Cass Lintott Professional Corporation v Edmund H Schuster Professional Corporation, 2017 ABQB 531

Court of Queen’s Bench of Alberta Citation: Cass Lintott Professional Corporation v Edmund H Schuster Professional Corporation, 2017 ABQB 531 Date: 20170831 Docket: 1301 03601 Registry: Calgary Between: Cass Lintott Professional Corporation Plaintiff - and - Edmund H. Schuster Professional Corporation, Sinclair Schuster Bruce & Fair LLP, Bradley Sinclair Professional Corporation, Calum John Bruce, Charles F. Fair Professional Corporation and Charles Frederick Fair Defendants - and - Edmund H. Schuster Professional Corporation Plaintiff by Counterclaim - and - Cass Lintott Professional Corporation, Cass Lintott and Cassandra Lintott Defendants by Counterclaim

_______________________________________________________ Memorandum of the Honourable Mr. Justice J.T. Eamon _______________________________________________________ Introduction [ 1 ] This memorandum settles the formal order and provides additional directions on costs for the appeal by Edmund H. Schuster Professional Corporation (Schuster PC) from the decision of Master J. L. Mason to summarily dismiss portions of a counterclaim filed by Schuster PC against the Defendants by Counterclaim. [ 2 ] The claim arose from the dissolution of a law partnership.

Master Mason struck out the parts of the counterclaim alleging civil conspiracy among the defendants by counterclaim and knowing assistance in breaching a fiduciary obligation owed by Cass Lintott Professional Corporation (Lintott PC) to Schuster PC. [ 3 ] The appellant alleged, for the first time on the appeal, that the individual defendants by counterclaim induced a breach of contract or unlawfully interfered with economic relations, and that Mr. Lintott was liable for obligations of Lintott PC under

section 133 of the Legal Profession Act , RSA 2000, c. L-8 as discussed in Horst Tyson Dahlem Professional Corporation v John F Schneider Professional Corporation (Canmore Legal Services) , 2017 ABCA 97 . [ 4 ] On May 23, 2017 I delivered oral reasons for decision. In the result, I agreed with Master Mason’s decision. I dismissed the appeal, other than to direct Mr. Lintott remain a party to the counterclaim only with respect to alleged liability under

section 133 of the Legal Profession Act . This point was not argued before Master Mason. I made clear in my decision that I made no finding that Mr. Lintott is personally liable for any obligations of Lintott PC. [ 5 ] I also said in my oral reasons that I did not determine whether any formal amendments to the pleadings were necessary to pursue the

section 133 claim. I said I leave that issue to the parties. I contemplated that if they could not agree, in view of the decision of Côté JA in Balm v 3512061 Canada Ltd , 2003 ABCA 98 at para 11 whether a formal amendment was necessary, they could resolve that by application in the ordinary course. (Also, the parties should understand that the

section 133 allegation is to be determined on the portions of the pleadings that have not been struck out – it is not an indirect means to reassert the allegations of wrongdoing that have been struck out.) [ 6 ] As to costs, I directed that

(1) Ms. Lintott recover costs of the appeal, on column 4 of

Schedule “C” subject to disclosure of any formal settlement offers, (2) the costs of the

summary judgment application awarded by Master Mason should not be disturbed,

(3) Mr. Lintott and Lintott PC should recover 75% of the costs of the appeal, and (4) the parties could send written submissions or arrange a further date to speak to whether the Court could set aside Mr. Lintott’s recovery of the entire costs of the action from Schuster PC. [ 7 ] I received written submissions, and have taken them as meaning the parties have elected to forego a further attendance and want the remaining matters resolved on their written submissions. Formal order [ 8 ] Lintott PC and Mr. Lintott submitted a form of order. Schuster PC disputes some of its provisions. [ 9 ] Counsel for Schuster PC says I decided that Mr. Lintott was liable under

section 133 of the Legal Profession Act and the only remaining issue was about quantum. [ 10 ] I was hearing an appeal from a

summary dismissal of Shuster PC’s claims. I said that Mr. Lintott’s argument did not meet the standard for

summary dismissal. I did not say that Mr. Lintott was liable. [ 11 ] Para 2 of the form of order will read: Mr. Lintott shall remain a party to the counterclaim only with respect to the allegation that he is liable for obligations of Cass Lintott Professional Corporation under

section 133 of the Legal Profession Act , RSA 2000, c. L-8. The Court makes no finding on this appeal that Mr. Lintott is liable on this claim.

The Court does not determine on this appeal whether any formal amendments to the pleadings are necessary to assert this claim, and the parties may apply to a Master in Chambers to resolve any dispute over any proposed amendments. [ 12 ] Although not mentioned by counsel, the formal order should recite the particulars (judicial officer and date) of the decision appealed from. [ 13 ] Although not mentioned by counsel, the Court is concerned with the recital purporting to identify all the materials relied on in the appeal.

The appeal record in this proceeding was voluminous, and had become somewhat repetitive and fragmented because some parties relied on a series of affidavits which had been filed over the years in relation to other applications on the file. Each party outlined in its brief which materials they relied on. There was no joint statement from counsel of what the appeal record comprised. I could not

locate some of the documents on the Court file. This was discussed at a further hearing on April 19, 2017 and subsequent correspondence among counsel and the Court. There was even a dispute after the parties appeared to argue the appeal, whether a party could rely on its answers in pre-trial questioning in view of Rule 5.31 of the Alberta Rules of Court. (In my oral reasons, I stated I had read the passages from the questioning, and that having reviewed all the evidence they were not material to my findings and not material evidence.) [ 14 ] It is unusual to describe the records in such detail in a formal order.

Given the history of disputes between Schuster PC and Lintott PC/Cass Lintott over details in this litigation, I direct that (

a) if both sides want a detailed list of the appeal record materials then both counsel must review the April 19, 2017 proceedings and following correspondence to ensure the recital is in accordance with those discussions, so that the Court can sign the order without direct verification, and each will approve the final form of order as the order made, and (

b) if there is any disagreement over the recital, the parties will substitute the detailed recital with a statement that “the Court has reviewed the materials submitted by the parties”. Costs [ 15 ] Schuster PC says it understands I awarded 75% of the appeal costs to Mr. Lintott and Schuster PC was to receive a 25% award. Mr. Lintott says I ordered that he recover 75% of his costs and no award was made to Schuster PC. [ 16 ] I did not say that Schuster PC was awarded costs. The Court has a wide discretion to decide who should bear the costs. Not all parties recover costs where success was divided.

An example is the recent appeal in Dahlem , where successful appellants were ordered to pay the costs of the appeal where their success was limited. [ 17 ] This was a case of divided success. Schuster PC advanced 6 legal theories in support of its appeal from

summary judgment: predominant purpose conspiracy; conspiracy to injure the plaintiff by counter claim by unlawful means; knowing assistance in breaching a fiduciary obligation; inducing breach of contract; unlawful interference with economic interests; and, liability under

section 133 of the Legal Profession Act . Schuster PC succeeded on one ground,

section 133. [ 18 ] The very voluminous briefs were mainly devoted to the allegations that failed. The

section 133 ground was relatively simple. The appeal is a de novo hearing, so the onus remained on the moving party for

summary judgment (Lintott). The issue was mainly whether Lintott had shown that there was no merit to joining the shareholder of a professional corporation in relation to the winding up of the law partnership. There was not much effort required to ascertain the applicable law. The

interpretation of

section 133 is well established in Alberta. See the review of the applicable authorities by both the trial judge and the Alberta Court of Appeal in Dahlem . There were also some minor related points such as limitation periods and pleading requirements. [ 19 ] Mr. Lintott was substantially successful, including on all the most complex allegations and the hotly contested factual issues. Schuster PC was substantially unsuccessful, and raised numerous allegations and grounds that failed. I therefore reduced the amount Schuster PC had to pay to Mr.

Lintott/Lintott PC to recognize that Schuster PC succeeded on one relatively simple point. [ 20 ] Para 4 of the form of order will read: Costs of this appeal are awarded to Cass Lintott PC and Cass Lintott against Schuster PC, to be assessed on the basis of 75% of Column 4 of

Schedule “C”. [ 21 ] In my oral ruling on costs, I said the order will include a provision that the costs awarded by Master Mason relating to the

summary judgment applications remain as is. That is missing from the form of order submitted. It must be included in the order. [ 22 ] The parties dispute whether Mr. Lintott must refund the costs of the entire action recovered from Schuster PC. He recovered these costs because the action was dismissed against him. Schuster PC says he must refund them because the appeal was allowed in part and he remains a party. Mr. Lintott says the costs were settled so the Court should not disturb the settlement. [ 23 ] The parties attended before Master Mason on June 3, 2016 and received directions on costs. Mr.

Lintott’s counsel was to submit a revised bill of costs in accordance with the directions. Mr. Chiu submitted a revised bill of costs for $16,473.46 on June 8, 2016. [ 24 ] That did not resolve the disagreements. Schuster PC asserted several adjustments mentioned in Mr. McConnell’s letter dated June 30, 2016. Schuster PC eventually tendered $7899.40, with a letter indicating that amount represented the costs Schuster PC considered were owing pursuant to Master Mason’s ruling and Schuster PC was tendering the funds to comply with a time deadline to pay.

The letter said the funds were sent without condition, other than “they are sent without prejudice to my client’s position that it is entitled to an award of costs of the proceedings related to the costs claimed by Mr. and Mrs. Lintott”. The condition appears to mean that Schuster PC was paying Mr. Lintott but reserved the right to claim those costs against Lintott PC in the ongoing proceedings. [ 25 ] The matter was not returned to Master Mason. [ 26 ] There is nothing in the materials that indicate that the costs arose from a negotiated compromise of issues.

Schuster PC was trying to comply with a costs direction from the court. [ 27 ] Mr. Lintott is no longer entitled to the costs of the action awarded by Master Mason as he remains a party to the action. It will be up to a trial judge in due course to decide how to apportion costs among the various parties after the result of the litigation is known. The order will provide: The award to Mr. Lintott for the costs of the action, other than the costs relating to the

summary judgment application, is set aside. The amount to be refunded by Mr. Lintott to Schuster PC is the portion of the items paid relating to the proceedings other than the

summary judgment application. Any items relating to both the action and the

summary judgment application are to be reasonably apportioned. If the parties cannot agree on the quantum of the refund, they are to arrange an attendance before Master Mason or, if required by her, an assessment officer to fix the amount.

[ 28 ] The parties submitted various other disputes over the costs claimed by Mr. or Ms. Lintott or Lintott PC in the appeal. They are resolved as follows: (

a) Ms. Lintott’s claim for one additional half day under item 8(1) to attend for judgment is allowed. Mr. Lintott’s claim for 75% of the same amount is allowed. The parties attended in Court twice following argument of the appeal (April 19 and May 23, 2017). They made submissions on the content of the record, received the oral reasons for decision, and made submissions on costs. It was necessary for counsel to attend on each occasion. A single additional fee for these two attendances is reasonable. (

b) The parties dispute whether the per page charge for photocopying is 15 cents or 25 cents. I allow 15 cents per page, in the absence of evidence justifying a higher amount. See Court of Queen’s Bench Costs Manual (online version), p 27-28. (

c) Ms. Lintott’s claim for the costs of binders and tabs is allowed for the sets of written submissions provided to the Court or other parties. See Court of Queen’s Bench Costs Manual (online version), p 16, 33. Any other costs in this category are not allowed because there is no reason other binders or tabs cannot be re-used. (

d) Ms. Lintott’s claim for parking for her lawyer is disallowed. The general rule is that a client is responsible for placing their lawyer at the place of hearing at their expense. See Court of Queen’s Bench Costs Manual (online version), p 23, 26, 34. There is no reason to depart from the general rule in this case. Counsel are expected to come to the court house to argue cases, and getting there is part of their overhead. (

e) The parties are directed to prepare bills of costs complying with my directions, and submit them to an assessment officer in the event of any further disagreement. [ 29 ] There are no costs awarded for these proceedings to settle the terms of the order and obtain the additional directions on costs. Written submissions dated the 9 th and 14 th days of June, 2017. Dated at Calgary, Alberta this 31 st day of August, 2017. J.T. Eamon J.C.Q.B.A. Appearances: Spencer Chimuk Burstall Winger Zammit for the Plaintiff by Counterclaim/Appellant Edmund H.

Schuster Professional Corporation Elmer Chiu Legal Centre For the Defendants by Counterclaim/Respondents Cass Lintott and Cass Lintottt Professional Corporation Robert O. Millard Millard Law for the Defendant by Counterclaim/Respondent Cassandra Lintott