Ellingson v Hall, 2023 ABKB 275

Court of King’s Bench of Alberta Citation: Ellingson v Hall, 2023 ABKB 275 Date: 20230505 Docket: 2303 03889 Registry: Edmonton Between: Kennedy Ellingson, Jane Ellingson, Chris Ellingson and Ellingson Equestrian Inc Plaintiffs - and - Jessica Hall and 1490508 Alberta Ltd Defendants _______________________________________________________ Endorsement of the Honourable Justice J.J.

Gill _______________________________________________________ Introduction [ 1 ] On April 19 ,2023 an application by Kennedy Ellingson and Ellingson Equestrian Inc (the EEI Plaintiffs) for an interim and interlocutory injunction to stay in the Riverfront Premises was dismissed with costs to the Defendants. The EEI Plaintiffs vacated as of April 26, 2023. [ 2 ] This application addresses the quantification of costs arising from that decision.

Background [ 3 ] The dispute centered around an equestrian Centre (the Riverfront premises), operated by the Defendants, where the EEI Plaintiffs conducted business. [ 4 ] On December 2, 2022, the Defendants provided written notice to the EEI Plaintiffs to vacate the premises on April 1, 2023 (the “Termination Date”).

The Termination Date was subsequently extended, on January 30, 2023, to April 30, 2023. [ 5 ] Relying on various month-to-month written agreements, short term oral agreements and unconcluded negotiations concerning a longer-term agreement the EEI Plaintiffs sought an interim/interlocutory injunction enjoining the Defendants from compelling them or any of their clients to vacate the Riverfront Premises for up to a 2-year period ending on April 30th, 2025.

Submissions The Plaintiffs [ 6 ] The issue is how the Court's discretion ought to be exercised in circumstances where the Defendants achieved “substantial success”. The EEI Plaintiffs submit that the Defendants are entitled to

Schedule C Costs of either Column 1 ($3,543.75) or Column 4 ($7,785.75). [ 7 ] The Court should not grant elevated or solicitor-client costs as the necessary considerations for the granting of such scales of costs are absent. None of the EEI Plaintiffs conduct could fairly be characterized as "reprehensible, scandalous or outrageous". [ 8 ] There are no factors that justify enhanced or solicitor-client scale costs. All conduct such as delay, and the timing and length of submissions and other documents were decisions of counsel and not those of the EEI Plaintiffs.

The issue regarding the late filing of the Brief was based on a misunderstanding. [ 9 ] The length of the Affidavit, Application and Brief were due to the highly fact-intensive nature of the test for injunction where each portion of the test relates highly to the factual matrix, and were necessary, despite the Application failing. [ 10 ] The Injunction Application did not involve a sum of money, and costs ought to be awarded based on Column 1.

If the Court considers the damages amounts claimed in the Action, it is submitted that only damages claimed by the EEI Plaintiffs ought to be considered as the other Plaintiffs were not parties to the Application, despite being sureties on the Undertaking in Damages. The Defendants [ 11 ] The Defendants submit

Schedule C Costs are not appropriate in this instance. Solicitor Client Costs should be awarded . [ 12 ] The EEI Plaintiffs’ claim is for $1.95M, but includes an unspecified amount of other damages, interest, and solicitor client costs. The

Schedule C column is either 4 or 5.

Schedule C costs of this Application on Column 4 are $16,536.58 and on Column 5 are $20,799.83, representing 25% and 31.5% of actual costs. [ 13 ] As noted by the ABCA in McAllister v Calgary (City), 2021 ABCA 25 , at paragraphs 53 , 54, 62, 63, and 65 to 66

Schedule C costs do not necessarily represent an appropriate or satisfactory partial indemnification for reasonable and proper costs incurred. This is the case here. [ 14 ] Solicitor-client costs against the EEI Plaintiffs are justified , pursuant to Rule 10.33(2)(

d) and pursuant to the to FIC Real Estate Fund Ltd. v Phoenix Land Ventures Ltd ., 2016 ABCA 303 , for several reasons including :

a) The Injunction Application was hopeless from the outset. It was dismissed for: i. Failing to meet every element of the test for an injunction; ii. Being frivolous and vexatious; iii. Being brought in bad faith; and iv. Being barred by the equitable doctrines of laches and clean hands.

b) The Application constituted a significant waste of the Court’s precious judicial resources;

c) There was no serious issue of fact or law requiring the time and expense that went into the Application;

d) The EEI Plaintiffs engaged in tactical delay: scheduling the hearing 12 days before the expiry of the Extended Termination Period;

e) The EEI Plaintiffs failed to comply with their obligations under the Foundational Rules , and engaged in litigation misconduct: i. Bringing a meritless Application; ii. The Statement of Claim and Application materials were prolix and contained a significant amount of Information that required review and response, causing lengthy materials on the Application;

iii. The EEI Plaintiffs’ conduct in relation to Questioning on Affidavit including the refusal to proceed remotely, requiring Courtintervention, the refusal to produce Kennedy Ellingson at 4:00 pm on the business day before she was to be Questioned, requiring Courtintervention, and unilaterally terminating Questioning of Kennedy Ellingson 12 minutes into it; and iv. Repeatedly threatening to adjourn their “emergency” Application, or otherwise causing delay.

f) The EEI Plaintiffs failed to comply with the Court’s guidelines and ordinary practices on written submissions for an emergencyCommercial List application – and used the opportunity to rebut Riverfront’s submissions in their Applicant’s brief;

g) Obstructing and attempting to shield Kennedy Ellingson from Questioning on Affidavit by terminating the Questioning 12 minutesin, refusing to produce her to be Questioned again by Riverfront’s chosen legal counsel, and subsequently having a 189-page Affidavitsworn by a legal assistant to further insulate Kennedy Ellingson from Questioning on Affidavit; and

h) The EEI Plaintiffs failed to accept a Calderbank Offer provided on April 11, 2023, to grant them a further two months past theExtended Termination Date if they withdrew the Application. [15] The conduct of the EEI Plaintiffs in this Application, and the lead up to it, was reprehensible, scandalous, and outrageous, andshould be both deterred and punished. The only way for justice to be done in these circumstances is for the EEI Plaintiffs to fullyindemnify the Defendants for its solicitor client costs.

The Plaintiffs The Law [16] Rule 10.31(1) provides as follows: Court-ordered Costs Award 10.31(1) After considering the matters described in rule 10.33 [Court considerations in making a costs award], the Court may order oneparty to pay to another party, as a costs ... (b)any amount that the Court considers appropriate in the circumstances, including, without limitation, (i)an indemnity to a party for that party’s lawyer’s charges, or (ii)a lump sum instead of or in addition to assessed costs. [17] Rule 10.33(2) provides as follows: Court Considerations in Making Costs Award 10.33(2) In deciding whether to impose, deny or vary an amount in a costs award, the Court may consider any or all 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 the action; … … (

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 or prescribed document; (

f) a contravention of or non-compliance with a rule or an order; (

g) whether a party engaged in misconduct; (

g) any offer of settlement made, regardless of whether or not the offer of settlement complies with

Part 4, Division 5. [18] The Court of Appeal for Alberta in FIC Real Estate Fund Ltd. v Phoenix Land Ventures Ltd., 2016 ABCA 303, set outconsiderations in awarding solicitor-client costs as follows: [4] Generally, an award of solicitor-client costs is based on misconduct that occurs during the course of litigation. However, that it not aninvariable rule.

In Sidorsky v CFCN Communications Ltd, 1997 ABCA 280 at para 28, [1998] 2 WWR 89, this Court further clarifiedthat “a departure from party and party costs should only occur in rare and exceptional circumstances” and endorsed a list of examplesfrom Jackson v Trimac Industries, (1993), (AB KB), 138 AR 161 at 172 (QB), where a greater costs award would beappropriate: 1) circumstances constituting blameworthiness in the conduct of the litigation by that party…; 2) cases in which justice can only be done by a complete indemnification for costs…;

3) where there is evidence that the plaintiff did something to hinder, delay or confuse the litigation, where there was no serious issue of fact or law which required these lengthy, expensive proceedings, where the positively misconducting party was “contemptuous” of the aggrieved party in forcing that aggrieved party to exhaust legal proceedings to obtain that which was obviously his…; … 5) where the (party) (is) guilty of positive misconduct, where others should be deterred from like conduct and the (party) should be penalized beyond the ordinary order of costs…; … Analysis [ 19 ] In dismissing the injunction application, I found that the EEI Plaintiffs: 1.

Had not established any of the elements required to obtain injunctive relief. 2. Were disentitled to equitable relief as they had displayed elements of improper purpose and lack of good faith. This conclusion was based on the EEI Plaintiffs conduct including:

a) Bringing an application that was frivolous and vexatious.

b) Proceeding in a non diligent and obstructionist manner despite claiming that the injunctive application was urgent;

c) Filing prolix, repetitive and voluminous material including a 23 page application document, a 307 page affidavit and 154 page brief.

d) Flagrantly disregarding court policy, rules, and direction in relation to the timelines for filing of briefs. The EEI Plaintiffs brief was filed 7 days late at approximately 430 pm on the day before the application (several days after the Defendants brief). The EEI Plaintiffs took advantage of this delay to respond to the Defendants brief. This displayed not only a disregard for the rules but also a contempt for any concept of a fair process. Decision [ 20 ] Based on my reasons in dismissing the injunction application and the submissions of the Defendants I find that

Schedule C costs are not appropriate in this case and do not represent an adequate indemnity of reasonable and proper costs of the Defendants. [ 21 ] There are many factors present which strongly support an award of elevated costs against the EEI Plaintiffs. The blameworthy conduct of the EEI Plaintiffs in the conduct of the litigation meets the requirements under the rules and the guidelines from the ABCA for awarding enhanced, greatly enhanced, indemnity or Solicitor client costs. [ 22 ] I have reviewed the solicitor client costs submitted by the Defendants. I find them to be reasonable.

I note that the hourly rate requested by their principal lawyer is significantly reduced from $500/hour to $300/hour, representing a reduction in over $22,000 in legal fees. No further assessment of these solicitor client costs is required. [ 23 ] I award costs to the Defendants on a solicitor client full indemnity basis in the lump sum amount of $65,000.00. Heard by way of written submissions filed April 27 th , 2023. Dated at the City of Edmonton, Alberta this 5 th day of May, 2023. J.J. Gill J.C.K.B.A. Appearances: Richard Hajduk for the Plaintiffs

Michele Wolowidnyk for the Defendants