Phillips Legal Professional Corporation v Schenher, 2020 SKCA 117

Court of Appeal for Saskatchewan Docket: CACV3395 and CACV3488 Citation: Phillips Legal Professional Corporation v Schenher , 2020 SKCA 117 Date: 2020-10-15 Between: Phillips Legal Professional Corporation Appellant And Mervin Schenher Respondent Plaintiff/Respondent And Kimberlynn Schulz Respondent Defendant/Petitioner Before: Ottenbreit, Ryan-Froslie and Leurer JJ.A. Disposition: Costs decided Written reasons by: The Honourable Madam Justice Ryan-Froslie In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr.

Justice Leurer On appeal from: QBG 2723 of 2016/FLD 124 of 2017, Regina Appeal heard: Rule 40 – written submissions only Counsel: W. Timothy Stodalka for Phillips Legal Professional Corporation David Couture for Mervin Schenher Kimberlynn Schulz non-appearing Ryan-Froslie J.A. I. Introduction [ 1 ] The sole issue before this Court is costs with respect to the following decision: Phillips Legal Professional Corporation v Schenher , 2020 SKCA 87 .

The decision arose out of two appeals commenced by Phillips Legal Professional Corporation [Legal Corporation] against the respondents, Mervin Schenher and Kimberlynn Schulz. Only Mr. Schenher opposed the appeals. [ 2 ] In its first appeal, the Legal Corporation had requested an amendment to the formal judgment rendered in an action between Mr. Schenher and Ms. Schulz. Mr. Schenher had obtained judgment against Ms. Schulz for money owing pursuant to a promissory note. The formal judgment contained a provision that money held in trust by the Legal Corporation on behalf of Ms. Schulz would be paid to Mr. Schenher.

The Legal Corporation claimed a lien against those monies and accordingly wanted the formal judgment amended to strike the provisions relating to payment to Mr. Schenher. The Legal Corporation’s second appeal was against a decision emanating from the Court of Queen’s Bench that determined it did not have a valid solicitor’s lien with respect to the monies it held in trust. [ 3 ] For the reasons set out below, the Legal Corporation, which was successful in its appeals, should be awarded costs, both in this Court and the Court of Queen’s Bench.

In my view, those costs should be fixed in accordance with the applicable tariff. II. Preliminary matter [ 4 ] The Legal Corporation filed an affidavit setting out the offers it had made to Mr. Schenher to settle its appeals. The affidavit also sets out Mr. Schenher’s alleged responses to those offers. Mr. Schenher objected to the filing of that affidavit evidence though he provided no basis for his objection.

In addition, he filed an affidavit of his own, which he requested the Court accept if it allowed the Legal Corporation’s affidavit to be filed. [ 5 ] One rationale for awarding costs is to encourage settlement of legal disputes. Settlement not only benefits the public because it saves resources pertaining to the administration of justice, but it also benefits the litigants who are spared the time required to pursue litigation, as well as the emotional and monetary costs associated therewith. Thus, settlement offers are a legitimate factor in awarding costs. As such, both the Legal Corporation and Mr.

Schenher’s affidavits are accepted and will be considered by this Court. III. Relevant Background [ 6 ] In its substantive decision with respect to the appeals, this Court found that the Legal Corporation had a valid solicitor’s lien against monies owned by Ms. Schulz and received by the Legal Corporation as a result of litigation conducted on her behalf. Further, it found that the Legal Corporation’s lien had priority over Mr. Schenher’s unsecured judgment on the promissory note. [ 7 ] The relevant factual background is as follows: (

a) The monies paid into the Legal Corporation’s trust account were, by court order, to be retained by the Legal Corporation pending further order or agreement between Ms. Schulz and Mr. Schenher. The Legal Corporation was not involved in the granting of that

order. (

b) Ms. Schulz was not represented by the Legal Corporation with respect to Mr. Schenher’s claim pursuant to the promissory note. (

c) Ms. Schulz did not appear at trial and, as a result, Mr. Schenher was granted judgment based on the promissory note. The trial judge’s written reasons made no reference to the monies held in trust by the Legal Corporation. (

d) The formal judgment submitted by Mr. Schenher for issuing included a provision that the monies held in trust by the Legal Corporation would be paid to him. The Legal Corporation was not provided with notice of that request nor was the trial judge advised of the Legal Corporation’s lien when he was asked to approve the judgment. (

e) The Legal Corporation requested Mr. Schenher to amend his formal judgment by excluding the clauses with respect to payment of the trust monies to him. When Mr. Schenher refused, the Legal Corporation brought an application before the trial judge to amend the formal judgment and to confirm its lien. The trial judge dismissed the Legal Corporation’s application partly because Mr. Schenher did not advise the trial judge that he was aware of the Legal Corporation’s lien prior to the granting of the judgment. (

f) The Legal Corporation then appealed both the formal judgment and the trial judge’s ruling with respect to its lien. Those two appeals were heard together. Only one appeal book, one set of factums and one hearing was required to deal with both appeals. IV. Issues [ 8 ] The issues for determination of this Court may be summarized as follows: (

a) Does this Court have authority to grant costs to the Legal Corporation with respect to the Queen’s Bench decision? (

b) What costs, if any, are appropriately awarded for the proceedings in this Court? V. Analysis A. Authority to grant costs in the Court of Queen’s Bench [ 9 ] I will deal first with Mr. Schenher’s assertion that the Legal Corporation “provided no case authority to suggest” it is appropriate, or “the practice of this Court” to award costs with respect to the judgment overturned. [ 10 ]

Section 12 of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 , sets out the powers of this Court: 12

(1) On an appeal, the court may: (

a) allow the appeal in whole or in part; (

b) dismiss the appeal; (

c) order a new trial; (

d) make any decision that could have been made by the court or tribunal appealed from ; (

e) impose reasonable terms and conditions in a decision; and (

f) make any additional decision that it considers just. (Emphasis added) [ 11 ] In rendering his decision with respect to the Legal Corporation’s claim for a solicitor’s lien, the trial judge awarded costs against the Legal Corporation. This Court overturned the trial judge’s decision. As this Court has the power to make any decision “that could have been made” by the Court of the Queen’s Bench, it has the power to order costs in that Court. Pursuant to Rule 11-7(1) of The Queen’s Bench Rules , costs normally follow the event.

As a result of its appeal, the Legal Corporation was successful in its application in the Court of Queen’s Bench. It is thus entitled to costs with respect to that application. [ 12 ] The Legal Corporation suggests a cost award of $2,200.00 would be appropriate. It attached to its affidavit a draft Bill of Costs based on the Queen’s Bench tariff that reflects that amount. Mr.

Schenher did not take issue with the amount of those costs. [ 13 ] In my view, costs in the Court of Queen’s Bench should follow the cause and, as the Legal Corporation was successful in overturning the Queen’s Bench decision, it should receive its costs in that Court in the amount of $2,200.00 B. Costs in the Court of Appeal [ 14 ] There are two issues with respect to costs in this Court: (

i) entitlement; and (ii) quantum. 1. Entitlement

[ 15 ] The Legal Corporation argues that it was successful in both its appeals and as such is entitled to costs. [ 16 ] Mr. Schenher contends that the Legal Corporation is not entitled to costs because: (

a) none of the Legal Corporation’s offers met the criteria of The Queen’s Bench Rules 4-26 to 4-32; (

b) the Legal Corporation’s offers were contingent on Mr. Schenher making a factual admission, namely, that the Legal Corporation had not acted for him since 2010 and had not prepared the promissory note on his instructions; (

c) the Legal Corporation had prepared its own materials with respect to the appeals, thus reducing its costs; and (

d) the Legal Corporation’s notices of appeal contained a large number of grounds, thus forcing Mr.

Schenher to respond to a multitude of issues. [ 17 ] The granting of costs is a discretionary matter governed by relevant factors, including but not limited to the outcome of the appeal, how the appeal has been conducted and offers of settlement. [ 18 ] The purposes of an award of costs are to ensure an efficient, orderly and fair legal process; to indemnify or compensate the successful party, at least in part, for expenses incurred in the proceeding; to discourage meritless, frivolous or vexatious proceedings; and to sanction conduct that increases the duration or expense of litigation or that is otherwise unreasonable: British Columbia (Minister of Forests) v Okanagan Indian Band , 2003 SCC 71 , [2003] 3 SCR 371. [ 19 ] Generally, costs will be awarded to a successful litigant.

This is so even if the successful litigant has made no offers of settlement. While a successful litigant may be disentitled to costs if they have unreasonably refused offers of settlement from the losing party, that is not the situation here. Mr. Schenher did not make any offers of settlement. In my view, the Legal Corporation, as the successful litigant, would prima facie be entitled to costs. Mr. Schenher argues otherwise. [ 20 ] Mr. Schenher’s first two arguments are grounded in the offers of settlement made by the Legal Corporation. [ 21 ] Mr.

Schenher first submits that none of the Legal Corporation’s offers met the criteria set out in The Queen’s Bench Rules 4-26 to 4-32. In my view, this argument is without merit for two reasons. First, The Queen’s Bench Rules pertaining to costs do not apply in this Court. Second, while offers that meet the requirements of those rules are relevant to the issue of quantum , the fact the Legal Corporation’s offers did not attract the special costs consequences triggered by those rules does not disentitle it from obtaining costs ordinarily awarded to a successful litigant.

Let me elaborate. [ 22 ] Rule 51 of The Court of Appeal Rules provides that, “[s]ubject to these rules, Subdivision 2 of Division 4 of

Part 13 of The Queen’s Bench Rules shall apply, with any necessary modification, to an application to a court or a judge”.

Part 13 relates to technical rules, including the form and content of affidavits and exhibits. It does not deal with costs. Rather, The Queen’s Bench Rules pertaining to costs are found in

Part 11. Having said that, the factors set out in Rule 11-4(1) of The Queen’s Bench Rules are matters generally taken into account by this Court when considering the issue of costs. [ 23 ] Further, Rules 4-26 to 4-32 of The Queen’s Bench Rules deal with situations where formal offers of settlement have been made. The form and content of such offers are set out in those rules, which provide for an increased cost award where a formal offer has been made that is equal to or better than the judgment received. Those rules deal with a specific situation where double costs will be awarded. [ 24 ] Mr.

Schenher’s second argument is that the Legal Corporation should be denied costs because all its offers of settlement were conditional on him admitting facts that have not been established. The uncontroverted evidence supports a finding that the Legal Corporation’s offers were conditional on Mr. Schenher admitting the Legal Corporation had not acted for him since 2010 and had not acted on his instruction when it prepared the promissory note upon which his judgment against Ms. Schulz was based. In my view, this argument is also without merit.

It is unclear from the evidence whether the promissory note was prepared on Ms. Schulz’s or Mr. Schenher’s instructions. Conditions attached to a monetary offer of settlement go to the reasonableness of the offer and will impact a determination of whether there should be an enhanced costs award. As a general rule, however, such conditions will rarely affect entitlement. This is so, because as already pointed out, it is not a precondition to an award of costs that a successful litigant make offers of settlement. [ 25 ] Mr.

Schenher’s third argument is that the Legal Corporation should not be entitled to costs because it prepared its own appeal documents, thus decreasing the legal costs it had to pay with respect to its appeals. [ 26 ] There is no evidence the Legal Corporation prepared its own materials but, even if it did, that is not a reason to deny it costs. Party-party costs are not solicitor-client costs. They are not meant to fully compensate a litigant for legal expenses incurred as result of an appeal.

Further, the Legal Corporation would have expended time and money to prepare the documentation relating to its appeals, including its appeal book and its factum. Finally, the Legal Corporation was represented by independent legal counsel at the hearing of the appeals. In other words, the Legal Corporation incurred legal expenses over and above the preparation of its materials. [ 27 ] Mr.

Schenher’s final argument is that the Legal Corporation’s notices of appeal contained numerous grounds thus requiring him to respond to a number of different issues. [ 28 ] In assessing this ground of appeal, it is important to remember the Legal Corporation had to initiate two appeals, one with respect to the formal judgment issued on the promissory note and the other relating to the application to enforce its solicitor’s lien. While the two notices of appeal set out 31 grounds, out of necessity those grounds overlapped resulting in a duplication of issues. Further, Mr.

Schenher in his factum acknowledged that the grounds of appeal were narrowed in the Legal Corporation’s factum. In the circumstances, the number of grounds of appeal do not warrant denying the Legal Corporation its costs. 2. Quantum

[ 29 ] The Legal Corporation requests enhanced costs because its monetary offers of settlement were reasonable and were not accepted. I am not prepared to grant the Legal Corporation’s request given that its offers were conditional on Mr. Schenher admitting controverted facts with which he disagreed. [ 30 ] Mr. Schenher contends that the Legal Corporation should be awarded costs less than the applicable tariff for the same four reasons he submitted that costs should not be awarded in the first place.

For the reasons already set out herein, those four arguments are equally without merit with respect to the question of quantum of costs. In my view, there is no reason to deny the Legal Corporation costs assessed in accordance with the applicable tariff. [ 31 ] The Legal Corporation prepared a draft Bill of Costs with respect to its appeals. In doing so, it assessed its costs under Column 2 of the Court of Appeal tariff. Mr.

Schenher contends that Column 2 is not appropriate because the Legal Corporation was granted judgment in the amount of $48,352.24 and Column 1, not Column 2, applies to judgments where the amount awarded does not exceed $50,000.00. [ 32 ] While Mr. Schenher is correct that Column 1 applies where the judgment granted does not exceed $50,000.00, in my view, Column 2, not Column 1, applies because non-monetary relief was also granted. [ 33 ] Rule 54(1)(

b) of The Court of Appeal Rules provides that: 54(1) Unless otherwise ordered: ... (

b) Column 2 of

Schedule 1 applies to the taxation of costs where non-monetary relief is involved. (Emphasis added) [ 34 ] The Legal Corporation had requested and was granted non-monetary relief in its appeal, namely, the amendment of the formal judgment (based on the promissory note) to exclude the provisions relating to payment of the trust monies held by it to Mr. Schenher. [ 35 ] The Bill of Costs filed by the Legal Corporation claimed costs in this Court of $9,014.25 for fees and disbursements. In my view, that draft Bill of Costs contains three items that do not comport with costs determined in accordance with Column 2: (

a) item 5, being costs for a “complex” opposed motion (Mr. Schenher had applied to lift the stay); (

b) item 12, being correspondence, which was assessed at $500.00; and (

c) item 16, being photocopying charges of $785.00. I will address each of these items in turn. a. Item 5: Application to lift the stay [ 36 ] Mr. Schenher applied to lift or, in the alternative, to partially lift the stay of execution automatically imposed as a result of the Legal Corporation’s appeals. He was successful in that application as a partial stay was granted and he received $25,000.00 of the monies held in trust by the Legal Corporation.

The Chambers judge ordered that the costs of that application would be “costs in the cause”. [ 37 ] Assessment decisions from this Court have generally held that applications to lift a stay are simple as opposed to complex motions. Those costs under Column 2 would thus be assessed at $375.00 not $500.00. b. Item 12: Correspondence [ 38 ] In its draft Bill of Costs, the Legal Corporation claimed $500.00 for correspondence pursuant to item 12 of the tariff. However, correspondence under Column 2 is assessed at $200.00, not $500.00. There is no reason to vary from the tariff amount. c.

Item 16: Photocopying charges [ 39 ] The Legal Corporation assessed its disbursement for photocopying its factum and appeal book at $0.50 per page. Assessment decisions pertaining to costs in this Court have consistently awarded $0.25 per page for such a disbursement. There is nothing to justify a variation from the usual practice. Accordingly, the photocopying disbursement should be calculated at the rate of $0.25 per page. [ 40 ] Applying the adjustments identified, the Legal Corporation’s costs in this Court are fixed at $6,387.50, calculated as follows: Tariff Items Fees Disbursements 2.

Notice of appeal (x2) $800.00 $400.00 for court filing fees 4. Simple motion $375.00 6. Agreement as to content of the appeal book $200.00 7. Preparation of the appeal book $500.00 8. Preparation of factum $2,000.00 9. All other preparations for hearing $750.00

10. Appearance to present argument (one counsel for one half-day) $400.00 11. Preparing formal judgment or order $200.00 $20.00 court fee 12. Correspondence $200.00 13. Preparation of Bill of Costs $150.00 16. Photocopying factum and appeal book (5 copies of 314 pages at $0.25 per page) $392.50 Total Fees $5,575.00 Total Disbursements $812.50 Total Fees and Disbursements $6,387.50 VI. Conclusion [40] The Legal Corporation is entitled to costs both in this Court and in the Court of Queen’s Bench. [ 41 ] Mr.

Schenher shall pay to the Legal Corporation costs in the Court of Queen’s Bench fixed at $2,200.00. [ 42 ] Mr. Schenher shall pay to the Legal Corporation costs in this Court fixed at $6,387.50. “Ryan-Froslie J.A.” Ryan-Froslie J.A. I concur. “Ottenbreit J.A.” Ottenbreit J.A. I concur. “Leurer J.A.” Leurer J.A.