Real Estate Council of Alberta v Moser, 2021 ABQB 787

Court of Queen’s Bench of Alberta Citation: Real Estate Council of Alberta v Moser, 2021 ABQB 787 Date: 20211005 Docket: 1801 09968 Registry: Calgary IN THE MATTER OF AN APPLICATION UNDER SECTION 9(4) OF THE REAL ESTATE ACT , RSA 2000, c R-5 Between: Real Estate Council of Alberta Applicant - and - Robyn Moser Respondent _______________________________________________________ Decision of the Honourable Justice April Grosse _______________________________________________________ I. Introduction [ 1 ] The parties agree that this action is now moot.

They disagree on whether costs should be awarded and, if so, on the applicable procedure and terms. II. Facts and Context [ 2 ] While many facts are in dispute, there is no material disagreement on the following factual and procedural context. [ 3 ] The Real Estate Council of Alberta (“RECA”) is Alberta’s real estate industry regulator. At the time this litigation commenced, RECA was established as a corporation with 12 appointed members pursuant to the Real Estate Act , RSA 2000, c R-5 , ss 3 and 6 (“ REA ”).

RECA also employed an Executive Director and other staff. [ 4 ] Robyn Moser was appointed as a member of RECA effective November 1, 2015. Friction developed relatively quickly between Ms. Moser and some other RECA members and staff. On July 16, 2018, RECA commenced this litigation by Originating Application, seeking both interim and permanent relief, including an order declaring Ms. Moser disqualified from RECA membership. RECA alleged that Ms. Moser had contravened subsection 9(1) of the REA by acting in a manner that may result in, or create the

appearance of, impeding RECA from carrying out its purposes, foregoing independence or impartiality and adversely affecting RECA’s integrity. When informed of these alleged contraventions, she refused to resign as required by subsection 9(2) of the REA . [ 5 ] Ms. Moser disputed the allegations and denied that she had any obligation to resign. She alleged that she was just doing her job as a diligent member of RECA. She believed the proceedings against her were instigated by a subset of RECA, at the urging of its Executive Director, as the culmination of a campaign to marginalize her and limit her influence.

She alleged that the proceedings were brought for the improper purpose of distracting RECA from investigating various allegations of wrongdoing by the Executive Director and certain other RECA members. [ 6 ] The ensuing litigation involved, among other steps, a number of days of questioning, an interlocutory application to compel answers to undertakings ( Real Estate Council of Alberta v Moser , 2019 ABQB 106 ), an application for

summary judgment, and an appeal of the undertaking decision to the Court of Appeal ( Moser v Real Estate Council of Alberta , 2019 ABCA 384 ). Before any hearing on the merits was in sight, the government commissioned a third-party review of RECA’s governance and operations, culminating in the enactment of the Real Estate Amendment Act , 2019 , SA 2019, c 13 , (the “ Amendment Act ”) which dismissed all RECA members, including Ms. Moser.

The parties agree that this rendered RECA’s Originating Application moot. [ 7 ] On February 20, 2020, RECA filed an application to discontinue the Originating Application on a without costs basis. Its position is that since the merits were never determined and the matter became moot due to the government’s intervention, each party should bear their own costs. [ 8 ] On February 21, 2020, Ms. Moser filed an application for an order dismissing the Originating Application as moot and awarding costs of the entire action on a “solicitor and own client full indemnity basis” (the “Costs Application”). Ms.

Moser bases her request for full indemnity costs on: 1) an indemnity provision in RECA’s Bylaws (the “Bylaw Indemnity”); and 2) her assertions that the Originating Application was improper and an abuse of process and that RECA engaged in litigation misconduct. Ms. Moser has not presented a bill of costs, but her evidence is that, as of February 21, 2020, her legal fees to defend against the Originating Application and “collateral attacks initiated by RECA’s Executive Director” were $1,178,466.22. [ 9 ] Both applications came before Justice Slawinsky on March 4, 2020.

She adjourned them to a full day special application without oral evidence for determination of the following issues: 1) Whether Ms.

Moser is entitled to costs of the Originating Application and in what amount, if it is possible to make that determination in [the full day special hearing]; 2) In the event that the issue of entitlement to and/or quantification of costs cannot be dealt with at the Special Justice Chambers Hearing, whether it should proceed to trial of an issue and, if so, with or without oral evidence. [ 10 ] I understand that further disagreements arose over Justice Slawinsky’s direction and the parties appeared before her again on January 26, 2021.

I was not provided with any Order arising out of that appearance, nor is there one on the Court file. In any event, the full day special application directed by Justice Slawinsky came before me on April 22, 2021. [ 11 ] On June 20, 2020, Ms. Moser commenced a separate action against a number of current or former RECA members and staff. Ms. Moser alleges abuse of public office, abuse of statutory authority, breach of natural justice, and abuse of process, particularly in respect of the steps leading to, and the filing of, the Originating Application. Among other remedies, Ms.

Moser claims general damages, special damages, damage for abuse of office and powers, aggravated damages, punitive and exemplary damages, interest and costs. III. Issues [ 12 ] In their briefs, neither party framed the issues as they were set in Justice Slawinsky’s order. The challenge is that each party argues, to some extent, that I can decide entitlement to costs on the record as it now stands, but only if I decide certain points in their favour. If I do not, then each wants a further proceeding.

This leads to a certain jockeying for position in the framing of the issues. [ 13 ] In oral argument, both parties confirmed their agreement that I can and should interpret the Bylaw Indemnity on the existing record. [ 14 ] Based on the applications filed, the Order of Justice Slawinsky and the submissions of the parties, the live issues before me, in the order I will address them, are: 1) In light of the case becoming moot, should both parties bear their own costs? 2) Under the Rules of Court and common law, is Ms.

Moser entitled to costs on a full indemnity or other basis? 3) Even if the parties would otherwise bear their own costs, could Ms. Moser still have a claim under the Bylaw Indemnity? 4) Is the Bylaw Indemnity applicable? 5) What, if any, further process is required? IV. Analysis A. Since the action is moot, should the parties bear their own costs?

[15] RECA concedes that the Court has jurisdiction to award costs even though the Originating Application is now moot: Vukelichv Mission Institution, 2002 BCSC 495 at para 19. However, RECA argues that where the case is moot through no fault of either party, Ishould decline to award any costs. [16] Ms.

Moser argues that RECA seeks a discontinuance and that this case should follow the normal course for discontinuedproceedings - the discontinuing plaintiff pays costs unless the parties agree or the court orders otherwise: Shergill v Skene, 2011 ABQB334; Mele v Thorne Ridell (1997), (ON SC), 32 OR (3d) 674 (Gen Div); Goulin v Goulin (1995), (ON SC), 26 OR (3d) 472 (Gen Div).

The challenge in applying these cases is that the Court’s reasoning is based on the plaintiffchoosing to discontinue after causing the defendant to run up costs, particularly where the discontinuance can be equated with anadmission that there were no grounds for the claim. In this case, RECA’s request to discontinue arises out of the case becoming moot,with no ability to determine at this stage whether either party would have been successful on the merits. [17] Costs are in the discretion of the Court, as guided by the Rules.

Rule 10.29 provides that a successful party to an application,proceeding or action is generally entitled to a costs award against the unsuccessful party. Rule 10.33 sets out a non-exclusive list offactors that the Court may consider in awarding costs. [18] As reflected in Rule 10.29, costs normally are awarded where there has been some result on the merits and the successachieved by each party can be assessed. A number of the factors in Rule 10.33 reflect this reality as well. This is consistent with thetraditional purpose of an award of costs, being partial indemnification of the successful party.

This remains the paramount objective,though other purposes for awards of costs are now recognized: British Columbia (Minister of Forests) v Okanagan Indian Band, 2003SCC 71 at para 21. [19] In a case that both parties agree is moot, there is no outcome on the merits by which to judge success.

In a number of cases,the courts have refused to award costs where the matter has become moot through no fault of either party: see, for example, DemocracyWatch v British Columbia (Conflict of Interest Commissioner), 2017 BCCA 366 at para 21 and Democracy Watch v Canada(Attorney General), 2018 FCA 195. [20] In some cases, a party has been awarded costs where the issues were moot, often because of the public interest nature of thelitigation or because one party had a role in rendering the matter moot.

See, for example, Vukelich, Kennett Estate v Manitoba(Attorney General) (1998), (MB CA), 129 Man R (2d) 244 (CA) and Josef v Ontario (Minister of Health), 2013ONSC 6091. Here, both parties suggest that the other’s conduct precipitated the passing of the Amendment Act, but neither argues thatthe other controlled that step or was in a position to render the case moot unilaterally. [21] All of the cases presented are factually distinct from the one at bar and, in exercising my discretion on costs, I must addressthe particular facts before me.

In my view, on these facts and despite there having been no determination on the merits, the recognizedprinciples support awarding Ms. Moser some costs for these reasons: • RECA chose to commence litigation. I appreciate that it could have been meritorious, but both parties had complaints and, asbetween the two of them, it was RECA that set in motion the process by which both parties would incur expenses. There are risksassociated with that choice. • In net effect, the Amendment Act gave RECA what it wanted, at least vis à vis Ms.

Moser; she ceased to be a RECA member,albeit through the intervening action of a third party. Ms. Moser cannot say the same thing. She has lost her position, just as if she hadbeen unsuccessful in the litigation, but RECA never had to prove its case. Further, RECA made allegations of improper andunprofessional conduct against Ms. Moser, which remain on the record. She will not have the opportunity to clear her name, at least notin this proceeding.

I appreciate that she has filed materials in this Action and in the Moser Action calling into question the conduct ofother individuals, but none of them is a party to this proceeding so as to be eligible for a costs award here. This case is distinguishablefrom cases of unproven fraud allegations because it was rendered moot, as opposed to the plaintiff withdrawing the claim or beingunsuccessful, but those cases recognize the impact that allegations of impropriety made on the public record can have on a professionalperson, even if they are never proven. • Most importantly, the

preamble to the Amendment Act states that the Minister of Service Alberta received complaints about RECAand that a review found that the members were not governing effectively because of significant interpersonal conflict, a lack of focus onstrategic issues, a lack of constructive relationships with industry associations and inadequate oversight of operations. The KPMG reportthat precipitated the Amendment Act, and is in evidence, refers to a number of challenges, not all of which reasonably can be interpretedas pertaining to Ms. Moser alone.

In other words, I do not have to get into the merits of the Originating Action to find that the issues atRECA that caused the government to pass the Amendment Act may have included, but were not limited to, issues with Ms. Moser.Accordingly, I find that RECA as an entity should bear some responsibility for costs.

This reflects the role that RECA’s circumstancesas an organization played in rendering the litigation moot, eliminating the opportunity for either party to claim costs based on a findingon the merits. [22] In light of this conclusion, I need not address the third issue set out above, namely whether the Bylaw Indemnity could applyeven if this was a case where the parties should otherwise bear their own costs. B. Costs under the Rules of Court and Common Law [23] Ms.

Moser argues that she is entitled to full indemnity costs because the Originating Application was improper and an abuseof process and because RECA engaged in misconduct during the litigation. [24] Ms. Moser particularized her allegations in the Costs Application. Her earlier affidavit filed July 15, 2019 in response to theOriginating Application addresses some of the topics later raised in the Costs Application and I understand that she wishes to leadadditional evidence. Further, if the Court is going to consider Ms.

Moser’s allegations of improper conduct in, or leading up to, thelitigation, RECA wishes to lead additional evidence and to conduct cross-examination. RECA suggested that several weeks of trial

would be required, though I believe that estimate was for all costs-related matters, including the Bylaw Indemnity. [25] In my view, subject to my findings below on the Bylaw Indemnity, the issue of costs should be decided based on the record asit now stands without findings by the Court on any material facts in dispute. My reasons for this are as follows: • The allegations in the Costs Application are contested matters of fact that have never been decided. They are, to a great extent, anextension of the disputes between Ms. Moser and RECA members and staff that RECA relied upon in the Originating Application.

Someof them go directly to the merits of the Originating Application. A court may make findings of fact for the purposes of deciding costs:Canadian Natural Resources Ltd v Wood Group Mustang (Canada) Inc, 2018 ABCA 305 at para 106. However, while the Courtmight be able to make some findings based on the existing record, oral evidence and credibility findings would be required. • Even if some findings could be made, the existing record is problematic in that it includes significant examination of RECAwitnesses by Ms. Moser, but the Amendment Act was passed before RECA conducted any questioning of Ms.

Moser. • Although there may be cases where pleadings and evidence going only to costs are permitted (see, for example, Royal Bank vFogler, Rubinoff (1985), 3 CPC (2d) 248 (ONHC)), it is more common to reject them (see, for example, AI MacFarlane & AssociatesLtd v Delong (1986), (ON SC), 55 OR (2d) 89 (HC) and Eli Lilly & Co v Apotex Inc, 2003 FC 978). This is becausecosts are generally incidental to the action itself.

In Josef, in the context of considering whether to allow proceedings on the merits of theoriginal claim in order to decide costs, the Court said at para 17, “It is not appropriate to decide the merits as a condition precedent todeciding costs. The tail does not wag the dog.

The court will not decide moot issues in order to decide costs.” While proceedings todetermine costs in this case may not be identical to proceedings on the merits, they would be significant and the same concerns arise. • It would be a questionable use of court resources to allow an oral fact-finding hearing to proceed for the purposes of determiningall the questions raised by the ancillary issue of costs when the litigation itself is moot.

This is particularly so where there has not evenbeen an argument that this matter meets the test in Borowski v Canada (Attorney General), (SCC), [1989] 1 SCR 342for litigation that should be heard even though it is moot and the allegations going to costs are intertwined with the merits of thelitigation itself. This is not, by contrast, a situation where the claim for enhanced or indemnity costs is based on a failure to discloseduring litigation or conduct at a particular court hearing. • Many of the allegations made by Ms.

Moser in support of her argument for indemnity costs relate to conduct leading up to thefiling of the Originating Application. Costs are generally not available for pre-litigation conduct: Polar Ice Express Inc v Artic GlacierInc, 2009 ABCA 20; Pillar Resource Services Inc v PrimeWest Energy Inc, 2017 ABCA 19 (where the panel issued three separatejudgments, with two of them finding that pre-litigation conduct could not ground an award of costs).

This is all the more the case wherethe matter is moot, the conduct in question has not been canvassed in an action on the merits and further proceedings would be requiredin respect of the alleged acts. • Ms. Moser has commenced a separate action that overlaps to at least some extent with her allegations in the Costs Application. Shesays the two matters should not be consolidated or joined.

Her position increases the risk of inefficient use of court resources with twoseparate actions proceeding, based on the same or similar events, with one being for costs only where the underlying action is moot. [26] Full indemnity costs – also known as solicitor and own client costs – are “virtually unheard of except where provided bycontract”: Luft v Taylor, Zinkhofer & Conway, 2017 ABCA 228 at para 78.

On the existing record, and without making findings of facton contested evidence, the case for indemnity costs based on misconduct leading into or during the litigation is not made out and I wouldnot grant full indemnity costs on that basis. [27] Since the parties did not address scale or quantum of costs other than full indemnity costs, I retain jurisdiction over thoseissues. If the parties are unable to agree, a process for further submissions can be addressed by case conference, to be requested within30 days of today’s date. C. The Bylaw Indemnity [28] Ms.

Moser’s primary argument is that she has a right to be fully indemnified for her costs pursuant to the Bylaw Indemnity.Both parties ask that I interpret the Bylaw Indemnity to the extent I am able. [29]

Section 29 of RECA’s Bylaws reads: The Council shall indemnify each member against all costs, charges and expenses that the member incurs in respect of any civil, criminalor administrative action or proceeding to which the member is made a party by reason of anything done or permitted by the member inthe execution of the duties of office as member, except things that are occasioned by the member’s own willful neglect. [30] Ms. Moser argues that, on the plain wording of this section, she is entitled to indemnity.

She was a RECA member and sheincurred costs, charges and expenses in respect of a civil proceeding to which she was made a party by reason of things done in theexecution of her duties. She interprets the Originating Application as alleging that she, in effect, did too much as a RECA member –asking too many questions, sending too many emails, and other such conduct. She argues that nothing in the Originating Applicationsuggests that any of the alleged infractions occurred other than in the course of the execution of her duty as a RECA member. Further,Ms.

Moser asserts that RECA has never alleged willful neglect or described any of her conduct as neglectful. Accordingly, her position isthat she has a prima facie right to indemnification and that I can make that finding on the existing record. [31] RECA argues that the Bylaw Indemnity cannot apply in these circumstances and that Ms. Moser’s claim must be dismissedwithout further proceedings for the following reasons:

a) The conduct alleged in the Originating Application was outside of, and in breach of, Ms. Moser’s duties of office as a RECAmember.

b) Ms. Moser’s conduct amounts to willful neglect, triggering the exception in

section 29 even if the Bylaw Indemnity otherwisewould apply.

c) Because there was no decision on the merits, Ms. Moser’s application for costs is effectively a request for an advance of costs,which is not permitted by the Bylaw Indemnity.

d) The Bylaw Indemnity does not cover proceedings commenced by RECA itself. [32] RECA’s position is that if I reject these arguments and find that the Bylaw Indemnity could apply, then there must be furtherproceedings to determine whether it actually applies on the facts of this case. [33] As discussed below, I have concluded that the Bylaw Indemnity could apply, but I am unable to determine on the recordbefore me whether it does or should apply. Regrettably, this means that further proceedings are necessary if the parties cannot come to aresolution, as I strongly encourage them to do. 1.

Proceedings commenced by RECA [34] While proceedings commenced by disgruntled stakeholders or members of the public may well be more common,

section 29does not limit the application of the Bylaw Indemnity to proceedings commenced by parties other than RECA. Rather, on its plainwording, it applies to any civil, criminal or administrative action or proceeding. [35] RECA argues that silence should be interpreted as non-inclusion of actions or proceedings commenced by RECA itself. Inother words, actions commenced by RECA would need to be expressly included.

RECA argues that to interpret the Bylaw Indemnityotherwise undermines the policy behind director indemnities. [36] The Bylaw Indemnity has some similarities to the wording of indemnification for directors and officers in businesscorporations legislation: see, for example, Alberta Business Corporations Act, RSA 2000, c B-9, s 124.

It is generally accepted that thepolicy behind indemnification in the corporate context is to encourage qualified candidates to accept positions and to ensure they arereimbursed for the adverse consequences of carrying out the role: see, for example, Bennett v Bennett Environmental Inc, 2009 ONCA198 at para 23. To discourage misconduct, such legislation includes express limits on the circumstances under which directors or officerscan be reimbursed. [37] The parties accept that the Bylaw Indemnity has similar policy underpinnings.

I am not convinced, however, that it must beinterpreted as excluding actions by RECA in order to be consistent with that policy. While allowing for application of the BylawIndemnity in an action by RECA means it could apply in circumstances where RECA considers a member to be in breach of their duties,RECA could be wrong in its allegations of breach. In such a case, the policy of encouraging qualified candidates and reimbursing themfor costs arising out of their work, subject to the exception for willful neglect, would support indemnity coverage.

A potential candidateno more wants exposure to the costs of defending an action brought by RECA than one brought by a third party. If the concern is that theexisting exception for “willful neglect” is not broad enough and may leave room for indemnification in circumstances where RECA issuccessful in demonstrating a breach of duty, then the answer may be to re-craft the exception rather than reading in a requirement thatonly proceedings commenced by third parties are covered.

Further, it is presumably open to RECA to limit expressly the BylawIndemnity to third party actions (subject to any limits on its power in that regard, which are not at issue in this application and which Ishould not be taken as having decided). [38] Moreover, comparison of the Bylaw Indemnity and the analogous provision in the ABCA or other business corporationslegislation has limits. RECA is a statutorily-created regulator, not a corporation carrying on business for profit.

Further, the ABCA wasdrafted by the Legislature, while the Bylaws were drafted by RECA, albeit pursuant to the power granted by the Legislature under theREA. The difference in drafters reduces my ability to rely on one to interpret the other. Also, there is no magic wording; other businesscorporations statues include similar indemnity concepts but the wording differs. With all these cautions in mind, it remains noteworthythat section 124(1) of the ABCA expressly excludes actions by or on behalf of the corporation; these are addressed separately in section124(2).

This suggests that, but for the exclusion, they would be included. It also suggests that, in the corporations context, the Legislaturehas recognized that the policy objectives behind indemnification apply to at least some proceedings commenced by the corporation itself. [39] Both parties took the position that this case is more analogous to statutory indemnification than to contractualindemnification, as addressed in cases such as Resolute FP Canada Inc v Ontario (Attorney General), 2019 SCC 60. 2.

Willful Neglect Exception [40] I disagree with both parties on the application of the willful neglect exception. [41] I do not agree with Ms. Moser that, for the exception to apply, RECA would have had to plead or otherwise raise willfulneglect expressly in the Originating Application. While the framing of the pleadings or issues in an action or proceeding for whichindemnification is sought may well have some relevance in deciding whether the indemnity applies, I am not convinced that they aredeterminative.

If they were, then a RECA member’s right to indemnity would be dependent on whether some other party, whetherRECA or a third party, alleged or otherwise raised willful neglect. This could lead to mischief and could easily undermine the policybehind the indemnification. It also could lead to absurdly ad hoc indemnity coverage, based not on the substance of the relationshipbetween the acts at issue and the wording of the indemnity, but on how a party framed the issues in proceedings in which the indemnityitself often will not be in issue and in which one party often will have no interest in the indemnity at all.

One can imagine a number ofscenarios where a third party claim against a RECA member may not raise willful neglect, presumably leaving that issue to be addressedas between RECA and the member in separate proceedings on the Bylaw Indemnity. [42] To the extent that Ms. Moser suggests that the allegations in the Originating Application could not, in substance, give rise to afinding of willful neglect, again I disagree. Both parties rely on R v Dahl, (AB CA), [1936] 4 DLR 629 (Alta CA) for

the definition of “willful neglect” in Alberta. Ms.

Moser relies on the statement of MacGillivray JA at para 78 that the term means “an omission consciously and intentionally made which was known or as a matter of law is presumed to have been known to the person guilty of the omission, to be wrongful in the circumstances.” RECA relies on para 31, in which Clarke JA quotes from In re City Equitable Fire Insur Co Ltd , [1925] Ch 407 that “…a person is not guilty of 'wilful neglect or default' unless he is conscious that in doing the act which is complained of, or in omitting to do the act which it is said he ought to have done, he is committing a breach of his duty and also…'recklessly careless whether it is a breach of duty or not.'” Assuming, without deciding, that the

interpretation of “willful neglect” would be the same in respect of indemnification as in a criminal case, I do not accept Ms. Moser’s submission that none of the allegations in the Originating Application could result in a finding of willful neglect. In a broad sense, the Originating Application alleges omissions of duty, albeit often through positive acts. It also specifically alleges an omission to maintain confidence and a failure to be honest with RECA members.

These allegations could, depending on the evidence, give rise to a finding of willful neglect. [ 43 ] Equally, I reject RECA’s conclusory statement that “Moser’s conduct falls within these exclusions.” Whether Ms. Moser was made a party to the Originating Application by reason of her own willful neglect requires findings of fact on matters that are hotly contested in the evidence filed to date. It may well require findings of fact that never would have been made in proceedings under the Originating Application itself, because the test for the breaches of duty alleged against Ms.

Moser was unlikely to be coextensive with the test for willful neglect. 3. Execution of Duties [ 44 ] The parties’ arguments as to whether Ms. Moser was acting in the execution of her duties as a RECA member are intertwined with their arguments about whether she breached those duties. I have found that further proceedings are necessary to determine the willful neglect issue; I cannot see how any additional evidence or other material effort would be needed to address the “in execution of her duties” issue at the same time. Accordingly, I decline to comment on the latter at this time.

There is nothing to be gained and it is preferable for it to be left to the proceeding where the application of the Bylaw Indemnity is decided with the benefit of an enhanced record. 4. Advancement of Costs [ 45 ] RECA argues that because the proceeding is moot, Ms. Moser’s claim amounts to a request for an advancement of costs. The parties agree that the Bylaw Indemnity does not provide for advancement of costs prior to the conclusion of an action or proceeding, in contrast to the ABCA, where advancement is expressly addressed. [ 46 ] To some extent, Ms.

Moser’s claim for indemnity and a request for an advance of costs are analogous because, in both cases, there has not been a decision on the merits. In this case, however, despite the lack of a decision on the merits, the underlying litigation is, in substance, concluded. Therefore, I do not accept that Ms. Moser is, in effect, asking for an advance and that the indemnity should be rejected on that basis alone. The fact that there has not been, and will not be, a decision on the merits of the Originating Application has implications for costs, but does not render Ms.

Moser’s claim an application for an advance. [ 47 ] If any request for costs without a decision on the merits were treated as a request for advance costs, then a RECA member could never recover costs incurred in a matter that was resolved by agreement without a hearing. D. Further Proceedings [ 48 ] For the reasons set out above, I am not prepared to authorize or direct further proceedings to make findings of fact in this matter for purposes of costs, outside of the Bylaw Indemnity. However, in my view, if Ms.

Moser has a right to full indemnity costs under the Bylaw Indemnity, that right exists independently of any costs award in the context of the Originating Application. Unlike the other bases for costs, which are incidental to the action in the main and governed by the Rules of Court and the Court’s inherent jurisdiction, any rights under the Bylaw Indemnity are rights inter se between Ms. Moser and RECA. There is a judicial discretion to override solicitor-client costs clauses in contracts, and I see no reason why the same would not exist in respect of a bylaw.

That discretion, however, should be exercised only in limited circumstances: Canadian Natural Resources Ltd v Wood Group Mustang (Canada) , 2018 ABCA 305 at para 107 . Whether that discretion should be exercised in this case in respect of the Bylaw Indemnity is a matter for another day. I do not see a basis for exercising it to put an end to Ms. Moser’s claim at this stage. [ 49 ] RECA argues that a proceeding on issues such as willful neglect and the execution of Ms. Moser’s duties will amount to litigating the merits of the allegations in the Originating Application, despite the issues being moot.

I understand the concern and I again urge the parties to make every effort to resolve this matter, either on their own or with assistance. I appreciate that the relationships between the parties and counsel are strained and that the issues are highly contentious. I also appreciate that this litigation is taking place against the backdrop of the larger suite of industry issues referenced in the Amendment Act.

Nevertheless, it makes no sense for each party to spend another $1 million fighting over the first $1 million. [ 50 ] That said, if further proceedings are required to determine the application of the Bylaw Indemnity, so be it. I am not convinced that this amounts to litigation on the merits, as the issues and tests overlap but are not identical. Moreover, given my view that Ms. Moser’s claim under the Bylaw Indemnity is independent of a claim for costs under the Rules of Court , my concerns about further proceedings are mitigated.

The use of court resources to determine the application of the Bylaw Indemnity is more palatable because it is more akin to private litigation over an existing alleged right than to proceedings on the ancillary issue of costs alone. I note that if a third party commenced an action against a RECA member, it could well lead to separate proceedings between the member and RECA on the application of the Bylaw Indemnity. This does not mean, of course, that these parties have carte blanche to run whatever litigation they like and to use court resources as they choose.

They, like all parties, have a responsibility to manage the litigation in a manner consistent with the foundational rules and the Court has oversight in that regard. They are entitled to a fair and proportionate procedure, not to every hour of Court time that either party might like. [ 51 ] I think it appropriate to allow the parties an opportunity to digest this Decision and then make further submissions on

procedure for determining the Bylaw Indemnity issue, including whether any such procedure should be linked to the separate Moser Action. I understand that the parties disagree on this point and there may well be other procedural options, considerations or arguments that are not apparent to me without the benefit of input from the parties. [ 52 ] Before closing, I should note that there is clearly another dispute brewing between the parties as to which costs are covered by the Bylaw Indemnity if it does apply. These issues arose tangentially in the oral submissions before me, but were not fully argued.

For example, is there a reasonableness requirement in terms of the costs incurred? If so, which costs were reasonable? Does the Bylaw Indemnity cover interlocutory steps in which Ms. Moser was unsuccessful or for which she was ordered to pay costs to RECA? Nothing herein should be taken as a ruling on what is covered by the Bylaw Indemnity if it applies. V. CONCLUSION [ 53 ] For the reasons set out above, I conclude that this is not a case where each party must bear their own costs as a result of the matter becoming moot. The Bylaw Indemnity may apply to indemnify Ms.

Moser for her costs incurred in this Action, at least to some extent, but I am unable to determine that on the existing record. I will consider further submissions from the parties on the procedure to determine that issue. If the Bylaw Indemnity does not apply, the existing record does not establish a case for full indemnity costs and there will be no further proceedings in that regard. Ms. Moser then would be entitled to some costs, with the terms and quantum to be further spoken to. [ 54 ] Counsel may write to my office within 30 days to set up a case conference to determine next steps.

I expect that there will have been meaningful discussions between counsel well in advance of that conference as to the potential for a full resolution on costs, and on process for any further steps required. Heard on the 22 nd day of April, 2021. Dated at the City of Calgary, Alberta this 5th day of October, 2021. April Grosse J.C.Q.B.A. Appearances: Susan Kushneryk, Eric Morgan, Filippo Titi for the Applicant Steven T. Robertson, Annie Alport for the Respondent