Erickson Estate v Axsen, 2024 ABKB 69

Court of King’s Bench of Alberta Citation: Erickson Estate v Axsen, 2024 ABKB 69 Date: 20230206 Docket: 2301 05197 Registry: Calgary Between: Daniel Parent, Executor of the Estate of Beverly Erickson, and Daniel Parent Plaintiffs/Respondents - and - Croft Axsen, Judy Benteau, JMC Jencor Mortgage Corporation, Northern Premier Capital Inc., Northern Premier Equities Inc., Northern Premier Investments Netherland (Canada) Ltd., Northern Premier Investments Netherland B.V., Miwa Weninger, Weninger Properties Inc. and Japanab International Inc.

Defendants Croft Axsen, Judy Benteau, Northern Premier Capital Inc., and Northern Premier Equities Inc. Applicants _______________________________________________________ Endorsement of the Honourable Justice J.S. Little _______________________________________________________

[1] This is a costs decision. The merits decision may be found at 2024 ABKB 10. Briefly, Daniel Parent (Parent) as executor ofan estate and in his own capacity obtained an ex parte order freezing the assets of Croft Axsen (Axsen) and others. I lifted that orderprimarily on the basis that there had been incomplete disclosure of relevant information at the ex parte hearing and secondarily thatcertain elements of the test for an attachment order had not been met.

I found that Axsen was entitled to costs and that if the partiescould not agree on quantum, they could provide brief written submissions to me. [2] Counsel for Axsen seek solicitor-client costs of close to $200,000, less the $2000 ordered to be paid by Parent pursuant to aprevious court order.

Alternatively, they seek McAllister costs (McAllister v Calgary (City), 2021 ABCA 25) in the region of 50% oftheir solicitor-client costs. [3] Counsel for Parent argued that neither solicitor-client costs nor McAllister costs are justified for this interlocutory matter. [4] While I lifted the attachment order for reasons including those which the Court of Appeal found in Secure 2013 Group Inc.v Tiger Calcium Services Inc., 2017 ABCA 316 (Tiger Calcium) and in which in its costs decision at 2018 ABCA 110 it also found atparagraph 33 that solicitor-client costs were appropriate, it is worth going back to FIC Real Estate Fund v Phoenix Land Ventures Ltd,2016 ABCA 303, to which the Court of Appeal referred in Tiger Calcium, to find the bases on which solicitor client costs may beawarded: [4] Generally, an award of solicitor-client costs is based on misconduct that occurs during the course of litigation.

However, thatis not an invariable rule.

In Sidorsky v CFCN Communications Ltd, 1997 ABCA 280 at para 28, [1998] 2 WWR 89, this Court furtherclarified that “a departure from party and party costs should only occur in rare and exceptional circumstances” and endorsed a list ofexamples from Jackson v Trimac Industries Ltd, (1993), (AB KB), 138 AR 161 at 172 (QB), where a greater costsaward would be appropriate: 1) circumstances constituting blameworthiness in the conduct of the litigation by that party (Reese et al v Alberta (Minister ofForestry, Lands and Wildlife) et al, (AB KB), [1992] AJ No 745, 5 Alta LR (3d) 40 (QB)); 2) cases in which justice can only be done by a complete indemnification for costs (Foulis et al v Robinson; Gore Mutual Inc Co,Third Party, (ON CA), [1978] OJ No 3596, 21 OR (2d) 769 (CA)); 3) where there is evidence that the plaintiff did something to hinder, delay or confuse the litigation, where there was no serious issueof fact or law which required these lengthy, expensive proceedings, where the positively misconducting party was “contemptuous” of theaggrieved party in forcing that aggrieved party to exhaust legal proceedings to obtain that which was obviously his (Max Sonnenberg Incv Stewart, Smith (Canada) Ltd, (AB KB), [1986] AJ No 1036, 48 Alta LR (2d) 367 (QB)); 4) an attempt to deceive the court and defeat justice, an attempt to delay, deceive and defeat justice, a requirement imposed on theplaintiff to prove facts that should have been admitted, thus prolonging the trial, unnecessary adjournments, concealing materialdocuments from the plaintiffs and failing to produce material documents in a timely fashion (Olson v New Home Certification Programof Alberta, (AB KB), [1986] AJ No 347, 44 Alta LR (2d) 207 (QB)); 5) where the defendants were guilty of positive misconduct, where others should be deterred from like conduct and the defendantsshould be penalized beyond the ordinary order of costs (Dusik v Newton (1984), 51 BCLR 217, (SC)); 6) defendants found to be acting fraudulently and in breach of trust (Davis v Davis, (MB KB), [1981] MJ No 320, 9Man R (2d) 236 (QB); 7) the defendants' fraudulent conduct in inducing a breach of contract and in presenting a deceptive statement of accounts to the courtat trial (Kepic v Tecumseh Road Builder et al, [1987] OJ No 890, 23 OAC. 72); 8) fraudulent conduct (Sturrock v Ancona Petroleums Ltd, (AB KB), [1990] AJ No 738, 111 AR 86 (QB)); and 9) an attempt to delay or hinder proceedings, an attempt to deceive or defeat justice, fraud or untrue or scandalous charges (PharandSki Corp v Alberta, (AB KB), [1991] AJ No 902, 83 Alta LR (2d) 152 (QB)). [5] Of these bases, I found that Parent ought to have fully disclosed certain matters at the ex parte application, which certainly isblameworthy conduct.[1] But I do not see it rising to the level of blameworthiness that would justify solicitor-client costs.

And the otherbases which might ground an award of solicitor-client costs are not found in the short history of this litigation. They generally will bemore relevant factors in drawn out litigation or litigation which results in positive findings of fact following a trial. In the case of thisinterlocutory matter, I am not prepared to make the necessary inferences that might ground one or more of the other bases. [6] Counsel for Parent submits that

Schedule C costs are appropriate, albeit perhaps with some enhancement. In this case,Parent is suing for $8,000,000 in damages. That puts the matter into Column 5. The amount for a contested application with briefswould be $2700, or $4050 for a full day. Adding some other steps including questioning, might take the costs up to $6000. Even using amultiplier to enhance the costs would not bring them anywhere near to meaningful compensation to Axsen, particularly if, as counsel forParent seeks, they then must be assessed.

That would only further prolong this matter, when what the parties need to do is to either getto trial or reach some form of resolution. [7] Rule 10.33 requires that I consider a number of factors in awarding costs. Of those, the ones that I find applicable here are: (a)The result of the action and the degree of success of each party. Here, the action is not concluded, but Axsen was entirely successfulin an application to set aside a broad, restrictive Order.

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c) The importance of the issues. A party’s conduct in obtaining an ex parte order is an important issue. Here, it was necessary that Axsen mount an enthusiastic response designed to ensure as best as possible that the Order was properly vacated. [ 8 ] That response turned out to be very expensive.

Counsel for Axsen properly points out that that expense was necessary due to the “nature and importance of the Application, the amount at issue, the serious nature of the allegations made in the Action, the skill, work, and responsibility involved, and sheer volume of evidence that was required to be adduced to respond to the Respondents’ allegations.” It is difficult to fault counsel for going above and beyond what might have been minimally necessary to defend its client’s position, even if the Court chooses not to fully compensate the client for all of that work.

And, as counsel for Parent has conceded in his brief, many of the steps taken and the material submitted will be valuable in the substantive litigation as well. [ 9 ] For those reasons, I adopt the McAllister approach in conjunction with the lump sum permitted by Rule 10.31(1)(b)(ii) which goes some of the way to compensating Axsen. A lump sum award of $40,000 recognizes the factors that I find important from Rule 10.33 and avoids the necessity of further involvement of the Court and its finite resources in settling the matter of costs.

I recognize that this amount is only about half of the 40-50% recognized by the Court of Appeal in McAllister as being an appropriate level of indemnification , but that case involved all steps from start to finish where there was a novel question of law at play. The case at hand is an interlocutory matter which, while substantial, is not determinative of the lawsuit. [ 10 ] I award a lump sum of $40,000 and direct that it be paid or appropriate security be posted before Parent takes further steps in the litigation. [ 11 ] Thank you to both counsel for their concise submissions.

Written submissions received January 31, 2024. Dated at the City of Calgary, Alberta this 6 th day of February, 2024. J.S. Little J.C.K.B.A. Written submissions: Peter R.S. Leveque Miles Davison LLP for the Respondents Kaila Eadie and Angad Bedi Jensen Shawa Solomon Duguid Hawkes LLP for the Applicants