Janela v Janela, 2017 ABQB 331

Court of Queen’s Bench of Alberta Citation: Janela v Janela, 2017 ABQB 331 Date: 20170517 Docket: 4803 171999 Registry: Edmonton Between: Ja-Neen Rae Janela Plaintiff/Applicant - and - Carlos Manuel Janela Defendant - and - Ryan's Concrete Pumping Ltd., Janela Group Inc., JRJ Concrete Ltd., and 1061795 Alberta Ltd. Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice B.R.

Burrows _______________________________________________________ [ 1 ] Ja-Neen Rae Janela seeks an order setting the amount payable pursuant to Rule 5.13(2) to the respondent corporations for the production of records which they have previously been ordered to produce in these proceedings. [ 2 ] The context is an action for the division of matrimonial property and for the determination of Carlos Manuel Janela’s income for child and spousal support purposes.

Ryan’s Concrete Pumping Ltd. [ 3 ] On January 23, 2017, Ackerl J. ordered Ryan’s Concrete Pumping Ltd., and two other corporations who are not respondents to this application, to produce records identified in the order to counsel for the Plaintiff. The order required that the records be produced within 30 days. The order did not address the recovery by Ryan’s of costs it might incur in complying with the order. [ 4 ] Ryan’s counsel produced the records on February 21, 2017 and March 2, 2017.

Ryan’s counsel advised Plaintiff’s counsel at the time the records were provided, among other things, that Ryan’s incurred significant expenses to assemble, generate and create the records its counsel produced. Later, Ryan’s counsel sent Plaintiff’s counsel its statements of account to his client, Ryan’s, for fees and disbursements in relation to attending to the production of the records as required by the order. The total of the accounts was $2234.67. The total disbursements included in the accounts as $38.25. [ 5 ] Ryan’s, though served with notice of this application, did not appear.

Janela Corporations [ 6 ] On January 23, 2017, Ms. Janela also applied for an order requiring the other respondent corporations to produce documents. That application was adjourned to be heard in special chambers. The adjourning order contemplated that costs of the application would be addressed at the special chambers hearing. [ 7 ] On February 28, 2017, Goss J., by a consent order, ordered the remaining respondents, which the order referred to collectively as the Janela Corporations, to produce records which were identified in the order. The consent order provided: 2.

The Janela Corporations shall provide a statement of costs to produce the records set out in paragraph 1 of this Order to the [Plaintiff]. The Janela Corporations shall produce the records for the Applicant within 30 days of receipt of payment for the production of the records. 3.

The [Defendant] shall be responsible to fully indemnify the Applicant for any disbursements associated with the records set out herein. [ 8 ] The February 28 order also provided that no costs would be payable by the Janela Corporations. [ 9 ] Prior to the commencement of this action, Carlos Janela, the Defendant, was a shareholder and director of the Janela Corporations. The other shareholders were his brothers. The other directors were his brothers and his parents. The commencement of this matrimonial property action triggered a provision in the USA requiring Mr.

Janela to sell his shares to one of the companies in the Janela organization and to resign as a director. [ 10 ] On March 5, 2017, counsel for the Janela Corporations, Mr. Hawreluk, advised Plaintiff’s counsel that the payment required from the Plaintiff prior to production of the records was $28,600.00. Mr.

Hawreluk broke that total down as follows: - Business Valuation $ 5,500 - Office time to find and copy records $ 4,600 - KPMG $ 3,500 - Bennett Jones LLP $15,000 Total: $28,600 [ 11 ] The Plaintiff submits that this cost claim was obviously unreasonable and that it was advanced as a continuation of the efforts of the members of the Defendant’s family, who control the Janela Corporations, to frustrate her matrimonial property claim.

Those efforts, she swears, were first evident in the Janela Corporations opposition to her application for the production of records prior to the resolution of that matter by means of the consent order. [ 12 ] The Janela Corporations have responded to this application with the affidavit of Viyan Janela, their controller and office manager. With regard to the records agreed in the consent order to be produced, she swears: The Records are not available electronically. They are boxed and in storage at Sentinel Storage located in Windermere, Edmonton, which is a 25 to 30 minute drive from JRJ’s office.

It is estimated that it will take 8 hours over 2 business days to travel back and forth to the storage facility, go through all of the boxes, and locate and retrieve the Records. The volume of records is extensive and includes approximately 360 charts of accounts with varied number of pages per account. The records in the boxes will then need to be reviewed, photocopied, re-packaged, transported back to storage, and re-organized in the storage unit. In total, it is estimated that the time involved to review the records in the boxes after they have been retrieved will be 32 hours.

As a result, the cost to obtain, review, produce and return the Records is $3800 ($95.00/hour x 40 hours) plus approximately $500 for photocopying. I estimate we will require at least one hour of our accountant, KPMG’s, time to produce records that the companies will not be able to locate. KPMG has advised that it will charge $350 per hour for its services. [ 13 ] Ms.

Janela also swears that the corporations have paid its counsel, Bennett Jones LLP, over $14,000 to represent them in these proceedings and claims reimbursement of that amount. [ 14 ] The total cost which the Janela Corporations represent they will incur in complying with the consent production order is therefore $18,883.28. This, they submit, is the amount Ms. Janela must pay before they are required to produce the documents.

[ 15 ] The original claim for $28,600 has thus been reduced to $18,883.28. Ms. Janela submits that this revised amount is also obviously unreasonable. [ 16 ] Mr. Janela’s position on this application is the same as Ms. Janela’s. The Amounts Determined by the Court [ 17 ] Rule 5.13 governs applications for the production by third party of records relevant to an action.

Rule 5.13(2) provides: The person requesting the record must pay the person producing the record an amount determined by the Court. [ 18 ] Counsel cited no authority as to the test the Court is to use in making the determination required by Rule 5.13(2) and I have not located any myself. [ 19 ] Rule 5.13(2) does not relate to the cost of opposing the application in which the production order was made.

Whether the costs of appearing and opposing the application should be payable by the applicant to the party ordered to produce documents, even though they were not successful in their opposition to the application, is a matter to be raised before the judge who grants the order for production. [ 20 ] The February 28 consent order dealt with application costs. It provided that the Janela Corporations would not be required to pay costs. In my view, it is fair to interpret the consent order as intending that Ms. Janela, the successful party, would not pay costs either.

Much of what the Janela Corporations now claim under Rule 5.13(2) is cost incurred in opposing the application and is therefore not properly the subject of an order under that Rule. [ 21 ] Rule 5.13(2) is intended to ensure that the non-party producing the records recovers the reasonable expense of producing them. [ 22 ] As to Ryan’s, its counsel sent an account to Plaintiff’s counsel which does not distinguish between the cost of Ryan’s receiving legal advice and services in relation to its complying with the production order and the cost of producing the documents.

Ryan’s has not availed itself of the opportunity to participate in this application. It has not sought to have the court determine the amount it should be paid under Rule 5.13(2). In my view, it is therefore appropriate that I determine the amount to be paid to it pursuant to Rule 5.13(2) to be nothing. [ 23 ] As to the Janela Corporations, a very substantial portion of the $18,883.28 it now claims relates to the costs of opposing the application which, as indicated, are not recoverable under Rule 5.13(2).

Also, the obviously inflated initial claim the Janela Corporations made ($28,000) makes it difficult to accept and rely upon its estimate of the cost it will actually incur in complying with the order. [ 24 ] Further, the fact that it has been necessary for Ms. Janela to make a Rule 5.13 application rather than to seek production of the documents from Mr. Janela results from the USA which put the documents out of Mr. Janela’s power and control. The USA required Mr. Janela to sell his shares and resign his directorship because of these proceedings. If the records had remained in Mr.

Janela’s power and control they would have been producible by him, at his cost, and reviewable by Ms. Janela without payment except by way of costs determined at the conclusion of the litigation. The cause of the company’s production expense is therefore, at least in some measure, the result of the internal arrangements the company members chose to put in place. In my view, this justifies limiting the amount payable by Ms.

Janela. [ 25 ] Lacking a reliable estimate of the actual cost and given the requirement in the consent order that the Rule 5.13(2) amount be paid before production, I determine the amount payable by Ms. Janela under Rule 5.13(2) to the Janela Corporations to be $500. [ 26 ] There will be no costs of this application payable by anyone to anyone. Heard on the 7 th day of April, 2017. Dated at the City of Edmonton, Alberta this 17 th day of May, 2017. B.R. Burrows J.C.Q.B.A. Appearances: Rhyannon L. O'Heron for the Plaintiff

Jordan Bienert for the Defendant David M. Hawreluk for the Respondents Janela Group Inc., JRJ Concrete Ltd., and 1061795 Alberta Ltd. Ryan’s Concrete Pumping Ltd. did not appear on the application.