Patel v Chief Medical Supplies Ltd, 2021 ABQB 667

Court of Queen’s Bench of Alberta Citation: Patel v Chief Medical Supplies Ltd, 2021 ABQB 667 Date: 20210820 Docket: 1501 00040 Registry: Calgary Between: Sam Patel, Shahir Patel, Bharat Patel, Manjula Patel, Dr. Moises Lasaleta and Elizabeth Lasaleta Plaintiffs - and - Chief Medical Supplies Ltd., 1134853 Alberta Ltd., Hament Holdings Ltd., Harripaul Tulan also known as Paul Tulan, Jasoda Tulan and 2427419 Ontario Ltd. Defendants _______________________________________________________ Costs Decision of the Honourable Mr. Justice C.M.

Jones _______________________________________________________ Introduction [ 1 ] The parties to this long running action ultimately arrived at a settlement but left open the matter of costs. [ 2 ] The Plaintiffs (the Applicants in this decision) made application for those costs (Original Costs Application). My decision regarding the Original Costs Application may be found at: Patel v Chief Medical Supplies Ltd , 2021 ABQB 355 (Original Costs Decision) .

I directed that if the parties could not agree on costs associated with the conduct of the Original Costs Application they were to make written submissions. [ 3 ] I have received and considered those written submissions. Background [ 4 ] This matter arose from a dispute between two shareholding factions in two private corporations. As noted above, it was effectively settled.

The Order of this Court which gave effect to the terms of that settlement expressly stated that the Action was concluded “without any ultimate determination on the merits”. [ 5 ] The parties positions in relation to the Original Costs Application were summarized at paragraphs 10 through 12 of the Original Costs Decision:

[10] Fundamentally, there are only two issues before me: the appropriate scope of costs and the appropriate scale of costs. [11] With respect to scope, the Applicants seek an award of costs for the entirety of this Action. The Respondents assert that costs should be awarded to the Applicants only for the three interlocutory applications on which they were successful [referred to herein as the Successful Applications]. [12] With respect to scale, the Applicants seek solicitor-client costs.

They argue, inter alia , that the Court should consider alleged misconduct on the part of Tulan, both before and during the litigation. The Respondents oppose an award on this scale. They acknowledge that enhanced costs are appropriate for one of the Applicants’ successful interlocutory applications, but argue that only party-party costs are appropriate for the other two.

They assert that only litigation misconduct is relevant to enhanced costs and deny that there has been any such misconduct. [ 6 ] In the result, I declined to award costs in respect of the entirety of this Action and I declined to award costs on a solicitor- client basis, opting instead to award party-party costs computed as a percentage of assessed solicitor-client costs. In that regard I awarded the Applicants 50% of their assessed solicitor-client costs in connection with two applications in respect of which they succeeded and 75% of their assessed solicitor-client costs in respect of one other.

The Parties’ Positions Regarding Costs Associated with the Original Costs Application The Applicants [ 7 ] The Applicants argue that the parties should bear their own costs in respect of the Original Costs Application. Alternatively, they argue that I should delay any costs decision until the Review and Assessment Officer has concluded the process of assessing costs awarded in accordance with the Original Costs Decision. Any costs awarded should be taxable on

Schedule C. [ 8 ] The Applicants note, in their brief relating to the Original Costs Application, that they put forward an alternative if I was not willing to grant solicitor-client costs. They requested costs in the form of a lump sum in such amount as I determined appropriate in the range of 50% of their actual reasonable legal expenses. [ 9 ] They also point out that the Respondents argued in their response brief relating to the Original Costs Application that the Applicants should be entitled to a maximum of $51,975.00 in costs. This amount represented costs of the three Successful Applications advanced by the Applicants computed in accordance with column 5 of

Schedule C to the Alberta Rules of Court ( Rules ) [ 10 ] Given the parties’ positions going into the Original Costs Application, the Applicants argue that the results of Original Costs Decision were mixed. Those results varied materially from what each side was proposing. On the one hand, the Applicants did not receive solicitor-client costs relating to the entire Action. On the other hand, costs were not awarded pursuant to

Schedule C to the Rules, as requested by the Respondents. Nor were costs awarded at the quantum proposed by the Respondents. [ 11 ] The Applicants note that the Respondents specifically argued against costs awarded on a percentage of solicitor-client costs. The Applicants, on the other hand, sought costs computed in that fashion as an alternative to their primary submission. [ 12 ] The Applicants posit that the quantum of costs emanating from the Original Costs Decision, ultimately determined by the Review and Assessment Officer, may inform on the degree of success they may be said to have achieved.

If that is correct, they suggest that this costs decision might be deferred until the Review and Assessment Officer has completed his task. [ 13 ] They also argue that if I do award costs in connection with the Original Costs Application, I should have recourse to

Schedule C of the Rules. I should not utilize a percentage of solicitor-client costs approach as advocated by the Respondents and as I employed in arriving at the Original Costs Decision. They take the position that the percentage of solicitor-client costs approach is appropriate where there is substantial success on material points, but not where, as they argue is the case here, there was mixed success at the Original Costs Application.

The Respondents [ 14 ] The Respondents claim they were substantially successful on the two primary issues, being the proper scope of the costs award limited to the three Successful Applications by the Applicants and party-party costs as the proper measure of costs. They seek costs in respect of the conduct of the Original Costs Application which purports to mirror the results of that application, as reflected in the Original Costs Decision.

Thus, they seek 50% of their solicitor-clients costs associated with the Original Costs Application. [ 15 ] The Respondents point to their success in opposing the Applicants’ request for costs in respect of the entire Action. The Respondents also note that I declined the Applicants’ request for full indemnity costs or, alternatively, some form of enhanced costs. [ 16 ] They point out that I awarded the Applicants party-party costs in respect of only three applications, being the Successful Applications.

They mention in their submissions pertaining to this costs application that I used percentages of solicitor-client costs as the measure of party-party costs which I awarded in connection with the Original Costs Application. I did that to reflect my determination that simply applying

Schedule C would not achieve the objective of arriving at an appropriate level of indemnification, which I did not believe would devolve from the strict application of

Schedule C. [ 17 ] The Respondents argue that in doing so, the Original Costs Decision aligns much more closely with their position than the Applicants’ position. This, they argue, suggests that they enjoyed substantial success.

[ 18 ] The Respondents argue in awarding costs in respect of the Original Costs Application that I should use a percentage of assessed solicitor-client costs approach.

As reflected in the Original Costs Decision, I used that approach in arriving at an award of costs in favour of the Applicants in connection with the Successful Applications. [ 19 ] The Respondents further submit that I should award those costs at a level of 50% of assessed solicitor-client costs, not at the 75% level which I used in respect of one of the Successful Applications. [ 20 ] They point to the fact that I did not find them to have engaged, during the course of the Action, in litigation misconduct. Decision [ 21 ] The parties enjoyed mixed success but the mix favours the Respondents.

The Applicants failed in securing costs on a full indemnity basis but succeeded in obtaining one of their alternative requests for relief, being costs on a percentage of their assessed solicitor-client costs.

In that regard, they were somewhat more successful in respect of one of the Successful Applications, obtaining costs at a rate of 75% of assessed solicitor-client costs, as opposed to the 50% they suggested in their costs submissions. [ 22 ] The Respondents opposed both approaches to determining costs, succeeding in respect of their opposition to full solicitor- client costs but failing in respect of their opposition to computation of costs with reference to a percentage of assessed solicitor-client costs. [ 23 ] To this point in the analysis, success was mixed. [ 24 ] However, the Applicants did not succeed in obtaining costs in respect of the entire Action.

The Respondents succeeded in resisting that request. In that regard, the Respondents enjoyed success which eluded the Applicants. [ 25 ] I believe that success tips the scales in favour of the Respondents and entitles them to an award of costs against the Applicants. [ 26 ] I agree with the Respondents that a costs award in respect of the conduct of the Original Costs Application should, as was the case with my award of costs for the Successful Applications, be based on a percentage of assessed solicitor-client costs.

The same principles that applied to the determination of the award in respect of the Successful Applications apply here. [ 27 ] That is, a percentage of assessed solicitor-client costs arising in respect of the conduct of the Original Costs Application.

That approach renders it unnecessary to wait until the quantum of costs associated with the Successful Applications is determined by the Review and Assessment Officer. [ 28 ] It does require the parties to attend before the Review and Assessment Officer to have the Respondents’ solicitor-client costs reviewed and assessed in respect of the Original Costs Application.

Presumably, the Review and Assessment Officer is able to perform that assessment, and the assessment of costs awarded in respect of the Successful Applications, at the same time. [ 29 ] The appropriate percentage to be applied in respect of solicitor-client costs assessed by the Review and Assessment Officer in respect of the Original Costs Application is 50%. Dated at the City of Calgary, Alberta this 20 th day of August, 2021. C.M. Jones J.C.Q.B.A. Appearances: Robert Hawkes Q.C. for the Applicants Andrew Sunter for the Respondent s