Baker Law Firm v Condominium Corporation No, 2023 ABKB 330

Court of King’s Bench of Alberta Citation: Baker Law Firm v Condominium Corporation No 1611047, 2023 ABKB 330 Date: 20230531 Docket: 2001 14624 Registry: Calgary Between: Baker Law Firm Appellant - and - Condominium Corporation No. 1611047 Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice M.H. Bourque _______________________________________________________ Background [ 1 ] On September 3, 2019, the Appellant law firm (“ Baker Law ”) sued the Respondent (“ Condo Corp ”) for non-payment of fees in the Provincial Court of Alberta (as it was then known) (the “ PC Claim ”). The amount in dispute is $6,143.07.

[ 2 ] On March 20, 2020 (which was, it is judicially noted, within days of Alberta declaring a public state of health emergency due to COVID-19), Baker Law caused the PC Claim to be served at Condo Corp’s registered address, which was at the address of Baker Law’s former office, which Baker Law had vacated less than 6 months earlier, on or about September 30, 2019. [ 3 ] Baker Law sought to validate service of the PC Claim on Condo Corp on October 20, 2020, more than one year after the PC Claim was filed.

According to Baker Law’s letter to the Provincial Court dated October 20, 2020, another lawyer in its firm had attempted on previous occasions to file the application to validate service, but it had been rejected for insufficient materials. The procedure card relating to the PC Claim reveals that on September 23, 2020, more than one year after the PC Claim was filed, the file was sent for direction to “deem service good”. The procedure card reveals that on September 24, 2020, the sought direction was denied.

Similarly, on October 27, 2020, the application was sent for direction and on November 9, 2020, the Provincial Court denied the application. [ 4 ] On November 18, 2020, Baker Law withdrew the PC Claim. [ 5 ] On December 1, 2020, Baker Law commenced a new claim in the Court of Queen’s Bench (the “ QB Claim ”). [ 6 ] On January 7, 2021, Condo Corp filed a Statement of Defence, which was not prepared by its current counsel. In it, Condo Corp acknowledges having retained Baker Law in relation to an easement review, and that its fees would be limited to $5,000 and paid for by a third party.

It further alleges that the third party paid the $5,000 and did not expect any further fee invoice from Baker Law. [ 7 ] Shortly thereafter, on February 12, 2021, Baker Law applied for an order to strike the defence, on the basis that the President of the Condo Corp was not a member of the Law Society of Alberta and that Condo Corp could not be represented by one of its officers or director. Condo Corp appears to have then retained Ms. Snowball, and on April 28, 2021, Baker Law’s application to strike was adjourned sine die on consent.

I note that Baker Law’s affidavit in support of its application to strike says nothing of the withdrawn PC Claim. [ 8 ] On April 26, 2021, Condo Corp applied to have the QB Claim transferred to the Provincial Court of Alberta (the “ Transfer Application ”) pursuant to

section 57 of the recently renamed Court of Justice Act , RSA 2000 c C-30.5 . According to the Transfer Application, on March 19, 2021, Condo Corp requested Baker Law’s consent, which was refused without reasons. [ 9 ] The Transfer Application was returnable in Masters Chambers (as it was then known), and was eventually adjourned to a February 1, 2022 special application before Master Prowse, as he then was (“ AJ Prowse ”).

AJ Prowse reluctantly dismissed the Transfer Application on the basis that the legislation did not allow the transfer to be made without Baker Law’s consent. [ 10 ] AJ Prowse invited the parties to make representations regarding costs. Baker Law submitted that its retainer agreement called for solicitor and his own client full indemnity costs in the event of any action for recovery of fees.

The relevant portion of the retainer agreement provided as follows: In the event it becomes necessary to commence legal action due to non-payment of legal accounts, [Baker Law] shall be entitled to recover all associated costs and expenses, on a solicitor and his own client full indemnity basis. [ 11 ] In response to questioning from AJ Prowse as to why Baker Law did not proceed to sue in the Provincial Court, Mr.

Baker responded by acknowledging that the claim had originally been filed in the Provincial Court and that (transcript, February 1, 2022, page 9, lines 8-14): [w]e had considerable difficulties with the Provincial Court, who refused – ultimately one judge in the Provincial Court refused to issue an order declaring service on the defendant corporation valid, so we had the choice of appealing that order to a master of the Court of Queen’s Bench or simply withdrawing our Provincial Court claim and refiling in the Court of Queen’s Bench. So we spent a year in the Provincial Court on this matter.

And didn’t get satisfaction that we could actually advance our claim. [ 12 ] In response, Ms. Snowball indicated to the Court that (at page 13, lines 8-16): this is the first that [Condo Corp] or I have heard of Baker Law attempting to serve the [PC Claim] and apparently struggling with the Provincial Court to get service recognized by the Court within the time span. We know nothing of that. ... but in terms of the amount of money at issue here, this matter belongs in Provincial Court and had we been asked to accept service, I believe that we would have.

I’d simply had no information and no facts, but we have no knowledge of the yearlong struggle as told by Mr. Baker. [ 13 ] After hearing submissions, AJ Prowse awarded costs in the lump sum amount of $750. He stated that the main reason for the lump sum award was to avoid having the dispute go to a review and that Baker Law did not engage outside counsel and therefore did not have solicitor and client costs in the traditional sense.

AJ Prowse noted that costs are a discretionary matter, and that he was setting costs at $750 having regard to the amount at issue and the fact that, in his view, the matter was more appropriate for the Civil Division of the Court of Justice. [ 14 ] Baker Law appealed AJ Prowse’s costs award (“ Costs Appeal ”). Condo Corp did not appeal the order dismissing the Transfer Application. [ 15 ] The Costs Appeal proceeded on the record before AJ Prowse.

In addition, Condo Corp filed an affidavit providing, in my opinion, relevant and material evidence regarding Baker Law’s attempts to serve the PC Claim and I find that it should form part of the appeal record pursuant to Rule 6.14(3). [ 16 ] Both parties filed extensive briefs on the Costs Appeal. In addition, Baker Law’s brief includes a Draft Bill of Costs relating to the Transfer Application.

In it, it claims $10,417 for all steps related to the Transfer Application between April 6, 2021 and February 3, 2022, including questioning of Condo Corp’s affiant, attendances in Masters’ Chambers on three dates, including before AJ Prowse, research, drafting a brief, and miscellaneous correspondence. There are no detailed time entries associated with the Draft Bill of Costs

identifying the person doing the work, the date on which the work was done, or the rate charged. In addition, it lists an amount of $139.50 for preparation of the Draft Bill of Costs, as well as disbursements for transcripts of the cross-examination of Condo Corp’s affiant ($330.75) and modest court filing fees (totalling $30). When GST is added, the total draft bill of costs requests $11,521.62. Issue on Appeal [ 17 ] The issue for determination is whether AJ Prowse correctly awarded costs to Baker Law in the amount of $750.

Position of the Parties [ 18 ] Baker Law submits that AJ Prowse erred in law by failing to take into account the covenants in the retainer agreement that entitles it to costs on a solicitor and his own client, full indemnity basis. Baker Law also submits that AJ Prowse erred in fact or mixed law by inferring when there was no evidence to support the conclusion that Condo Corp did not receive independent legal advice on the terms of the retainer prior to its signing.

Accordingly, Baker Law submits that its appeal should be allowed and that costs of $11,521.62 should be awarded in its favour. [ 19 ] Condo Corp submits that AJ Prowse did not misdirect himself as to the applicable law, made no palpable error in the assessment of the facts, and did not exercise his discretion unreasonably. Condo Corp further submits that its additional evidence pertaining to Baker Law’s failed attempt to serve the PC Claim show conduct by Baker Law that is unreasonable and may be one or more of vexatious, oppressive or improper.

Standard of Review [ 20 ] An appeal from an Applications Judge is a hearing de novo : Kadco Construction Inc v Sterling Bridge Mortgage Corp , 2021 ABCA 52 at para 11 . The standard of review is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 30 . Analysis [ 21 ] The first issue for determination is the appropriate amount of costs in respect of the Transfer Application. [ 22 ] In McAllister v. Calgary (City) , 2021 ABCA 25 , the well-known principle that costs follow the result was confirmed and that the successful party is entitled to a costs award against the unsuccessful party.

However, the Court noted that entitlement may not always be obtained (at para 21). McAllister does not draw any distinction in the manner a court determines costs, as between costs awarded at an interim stage, such as in the instant case, or costs awarded for an action, as a whole, following settlement or trial. The Court of Appeal sets out the steps to follow in determining costs. First, the Court considers the Rule 10.33 factors (at para 23).

Then, the Court considers the award options available in Rule 10.31 (at para 24). [ 23 ] Turning to the Rule 10.33 factors in this case, Baker Law was the successful party in the Transfer Application. Although that application did not strictly involve an amount claimed or recovered, the amount in the underlying QB Claim is relatively minimal.

The Transfer Application was neither complex nor important and it did not result in an apportionment of liability. [ 24 ] Rule 10.33 contains several party conduct factors, including conduct of a party that tended to shorten the action (10.33(1)(f)), conduct of a party that was unnecessary or that unnecessarily lengthened or delayed the action or any stage or step of the action (10.33(2) (a)), whether a party started separated actions for claims that should have been filed in one action (10.33(2)(c)), and whether a party engaged in misconduct (factor 10.33(2)(g)).

In my view, by refusing to consent to the Transfer Application, Baker Law engaged in conduct that unnecessarily lengthened or delayed the resolution of the action, particularly in the face of having originally initiated its lawsuit against Condo Corp in the Provincial Court. The fact that it ran into problems with validating service of the PC Claim is, in my view, largely of its own doing. [ 25 ] By way of further background, shortly after having retained Baker Law, Condo Corp changed its registered address to Baker Law’s then business premises address at 202 6 th Avenue SW, in Calgary.

This occurred on February 20, 2019. Following Condo Corp’s refusal to pay Baker Law’s invoice for legal services, Baker Law wrote to Condo Corp on August 1, 2019 advising that it was terminating its retainer agreement and that “any litigation undertaking by our office will be pursued in the Provincial Court of Alberta”. [ 26 ] In support of the validation of service application in the Provincial Court, Baker Law’s affiant deposed that Mr. Baker advised her that shortly after terminating the retainer, “on or about September of 2019” Mr.

Baker spoke with Condo Corp’s property manager, advising her that Condo Corp would need to change its address for service and to arrange to collect Condo Corp’s corporate seal. She adds that the retainer agreement authorised Mr. Baker to communicate with the property manager. On this point, I note that the retainer merely permits Baker Law to accept instructions from the property manager. The affidavit does not disclose whether Mr. Baker advised that Baker Law would be moving effective September 30, 2019.

In any event, the affiant deposes that Condo Corp “did not change its address for service until May 25, 2020, over 2 months after service of the [PC Claim]”. [ 27 ] In March 2020, Baker Law set out to serve the PC Claim on Condo Corp by engaging a process server and directing them to serve Condo Corp at its registered address: Baker Law’s former business premises site. There was no possibility that the PC Claim would have come to Condo Corp’s attention by this means of service.

Leaving aside that Baker Law’s actions happened within days of the initial COVID-19 lockdowns, I find that Baker Law had to have known that service on Condo Corp at Baker Law’s former business address was futile and would be ineffective.

[ 28 ] I also note that service of the PC Claim by process server was not the only option available to Baker Law. Subsection 42(1) (

b) of the Provincial Court Civil Procedure Regulation , Alta Reg 176/2018 provides that service of a commencement document on a corporation can be made by serving it using a method described in subsection 41(1) “on an individual who appears to have management or control responsibilities in respect of the corporation at its principal place of business or activity”. As noted earlier, Baker Law believed it was authorised to communicate directly with Condo Corp’s property manager.

Faced with the inevitability that proper service would not result if it served the PC Claim on its former business address, Baker could have served it on the property manager. Alternatively, Baker Law could also have remedied the impossibility of effective service by obtaining an order for substitutional service per subsection 41(1)(d), explaining the circumstances.

I have no doubt that the Provincial Court would have granted such an order given the circumstances. [ 29 ] Lastly, by the time Baker Law sought to validate service of the PC Claim, the 12-month window for service of the PC Claim itself and to request an extension of that window ( Provincial Court Civil Procedure Regulation , s. 4 ). [ 30 ] While I can appreciate that Baker Law felt that it could not get satisfaction to advance its claim in Provincial Court as Mr.

Baker described in paragraph [11] herein, he also acknowledged in his submissions before AJ Prowse that the Civil Division of the Provincial Court of Alberta was an appropriate and more expeditious venue to adjudicate his claim against Condo Corp. Instead, Baker Law fought the Transfer Application that would have seen the claim adjudicated in the exact venue Baker Law had initially chosen. In the process, it claims to be entitled to recover fees nearly double the amount in issue in its claim against Condo Corp. Not to mention that this course of action did not aid in the resolution of the claim itself.

Had Baker Law consented to the Transfer Application, the matter would undoubtedly already been heard and adjudicated by now, at significantly less expense, following a streamlined process. It is inexplicable to me why Baker Law would not have preferred this course of action. Baker Law’s failure to consent to the Transfer Application weighs heavily in my award of costs. [ 31 ] Lastly, I turn to consider factor 10.33(1)(

g) which pertains to matters related to the question of reasonable and proper costs that I consider appropriate. [ 32 ] Baker Law submits that in the event of non-payment of fees, its retainer agreement with Condo Corp authorizes it to recover solicitor-and-own-client fees from Condo Corp.

The relevant clause reads as follows: In the event it becomes necessary to commence legal action due to non-payment of legal accounts, [Baker Law] shall be entitled to recover all associated costs and expenses, on a solicitor and his own client full indemnity basis. [ 33 ] In my view, this clause refers to entitlement to costs and expenses associated with recovery efforts only. The word recover used in association with the words costs and expenses suggests the clause authorizes recovery for amounts expended and out of pocket of Baker Law.

I accept that Baker Law is out of pocket minimal disbursements for a transcript and some court filing fees. Otherwise, the principal of Baker Law, Mr. Baker, appears to have done most of the work resisting the Transfer Application. He questioned Condo Corp’s affiant on the Transfer Application. He also argued the Transfer Application before AJ Prowse. While I appreciate that Mr. Baker’s written submissions filed in advance of the hearing before AJ Prowse are on the letterhead of KH Dunkley Law Group, Mr. Baker is listed as the author and there is no evidence that KH Dunkley Law Group invoiced Baker Law for Mr.

Baker’s services. I also have no evidence of Mr. Baker’s financial arrangement with KH Dunkley Law Group or when he joined that firm. In any event, it was open to Baker Law to submit an affidavit addressing matters relevant to its costs pursuant to Rule 6.14(3), and it did not do so. While it is undoubtedly true that Mr.

Baker and/or individuals at Baker Law expended time and effort in opposing the Transfer Application, on the evidence before me, Baker Law is out-of-pocket costs and expenses for the transcript and court filing fees. [ 34 ] Having considered the Rule 10.33 factors and their application to the facts and circumstances of this case, like AJ Prowse, I would have awarded costs, and in selecting an option under Rule 10.31, I too would have awarded them in a lump sum instead of assessed costs. In exercising his discretion, AJ Prowse awarded a lump sum of $750. I see no reason to disturb the amount of his award.

Disposition [ 35 ] The Costs Appeal is dismissed. Costs [ 36 ] If the parties are unable to agree on costs of this appeal, they may contact the Judicial Scheduler to arrange for an in-person hearing. Heard on the 8 th day of February, 2023. Dated at the City of Calgary, Alberta this 31 st day of May, 2023.

M.H. Bourque J.C.K.B.A. Appearances: Roger Baker for the Appellant Laura C. Snowball for the Respondent