Romspen Investment Corporation v Stephenson, 2021 ABQB 486

Court of Queen’s Bench of Alberta Citation: Romspen Investment Corporation v Stephenson, 2021 ABQB 486 Date: 20210624 Docket: 1703 22610 Registry: Edmonton Between: Romspen Investment Corporation Plaintiff/Applicant - and - Eileen Evelyn Stephenson Defendant/Respondent _______________________________________________________ Reasons for Decision of the Honourable Madam Justice D.L. Shelley in relation to the Plaintiff’s Application for Costs _______________________________________________________ Background [ 1 ] Ms.

Stephenson guaranteed a corporate loan that had been made by Romspen to a corporation whose principals included her daughter. A collateral mortgage was taken over Ms. Stephenson’s property.

[2] Much of the history of the matter is outlined in the Decisions of the Alberta Court of Appeal, cited at 2020 ABCA 437 and2020 ABCA 316, the Master’s Decision, cited at 2019 ABQB 798, and in my oral reasons for decision given on March 2, 2021,following the parties’ appearance before me on February 26, 2021. [3] Following Ms. Stephenson’s unsuccessful appeal to the Court of Appeal on November 30, 2020, in which the Court ofAppeal found no error in this Court’s Decision to terminate a stay in the Alberta foreclosure proceedings, Ms.

Stephenson applied to thisCourt for various remedies, including: an interim injunction to restrain Romspen from enforcing the Sale Order that had been granted onNovember 1, 2018; an order setting aside the Sale Order; a reconsideration of the Sale Order; and an order directing an accounting byRomspen in relation to the underlying corporate loan. The application was dismissed. Romspen now seeks costs in relation to theapplication. [4] Specifically, Romspen seeks costs on a solicitor and own client full indemnity basis or, alternatively, costs on the basis oftwo times Column 5 of

Schedule C of the Alberta Rules of Court. Position of the Parties Romspen’s Position [5] Romspen relies on Rule 10.31(1) and Rule 10.33, and, in particular, ss (2) of the latter.

Romspen also relies on the followingcases: • Lameman v Alberta, 2011 ABQB 532; • Nature Conservatory of Canada v Waterton Land Trust Ltd, 2016 ABQB 65; • KEM Presentations Inc v Shell Canada Products Ltd, 2003 ABCA 217; • 956126 Alberta Ltd v JMS Alberta Co Ltd, 2021 ABQB 121; • Hamilton v Open Window Bakery Ltd, 2004 SCC 9; • Young v Young (SCC), [1993] 4 SCR 3; • Northland Material Handling Inc v Parkland (County), 2012 ABQB 586; • Thompson v Procrane Inc, 2016 ABCA 71; • Pillar Resource Services Inc v PrimeWest Energy Inc, 2017 ABCA 19; • Abt Estate v Ryan, 2020 ABCA 133; • Commonwealth Credit Union Limited v 3A Academy & Consulting Ltd, 2011 ABCA 11; and • Parrish & Hiembecker Ltd v All Peace Auctions Ltd, 2002 ABQB 602. [6] Romspen submits that Ms.

Stephenson’s unsubstantiated allegations of misrepresentation, high-handedness and deceit entitleit to the elevated costs sought in this Application. It submits that Ms. Stephenson’s actions fall within the conduct described in Rule10.33(2) and, as such, should attract enhanced costs based on the principles established and applied in the case authorities relied on. [7] Although Romspen’s recourse under Ms.

Stephenson’s guarantee is “limited to the amount received by the Lender onenforcement of the Guarantor’s Mortgage”, Romspen argues that the situation in this case is the same as the one dealt with in the AlbertaCourt of Appeal decision in Commonwealth.

In that case, the Court of Appeal overruled the trial judge’s conclusion that the limitingprovision in the guarantee extended to the lender’s entitlement to legal costs. [8] Romspen refers to the following specific actions as support for the costs requested in this Application: • numerous collateral attacks throughout the proceedings on Orders that were not appealed; • numerous unfounded accusations that Romspen has mislead both Ms. Stephenson and the Court; • Ms. Stephenson’s daughter, Ms. Coflin, who has provided all of the evidence on behalf of Ms.

Stephenson, accusing Romspen ofhaving mislead the Court in several respects and also accusing it of dishonesty; • allegations that Romspen acted improperly and in contravention of a standstill agreement when it took title to the mortgagedproperty, when the evidence is clear that there was no standstill agreement and that Romspen was entitled to take title; • serious allegations of dishonesty and misrepresentation, which were premised on Ms. Stephenson being in receipt of newevidence, when that information had been available to Ms.

Stephenson long before the application in which it was raised; • having had approximately four years to investigate this information, but failing to do so; and • collateral attacks and tactics employed during the litigation significantly lengthening the proceedings and increasing the costthereof.

Romspen submits that Ms. Stephenson’s conduct in the proceedings, including that specifically referred to above, warrants censure and should attract the costs sought by it in this application. Ms. Stephenson’s Position [ 9 ] Ms. Stephenson’s position is unknown, as she did not file any response to this application for costs. Analysis [ 10 ] The dismissed application from which this costs application arises was based upon numerous serious allegations of misconduct alleged to have been committed by Romspen.

In dismissing the application, I concluded that some of the assertions were clearly incorrect and that the “new evidence” relied on by Ms. Stephenson was not new at all. I noted that the Court of Appeal had concluded that Ms. Stephenson had no defence to the unappealed Sale Order related to her mortgaged property.

I also noted that the Court of Appeal decision had addressed several of the arguments raised in the application. [ 11 ] I concluded that the application could fairly be described as another attempt to obtain a stay of the Sale Order, which had already been denied by the Court of Appeal in its November 30, 2020 dismissal of the appeal. The application was therefore res judicata .

It constituted a collateral attack on both the Sale Order and the Court of Appeal decision. [ 12 ] I agree with Romspen’s submission that the circumstances of this case are similar to those dealt with by the Court of Appeal in Commonwealth . In that case, the Court of Appeal held that: We do not read the language here as allowing the [guarantors] to litigate without risk due to the guarantee cap, for to do so might suggest that guarantors under similar agreements who litigate unreasonably or excessively would likewise avoid responsibility for the resulting expended resources. The

interpretation of a contract should be commercially reasonable. The reasonable

interpretation of the guarantees is that the guarantors’ exposure to extra costs is limited to the amount in the guarantees, but that the guarantees do not attempt to address or limit the exposure of the guarantors to costs ordered under the Rules of Court. [ 13 ] In this case, the type of conduct engaged in by Ms. Stephenson (that is, the bringing of numerous proceedings aimed at delaying the effect of a Sale Order that was never appealed) should be discouraged by the awarding of costs that are not subject to the limitation contained in her guarantee. Further in that regard, Ms.

Stephenson’s guarantee provides for costs as between Romspen and its solicitor. Given the nature of the allegations advanced against Romspen (in some cases, in the face of evidence disproving the allegation and, in others, on the basis of unsubstantiated and uninvestigated information), this conduct is to be discouraged. [ 14 ] I conclude that this is one of the rare cases in which the actions of a party, Ms.

Stephenson, should cause this Court to exercise its discretion to award solicitor and own client costs on a full indemnity basis to discourage the continuation of such conduct. [ 15 ] Therefore, Romspen is awarded costs of the unsuccessful application as between it and its solicitors on a full indemnity basis. Should there be a disagreement as to the resulting quantum, unless a disputed item falls outside the jurisdiction of the Review Officer, disputed items should be referred to the Review Officer for determination. Heard by way of written submissions received on the 18 th day of March, 2021.

Dated at the City of Edmonton, Alberta this 24 th day of June, 2021. D.L. Shelley J.C.Q.B.A. Appearances: Coralie Mohr Witten LLP For the Plaintiff/Applicant Terrence Warner

Miler Thomson LLP for the Defendant/Respondent