Amik Oilfield Equipment & Rentals Ltd v Whitecap Resources Inc, 2017 ABQB 45

Court of Queen’s Bench of Alberta Citation: Amik Oilfield Equipment & Rentals Ltd v Whitecap Resources Inc, 2017 ABQB 45 Date: 20170124 Docket: 1501 08382 Registry: Calgary Between: Amik Oilfield Equipment & Rentals Ltd. Plaintiff - and - Beaumont Energy Inc., Beaumont Energy Inc. carrying on business as Whitecap Resources Inc. and Whitecap Resources Inc. Defendants _______________________________________________________ Memorandum of Decision of J.L.

Mason , Master in Chambers _______________________________________________________ [ 1 ] In reasons dated November 7, 2016, I assessed damages for breach of contract in the amount of $486,165.12. The parties were unable to reach agreement as to costs of the action and chose to submit written argument in this regard. [ 2 ] For the reasons that follow, I award costs to the plaintiff in the amount of $9,750 inclusive of disbursements.

June 18, 2015 offer [ 3 ] By letter dated June 18, 2015 marked “without prejudice”, Amik offered two options to resolve the dispute: Whitecap could pick up the units and pay the agreed price, or pay a restocking fee of $245,419.34 plus GST. Amik also sought a further $46,192.91 plus GST for further services and product supplied. If neither option were accepted, Amik advised it would commence an action, and enclosed an unfiled copy of a statement of claim. The offer remained open until June 30, 2015.

June 1, 2016 offer [ 4 ] Following its successful

summary judgment application, and prior to the damages hearing, Amik issued a further offer to Whitecap, by letter dated June 1, 2016. It too was marked “without prejudice” and again offered two options: take delivery of the units at the agreed price, or pay $300,000 in exchange for a discontinuance without costs and a release. The offer remained open until June 6, 2016, the day before questioning of Amik’s president and chief executive officer on damages. [ 5 ] Amik seeks a doubling of its claimed

Schedule C fee items from the outset of the action. It refers to rule 4.29, as well as Calderbank v Calderbank , [1975] 3 All ER 333 (CA) . Entitlement to and manner of awarding costs [ 6 ] Rule 10.29(1) sets out the general rule: a successful party to an application, proceeding or action is entitled to a costs award against the unsuccessful party, and the unsuccessful party must pay the costs forthwith, subject to the court’s general discretion under rule 10.31. [ 7 ] Rule 10.31(1) provides that after considering the matters described in rule 10.33, the court may order one party to pay another party, as a costs award, one or a combination of the following: (

a) the reasonable and proper costs that a party incurred to file an application, to take proceedings or to carry on an action ... or (

b) any amount that the Court considers to be appropriate in the circumstances, including, without limitation, (

i) an indemnity to a party for that party’s lawyer’s charges, or (ii) a lump sum instead of or in addition to assessed costs. [ 8 ] Rule 10.31(3) states that in making a costs award under subrule (1)(a), the court may order any one or more of the following: (

a) one party to pay to another all or part of the reasonable and proper costs with or without reference to

Schedule C … ; (

b) one party to pay to another an amount equal to a multiple, proportion, or fraction of an amount set out in any column of the tariff in Dvision 2 of

Schedule C...or an amount based on one column of the tariff, and to pay to another party or parties an amount based on amounts set out in the same or another column; (

c) one party to pay to another party all or part of the reasonable and proper costs with respect to a particular issue, application or proceeding or part of an action; (

d) one party to pay to another a percentage of assessed costs, or assessed costs up to or from a particular point in an action. Rule 10.33 – factors to consider in making a costs award [ 9 ] Rule10.33(1) lists factors relating to the litigation that a court may consider in making a costs award: (

a) the result of the action and the degree of success of each party; (

b) the amount claimed and the amount recovered; (

c) the importance of the issues; (

d) the complexity of the action; (

e) the apportionment of liability; (

f) the conduct of a party that tended to shorten the action; (

g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate. [ 10 ] Rule 10.33(2) goes on to list some factors the court may consider relating to the conduct of the parties: (

a) the conduct of a party that was unnecessary or that unnecessarily lengthened or delayed the action or any stage or step of the action; (

b) a party’s denial or refusal to admit anything that should have been admitted; (

c) whether a party started separate actions for claims that should have been filed in one action or whether a party unnecessarily separated that party’s defence from that of another party; (

d) whether any application, proceeding or step in an action was unnecessary, improper or a mistake; (

e) an irregularity in a commencement document, pleading, affidavit, notice, prescribed form or document; (

f) a contravention of or non-compliance with these rules or an order; (

g) whether a party has engaged in misconduct. The compromise rules

[ 11 ] Rule 10.31(6) provides that the discretion under the rule is subject to any specific requirement of the rules about who is to pay costs and what costs are to be paid. [ 12 ] Rule 4.24(1) provides: 4.24(1) At any time after a statement of claim...is filed, but 10 days or more before (

a) an application for judgment by way of a

summary trial is scheduled to be heard, (

b) a trial is scheduled to start, or (

c) an application is scheduled to be heard or considered, one party may serve on the party to whom the offer is made a formal offer to settle the action or a claim in the action. [ 13 ] Rule 4.24(2) sets out some requirements: 4.24(2) To be valid a formal offer to settle must be made within the period described in subrule (1), be in Form 22 and include the following information: (

a) the name of the party making the offer; (

b) the name of the party or parties to whom the offer is made; (

c) what the offer is and any conditions attached to it; (

d) whether or not the amount of the offer is inclusive of interest, and, if not, to what date and at what rate interest is payable under the terms of the offer; (

e) whether or not the amount of the offer is inclusive of costs , and, if not, the amount or scale of the costs and the date to which they are payable under the terms of the offer; (

f) the requirements that must be complied with to accept the offer; (

g) a form of acceptance of the offer; (

h) notice of the costs consequences specified in rule 4.29... [ 14 ] Rule 4.29(1) states: 4.29(1) Subject to subrule (4), if a plaintiff makes a formal offer to settle that is not accepted and subsequently obtains a judgment or order in the action that is equal to or more favourable to the plaintiff than the offer, the plaintiff is entitled to double the costs to which the plaintiff would otherwise have been entitled under rule 10.31(1)(a) … for all steps taken in relation to the action or claim after service of the offer, excluding disbursements. [ 15 ] Rule 4.29(4) provides that: 4.29(4) This rule does not apply (

a) if costs are awarded under rule 10.31(1)(b), (

b) in the case of a formal offer to settle made with respect to an application for judgment after a

summary trial, if the offer is made less than 10 days before the date scheduled to hear the application for judgment, (

c) in the case of a formal offer to settle made with respect to any other matter, if the offer is made less than 10 days before the date scheduled for the trial to start, (

d) in the case of a formal offer to settle that is withdrawn in accordance with rule 4.24(4)… (

e) if in special circumstances the Court orders that this rule is not to apply. Calderbank Offers [ 16 ] A defining feature of a Calderbank v Calderbank offer of settlement is that if it is not accepted, the party making the offer reserves the right to disclose non-privileged communications about costs to the court: EAD Property Holdings

(103) Corp. v Greyhound Canada Transportation ULC , 2015 ABQB 425 at paragraph 35 , citing Holzicki Estate v Alberta (Public Trustee) , 2009 ABQB 260 .

Costs award [ 17 ] Given that Amik’s June 8, 2015 offer was issued prior to the commencement of the action, it does not qualify as a formal offer within the meaning of the compromise rules and thus the doubling consequence of rule 4.29 is not automatically engaged. Nor is it clear from the offer that it will not be privileged at the costs stage. However, this offer may still factor into the costs award: see for example, Botan (Botan Law Office) v. St.

Amand , 2012 ABQB 260 at paragraphs 78-82 , aff’d 2013 ABCA 22 . [ 18 ] It is true that Whitecap had only taken over Beaumont a few months prior to receiving the June 18, 2015 offer. However, Whitecap was well aware of Amik’s claim. Whitecap’s Brad Jennings had engaged in discussions with Amik’s Mr. Duhaime in April of 2015 and had rejected an offer to pay a restocking fee at that time. [ 19 ] The June 1, 2016 offer was issued after the statement of claim was issued, but lacks other requirements of rule 4.24(2), such as the notice of the costs consequences specified under rule 4.29.

It similarly does not indicate that it will be referenced at the costs stage. Again, however, this offer may still factor into the costs award. [ 20 ] It seems to me that Amik made two reasonable and genuine offers of compromise, prior to and after the commencement of the action, and gave Whitecap a reasonable period of time to consider each.

Each carried the possibility of resolving the matter for significantly less than the full amount claimed and a savings of further costs. [ 21 ] Whitecap argues that the sequence of hearings in this matter and the need for written submissions should disentitle Amik to any costs. [ 22 ] Amik brought its application for

summary judgment in morning chambers. Whitecap argued that a special hearing was necessary and the Court agreed. The Court directed further evidence and briefing to assess whether damages could also be awarded without the need for trial. That hearing took place following questioning on damages as per Whitecap’s request, and a damages award was made, following written submissions and lengthy oral submissions by both parties. The submissions following the hearing were required due to the positions taken by both parties at the hearing, and a subsequent dispute as to the form of order.

The outcome of the two special hearings is that Amik has been awarded judgment and saved a trial. [ 23 ] Whitecap’s approach on the mistaken reference to “September” in the statement of claim and the naming of the plaintiff with “Inc” rather than “Ltd”, and its late provision of additional affidavit evidence (all referenced in prior judgments) increased the time and cost of these proceedings. [ 24 ] Amik is entitled to the fee items claimed with two exceptions. Item 3(2) (review of opposite party documents) is excluded as Whitecap did not serve an affidavit of records.

A total of $1500 is granted for fee items 5(1) and (2) (preparation and attendance at questioning) as full questioning was not conducted. Amik defended cross-examination on the affidavit in support of

summary judgment and questioning of its representative on the subject of damages only. The total fees awarded are $6000. In all the circumstances Amik is also entitled to an enhancement of costs in the amount of $2000. Typical disbursements and other charges have been claimed totalling $1322.40 plus GST, but Whitecap points out that no internal records, invoices or other particularization have been provided. To avoid further time being spent on this, disbursements are set at $1000. [ 25 ] The parties chose to make relatively brief costs submissions in writing so as to avoid a further hearing.

Amik seeks costs of $2000 for its submissions. Amik received enhanced costs but not the double costs it sought, nor all of the fee items claimed. Whitecap asserted no costs should be payable. In all the circumstances, Amik is entitled to further costs of $750 inclusive of disbursements. [ 26 ] All costs are payable forthwith as per the general rule. Written submissions received January 3, 2017 (Amik) and January 9, 2017 (Whitecap). Dated at the City of Calgary, Alberta this 24 th day of January, 2017 . J.L. Mason M.C.C.Q.B.A. Appearances:

Johanna C. Price Peacock Linder Halt and Mack LLP for the Plaintiff Christian J. Popowich Code Hunter LLP for the Defendants