Kim v Choi, 2021 ABQB 645

Court of Queen’s Bench of Alberta Citation: Kim v Choi, 2021 ABQB 645 Date: 20210816 Docket: 1303 09884 Registry: Edmonton Between: Yong Gook Kim and Young Sook Kim Applicants - and - Kwang Hoon Choi, Yoo Kyung Choi and 1286290 Alberta Ltd. Respondents _______________________________________________________ Endorsement of the Honourable Mr.

Justice Peter Michalyshyn _______________________________________________________ Introduction [ 1 ] This endorsement addresses costs coming after an application by the Kims to set aside an order for judgment against the Chois of just under $800,000 plus judgment interest and solicitor and own client costs and granting other relief. As more fully explained in the reported reasons at 2020 ABQB 51 , the decision was a close call but the judgment was set aside. Notwithstanding the Chois’ success in the set-aside application, owing to their conduct leading up to that application, costs were to be paid to the Kims.

Those costs were to be assessed either by way of agreement, or by the court following submissions of counsel, but within certain parameters, including that solicitor-client costs would not be ordered given the record before the court, and that costs would be considered only for things in the litigation after March 23, 2016 – the date the Kims’ application for judgment was filed.

[2] As the parties were unable to agree, I received written submissions as to costs, the essence of which follows. [3] For the Kims, as a starting point counsel acknowledged the court took “the rare step” of awarding costs to the Kimsnotwithstanding the Chois were successful in having the judgment set aside. [4] Turning then to Rule 10.31 to 10.33 factors, counsel notes: a. that from March 23, 2016 the Kims’ steps in the litigation could have been avoided had the Chois engaged in the litigation; b. there is no suggestion that any of the steps taken by the Kims were unnecessary; c.

Schedule C amounts should be enhanced by reason of the general increase to the tariff, and in accordance with such cases asGo Community Centre v Clark Buildings and Stantec Consulting Ltd, 2020 ABQB 203 (and, more recently, McAllister v Calgary(City), 2021 ABCA 25). [5] The Kims therefore seek costs from March 23, 2016 including the set-aside application, and on the basis of an amount justshy of 50 per cent partial indemnity and 100 per cent of disbursements, all of which comes to $37,440.99. [6] The Chois suggest a quantum of costs of $5,094.74.

Counsel noted: a. the Kims’ costs should be limited to ‘thrown-away’ costs related only to obtaining the judgment which was set aside; b. the Kims should not have their own costs of the set-aside application itself, in which the Chois were successful; c. the Kims’ costs should be limited accordingly to the period of June 22, 2016 (the date the Chois’ counsel withdrew) to the date theChois applied to set aside the judgment in question; d. there should be no enhancement of ordinary

Schedule C costs, again if only because the Chois have already been denied costs inrelation to the successful set-aside application; e. if costs are to be enhanced, they should be no more than 35 per cent of ordinary

Schedule C costs; f. certain costs items (Orders of July 6, 2016 and December 15, 2016) were fixed as to costs and should not be revisited. Analysis [7] The costs decision in McAllister v Calgary (City), 2021 ABCA 25 came well after the written submission of the parties.

Nofurther detailed submissions were forthcoming as a result of it. [8] Noting the trial courts’ wide discretion to award costs, the court in McAllister noted as well that discretion is subject to theRules of Court, and to the need to act judicially. [9] With regard to entitlement, I pause to note the McAllister court’s reminder that costs are generally awarded to a successfulparty, absent misconduct on their (at para 22, citing BR v Children’s Aid Society of Metropolitan Toronto, (SCC),1995 1 SCR 315). The Chois also refer to Yehya v Thomas, 2020 ABCA 262, at para 18.

These decisions support the Chois’ cause thathaving been denied their own costs for the successful set-aside application, I should not visit costs against them for that very application. [10] I agree with the Chois’ position. It is important to note that at paragraph 41 of my set-aside decision I indicated that the Choiswill pay costs to the Kims. However, other than to mention as a starting-point the date of March 23, 2016, I decided nothing about theperiod of time for the Chois’ costs liability. Rather, I invited the parties to make submissions in that regard.

Having considered thosesubmissions I am persuaded that costs payable to the Kims should not include costs of the Chois’ successful set-aside application. Thenet effect of course is still a net gain for the Kims – at least from the limited

Schedule C perspective – in that but for my order denyingthe Chois their costs, they would be entitled to claim

Schedule C costs against the Kims. [11] I have also decided based on written submissions that contrary to the Chois’ position, the Kims’ entitlement to costs shouldstart from March 23, 2016 being the date of the application that eventually gave rise to the judgment of February 13, 2017. [12] In the result, entitlement is from March 23, 2016 but ends with notice by the Chois’ new counsel, in January, 2018, of the set-aside application. [13] As to quantum, McAllister is a reminder explicitly to consider Rule 10.33(1) and (2) factors.

Here, I note the costs at issue arenot “of the action” but thrown-away costs coming before an important but still discrete application. [14] I have already taken into account the “degree of success” factor in Rule 10.33(1)(

a) by concluding the Chois, while successfulin the application, should be denied costs for it. The Rule 10.33(1)(

f) factor of “the conduct of a party that tended to shorten the action”is relevant here too, as are Rule 10.33(2)(a), (

d) and (

g) factors. The action would appear to be at least moderately complex and liability,over all, is undecided. [15] Turning then to rule 10.31(1)(a), again McAllister is a reminder that costs may be awarded with or without reference toSchedule C, at paras 25-29: [25] … in making a costs award under 10.31(1)(a), as in this case, the court is provided with a menu of orders it may make withrespect to costs. Rule 10.31(3)(

a) expressly provides that “all or part of reasonable and proper costs” may be ordered, “with or without

reference to

Schedule C.” This suggests significant discretion on the part of a trial judge in implementing a reasonable and proper costs award and would appear to clearly permit an order for a lump sum percentage of legal costs. Rule 10.31(3)(

d) expressly permits such a costs award. Rule 10.31(3)(

b) permits the court to make an order directing the unsuccessful party to pay the successful party an amount equal to a multiple, a proportion or a fraction of an amount set out in any column of the Tariff of Recoverable Fees in

Schedule C. [26] It is important to note that the options set forth in Rule 10.31(3) are expressly linked to Rule 10.31(1)(a), which permits the court to award “the reasonable and proper costs that a party incurred”. [27] What comes out of this analysis of the Rules is that a costs award made with reference to

Schedule C is only one of several options open to a court in awarding costs to a successful party and that awarding a percentage of assessed costs is expressly authorized. [28] The trial judge attempted to apply “a principled approach which considers the purpose of costs”, but she appeared to perceive

Schedule C to be the default rule, absent misconduct or complexity, for making cost awards. The Rules of Court do not support that characterization. Costs awards may or may not be based on

Schedule C. A variety of means are countenanced by the Rules to arrive at a reasonable costs award (see Renke, J. in GO Community Centre v Clark Builders and Stantec Consulting Ltd , 2020 ABQB 203 at para 82 ). [29] To summarize,

Schedule C is merely one of a number of options or tools that may be used to achieve the outcome of reasonable and proper costs under Rule 10.31(1)(a). Other options include not making any reference to

Schedule C (Rule 10.31(3)(a)); or awarding costs pursuant to “a multiple, proportion or fraction of an amount set out in …

Schedule C” (Rule 10.31(3)(b); or awarding a percentage of assessed costs (Rule 10.31(3)(d)). [ 16 ] Finally, while acknowledging the usefulness of

Schedule C in certain cases, McAllister and other cases mentioned within it also comment about the 40-50 per cent level of indemnification which “provides a reasonable guideline upon which the level of indemnification implied by the phrase “reasonable and proper costs” may be measured under the Rules” (at para 50). [ 17 ] With these comments in mind, I turn now to the parties’

Schedule C calculation of $2,950 for things done between March 23, 2016 and early January, 2018. The Chois concede these are thrown-away costs payable to the Kims. The parties have also calculated the sum of $4,250 in

Schedule C costs for the set-aside application which, again but for my earlier decision, would be costs payable to the Chois. By avoiding liability for the Chois’ own costs, the overall effect is a notional

Schedule C costs award to the Kims of $7,200: $2,950 in actual costs + $4,250 in avoided costs = $7,200. [ 18 ] These calculations are based on the

Schedule C in place at the time of the litigation steps in question. In accordance with any number of authorities and principles of indemnification the calculation could be subject to an inflation adjustment. The Kims suggest an inflation factor of 40 per cent, the Kims say not more than 35 per cent. I would adopt the 40 per cent figure. But that inflation factor applies only to the actual costs the Kims are entitled to claim. And of the actual costs of $2,950, I agree with the Chois that no inflation factor should attach to the two 2016 orders in which other judges quantified costs at $750 costs each.

In the result, on this notional analysis the Kims are entitled to a 40 per cent inflationary increase to the remaining $1,450 in

Schedule C fees, which comes to $2,030. Adding back the two $750 orders, total

Schedule C costs would be $3,530. [ 19 ] Before leaving this discussion of

Schedule C, I note the Kims’ draft

Schedule C calculation at “Appendix A” of their written submission also seeks an order doubling grossed-up

Schedule C costs. Other than to refer to R & R Consilium Inc v Talbot , 2019 ABQB 275 , no rationale is given for the suggested doubling of the fees claimed. Presumably the rationale is that the costs award to the Kims should be enhanced as a result of the Chois conduct in the litigation. Double costs of

Schedule C fees actually payable to Kims would be $7,060. [ 20 ] For purposes of this analysis, to that figure must be added-back the $4,250 in

Schedule C fees the Chois have been denied, but which is the net gain as I have characterized it, to the Kims. And to be consistent, that $4,250 sum must be grossed up by the same 40 per cent, coming then to $5,950. On one approach to the determination of reasonable costs, that $5,950 might then be added to the $7,060 in

Schedule C fees actually payable, leading to a total of $13,010. [ 21 ] I turn to “Appendix B” in the Kims’ written submission which is a draft solicitor-client bill of costs coming to a total of $53,783.50. It is of limited usefulness given that I have determined a period of costs entitlement that is different from that set out in the draft bill of costs. That said, and subject to it being confirmed and quantified, the time-entries on Appendix B for the period of March 30, 2016 to January 8, 2018 appear to add up to just over 76 hours.

Without knowing the actual value of these hours, I can only speculate what 40-50 per cent indemnification might look like in this case.

Put another way, without having a better sense of the value of 40-50 per cent indemnification, it is difficult to know if a notional award of as much as $13,010 represents reasonable and proper costs (not including disbursements) on a full McAllister analysis. [ 22 ] It remains to address disbursements. [ 23 ] The starting point is the disbursement calculation conceded on behalf of the Chois at $1,262.69 plus GST. [ 24 ] It is unclear whether disbursements for electronic legal research ($1,085.21) are being claimed; it appears on the Kims’ “Appendix B” but not on “Appendix A”.

In any event, I would not allow this sum as a reasonable disbursement. [ 25 ] The largest contested disbursement is $6,562.23 paid to California lawyers in relation to proceedings between 1286290 Alberta Ltd. and the Chois. There are a number of unresolved issues regarding these claimed disbursements. Reviewing the billing documents, they appear for the most part to be legal fees. I have at best an incomplete understanding based on the costs submissions/attachments from counsel as to the legal work done, and for whose benefit, and during what time frame.

For example, the accounts from the California law firm are all dated no earlier than January, 2019, whereas as noted above the time frame I am dealing with extends only to early January, 2018. Further, the claim is for 100 per cent of the legal fees. As such it fails on even a superficial application of the 40-50 per cent indemnification test. Subject to any further submissions of counsel, I am reluctant to decide anything about the $6,562.23 disbursement claim that would prejudice 1286290 Alberta Ltd. from pursuing the claim in whatever litigation may

still follow. Conclusion [ 26 ] Given the conclusions reached in my earlier reasons regarding the Chois’ conduct in the litigation giving rise to the judgement and set-aside application, on a notional

Schedule C basis only I would conclude the Kims are entitled to grossed-up double

Schedule C costs of $7,060, plus disbursements of $1,262.69. I would leave any GST calculations to the parties. This conclusion takes into account the denial of the Chois own costs for the successful set-aside application, the value of which to the Kims is $5,950. On this approach the Kims are, in total, $13,010 to the good. [ 27 ] My only misgiving is that I am unable fully to comply with McAllister as I have no reliable information regarding what 40-50 per cent indemnification looks like for the appropriate period of time in this case.

It may be that it looks rather like the $13,050 figure arrived at notionally in these reasons. It will be for counsel to decide. It may be that counsel have enough to go on to finalize costs without further intervention of the court. However, if they wish to do so, counsel are free to come back to me at their convenience with further information/submissions. Written submissions July 28 and August 11, 2020. Dated at the City of Edmonton, Alberta this 16 th day of August, 2021. Peter Michalyshyn J.C.Q.B.A. Appearances: A.

Danielle Bourgeois Field Law for the Applicants Lamont Bartlett Bennett Jones for the Respondents