims at the time of the original statement of claim and that some of the amendments were later abandoned.

Master Smart,on the application, directed that costs were to be determined by the trial judge. [56] Dr. Jones is entitled to this item. He succeeded on the application. The fact that he knew of the added claims at the time of theoriginal statement of claim does not mean that it was necessary to include it at the time. Drs. Phan and Gerosa opposed the applicationand were unsuccessful. The fact that some of these added claims were not proceeded with does not mean that Dr. Jones should not getcosts for the application he succeeded on. [57] Item 8(1) Applications: Dr.

Phan argues that two of the items here claimed should be disallowed because on one of theapplications, Master Wacowich gave the Defendants costs in any event of the cause, and the other directed that no costs were to beawarded to either party. [58] I am not going to vary Master Wacowich’s determination. Dr. Phan is entitled to set off the costs awarded to the Defendantson the one application against Dr. Jones’ costs as determined herein. Dr. Jones is not entitled to costs of the application where MasterWacowich directed that no one should have costs. [59] Second counsel fees: Dr.

Phan argues that these should be disallowed following an analysis of the factors described in Clancyv Gough, 2011 ABQB 778; Alberta Productions Corp. v Canada Lands Co. CLC Ltd., 2004 ABCA 25; Alberta Mortgage & HousingCorp. v Strathmore Investments Ltd., (1995), 1995 ABCA 266 , 169 AR 286 (ABCA); and Watts v Wakerich, 2001 ABCA207. [60] Second counsel fees are discretionary. It is ironic that Dr. Phan objects to Dr. Jones being awarded second counsel fees whileseeking them himself in the bill of costs put forward on this application. [61] The most recent decision on the subject is Chapell v CPR.

There, Erb J awarded second counsel fees, noting at paras 29-31: [29] Although the complexity of the issues and the general importance of the issues are important factors, the litigation need not beeither complex or weighty for second counsel fees to be awarded: Kassam v. Dragish (1991), (AB KB), 123 A.R.161 (Q.B.) at para. 13. However, in Alberta, monetary value of the case is a weighty factor: Kassam at para. 13.

While second counselneed not be present at every court appearance, such counsel must assist in the preparation leading up to presentation of the matter andsuch involvement must be justified by the nature of the case: Davidson v. Patten, 2005 ABQB 521 , 381 A.R. 6, var’d on othergrounds 2008 ABCA 65 at para. 19. [30] The amount claimed in second counsel fees is also a pertinent factor: Kassam at para. 17.

In Kassam, at para. 14 Veit J. alsosuggested that courts should err, if at all, on the side of generosity by allowing second counsel fees since party and party costs provide acheck and balance by reimbursing only a fraction of the cost of second counsel at trial. [31] The Alberta Court of Appeal also came to a similar conclusion, that is, in a case of real doubt, erring on the side of the party whichretained the second counsel: Viridian Inc. v. Dresser Canada Inc., 1998 ABCA 275 at para. 4. [62] Here, I decline to award second counsel fees. This was not a complicated action.

It was not particularly document-intensive. Irecognize that Mr. Feehan had the benefit of second counsel, and while that may have been helpful, this is not the sort of case thatrequired more than one lawyer to handle it. [63] Most importantly, the amounts involved in this litigation strongly suggest that the use of second counsel was not cost effectivein pursuing the litigation and defending the counterclaim. I do not think that second counsel fees are appropriate in an uncomplicatedmatter with a low dollar amount. Pre-judgment Interest

[ 64 ] Dr. Phan argues that Dr. Jones should not recover pre-judgment interest on the amount awarded to him because of his conduct during the litigation as well as the delays in bringing this matter to trial. [ 65 ] The Judgment Interest Act , RSA 2000 c J-1provides: 2(1) Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest in accordance with this Part from the date the cause of action arose to the date of the judgment. However, the Court has the power to vary the interest award under section 2(3):

(3) If it considers it just to do so having regard to changes in market interest rates, the circumstances of the case or the conduct of the action, the court may (

a) refuse to award interest under this Part, (

b) award interest under this Part at a rate higher or lower than the rate set out in this Part, or (

c) award interest under this Part for a period other than the period provided for in this Part. [ 66 ] In 216927 Alberta Ltd. v New Town of Fox Creek , the Court of Appeal disallowed the plaintiff’s claim for pre-judgment interest despite the plaintiff’s ultimate success in the action.

That was in the context of the plaintiff successfully recovering some of the monies it had paid towards a land purchase, despite its repudiation of the purchase agreement. [ 67 ] The Court of Appeal held at para 51-52: [51] While s. 2(1) states that the court “shall” award interest nonetheless there is an overriding discretion in (3) to refuse to award any interest having regard to “the circumstances of the case”.

In my view before the court should exercise its discretion to refuse to award interest and thus deprive a litigant of what is a prima facie entitlement to under (1) the reason for doing so must be compelling. [52] In this case the circumstances of the repudiation by the appellant are sufficiently compelling to allow the court to refuse to award interest under the Act. The trial judge’s findings in this case amount to more than a mere default under the agreement. The finding was to the effect that the appellant was not prepared to complete and indeed had not been prepared to complete for a number of years.

While it would be unfair and indeed unconscionable to allow the Town an unwarranted $88,500.00 windfall it would be equally unjust to order the Town to pay interest on this sum when the fault was not its own. [ 68 ] Rayani v Yule & Co. , 1996 AJ No. 156 (ABCA) holds at paras 28 and 29 : [28] However, the plaintiff argues for full interest because the defendant Yule (or its liability insurer) had the use of the money throughout and could earn interest on it.

There is some weight in that argument, but to my mind other countervailing factors outweigh it. [29] In the first place, the policy of s. 2(3) is obviously to encourage promptness, and (if need be) to penalize delay by denying interest. In the second place, the plaintiff has no right to treat the defendant as its compulsory banker.

A torts claim should not be treated like a savings account, idly drawing interest as long as the holder of it wishes. [ 69 ] At paras 30 and 31, the Court adopted a practical approach to pre-judgment interest where the plaintiff’s conduct and delay are put in issue: [30] The third factor is practicality… (the trial judge) could then hear detailed evidence on the delays month by month through the whole lawsuit, and decide whose fault each piece of delay was.

Then the judge could calculate a net figure attributable to the delay period. [31] Aside from some indications of delay, we do not begin to have such evidence here. The interest questioned is a very few thousand dollars. Retrying that issue to lead that evidence would be grossly uneconomical. The cure would be worse than the disease, even fatal.

Neither counsel sought a retrial of any kind. [ 70 ] In Chapell v Canadian Pacific Railway , 2011 ABQB 74 , Erb J reduced the successful plaintiff’s entitlement to pre-judgment interest by three years because the action had sat dormant for a number of years without explanation by the plaintiff (at paras 37 - 41). [ 71 ] Dr. Phan also quotes 3321665 Alberta v Exxon Mobil Canada Ltd. , 2012 ABQB 76 .

There, Belzil J reviewed relevant case law (including the above) on pre-judgment interest and concluded at para 24: [24] I identify the following factors as being relevant in determining whether the plaintiff should be deprived of pre-judgment interest for some period of time: 1. It is the plaintiff’s responsibility to prosecute an action with reasonable diligence. 2. The Judgment Interest Act provides a prima facie entitlement to the recovery of pre-judgment interest. 3. The court may reduce the award of pre-judgment interest for compelling reasons. 4.

The goal is to be fair to all parties which involves a consideration of all of the circumstances and a balancing of interests. No single factor is determinative of the issue.

5. The use of the term “conduct of the action” in the Judgment Interest Act necessarily involves an analysis of whether delays werejustified and explained. Not all delays in litigation are unjustified. 6. The Defendants are large corporations in active, capital intensive business and have had the use of the money which is a demonstrablebenefit to them. They have not adduced any evidence that they have not made use of the funds which would be used to pay an award ofpre-judgment interest. 7.

The action was complex, involving extensive document production and a multiplicity of issues respecting liability and damages. 8. The Defendants, as they were entitled, vigorously contested liability and damages. 9. Both sides in the litigation retained experts who prepared reports resulting in some delay during their preparation. 10. A plaintiff is not responsible for institutional delays in litigation, including delays occasioned waiting for a reserve judgment by theCase Management Judge and delay between the setting down of trial and the hearing of trial. 11. The action was in active Case Management. 12.

With the agreement of all counsel and pursuant to the Order of Lewis J., the Discovery of Mobil was completed only aftercompletion of the Husky Discovery which could only be completed after production of Husky documents was complete. There wassignificant dispute about the production of Husky documents which involved several contested court applications. 13. The action could not be set down for trial until all of the expert reports were completed. 14. There is no evidence that the Plaintiff made a conscious decision to delay the prosecution of the action for reasons unrelated to thecarriage of the action. 15.

The Defendants are not alleging any specific prejudice arising from delays in having the matter set for trial in terms of loss ofdocumentation or inability to produce witnesses. 16. On February 4, 2004 the Plaintiff’s lawyer was suspended by the Law Society of Alberta for alleged misconduct unrelated to thisaction and subsequently was disbarred. Current counsel in argument estimated that the change of counsel resulted in a delay of the actionof 24 months whereas counsel for the Defendants estimated that a delay of only a few months was caused by the change of counsel.

I amunable to determine precisely how much delay was caused by the forced change of counsel but clearly there was some significant delay.This unfortunate occurrence was not the fault of any party in this action. [72] On reviewing the history of the action, Belzil J concluded that the action had taken too long to get to trial and could have beentried sooner (at para 25).

He weighed the above factors and concluded that the “fairest result” was to deduct two years of pre-judgmentinterest from the award (at para 27). [73] In Skrepnek Estate v Krochak, 2014 ABQB 699, Read J disallowed pre-judgment interest for one year of the period from thetime of the claim until trial, on the basis that the plaintiff had been solely responsible for significant delays in the litigation. She relied onBelzil J’s decision in Exxon Mobil, and stated at para 18: [18] The policy behind s. 2 is to encourage promptness and to penalize delay if it occurs. The goal must be, however, to be fair to bothparties.

Over all, I conclude there were no periods during which the Plaintiff allowed the file to simply sit dormant. Yet there wereperiods during which matters were delayed by difficulties of the Plaintiff for which the Defendant was not responsible. For example,after the Plaintiff’s expert was chosen, there appears to have been considerable delay in communications with him and in obtaining hisopinion. The expert was first contacted in December of 2006, yet judging from the record of communications with him, his opinion doesnot appear to have been near finality until February 2008.

There is no explanation for this delay, other than the brief notation that theexpert has “been busy”. Under the circumstances, I have concluded it would be fair to disable the Plaintiff from collecting one year ofinterest, particularly for the time period included in the seventeen month gap set out above. Otherwise, I have concluded the delays,while unfortunate, cannot be called unjustified. [74] In A & L Plumbing & Heating Ltd. v Ridge Tool Company, 2008 SKQB 77, Ottenbreit J (as he then was) concluded twelveyears was too long to bring the matter to trial, and that the defendants had not delayed the matter.

Having regard to the delays, hereduced pre-judgment interest by 50 percent. [75] In Meehan v Holt, 2011 ABQB 110, Sullivan J awarded pre-judgment interest for seven of the eleven years it took the matterto get to trial, concluding that it should have only taken the plaintiff six years and allowing for a year of delays caused by the defendant. [76] In Pettipas v Klingbeil & Studzinski, 2000 ABQB 988, Hutchinson J considered Power J’s decision in Begro ConstructionLtd. v St. Mary River Irrigation District et al, (AB KB), [1994] A.J. No. 291 (ABQB).

In Begro Construction,Power J concluded that the action should have only taken two years to resolve and limited pre-judgment interest to that period. InPettipas, Hutchison J reviewed the circumstances of that case and concluded that the plaintiff should be limited to four years’ pre-judgment interest. [77] Macklin J considered the plaintiff’s serious medical issues that prolonged the course of the litigation in Patterson v Hryciuk,2005 ABQB 136. He stated at para 85: [85] In my view this is one of those rare cases where special circumstances can be shown to explain why a matter took so long toconclude.

Accordingly, the Plaintiff is entitled to pre-judgment interest from the date the cause of action arose to the date of judgment. Iwould emphasize however, that were it not for the peculiar circumstances of this particular litigation I may very well have declined toaward interest for the entire period of time.

[ 78 ] From my review of the competing chronologies, Dr. Jones had to be forced to produce various records on application by Dr. Phan before the Master. The Master awarded Dr. Phan costs in any event of the cause, payable at the end of the action. [ 79 ] On the other hand, it took Dr. Phan from May 2009 to April 2011 to produce patient lists and other relevant documents, requiring a special chambers application before Master Smart in October 2010. [ 80 ] I do not think either party is without fault regarding production of records. That being said, disputes over relevance and production are commonplace.

If applications are made, there are usually cost consequences for the loser. Sometimes applications result in a draw, or have mixed success. In those situations, it is common for those costs to be “in the cause” so the ultimate loser pays for that item of costs. [ 81 ] Here, there is no doubt that the litigation took a leisurely path towards trial. Neither party seemed to be in any particular hurry. There appear to have been periods where nothing at all was being done to advance the litigation. [ 82 ] As pointed out by Mr.

Feehan, the new Rules of Court make it clear that all parties have a responsibility to move litigation along. The new Rules of Court came into effect a little more than nine years after the litigation commenced, and it took another five and a half years from then to get it to trial. [ 83 ] I cannot think that this lawsuit should have taken more than five years to litigate.

Despite the numerous applications, it was not particularly complicated and documents were not extensive. [ 84 ] When I look at the chronologies provided by counsel, there was only one period of virtually no activity: April 26, 2004 to January 19, 2006. That appears to be attributable solely to Dr.

Jones as he changed counsel in that period. [ 85 ] If I consider the factors described by Belzil J in the Exxon Mobil case, other than with respect to that period, the litigation appears to have limped along with delays attributable to both sides, and some institutional delay. [ 86 ] I conclude that apart from the roughly two-year period of inactivity attributable solely to Dr. Jones, the rest of the delay is generally a shared responsibility. [ 87 ] I also conclude that a fair result regarding pre-judgment interest is to reduce Dr. Jones’ entitlement by a two-year period.

Thus I would end the calculation at April 8, 2014, being two years before my decision was filed. [ 88 ] Any greater reduction would result in a windfall to Dr. Phan and reward him for his role in the pace of this litigation. He has had the benefit of having some $72,000, which should have been paid over to Dr. Jones some fifteen years ago. Inflation has taken a far greater toll on the value of $72,000 than the pre-judgment interest Dr. Phan will have to pay. The pre-judgment interest is a fraction of the cost of borrowing a similar amount of money over that period. Double Costs [ 89 ] Dr.

Jones seeks double costs from March 24, 2009. In support, he has produced a Formal Offer to Settle for $89,000 from each of Dr. Phan and Dr. Gerosa, all inclusive of costs and pre-judgment interest. [ 90 ] It is clear that he has beaten that offer. Even after deducting the amount awarded at trial to Dr. Phan on the counterclaim, pre- judgment interest on the net amount exceeds by a significant amount the $89,000 offer of March 24, 2009. [ 91 ] Dr. Phan argues that the offer of March 24, 2009 should not be considered because it did not deal expressly with Dr. Phan’s counterclaim.

To be a valid order under Rule 4.29, certain requirements are set out. I consider that it was implied, if not express, from the March 24, 2009 offer that Dr. Jones was offering a net, all-inclusive amount. If I am mistaken in this, however and if this offer was not clear enough to qualify as an offer under Rule 4.29, it would still qualify as a Calderbank offer and allows me to take it into account. [ 92 ] It would perhaps have been better for the offer to expressly require that the counterclaim be dismissed. That was made clear in the offer Dr. Jones made to Dr.

Phan dated April 26, 2012 in the amount of $100,000 which specifically included a discontinuance of counterclaim. Dr. Jones clearly beat that offer. [ 93 ] Rule 4.29 clearly entitles Dr. Jones to double costs from April 26, 2012. I am of the view that the March 24, 2009 offer should be treated as a valid Rule 4.29 offer, or treated in a similar fashion as a Calderbank offer. The difference in costs between March 2009 and April 2012 is not, in the overall context of this litigation, particularly significant. [ 94 ] I would observe that Dr.

Jones has also beaten the offer of February 24, 2016 in the all-inclusive amount of $140,000. [ 95 ] Dr. Phan also objects to paying double costs on the basis that a new offer of judgment negates an earlier offer. If I were to accept that argument, it would mean that Dr. Jones would not be entitled to double costs until after the final offer of February 24, 2016, because that offer would have had the effect of negating the April 2012 offer (despite the fact that it had been beaten too).

The April 2012 offer would have had the effect of negating the March 2009 offer on the same basis, despite it having been beaten as well. [ 96 ] No authority is cited for that proposition. While it is a basic principle of contract law that a new offer has the effect of revoking an earlier offer, that is not the case with offers of settlement under the Rules of Court. Offers to settle expire on their terms. [ 97 ] In the context of settlement offers, the parties should be encouraged to revisit their earlier positions during the litigation.

If a party either rejects an offer of settlement, or does not respond to it such that it expires by the passage of time, the party who made the offer cannot logically be held to have compromised his or her position by making a later, higher offer. That would be a nonsensical result.

[ 98 ] It is quite appropriate for a party to make an offer, and when it is not accepted, to later say “too bad you didn’t accept my earlier offer, because now I will only settle for more”. Multiple offers of settlement may be made and if the party beats any of his or her offers, double costs will flow from the date of the beaten offer. [ 99 ] Settlement is to be encouraged, and the use of the compromise provisions of the Rules of Court is an important way to increase cost recovery if the other side gambles and loses. [ 100 ] As pointed out by Dr.

Jones, this can be inferred from Spartek v Brown , 2015 ABQB 190 . [ 101 ] The only qualification on the recovery of double costs for beating an offer of settlement under Rule 4.29 is if the offer is not a genuine offer of compromise, following Phillips v Nagy , 2007 ABCA 58 . Dr. Phan does not argue that any of the offers were not “genuine offers”. He does suggest that the initial offer was deficient in that it did not deal specifically with Dr. Phan’s counterclaim. I have dealt with that objection above.

He also argues that the offers should not be considered or treated as genuine offers because the first two were made before all records had been produced, and there had been difficulties in getting Dr. Jones to produce all of his records. [ 102 ] There is no principle that offers of settlement can only be made after certain steps in a lawsuit have been taken, let alone completed. It is not uncommon for an offer to be made by the defendant before the defendant has even filed a statement of defence. There is no merit to this argument. [ 103 ] I find that Dr.

Jones has made several genuine offers, all of which were beaten. He is entitled to double costs from the date of the first beaten offer, namely March 24, 2009. Conclusion [ 104 ] I find that both parties are equally responsible for the time this lawsuit took, but for the two-year period when Dr. Jones appears to have taken no steps. That is dealt with in my consideration of pre-judgment interest. No reduction in the award of costs in Dr. Jones’ favour is called for. [ 105 ] Dr.

Jones is entitled to judgment in the additional amount of $98.48, plus pre-judgment interest on that amount as calculated below. [ 106 ] Dr. Jones is entitled to pre-judgment interest on the net amount awarded to him as prescribed by the Judgment Interest Act up to two years before the date of my decision. [ 107 ] Dr. Jones is allowed two amounts of costs for filing affidavits of records. [ 108 ] Dr. Jones is not allowed costs for questioning in relation to the application where the Court directed that neither party should have costs. [ 109 ] Dr.

Jones is allowed the item for the amendment of pleadings application. [ 110 ] Dr. Jones is not allowed costs for the application where Master Wacowich gave the Defendants costs in any event of the cause. Indeed, Dr. Phan is entitled to deduct one application fee for that application from the amount of costs otherwise ordered in favour of Dr. Jones. Dr. Jones is not entitled to costs for the application where the Court directed that no costs were to be awarded to either party. [ 111 ] Dr. Jones is not entitled to second counsel fees for this litigation. [ 112 ] Dr.

Jones is allowed double costs for steps taken after March 24, 2009. [ 113 ] Dr. Phan is not allowed any costs of the proceedings, other than the one application fee discussed above. [ 114 ] In the end, Dr. Jones is only entitled to recover half of the total amount of costs of the litigation from Dr. Phan. There was only one lawsuit; only one trial. He had only one law firm representing him at a time. To the extent that there are cost items relating to both defendants (such as pleadings and the trial), Dr. Jones is entitled to half of those amounts, as the other half would be Dr. Gerosa’s responsibility.

To the extent that costs can be easily identified with Dr. Phan (such as for discoveries or questioning), Dr. Jones would be entitled to the full amount. [ 115 ] Dr. Jones has been the net winner of this application, but taking into consideration he has only been partly successful, he is entitled to only one set of costs for it (not to be doubled). Heard on the 7 th through the 11 th days of March, 2016. Dated at the City of Edmonton, Alberta, this 2 nd day of November, 2016.

Robert A. Graesser J.C.Q.B.A. Appearances: Edward R. Feehan and Erin Burton Duncan Craig LLP for the Plaintiff Kim Wakefield, Q.C. and Omolara Oladipo Dentons Canada LLP for the Defendant Phan