Kostic v Thom, 2023 ABKB 642

Court of King’s Bench of Alberta Citation: Kostic v Thom, 2023 ABKB 642 Date: 20231114 Docket: 1501 11111 Registry: Calgary Between: Liliana Kostic Plaintiff - and - Jeffrey N. Thom and Miller Thomson LLP Defendants _______________________________________________________ Reasons for Decision of the Honourable Justice Robert A.

Graesser _______________________________________________________ Introduction [ 1 ] Following the retirement of Associate Chief Justice John Rooke in late 2022, case management of his many matters involving Liliana Kostic, Dale McMullen, and Brian Jackson on the one hand, and the Piikani Nation (the “Nation”) on the other, was transferred to Justice Willie De Wit (as he then was). In April 2023, all of these matters were transferred to me. The Order of September 16, 2022 (filed November 29, 2023) includes 31 actions, although some of them appear dormant.

That order included a number of actions involving many of the same parties then being case management by Justice Rosemary Nation.

[ 2 ] During the course of my case management of these proceedings, I adopted the protocol established by ACJ Rooke in his order of February 2013. Amongst other things, the parties in these various lawsuits were not allowed to bring applications without first obtaining a fiat from the case management judge. The fiat process involves the prospective applicant filing a fiat request, supported by the draft notice of application. Submissions are limited to five pages in length. The fiat request must be served on opposing parties, who may respond if they object to the applications or any part of them.

The respondents are page-limited in their response submissions. [ 3 ] There are a large number of Court of King’s Bench decisions concerning some of these actions, as well as Court of Appeal decisions and decisions from leave applications to the Supreme Court of Canada. [ 4 ] It has been a daunting task to become familiar with the various actions that are active. Many of the actions are related and it is not possible to understand what is going on and what is required to go on in one action without reference to many others.

All of the Liliana Kostic actions relate to the compensation paid to the Piikani Nation as a result of the construction of the Old Man River Dam on Nation lands. A settlement with both the Federal and Provincial Governments led to the creation of various trust funds. Ms. Kostic, who is not a member of the Piikani Nation, was engaged by the Nation to manage the various trust funds. [ 5 ] At the time of her engagement, Ms. Kostic worked for Wood Gundy (subsequently CIBC Wood Gundy, now CIBC World Markets).

The Trustee of the various trusts, CIBC Trust Corporation (“CIBC Trust”), entered into a brokerage agreement with Wood Gundy in 2001. After several years, Ms. Kostic left Wood Gundy and joined Raymond James Limited (“RJL”). At the same time, CIBC Trust changed brokerage firms to RJL. [ 6 ] In 2006, Piikani Investment Corporation commenced action 0601 (“Action 0601”) on behalf of the Nation against RJL, Ms. Kostic, and others, claiming damages for negligence, breach of contract, breach of fiduciary duty, fraud, and conspiracy. At some time in 2007, the Nation terminated Ms.

Kostic’s contract with it, and CIBC Trust Company terminated the contract with RJL. [ 7 ] RJL and Ms. Kostic had liability insurance through AIG Insurance Company of Canada (“AIG”). They appointed Jeffery Thom, then a partner in Miller Thomson LLP (“Miller Thomson”) to defend the claims against RJL and Ms. Kostic. [ 8 ] At some time in 2011 several related lawsuits were consolidated into Action 0601 with the Nation as the sole plaintiff. The Nation through its counsel, Jensen Shawa Solomon Duguid Hawkes LLP (“JSS”) discontinued Action 0601 against most of the Defendants but for RJL and Ms.

Kostic and two individuals. Those individuals do not appear to have taken

part in the proceedings over the years. The Nation eventually amended their statement of claim in that action to remove all allegations of fraud against RJL and Ms. Kostic. [ 9 ] Ms. Kostic refused to consent to the fraud allegations being discontinued without costs. During the time these changes were happening, Ms. Kostic lost confidence in Mr. Thom and believed that her interests were not being well represented. AIG agreed to retain William Klym as her defence counsel, or to reimburse Ms. Kostic for Mr. Klym’s fees and disbursements. Mr. Klym successfully brough a

summary dismissal allegation of the fraud allegations in Action 0601, which ACJ Rooke granted without costs in favour of or against anyone. [ 10 ] In 2015, Ms. Kostic, who was still represented by Mr. Klym, sued Mr. Thom and Miller Thomson (collectively “Thom”) for negligence as a result of their handling of the defence of the Piikani Nation claim against Ms. Kostic. The basic allegations are that Thom failed to bring applications and take steps that would have ended the lawsuit much earlier. As a result, Ms.

Kostic claims she has suffered significant financial losses, stress and anxiety, and she has had to incur significant legal fees. Additionally, Ms. Kostic alleges that Thom negligently failed to commence a defamation action against the Nation and others within the time allowed by the Limitations Act . [ 11 ] The history of this lawsuit is described in ACJ Rooke’s decision Kostic v Thom , 2020 ABQB 324 and by the Court of Appeal in the appeal from that decision, reported at 2021 ABCA 406 . [ 12 ] Ms. Kostic applied for a fiat for a number of applications in June 2016.

That process was largely overtaken by Thom’s application for

summary dismissal, which was granted by ACJ Rooke in his decision cited above. Ms. Kostic appealed the dismissal, and the Court of Appeal overturned the ACJ’s decision in 2022. [ 13 ] In August 2022, Ms. Kostic sought leave to bring applications for a number of things. She filed an affidavit in support of the fiat request, sworn August 24, 2022. By then, Mr. Klym had been replaced by Gabor Zinner, who had a limited retainer arrangement with Ms. Kostic. He provided submissions on the request to ACJ Rooke on August 25. [ 14 ] Thom’s counsel, Emery Jamieson LLP (“Emery Jamieson”) replied on September 9, 2022.

They did not oppose a fiat for four of the applications: 1. to address the sufficiency of the Defendants’ Affidavit of Records; 2. to permit the filing of an Amended Amended Statement of Claim; 3. for de bene esse cross-examination of Ms. Kostic’s medical expert; and 4. for the development of a litigation plan. [ 15 ] They resisted the request for the other five applications: 1. Production of Mr. Thom’s medical records for the relevant time; 2. Dismissal or striking of the Defendants’ statement of defence as a result of alleged misrepresentations;

3. A declaration that Mr. Thom is in contempt of Court relating to disclosure of records; 4. A declaration that Mr. Thom is in breach of the Law Society’s Code of Conduct relating to disclosure of information and records; and 5. Enhanced costs for all of these applications. [ 16 ] Mr. Zinner wrote a follow-up letter to ACJ Rooke on October 16, 2022 asking that the matters be scheduled as soon as possible. [ 17 ] After my appointment as case manager, Mr. Zinner wrote me on June 19, 2023.

Much of Justice De Wit’s time as case manager had been taken up with proceedings by the Traditional Chiefs, as represented by Dianna North Peigan, who were attempting to intervene in some of the lawsuits directly involving the Piikani Nation. [ 18 ] By the time of my appointment, Ms. Kostic’s fiat request for these applications had not been dealt with.

My first case management conference was set for June 21, at which time a number of outstanding fiat requests in this action and a number of others were discussed. [ 19 ] Further case management on September 7, 2023 directed the filing of various fiat requests and responses. [ 20 ] In accordance with the protocol developed by ACJ Rooke for applications in case management, Mr. Handzic responded to Ms. Kostic’s request on September 29. [ 21 ] I will deal with the various applications Ms. Kostic wishes to pursue: 1. Production of Mr. Thom’s medical records for the relevant time [ 22 ] Ms. Kostic alleges that Mr.

Thom’s ability to effectively represent her was impacted by alcohol addiction. She seeks production of his medical records as they relate to alcohol addiction and treatment for it. Her notice of application seeks records from December 1, 2006 to September 13, 2013 “that bear on his competency to practice law”. [ 23 ] She cites two cases in support of the intended application, Law Society of Upper Canada v Anthony Edward McCusker, 2013 ONLSHP 53 and Markovitz (Re) , 2012 LSBC 25 . Those are reported decisions from the Law Society of Upper Canada (Ontario) and have nothing to do with lawyers’ negligence.

They deal with professional conduct matters and the lawyers’ overall competence to practice law. [ 24 ] What a plaintiff in a legal malpractice or negligence lawsuit must prove is that the lawyer made a mistake that fell below the standard of practice of an ordinarily competent lawyer. It does not matter why the lawyer made the mistake. Simply having an addiction or condition that may affect a lawyer’s judgment from time to time does not make everything they do or did wrong. Negligence must be specifically proven. As noted by the Court of Appeal in Ms.

Kostic’s successful appeal, the standard of care must generally be proven through independent expert evidence. [ 25 ] What caused the lawyer’s negligence, if any, is irrelevant. Ms. Kostic cannot succeed in her claim against Mr. Thom and Miller Thomson simply by proving that he had an alcohol problem during the period he was representing her. She must prove that he made a negligent mistake. [ 26 ] There is no relevance to this information and Ms. Kostic’s fiat request is denied. It is axiomatic to this conclusion that any questioning on this issue is also irrelevant and immaterial. 2.

Dismissal or striking of the Defendants’ statement of defence as a result of alleged misrepresentations [ 27 ] This proposed application arises from Ms. Kostic’s belief that an affidavit sworn by Mr. Thom in an application to stop the clock on filing their affidavit of records while Thom and Miller Thomson pursued a

summary dismissal action contained falsehoods and misrepresentations. [ 28 ] Following the Court of Appeal decision dismissing the application for

summary dismissal, the Defendants filed their affidavit of records. That affidavit is the subject of the application Ms. Kostic may make regarding the sufficiency of the Defendants’ disclosure. [ 29 ] There may be honest disagreements between parties as to what is relevant and material and what is discoverable. Applications for further discovery and a better affidavit of records are common, especially in complicated litigation. [ 30 ] An application such as Ms.

Kostic proposes will undoubtedly require cross-examination on affidavits and an extensive process to determine whether any non-disclosure of records was deliberate and might be characterized as litigation misconduct. Even then, striking out a party’s pleading is essentially a nuclear response. I am unaware of a lawsuit that has been determined at a

summary stage because of document disclosure issues. [ 31 ] Most matters are either resolved or determined at trial on the merits of the case. Very few are decided on technical issues, and fewer yet (if any) are dismissed or allowed because of litigation misconduct and without regard to the merits. [ 32 ] The relief sought by Ms. Kostic is in my view entirely unrealistic. If there has been any litigation misconduct, that will be something for the trial judge to consider after they have decided the case following trial. An application such as the proposed one would

consume an inordinate amount of time, delay the ultimate resolution of the matter, and not provide the relief Ms. Kostic seeks even if she had some measure of success on it. [ 33 ] Ms. Kostic will not be able to avoid having to prove that Mr. Thom was negligent and that his negligence caused her loss and damages. An application based on a disagreement over production of records is not a shortcut to the trial. [ 34 ] No fiat is granted on this proposed application. 3. A declaration that Mr.

Thom is in contempt of Court relating to disclosure of records [ 35 ] This application is subsumed by the application for which a fiat has been consented to relating to producing a further and better affidavit of records. Whether there has been a breach of previous court orders regarding the production of records will undoubtedly be a focus of that application, as I understand Ms. Kostic believes that there are relevant and material records that have yet to be disclosed by Mr. Thom and Miller Thomson. Remedies can be addressed within that application.

I do not see these as “stand alone” applications. [ 36 ] No fiat is granted for this issue to be dealt with separately. If there are cost issues that are not specifically addressed in the context of other applications, they can be addressed when costs are spoken to after the trial. Having interlocutory applications to deal with costs on other interlocutory applications is generally inefficient and unhelpful in moving litigation towards trial. 4. A declaration that Mr.

Thom is in breach of the Law Society’s Code of Conduct relating to disclosure of information and records [ 37 ] This Court has no jurisdiction to deal with matters under the Alberta Law Society’s Code of Conduct . Court practice is governed by the Alberta Rules of Court , not the Law Society’s Code of Conduct . If Ms. Kostic has a concern over whether or not Mr. Thom complied with his ethical responsibilities under the Law Society’s Code of Conduct , she must address those concerns with the Law Society. [ 38 ] The issue as framed in the draft notice of application suggests that Mr. Thom has not given Ms.

Kostic property entrusted to him, or records she believes are hers. If the “property” she refers to is records, any issues concerning those will be addressed in the application regarding the affidavit of records. If the property is other than records, that would in the first instance be an issue for the Law Society. [ 39 ] The Law Society’s Code of Conduct is essentially irrelevant to this lawsuit, other than as it may related to the appropriate standard of care and duties a lawyer owes to their clients. [ 40 ] The issues raised by Ms.

Kostic under this heading are not matters which can be dealt with by the Court. [ 41 ] No fiat is granted for this intended application. 5. Enhanced costs [ 42 ] To the extent costs have not already been dealt with in previous applications, costs are generally dealt with at the end of the trial and following the result of the trial. The trial judge has a very wide discretion regarding costs and may consider any misconduct by any party during the litigation. [ 43 ] Costs can be spoken to following any interlocutory application, and that seems to have been a pattern here.

There can be no advance ruling on the appropriate level of costs. It is premature to deal with this now and there will be no efficiency resulting from permitting an application of this nature to proceed. Conclusion [ 44 ] None of these remaining applications warrant the granting of a fiat for the reasons set out above. There are four applications for which a fiat is appropriate and the resolution of which may be necessary to have the matter proceed to trial in a more expeditious manner than has been the case to date. [ 45 ] I have not determined if I will be the judge who hears these applications.

I am unclear as to how much time will be required for the applications. So that they can be scheduled and heard efficiently, the parties should finalize the materials they intend to rely on for these four matters. I expect that they should be heard together as the underlying background is common for all of them. [ 46 ] In that regard, I would ask that Ms. Kostic finalize her application and supporting materials. I know the amended notice of application and a supporting affidavit were filed in August, 2022. There was no brief filed in support of them. I suggest that Ms.

Kostic complete her materials by December 11 (roughly a month from now). Mr. Handzic should complete and file and serve his response materials by January 15, 2024. Any reply by Ms. Kostic should be done by January 31, 2024. [ 47 ] In the meantime, I will attempt to have the matter scheduled for hearing at some time in February or March, subject to my availability or the availability of another judge to hear these matters.

[ 48 ] If the proposed

schedule for completing the materials does not work, I would ask the parties to contact me with any requested changes. Heard by way of written submissions. Dated at the City of Calgary, Alberta this 14 th day of November, 2023. Robert A. Graesser J.C.K.B.A. Appearances: Gabor I. Zinner for the Plaintiff Kember Handzic for the Defendants