All Good Collective Corp v 314 Pure Cannabis Ltd, 2023 ABKB 127

Court of King’s Bench of Alberta Citation: All Good Collective Corp v 314 Pure Cannabis Ltd, 2023 ABKB 127 Date: 20230306 Docket: 2203 13444 Registry: Edmonton Between: All Good Collective Corp. Plaintiff - and - 314 Pure Cannabis Ltd. Defendant _______________________________________________________ Endorsement As to Costs of the Honourable Justice Douglas R.

Mah _______________________________________________________ [ 1 ] This costs ruling arises from my dismissal of All Good’s application for an interim injunction to sequester some $300,000 of 314’s cash pending adjudication of All Good’s breach of contract action against 314.

The background to this litigation is extensively recited in my decision at 2023 ABKB 21 . [ 2 ] In the application, All Good was attempting to secure itself for an eventual judgment it hopes to achieve against 314 and, as a legal basis, relied on a provision in a contract that All Good itself had already agreed had been terminated. [ 3 ] 314 seeks 50% of actual indemnity (or $14,292.25) as the successful party per the scale set out by the Court of Appeal in McAllister v Calgary (City), 2021 ABCA 25 and GG & HH Inc v 2306084 Alberta Ltd , 2022 ABKB 834 (Eamon J).

The second case applies the McAllister approach to the successful defence of an interlocutory injunction application by awarding 40% of assessed solicitor-and-client costs. 314’s counsel argues that All Good did not meet any of part of the test for a Mareva injunction and it was therefore unnecessary and improper. [ 4 ] In response, All Good submits that costs for this application should be in the cause because 314 did not refute bad faith

allegations that it had advanced a weak excuse to escape its financial commitments in the contract. Since the bad faith allegations remain live, counsel for All Good argues, it should be the final decision-maker (trial judge or Applications Judge at

summary judgment) who determines all the costs. [ 5 ] Alternatively, All Good’s counsel says that the application costs should be on Column 3 of

Schedule C, given that the amount at stake was $300,000 and the matter was not so complex so as to attract McAllister -scale costs. A number of recent Alberta cases were cited to illustrate that

Schedule C costs remain appropriate for interlocutory applications: St Pierre v Brown , 2022 ABCA 24 at para. 21 , Wang v Alberta , 2022 ABCA 79 at para. 28 , McCarthy Estate (Re), 2022 ABCA 131 at para. 44 and Carbone v Burnett , 2021 ABCA 432 at para. 24 . [ 6 ] Finally, All Good is still concerned about 314’s solvency. If All Good is required to pay costs to 314 now, that potentially it would place it in the ironic position of having judgment against 314 and yet being out-of-pocket for costs paid. [ 7 ] The successful party is presumptively entitled to costs: McAllister at para 21 , Rule 10.29(1).

The determination of costs is inherently discretionary and the exercise of that discretion must be based on judicial principles of reasonableness, fairness, balance and equity: JBRO Holdings Inc v Dynasty Power Inc , 2022 ABCA 258 at para 26 , Rule 10.31. The relevant considerations for a costs award are found in Rule 10.33 and include, among a list of factors, result, complexity, and whether an application was unnecessary or improper. [ 8 ] All Good’s counsel is quite right that

Schedule C is still routinely relied upon by Courts to determine costs in interlocutory matters. In GG & HH at para 28, Eamon J commented on the relationship between the McAllister scale and the continued use of

Schedule C, comments with which I agree: The Court of Appeal recently affirmed a general approach to quantifying reasonable and proper costs at a level approximating 40-50% of actual costs ( McAllister at para 45 ), an option available under Rule 10.31 (3)(d).

Schedule “C” may be appropriate in routine, high volume chambers applications ( McAllister at para 59 ).

Schedule C can also be a useful default to which parties may defer, or which trial judges may adopt in a variety of circumstances. For example, in cases in which there is a significant imbalance in the power and means of the parties,

Schedule C, notwithstanding its limitations vis-à-vis indemnity, may be preferable ( McAllister at para 60 ). Further, a

Schedule C determination might be used as a cross-check to ensure that a costs award otherwise arrived at is reasonable ( McAllister at para 61 ). [ 9 ] In none of the cases cited by All Good’s counsel, intended as examples to show the continued primacy of

Schedule C when it comes to awarding costs in interlocutory matters, was the McAllister scale invoked by the successful side or even discussed. The St. Pierre case was a mobility case in family law where the unsuccessful Respondent was a self-represented litigant (SRL). In the Wang case, an elevated costs award was pared down to a more befitting

Schedule C scale because the unsuccessful parties were SRLs who had been denied procedural fairness at the costs hearing. The paragraph cited from McCarthy Estate related to the un successful party having her claim for solicitor-and-client costs rejected and replaced with

Schedule C costs in the context of a discussion by the Court of the now-discarded presumption that all parties to estate litigation will be indemnified out of the estate. In Carbone , the unsuccessful SRL was ordered to pay a set of

Schedule C costs when her application for permission to appeal a previous costs award was denied. [ 10 ] As such, none if these cases, even as illustrations, provide much guidance in this case. I am not dealing here with SRLs who are faced with costs, or a situation where the Court is concerned about not depleting an estate. Here, the litigants are two relatively sophisticated corporations who appear to be dealing in larger sums of money. [ 11 ] I agree with 314’s counsel that the application was unnecessary. It failed as both a mandatory and a Mareva injunction.

I appreciate that All Good was trying to secure itself for an eventual judgment but as I said at para 30 of 2023 ABKB 231 , it was really in no different a position that any plaintiff who sues a defendant for a money judgment. I made my point about the merits of the application in my previous decision and will not repeat myself here. [ 12 ] As such, the McAllister approach as applied in GG & HH applies here and I direct that All Good pay 40% of 314’s costs of the application, assessed if necessary. [ 13 ] There will be no costs of the present application.

To avoid All Good now being out-of-pocket, I will permit these costs to be set-off and payable after all costs awards have been determined. [ 14 ] Finally, I want to be clear that the allegation that 314 acted in bad faith by stringing All Good along and then purporting to terminate the contract on a bogus excuse, and whether All Good suffered loss and damage thereby, remain live issues to be adjudicated. My point is only that All Good cannot rely on 314’s conduct as a reason for denial of costs, when that conduct has not yet been proven.

Heard by way of written submissions on the 8 th February and 9 th February, 2023. Dated at the City of Edmonton, Alberta this 6 th day of March, 2023. Douglas R. Mah J.C.K.B.A.

Appearances: Carter D. Greschner, Bryan & Company LLP for All Good Collective Corp Trevor McDonald, Burnet Duckworth & Palmer LLP for 314 Pure Cannabis Ltd