Rumancik v Hardy, 2021 ABQB 917

Court of Queen’s Bench of Alberta Citation: Rumancik v Hardy, 2021 ABQB 917 Date: 20211117 Docket: 1701 16893 Registry: Calgary Between: Joel Rumancik and Candace Rumancik Applicants/Plaintiffs - and - Jacob Hardy and Michael Bates Respondents/Defendants _______________________________________________________ Cost Ruling of the Honourable Mr. Justice W.P. Sullivan _______________________________________________________ [ 1 ] This costs ruling arises out of my decision in this matter, cited as Rumancik v Hardy , 2021 ABQB 374 .

I ruled on numerous refused undertakings and objections by the Defendants and directed that they answer substantially all of the questions that were put by counsel to them at questioning. [ 2 ] The Rumanciks were substantially successful in their application to compel answers to undertakings and answers to the refusals. The number of undertakings and refusals exceeded 180. [ 3 ] The issue before me is whether the Plaintiffs be awarded their costs and what the amount of that award should be. In this

case, the Plaintiffs seek a costs award of $24,066.75, being one half of their actual solicitor-and-client costs. [ 4 ] A successful party, in this case the Rumanciks, are entitled to their costs, and although not 100% successful, they were substantially successful in their application before me. [ 5 ] In GO Community Centre v Clark Builders and Stantec Consulting Ltd , 2020 ABQB 203 , Mr.

Justice Renke of this Court at paragraph 59 said this: [59] The purposes of the costs regime can be enumerated in different ways, but costs serve two direct purposes and one higher order purpose (which in turn serves further purposes promoting the rule of law). First, costs provide some compensation to a successful litigant. The litigant is not required to shoulder alone all of the expense of legal vindication. In that way, costs serve the higher order objective of enhancing access to justice by providing deferred reimbursement to a successful litigant.

This higher-order objective also imposes constraints on costs, which I’ll return to below. Second, costs promote rational and litigation norm-consistent decision making. On the one hand, costs discourage frivolous claims and discourage improper litigation behaviour. On the other hand, by adding a measure of predictable risk to litigation, costs can contribute to incentives for settlement. These objectives promote access to justice by freeing the litigation system from cases that need not or should not be litigated.

See, e.g., Geophysical Service Incorporated v Falkland Oil and Gas Ltd , 2019 ABQB 314 , Woolley J at paras 16 and 28 and McAllister v Calgary (City) , 2018 ABQB 999 , Kubik J at para 14: [14]

Schedule C costs serve many useful purposes in litigation. First, they reward a successful party by compensating them for the significant steps taken in the litigation. Second, they allow the parties to effectively measure the risk of costs associated with the litigation. This assists in achieving a third purpose – encouraging parties to abide by the foundational rules which promote resolution of the issues between the parties in a practical and efficient manner. See also EAD Property Holdings

(103) Corp v Greyhound Canada Transportation ULC , 2015 ABQB 425 , Topolniski J at para 16; Strategic Acquisition Corp v Multus Investment Corporation , 2017 ABQB 297 , varied 2018 ABCA 63 , Mahoney J at para 17(QB): [17] … [T]he Court must always be mindful of the purposes that costs orders serve. As Perell J. summarized in 394 Lakeshore Oakville Holdings Inc. v.

Misek , 2010 ONSC 7238 para 10 : Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements. [ 6 ] And the Justice went on at paragraphs 124 and 125: [124] The costs determination requires correlation of two axes of analysis.

The first axis of analysis concerns the particular circumstances of the litigation in light of the rule 10.33 factors. This factual analysis concerns whether the circumstances make the particular case unlike the standard or usual case presupposed by

Schedule C. More precisely, the analysis would concern (in particular) whether the legal input required to achieve success was, in the Court’s opinion, quantitatively or qualitatively greater than would be required for the standard or usual case. If not, and the case is a standard case, resort may be had to

Schedule C (whether or not adjusted for inflation). If the conclusion is that the case was not standard, a further determination must be made of the degree to which case deviated from the standard case. [125] The second axis of analysis concerns the costs assessment. The amount of costs should be, to use the Court of Appeal’s language in Goldstick Estate , “proportional” to the legal work done and other relevant circumstances.

This is another way to say that the costs award should be “reasonable.” [ 7 ] And paragraph 161: The alternative, should the judge not wade into the assessment of the account or the parties not agree on the reasonableness of an account, is to set a percentage but order the account to be assessed under Subdivision 2 of Division 2 of

Part 10... [ 8 ] And paragraph 163: In my opinion, the percentage indemnity approach, despite the concerns raised, remains a viable approach to costs assessment outside of its traditional application in lengthy, complex proceedings.

The availability of this approach, however, is best confined to narrow circumstances such as litigation with substantial sums at stake, involving significant legal or factual complexities, between sophisticated parties on an equal economic footing. [ 9 ] The Alberta Court of Appeal very recently commented on costs in McAllister v Calgary (City) , 2021 ABCA 25 , beginning at paragraph 21 : “The Rules confer a qualified “entitlement” to costs to the successful party”. They then go on to cite Rule 10.33, noting the items that a court may consider in awarding and determining the amount of costs.

And importantly with respect to this decision, the Court went on in paragraph 41: [41] In Alberta, the weight of authority is that party and party costs should normally represent partial indemnification of the successful party at a level approximating 40-50% of actual costs (citations). [ 10 ] The Court of Appeal continued at paragraph 46: [46] If the option of awarding costs as a percentage of assessed costs is chosen, the assessment of the costs may require a consideration of what is a reasonable amount which ought to have been charged for the services the successful party’s lawyer rendered and that may require reference to the considerations set forth in Rule 10.2(1) which go into the determination of what constitutes a reasonable charge (the Rule is reproduced at paragraph 47 herein).

If a trial judge chooses to award a percentage of the assessed costs

pursuant to Rule 10.31(3)(

d) to the successful party, then what is being considered are the “reasonable and proper costs that a party incurred” under Rule 10.31(1)(a). In order to determine whether the costs incurred are reasonable and proper, they must be assessed, either by the party opposite, or by the judge or by an assessment officer. If it is the trial judge, then he or she should consider the reasonableness of both the legal services performed and the amounts charged for those services. Reasonable costs reasonably incurred is what the percentage must be based on.

The incurring of the cost must be reasonable and the amount of the cost incurred must also be reasonable. As indicated above, the assessment may also be undertaken by the party opposite or, if the parties cannot reach an agreement on costs, the trial judge may direct an assessment of the legal costs by an assessment officer, pursuant to Rule 10.34. Rule 10.31(3)(

d) contemplates such an assessment when it speaks of one party being ordered to pay the other “a percentage of assessed costs” (emphasis added). [ 11 ] In the costs submission of the Respondent Michael Bates, his counsel refers to Schwartz Estate v Kwinter , 2013 ABQB 147 wherein Justice Graesser outlined the basic principles at paragraph 111: [111] The minutia of the evidence is rarely the deciding factor in a claim for costs. Courts will normally take a bigger picture view of costs, following the basic principles that: 1. Costs follow the event; 2. Usual costs are those provided for in

Schedule C of the Rules of Court ; 3. The court has a wide discretion (to be exercised judicially) as to the awarding of costs in any matter; 4. A successful party may be denied costs, or awarded costs on a lesser scale, because of his or her conduct during the course of the litigation, or because of the magnitude of the award in comparison with the costs calculated on the usual column; 5. Costs on an elevated scale (higher column of costs or multiples of ordinary

Schedule C costs) are the exception and not the rule; and 6. An award of elevated costs to the successful party requires either that the magnitude of the award is not reflected in the columns in

Schedule C (well more than $1.5 million) or some misconduct during the litigation on the part of the unsuccessful party. [ 12 ] Counsel for Mr. Bates goes on to quote McAllister , stating that it does not change the law in Alberta with respect to costs, nor does it abrogate or modify the general principles set out by Mr. Justice Grasser. He quotes from paragraph 64 of McAllister : [64] However, we emphasize, once again, that this was a case involving an almost completed piece of protracted litigation, which included a trial and the many steps required to bring the matter to trial.

The issue of indemnification becomes a more important consideration in assessing costs at the end of a lawsuit than it does at each and every step of the way. At the interlocutory stage, it is often not clear who will ultimately be entitled to some level of indemnification. [ 13 ] The Defendants go on to say in their brief, “the Defendant should not be made to pay for the decision of the Plaintiffs and/or their counsel to take a disproportional approach to a relatively straight forward interlocutory application”.

And they go on to again quote further from Schwartz Estate at paragraph 230 , concluding in their submissions that in the present case “it is submitted that $52,036.11 or even 50% of that amount for an interlocutory application dealing with the objections at questioning is completely unreasonable and inappropriate”. [ 14 ] In his submissions Mr. Hardy takes the position, generally, that the substance of my decision and the bulk of the objections raised to undertakings and refusals relate to Mr. Bates’ pleadings and not to his pleadings.

It is clear in his submissions that he had filed an independent and separate Statement of Defence in this action and that this action is collateral to another action 1601-15910 and among other parties names the Calgary Police Service. [ 15 ] The primary issue that was decided in my decision related to solicitor-client privilege and that the communications that were in issue “are directly related to action 1601-15910” in which Michael Bates, up until my decision, was representing Mr. Hardy. [ 16 ] I note in paragraph of 25 of Mr.

Hardy’s submissions the following: [25] The pleadings in this case, both the claim and most important the defence, raise questions with respect to publication, responsible communication in the public interest, qualified privilege and malice.

As stated in the applicant’s brief at paragraph 30. “In his Statement of Defence, Bates concedes to filing the Hardy’s Statement of Claim and communicating or publishing same with the press release to Grant and other media contacts on Hardy’s behalf...” They, the Plaintiffs, go on to state: This paragraph speaks to ‘‘the defence" as one pleading but mention specifics not mentioned in Mr. Hardy’s Defence. [ 17 ] In concluding his submissions, Mr. Hardy says this: Although Mr.

Hardy has not yet seen the Plaintiffs costs submissions, he understands they are asking for a percentage of total actual costs spent during an undisclosed period of time. No details other than a list of bills have been provided It is important to highlight that during the time period from Jan 2020 through Mar 2020 there are close to 400 emails exchanged with Ms. Lemmens and the majority are not specific to this application.

Lastly, as the court has already highlighted in the decisions “substantial” additional material was prepared for this application which was not considered and related to without prejudice communication which did not have court approval to be used as evidence. [ 18 ] Both Defendants have raised arguments that costs should be awarded based on the

Schedule and strictly on the Schedule. However, I note the submissions of the Applicants at paragraphs 11, 12 and 13:

[11] The Applications were argued with considerable intensity, and were factually and legally complex, underpinned by events involving multiple actions. Argument required an extensive review of the merits of the privilege claims advanced, and necessitated detailed analyses and response to the Defendants’ objections and arguments regarding same. Given the two applications before this Court, and in particular, the sheer number of responses at issue, each of the briefs required two separate appendices for each application.

These appendices addressed each undertaking and refusal individually, which frequently involved addressing multiple claims of privilege, since the Defendants mostly did not identify what privilege they were even claiming. As such, the Rumanciks’ written submissions were necessarily substantial, and required “considerable resources” to prosecute. [12] As the successful party, the Rumanciks are entitled to their party-party costs. This Court has confirmed that party-party costs should approximate 40-50% of a party’s reasonable legal bill and has the discretion to order same without reference to

Schedule C. This Court has confirmed that items identified in

Schedule “C” have been put in place as a “purely-optional rubber stamp for a judge, who may use it or not, or amend it, as he or she sees fit.” The Alberta Court of Appeal has further confirmed that

Schedule “C” costs are not the default rule for making costs awards16 and “cannot realistically achieve an appropriate level of costs in the context of complex and protracted litigation. As noted above, the Applications were complex and not inexpensive to prosecute: the Rumanciks spent $52,036.10 pursuing the Applications. [13] As the percentage indemnity approach is associated with lengthy, complicated litigation, the Rumanciks submit that 50% of their legal costs incurred is reasonable in the circumstances. Indeed, the circumstances of the Applications indicate that an award under

Schedule “C” would not meet costs objectives. Given the noted complexity of the Action, importance of the issues, and sheer volume of responses sought, the legal input required to achieve success on these Applications was qualitatively and quantitatively greater than would be required for a standard application presupposed by

Schedule “C”. In particular, argument demanded voluminous written submissions: the two separate applications required two briefs, 49 pages and 103 pages of argument, respectively, with separate appendices needed for each brief, for each application. [ 19 ] This submission appears to accurately reflect the circumstances around this issue and I give it significant weight. [ 20 ] Both GO Community Centre and McAllister refer to having the legal costs assessed by the Court or Review Officer.

The Applicants consent to this process “with full accounts redacted accordingly”. [ 21 ] I therefore order that costs be ordered in this matter at 50% of the amount assessed by the Review Officer, being the amount charged to the Rumanciks by their counsel for items related directly to the matters of the application that was heard by me and the subject of my decision. The Defendants will be liable jointly and severally for this amount. Dated at the City of Calgary, Alberta this 17 th day of November, 2021. W.P. Sullivan J.C.Q.B.A. Appearances: Matti Lemmens for the Applicants/Plaintiffs Eugene J.

Bodnar for Michael Bates Jacob Hardy, Self-represented