Rath v 4th Street Holdings Ltd, 2021 ABQB 201

Court of Queen’s Bench of Alberta Citation: Rath v 4th Street Holdings Ltd, 2021 ABQB 201 Date: 20210317 Docket: 1601 15253 Registry: Calgary Between: Trevor Rath and Pamela Rath Plaintiffs - and - 4th Street Holdings Ltd carrying on business as Re/max Real Estate (Central), Michael Wood and Joel Semmens Defendants _______________________________________________________ Reasons for Judgment on Costs of the Honourable Madam Justice M.H. Hollins _______________________________________________________ [ 1 ] The Raths retained the Defendants in their purchase of a Kensington area townhouse in 2014.

After completion of the purchase and taking possession of their new home, the Plaintiffs came to believe that they had overpaid for the townhouse and that the Defendants had failed to provide them with information they needed to make a more prudent decision about the purchase. [ 2 ] After trial, I found that the Defendants were not liable for the alleged losses and dismissed the Plaintiffs’ claims. The parties cannot agree on costs. The successful Defendants are seeking costs of $67,940.59 whereas the Plaintiffs calculate the costs payable as $19,805.33.

The difference is primarily attributable to the treatment of a Formal Offer to Settle by the Defendants. [ 3 ] For the reasons that follow, I find that the Defendants are entitled to double their costs for all items following service of the Formal Offer to Settle on April 2, 2018 and that the “new”

Schedule “C” which came into effect on May 1, 2020 governs the calculation of party-party costs. However, those costs should be calculated on Column 2 of that

Schedule and with some adjustments as described herein.

Costs Generally [ 4 ] Under Rule 10.33(1) of the Alberta Rules of Court , I may consider the following 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. [ 5 ] It is important to remember that costs remain in the discretion of the trial judge. In this case, both parties agreed that costs should be referable to

Schedule “C” of the Alberta Rules of Court . While not automatic; McAllister v Calgary (City of) , 2021 ABCA 25 at paras 28-30 , I agree that here, application of that

Schedule results in a costs award that is both foreseeable and reasonable in the circumstances of this case and which adequately considers the applicable factors above, namely items (a) – (

d) inclusive. Which Schedule/Column Applies? [ 6 ] On May 1, 2020, the Alberta Rules of Court were amended to provide a new

Schedule “C” with increased amounts assessed for various steps in litigation. These higher fees were to apply effective May 1, 2020 “whether the activity described in the item happened before or after that date”. Both parties acknowledge this wording. However, the Defendant argues that the trial, and thus all steps in the litigation, were complete before May 1, 2020. If the judgment had been rendered before May 1, 2020 instead of in August, 2020, the former

Schedule would have applied. [ 7 ] While I appreciate that it may seem unfair to transition to a new and higher tariff simply because it took some months to render judgment following trial, the wording of the transition provision for the new

Schedule is clear. Amounts assessed on or after May 1, 2020 are to be calculated under the new

Schedule regardless of whether any or all of those steps occurred prior. To purport to apply the

Schedule and ignore that direction does not make sense. [ 8 ] Further, as pointed out by counsel for the Plaintiffs, the amounts under Column 2 of the new

Schedule and Column 3 of the old

Schedule (which would have been the appropriate column if I was using the old Schedule) are very close in quantum. [ 9 ] The Defendants argue that interest and costs should be added to the amount claimed in the Statement of Claim to put this assessment into Column 3 rather than Column 2. I disagree. Costs and interests are not in the nature of expressed, empirical claims which allow parties to know and assess their risks regarding litigation costs. The amount claimed at trial was $179,200, not appreciably different than what was claimed in the pleadings. [ 10 ] Accordingly, Column 2 of the new

Schedule should apply. The Defendants’ Formal Offer to Settle [ 11 ] On April 2, 2018, the Defendants’ made a Formal Offer to Settle to the then-unrepresented Plaintiffs to accept a Discontinuance of Action with no claim for costs i.e. a waiver of the Defendants’ costs to date. At that time, the Defendants’ taxable costs were $3,000. [ 12 ] On April 2, 2018, pleadings had closed and Affidavits of Records had been exchanged.

Prior to extending the Formal Offer, counsel for the Defendants wrote to the Plaintiffs to opine that the standard of care in similar cases was such that they were unlikely to be successful at trial. Sometime in May of 2018, while the Formal Offer was still open, the Plaintiffs retained counsel. No reply to the Offer nor any request to extend it was forthcoming. Questioning was conducted in July of that year. [ 13 ] Under Rule 4.29(3), the Defendants are entitled to double their recoverable costs under

Schedule “C” for each enumerated step taken after April 2, 2021. However, in the spirit of wide discretion regarding costs, there is a relatively long line of cases flowing from Allen v University Hospitals (Board) , 2006 ABCA 101 [ Allen ], which has held that a Formal Offer to Settle made under our Rules may not attract double costs if the offer is not genuine; Allen at para 13 . [ 14 ] First, the offer must be reasonable and realistic when given and while it remains open; Allen at para 14 . It should reflect what is known about the relative merit of the parties’ respective positions at the time it is made.

In other words, the ultimate result at trial is relevant but not determinative to whether the offer was realistic at the time it was made; Allen at para 17 . [ 15 ] Second, the offer must include an element of compromise; Allen at para 15 , although this requirement may be satisfied by a waiver of costs; Singh v Noce , 2018 ABQB 950 at para 35 . It cannot be merely a “no risk” litigation strategy to increase costs. The offeror must be giving something up that he or she might not ultimately be required to give up.

[ 16 ] Dealing first with the status of this action on April 2, 2018, as mentioned, pleadings had closed and documentary records had been exchanged. The Offer remained open to June 2, 2018 (Rule 4.24(3)(a)), during which time counsel for the Plaintiffs was retained and presumably began to prepare for the next step in the action, the Questioning.

While the Questioning itself took place in July, the Defendants had been seeking Questioning dates as far back as May, intimating that Plaintiffs’ counsel would have had some pressure to get up to speed on the claim relatively quickly. [ 17 ] Certainly, we can assume that not only did the Plaintiffs review Mr. Doyle’s letter dissuading them from proceeding but that their new counsel would have as well. His clients’ disclosure was complete as was the Defendants, including the contracts containing the exclusionary clauses that were at issue.

I therefore find that the Formal Offer was not extended so early in the process so as to obviate its purpose – to encourage reasonable settlement. Indeed, to say otherwise would invite the inference that parties must always incur the significant costs of completing Questioning before an offer could be binding under Rule 4.24, which would not advance the objective of the scheme. [ 18 ] Was the offer to waive $3,000 in sunk costs an element of compromise? I find that it was.

While there is no hard and fast rule about what amount would suffice – other than that a truly nominal amount will not – given the final taxable costs of this action to and including trial, the $3,000 is a sufficient element of compromise. [ 19 ] Accordingly, Rule 4.29(3) applies and the Defendants are entitled to double costs for all steps taken after April 2, 2018. Miscellaneous Line Items [ 20 ] The Defendants claim fees for 4 half-days of Questioning on the rationale that 4 witnesses were questioned, even though that took only 2 half-days.

While I do not wish to discourage efficiency in Questioning, 2 half-days are 2 half-days, regardless of how many witnesses are examined. [ 21 ] Next, the Plaintiffs quite correctly point out that “preparation for Questioning”, which is an addition to the types of compensable steps in the new Schedule, is not eligible for inclusion as a double costs item and must be charged as a single cost item. [ 22 ] I have confirmed that the trial was for 3 days, not 3.5 days. [ 23 ] Lastly, the Defendants claim double the tariff amount for the written briefs. The Plaintiffs object on the basis that I did not request briefs.

I am reminded by counsel that Plaintiffs’ counsel tendered his brief at the opening of trial and Defendants’ counsel sometime later in the trial. Notwithstanding this, both lawyers presented oral arguments in closing. Thus, I think it is fair to treat the filed material not as full written argument which would take the place of closing arguments but closer to an outline, with case authority to assist me with their oral arguments. Accordingly, the Defendants may claim a single amount for these Briefs but not a double amount.

Conclusion [ 24 ] The global award of costs will need to be recalculated with these directions but it will be something slightly less than the approximately $68,000 claimed by the successful Defendants. For a relatively straightforward action with a short trial, that amount reflects what I consider to be a reasonable rate of recovery, albeit short of indemnification, for the conduct of this matter. [ 25 ] Counsel for the Defendants is to draft a revised Bill of Costs, reflecting these directions. There are no costs awarded of this application as success was somewhat mixed. Heard on the 8 th day of March, 2021.

Dated at the City of Calgary, Alberta this 17th day of March, 2021. M.H. Hollins J.C.Q.B.A. Appearances: Peter R.S. Leveque for the Plaintiffs

James M. Doyle for the Defendants