Dunn v Condominium Corporation No., 2022 ABKB 782

Court of King’s Bench of Alberta Citation: Dunn v Condominium Corporation No. 0420105, 2022 ABKB 782 Date: 20221124 Docket: 1703 03574 Registry: Edmonton Between: Trevor Dunn Plaintiff - and - Condominium Corporation No. 0420105 and Celtic Management Services Inc. Defendants Corrected judgment: A corrigendum was issued on November 29, 2022; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Costs Decision of the Honourable Justice Susan L. Bercov _______________________________________________________

Introduction [ 1 ] After a three-day trial, I found the Defendant Condominium Corporation No. 0420105 (“Condo Corporation”) liable in nuisance: 2022 ABQB 516 . I awarded the Plaintiff judgment in the amount of $25,250.00 less settlement funds received under a Pierringer Agreement net of solicitor and client costs incurred in the claim against the settling Defendant. [ 2 ] I gave the parties leave to return if they could not agree on the amount to be deducted from the judgment or the issue of the costs of the trial. The parties are not able to agree on either.

The parties provided written submissions. [ 3 ] While the parties agree that as the successful party the Plaintiff is entitled to an award of costs, they disagree on the amount of the cost award. The Plaintiff seeks solicitor client costs of the entire action in the sum of $81,631.00, because the Defendants refused to attend alternative dispute resolution. In the proposed Judgment Roll, the Plaintiff deducts $12.000.00, the full amount paid under the Pierringer Agreement, because the Plaintiff seeks solicitor client costs throughout the action.

In the alternative, the Plaintiff seeks 40 – 50 % of his solicitor client costs. [ 4 ] The Defendants’ position is that r 10.42 of the Alberta Rules of Court , Alta Reg 124/2010 limits the Plaintiff’s recovery to 75% of Column 1 of

Schedule C, plus disbursements. The Defendants disagree that there is any misconduct justifying an enhanced cost award. The Defendants disagree that reasonable and proper costs are 40 – 50% of indemnification. [ 5 ] In determining the Plaintiff’s reasonable and proper costs, the Defendants argue that I should not apply 40 – 50% of indemnification because: the statements of account charge for matters unrelated to the action, the statements of account are not itemized and contain insufficient detail to allow the court to consider the reasonableness of the account, the costs claimed are disproportionate to the amount recovered, and the Defendants were partially successful. [ 6 ] In

summary, the issues I must decide are: 1. Does r 10.42 apply? 2. Are enhanced costs appropriate? 3. What amount of costs is appropriate? 4. How much should be deducted from the judgment for the $12,000.00 the Plaintiff received under the Pierringer Agreement? 1. Does Rule 10.42 apply? [ 7 ] Rule 10.42 provides: 10.42(1) This rule applies only to actions the subject-matter of which is within the jurisdiction of the Provincial Court.

(2) Despite anything in this Division or

Schedule C, unless the Court otherwise orders, (

a) in the case of an action brought in the Court of Queen’s Bench for which the amount sued for or the amount of the judgment or order does not exceed the amount for which the Provincial Court has jurisdiction under

section 9.6 of the Provincial Court Act, the costs to and including judgment or order must be assessed, if at all, at not more than 75% of the amount specified in Column 1 of the tariff in Division 2 of

Schedule C; (

b) in the case of an action described in clause (a), post-judgment matters are to be assessed, if at all, at not more than 100% of the amount specified in Column 1 of the tariff in Division 2 of

Schedule C. [ 8 ] The Defendants argue that the amount claimed, $39,000.00, is within the Provincial Court limit: see Provincial Court Civil Procedure Regulation , Alta Reg 176/2018 , s 2. The Plaintiff should have commenced the action is small claims court. While the Defendants concede that r 10.42 provides me with discretion not to apply the rule, the rule should be applied unless there is a sufficient reason not to. [ 9 ] One of the defences raised by the Defendants at the trial is that the Plaintiff’s claim was barred by the Condo Corporation’s bylaws.

Relying on Majeau v Condominium Corporation No 0024327 , 2019 ABQB 603 [ Majeau ], the Plaintiff argues that Provincial Court jurisdiction does not extend to claims based on the Condominium Property Act , RSA 2000, c C-22 or bylaws made under that Act . The Plaintiff argues that the Defendants cannot raise the application of r 10.42 when they have asserted in argument the application of a bylaw that could not be raised in Provincial Court. [ 10 ] I conclude that there are sufficient reasons not to apply r 10.42 in this case.

There is no evidence that the Defendants at any time suggested to the Plaintiff that he should advance his claim in the Provincial Court. At trial, the Defendants raised every conceivable defence. Considering the defences raised at trial and the Court’s decision in Majeau , I am satisfied that if the Plaintiff had commenced the action in Provincial Court, there is a significant risk that the Defendants would have argued that the Provincial Court has no jurisdiction. In these circumstances, there is a sufficient reason not to apply r 10.42. 2. Are Enhanced Costs Appropriate? a. Plaintiff’s Position

[ 11 ] Rule 1.2(1) provides that the purpose of the Rules is to encourage a fair and just resolution of claims in a timely and cost- effective manner. Rule 4.2 sets out the responsibilities of the parties in the litigation process. Rule 4.16 provides that the responsibility of the parties includes good faith participation in one or more dispute resolution processes, unless the Court waives this responsibility. [ 12 ] The Plaintiff argues that the Defendants failed to comply with the foundational rules.

Relying on Barry v Industrial Alliance Insurance and Financial Services Inc , 2022 ABQB 265 [ Barry ] the Plaintiff contends that enhanced costs are justified in this case because the Defendants refused to make any settlement offers and refused to attend any dispute resolution process. b. Defendants’ Position [ 13 ] The Defendants argue that the facts in this case are different than the facts in Barry . There is no misconduct in this case.

The case law is clear that costs should not be enhanced simply because the litigation was found to without merit: Geophysical Service Incorporated v Falkland Oil and Gas Limited , 2019 ABQB 314 . c. Analysis [ 14 ] I agree with the Defendants that Barry is distinguishable. In that case, Justice Feasby found the insurer’s hardball tactics in the circumstances of that case constituted litigation misconduct justifying an enhanced award of costs.

In this case, the Defendants did not engage in similar hardball tactics as in Barry . [ 15 ] I agree with the cases the Defendants rely on that enhanced costs are not appropriate simply because the litigation was found to be without merit. However, those cases are distinguishable. The issue in this case is whether it is appropriate to award enhanced costs where a defendant refuses to engage in dispute resolution, arguing the case is without merit.

None of the cases provided by counsel address this issue. [ 16 ] In Hryniak v Mauldin , 2014 SCC 7 [ Hryniak ] , the Supreme Court held that ensuring access to justice is the greatest challenge to the rule of law in Canada today. Court proceedings have become so expensive and protracted that most Canadians cannot afford them, and, without an effective and accessible means of enforcing rights, the rule of law is threatened. [ 17 ] It is well accepted that Hryniak advocated for a culture shift.

The rules are designed to streamline the civil litigation process and encourage settlement of issues: Canadian Natural Resources Ltd v ShawCor Ltd , 2014 ABCA 289 . These rules include r 1.2 and r 4.16. [ 18 ] In this case one of the initial Defendants reached resolution with the Plaintiff under a Pierringer Agreement. The Plaintiff wanted to engage in a dispute resolution process with the remaining two Defendants. These Defendants applied under r 4.16(2) for an exemption from attending any dispute resolution process.

In support of the application, an employee of Aviva Insurance Company of Canada deposed: “The Defendants are of the opinion that there will be no liability found in this Action. As such, the Defendants would not be making any offer to settle at a Dispute Resolution Process. I believe that attendance at a Dispute Resolution Process will not result in a resolution of this matter and will result in further delay and expense to the parties.” [ 19 ] The application proceeded in civil chambers. The Plaintiff opposed.

An Order was granted exempting the Defendants from attending dispute resolution. [ 20 ] In Rampersaud v Baumgartner , 2012 ABQB 673 , Justice Burrows refused to grant an order exempting the parties from the mandatory dispute resolution requirement where both parties consented to the order arguing that dispute resolution would be futile. Justice Burrows notes that the new Rules were adopted despite significant controversy.

Justice Burrows concluded that “The intent that pre-trial dispute resolution no longer be voluntary would be entirely frustrated if the Rule could be waived by the consent of the parties to the litigation.” [ 21 ] The same can be said where one party applies for an exemption on the basis that dispute resolution is futile because there is no merit to the claim.

The intent that pre-trial dispute resolution no longer be voluntary would be entirely frustrated if one party can apply based on an Affidavit deposing that no offers to settle will be made because in the Defendants’ opinion there is no merit to the claim. [ 22 ] In IBM Canada Ltd v Kossocan , 2011 ABQB 621 , Justice Mahoney canvassed the jurisprudence from other jurisdictions with mandatory dispute resolution processes on when an exemption should be granted.

The Court held that there is value to an alternative dispute resolution process even in the face of a strong claim, because the parties might lack information, make distorted assessments, misjudge costs, have an overly optimistic view of trial risks and outcomes, or fail to understand the hidden benefits of settlement: at para 26. Even if a final agreement is not reached, the parties can gain more information, potentially sharpen their understanding of the issues, and reduce the costs of final litigation: at para 27. [ 23 ] A judge cannot determine in regular chambers whether there is merit to a claim.

Parties can be mistaken about their assessment of a claim. A party may learn information at a dispute resolution that leads to a reassessment of the claim. Even if the action does not settle, discussions at dispute resolution may lead to reducing the issues for trial where one party abandons part of the claim or the defendant abandons some of the defences. [ 24 ] This case illustrates the concerns the Supreme Court expressed in Hryniak about access to justice.

By refusing to attend dispute resolution to resolve this case, the Plaintiff’s options were to discontinue his meritorious claim or incur significant legal fees to proceed to trial. Most individuals could not afford to take the matter to trial. Most would discontinue, resulting in a denial of access to justice.

[25] In McAllister v Calgary (City of), 2021 ABCA 25 [McAllister], the Court of Appeal recognized that there are cases whereindemnity is not the primary purpose of a costs award: at para 35, citing British Columbia (Minister of Forests) v Okanagan IndianBand, 2003 SCC 71. Cost awards can be designed to encourage settlement. Cost awards are important to promoting access to justice. [26] This is also reflected in the Rules of Court.

Rule 10.33 sets out factors the Court may consider in making a costs award,including: • Whether any application, proceeding or step in an action was unnecessary, improper or a mistake; • A contravention of or non-compliance with these rules or an order; and • Whether a party has engaged in misconduct. [27] After considering the matters set out in r 10.33, r 10.31 provides the court with 2 options for awarding costs: (

a) thereasonable and proper costs that a party incurred; or (

b) an amount that the Court considers appropriate in the circumstances. Enhancedcosts are awarded under r 10.31(b). [28] A defendant may apply for

summary judgment where an action has no merit.

Refusing to attend or engage in disputeresolution, on the basis that there is no merit to the claim, runs counter to the foundational rules designed to facilitate access to justice byfacilitating the quickest means of resolving a claim at the least expense. [29] For policy reasons, to encourage settlement, I conclude that where a party refuses to engage in dispute resolution on the basisthat there is no merit to the claim, it is appropriate to award enhanced costs against that party where it is determined at trial that therewas merit to the claim. [30] Parties have the right to refuse to make offers of settlement in dispute resolution.

Defendants have the right to proceed to trialarguing there is no merit to a claim. However, a risk of enhanced costs where parties refuse to attend dispute resolution should causeparties to carefully consider how confident they are in their assessment that there is no merit to the claim. It may cause parties to attenddispute resolution to listen to the views of the opposing party or a third party on the merits of the claim. This facilitates access to justice. 3. What Amount of Costs is Appropriate? [31] The written submissions of the Plaintiff seek solicitor client costs of $81,631.88.

In his reply submissions, the Plaintiff seeksan additional $9,735.60 for services rendered subsequent to the Judgment Roll. [32] Solicitor client costs will normally only be awarded where there has been reprehensible, scandalous, or outrageous conduct bya party: Tiger Calcium Services Inc v Secure 2013 Group Inc, 2018 ABCA 110 at para 15, citing Young v Young, (SCC), [1993] 4 SCR 3 at 134.

An award of solicitor client costs is rare and must be based on a finding of intentional conduct during thelitigation: ibid; Weatherford Canada Partnership v Addie, 2019 ABCA 92 at para 14 [Weatherford Canada]. [33] In my view, an enhanced cost award of solicitor client costs is not appropriate for the following reasons. a. Many of the Plaintiff’s Statements of Account do not identify the time spent on individual tasks. The Defendants argue that theStatements include services rendered in a different action. In his reply submission, the Plaintiff concedes that a small amount, $2,781.68,relates to another action.

I agree with the Defendants that services relating to other actions should not be included. b. The additional $9,735.60 does not identify the time spent on individual tasks. From the description of services, it appears that someof the services relate to an appeal, while others relate to settling the costs. It is not possible from the account to determine how muchrelates to settling the cost award and how much relates to an appeal. c. The standard of reprehensible, scandalous, or outrageous conduct is not met in this case; and d.

The Defendants were partially successful as the action was dismissed as against Celtic and the limitations defence was partiallysuccessful. [34] The Defendants argue that the Plaintiff’s costs are completely disproportionate to the amount of damages the Plaintiff sought,and the amount awarded. I agree. However, the difficulty with this argument is that it is not possible to retain counsel to conduct a three-day trial for a proportionate sum. This is particularly true in this case when the Defendants raised numerous defences requiring thePlaintiff to respond.

This is the access to justice issue the Rules seek to address. Accordingly, where the Defendants compel the Plaintiffto proceed to trial on a small claim by refusing to attend dispute resolution, any argument that the Plaintiff’s costs are disproportionateshould not be entertained. [35] Where solicitor client costs are not justified, it may still be appropriate to award enhanced costs: Eist v Goldstick Estate, 2019ABCA 508 at para 30; Weatherford Canada at para 18. Rule 10.31(

b) provides that costs can be awarded in a lump sum instead of or inaddition to assessed costs. Considering all the circumstances of this case, I conclude that a lump sum award of $65,000.00 in costs isappropriate. 4. How Much Should be Deducted for the Amount Paid Under the PierringerAgreement? [36] The Plaintiff received $12,000.00 under the Pierringer Agreement. I directed that the amount received, less solicitor clientcosts in recovering that amount, be deducted from the judgment of $25,250.00.

[ 37 ] The Plaintiff advises that solicitor client costs incurred in the claim against the settling Defendant are $3,801.00. Accordingly, the amount that should be deducted from the judgment of $25,250.00 is $8,199.00 ($12,000.00 - $3,801.00). This leaves a judgment of $17,051.00. Conclusion [ 38 ] I award judgment in favour of the Plaintiff in the sum of $17,051.00 plus costs in the sum of $65,000.00. Heard via written submissions on the 2 nd and 9 th days of September, 2022 Dated at the City of Edmonton, Alberta this 24 th day of November, 2022 Susan L. Bercov J.C.K.B.A.

Appearances: Randy Langley Henning Byrne LLP for the Plaintiff Sean Stepchuk Aviva Trial Lawyers for the Defendants _______________________________________________________ Corrigendum of the Cost Decision

of The Honourable Justice Susan L. Bercov _______________________________________________________ Corrected the citation line to proper shortened format