PETER GERRY WHALEN v. NICOLE CHIASSON, 2022 NBKB 233

IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON Whalen and Chiasson v. Allstate et al. 2022 NBKB 233 MC-40-2020 November 29, 2022 BETWEEN: PETER GERRY WHALEN and NICOLE CHIASSON , Plaintiffs, - and – ALLSTATE INSURANCE COMPANY OF CANADA, Defendant, - and – 668339 New Brunswick INC., a body corporate doing business as PUROCLEAN SERVICES OF MONCTON , Third Party. DECISION BEFORE: Chief Justice Tracey K.

DeWare AT: Moncton, New Brunswick DATE OF HEARING: November 1, 2022 DATE OF DECISION: November 29, 2022 APPEARANCES: Amy Stewart, agent for Hélène Beaulieu, on behalf of the Defendant Yanis Khiari, for the Third Party Peter Gerry Whalen and Nicole Chiasson, did not appear

DeWare, C.J. INTRODUCTION [ 1 ] This decision responds to the Third Party’s motion seeking payment of their costs following the Defendant’s discontinuance of its third party claim. FACTS [ 2 ] Peter Gerry Whalen and Nicole Chiasson, the Plaintiffs, have their property insured with Allstate Insurance Co. of Canada, the Defendant. On August 12, 2019, the Plaintiffs suffered flooding damage to their insured property.

The Third Party, 668339 New Brunswick Inc., doing business as Puroclean Services of Moncton, the Third Party, prepared a quote setting out the estimated costs to restore the flooded residence and repair the damages. This quote was prepared by the Third Party’s employee, Remi Doiron. [ 3 ] A dispute ensued between the Plaintiffs and the Defendant over the restoration costs. As a result of this dispute, a legal action was filed. On March 25, 2020, the Defendant filed the Third Party Claim.

The Third Party Claim alleges that Remi Doiron made false representations to the Plaintiffs’ regarding the portion of their homes flooring that could or should be replaced under the insurance policy. The Third Party disputed this claim and filed a Third Party Defence on May 6, 2020. [ 4 ] The issues as between the Plaintiffs and the Defendant were resolved via mediation. The Defendant then sought the Discontinuance of the Third Party Claim upon the payment of $182.50.

The Third Party refused to accept the Notice of Discontinuance of the Third Party Claim with a payment of only $182.25 as they had expanded $2,838.55 in defending the matter. [ 5 ] The Defendant filed the present motion seeking leave of the Court to discontinue the Third Party Claim upon payment to the Third Party of $182.25. The Third Party contests the relief sought by the Defendant and seeks payment of their actual costs in the amount of $2,838.55.

ISSUES [ 6 ] The issue for this Court to resolve is whether or not, in these circumstances, the Third Party is entitled to full indemnity for legal costs incurred as opposed to those costs set out under Tariff “C” of Rule 59 of the New Brunswick Rules of Court . POSITION OF THE PARTIES [ 7 ] The Third Party submits that it is entitled to full indemnity for its legal fees in this matter as the Third Party Claim was frivolous, vexatious, and could not proceed.

The Third Party suggests that this Court has the discretion, under Rule 59.01 of the New Brunswick Rules of Court , to order payment of its full outstanding legal fees. [ 8 ] The Defendant maintains that this Court has no discretion to order costs payable as requested by the Third Party. The Defendant suggests Rule 59 is unequivocal as to what costs a Third Party is entitled to receive following a Discontinuance. The Defendant suggests that the Court has no discretion in these circumstances to order costs as requested by the Third Party.

LAW AND ANALYSIS [ 9 ] The Defendant brings the present motion pursuant to Rules 25.01(b), 25.07 and 59.03 of the New Brunswick Rules of Court : 25.01 Discontinuance by Plaintiff A plaintiff may discontinue his action against a defendant, either in whole or in part […] (

b) after the close of pleadings, with leave of the court, or […] 25.07 Application to Counterclaims, Cross-Claims and Third Party Claims

Subject to Rules 28, 29 and 30, this rule applies, with any necessary modification, to a counterclaim, a crossclaim or a third party claim. 59.03 Costs on a Contested Motion

(1) Where, on the hearing of a contested motion, the court is satisfied that the motion ought not to have been brought or opposed, the court shall fix the costs of the motion and may order them to be paid forthwith.

(2) Subject to paragraph (1), the judge hearing a motion shall fix the costs thereof.

(3) Costs fixed under paragraph (2) shall be added to or deducted from costs fixed or assessed under Rule 59.08. [ 10 ] The Court is of the view the consideration of the following rules are also necessary in resolving the issue. 59.01 Authority of the Court

(1) Subject to any Act and these rules, the costs of a proceeding or a step in a proceeding are in the discretion of the court and the court may determine by whom and to what extent costs shall be paid.

(2) Nothing in this rule shall be construed so as to interfere with the authority of the court (

a) to fix the costs of a proceeding, or a step in a proceeding, with or without reference to a tariff, instead of requiring assessment of the costs , (

b) to allow or refuse costs in respect of a particular issue or part of a proceeding, (

c) to order costs to be assessed on a solicitor and client basis, or (

d) where parties are entitled to costs from each other, to order set-off of the costs. 59.02 Costs of a Proceeding In fixing costs, the court may consider (

a) the amount claimed and the amount recovered, (

b) the apportionment of liability, (

c) the complexity of the proceeding, (

d) the importance of the issues,

(

e) the conduct of any party which tended to shorten or unnecessarily lengthen the duration of the proceeding, (

f) the manner in which the proceeding was conducted, (

g) any step in the proceeding which was improper, vexatious, prolix or unnecessary , (

h) any step in the proceeding which was taken through over-caution, negligence or mistake , (

i) the neglect or refusal of any party to make an admission which should have been made, (

j) whether or not two or more defendants or respondents should be allowed more than one set of costs, where they have defended the proceeding by different solicitors, or where, although they defended by the same solicitor, they separated unnecessarily in their defence, (

k) whether two or more plaintiffs, represented by the same solicitor, initiate separate actions unnecessarily, and (

l) any other matter relevant to the question of costs. 25.03 Costs on Discontinuance or Withdrawal A party wholly discontinuing an action or wholly withdrawing his Statement of Defence against another party shall pay the costs of the other party to date, including the costs of any cross-claim or third party claim , unless the court orders or the parties agree otherwise. 25.05 Effect of Discontinuance on a Cross-Claim or Third Party Claim Where an action is discontinued against a defendant who has cross-claimed or made a third party claim, the cross-claim or third party claim shall be deemed to be dismissed 30 days after the discontinuance, with costs payable by the plaintiff, unless the court orders otherwise during the 30 day period. [emphasis mine] [ 11 ] As the Third Party raises the question of the merit of the Third Party Claim, it is necessary to look at the pleadings.

The cause of action set out by the Defendant as against the Third Party can be found in paragraphs 7 and 8 of the Third Party Claim. These paragraphs read as follows: 7.

The Defendant has denied that it is liable to the Plaintiffs for the relief claimed, but in the event that the Defendant is found liable to the Plaintiffs, which liability is not admitted but specifically denied, it states that any damages sustained by the Plaintiffs, which are also not admitted but specifically denied, were caused or contributed to by the negligence of the Third Party, the particulars of which are set out in its Statement of Defence and further are set out below: (

a) representing to the Plaintiffs, who relied on its false representations, that the Defendant was not allowed to have its accredited agent access to the Plaintiffs premises to survey and examine the damaged property; (

b) representing to the Plaintiffs, who relied on is false representations, that the accredited agent selected by the Defendant was not qualified in the circumstances; (

c) representing to the Plaintiffs, who relied on its false representations, that the Plaintiffs are entitled to recover from the Defendant for property which had not sustained any direct damage caused by the sewage back up;

(

d) encouraging the Plaintiffs to breach their contractual obligations to the Defendant to allow its accredited agent perform its survey and examination of the premises; (

e) failing to provide the rebuild estimate in a reasonable and timely manner; (

f) providing a repair estimate inconsistent with the revised tear out estimate approved by the Defendant; (

g) providing a repair estimate which was excessive and which did not limit the repair of property which had sustained direct damage from the sewer backup; (

h) failing to complete the tear out and rebuild of the property in the period it represented was needed to complete the work; and (

i) such further and other negligence as will be disclosed in this action. 8. In the alternative, the Defendant pleads and relied on the Contributory Negligence Act , RSNB 2011, c 131 , and, in the event that the Defendant is held liable to the Plaintiffs and damages are awarded against the Defendant, which is not admitted but specifically denied, the Defendant claims contribution from the Third Party pursuant to

section 2 (

c) of the Tortfeasors Act , RSNB 2011, c 231 . [ 12 ] In the present matter, I disagree with the Defendant’s assertion that the Court’s discretion to award costs is fettered by the application of Tariff “C” under Rule 59 Rules of Court . Further, costs in this matter are not to be assessed pursuant to Rule 59.03 as requested in the Defendant’s Notice of Motion. Rule 59.03 applies to costs on a contested motion.

While this motion is contested, the issue is the appropriate costs to be awarded on the filing of the Third Party Claim, not the costs of the motion itself. [ 13 ] It is not necessary to delve into details on the merit of the Third Party Claim for the purpose of the present motion. However, suffice it to say the merit of the Third Party Claim was tenuous at best. The main action involves a contractual coverage dispute between the Plaintiffs and the Defendant following a flood at an insured residence.

It is difficult to conceive how the representations made by the Third Party could have come into consideration in the adjudication of the main action. It is not surprising that this matter was resolved without the participation of the Third Party. [ 14 ] The Third Party is essentially seeking payment of its legal fees on a solicitor-client basis. Such a costs award in New Brunswick is reserved for a very limited number of cases. In this case, the corporate Third Party did not have counsel for a period of time and was never required to attend discovery.

That said, the Third Party was required to expend sums to defend an action whose merit, on its face, can only be described as tenuous. [ 15 ] Costs are intended to compensate parties and discourage frivolous actions. Unfortunately, in New Brunswick, the costs regime as set out in Rule 59 of the New Brunswick Rules of Court is grossly outdated and provides little deterrence against the filing of questionable proceedings. An overhaul of Rule 59 is long overdue.

However, Rule 59.01 clearly provides the Court with the ultimate discretion in the order of costs in all matters. [ 16 ] In my view, the amount of $182.50 is insufficient in this case. The Third Party was forced to expend over $2,800.00 to defend this matter. While the situation does not warrant costs on a solicitor-client basis, it does require compensation beyond the specific fees set out in Tariff “C” of Rule 59 . In my view, the Third Party Claim was frivolous, and the costs award must reflect that fact.

In all of the circumstances, the Third Party is awarded costs of $1,500.00 which is inclusive of disbursements and includes the costs on the motion. The Third Party Claim is discontinued upon payment by the Defendant to the Third Party in the amount of $1,500.00. DATED at Moncton, N.B., this 29 th day of November 2022. _______________________________________ Tracey K. DeWare Chief Justice of the Court of King’s Bench

of New Brunswick