Condominium Corporation No 082, 2021 ABQB 429

Court of Queen’s Bench of Alberta Citation: Condominium Corporation No 082 9220 (Terwillegar Terrace) v Yan, 2021 ABQB 429 Date: 20210601 Docket: 1703 03482 Registry: Edmonton Between: Condominium Corporation No. 082 9220 o/a Terwillegar Terrace Applicant - and - Li Yan and Kyle Fan Respondents Corrected judgment: A corrigendum was issued on June 3, 2021; the corrections have been made to the text and the corrigendum is appended to this judgment.

Corrected judgment: A corrigendum was issued on June 2, 2021; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of Brian W. Summers, Master in Chambers _______________________________________________________ [ 1 ] This Memorandum of Decision considers a party’s entitlement to discontinue its action unilaterally and its liability for legal costs after doing so.

The Action [ 2 ] In this action Condominium Corporation No. 082 9920 o/a Terwillegar Terrace (“the Condo Corp”) filed an Originating Application seeking: (1) a declaration that the Respondents had engaged in “improper conduct” as that term is defined under the Condominium Property Act; (2) an order requiring the Respondents to cease and desist from making, publishing, posting or otherwise communicating defamatory statements against the Condo Corp, its Board of Directors and the property manager CS Management Inc (“CSM”); (3) an order that the Respondents’ dog named Caesar be removed from their condominium; (4) an order evicting the Respondent Kyle Fan from the condominium unit owned by his mother, the Respondent Li Yan; (5) judgment for $4,293.21; and (6) costs on a solicitor and client basis. [ 3 ] The alleged improper conduct related to noise complaints, complaints of Caesar urinating and defecating where it should not, Ms.

Yan failing to remove her vehicle from her parking stall for snow removal and Caesar lunging at a child on more than one occasion. Several fines were levied against Ms. Yan’s condominium unit. [ 4 ] The Condo Corp filed a seven page affidavit (not including exhibits) in support of its application. The Condo Corp representative was questioned on his affidavit and he gave 59 undertakings. Those undertakings were not answered for approximately 10 months. [ 5 ] Without prejudice discussions regarding settlement occurred between the parties, without success.

When no resolution could be reached, the litigation resumed with the Condo Corp representative being questioned on his undertakings.

At that second questioning, the Condo Corp was asked for a further 46 undertakings. [ 6 ] Counsel for the Condo Corp sent counsel for the Respondents a “with prejudice” letter advising that as the Condo Corp no longer wished to continue the action it would be filing a Discontinuance of Claim and paying into court the sum of $8000 for costs and invited the Respondents to make an application to court if they took the position that they were entitled to a greater cost award. [ 7 ] The Condo Corp did file a Discontinuance of Claim.

The Application [ 8 ] The Respondents did file an application seeking orders and declarations that: (

a) All outstanding charges against the Respondents’ condominium owner’s ledger be removed; (

b) All records regarding the history of the matter be expunged; (

c) All records regarding enforcement actions taken against the Respondents be expunged; (

d) Cost on and solicitor-and-own-client full indemnity basis, or alternatively enhanced costs; and (

e) If necessary, an exemption from the obligation to pay the portion of any special levy that may be owing by the Respondents as a result of a costs award in their favour. [ 9 ] After the Respondents had filed their application, the Condo Corp filed two affidavits advising that it had complied with items (

a) to (

c) and had forwarded $8000 to the Respondents’ counsel for costs (“Compliance Affidavits”). Legal Issues Was the filing of the Discontinuance an Abuse of Process? [ 10 ] The Respondents assert that the filing of the Discontinuance of Claim amounted to an abuse of process. [ 11 ] The authority for a Plaintiff or Applicant to discontinue an action is found in Rule 4.36, as follows: Discontinuance of claim 4.36(1) Before a date is set for trial, a plaintiff may discontinue all or any part of an action against one or more defendants.

(2) After a trial date has been set but before a trial starts, a plaintiff may discontinue all or part of an action against one or more defendants only (

a) with the written agreement of every party, or (

b) with the Court’s permission.

(3) After the trial starts, a plaintiff may discontinue all or part of an action only with the Court’s permission.

(4) A discontinuance under this rule must be in Form 23 and must be filed and served on each of the other parties and, after the plaintiff serves notice of discontinuance, the defendant is entitled to a costs award against the plaintiff for having defended against the discontinued claim.

(5) The discontinuance of the action may not be raised as a defence to any subsequent action for the same or substantially the same claim. [ 12 ] Pursuant to this Rule, the Condo Corp was free to discontinue without agreement of the Respondents or leave of the Court, since the action was not set for trial. [ 13 ] But the Respondents assert that where litigation has proceeded to a certain point, a unilateral discontinuance is an abuse of process since the result of the discontinuance is to deprive the defendant/respondent of resolution of the issues and pursuant to Rule 4.36(5) the issues remain alive.

They say that where litigation has reached that point, in effect the lawsuit belongs to both parties. [ 14 ] Counsel for the Respondents refers to the case of De Shazo v Nations Energy Company Ltd, 2006 ABCA 400 . In that case the plaintiff unilaterally discontinued his action after some of the defendants filed a

summary dismissal application, but before the application was heard. As another defendant had already been successful in having the action dismissed based upon a limitation argument, it seemed likely if not certain that the defendants would be successful on their

summary dismissal application. The plaintiff planned to carry on with a similar action which he had commenced in the state of Texas. [ 15 ] The chambers justice granted

summary dismissal and rejected the plaintiff’s argument that the Court did not have jurisdiction after the discontinuance was filed. The plaintiff’s appeal of the

summary dismissal adjudication was dismissed by the Court of Appeal. The Court of Appeal agreed with the chambers justice that that the unilateral discontinuance was an abuse of process in that case. [ 16 ] In my view the De Shazo case is distinguishable from the case before me. That case had been set for adjudication in the

summary dismissal application. The plaintiff had the same litigation proceeding in an alternate venue. [ 17 ] In this case the Condo Corp has filed evidence acceding to all relief sought by the Respondents on this application, except as to costs. The claims of improper conduct that the Condo Corp levied against the Respondents are clearly limitation barred. This case was not ready for adjudication as 46 undertakings remained outstanding.

Furthermore, the Respondents have not applied to set aside the Discontinuance of Claim. [ 18 ] I reject the Respondents’ assertion that the Discontinuance of Claim was an abuse of process and therefore the Court should rule on the merits. Given the Compliance Affidavits, there is nothing further to adjudicate, except costs. Determination of Costs [ 19 ] The Condo Corp asserted that following its Discontinuance of Claim, it was only liable for costs under Column 1 of

Schedule “C” which amounts to $3,375.00. The payment of $8,000.00 was said to be a gesture of goodwill as the Condo Corp said that it wanted “all parties to move past this Action”. [ 20 ] The recent decision of our Court of Appeal in McAllister v Calgary (City), 2021 ABCA 25 makes it very clear that costs under the Tariff of Recoverable Fees in

Schedule “C” is not the starting point or default position for a determination of a costs award. [ 21 ] In that case the plaintiff was successful at trial in establishing liability on the part of the defendant. The trial justice awarded costs under

Schedule “C”. The plaintiff appealed on the basis that the costs award did not provide a reasonable level of indemnification for the amount expended. The

Schedule “C” costs only amounted to a 17% indemnification of the plaintiff’s actual costs. [ 22 ] In its analysis, the Court noted that the starting point in considering costs is to look at the factors under Rule 10.33. That Rule states: Court considerations in making costs award 10.33(1) In making a costs award, the Court may consider all or any of the following: (

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

b) the amount claimed and the amount recovered; (

c) 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.

(2) In deciding whether to impose, deny or vary an amount in a costs award, the Court may consider all or any of the following: (

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 of 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; (

h) any offer of settlement made, regardless of whether or not the offer of settlement complies with

Part 4, Division 5. [ 23 ] The Court of Appeal continued its analysis by noting that after considering the factors under Rule 10.33 the court is directed by the Rules to go to Rule 10.31 which provides options for making costs awards: Court-ordered costs award 10.31(1) After considering the matters described in rule 10.33, the Court may order one party to pay to 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 that a party incurred to participate in an application, proceeding or action, (

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. [ 24 ] The Court noted that Rule 10.31(3) provides a “menu of orders” for an award under Rule 10.31(1)(a). That Rule states:

(3) 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 Division 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. [ 25 ] In considering the quantum of costs to be awarded under Rule 10.31(1)(

a) the Court of Appeal stated (at paragraph 41): “In Alberta, the weight of authority is that party and party costs should normally represent partial indemnification of the successful party at a level approximating 40-50% of actual costs...”. [ 26 ] The Court also stated that the Tariff of Recoverable Fees in

Schedule “C” is but one tool or option that may be used to achieve the outcome of reasonable and proper costs under Rule 10.31(1)(a). [ 27 ] At the hearing in this case, I asked counsel for the Respondents as to the amount of the Respondents’ legal costs in this action. He indicated that the costs before preparing for and making the application were in the $40,000 range. However, I note that there is no evidence before the Court on this point. [ 28 ] If the Court were to order that the Condo Corp pay the Respondents’ reasonable and proper costs under Rule 10.31(1)(

a) calculated on the appropriate column of

Schedule “C”, such an award would be inadequate indemnification. If the calculation of counsel for the Condo Corp is correct (at $3,375.00), the Respondents would be indemnified less than 10% of the amount actually expended. [ 29 ] The Respondents are seeking more than reasonable and proper costs under Rule 10.31(1)(a). They are seeking costs on a solicitor-and-own-client, full indemnity basis, or alternatively for enhanced costs. Their application for costs is under Rule 10.31(1)(b). [ 30 ] The arguments made on behalf of the Respondents as to why costs should be awarded on an enhanced scale include the following (excerpts taken from the Respondents’ brief): (

a) The Condo Corp was seeking extraordinary remedies including the eviction of Mr. Fan and the removal of the family dog; (

b) Through the course of questioning of the Condo Corp’s representative it became apparent that: (

i) the Condo Corp did not have any or sufficient evidence to establish the allegations of wrong-doing and improper conduct; and (ii) the property manager CSM did not have the Board’s authority to take many of the steps that it did; (

c) There was nothing in the evidence or the records of the Condo Corp upon which any liability on the part of the Respondents could be founded; (

d) There was no serious issue of fact or law requiring a court application; (

e) The Condo Corp did not take an incremental approach to bylaw enforcement, as it should;

(

f) The Compliance Affidavits filed on behalf of the Condo Corp go directly to the merits of the Condo Corp’s claim and were provided to undermine the Respondents’ application; (

g) In forcing the Respondents to respond to and deal with the Condo Corp’s claims and then attempt to walk away by discontinuing the action, and filing evidence that it always had, the Condo Corp was contemptuous of the Respondents; (

h) The Condo Corp abused the court process, wielding it like a hammer in an effort to exert significant force and control over the Respondents; (

i) Weaponizing the court process to attempt to exert significant influence and control over a resident is exactly the kind of behaviour that engages the regulatory function of a costs award; (

j) Without an award of costs on a solicitor-and-own-client full indemnity basis, there will be a clear message sent to condominium corporations that they can use the court process to abuse and harass unit owners, regardless of the merits of their claims; and (

k) Justice can only be done by a complete indemnification of the Respondents’ costs. [ 31 ] The evidence put forward by the Condo Corp in this matter included the following: (

a) A condominium owner filed a complaint that Ms. Yan was outside her unit screaming for 10 minutes (apparently at Caesar) as she had dropped her dog ‘s leash; (

b) Ms. Yan’s dog Caesar was not registered with the Condo Corp as required by the bylaws; (

c) Ms. Yan took responsibility for Caesar urinating in front of the 4 th floor elevator and the $250 fine associated with it, but said that she could not afford to pay for other unreasonable charges; (

d) Ms. Yan did not remove her vehicle from her parking stall after a notice was provided to do so prior to snow removal; (

e) The Board received another complaint that Caesar had been continually urinating on another tenant’s patio. A photograph was taken of this happening. (

f) A complaint was filed by a condominium owner that Caesar lunged at the car seat containing her baby, narrowly missing the child. Two such incidents were reported. [ 32 ] When this action was discontinued, the Respondents had not filed any evidence.

It is not clear if they were going to file their own evidence refuting allegations made. [ 33 ] I do not accept the Respondents’ submissions that the Condo Corp had no evidence; that there was nothing in the records of the Condo Corp upon which liability of the Respondents’ could be found; and that there was never any serious issue of fact or law. [ 34 ] It is very apparent that the Board received a number of complaints from condominium owners that required the Board’s attention.

However, it is also very apparent that the Board and the property manager CSM completely bungled how they dealt with some of those complaints. [ 35 ] CSM took actions against the Respondents that were never authorized by the Board. Board resolutions were lacking. Fines were imposed when only a warning had been authorized. Fines were imposed in excess of what the Condo Corp was allowed under its bylaws.

Certainly some (but not all) of the actions taken against the Respondents were done based on circumstantial evidence only. [ 36 ] I do not accept the Respondents’ submission that the Condo Corp walked away from the litigation because there was no basis for steps taken by the Condo Corp.

I do accept the submission on behalf of the Condo Corp that it filed the Discontinuance of Claim because the cost of litigating became too much and especially in light of the 105 undertakings that had been requested of it. [ 37 ] I do find fault on the part of the Condo Corp in the conduct of the litigation as it was very apparent that the representative questioned on his affidavit was not adequately prepared. There was a reason that 105 undertakings were requested, although I acknowledge the position of counsel for the Condo Corp that there were a number of the undertakings that had marginal relevance.

Furthermore, the Board was never properly engaged in the litigation as it never reviewed the answers to undertakings, but left it all up to CSM. [ 38 ] Taking all of the foregoing into account, I conclude that justice does not require that the Respondents be completely indemnified for their legal costs. However, I think that an award of “reasonable and proper costs” under Rule 10.31(1)(

a) is not adequate and that an award of enhanced costs against the Condo Corp is appropriate. [ 39 ] Weighing all of the factors, I direct that the Condo Corp pay two-thirds of the Respondents’ reasonable legal costs reasonably incurred (ie on a solicitor and client basis and not on an indemnity basis), as may be agreed to by the parties or if necessary, as determined by an assessment officer of the Court of Queen’s Bench of Alberta. The $8,000 sent to counsel for the Respondents shall be credited to the Condo Corp’s liability for those costs.

I also order that if the Condo Corp makes any assessment against the condominium owners to fund payment of these legal costs, the Respondents will be exempt from that assessment. Heard on the 29 th day of April, 2021.

Dated at the City of Edmonton, Alberta this 1 st day of June, 2021. Brian W. Summers M.C.Q.B.A. Appearances: Roberto Noce QC and Michael Gibson Miller Thomson LLP for the Respondents Li Yan and Kyle Fan Amber Nickel Willis Law for Condominium Corporation No. 082 9220 o/a Terwillegar Terrace _______________________________________________________ Corrigendum of the Memorandum of Decision of Brian W.

Summers, Master in Chambers _______________________________________________________ The Applicant’s name was corrected from “ Condominium Corporation 0829220” to “Condominium Corporation No. 082 9220”. _______________________________________________________ Corrigendum of the Memorandum of Decision of Brian W. Summers, Master in Chambers _______________________________________________________ Under “Appearances”, Mr. Noce’s name and law firm was corrected, and Mr. Gibson’s name was added.