Woodbridge Homes Inc v Andrews, 2019 ABQB 968

Court of Queen’s Bench of Alberta Citation: Woodbridge Homes Inc v Andrews, 2019 ABQB 968 Date: 20191218 Docket: 1103 03674 Registry: Edmonton Between: Woodbridge Homes Inc Plaintiff/Defendant by Counterclaim - and - Josephine Andrews Defendant/Plaintiff by Counterclaim _______________________________________________________ Memorandum of Decision on Pre-Judgment Interest and Costs of the Honourable Mr. Justice S. N.

Mandziuk _______________________________________________________ Background Facts [ 1 ] On August 1, 2019, I issued my Memorandum of Decision with respect to the substantive issues between the parties that were tried before me for approximately 14 days: Woodbridge Homes Inc v Andrews , 2019 ABQB 585 [ Trial Decision ]. [ 2 ] In the Trial Decision, I granted the Plaintiff judgment against the Defendant in the amount of $46,490.60.

The judgment was grounded in a quantum meruit claim related to third-party out of pocket expenses that the Plaintiff incurred with respect to work and material costs arising from the placement of the Defendant’s mobile home on a parcel of land. [ 3 ] I dismissed the balance of the Plaintiff’s claim, which was for rent connected to a different property, breach of contract and other relief. Additionally, I ordered that the Plaintiff’s Builder’s Lien and Certificate of Lis Pendens be discharged forthwith from title to the Defendant’s land.

[ 4 ] The Defendant had filed a Counterclaim but withdrew it during the trial. [ 5 ] Since the Trial Decision was issued, the parties have been unable to settle the terms of my judgment. They disagree on pre- judgment interest and costs. [ 6 ] I did not expressly award statutory judgment interest in the Trial Decision. [ 7 ] On costs however, I ruled that the parties would each bear their own costs, except for $1000 that was to be paid to the Defendant by the Plaintiff due to late document disclosure.

The Positions of the Parties [ 8 ] On December 27, 2017, a few weeks before trial, the Defendant offered to settle the matter in its entirety by paying the Plaintiff $50,000 “all inclusive, in full and final settlement of its claim” along with a discontinuance of her Counterclaim.

The offer was made “without prejudice except as to costs” in accordance with the principle established in Calderbank v Calderbank , [1975] 3 WLR 586, 3 All ER 333 (Eng CA) . [ 9 ] Specifically, the Defendant reserved her right to reference the offer “in respect of any submissions as to costs.” [ 10 ] There is no dispute that this offer was properly served and there is no argument concerning its bona fides . [ 11 ] The offer was not accepted by the Plaintiff. [ 12 ] The offer was brought to my attention after the Trial Decision was rendered.

The Defendant seeks costs from the date of the offer to the end of the trial in the amount of $34,566.59 based on Column 3,

Schedule C of the Alberta Rules of Court , Alta Reg 124/2010 . [ 13 ] The Plaintiff refutes the Defendant’s position on costs and seeks interest on my judgment, pursuant to the Judgment Interest Act , RSA 2000, c J-1 . [ 14 ] The Plaintiff argues that I am functus officio with respect to costs because the appeal period has expired without any appeal being filed and I have already decided costs in my written reasons. Therefore, the Plaintiff argues, I am not able to address costs at this point. [ 15 ] However, the Plaintiff argues that I am not functus officio on the question of judgment interest.

That is, the Plaintiff contends that I am still able to decide whether or not (and to what degree) pre-judgment interest should be awarded. [ 16 ] The Defendant appears to take no issue with the Plaintiff’s calculation of the total judgment, with interest, as being $51,187.81, but argues that judgment interest should not be awarded to the Plaintiff in full. [ 17 ] The Defendant asks me to exercise my discretion and refuse the Plaintiff’s request in whole or in part. Issues [ 18 ] I will deal with the issues in the following sequence: (

a) Am I functus officio with respect to costs or judgment interest? (

b) If I am not functus officio on the interest issue, is judgment interest payable? (

c) Does the existence of the Calderbank offer allow me to revisit my direction in the Trial Decision that the parties would each bear their own costs? Functus Officio Argument [ 19 ] The basis for the Plaintiff’s argument is that I have already given a ruling on costs in my Trial Decision. Therefore, I cannot make a further ruling on costs.

However, the Plaintiff maintains, given that I did not explicitly address judgment interest in my written reasons, I can proceed to make a ruling in that regard. [ 20 ] I disagree on the question of costs. [ 21 ] Although I have pronounced judgment in the Trial Decision, the judgment has not been entered. Under r 9.13 of the Alberta Rules of Court , the judge retains a broad discretion to vary a judgment until the judgment is entered. Rule 9.13 provides:

At any time before a judgment or order is entered, the Court may (

a) vary the judgment or order, or (

b) on application, and if the Court is satisfied there is good reason to do so, hear more evidence and change or modify its judgment ororder or reasons for it. [22] While Rule 9.13 allows a judge to vary a judgment on her or his own initiative, such action should only proceed unilaterallyon notice to the parties that a variation is contemplated, identifying the variation and with the parties being given an opportunity to makesubmissions: Paniccia Estate v Toal, 2012 ABQB 11 at para 34. [23] Graesser J stated in Evans v The Sports Corporation, 2011 ABQB 478 (at para 15) that “[r]eading the plain language of Rule9.13, I believe that I have extremely broad authority to do what I think is correct in [the] circumstances.” [24] Topolniski J reopened a judgment under Rule 9.13(

b) in 581257 Alberta Ltd v Aujla, 2011 ABQB 539, where an offer hadbeen made prior to the issuance of her decision, finding that this was a “good reason” within the meaning of the Rule. [25] The doctrinal operation of functus officio circumscribes the judge’s discretion after entry of the judgment. In Fas Gas Oil Ltdv JH Automotive Ltd, 2004 ABCA 120 at para 19, our Court of Appeal indicated: As a general rule a court has no power, even with the consent of all affected parties, to set aside or vary a final judgment or order after ithas been drawn up, signed by or on behalf of the court and entered.

The court is functus officio. There are exceptions. A court hasinherent jurisdiction at common law to vary a final judgment or order after it has been signed and entered in two situations: (1) wherethere has been a clerical mistake in drawing it up; and (2) where there has been error in expressing the manifest intention of the court . . .[emphasis added]. [26] The application here does not seek the correction of a “mistake or error in a judgment or order arising from an accident, slip oromission” that would fall within the ambit of r 9.12.

The application is to have costs addressed in light of an offer that was made withoutthe Court’s knowledge when the Trial Decision was rendered, and prior to entry of the judgment. [27] The issuing or giving of written reasons is not equivalent to the entry of judgment. [28] In R v Villeda, 2010 ABCA 410 at para 8, 502 AR 78, the Alberta Court of Appeal wrote: The distinction between the entry of judgment and the giving of reasons, as it relates to being functus, was discussed in Yukon TerritoryCourt of Appeal in R. v. Hummel, 2003 YKCA 3, 175 CCC (3d) 1.

The court stated at paras. 10-11: It has been definitively determined both in Ontario: R. v. H. (E.F.); R. v. Rhingo (1997), (ON CA), 115 C.C.C. (3d) 89(Ont.C.A.) and in British Columbia: R. v. Garcha, 2000 BCCA 550, that if the appeal has been heard on the merits and judgment hasbeen entered, the Court of Appeal has no power to re-open an appeal.... The court is functus officio on the entry of the judgment but not at the time reasons are issued: Rhingo, footnote 10 at p. 106. [emphasis in original]. [29] In the case at bar, I gave reasons in the Trial Decision.

I ordered that the parties would each bear their own costs. [30] However, a formal judgment has not yet been entered; and until that happens, this Court remains seized of the matter and isnot functus officio: R v Adams, (SCC), [1995] 4 SCR 707 at para 29; Busch v Busch, 2016 ABQB 184 at para 18; and Rv Villeda at para 7. [31] In addition, there is an exception to the functus officio doctrine where costs are involved: Saskatchewan Power Corporation vAlberta (Utilities Commission), 2015 ABCA 281 at para 10; and Rule 10.30(1)(c). [32] Rule 10.30(1)(

c) reads: 10.30(1) Unless the Court otherwise orders or these rules otherwise provide, a costs award may be made … (c)in respect of trials and all other matters in an action, after judgment or a final order has been entered. … […] [33] As such, this Court is not functus officio on the costs issue. Judgment Interest [34] I am also not functus officio with respect to pre-judgment interest. [35] Section 2(1) of the Judgment Interest Act, states: “[w]here a person obtains a judgment for the payment of money or ajudgment 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” [emphasis added]. [36] Section 2(3) of the Judgment Interest Act gives the Court a residual discretion with respect to interest awards: 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. [Emphasis added]. [37] The Plaintiff’s position is that it is entitled to judgment interest on the sum awarded: $46,490.60. The Defendant argues thatjudgment interest should not be awarded because of the Plaintiff’s conduct of this litigation, specifically delay attributable to thePlaintiff. [38] It is an understatement to say that litigation delay is viewed negatively by Alberta’s courts.

This point has been made manytimes, perhaps most emphatically by our Court of Appeal in Humphreys v Trebilcock, 2017 ABCA 116 at para 90, where it stated that“[l]itigation delay is a corrosive force in a free and democratic state committed to the rule of law.” [39] Litigation behaviour, including delay, can have an effect on a successful party’s entitlement to pre- judgment interest. It is notto be taken lightly or skated over by the Courts of this Province. Belzil J provided a useful

summary of the law in 321665 Alberta Ltd vExxonMobil Canada Ltd, 2012 ABQB 76 at para 24, indicating 16 factors for consideration in determining whether or not interestshould be granted for some period of time or at all.

These include the responsibility of the Plaintiff to move the action along with“reasonable diligence.” [40] Belzil J also noted in 321665 Alberta Ltd that the right to interest is prima facie and that it can be reduced “for compellingreasons” as “[t]he goal is to be fair to all parties which involves a consideration of all of the circumstances and a balancing of interests”:(at para 24(4)). [41] Here, the parties each point to the other’s delay. The Defendant says that the Plaintiff’s conduct resulted in delay. ThePlaintiff responds with its own arguments about the Defendant’s delay.

One could observe that the reason that this trial was bifurcated inthe first place related to both counsel (or other counsel in their respective firms) significantly underestimating the amount of time thatwould be required for trial. [42] There are cases in which Courts have exercised their discretion and reduced or varied pre-judgment interest because of delay,based on the underlying purpose of

section 2 of the Judgment Interest Act. Verville J, in Cornelson v Alliance Pipeline Ltd, 2015 ABQB152 at para 25, commented: The policy behind s. 2 is to encourage promptness and to penalize delay. Therefore, courts will reduce pre-judgment interest where therehas been undue delay in advancing the lawsuit: Rayani v Yule & Co (Hong Kong) (1996), 1996 ABCA 35 , 178 AR 231,[1996] AJ No 27 (CA).

Pre-judgment interest has also been denied for lying and exaggerating, for withholding evidence and givingfaulty evidence, and other forms of misconduct: WA Stevenson, JE Côte, Civil Procedure Encyclopedia (Edmonton: Juriliber, 2003) at51-12 and cases cited therein. [43] In Meehan v Holt, 2011 ABQB 110, Sullivan J held that the Plaintiff’s delay operated to reduce a pre-judgment interestaward. He observed that “[t]here is an onus on the Plaintiff to move the action forward, and many mechanisms available to the Plaintiffto do so.

Unnecessary delay drives up costs, and impacts on access to justice” (at para 23). [44] The onus is on the Defendant as it seeks to rebut a prima facie entitlement to pre-judgment interest. I do not have evidencebefore me on this application, but I can consider the procedural record. On that basis, I am not convinced, on a balance of probabilities,that there are “compelling reasons” to deprive the Plaintiff of pre-judgment interest.

I am unable to find that either party was exclusivelyor predominantly responsible for the delay of this action to such a degree that it would affect the presumptive interest award. [45] Accordingly, the Plaintiff is entitled to interest on the amount awarded. The Plaintiff was deprived of money that it paid tothird parties, and the Defendant has had the benefit of goods and services obtained from those third parties for a number of years. [46] In the Trial Decision, I designated a specific judgment amount for each third-party expense.

It is tempting to indicate thatjudgment interest will run from the date of payment of each third party. However, I am concerned that the next debate will be aboutwhen each third party was paid. Additionally, the records kept by the Plaintiff were incomplete, and one might even say, casual. [47] Therefore, I am exercising my discretion to have pre-judgment interest on the amount of $46,490.60 run from August 31,2010 to the date that my decision was issued: August 1, 2019. [48] That award to the Plaintiff is granted.

Costs and the Calderbank Offer [49] As noted above, I am not functus officio on the question of costs; and consequently, not disqualified from addressing the costs

issue. [50] Rule 10.29 sets out the general default rule regarding costs. The successful party in an action is entitled to a costs awardagainst the unsuccessful party, payable forthwith, subject to the Court’s general discretion (Rule 10.31) and some other qualificationswhich are not relevant here. [51] I directed in my written reasons that the parties were to bear their own costs. There was mixed success.

The Plaintiff recoveredonly part of its claim. [52] Rooke J (as the then was) stated in McAteer v Devoncroft Developments Ltd, 2003 ABQB 425 at para 1 (fn 2) that“Calderbank Offers allow a party to make a settlement offer without prejudice to the issues at trial, while giving the party making theoffer the right to refer to it on the issue of costs.” [53] Although it is persuasive, Calderbank is not binding authority on this Court.

These offers are “available and should be arelevant consideration” in the exercise of the Court’s discretion in determining costs: Horizon Resource Management Ltd v BlazeEnergy Ltd, 2013 ABCA 139 at para 91. [54] Our Court of Appeal in Horizon Resource Management Ltd (citing Fullowka v Royal Oak Ventures Inc, 2008 NWTCA 9 atparas 23-24) referred to Calderbank offers as “one weapon in the case settlement arsenal” and directed that “[c]ourts should not restrictways in which parties may try to settle with cost consequences” (para 93).

The Court cited its decision in Mahe v Boulianne, 2010ABCA 74 at para 10: [T]he Rules of Court do not specify that any particular form of offer is required to trigger its costs consequences, and an offer need notmake reference to costs.”: para 10. Offers that do not comply with the Rules can have an effect on costs.

These do not restrict the court’sdiscretion over costs, but are a relevant consideration. [55] Offers to settle, both formal and informal, are consistent with foundational r 1.2 which emphasizes timeliness, costeffectiveness and, notably the intention of the rules “to encourage the parties to resolve the claim themselves, by agreement, with orwithout assistance, as early in the process as practicable” (Rule 1.2(2)(c)). [56] Doubling of costs is not automatic or presumed with Calderbank offers, but such an offer is relevant to the Court’s exercise ofits wide discretion over costs: Bruen v University of Calgary, 2019 ABCA 275 at para 7.

The effect of an informal offer on the award ofcosts is in the discretion of the trial judge (Paniccia Estate v Toal, 2012 ABCA 397 at para 145). [57] I directed that there be no costs awarded. I have a broad discretion, to be exercised judicially, with respect to awards of costs(Pharand Ski Corp v Alberta (1991), (AB KB), 81 Alta LR (2d) 304 (QB) at 398). This discretion includes directingthat there be no costs awarded, where there has been mixed success, as there was here.

That discretion is informed, but not fettered, bythe existence of a Calderbank offer. [58] Contrary to the Defendant’s argument, a Calderbank offer does not automatically “trigger a costs award”: Defendant’sWritten Brief at para 13. In this regard, the Alberta Court of Appeal in Bruen at para 7, commented as follows: Rule 14.59 provides for the doubling of costs when a formal offer to settle an appeal is made, and the party making the offer achievesgreater success on the appeal.

Informal offers, such as Calderbank offers, are also relevant to costs, although doubling is not automaticor presumed: Koma v Tomich Estate, 2011 ABCA 257 at para. 6, 70 ETR (3d) 1.

Where informal offers are involved, the court has awide discretion over costs, and there is no “one-size fits all” response to nominal offers to settle: [Carroll v ATCO Electric Ltd, 2018ABCA 186 at para 3, 68 Alta LR (6th) 302] (emphasis added). [59] Also, these costs rules “are not to be used as a mere stratagem for doubling costs”: Allen (Next Friend of) v UniversityHospitals Board, 2006 ABCA 101 at para 16, 384 AR 23. [60] Given the mixed success of the parties, I maintain my order regarding costs.

Each party will bear their own costs. [61] In any event, I note that the final, total amount of the judgment – when calculated with the pre-judgment interest that I haveawarded – exceeds the $50,000 all-inclusive sum offered by the Defendant (according to the Plaintiff’s calculation). Thus, even if theCalderbank offer gave the Defendant a substantive right to costs, the total sum of the judgment award plus the pre-judgment interestamount beats the Defendant’s Calderbank offer. In other words, the Defendant’s all-inclusive Calderbank offer was not more favourablethan the final judgment awarded in this action.

Put differently, the Calderbank offer here did not beat the judgment amount ultimatelyawarded in this case. [62] The Defendant made an alternative argument that even if judgment interest is payable, the amount of $51,187.81 is “still notbetter than $50,000 and avoiding the costs of a ten (10) day trial” at least in part because of the costs of transcripts and experts. I take thisto be a wholistic assessment of costs, which includes not only the liquidated sum but other amounts that were expended in bringing thismatter to trial.

I see no merit in that argument, given that the Defendant’s Calderbank offer was made on an all-inclusive cash basis, noton the basis of non-cash consideration. [63] The Defendant’s alternative argument – that the amount of “$51,187.81 is still not better than $50,000” – would potentiallycreate a slippery slope as to what would constitute a “better” or “more favourable” offer or judgment. Is it, hypothetically, one dollarabove the offer, or a few hundred dollars or an amount up to a million dollars that would determine whether or not the judgment is morefavourable or better than the offer?

This sort of uncertainty would serve to undermine the court-endorsed purpose of settlement offers,including those made under Calderbank. Conclusion

[ 64 ] The Plaintiff shall have pre-judgment interest on the judgment of $46,490.60, pursuant to the Judgment Interest Act , from August 31, 2010 to and including August 1, 2019. [ 65 ] My ruling on costs stands. Each party will bear their own costs, notwithstanding the Defendant’s Calderbank offer, dated December 27, 2017. [ 66 ] The parties will beach bear their own costs of this application. Heard on the 23 th day of October, 2019. Written Submissions filed October 25 and November 6, 2019 Dated at the City of Edmonton, Alberta this 18 th day of December, 2019. S. N. Mandziuk J.C.Q.B.A.

Appearances: Alexander Yiu Ackroyd LLP for the Plaintiff/Defendant by Counterclaim Tarryn Klapper Main Street Law LLP for the Defendant/Plaintiff by Counterclaim