1490703 Alberta Ltd Plaintiff - v. -, 2021 ABQB 853

Court of Queen’s Bench of Alberta Citation: 1490703 Alberta Ltd v Chahal, 2021 ABQB 853 Date: 20211029 Docket: 1601 09247 Registry: Calgary Between: 1490703 Alberta Ltd Plaintiff - and - Raj H.S. Chahal, Novy Cheema, Murray D. MacKay, Murray MacKay Professional Corporation, Jason R.

Ingimundson, Jason Ingimundson Professional Corporation, Harpreet Thiara, Francisco Ignacio, Sandeep Basra, Zafir Rashid, Zachery Penner, Randy Chan, Jane Doe, John Doe, ABC Corporation and XYZ Corporation Defendants _______________________________________________________ Endorsement Regarding Costs of the Application of the Honourable Mr. Justice O.P. Malik _______________________________________________________ I. Introduction [ 1 ] In 1490703 Alberta Ltd v Chahal , 2021 ABQB 495 , I upheld a Master’s decision which dismissed the Plaintiff’s application for

summary judgment against the MacKay Defendants (defined terms used here are the same as those in my underlying decision) and which granted the MacKay Defendants’ application for

summary dismissal of the Plaintiff’s action on the basis of limitations. [ 2 ] The parties were unable to agree on costs, so I address that issue here. [ 3 ] The parties provided submissions on costs of the action as a whole . However, upon deciding the matter before her, the Master awarded costs to the MacKay Defendants of approximately $15,000.00. [ 4 ] I acknowledge that an appeal from a Master’s decision is de novo and that the standard of review is correctness on all issues ( Bahcheli v Yorkton Securities Inc. , 2012 ABCA 166 at para 12 ).

However, costs awards are discretionary, are entitled to deference, and should not be interfered with absent error ( 864503 Alberta Inc. v Genco Place Properties Ltd., 2019 ABCA 248 at para 11 ; Coley v Payne , 2015 ABQB 269 at para 20 ). [ 5 ] I do not identify any error in the Master’s decision regarding costs nor have the parties raised any concerns with her decision in that regard. In the result, the Master’s costs decision will stand. Consequently, the only matter before me is what the MacKay Defendants’ costs should be in respect of this appeal. II. Costs i.

The Plaintiff’s Submissions [ 6 ] The Plaintiff argues that it should not be responsible for any costs. It submits that an award of costs would result in a “serious denial of justice, discouraging litigants from asserting their rights”; would be inimical to preserving a litigant’s access to justice; and would “defeat” the purpose of the Rules . [ 7 ] The Plaintiff relies on the case of Pauli v ACE INA Insurance 2004 ABCA 253 at para 21 , for the proposition that I may decline to award costs on a novel question of law, new or ambiguous legislation, an unsettled point of practise or where there is a conflict

in the law that, for the purpose of the public interest, needs to be settled. [ 8 ] In its written submissions, the Plaintiff frames the public interest that applies here in the following terms: ...if a litigant is represented by counsel in matters, the client would have to essentially “figure out” whether by the client’s own research, or the client engaging other counsel for opinions, as to whether any claims arose. The serious consideration here is whether a client should be able to rely on counsel for advice as to when a claim arose. [ 9 ] The Plaintiff states that should I be inclined to award costs, I do so in accordance with the tariff set out in

Schedule C, Division 2 of the Rules rather than on a 40-50% indemnity basis of the Defendants’ incurred expenses as the MacKay Defendants have suggested I do per McAllister v Calgary (City) , 2021 ABCA 25 . During further oral argument, however, the Plaintiff conceded that it is appropriate that costs of the appeal be calculated on the basis of (at least what I call) a McAllister indemnity of 40-50%. ii. The MacKay Defendants’ Submissions [ 10 ] The MacKay Defendants argue that awarding costs on the basis of the tariff in

Schedule C, Division 2 of the Rules would be inadequate given the legal fees of approximately $29,000.00 they have incurred in respect of this appeal. They maintain that a 50% indemnification of their incurred expenses is representative of their actual costs and therefore appropriate in the circumstances. The MacKay Defendants note that following the Master’s decision, they served the Plaintiff with a Formal Offer to Settle in April 24, 2020 for a consent dismissal of the appeal on a without costs basis which the Plaintiff did not accept.

Consequently, the MacKay Defendants say they are entitled to double costs pursuant to Rule 4.29. [ 11 ] In the alternative, the MacKay Defendants submit that I should award costs on an enhanced scale pursuant to a multiple of

Schedule C fees to reflect their attempt to resolve the matter through the Formal Offer and that these costs should be “well in excess” of what they would receive with a doubling of their costs. III. Analysis [ 12 ] As a preliminary matter, I reject the Plaintiff’s contention that an award of costs would undermine the application of the Rules as these relate to considerations of access to justice. The purpose of the Rules as articulated in Rule 1.2 is to promote the resolution of disputes in a timely, efficient, and cost-effective way.

Amongst other things, the Rules are designed to: assist parties identify issues in dispute, facilitate quick resolution of claims, encourage parties to resolve claims on their own and to offer various alternative dispute options, require parties to communicate honestly and openly, and provide an effective, efficient and credible system of remedies. [ 13 ] Indeed, costs provisions constitute an important element in the scheme of the Rules as they are designed to “promote settlement, deter frivolous actions and defences...deter parties from taking unnecessary steps, and to sanction those who refuse a responsible settlement offer ( EAD Property Holdings

(103) Corp v. Greyhound Canada Transportation ULC , 2015 ABQB 425 at para 16 ). This is articulated by the Supreme Court of Canada in the following terms in British Columbia (Minister of Forests) v Okanagan Indian Band , 2003 SCC 71 at paras 25-26 : ...modern costs rules accomplish various purposes in addition to the traditional objective of indemnification.

An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer; this policy has been codified in the rules of court of many provinces...Costs can also be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice.

Indeed, the traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner’s litigation expenses to the loser rather than leaving each party’s expenses where they fall (as is done in jurisdictions without costs rules), they act as a disincentive to those who might be tempted to harass others with meritless claims.

And because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court’s concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs. [ 14 ] This purposive reading of the Rules applies equally to plaintiffs and defendants.

Neither party involved in a litigation matter is entitled to blithely carry on without acknowledging the costs consequences that will have to be paid to the winning side should their case fail. [ 15 ] Further, I cannot identify in the Plaintiff’s action (and this appeal) any public interest issue. These proceedings raise a straightforward limitations question.

The law of limitations, at least in the context of a professional negligence claim against lawyers, is well settled and does not, as far as I can tell, warrant any special cost considerations. [ 16 ] Finally, formal offers of settlement are an important part of the Rules ’ design to drive early resolution.

The operation of Rule 4.29 which encourages compromise settlement on terms that are fair and reasonable via the application of double costs is in all respects appropriate and is entirely consistent with the Rules ’ purpose ( Union Square Apartments Ltd. v Academy Contractors Inc. (Abalon Construction) , 2017 ABQB 151 at para 12 ). [ 17 ] The MacKay Defendants provided the Plaintiff with various opportunities to resolve their action on a without costs basis prior to the Master’s decision.

They provided the Plaintiff with a further opportunity via a Formal Offer to discontinue its appeal without costs after the Master’s decision. The Plaintiff therefore would have fully appreciated the costs consequences of proceeding but elected to carry on, regardless. That is properly the Plaintiff’s choice to make. However, the Plaintiff would have been well-minded to accept the MacKay Defendants’ Formal Offer as its appeal of the Master’s well-reasoned and detailed decision was, at least in my view, bound to fail.

[ 18 ] In approaching the issue of what a party’s proper indemnification should be, I am guided by the Alberta Court of Appeal’s decision in McAllister v Calgary (City) , 2021 ABCA 25 . [ 19 ] Pursuant to Rule 10.29(1), a successful party is prima facie entitled to costs from the unsuccessful party.

In determining what amount of costs should be awarded, the court considers those factors enumerated in Rule 10.33 which include the following: - each party’s success: Rule 10.33(1)(a); - the amount claimed and recovered: Rule 10.33(1)(b); - the importance of the issue being litigated: Rule 10.33(1)(c); - the complexity of the action: Rule 10.33(1)(d); - the apportionment of liability: Rule 10.33(1)(e); - the conduct of a party that shortened the action: Rule 10.33(1)(f); and - any other matter related to the question of reasonable and proper costs that the Court considers appropriate: Rule 10.33(1)(g). [ 20 ] Following its consideration of Rule 10.33, the court is directed to proceed to Rule 10.31 which grants the court broad discretion to craft an award that is reasonable and proper: Rule 10.31(1)(a); or that is appropriate in the circumstances: Rule 10.31(1)(b); or that is a combination of both. [ 21 ] In awarding reasonable costs pursuant to Rule 10.31(1)(a), the court can award costs on one or more of the following grounds: - with or without refence to

Schedule C: Rule 10.31(3)(a); - an amount equal to a multiple, proportion or fraction of the amount set out in any column of

Schedule C: Rule 10.31(3)(b); - costs to be paid with respect to a particular issue, application or proceeding: Rule 10.31(3)(c); or - costs to be paid on the basis of a percentage of all, or part of the successful party’s assessed costs: Rule 10.31(3)(d). [ 22 ] Rule 10.31(1)(

b) allows the court to award “any amount” that it considers appropriate in the circumstances including but not limited an award of costs on the basis of an indemnity for a party’s legal fees or a lump sum instead of, or in addition to, assessed costs. An assessment of the reasonableness of legal costs must also consider Rule 10.2(1). [ 23 ] There is no presumption that costs should be awarded on the basis of the appropriate column of

Schedule C as this would not always produce a costs award that is reasonable. ( McAllister at paras 53-56 ). While

Schedule C provides a rough ballpark of what reasonable costs might approximate in some contexts,

Schedule C should be looked at as one of a number of tools rather than as the default mechanism for determining reasonable costs. [ 24 ] Generally speaking, the purpose of a reasonable and proper costs award pursuant to Rule 10.31(3)(

a) is to provide the successful party with partial indemnification of its costs. In McAllister , the Court of Appeal confirmed that a 40-50% level of indemnification provides a “reasonable guideline upon which the level of indemnification implied by the phrase “reasonable and proper costs” may be measured under the Rules”. ( McAllister at para 51 ). [ 25 ] While McAllister does not address the consequences of formal offers to settle on the granting of costs on an indemnity basis, I see no reason as to why a special approach is warranted.

If a proper measure of costs in the usual course is on a percentage indemnity basis of a parties’ expenses, then a doubling of costs would simply mean a doubling of whatever the costs awarded on an indemnity basis would be. [ 26 ] Having regard to the parties’ submissions on costs and the guidance that I derive from the case law, I grant the MacKay Defendants indemnification of 50% of their incurred expenses.

However, the application of Rule 4.29(2) requires a doubling of its costs such that the MacKay Defendants shall recover double this amount, plus disbursements and expenses. [ 27 ] In my view, the action was neither important in terms of the issues being litigated ( Rule 10.33(1)(c)), nor particularly complex ( Rule 10.33(1)(d)). The MacKay Defendants were entirely successful in terms of the ultimate result ( Rules 10.33(1)(

a) and (b)). I do not believe any of the factors enumerated in Rule 10.33(2) apply. [ 28 ] I have reviewed the MacKay Defendants’ Formal Offer to Settle. The Plaintiff does not argue that the Formal Offer is not genuine or does not meet the requirements of the Rules . In my view, the Formal Offer is operative. Had it been accepted, this appeal proceeding would have come to a proper and timely resolution ( Rule 10.33(1)(f)). [ 29 ] I find that providing the McKay Defendants with a doubling of a 50% indemnification of their fees, plus GST and disbursements, is a reasonable and proper costs award to make pursuant to Rule 10.31(1)(

a) having regard to the factors set out in Rules 10.33 and 10.2(1). IV. Disposition [ 30 ] In respect of this appeal, the MacKay Defendants are entitled to a doubling of their incurred costs on a 50% indemnity basis, plus GST and disbursements. Written submissions on costs were received from the parties on August 11 and 12 and September 15 with additional oral submissions

heard on October 27, 2021. Dated at the City of Calgary, Alberta , October 29, 2021. O.P. Malik J.C.Q.B.A. Appearances: Clive Llewellyn for the Plaintiff, 1490703 Alberta Ltd Zul Verjee QC for the MacKay Defendants, Novy Cheema, Murray D. MacKay, Murray MacKay Professional Corporation