Rocky View (County) v Wright, 2021 ABQB 930

Court of Queen’s Bench of Alberta Citation: Rocky View (County) v Wright, 2021 ABQB 930 Date: 20211119 Docket: 2001 03559 Registry: Calgary Between: Rocky View County also known as Municipal District of Rocky View No. 44 Plaintiff/Applicant - and - Samanntha Wright Defendant/Respondent _______________________________________________________ Ruling on Costs of the Honourable Mr. Justice N.E.

Devlin _______________________________________________________ [ 1 ] The Municipal District of Rocky View brought two concurrent applications to have the respondent, Councillor Samanntha Wright, disqualified from her elected office. In reasons reported at 2021 ABQB 422 , I dismissed those applications. On the first removal application, I found that Wright had not voted on a matter in conflict of interest. On the second removal application, I found that the Court should exercise its discretion not to remove Wright for having failed to pay municipal property taxes on time.

Wright was thus successful on both facets of the application. The parties could not agree on costs, necessitating this further decision. I. Background

[ 2 ] Only a brief précis of my decision on the merits is required. In 2019, Wright voted on two motions related to proposed land re-zoning and development on a property adjacent to her own. No one on Council took issue with Wright participating in the decisions at the time. Indeed, I found that the Reeve appeared to have endorsed the propriety of her doing so.

On the application, I found that Wright did not have a conflicting pecuniary interest within the context and meaning of the Municipal Government Act , RSA 2000 c M-26 (the “ MGA ”), and had not acted in a manner that would disqualify her from continuing to serve in her elected capacity. I further concluded that the she should not be removed in any event, if I was mistaken as to the existence of a conflict. [ 3 ] Moreover, I also concluded that the late application to find her in conflict of interest was

an act of political retribution stemming from tensions and factionalization which had arisen on the Council subsequent to her impugned votes. On this issue, I made the following findings of fact at paragraph 79: …the timing and circumstances of the move to disqualify Councillor Wright suggest that it is not animated by a legitimate ethical concern about conflict of interest. The motion leading to this application came almost a year after the fact. In the intervening time, an internecine conflict had arisen between Councillor Wright and a majority of Council and the MD’s administration.

I have little trouble finding that the resurrection of this issue, and the motion to remove Councillor Wright, were driven by political animus against her rather than by any genuine concern over the propriety of her votes on the Development. [ 4 ] The motion to remove Wright authorized the first application before the Court. Effectively, therefore, I found that the judicial process had been employed in a political vendetta. [ 5 ] In respect of Wright’s unpaid taxes, I found that her default was an honest mistake negligently made.

While the unpaid taxes rendered her prima facie disqualified, I found that the Council had acted without any regard for due process, again driven by political motives. This led to the following findings of fact at paragraphs 110-111: …the conduct of the Special Meeting, at which this application was authorized, was the product of political animus towards Councillor Wright and a desire to remove her for reasons unrelated to the tax debt. This conclusion is inescapable given that none of the councillors who voted in favour of the motion expressed the slightest interest in hearing her explanation for the situation.

Oblique motives for enforcing the integrity requirements contained in

section 174 of the MGA neither excuse ethical lapses nor attenuate their severity. However, a transparent attempt to recruit this Court into a politically motivated ouster, largely unmoored from any actual ethical concerns, weighs against removing the subject councillor. [ 6 ] For those reasons I exercised the Court’s discretion under section 176(1) (

b) of the MGA to permit Wright to remain on Council for the following reasons, at paragraphs 116-117: In the end, this is a close call. There is no evidence of a corrupt motive or any actual conflict of interest. What we are left with is a careless and irresponsible mistake, of some magnitude and duration, relating to a basic and significant civic obligation, albeit one that ultimately did no harm. The factor that tips the scales in the exercise of my discretion is the hasty, unfair, and extrinsically motivated manner in which Council treated Councillor Wright’s tax issue at the Special Meeting.

Put bluntly, basic procedural fairness was abandoned when the MD and Council were presented with an opportunity to remove Councillor Wright, who had by that point become their political bête noire. Irrespective of the merits of the underlying case against Councillor Wright, the Court should avoid lending its authority to unfair and politically motivated processes or being seen as an instrumentality of political retribution. [ 7 ] It is against this factual backdrop that I must now determine the application for costs. II.

The Governing Principles [ 8 ] The successful party is normally entitled to costs: R 10.29; Hotchkiss v Budding Gardens Inc , 2021 ABQB 333 at para 25 . Costs are highly discretionary, subject to a principled application of the factors set out in Rules 10.33(1) and (2): Weatherford Canada Partnership v Artemis Kau Kautschuk und Kunstoff-Technik GmbH , 2019 ABCA 92 at paras 1 , 11; Abt Estate v Cold Lake Industrial Park GP Ltd , 2020 ABCA 133 at para 26 , [ 9 ] In making a costs award, the Court may consider all or any of the following:

a) the result of the action and the degree of success of each party;

b) the amount claimed and the amount recovered;

c) the importance of the issues;

d) the complexity of the action;

e) the apportionment of liability;

f) the conduct of a party that tended to shorten the action; and

g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate. [ 10 ] The Rules provide guidance on forms of behaviour by litigants that might be relevant to the award of costs. Specifically, Rule 10.33(2) provides as follows:

In deciding whether to impose, deny or vary an amount in a costs award, the Court may consider all or any of the following: (

a) the conduct of a party that was unnecessary or that unnecessarily lengthened or delayed the action or any stage or step of theaction; (

b) a party's denial of or refusal to admit anything that should have been admitted; (

c) whether a party started separate actions for claims that should have been filed in one action or whether a party unnecessarilyseparated that party's defense from that of another party; (

d) whether any application, proceeding or step in an action was unnecessary, improper or a mistake; (

e) an irregularity in a commencement document, pleading, affidavit, notice, prescribed form or document; (

f) a contravention of or non-compliance with these rules or an order; and (

g) whether a party has engaged in misconduct. [11] Misconduct leading to litigation is not relevant to costs, but misconduct within the litigation may lead to enhanced costs: PolarIce Express Inc v Arctic Glacier Inc, 2009 ABCA 20 at para 21; PriceWaterhouseCoopers Inc v Perpeptual Energy Inc, 2021 ABCA16 at para 179. [12] Where the litigation is properly conducted, but is in itself an abuse of process, this may also yield enhanced costs. Courts areentitled to consider a party’s conduct in initiating the proceedings as well as its conduct thereafter: Hur v 726913 Alberta Ltd., 2013ABQB 208 at para 97.

This was referenced in Jackson v Trimac Industries Ltd (1993), (AB KB), 138 AR 161 (QB),where the Court provided the following example of a “rare and exceptional or unusual case” at para 28: where there was no serious issue of fact or law which required these lengthy, expensive proceedings, where the positively misconductingparty was “contemptuous” of the aggrieved party in forcing that aggrieved party to exhaust legal proceedings to obtain that which wasobviously his… [13] In this case, the award of costs should also be informed by the purposes of the MGA, as the applications were brought underits auspices. The

Preamble of the MGA states: WHEREAS Alberta’s municipalities, governed by democratically elected officials, are established by the Province, and are empoweredto provide responsible and accountable local governance in order to create and sustain safe and viable communities; [14] In a similar vein,

section 3 states that, “The purposes of a municipality are (

a) to provide good government...” I have nodifficulty concluding that a core purpose of the MGA, as re-enforced by the integrity provisions of Divisions 6, 7 and 8, is to provide andprotect meaningful democratic representation by elected municipal councillors: see Shell Canada Products Ltd. v Vancouver (City), (SCC), [1994] 1 SCR 231 at para 88. III. The Parties’ Positions [15] Wright asks for costs on the basis of three times Column 5, under

Schedule “C” of the Rules. This amounts to costs anddisbursements of $43,176.13. She argues that this strikes an appropriate balance between entitlement to full indemnity costs in what wasa politically-motivated application, and the fact the Court had to rely on its discretion to allow her to remain as a Councillor in respect ofthe tax issue. [16] Wright emphasizes that she was defending both her reputation and livelihood in these applications.

She relies heavily on thedecision of Justice Ross in Waste Management of Canada Corporation v Thorhild (County), 2009 ABQB 157, which endorsedcalculating costs in a similar application on the basis of three times Column 5. [17] In that case, this Court determined that an enhanced award of costs was justified by three factors, as stated at paragraph 17 ofthe decision: 1. [The] Councillor…was justified in participating in the proceedings, not only to defend his own reputation, but also to represent theinterests of the voters who elected him. 2.

The issues on which [the] Councillor…succeeded were important not only between the parties, but also to the community at large.These issues include the nature of the issue before Council, which was a matter of great public interest in the County, and theCouncillor’s entitlement to participate in Council’s decision and to represent the views of the voters who elected him. 3.

The fairness of an award of costs is demonstrated by the factors considered in Wainwright (Council of Municipal District No. 61) v.Willerton: “the principles of democracy and his commitment to and respect for the voters who elected him required that [CouncillorCroswell] resist” the application. The Councillor has incurred significant liability to retain legal counsel, a liability which could deter himand others similarly situated from participating in municipal politics.

The scale of costs requested, three times Column 5, will notindemnify the appellant for his actual costs, however in my view it will provide a fair apportioning of the costs of the application. [18] Wright also relies on the decision of Justice Veit in Wainwright (Council of Municipal District No. 61) v Willerton, 2000ABQB 980. In that decision, the Court awarded taxed costs to the successful councillor on a solicitor-client basis. [19] In response to a query by the Court, counsel for Wright indicated that she had incurred actual legal fees, GST and

disbursements amounting to $58,812.51 in respect to these matters. [ 20 ] Rocky View responds that the parties should bear their own costs, or, in the alternative, costs should be assessed on Column 1. Rocky View relies heavily on the fact that Wright did not concede she was disqualified by virtue of the tax delinquency until late in the litigation, and suggests that a great amount of costs was expended unnecessarily prior to her concession on this point.

I note that that concession followed the recent decision of my sister Justice Leonard in Ryley (Village) v Lee , 2021 ABQB 130 . [ 21 ] Rocky View acknowledges that Alberta courts have awarded multipliers on costs, but only where the complexity of the action or the conduct of the parties warrant it, citing Stewart Estate v 1088294 Alberta Limited , 2016 ABCA 144 and Go Community Centre v Clark Builders and Static Consulting Limited , 2020 ABQB 203 .

The municipality argues that neither of those situations apply in this case. [ 22 ] Lastly, Rocky View argues that Wright has mischaracterized a number of the steps in the litigation for

schedule calculation purposes. Rocky View indicates that it incurred total solicitor-client costs in this case of $33,462.50. IV. Application To The Present Case a. Complexity [ 23 ] This litigation was, in substance, more akin to a three-day trial with a slate of factual witnesses, than a half-day application. There were two separate applications for removal, on discrete bases. Both of these were heavily factual and required the preparation of lengthy affidavits on which the deponents were cross-examined.

The factors relevant to whether Wright should be removed or permitted to remain on Council were also multifarious and unrelated as between the two applications. [ 24 ] This application went as far as possible into the realm of contentious facts without requiring a full viva voce hearing. Only the efficient conduct of the matter by experienced and capable counsel permitted it to be heard as it was. The actual costs incurred by both parties reflect this reality. For these reasons, I find that

Schedule C is a poor proxy for costing this litigation, as reflected by Wright’s request for a 3x multiplier. b. Importance of Wright’s late concession on disqualification [ 25 ] Contrary to Rockyview’s submissions, I find that Wright’s late concession that she was prima facie disqualified in respect of the tax debt is largely a red herring in respect of costs. The fact of her tax debt, and its resolution, were not materially at issue and did not consume much of the witnesses’ evidence.

By contrast, the explanation for the tax default, the manner of Council’s handling of the matter, and the nature of the disputed development and its potential impact on Wright’s property were all complex and contested.

These would all have been material issues irrespective of her concession, as these factors informed the application of the Court’s discretion under s 176(1)(b). [ 26 ] Moreover, whether Wright was disqualified was a pure question of law on an issue that was at least arguable, flowed from unpropitious drafting in the MGA , and required definitive resolution by this Court in Ryley , only months before the present hearing. I do not find that this sub-issue had much impact on the total cost and scale of this litigation. c.

The impact on democratic governance [ 27 ] This action, and the implication of the costs ruling following it, occur in a unique context, namely that of democratic local government. When a majority of councillors vote to commence a judicial process to remove one of their colleagues for alleged misfeasance or disqualification, they do so with the comfort of being backed by the public purse. The subject councillor, on the other hand, is left to defend his or her office and livelihood from personal funds.

A similar mechanism of imbalance was considered relevant by Justice Sidnell in her costs decision in Calgary (City) v Teulon , 2021 ABQB 501 at para 37 , where she described it in the following terms: …the persons making the decisions for a governmental body are not required to support their decisions by paying the legal bills. Rather, it is the individual litigant…who is merely reacting, who is required to pay the legal bills incurred by being brought into the proceedings. [ 28 ] This asymmetry gives rise to particular concerns.

Specifically, in cases such as this, where the Court finds that the judicial proceeding was driven in whole or part by improper political motivations, a basic application of

Schedule “C” without modification not only works an injustice, it undermines the democratic process. The subject councillor may well keep his or her seat, though at a net cost that absorbs most of the modest compensation they receive in their elected position. Such an outcome transforms disqualification applications of this nature into a potent political weapon, whether successful or not. [ 29 ] One of the core animating purposes of the MGA is effective local democracy.

It would be ironic, if not perverse, if disqualification applications brought under the auspices of this legislation had the effect of arming majority political factions (or other deep-pocketed parties) with a risk-free but potentially financially devastating weapon against their outnumbered political adversaries. [ 30 ] As I noted in my reasons, the wording of the MGA places councillors in an invidious catch-22 situation, as they face disqualification for improperly declining to vote on a motion where they may – but do not clearly – have a conflict of interest.

This feature of the MGA should not be allowed to create a device whereby unhappy but monied parties are able to intimidate elected officials with the threat of costly disqualification proceedings. [ 31 ] Misusing legal process to punish, intimidate, or bully another party is a form of abuse of process. Such conduct may provide a

basis on which to consider enhanced costs, even though the improperly motivated litigation may itself have been reasonably and properly conducted: Haack v Secure Energy (Drilling Services) Inc , 2021 ABQB 342 at para 20 . In Haack , Justice Woolley considered this factor when deciding whether to impose solicitor-client costs.

She noted that this factor is “sufficient in and of itself” to justify such costs: para 21, citing Pillar Resource Services Inc v PrimeWest Energy Inc , 2017 ABCA at paras 1, 158. [ 32 ] Moreover, improperly motivated litigation displaces court resources at the expense of the community, as acknowledged by Justice Stratas in Canada v Olumide , 2017 FCA 42 (albeit in the context of vexatious litigants) at para 18. [ 33 ] I acknowledge that, generally, courts must balance …between fully compensating successful parties who through no fault of their own had to engage in legal proceedings (on the one hand) and the chilling effect on parties bringing or defending claims if the unsuccessful party has to bear too heavy a costs burden (on the other).

McAllister v Calgary (City) , 2021 ABCA 25 at para 45 . [ 34 ] However, this balance may be tipped depending on the conduct of the litigation and other factors “not necessarily having anything to do with the conduct of the litigation”: McAllister at para 51 . I find that the democratic implications of litigation costs in disqualification applications under the MGA provide a freestanding and sui generis basis for awarding costs on closer to an indemnity basis in favour of the subject councilors. This amounts to a relevant, unique “circumstance” within the meaning of Rules 10.31(1)(

b) and 10.33(1)(

c) and (g). [ 35 ] That said, the values animating the substantial indemnification of an elected representative who successfully defends her office from a politically motivated attempt at removal should not translate into carte-blanche spending on legal fees by individuals in such a position.

Proportionality remains a touchstone of an appropriate costs award in such circumstances. [ 36 ] Finally, in the unique circumstance where a vote by a democratic body is required to commence a proceeding under the MGA , targeting an elected representative for removal, I find that a failure of fairness and due process may taint the litigation.

In this case, for instance, Wright was denied the basic opportunity to gather and present a factual response to being ambushed by the unpaid tax issue at a special meeting. [ 37 ] I find that this failure of due process is analogous to conduct that creates needless steps in litigation. The second application for removal might never have been commenced if Wright had been given the opportunity to be meaningfully heard on the allegations and Rocky View Council had considered the merits of the situation with an open mind. I find that this brings the factors articulated in Rules 10.33(2)(

d) and (

g) into play. [ 38 ] I hasten to add that, while my findings were critical of the manner in which these applications were commenced, and the motives underlying them, Counsel for Rocky View conducted the actual litigation in a thoroughly efficient and professional manner. Her litigation conduct was blameless. d. Wright’s “fault” in respect of the tax non-payment [ 39 ] It is clear that Wright was largely the author of her own misfortune on the tax arrears issue. Her defaults resulted in her prima facie disqualification to hold office.

This would have potentially justified, though not mandated, Rocky View referring the matter to the Courts to determine if she should be permitted to remain as a Councillor. She was successful on that application and should receive costs, but the broader public interest in indemnifying her applies with less force to this facet of the case. In simple terms, it is not unjust that she bears some of the ultimate actual costs of legally defending her position on the tax arrears issue. V.

Conclusion On Costs [ 40 ] In the final analysis, I find that Wright should be indemnified, to a reasonable extent, in respect of the conflict of interest application, and should receive enhanced costs in respect of the tax arrears application. [ 41 ] Therefore, I exercise my discretion to award Councillor Wright lump sum costs for both applications, as authorized by Rule 10.31(1)(b)(ii), in the total amount of $40,000, inclusive of disbursements, GST, and costs submissions.

While not intended as a percentage of actual costs, I find that this amount accords with the complexity and importance of the case and the legal work done, and amounts to a proportionate but meaningful enhancement of costs from the 40% to 50% of indemnity benchmark recently endorsed by the Court of Appeal in McAllister . Heard by the way of written submissions. Dated at the City of Calgary, Alberta this 19 th day of November, 2021.

N.E. Devlin J.C.Q.B.A. Appearances: Janice Agrios, QC for the Plaintiff/Applicant Rocky View County Michael Niven, QC and Michael Custer for the Defendant/Respondent Samanntha Wright