ALBERTA LAW REPORTS Sixth Series Reports of Selected Cases from the Courts of Alberta and Appeals

VOLUME 46 (Cited 46 Alta. L.R. (6th))

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THOMSON REUTERS CANADA, A DIVISION OF THOMSON REUTERS CANADA LIMITED One Corporate Plaza Customer Relations 2075 Kennedy Road Toronto 1-416-609-3800 Toronto, Ontario Elsewhere in Canada/U.S. 1-800-387-5164 M1T 3V4 Fax 1-416-298-5082 www.carswell.com Contact www.carswell.com/email R. v. Brodt 213

[Indexed as: R. v. Brodt] Her Majesty the Queen (Respondent) and Michael James Brodt (Appellant) Alberta Court of Appeal Docket: Edmonton Appeal 1603-0136-A 2016 ABCA 373 Catherine Fraser C.J.A., Jack Watson, Sheila Greckol JJ.A. Heard: November 15, 2016 Judgment: November 30, 2016 Criminal law –––– Sentencing — Sentencing for multiple convictions –––– Totality principle — Accused pleaded guilty to one count of possessing restricted firearm with readily accessible ammunition, four breaches of recognizance and ten counts of possession for purposes of trafficking — Offences took place over three distinct time periods — Accused was sentenced to 14 years’ imprisonment — Accused appealed sentence — Appeal allowed — Global sentence of 10 years’ imprisonment, less credit for pre-sentence custody, was appropriate — Sentencing judge’s failure to factor in common law totality was reviewable error — Sentencing judge correctly characterized events as constituting three separate transactions and made sentences for each group consecutive to each other — There was no principled reason however for sentencing judge making sentences within each group consecutive to each other — Fact that different drugs were involved did not mandate consecutive sentences for each drug — Sentenced judge referred to two factors as aggravating which should not have been treated as such at sentencing — Accused had no criminal record and was battling addiction to drugs — Accused pleaded guilty to every count which was mitigating — It was unclear how sentencing judge apportioned guilty pleas between various sentences — Global sentence imposed was unduly long or harsh — Consecutive sentences for drug offences in each group was not justified. Cases considered: R. v. B. (G.) (2013), 2013 ABCA 93, 2013 CarswellAlta 299, [2013] A.J. No. 205, 544 A.R. 127, 567 W.A.C. 127 (Alta. C.A.) — referred to R. v. Bear (2016), 2016 SKCA 140, 2016 CarswellSask 690, [2016] S.J. No. 587 (Sask. C.A.) — referred to R. v. Keough (2012), 2012 CarswellAlta 61, 2012 ABCA 14, [2012] A.J. No. 10, [2012] 5 W.W.R. 45, 57 Alta. L.R. (5th) 68, 281 C.C.C. (3d) 476, 519 A.R. 236, 539 W.A.C. 236 (Alta. C.A.) — referred to R. v. May (2012), 2012 ABCA 213, 2012 CarswellAlta 1170, [2012] A.J. No. 703, 533 A.R. 182, 557 W.A.C. 187, 75 Alta. L.R. (5th) 135 (Alta. C.A.) — considered 214 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

R. v. McDonald (2015), 2015 ABCA 108, 2015 CarswellAlta 457, [2015] A.J. No. 303, 18 C.R. (7th) 397, 323 C.C.C. (3d) 291, 599 A.R. 300, 643 W.A.C. 300, 16 Alta. L.R. (6th) 101 (Alta. C.A.) — referred to R. v. McLean (2016), 2016 SKCA 93, 2016 CarswellSask 478, [2016] S.J. No. 406, 484 Sask. R. 137, 674 W.A.C. 137 (Sask. C.A.) — referred to R. v. Pazder (2016), 2016 ABCA 209, 2016 CarswellAlta 1250, [2016] A.J. No. 672, 39 Alta. L.R. (6th) 333 (Alta. C.A.) — referred to R. v. Rahime (2001), 2001 ABCA 203, 2001 CarswellAlta 1019, 156 C.C.C. (3d) 349, [2001] 10 W.W.R. 428, [2001] A.J. No. 988, 286 A.R. 377, 253 W.A.C. 377, 95 Alta. L.R. (3d) 237 (Alta. C.A.) — referred to R. v. Snow (2006), 2006 ABCA 167, 2006 CarswellAlta 741, 384 A.R. 187, 367 W.A.C. 187 (Alta. C.A.) — considered R. v. Trinh (2012), 2012 ABCA 383, 2012 CarswellAlta 2169, 539 A.R. 297, 561 W.A.C. 297 (Alta. C.A.) — referred to R. v. Wozny (2010), 2010 MBCA 115, 2010 CarswellMan 757, [2010] M.J. No. 384, [2011] 2 W.W.R. 630, 262 Man. R. (2d) 75, 507 W.A.C. 75, 267 C.C.C. (3d) 308 (Man. C.A.) — referred to Statutes considered: Controlled Drugs and Substances Act, S.C. 1996, c. 19 s. 5(2) — considered Criminal Code, R.S.C. 1985, c. C-46 s. 95(1) — considered s. 145(3) — considered s. 718.2(c) [en. 1995, c. 22, s. 6] — considered

APPEAL by accused from sentence imposed on conviction for multiple offences.

J.D. Martin, for Respondent L.L. Garcia, for Appellant

Per curiam (orally):

1 Michael Brodt appeals his global sentence of 14 years imprisonment for primarily gun and drug offences. Central to this appeal is how courts deal with the concept of “totality” — in both its statutory and common law form — and in turn how multiple convictions for drug offences should be treated. 2 Brodt pled guilty to 15 charges comprised of the following: one count of possessing a restricted firearm with readily accessible ammunition contrary to s 95(1) of the Criminal Code; four breaches of recognizance contrary to s 145(3) of the Criminal Code; and 10 counts of possession R. v. Brodt Per curiam 215

for the purposes of trafficking contrary to s 5(2) of the Controlled Drugs and Substances Act. The drugs included methamphetamine (three counts), cocaine (two counts), heroin (two counts), GHB (two counts), and oxycodone. 3 The offences took place over three distinct time periods. Brodt was arrested in August 2014, and found in possession of a restricted weapon (a handgun) as well as various drugs (methamphetamine, GHB, and heroin). This gave rise to the gun conviction and three of the drug convictions. Released on a recognizance, Brodt was then found in breach of a number of conditions in November of 2014. A variety of drugs was subsequently discovered, leading to four more drug convictions (GHB, cocaine, heroin, and methamphetamine). Finally, in January of 2015, Brodt was again found in breach of two conditions of his recognizance which in turn unearthed drugs (methamphetamine, cocaine, and oxycodone) that led to the final three convictions of possession for the purpose of trafficking. 4 The sentencing judge correctly characterized the events as constituting three separate transactions. As the second set of offences was committed while on release for the first, and the third while on release for the second, she made those dispositions consecutive to each other. However, she also made each of the convictions within each group consecutive to 1 one another. The result was a preliminary global sentence of 36 /2 years, reduced to 14 years on the basis of the principle in s 718.2(c) of the Criminal Code that “where consecutive sentences are imposed, the com- bined sentence should not be unduly long or harsh”. 5 However, there was no principled reason in this case to have the drug offences run consecutively within each group of offences. Under common law totality, the drug offences should typically run concurrently to one another within each group of offences. As this Court noted in R. v. May, 2012 ABCA 213 (Alta. C.A.) at para 8, (2012), 533 A.R. 182 (Alta. C.A.), a sentencing court should consider “the worst of the offences in the transaction, and then go on to assess what effect the other collateral or associated crimes has on the overall culpability of the offender”. It is correct that, as a general rule, multiple offences run consecutively when they are either not part of a single transaction, or deal with different legal interests: R. v. Keough, 2012 ABCA 14 (Alta. C.A.) at paras 59–61, (2012), 519 A.R. 236 (Alta. C.A.) (Paperny JA in dissent but not on this point); R. v. McLean, 2016 SKCA 93 (Sask. C.A.) at paras 49–50. But neither is the case here. The drug offences within each group were part of 216 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

the same transaction: see R. v. Bear, 2016 SKCA 140 (Sask. C.A.) at para 27. Nor does the fact that different drugs are involved mean that different legal interests apply. Accordingly, the mere fact that a number of different drugs were involved did not mandate consecutive sentences for each drug. Treating the offences in this way can too readily lead to an injustice. 6 Statutory totality requires reducing a cumulative sentence that will crush the offender’s rehabilitative prospects: see R. v. McDonald, 2015 ABCA 108 (Alta. C.A.) at para 54, (2015), 599 A.R. 300 (Alta. C.A.). This involves an individualized consideration of restraint which exists over and above whether a cumulative sentence for the offences is broadly proportionate. The focus is instead on the offender’s circumstances and whether the sentence is in keeping with the offender’s record and future prospects: R. v. Wozny, 2010 MBCA 115 (Man. C.A.) at paras 59–60, (2010), 262 Man. R. (2d) 75 (Man. C.A.). However, applying statutory totality under s 718.2(c) of the Code in cases of multiple transactions does not obviate the need to first consider common law totality. Relying exclusively on statutory totality, at the expense of common law totality, runs the risk that the final restraint review directed by Parliament, often called the “last look”, will start with a disproportionately high notional cumulative sentence. The result — the sentence ultimately imposed will not be sufficiently restrained to fully account for both common law and statutory totality. Here, the sentencing judge essentially failed to factor in common law totality. This was reviewable error. 7 Moreover, the sentencing judge referred to two “aggravating” factors which should not have been treated as such for sentencing purposes. First, she referred to the “nature of the drugs sold, Schedule I opiates, which are dangerous and highly addictive drugs”. Second, she listed “the potential harm to his customers and our society at large by virtue of the spread of these substances”. It is an error to count as aggravating, or for that matter mitigating, a factor which already forms part of a starting point: R. v. B. (G.), 2013 ABCA 93 (Alta. C.A.) at para 5, (2013), 544 A.R. 127 (Alta. C.A.). As this Court noted in R. v. Snow, 2006 ABCA 167, 384 A.R. 187 (Alta. C.A.), a “starting point may be adjusted to take into account aggravating and mitigating factors that are not already built in to the starting point” (para 12, emphasis added). 8 But both of the factors identified by the sentencing judge as aggravating form part of the relevant starting point category. For example, the starting point is three years imprisonment for commercial trafficking in R. v. Brodt Per curiam 217

cocaine on more than a minimal scale: R. v. Pazder, 2016 ABCA 209 (Alta. C.A.) at para 15; R. v. Rahime, 2001 ABCA 203, 286 A.R. 377 (Alta. C.A.). This particular starting point is premised in part on the “nature of the drug” being trafficked, namely cocaine. Once the starting point applies, the dangerous and addictive nature of cocaine has already been accounted for. So too with the harm to society: R. v. Trinh, 2012 ABCA 383 (Alta. C.A.) at para 9, (2012), 539 A.R. 297 (Alta. C.A.). Therefore, the sentencing judge erred in considering as aggravating two factors which were already accounted for in the relevant starting point sentences she applied. 9 Brodt had no prior criminal record and is battling an addiction to drugs which precipitated these offences. He entered guilty pleas to every possible count, having been fully cooperative with the authorities. This is mitigating, though it is not clear how the sentencing judge apportioned this factor between the various sentences. 10 Taking the foregoing into account, including all aggravating and mitigating factors, we have concluded that the global sentence imposed was unduly long or harsh. We do not consider consecutive sentences for the drug offences within each group justified. Under our approach, the cumulative sentence before application of statutory totality is significantly 1 less than 36 /2 years. In all the circumstances, a global sentence of 10 years imprisonment, less credit for pre–sentence custody, is appropriate. 11 To achieve this, we alter the sentences to five years imprisonment on the first group of offences, and to 30–months imprisonment on each of the second and third groups. On Information 151142809P1, a sentence of five years is imposed on count 15, with all other sentences remaining the same but running concurrent. On Information 141291633P1, a sentence of 30–months is imposed on count 3, with all other sentences remaining the same but running concurrent. On Information 150089506P1, a sentence of 30–months is imposed on count 1, with all other sentences remaining the same but running concurrent. The sentence on each Informa- tion will run consecutively to one another for the 10–year total result. 12 For the reasons given, the appeal is allowed. All ancillary orders made by the sentencing judge are affirmed. Appeal allowed. 218 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

[Indexed as: Toews v. Grand Palladium Vallarta Resort & Spa] Kerry Toews, Todd Toews and Her Majesty the Queen In Right of Alberta, as represented by the Minister of Health (Respondents) and Grand Palladium Vallarta Resort & Spa, formerly known as Palladium Vallarta Resort & Spa, Desarrollos Dine S.A. de C.V. dba Hotel Palladium Vallarta (Appellants) and First Choice Canada Inc., operating under the trade names Signature Vacations and Selloffvacations.com, Signature Vacations, Selloffvacations.com, Fiesta Hotel Group Resorts, Fiesta Hotels and Resorts SL, Fiesta Bavaro Hotels, S.A., Punta Mita Servicios S.C., Dominican Entertainment (Luxembourg) S.A.R.L., Dominican Entertainment S.A.R.L. and Dominican Entertainment S.A. and ABC Ltd. (Not Parties to the Appeal) Alberta Court of Appeal Docket: Edmonton Appeal 1603-0090-AC 2016 ABCA 408 Ronald Berger, Frederica Schutz, Sheilah Martin JJ.A. Heard: October 31, 2016 Judgment: December 21, 2016 Conflict of laws –––– Contracts — Choice of law — Forum conveniens — Substantial connection –––– Individual plaintiff arranged vacation to Mexico for her and her husband through defendant travel company based in Alberta — While on vacation plaintiff drank from unlabeled water in hotel minibar, which actually contained cleaning substance — Plaintiff suffered esophageal burns and she subsequently underwent 87 surgical procedures — Plaintiffs brought action in Alberta against travel company, hotel and hotel’s corporate owner — Hotel and owner brought unsuccessful motion to have action against them stayed on basis that Alberta did not have jurisdiction over action, or alternatively that Mexico was most convenient forum — Hotel and owner appealed unsuccessfully from master’s decision holding that Alberta courts had jurisdiction over personal injury claim — Hotel and owner appealed to Alberta Court of Appeal on issue of whether Alberta courts had jurisdiction on basis of real and substantial connection between plaintiffs and hotel owner — Appeal dismissed — Posi- tion taken by plaintiffs was that negligence flowed directly from chain of contracts, number of which were made in Alberta — But for chain of related Toews v. Grand Palladium Vallarta Resort & Spa 219

contracts, plaintiffs would not have stayed at hotel and tort could never have occurred — Recent Supreme Court of Canada judgment, not available to master or Queen’s Bench judge, held that all that is required is connection between claim and contract made in province where jurisdiction is sought to be assumed — Alberta contracts related to or were connected with plaintiffs’ claim against hotel and hotel owner — Owner need not have direct contract with plaintiffs in Alberta for presumptive connecting factor to apply. Conflict of laws –––– Torts — Jurisdiction of court over foreign tort — Gen- eral rule. Cases considered: Lapointe Rosenstein Marchand Melan¸con LLP v. Cassels Brock & Blackwell LLP (2016), 2016 SCC 30, 2016 CSC 30, 2016 CarswellOnt 10977, 2016 CarswellOnt 10978, 86 C.P.C. (7th) 223, 400 D.L.R. (4th) 1, 53 B.L.R. (5th) 173, (sub nom. Trillium Motor World Ltd. v. General Motors of Canada Ltd.) 485 N.R. 1, [2016] S.C.J. No. 30, (sub nom. Trillium Motor World Ltd. v. General Motors of Canada Ltd.) 349 O.A.C. 1 (S.C.C.) — considered Van Breda v. Village Resorts Ltd. (2012), 2012 SCC 17, 2012 CarswellOnt 4268, 2012 CarswellOnt 4269, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 17 C.P.C. (7th) 223, 10 R.F.L. (7th) 1, 429 N.R. 217, [2012] S.C.J. No. 17, [2012] A.C.S. No. 17, 291 O.A.C. 201, (sub nom. Club Resorts Ltd. v. Van Breda) [2012] 1 S.C.R. 572, (sub nom. Charron Estate v. Village Resorts Ltd.) 114 O.R. (3d) 79 (note) (S.C.C.) — considered Rules considered: Alberta Rules of Court, Alta. Reg. 124/2010 R. 11.25(3) — considered R. 11.25(3)(b) — considered R. 11.25(3)(d) — considered R. 11.25(3)(i) — considered

APPEAL by hotel and hotel owner from judgment reported at Toews v. First Choice Canada Inc. (2016), 2016 ABQB 130, 2016 CarswellAlta 435, 37 Alta. L.R. (6th) 359 (Alta. Q.B.), dismissing motion to have action against them stayed.

B. Zalmanowitz, Q.C., S.E. Hart, for Respondents F.R. Foran, Q.C., J.G. Hopkins, for Appellants K.J. Robinson, for Dominican Entertainment and others 220 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Per curiam:

1 This is an appeal of a Queen’s Bench ruling upholding a Master’s decision which held that the Alberta Courts have jurisdiction over a claim of personal injury suffered by the respondents while vacationing at the appellants’ hotel property located in Mexico. The appellants do not question the determination in the lower courts that Alberta, rather than Mexico, is the more convenient forum for the action. Rather, the issue is whether the Alberta courts have jurisdiction on the basis of a real and substantial connection between the respondents and the appellant hotel owner. The appellants maintain that it is unreasonable for a foreign defendant who has not involved itself in any contract made outside of its own country to be called upon to answer proceedings in Alberta. Were it otherwise, the appellants argue that such defendants would be subject to “universal jurisdiction” based solely on the residency of a plaintiff, contrary to private international law. 2 The factual underpinnings are the following: The respondents Kerry and Todd Toews who reside in Edmonton, purchased an all–inclusive family vacation at the appellants’ hotel in Mexico (the “holiday contract”). The purchase was made online on the website of Selloffvaca- tions.com. The booking confirmation and itinerary originated with “Sig- nature Vacations” whose standard form, terms and conditions provided that any disputes in relation to the travel package would be determined by arbitration in accordance with the laws of Ontario. 3 The hotel is owned by Desarrollos Dine S.A. de C.V. (“Desarrollos”). That company contractually agreed with Dominican Entertainment (“Do- minican”) to allot a block of all–inclusive rooms to Dominican to sell to its clients. Dominican’s clients are tour operators located worldwide. Both Desarrollos and Dominican are wholly owned subsidiaries of a third corporation located in the Netherlands. 4 Dominican then entered into a contract with Signature Vacations of Mississauga Ontario to market and re–sell the rooms in the hotel to Ca- nadian customers including Albertans. Selloffvations.com is a trade name for Signature Vacations and Signature Vacations is a division of First Choice Canada Inc. (“First Choice”). 5 Ms. Toews swallowed a portion of an unmarked, unlabeled water bottle in the fridge of their hotel room. It turned out to be a cleaning substance which burned her esophagus and resulted, following emergency medical treatment, in 87 surgical procedures. Toews v. Grand Palladium Vallarta Resort & Spa Per curiam 221

6 The respondents brought an action against First Choice, the appellant Palladium and its owner Desarrollos, and others in Alberta, for breach of contract and implied warranties, negligence and other common law duties. In its statement of defence, First Choice admitted that its contract with the Toews was governed by the laws of Alberta. First Choice ultimately entered into a Mary Carter Agreement with the Toews admitting that both Signature Vacations and Selloffvacations.com were trade names of First Choice, registered and carrying on business in Alberta. First Choice admitted that it had been properly served in Alberta, had attorned to the jurisdiction of Alberta, and acknowledged that the Toews contract with First Choice was made in Alberta, and that there is a “real and substantial connection” between Alberta and the facts upon which the action is based. 7 The appellant Desarollos filed an application for a stay of the action for lack of jurisdiction or, alternatively, a finding that Mexico is the proper forum. On December 19, 2014, the Master dismissed the application in a lengthy written decision and found that Alberta had jurisdiction in the action and was the more convenient forum of the action. The decision was based predominantly on what was found to be a “real and substantial connection” between the Toews claim and contracts made in Al- berta that relate to that claim, in keeping with the law set out by the Supreme Court in Van Breda v. Village Resorts Ltd., 2012 SCC 17 (S.C.C.). She also found that a real and substantial connection was established through Rule 11.25(3)(b), which similarly provides the same “presumption” of connection where a contract is made, preformed or breached in Alberta. 8 On March 4, 2016, a Queen’s Bench judge upheld the decision of the Master on both findings relating to jurisdiction (Van Breda and Rule 11.25(3)(b)) and again confirmed that Alberta was the most convenient forum for the action. In particular, at paras. 37–46, the court determined that both the booking contract and the holiday contract were made in Alberta, and that the appellants’ argument that they were not a party to either contract was not persuasive. He reasoned that there is no requirement of privity of contract as long as the contract is properly connected to the action (as was the case in Van Breda) and that the term “connected” is to be given a broad meaning. Further, the Queen’s Bench judge found that the only reason Ms. Toews was in the hotel room where she consumed the unknown substance, was because of the holiday contract and the only reason First Choice could enter into the holiday contract, was because of the booking contract. Both were made in Alberta, 222 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

“relate to” or are “connected with” the action, and connect the appellants to the action. Further, he ruled there is no requirement that the appellants carry on business in Alberta to raise this connection. Lastly, the Queen’s Bench judge found that there was both a “real and substantial connection” between the appellants and the action resulting from the contracts made in Alberta, both under the Van Breda factors and Rule 11.23(3)(d). He considered that there was no need to address the interpretation or ap- plicability of Rule 11.25(3)(i), i.e. if the appellants were “necessary and proper part[ies] to the action brought against another person”, namely First Choice in Alberta.

ANALYSIS 9 Although Rule 11.25(3) of the Alberta Rules of Court is arguably engaged, the appeal is capable of adjudication on the basis of the Van Breda “real and substantial connection” test alone. Indeed, Rule 11.25(3) expressly adopts the jurisdictional standard of a “real and substantial connection.” What is required is a claim which “relates to” or is “connected with” a contract made in Alberta. In Van Breda Lebel, J. recognized that a presumptive connecting factor exists where a contract connected with a dispute was made in the Province. [90] To recap, in a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute: [–––] (d) a contract connected with the dispute was made in the province. Club Resorts Ltd. v. Van Breda, [2012] 1 SCR 572, 2012 SCC 17 (CanLII) 10 The Toews advanced claims in both contract and tort against all defendants. The position of the respondents is that negligence flows directly from the chain of contracts a number of which were made in Al- berta. This satisfies the test. Put another way, but for the chain of related contracts, the Toews would not have stayed at Palladium and the tort could never have occurred. 11 The respondents rely upon a more recent decision of the Supreme Court of Canada in Lapointe Rosenstein Marchand Melan¸con LLP v. Cassels Brock & Blackwell LLP [2016 CarswellOnt 10977 (S.C.C.)] where the proposition that all that is required is a connection between the claim and a contract that was made in the province where jurisdiction is Toews v. Grand Palladium Vallarta Resort & Spa Per curiam 223

sought to be assumed. That decision was not available to the Master, nor to the Queen’s Bench judge. The Court reaffirmed: It is worth noting that nothing in Van Breda suggests that the fourth factor is unavailable when more than one contract is involved, or that a different inquiry applies in these circumstances. Nor does Van Breda limit this factor to situations where the defendant’s liability flows immediately from his or her contractual obligations, or require that the defendant be a party to the contract: Pixiu Solutions Inc. v. Canadian General–Tower Ltd., 2016 ONSC 906, at para. 28 (Can- LII). It is sufficient that the dispute be “connected” to a contract made in the province or territory where jurisdiction is proposed to be assumed: Van Breda, at para. 117. This merely requires that a defendant’s conduct brings him or her within the scope of the contractual relationship and that the events that give rise to the claim flow from the relationship created by the contract: paras. 116–17. (emphasis added) Lapointe Rosenstein Marchand Melan¸con LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30 (CanLII) 12 The respondents maintain that the contract between Toews and First Choice and the contract between First Choice and Palladium, or in the alternative between First Choice and Dominican, are all governed by the laws of Canada/Alberta. The respondents argue (at para. 43 of the Re- spondents’ Factum): Whether Palladium is a party to either contract, or whether Desarrol- los entered into a closely related contract with Dominican. . ., the Al- berta contracts “relate to” or are “connected with” the Toews’ claim against Palladium and Desarrollos. Desarrollos need not have the direct contract with the Toews in Alberta for a presumptive connecting factor to apply. 13 We agree. The appeal must be dismissed. Appeal dismissed. 224 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

[Indexed as: Pillar Resource Services Inc. v. PrimeWest Energy Inc.] Pillar Resource Services Inc. (Respondent / Plaintiff / Defendant by Counterclaim) and PrimeWest Energy Inc., PrimeWest Gas Corp. and TAQA North Ltd. (Appellants / Defendants / Plaintiffs by Counterclaim) and Equinox Engineering Ltd. (Not a Party to the Appeal / Third Party by Counterclaim) Alberta Court of Appeal Docket: Calgary Appeal 1601-0082-AC 2017 ABCA 19 J.D. Bruce McDonald, Myra Bielby, Thomas W. Wakeling JJ.A. Heard: October 13, 2016 Judgment: January 20, 2017* Civil practice and procedure –––– Costs — Particular orders as to costs — Costs on solicitor and client basis — Grounds for awarding — Miscon- duct –––– Plaintiff was successful in litigation for breach of construction contract — Parties made submissions regarding costs — Plaintiff asserted defendants were guilty of misconduct prior to litigation and engaged in blameworthy conduct during trial — Plaintiff was awarded complete indemnification costs against defendants — Trial judge held that defendants’ conduct warranted award of solicitor-client costs — Defendants appealed — Appeal dismissed — Trial judge’s award of full-indemnity costs was reasonably based on, at least, last three of four reasons she gave for making that award — First of four reasons for making costs award, causing unnecessary delays in post-completion negotiation occurred shortly before issuance of statement of claim — Remaining three reasons given by trial judge all arose from misconduct that occurred during litigation, or after issuance of statement of claim — These three reasons would justify award of full indemnity costs without consideration of first reason, pre-litigation negotiation misconduct — Law does not permit trial judge to base award of full- indemnity costs on pre-litigation conduct alone, independent of any other circumstances — Such costs are exceptional and generally to be awarded for misconduct that arises during course of litigation only, save for certain exceptions, which do not include pre-litigation conduct in and of itself — Trial judge was nonetheless reasonable in considering pre-litigation misconduct described in

* A corrigendum issued by the court on February 2, 2017 has been incorporated herein. Pillar Resource Services Inc. v. PrimeWest Energy Inc. 225

first of her reasons because it gave context to subsequent acts of trial misconduct. Civil practice and procedure –––– Costs — Particular orders as to costs — Costs on solicitor and client basis — Miscellaneous –––– Plaintiff was successful in litigation for breach of construction contract — Parties made submissions regarding costs — Plaintiff asserted defendants were guilty of misconduct prior to litigation and engaged in blameworthy conduct during trial — Third party was joined by reason of counterclaim — Counterclaim was dismissed — Parties made submissions regarding costs — Plaintiff was entitled to complete indemnification costs against defendants — Third party was entitled to costs against plaintiff — Defendants’ conduct warranted award of solicitor-client costs — Defendants were jointly and severally liable for costs — Plaintiff was awarded complete indemnification costs against defendants — Trial judge held that defendants made misleading requests for further information from plaintiff during post-completion negotiation, when clarification was not really issue, and it delayed in negotiations — Trial judge also found that defendants attempted to introduce additional evidence in its written argument after trial — Trial judge held that defendants’ refusal to admit facts that ultimately were not in issue unnecessarily lengthened trial time — Trial judge also found that there were unproven allegations of fraud that continued until trial, but were not addressed by defendants at trial — Defendants appealed — Appeal dismissed — Law does not permit trial judge to base award of full-indemnity costs on pre-litigation conduct alone, independent of any other circumstances — Such costs are exceptional and generally to be awarded for misconduct that arises during course of litigation only, save for certain exceptions, which do not include pre-litigation conduct in and of itself — Remaining three reasons given by trial judge all arose from misconduct that occurred during litigation, or after issuance of statement of claim — These three reasons justified award of full indemnity costs without consideration of first reason, pre-litigation negotiation misconduct. The plaintiff successfully bought an action for breach of a construction contract against the defendants. The plaintiff asserted that the defendants were guilty of misconduct prior to litigation; engaged in blameworthy conduct during the trial; called witnesses who provided misleading and disingenuous testimony; unduly prolonged the trial; and alleged fraud by the plaintiff that they failed to prove. Upon making submissions for costs, the plaintiff argued that the defendants’ conduct warranted award of solicitor-client costs. The defendants were found jointly and severally liable for costs on a solicitor- client basis. The first ground for making the costs award was that the defendants caused unnecessary delays in post-completion negotiation that occurred shortly before the issuance of the statement of claim. The other three grounds were the defendants’ attempt to introduce additional evidence in its written argument after trial; the 226 ALBERTA LAW REPORTS 46 Alta. L.R. (6th) additional trial time necessitated by one defendant’s refusal to admit facts that ultimately were not in issue; and the unproven allegations of fraud that continued until trial, but were not addressed at trial. The defendants appealed. Held: The appeal was dismissed. Per Bielby J.A.: The first of the four reasons for making the costs award was causing unnecessary delays in post-completion negotiation that occurred shortly before the issuance of the statement of claim. This conduct was therefore “prelitigation” misconduct, by definition. The law does not permit the award of full indemnity costs for this type of conduct standing alone. That issue was irrelevant to this appeal, as the remaining three reasons given by the trial judge all arose from misconduct that occurred during litigation, or after the issuance of the statement of claim. No challenge was made to her findings of fact in this regard. These three reasons would justify an award of full indemnity costs without consideration of the first reason, pre-litigation negotiation misconduct. The principles established by the decision of the Supreme Court of Canada in Young v. Young are binding in relation to when an award of solicitor-client costs can reasonably be made. Justice McLachlin’s silence on the effect of pre-litigation misconduct should not be interpreted as an intention that full indemnity costs be awarded based on that misconduct alone, even where it is reprehensible, scandalous or outrageous. There is no authority from the SCC that deals directly with whether full indemnity costs should be awarded for pre-litigation conduct alone. The trial judge was nonetheless reasonable in considering the pre-litigation misconduct described in the first of her reasons because it gave context to the subsequent acts of trial misconduct. Attempts to negotiate in bad faith prior to the start of the lawsuit foreshadowed the defendants’ proceeding to require the plaintiff to prove facts that were not in dispute, and aggressively defending claims to which they ultimately offered no defence. Per Wakeling J.A. (concurring): In Young v. Young, the SCC intended both forms of misconduct – pre-litigation and litigation conduct – to serve as foundations for an indemnity costs award. Seven Canadian appellate courts have unequivocally opined that blameworthy pre-litigation conduct may justify an indemnity costs award. Section 21 of the Court of Queen’s Bench Act proclaims that “the costs of and incidental to any matter authorized to be taken before the Court ... are in the discretion of the Court ... and the Court ... may make any order relating to costs that is appropriate in the circumstances”. This section is drawn in the broadest terms and authorizes the Court to award costs based on a party’s blameworthy pre-litigation or litigation conduct. No provision in the Alberta Rules of Court denies the court the jurisdiction to use a substantial or full-indemnity costs order as a tool to express its strong disapproval of a party’s pre-litigation conduct. Pillar Resource Services Inc. v. PrimeWest Energy Inc. 227

Statutory interpretation principles do not justify drawing a distinction between pre-litigation misconduct and litigation misconduct when assessing costs. It is an error to equate an indemnity costs order with punitive damages, which are penal in nature and have nothing to do with the amount of the successful party’s legal obligations to its counsel. However, a court may conclude that a party’s behavior is sufficient to trigger a full-indemnity costs order without meeting the level of egregiousness reserved for punitive damages. Costs awards that are the function of blameworthy litigation misconduct deliver a message to litigation lawyers that there are some litigation strategies that are so completely unacceptable that they will attract severe cost consequences. The trial judge erred in concluding that the defendants’ pre-litigation conduct constituted blameworthy conduct. The defendants were entitled to seek an explanation from the plaintiff as to why all the amounts they were asked to pay were reasonable and necessary for the completion of the project. Having determined that the trial judge’s assessment of the defendants’ pre-litigation conduct was not supportable and it not being clear from her reasons that she regarded the other aspects of the defendants’ misconduct as sufficient cause to justify her costs order, a fresh assessment had to be conducted of the defendants’ litigation conduct. The defendants’ decisions to allege in their pleadings, without any reasonable basis, that the plaintiff acted in a fraudulent manner and to force the plaintiff to prove facts that the defendants did not take issue with and, as a consequence, consume trial time for no good reason, would, by themselves, have been sufficient reason to order that defendant to fully indemnify the plaintiff for its trial costs. The defendants’ attempt to introduce expert evidence into its written argument was an additional reason that buttresses the conclusion that the defendants must fully indemnify the plaintiff for its costs in prosecuting its claim. Per McDonald J.A. (dissenting): Pre-litigation conduct in and of itself standing alone does not permit an award of solicitor-client costs. It therefore follows that if the three additional grounds listed by the trial judge in support of her award of solicitor-client costs were unsustainable, then that award could not stand. One ground was the defendants’ attempt to introduce additional evidence in its written argument after trial. Ultimately, this issue involved an admissibility ruling, and thus ought not to found an award of solicitor-client costs. Another ground was the additional time necessitated by the defendants’ refusal to admit facts that ultimately were not in issue. Failure to admit facts is a relevant consideration in awarding costs, but would rarely justify solicitor and client costs, at least beyond the costs of proving the disputed fact. Even if one were to construe the trial judge’s comments as suggesting a lack of merit on the part of the defendants’ defence, a lack of merit is not sufficient to justify an award of solicitor-client costs. 228 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

In justifying her award for solicitor-client costs, the trial judge asserted that the defendants had pled fraud. Having found fraud not to have been an issue in the merits decision, the trial judge erred in finding that it was in the costs decision. This ground was also without merit. The reasons advanced to justify an award of solicitor-client costs, which is recognized as an exceptional award, were, in this case, without merit. The appeal should have been allowed, the award of solicitor-client costs should have been set aside and instead, costs should have been awarded on the basis of Column 4 of Schedule C, except for those steps in the proceedings where costs had been previously decided prior to the commencement of trial. Cases considered by Myra Bielby J.A.: FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd. (2016), 2016 ABCA 303, 2016 CarswellAlta 1962, 91 C.P.C. (7th) 259, 21 E.T.R. (4th) 1, 42 Alta. L.R. (6th) 16, 403 D.L.R. (4th) 722 (Alta. C.A.) — considered Jackson v. Trimac Industries Ltd. (1993), 8 Alta. L.R. (3d) 403, 138 A.R. 161, [1993] 4 W.W.R. 670, 1993 CarswellAlta 310, [1993] A.J. No. 218 (Alta. Q.B.) — considered Sidorsky v. CFCN Communications Ltd. (1997), 1997 CarswellAlta 772, 53 Alta. L.R. (3d) 255, [1998] 2 W.W.R. 89, 206 A.R. 382, 156 W.A.C. 382, 15 C.P.C. (4th) 174, 40 C.C.L.T. (2d) 94, [1997] A.J. No. 880, 1997 ABCA 280 (Alta. C.A.) — considered Young v. Young (1993), [1993] 8 W.W.R. 513, 108 D.L.R. (4th) 193, 18 C.R.R. (2d) 41, [1993] 4 S.C.R. 3, 84 B.C.L.R. (2d) 1, 160 N.R. 1, 49 R.F.L. (3d) 117, 34 B.C.A.C. 161, 56 W.A.C. 161, [1993] R.D.F. 703, [1993] S.C.J. No. 112, 1993 CarswellBC 264, 1993 CarswellBC 1269, EYB 1993-67111 (S.C.C.) — followed

Cases considered by Thomas W. Wakeling J.A.: Access Mortgage Corp. (2004) Ltd. v. Arres Capital Inc. (2014), 2014 ABCA 280, 2014 CarswellAlta 1662, [2014] A.J. No. 1032, 584 A.R. 68, 623 W.A.C. 68 (Alta. C.A.) — considered Alberta (Provincial Court Judge) v. Alberta (Provincial Court Chief Judge) (1999), 1999 CarswellAlta 1286, 16 Admin. L.R. (3d) 242, [2000] 4 W.W.R. 92, 77 Alta. L.R. (3d) 208, 41 C.P.C. (4th) 136, (sub nom. Reilly v. Wachowich) 252 A.R. 293, 1999 ABQB 639 (Alta. Q.B.) — considered Alberta Treasury Branches v. 1401057 Alberta Ltd. (2013), 2013 ABQB 748, 2013 CarswellAlta 2719, [2014] 3 W.W.R. 180, 89 Alta. L.R. (5th) 185, 579 A.R. 152 (Alta. Q.B.) — referred to Ali v. Hartley Poynton Pty. Ltd. (2002), [2002] VSC 292 (Australia Vic. Sup. Ct.) — considered Alyeska Pipeline Service Co. v. Wilderness Society (1975), 421 U.S. 240 (U.S. Sup. Ct.) — referred to Pillar Resource Services Inc. v. PrimeWest Energy Inc. 229

Anderson v. Lawrence (2013), 2013 NBQB 21, 2013 CarswellNB 4, 98 C.C.L.T. (3d) 251, 1032 A.P.R. 223, 398 N.B.R. (2d) 223 (N.B. Q.B.) — considered Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. (1951), [1951] W.N. 205, [1951] 1 All E.R. 873 (Eng. K.B.) — considered Animal Welfare International Inc. v. W3 International Media Ltd. (2016), 2016 BCCA 372, 2016 CarswellBC 2578, 90 C.P.C. (7th) 215, 90 B.C.L.R. (5th) 96 (B.C. C.A.) — considered Apotex Inc. v. Egis Pharmaceuticals (1991), 4 O.R. (3d) 321, 37 C.P.R. (3d) 335, [1991] O.J. No. 1232, 1991 CarswellOnt 3149 (Ont. S.C.J.) — considered Arcambel v. Wiseman (1796), 1 L.Ed. 613, 3 U.S. 306 (U.S. Sup. Ct.) — considered Australian Guarantee Corp. v. De Jager (1984), [1984] V.R. 483, [1984] Vic Rep 40 (Australia Vic. Sup. Ct.) — considered Baron v. Lovell (1999), [1999] C.P.L.R. 630 (Eng. & Wales C.A. (Civil)) — considered Baulderstone Hornibrook Engineering Pty. Ltd. v. Gordian Runoff Ltd. (No. 2) (2009), [2009] NSWCA 12 (New South Wales C.A.) — considered Beaver Lumber Co. v. 222044 Ontario Ltd. (1996), 5 C.P.C. (4th) 253, 1996 CarswellOnt 3570, [1996] O.J. No. 3294 (Ont. Gen. Div.) — considered Beier v. Proper Cat Construction Ltd. (2013), 2013 ABQB 351, 2013 Carswell- Alta 1141, 35 R.P.R. (5th) 105, 564 A.R. 357, [2013] A.J. No. 707 (Alta. Q.B.) — considered Bell v. School Board of Powhatan County (1963), 321 F.2d 494 (U.S. C.A. 4th Cir.) — considered Binnie v. Pacific Health Ltd. (2003), [2003] N.Z.C.A. 69 (New Zealand C.A.) — considered Bizon v. Bizon (2014), 2014 ABCA 174, 2014 CarswellAlta 812, [2014] 7 W.W.R. 713, 96 Alta. L.R. (5th) 337, 71 Admin. L.R. (5th) 133, 572 A.R. 49, 609 W.A.C. 49 (Alta. C.A.) — referred to Black v. Norris (2012), 2012 NBQB 387, 2012 CarswellNB 806, 1045 A.P.R. 22, 403 N.B.R. (2d) 22 (N.B. Q.B.) — considered Bonnes v. Long (1979), 599 F.2d 1316 (U.S. C.A. 4th Cir.) — considered Bostock v. Ramsey Urban DC (1900), [1900] 2 Q.B. 616 (Eng. C.A.) — considered Brace v. Snow (2012), 2012 NLCA 24, 2012 CarswellNfld 158, (sub nom. Snow v. Brace) 1000 A.P.R. 90, (sub nom. Snow v. Brace) 322 Nfld. & P.E.I.R. 90, [2012] N.J. No. 152 (N.L. C.A.) — considered Bradbury v. Westpac Banking Corp. (2009), [2009] 3 N.Z.L.R. 400, [2009] NZSC 234, [2009] NZCA 234 (New Zealand C.A.) — considered 230 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Brawley v. Marczynski (2002), [2002] 4 All E.R. 1067, [2002] EWCA Civ 1453, [2003] 3 Costs L.R. 325, [2003] C.P. Rep. 15 (Eng. & Wales C.A. (Civil)) — considered Burlington (City) v. Dague (1992), 505 U.S. 557, 112 S.Ct. 2638 (U.S. Sup. Ct.) — referred to Burridge v. Stafford (1999), [1999] 1 All E.R. 660, [2000] 1 W.L.R. 927, 149 N.L.J. 1474, [2001] 1 Costs L.R. 77 (Eng. & Wales C.A. (Civil)) — considered Byers v. Kidd (1906), 13 O.L.R. 396, 8 O.W.R. 759, 1906 CarswellOnt 630 (Ont. K.B.) — considered Cachia v. Hanes (1994), 179 C.L.R. 403, 23 N.S.W.L.R. 304 (Australia H.C.) — considered Calandra v. Henley (2009), 2009 YKCA 6, 2009 CarswellYukon 67, 271 B.C.A.C. 162, 458 W.A.C. 162 (Y.T. C.A.) — considered Campbell & Co. v. Pollak (1927), [1927] A.C. 732, [1927] All E.R. Rep. 1, 137 L.T. 656, 43 T.L.R. 495, 51 Sol. Jo. 450, 96 L.J.K.B. 1093 (U.K. H.L.) — considered Canada Deposit Insurance Corp. v. Canadian Commercial Bank (1987), 50 Alta. L.R. (2d) 1, [1987] 3 W.W.R. 160, 64 C.B.R. (N.S.) 9, 76 A.R. 271, 1987 CarswellAlta 314, [1987] A.J. No. 111 (Alta. Q.B.) — considered Canada Deposit Insurance Corp. v. Canadian Commercial Bank (1989), 68 Alta. L.R. (2d) 194, 61 D.L.R. (4th) 161, (sub nom. Canadian Commercial Bank (In Liquidation), Re) 98 A.R. 353, 76 C.B.R. (N.S.) 1, [1989] 6 W.W.R. 154, 1989 CarswellAlta 353, [1989] A.J. No. 561, 1989 ABCA 150 (Alta. C.A.) — considered Chaina v. Alvaro Homes Pty. Ltd. (2008), [2008] NSWCA 353 (New South Wales C.A.) — considered Chambers v. Nasco, Inc. (1991), 501 U.S. 32 (U.S. C.A. 5th Cir.) — considered Chaplin v. Sun Life Assurance Co. of Canada (2004), 2004 BCSC 116, 2004 CarswellBC 159, 7 C.C.L.I. (4th) 277, [2004] B.C.J. No. 146, 1 C.P.C. (6th) 271, [2005] I.L.R. l-4448 (B.C. S.C.) — considered Civil Service Co-operative Society v. General Steam Navigation Co. (1903), [1903] 2 K.B. 756 (Eng. K.B.) — considered Colborne Capital Corp. v. 542775 Alberta Ltd. (1999), [1999] A.J. No. 33, 228 A.R. 201, 188 W.A.C. 201, 1999 CarswellAlta 29, 45 B.L.R. (2d) 21, [1999] 8 W.W.R. 222, 69 Alta. L.R. (3d) 265, 1999 ABCA 14 (Alta. C.A.) — considered Colgate-Palmolive Co. v. Cussons Pty. Ltd. (1993), 46 F.C.R. 225, 1993 FCA 536 (Australia Fed. Ct.) — referred to College of Physicians & Surgeons (Alberta) v. H. (J.) (2009), 2009 ABQB 48, 2009 CarswellAlta 137, 3 Alta. L.R. (5th) 333, [2009] 7 W.W.R. 150, 468 A.R. 101 (Alta. Q.B.) — considered Pillar Resource Services Inc. v. PrimeWest Energy Inc. 231

Cominco Ltd. v. Westinghouse Canada Ltd. (1980), 16 C.P.C. 19, 1980 Car- swellBC 517, [1980] B.C.J. No. 1353 (B.C. S.C.) — considered Commonwealth Bank of Australia v. Dalle Cort (2015), [2015] Que. S.C. 41 (Queensland S.C.) — considered Commonwealth of Australia v. Gretton (2008), [2008] NSWCA 117 (New South Wales C.A.) — considered Connecticut Nat. Bank v. Germain (1992), 503 U.S. 249 (U.S. C.A. 2nd Cir.) — considered Cooper v. Whittingham (1880), 15 Ch. D. 501 (Eng. Ch. Div.) — considered Cosgrove v. Chevron Queensland Ltd. (2000), [2000] QCA 157 (Queensland S.C.) — considered Cotterell v. Stratton (1972), (1872-73) L.R. 8 Ch. App. 295 (Eng. Ch. Div.) — considered Cummings v. Lewis (1992), 1992 FCA 334 (Australia Fed. Ct.) — considered Danoil Energy Ltd. v. Olson (1993), [1993] 7 W.W.R. 385, (sub nom. Olson v. Danoil Energy Ltd.) 109 Sask. R. 234, (sub nom. Olson v. Danoil Energy Ltd.) 42 W.A.C. 234, 1993 CarswellSask 344 (Sask. C.A.) — referred to Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 2009 Carswell- Ont 6185, [2009] O.J. No. 4236, 77 C.P.C. (6th) 1, 254 O.A.C. 356, (sub nom. Davies v. Clarington (Municipality)) 312 D.L.R. (4th) 278, 100 O.R. (3d) 66 (Ont. C.A.) — considered Davis v. Davis (1981), 9 Man. R. (2d) 236, 1981 CarswellMan 258, [1981] M.J. No. 320 (Man. Q.B.) — considered Dennis, Re (1987), 78 A.R. 81, 1987 CarswellAlta 436 (Alta. Surr. Ct.) — considered Dockside Brewing Co. v. Strata Plan LMS 3837 (2007), 2007 BCCA 183, 2007 CarswellBC 1618, (sub nom. Dockside Brewing Co. v. Strata Plan LMS 3837, Owners) 239 B.C.A.C. 33, (sub nom. Dockside Brewing Co. v. Strata Plan LMS 3837, Owners) 396 W.A.C. 33, 59 R.P.R. (4th) 12 (B.C. C.A.) — considered Dondi Properties Corp. v. Commerce Savings and Loan Association (1988), 121 F.R.D. 284 (U.S. Dist. Ct. N.D. Tex.) — considered Doré c. Québec (Tribunal des professions) (2012), 2012 SCC 12, 2012 Car- swellQue 2048, 2012 CarswellQue 2049, (sub nom. Doré v. Barreau du Québec) 343 D.L.R. (4th) 193, 34 Admin. L.R. (5th) 1, (sub nom. Doré v. Barreau du Québec) 428 N.R. 146, [2012] S.C.J. No. 12, [2012] A.C.S. No. 12, [2012] 1 S.C.R. 395, (sub nom. Doré v. Barreau du Québec) 255 C.R.R. (2d) 289 (S.C.C.) — considered Doucet v. Spielo Manufacturing Inc. (2011), 2011 NBCA 44, 2011 CarswellNB 227, 2011 CarswellNB 228, 332 D.L.R. (4th) 407, 4 C.P.C. (7th) 1, 83 B.L.R. (4th) 171, 91 C.C.E.L. (3d) 177, [2011] N.B.J. No. 153, 961 A.P.R. 1, 372 N.B.R. (2d) 1 (N.B. C.A.) — considered 232 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Driffill v. McFall (1878), 42 U.C.Q.B. 597, 1878 CarswellOnt 162 (Ont. H.C.) — considered Dusik v. Newton (1984), 51 B.C.L.R. 217, 1984 CarswellBC 37, [1984] B.C.J. No. 3084 (B.C. S.C.) — considered E.M.I. Records Ltd. v. Ian Cameron Wallace Ltd. (1982), [1982] 2 All E.R. 980, [1982] 3 W.L.R. 245, [1983] Ch. 59 (Eng. Ch. Div.) — referred to Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co. (1998), 1998 CarswellAlta 368, 216 A.R. 304, 175 W.A.C. 304, 61 Alta. L.R. (3d) 256, [1998] 10 W.W.R. 736, [1998] A.J. No. 404, 1998 ABCA 118 (Alta. C.A.) — considered Edmanson v. Chelie (1914), 7 W.W.R. 96, 7 Sask. L.R. 34, 1914 CarswellSask 235, 29 W.L.R. 328 (Sask. S.C. en banc) — considered Ellis v. MacPherson (2005), 2005 PESCAD 19, 2005 CarswellPEI 53, 33 R.P.R. (4th) 39, 248 Nfld. & P.E.I.R. 123, 741 A.P.R. 123, 15 C.P.C. (6th) 253, [2005] P.E.I.J. No. 51 (P.E.I. C.A.) — considered Elmsdale Landscaping Ltd. v. Nova Scotia (Minister of Environment) (2010), 2010 NSSC 127, 2010 CarswellNS 200, 50 C.E.L.R. (3d) 154, 289 N.S.R. (2d) 366, 916 A.P.R. 366, 91 C.L.R. (3d) 318 (N.S. S.C.) — considered Entreprises Ludco ltée c. Canada (2001), 2001 SCC 62, 2001 CarswellNat 2017, 2001 CarswellNat 2018, (sub nom. Ludco Enterprises Ltd. v. R.) 2001 D.T.C. 5505 (Eng.), (sub nom. Ludco Enterprises Ltd. v. R.) 2001 D.T.C. 5518 (Fr.), [2001] S.C.J. No. 58, (sub nom. Ludco Enterprises Ltd. v. Can- ada) 204 D.L.R. (4th) 590, (sub nom. Ludco Enterprises Ltd. v. Minister of National Revenue) 275 N.R. 90, [2002] 1 C.T.C. 95, (sub nom. Ludco Enterprises Ltd. v. Canada) [2001] 2 S.C.R. 1082, REJB 2001-25873, 2001 CSC 62 (S.C.C.) — considered Estate of Urbach, Re (1999), 252 A.D.2d 318, 683 N.Y.S.2d 631 (U.S. N.Y.A.D. 3rd Dept.) — considered Evaskow v. B.B.F. (1969), 71 W.W.R. 565, 9 D.L.R. (3d) 715, 1969 Car- swellMan 80, 70 C.L.L.C. 14,007 (Man. C.A.) — considered Evergreen Building Ltd. v. IBI Leaseholds Ltd. (2009), 2009 BCCA 275, 2009 CarswellBC 1569, 80 R.P.R. (4th) 1, 93 B.C.L.R. (4th) 77, [2009] 10 W.W.R. 1, 271 B.C.A.C. 298, 458 W.A.C. 298 (B.C. C.A.) — considered Excelsior Commercial & Industrial Holdings Ltd. v. Salisbury Hammer Aspden & Johnson (2002), [2002] All E.R. (D) 39, [2002] EWCA Civ 879, [2002] C.P. Rep. 67 (Eng. & Wales C.A. (Civil)) — considered F.D. Rich Co. v. United States (1974), 417 U.S. 116 (U.S. Sup. Ct.) — referred to FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd. (2016), 2016 ABCA 303, 2016 CarswellAlta 1962, 91 C.P.C. (7th) 259, 21 E.T.R. (4th) 1, 42 Alta. L.R. (6th) 16, 403 D.L.R. (4th) 722 (Alta. C.A.) — considered Farm Credit Canada v. Bossé (2014), 2014 NBCA 34, 2014 CarswellNB 254, 2014 CarswellNB 255, (sub nom. Bossé v. Farm Credit Canada) 1090 Pillar Resource Services Inc. v. PrimeWest Energy Inc. 233

A.P.R. 1, (sub nom. Boss´e v. Farm Credit Canada) 419 N.B.R. (2d) 1 (N.B. C.A.) — considered Fernandez v. Tan (2009), 2009 MBCA 113, 2009 CarswellMan 524 (Man. C.A.) — considered Ferris v. Rusnak (1984), 54 A.R. 319, 1984 CarswellAlta 340, [1982] A.J. No. 233 (Alta. Q.B.) — considered Fiege v. Cornwall General Hospital (1979), 30 O.R. (2d) 691, 117 D.L.R. (3d) 152, 4 L. Med. Q. 124, 1979 CarswellOnt 917 (Ont. H.C.) — considered Fleck v. Stewart (1991), 17 R.P.R. (2d) 132, 118 A.R. 345, 80 Alta. L.R. (2d) 334, 1991 CarswellAlta 93 (Alta. Q.B.) — considered Fleischmann Distilling Corp. v. Maier Brewing Co. (1967), 386 U.S. 714 (U.S. C.A. 9th Cir.) — considered Folsom v. Butte County Assoc. of Governments (1982), 32 Cal. 3d 668, 186 Cal. Rptr. 589, 652 P.2d 437 (U.S. Cal. Sup. Ct.) — considered Foulis v. Robinson (1978), 21 O.R. (2d) 769, 92 D.L.R. (3d) 134, 8 C.P.C. 198, 1978 CarswellOnt 466, [1978] O.J. No. 3596 (Ont. C.A.) — considered Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. (1988), 81 A.L.R. 397, [1988] FCA 364 (Australia Fed. Ct.) — considered Fox v. Vice (2011), 594 F.3d 423 (U.S. Sup. Ct.) — considered Germscheid v. Valois (1989), 34 C.P.C. (2d) 267, 68 O.R. (2d) 670, 1989 Cars- wellOnt 377, 68 O.R. (3d) 670 (Ont. H.C.) — considered Gerula v. Flores (1993), 16 C.P.C. (3d) 362, 1993 CarswellOnt 398, [1993] O.J. No. 210 (Ont. Gen. Div.) — considered Gerula v. Flores (1995), 126 D.L.R. (4th) 506, 83 O.A.C. 128, 1995 Carswell- Ont 1683, [1995] O.J. No. 2300 (Ont. C.A.) — considered Ghost Riders Farm Inc. v. Boyd Distributors Inc. (2016), 2016 ABCA 331, 2016 CarswellAlta 2044 (Alta. C.A.) — considered Gray v. Dougherty (1864), 25 Cal. 266 (U.S. Cal. Sup. Ct.) — considered Groia v. Law Society of Upper Canada (2016), 2016 ONCA 471, 2016 Cars- wellOnt 9453, 1 Admin. L.R. (6th) 175, 131 O.R. (3d) 1, 352 O.A.C. 210, 358 C.R.R. (2d) 1 (Ont. C.A.) — considered Hamilton v. Open Window Bakery Ltd. (2003), 2004 SCC 9, 2003 CarswellOnt 5591, 2003 CarswellOnt 5592, 40 B.L.R. (3d) 1, 235 D.L.R. (4th) 193, [2003] S.C.J. No. 72, 316 N.R. 265, 184 O.A.C. 209, 2004 C.L.L.C. 210- 025, 70 O.R. (3d) 255 (note), [2004] 1 S.C.R. 303, REJB 2004-54076, 70 O.R. (3d) 255, 2004 CSC 9 (S.C.C.) — considered Hardt v. Reliance Standard Life Insurance Co. (2010), 176 L.Ed.2d 998, 130 S.Ct. 2149, 560 U.S. 242 (U.S. Sup. Ct.) — considered Harnden v. Kosir (1995), 26 O.R. (3d) 588, 44 C.P.C. (3d) 34, 1995 Carswell- Ont 1330 (Ont. Gen. Div.) — considered Harnett v. Vise (1880), 5 Ex. D. 307, 43 L.T. 645 (Eng. C.A.) — considered 234 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Harold v. Smith (1860), 157 E.R. 1229, 5 Hurl. & N. 381 (Eng. Exch.) — considered Harris v. Petherick (1879), 4 Q.B.D. 611 (Eng. C.A.) — considered Harrison v. Schipp (2001), [2001] NSWCA 13 (New South Wales C.A.) — considered Hill v. Church of Scientology of Toronto (1995), 30 C.R.R. (2d) 189, 25 C.C.L.T. (2d) 89, 184 N.R. 1, (sub nom. Manning v. Hill) 126 D.L.R. (4th) 129, 24 O.R. (3d) 865 (note), 84 O.A.C. 1, [1995] 2 S.C.R. 1130, 1995 Cars- wellOnt 396, 1995 CarswellOnt 534, [1995] S.C.J. No. 64, EYB 1995-68609 (S.C.C.) — considered Huck v. Robson (2002), [2002] EWCA Civ 398, [2002] 3 All E.R. 263, [2003] 1 W.L.R. 1340, [2003] 1 Costs L.R. 19 (Eng. & Wales C.A. (Civil)) — considered Hunt v. TD Securities Inc. (2003), 2003 CarswellOnt 3141, [2003] O.J. No. 3245, 175 O.A.C. 19, 229 D.L.R. (4th) 609, 36 B.L.R. (3d) 165, 66 O.R. (3d) 481, 39 C.P.C. (5th) 206 (Ont. C.A.) — distinguished Hypec Electronics Pty. Ltd. v. Mead (2004), 61 N.S.W.L.R. 169, [2004] NSWSC 731 (New South Wales S.C.) — considered Imperial Elevator & Lumber Co. v. Olive (1914), 6 W.W.R. 1104, 7 Sask. L.R. 35, 1914 CarswellSask 196, 28 W.L.R. 421 (Sask. S.C. [In Chambers]) — considered Jackson v. Trimac Industries Ltd. (1993), 8 Alta. L.R. (3d) 403, 138 A.R. 161, [1993] 4 W.W.R. 670, 1993 CarswellAlta 310, [1993] A.J. No. 218 (Alta. Q.B.) — considered Jackson v. Trimac Industries Ltd. (1994), 20 Alta. L.R. (3d) 117, [1994] 8 W.W.R. 237, 155 A.R. 42, 73 W.A.C. 42, 1994 CarswellAlta 135, [1994] A.J. No. 445, 1994 ABCA 199 (Alta. C.A.) — considered Jacobi v. Newell (County No. 4) (1994), 19 Alta. L.R. (3d) 394, 28 C.P.C. (3d) 349, (sub nom. Jacobi v. Board of Education of Aqueduct Roman Catholic Separate School District No. 374) 153 A.R. 241, 1994 CarswellAlta 123, [1994] A.J. No. 1063 (Alta. Q.B.) — considered Jones v. Curling (1884), 13 Q.B.D. 262 (Eng. Q.B.) — considered Jones v. McKie (1964), [1964] 2 All E.R. 842, [1964] 1 W.L.R. 960, 108 S.J. 442 (Eng. C.A.) — considered Kazakhstan Kagazy Plc v. Zhunus (2015), [2015] EWHC 404 (Eng. Comm. Ct.) — considered Kentucky Bar Ass’n v. Waller (1996), 929 S.W.2d 181 (U.S. Ky. S.C.) — considered Kepic v. Tecumseh Road Builders (1987), 18 C.C.E.L. 218, (sub nom. Kepic v. Tecumseh Road Builders, division of Countryside Farms Ltd.) 23 O.A.C. 72, 1987 CarswellOnt 917, [1987] O.J. No. 890 (Ont. C.A.) — considered Kerr v. Danier Leather Inc. (2007), 2007 SCC 44, 2007 CarswellOnt 6445, 2007 CarswellOnt 6446, 87 O.R. (3d) 398 (note), 36 B.L.R. (4th) 95, [2007] Pillar Resource Services Inc. v. PrimeWest Energy Inc. 235

S.C.J. No. 44, 48 C.P.C. (6th) 205, 368 N.R. 204, 286 D.L.R. (4th) 601, 231 O.A.C. 348, [2007] 2 S.C.R. 331 (S.C.C.) — considered Kiam II v. MGN Ltd. (2002), [2002] 2 All E.R. 242, [2002] 1 W.L.R. 2810, [2002] EWCA Civ 66 (Eng. & Wales C.A. (Civil)) — considered King v. Gillard (1905), [1905] 2 Ch. 7 (Eng. C.A.) — considered Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd. (1990), [1990] 3 All E.R. 404, [1990] 3 W.L.R. 297, [1991] 1 A.C. 187, [1990] 2 Lloyd’s Rep. 95, [1991] 3 N.Z.L.R. 457 (New Zealand P.C.) — considered Larter v. Solid Rock Free Lutheran Church of Camrose (2012), 2012 ABCA 292, 2012 CarswellAlta 2383 (Alta. C.A.) — considered Latoudis v. Casey (1990), 170 C.L.R. 534, [1990] H.C.A. 59 (Australia H.C.) — considered Lavoie v. Wills (2002), 2002 ABCA 240, 2002 CarswellAlta 1228, 312 A.R. 373, 281 W.A.C. 373, [2002] A.J. No. 1240 (Alta. C.A.) — considered Leenen v. Canadian Broadcasting Corp. (2001), 2001 CarswellOnt 2011, 6 C.C.L.T. (3d) 97, 54 O.R. (3d) 612, 147 O.A.C. 317, [2001] O.J. No. 2229, [2001] O.T.C. 262 (Ont. C.A.) — considered Levy v. Carol Management Corp. (1999), 260 A.D.2d 27, 698 N.Y.2d 226, 1999 N.Y. Slip Op. 09786 (U.S. N.Y.A.D. 1st Dept.) — considered M. (D.E.) v. M. (J.M.) (2011), 2011 PECA 16, 2011 CarswellPEI 44, 4 R.F.L. (7th) 1, 974 A.P.R. 262, 313 Nfld. & P.E.I.R. 262 (P.E.I. C.A.) — considered M. (W.A.) v. Alberta (Minister for Child, Youth and Family Enhancement Act) (2017), 2017 ABCA 14, 2017 CarswellAlta 38 (Alta. C.A.) — considered MacKinnon v. Ontario (Municipal Employees Retirement Board) (2007), 2007 ONCA 874, 2007 CarswellOnt 8041, 64 C.C.P.B. 1, 62 C.C.E.L. (3d) 191, 2008 C.E.B. & P.G.R. 8274 (headnote only), 88 O.R. (3d) 269, 232 O.A.C. 3, 288 D.L.R. (4th) 688, 42 B.L.R. (4th) 157, [2007] O.J. No. 4860 (Ont. C.A.) — considered Macfie v. Cater (1920), 48 O.L.R. 487, 57 D.L.R. 736, [1920] O.J. No. 71, 1920 CarswellOnt 153 (Ont. H.C.) — considered Macfie v. Cater (1921), 50 O.L.R. 452, 64 D.L.R. 511, 1921 CarswellOnt 162 (Ont. C.A.) — referred to Magee v. Ottawa Separate School Board (1962), [1962] O.W.N. 83, 32 D.L.R. (2d) 162, 1962 CarswellOnt 245 (Ont. H.C.) — considered Maple Leaf Lumber Co. v. Caldbick (1918), 14 O.W.N. 99 (Ont. C.A.) — considered Marchand (Litigation Guardian of) v. Public General Hospital Society of Chat- ham (2000), 2000 CarswellOnt 4362, 51 O.R. (3d) 97, 138 O.A.C. 201, [2000] O.J. No. 4428, 43 C.P.C. (5th) 65 (Ont. C.A.) — considered Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd. (1986), 48 Alta. L.R. (2d) 367, [1987] 2 W.W.R. 75, 1986 CarswellAlta 247, [1986] A.J. No. 1036 (Alta. Q.B.) — considered 236 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Mayhew v. Adams (1930), [1930] 3 W.W.R. 539, 25 Sask. L.R. 204, [1931] 1 D.L.R. 611, 1930 CarswellSask 99, [1930] S.J. No. 53 (Sask. C.A.) — considered McCarthy v. Calgary Roman Catholic Separate School District No. 1 (1980), 30 A.R. 208, [1980] 5 W.W.R. 524, 17 C.P.C. 115, 1980 CarswellAlta 254, [1980] A.J. No. 55 (Alta. Q.B.) — considered McDonald Dure Lumber Co. v. Marston Holdings Ltd. (1976), 1976 Car- swellMan 131, 66 D.L.R. (3d) 375 (Man. C.A.) — considered McEnteggart v. Cataldo (1971), 451 F.2d 1109 (U.S. C.A. 1st Cir.) — considered McEvoy v. Ford Motor Co. (1990), 45 B.C.L.R. (2d) 363, 1990 CarswellBC 101 (B.C. S.C.) — considered McPhilemy v. Times Newspapers Ltd. (2001), [2001] 4 All E.R. 861, [2002] 1 W.L.R. 934, [2001] EWCA Civ 933, [2001] 2 Costs L.R. 295 (Eng. & Wales C.A. (Civil)) — considered Michael Wilson & Partners Ltd. v. Nicholls (2009), [2009] NSWSC 669 (New South Wales S.C.) — considered Montreal Trust Co. v. Tottrup (1990), 82 Alta. L.R. (2d) 363, 9 C.B.R. (3d) 220, 1990 CarswellAlta 262 (Alta. Q.B.) — considered Mortimer v. Cameron (1994), 19 M.P.L.R. (2d) 286, 17 O.R. (3d) 1, 68 O.A.C. 332, 111 D.L.R. (4th) 428, 1994 CarswellOnt 601, [1994] O.J. No. 277 (Ont. C.A.) — considered Myers v. Defries (1880), 5 Ex. D. 180 (Eng. Exch.) — considered Myers v. Elman (1939), [1940] A.C. 282, [1939] 4 All E.R. 484 (U.K. H.L.) — considered NMFM Property Pty. Ltd. v. Citibank Ltd. (2001), 109 F.C.R. 77, [2001] FCA 480 (Australia Fed. Ct.) — considered National Australia Bank Ltd. v. Petit-Breuilh (2000), [2000] VSC 291 (Australia Vic. Sup. Ct.) — considered Newfoundland Assn. of Provincial Court Judges v. Newfoundland (2000), 2000 NFCA 46, 2000 CarswellNfld 266, 191 D.L.R. (4th) 225, 50 C.P.C. (4th) 1, 27 Admin. L.R. (3d) 1, [2000] N.J. No. 258, 192 Nfld. & P.E.I.R. 183, 580 A.P.R. 183 (Nfld. C.A.) — considered Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC (November 23, 2010), Doc. 10-2327 (U.S. C.A. 7th Cir.) — considered Noorani v. Calver (2009), [2009] EWHC 592 (Eng. Q.B.) — considered Norberg v. Wynrib (1992), [1992] 4 W.W.R. 577, [1992] 2 S.C.R. 226, 92 D.L.R. (4th) 449, 12 C.C.L.T. (2d) 1, 9 B.C.A.C. 1, 19 W.A.C. 1, 138 N.R. 81, 68 B.C.L.R. (2d) 29, [1992] S.C.J. No. 60, 1992 CarswellBC 155, [1992] R.R.A. 668, 1992 CarswellBC 907, EYB 1992-67036 (S.C.C.) — considered Norbis v. Norbis (1986), 161 C.L.R. 513 (Australia H.C.) — considered Oelrichs v. Spain (1872), 82 U.S. 211 (U.S. Sup. Ct.) — considered Pillar Resource Services Inc. v. PrimeWest Energy Inc. 237

Olson v. New Home Certification Program of Alberta (1986), 44 Alta. L.R. (2d) 207, 69 A.R. 356, 1986 CarswellAlta 64, [1986] A.J. No. 347 (Alta. Q.B.) — considered Oshlack v. Richmond River Council (1998), 193 C.L.R. 72, [1998] H.C.A. 11 (New South Wales S.C.) — considered Oversea-Chinese Banking Corp. Ltd. v. Malaysian Kuwaiti Investment Co. SDN BHD (2004), [2004] VSC 351 (Australia Vic. Sup. Ct.) — considered Oz Optics Ltd. v. Timbercon Inc. (2012), 2012 ONCA 735, 2012 CarswellOnt 13318 (Ont. C.A.) — considered P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd. (2002), [2002] VSCA 24 (Australia Vic. Sup. Ct.) — considered P.Simms v. Law Society (2005), [2005] EWCA Civ 849 (Eng. & Wales C.A. (Civil)) — referred to Pacific Mobile Corp. v. Hunter Douglas Canada Ltd. (1979), [1979] 1 S.C.R. 842, 26 N.R. 453, 1979 CarswellQue 166, 1979 CarswellQue 166F (S.C.C.) — considered Paper Reclaim Ltd. v. Aotearoa International Ltd. (2006), [2006] 3 N.Z.L.R. 188, 8 N.Z.B.L.C. 101,685, [2006] NZCA 27, 11 T.C.L.R. 544 (New Zea- land C.A.) — considered Pelley v. Pelley (2003), 2003 NLCA 6, 2003 CarswellNfld 11, 221 Nfld. & P.E.I.R. 1, 661 A.P.R. 1, [2003] N.J. No. 13 (N.L. C.A.) — considered Perry v. Heywood (1998), 1998 CarswellNfld 220, [1998] N.J. No. 251, 175 Nfld. & P.E.I.R. 253, 537 A.P.R. 253 (Nfld. C.A.) — considered Petrogas Processing Ltd. v. Westcoast Transmission Co. (1990), 73 Alta. L.R. (2d) 246, [1990] 4 W.W.R. 461, 105 A.R. 384, 1990 CarswellAlta 51, [1990] A.J. No. 317 (Alta. Q.B.) — considered Petrotrade Inc. v. Texaco Ltd. (2000), [2001] 4 All E.R. 853, [2002] 1 W.L.R. 947, [2000] C.L.C. 1341, [2000] EWCA Civ 512 (Eng. & Wales C.A. (Civil)) — referred to Polar Ice Express Inc. v. Arctic Glacier Inc. (2009), 2009 ABCA 20, 2009 CarswellAlta 25, 99 Alta. L.R. (4th) 203, 446 A.R. 295, 442 W.A.C. 295 (Alta. C.A.) — considered Prebble v. Huata (2005), [2005] 2 N.Z.L.R. 467, [2005] NZSC 18 (New Zea- land S.C.) — considered Professional Sign Crafters (1988) Ltd. v. Seitanidis (1998), 1998 CarswellAlta 874, [1998] A.J. No. 1055, 1998 ABCA 303 (Alta. C.A.) — considered R. v. Lyttle (2004), 2004 SCC 5, 2004 CarswellOnt 510, 2004 CarswellOnt 511, 17 C.R. (6th) 1, 180 C.C.C. (3d) 476, 316 N.R. 52, 235 D.L.R. (4th) 244, [2004] S.C.J. No. 8, 184 O.A.C. 1, 115 C.R.R. (2d) 172, 70 O.R. (3d) 256 (note), [2004] 1 S.C.R. 193, REJB 2004-53613 (S.C.C.) — considered R. v. Sellars (1980), [1980] 1 S.C.R. 527, 20 C.R. (3d) 381, 52 C.C.C. (2d) 345, 110 D.L.R. (3d) 629, 32 N.R. 70, 1980 CarswellQue 34, 1980 CarswellQue 118, [1980] S.C.J. No. 9 (S.C.C.) — considered 238 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Raybestos-Manhattan, Inc. v. Friedman (1981), 156 Ga. App. 880, 275 S.E.2d 817 (U.S. Ga. Ct. App.) — considered Reeder v. Woodward (2016), 2016 ABCA 91, 2016 CarswellAlta 589, 67 R.P.R. (5th) 14, 37 Alta. L.R. (6th) 36, 616 A.R. 255, 672 W.A.C. 255 (Alta. C.A.) — considered Reese v. Alberta (1992), 5 Alta. L.R. (3d) 40, [1993] 1 W.W.R. 450, 9 C.E.L.R. (N.S.) 65, (sub nom. Reese v. Alberta (Minister of Forestry, Lands & Wild- life)) 133 A.R. 127, 13 C.P.C. (3d) 323, 11 Admin. L.R. (2d) 265n, 1992 CarswellAlta 138, [1992] A.J. No. 745 (Alta. Q.B.) — referred to Reid Minty v. Taylor (2001), [2002] 2 All E.R. 150, [2002] 1 W.L.R. 2800, [2002] E.M.L.R. 19, [2001] EWCA Civ 1723, [2002] 1 Costs L.R. 180, [2002] C.P. Rep. 12 (Eng. & Wales C.A. (Civil)) — considered Ridehalgh v. Horsefield (1994), [1994] 3 All E.R. 848, [1994] B.C.C. 390, [1994] Ch. 205, [1994] 2 F.L.R. 194, [1994] Fam. Law 560, [1994] 3 W.L.R. 462, [1994] E.G. 15, [1994] EWCA Civ 40, [1955-95] P.N.L.R. 636, [1997] Costs L.R. 268 (Eng. & Wales C.A. (Civil)) — considered Ritter v. Godfrey (1919), [1920] 2 K.B. 47, [1919] All E.R. 714, [1918-1919] All E.R. Rep. 714 (Eng. C.A.) — considered Scherer v. Counting Instruments Ltd. (1977), [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)) — referred to Seitz, Re (1974), 6 O.R. (2d) 460, 53 D.L.R. (3d) 223, 1974 CarswellOnt 877 (Ont. H.C.) — considered Shier v. Fiume (1991), 6 O.R. (3d) 759, [1991] O.J. No. 2367, 1991 CarswellOnt 1068 (Ont. Gen. Div.) — considered Sidorsky v. CFCN Communications Ltd. (1997), 1997 CarswellAlta 772, 53 Alta. L.R. (3d) 255, [1998] 2 W.W.R. 89, 206 A.R. 382, 156 W.A.C. 382, 15 C.P.C. (4th) 174, 40 C.C.L.T. (2d) 94, [1997] A.J. No. 880, 1997 ABCA 280 (Alta. C.A.) — referred to Siemens v. Bawolin (2002), 2002 SKCA 84, 2002 CarswellSask 448, 219 Sask. R. 282, 272 W.A.C. 282, [2002] 11 W.W.R. 246, 46 E.T.R. (2d) 254, [2002] S.J. No. 398 (Sask. C.A.) — considered Simpson, Ex parte (1809), 33 E.R. 834, 15 Ves. Jr. 476 (Eng. Ch. Div.) — considered Slawik v. State (1984), 480 A.2d 636 (U.S. Del. S.C.) — considered State Line Democrat v. Keosauqua Independent (1913), 161 Iowa 566, 143 N.W. 409 (U.S. Iowa S.C.) — considered Stiles v. British Columbia (Workers’ Compensation Board) (1989), 38 B.C.L.R. (2d) 307, 39 C.P.C. (2d) 74, 1989 CarswellBC 134, [1989] B.C.J. No. 1450 (B.C. C.A.) — considered Stout v. Track (2015), 2015 ABCA 10, 2015 CarswellAlta 160, 62 C.P.C. (7th) 260, 599 A.R. 98, 643 W.A.C. 98, 9 Alta. L.R. (6th) 341 (Alta. C.A.) — considered Pillar Resource Services Inc. v. PrimeWest Energy Inc. 239

Sturrock v. Ancona Petroleums Ltd. (1990), 75 Alta. L.R. (2d) 216, 111 A.R. 86, 1990 CarswellAlta 132, [1990] A.J. No. 738 (Alta. Q.B.) — considered Sun Life Assurance Co. of Canada v. Ritchie (2000), 2000 BCCA 231, 2000 CarswellBC 713, 184 D.L.R. (4th) 635, 76 B.C.L.R. (3d) 93, 31 R.P.R. (3d) 200, [2000] 6 W.W.R. 480, 136 B.C.A.C. 215, 222 W.A.C. 215 (B.C. C.A.) — considered T. (E.) v. Rocky Mountain Play Therapy Institute Inc. (2016), 2016 ABCA 320, 2016 CarswellAlta 2055 (Alta. C.A.) — referred to T. (F.) v. Alberta Children’s Guardian (1987), 55 Alta. L.R. (2d) 103, 10 R.F.L. (3d) 182, 83 A.R. 374, 1987 CarswellAlta 211 (Alta. Q.B.) — considered Tree Savers International Ltd. v. Savoy (1992), 84 Alta. L.R. (2d) 384, 39 C.C.E.L. 253, [1992] 2 W.W.R. 470, 40 C.P.R. (3d) 173, 87 D.L.R. (4th) 202, 120 A.R. 368, 8 W.A.C. 368, 1992 CarswellAlta 220, [1992] A.J. No. 61, 1992 ABCA 34 (Alta. C.A.) — considered Union Carbide Canada Ltd. v. Vanderkop (1976), 1 C.P.C. 114, 1976 Carswell- Ont 272, [1976] O.J. No. 1447 (Ont. H.C.) — considered Unique Concepts, Inc. v. Brown (1987), 115 F.R.D. 292 (U.S. Dist. Ct. S.D. N.Y.) — considered Vanderclay Development Co. v. Inducon Engineering Ltd. (1968), [1969] 1 O.R. 41, 1 D.L.R. (3d) 337, 1968 CarswellOnt 695, [1968] O.J. No. 1268 (Ont. H.C.) — considered Vaughan v. Atkinson (1962), 369 U.S. 527 (U.S. Sup. Ct.) — considered Vogel v. Brazeau (Municipal District) No. 77 (1996), 32 M.P.L.R. (2d) 195, 183 A.R. 121, 1996 CarswellAlta 270, (sub nom. Vogel v. Brazeau No. T1 (Municipal District)) [1996] A.J. No. 319 (Alta. Q.B.) — considered Vriend v. Alberta (1996), 40 Alta. L.R. (3d) 352, [1996] 8 W.W.R. 405, 184 A.R. 351, 122 W.A.C. 351, 141 D.L.R. (4th) 44, 2 C.P.C. (4th) 111, 1996 CarswellAlta 612, [1996] A.J. No. 643 (Alta. C.A.) — considered Walsh v. Mobil Oil Canada (2008), 2008 ABCA 268, 2008 CarswellAlta 1168, 2008 C.L.L.C. 230-033, 94 Alta. L.R. (4th) 209, 296 D.L.R. (4th) 178, [2008] 11 W.W.R. 205, 69 C.C.E.L. (3d) 1, [2008] A.J. No. 830, 440 A.R. 199, 438 W.A.C. 199, 64 C.H.R.R. D/84 (Alta. C.A.) — considered Watson v. Holyoake (1986), 15 C.P.C. (2d) 262, 1986 CarswellOnt 501, [1986] O.J. No. 541, [1986] O.J. No. 2313 (Ont. H.C.) — considered Wenden v. Trikha (1992), 1 Alta. L.R. (3d) 283, 124 A.R. 1, 6 C.P.C. (3d) 15, 1992 CarswellAlta 20, [1992] A.J. No. 217 (Alta. Q.B.) — considered Whiten v. Pilot Insurance Co. (2002), 2002 SCC 18, 2002 CarswellOnt 537, 2002 CarswellOnt 538, [2002] I.L.R. I-4048, 20 B.L.R. (3d) 165, [2002] S.C.J. No. 19, 209 D.L.R. (4th) 257, 283 N.R. 1, 35 C.C.L.I. (3d) 1, 156 O.A.C. 201, [2002] 1 S.C.R. 595, REJB 2002-28036, 58 O.R. (3d) 480 (note), 2002 CSC 18 (S.C.C.) — considered Williams v. Steinwand (2015), 2015 NWTSC 3, 2015 CarswellNWT 9 (N.W.T. S.C.) — considered 240 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Winnipeg Mortgage Holdings Ltd. v. Allard (1980), 20 B.C.L.R. 179, 1980 Car- swellBC 87, [1980] B.C.J. No. 1596 (B.C. S.C.) — considered Woodley v. Yellowknife Education District No. 1 (2000), 2000 NWTSC 7, 2000 CarswellNWT 5, 22 Admin. L.R. (3d) 237, [2000] N.W.T.J. No. 8 (N.W.T. S.C.) — considered World Printing & Publishing Co. v. Vancouver Printing & Publishing Co. (1907), 13 B.C.R. 220, 1907 CarswellBC 106 (B.C. C.A.) — considered Young v. Young (1990), 50 B.C.L.R. (2d) 1, 75 D.L.R. (4th) 46, 29 R.F.L. (3d) 113, 1990 CarswellBC 223, [1990] B.C.J. No. 2254 (B.C. C.A.) — considered Young v. Young (1993), [1993] 8 W.W.R. 513, 108 D.L.R. (4th) 193, 18 C.R.R. (2d) 41, [1993] 4 S.C.R. 3, 84 B.C.L.R. (2d) 1, 160 N.R. 1, 49 R.F.L. (3d) 117, 34 B.C.A.C. 161, 56 W.A.C. 161, [1993] R.D.F. 703, [1993] S.C.J. No. 112, 1993 CarswellBC 264, 1993 CarswellBC 1269, EYB 1993-67111 (S.C.C.) — considered 150 Centreville LLC v. Lin Associates Architects, PC (2013), 963 N.Y.2d 819, 39 Misc. 3d 513, 2013 N.Y. Slip Op. 23038 (U.S. Dist. Ct. S.D. N.Y.) — considered 155569 Canada Ltd. v. 248524 Alberta Ltd. (1999), 251 A.R. 393, 1999 ABQB 682, 1999 CarswellAlta 1461 (Alta. Q.B.) — considered

Cases considered by J.D. Bruce McDonald J.A. (dissenting): Colborne Capital Corp. v. 542775 Alberta Ltd. (1999), [1999] A.J. No. 33, 228 A.R. 201, 188 W.A.C. 201, 1999 CarswellAlta 29, 45 B.L.R. (2d) 21, [1999] 8 W.W.R. 222, 69 Alta. L.R. (3d) 265, 1999 ABCA 14 (Alta. C.A.) — referred to in a minority or dissenting opinion FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd. (2016), 2016 ABCA 303, 2016 CarswellAlta 1962, 91 C.P.C. (7th) 259, 21 E.T.R. (4th) 1, 42 Alta. L.R. (6th) 16, 403 D.L.R. (4th) 722 (Alta. C.A.) — considered in a minority or dissenting opinion Hamilton v. Open Window Bakery Ltd. (2003), 2004 SCC 9, 2003 CarswellOnt 5591, 2003 CarswellOnt 5592, 40 B.L.R. (3d) 1, 235 D.L.R. (4th) 193, [2003] S.C.J. No. 72, 316 N.R. 265, 184 O.A.C. 209, 2004 C.L.L.C. 210- 025, 70 O.R. (3d) 255 (note), [2004] 1 S.C.R. 303, REJB 2004-54076, 70 O.R. (3d) 255, 2004 CSC 9 (S.C.C.) — referred to in a minority or dissenting opinion Reeder v. Woodward (2016), 2016 ABCA 91, 2016 CarswellAlta 589, 67 R.P.R. (5th) 14, 37 Alta. L.R. (6th) 36, 616 A.R. 255, 672 W.A.C. 255 (Alta. C.A.) — referred to in a minority or dissenting opinion Sidorsky v. CFCN Communications Ltd. (1997), 1997 CarswellAlta 772, 53 Alta. L.R. (3d) 255, [1998] 2 W.W.R. 89, 206 A.R. 382, 156 W.A.C. 382, 15 C.P.C. (4th) 174, 40 C.C.L.T. (2d) 94, [1997] A.J. No. 880, 1997 ABCA 280 (Alta. C.A.) — referred to in a minority or dissenting opinion Pillar Resource Services Inc. v. PrimeWest Energy Inc. 241

Young v. Young (1993), [1993] 8 W.W.R. 513, 108 D.L.R. (4th) 193, 18 C.R.R. (2d) 41, [1993] 4 S.C.R. 3, 84 B.C.L.R. (2d) 1, 160 N.R. 1, 49 R.F.L. (3d) 117, 34 B.C.A.C. 161, 56 W.A.C. 161, [1993] R.D.F. 703, [1993] S.C.J. No. 112, 1993 CarswellBC 264, 1993 CarswellBC 1269, EYB 1993-67111 (S.C.C.) — referred to in a minority or dissenting opinion Statutes considered by Thomas W. Wakeling J.A.: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 Generally — referred to Child, Youth and Family Enhancement Act, R.S.A. 2000, c. C-12 Generally — referred to Civil Rights Act, 1964, 42 U.S.C. 21 s. 1988(b) — referred to Code of Civil Procedure, California s. 128.5(a) — considered s. 1021.5 — considered Court of Appeal Act, R.S.A. 2000, c. C-30 s. 12 — considered Court of Appeal Act, R.S.B.C. 1996, c. 77 s. 23 — considered Court of Queen’s Bench Act, R.S.A. 2000, c. C-31 Generally — referred to s. 21 — considered Court of Queen’s Bench Act, S.M. 1988-89, c. 4 s. 96(1) — considered Courts of Justice Act, R.S.O. 1990, c. C.43 s. 131(1) — considered Federal Court of Australia Act 1976, No. 156, 1976 s. 43(2) — considered Judicature Act, S.P.E.I. 2008, c. 20 s. 60 — considered Supreme Court Act, R.S.C. 1985, c. S-26 s. 47 — considered Supreme Court Act, R.S.Y. 2002, c. 211 s. 4(2) — considered Supreme Court Act 1986, No. 110 (Vic) 1986 s. 24(1) — considered Supreme Court of Judicature Act, 1875 (38 & 39 Vict.), c. 77 Generally — referred to Rules considered by Thomas W. Wakeling J.A.: Alberta Rules of Court, Alta. Reg. 124/2010 Generally — referred to 242 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

R. 1.1(2) — considered R. 1.2 — considered R. 1.2(1) — considered R. 1.2(2)(a) — considered R. 1.2(2)(b) — considered R. 1.2(2)(d) — considered R. 1.2(2)(e) — considered R. 1.2(3) — considered R. 1.2(3)(a) — referred to R. 1.2(3)(a) — considered R. 1.2(3)(c) — considered R. 1.2(3)(d) — considered R. 6.37(1) — considered R. 6.37(3) — considered R. 6.37(6) — considered R. 10.31 — considered R. 10.31(1) — considered R. 10.31(1)(b) — considered R. 10.31(1)(b)(i) — considered R. 10.33(1)(a) — considered R. 10.33(1)(g) — considered R. 10.33(2)(a) — considered R. 10.33(2)(b) — considered R. 10.33(2)(g) — considered Civil Procedure Rules, N.S. Civ. Pro. Rules 2009 R. 77.02(1) — considered Civil Procedure Rules 1998, S.I. 1998, No. 3132 Generally — referred to R. 44.2(1) — considered R. 44.2(2)(a) — considered R. 44.2(4) — considered R. 44.2(5) — considered R. 44.3 — considered R. 44.3(1) — referred to R. 44.4 — considered Court of Appeal (Civil) Rules 2005, SR 2005/69 R. 53 — considered R. 53E(3) — considered District Courts Rules 2014, LI 2014/179 R. 14.6(4) — considered Federal Courts Rules, SOR/98-106 R. 400(1) — considered Pillar Resource Services Inc. v. PrimeWest Energy Inc. 243

Federal Rules of Civil Procedure, 28 U.S.C., Appendix R. 54(d)(1) — considered High Court Rules 2004, 2004, No. 304 R. 50.1 — considered High Court Rules 2016, LI 2016/225 R. 14.1 — considered R. 14.2(a) — considered R. 14.2(f) — considered R. 14.6(4) — considered New York Codes, Rules and Regulations, NYCRR R. 130-1.1(a) — considered R. 130-1.1(b) — considered R. 130-1.1(c)(1) — considered R. 130-1.1(c)(3) — considered Queen’s Bench Rules, Sask. Q.B. Rules 2013 R. 11-1(1) — considered R. 11-1(2)(a) — considered Rules of Civil Procedure, R.R.O. 1990, Reg. 194 R. 57.01 — considered R. 57.01(2) — considered Rules of Civil Procedure, SCO 1959 (Alas.) R. 82(a) — considered Rules of Court, N.B. Reg. 82-73 R. 59.01 — referred to R. 59.01(1) — considered Rules of the Supreme Court 1971, W.A. 1971 R. 1(1) — considered Rules of the Supreme Court, 1883, 1883 R. 1 — considered Rules of the Supreme Court, 1965, S.I. 1965, No. 1776 R. 2(4) — referred to Rules of the Supreme Court, 1986, S.N. 1986, c. 42, Sched. D R. 55.02(1) — considered Rules of the Supreme Court of the Northwest Territories, N.W.T. Reg. R-010-96 R. 206 — considered Supreme Court (General Civil Procedure) Rules 2015, S.R. No. 103/2015 (Vict.) R. 63.03(1) — considered Supreme Court Civil Rules, B.C. Reg. 168/2009 R. 14-1(9) — considered Supreme Court Civil Rules 2006, 2006 (S. Aust.) R. 264(1) — considered R. 264(5)(b) — considered 244 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Supreme Court Rules 2000, S.R. 2000, No. 8 (Tas.) R. 839(d) — considered Supreme Court Rules 2004, SR 2004/199 R. 44(1) — considered Supreme Court Rules 2009, 2009, No. 1603 R. 46(1) — considered Uniform Civil Procedure Rules 1999, Qld. 1999 R. 681(1) — considered R. 703(1) — considered Uniform Civil Procedure Rules 2005, 2005, No. 418 (NSW) R. 42.1 — considered R. 42.2 — considered Tariffs considered by Myra Bielby J.A.: Alberta Rules of Court, Alta. Reg. 124/2010 Sched. C — referred to

Tariffs considered by J.D. Bruce McDonald J.A. (dissenting): Alberta Rules of Court, Alta. Reg. 124/2010 Sched. C, Tariff of Costs, column 4 — referred to Words and phrases considered: blameworthy conduct It is beyond doubt that the manner in which the litigation is conducted may constitute blameworthy conduct. ... At an abstract level, parties whose litigation conduct, viewed as a whole, demonstrates blatant disregard for their obligations under the Alberta Rules of Court [Alta. Reg. 124/2010] and court orders, and the rights of other parties or undermines the integrity of the trial process engage in blameworthy litigation conduct. ... Blameworthy litigation conduct may either be the proper characterization of a pattern of misconduct that occurred at one or more stages of the litigation spectrum — pleadings, discoveries, applications or trials — or, if the misconduct is sufficiently egregious, a single act — alleging in argument, either written or oral or both, without foundation, that the adjudicator and opposing counsel are corrupt — may be sufficient. fraud “Fraud” is defined by Webster’s Third New International Dictionary this way: “an intentional misrepresentation . . . for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right”. Pillar Resource Services Inc. v. PrimeWest Energy Inc. Myra Bielby J.A. 245

punitive damages It is an error to equate an indemnity costs order with punitive damages. The latter are penal in nature and have nothing to do with the amount of the successful party’s legal obligations to its counsel.

APPEAL from judgment reported at Pillar Resource Services Inc. v. PrimeWest Energy Inc. (2016), 2016 ABQB 120, 2016 CarswellAlta 424, 52 C.L.R. (4th) 37 (Alta. Q.B.), awarding costs against defendant on solicitor-client basis.

J.P. Gruber, A.E. Stead, for Respondent G.S. Solomon, Q.C., M.O. Ho, for Appellants

Myra Bielby J.A.: [FOOTNOTES TO FOLLOW THE DECISION.]

1 I agree with the decision of Justice Wakeling to the effect this appeal must be dismissed. The trial judge’s award of full-indemnity costs was reasonably based on, at least, the last three of the four reasons she gave for making that award. I respectfully disagree that the law permits a trial judge to base an award of full-indemnity costs on pre-litigation conduct alone, independent of any other circumstances. Such costs are exceptional and generally to be awarded for misconduct that arises during the course of the litigation only, save for certain exceptions which do not include pre-litigation conduct in and of itself. 2 I accept the facts as stated in Justice Wakeling’s decision. For ease of reference, I repeat that at the conclusion of a lengthy trial, in a separate written costs decision, the trial judge awarded the plaintiff/respondent, Pillar Resource Services Inc., full-indemnity costs because of the following misconduct on the part of the defendants/appellants: [22] I find that the following conduct of ...[PrimeWest], when viewed as a whole, warrants the exceptionaindemnity costs be awl relief of an award of solicitor-clients costs, subject to assessment and disbursements, including expert fees and the expenses of having Messrs. Guenther and Milliner give evidence. a) [PrimeWest’s] misleading requests for further information from Pillar during post-completion negotiation, when clarification was not really an issue, and its delays in such negotiation; b) [PrimeWest’s] attempt to introduce additional evidence in its written argument after trial; 246 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

c) the additional trial time necessitated by ...[PrimeWest’s] refusal to admit facts that ultimately were not in issue; d) the unproven allegations of fraud that continued until trial, but were not addressed by ... [PrimeWest] at trial. [23] The defendants are jointly and severally liable for these costs. [24] I am persuaded by these factors taken together that this is a case where justice can only be done by a complete indemnification of the successful plaintiff’s costs. In the present climate of expensive litigation and scarce judicial resources, [PrimeWest’s] efforts to delay the trial and prolong its length must be denounced and deterred. 3 The first of the four reasons for making the costs award, causing unnecessary delays in post-completion negotiation occurred shortly before the issuance of the statement of claim. This conduct is therefore “prelitigation” misconduct, by definition. I must disagree with Justice Wakel- ing’s conclusion that the law permits the award of full indemnity costs for this type of conduct standing alone. That issue is irrelevant to this appeal in any event, as the remaining three reasons given by Justice Ro- maine all arise from misconduct which occurred during litigation, or after the issuance of the statement of claim. No challenge is made to her findings of fact in this regard. These three reasons would justify an award of full indemnity costs without consideration of the first reason, pre-litigation negotiation misconduct. 4 The issue is not whether a judge has discretion to make an order of full indemnity against any of the parties to litigation. The issue is how and when that discretion should be exercised. 5 We are bound by the principles established by the decision of the Su- preme Court of Canada in Young v. Young, [1993] 4 S.C.R. 3, 108 D.L.R. (4th) 193 (S.C.C.) in relation to when an award of solicitor-client costs can reasonably be made. That decision did not arise from a trial judgment making such an award based on pre-litigation misconduct alone, nor did the Court expressly address the effect of pre-litigation misconduct in and of itself. In that case, the trial judge had ordered solicitor- client costs on the basis that the respondent’s custody claim had “little merit”, but also on the basis that he attempted to mislead the Court and was recalcitrant on matters of custody and maintenance that resulted in generating unnecessary court proceedings. The British Columbia Court of Appeal upheld the portion of that award relating to four days of trial time and four further days of interlocutory proceedings dealing with fi- Pillar Resource Services Inc. v. PrimeWest Energy Inc. Myra Bielby J.A. 247

nancial issues, based on the husband’s non-disclosure of financial information. 6 In upholding the Court of Appeal’s decision, Justice McLachlin (as she then was) in separate reasons concurring in the result stated at p 134: The Court of Appeal’s order was based on the following principles, with which I agree. Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties, accordingly, the fact that an application has little merit is no basis of awarding solicitor-client costs; nor is the fact that part of the cost of the litigation may have been paid by others... 7 Justice McLachlin’s silence on the effect of pre-litigation misconduct should not be interpreted as an intention that full indemnity costs be awarded based on that misconduct alone, even where it is reprehensible, scandalous or outrageous. Those were not the facts before her; she did not need to interpret the law that might arise on such facts, to do so would have been obiter at best. There is no authority from the Supreme Court of Canada that deals directly with whether full indemnity costs should be awarded for pre-litigation conduct alone. 8 There is authority from this Court, which binds me in the absence of an application for reconsideration, which states the contrary. In Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.) the Court stated: [28] Costs are discretionary and as a general rule, a departure from party and party costs should only occur in rare and exceptional circumstances. Examples of such circumstances, outlined in Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 at 172 (QB), include: 1. circumstances constituting blameworthiness in the conduct of the litigation by that party (Reese et al. v. Alberta (Minister of Forestry, Lands and Wildlife) et al., 1992 CanLII 2825 (AB QB), [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, 1978 CanLII 1307 (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 issue of fact or law which required these lengthy, expensive proceedings, where the positively misconducting party was “contemptuous” of the aggrieved party in forcing 248 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

that aggrieved party to exhaust legal proceedings to obtain that which was obviously his (Max Sonnenberg Inc v. Stew- art, Smith (Canada) Ltd, 1986 CanLII 1771 (AB QB), [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 the plaintiff to prove facts that should have been admitted, thus prolonging the trial, unnecessary adjournments, concealing material documents from the plaintiffs and failing to produce material documents in a timely fashion (Olson v. New Home Certification Program of Alberta, 1986 CanLII 1640 (AB QB), [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 defendants should be penalized beyond the ordinary order of costs (Dusik v. Newton (1984), 51 BCLR 217,1984 CanLII 690 (BC SC), 1984 CanLII 690 (SC)); 6. defendants found to be acting fraudulently and in breach of trust (Davis v. Davis, [1981] MJ No 320, 9 Man 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 court at trial (Kepic v. Tecumseh Road Builder et al., [1987] OJ No 890, 23 OAC. 72); 8. fraudulent conduct (Sturrock v. Ancona Petroleums Ltd, 1990 CanLII 5563 (AB QB), [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 (Pharand Ski Corp v. Alberta, 1991 CanLII 5931 (AB QB), [1991] AJ No 902, 83 Alta LR (2d) 152 (QB)). 9 No authority has been offered which expressly deals with the issue of whether full indemnity costs may reasonably be awarded based on prelitigation misconduct alone. None have been offered which expressly address whether the “rare and exceptional circumstances” described by this Court in Sidorsky which justify an award of full indemnity costs include pre-litigation conduct without more. 10 Justice Wakeling is incorrect, at para 75 of his reasons for decision, to the extent he interprets the majority decision in FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd., 2016 ABCA 303 (Alta. C.A.) as authority that pre-litigation misconduct may, on its own, form a reasonable Pillar Resource Services Inc. v. PrimeWest Energy Inc. Myra Bielby J.A. 249

basis for an award of full-indemnity costs. In that case, the majority upheld such an award on the basis of litigation misconduct alone, in the form of significant adverse credibility findings against the two principal witnesses who testified at trial for Phoenix. It observes at para 17, that FIC’s counsel did not attempt to justify the award by the existence of significant pre-litigation misconduct although significant adverse findings in this regard, including that which could be viewed as being akin to fraud, were made by the trial judge. 11 The last three reasons for the costs award made by the trial judge on this appeal fall within the following examples of circumstances where full indemnity costs may be awarded in variation of the expectation that only partial indemnity costs be awarded to a successful litigant, as established in Schedule C of the Alberta Rules of Court, Alta Reg 124/2010. Those examples are as listed in Jackson v. Trimac Industries Ltd. [1993 CarswellAlta 310 (Alta. Q.B.)] at para 28: 1) blameworthiness in the conduct of the litigation; 3) absence of a serious issue of fact or law which required the lengthy, expensive trial proceedings; and, 4) requiring the plaintiff to prove facts that should have been admitted, thus prolonging the trial. 12 Justice Romaine was nonetheless reasonable in considering the prelitigation misconduct described in the first of her reasons because it gave context to the subsequent acts of trial misconduct. Attempts to negotiate in bad faith prior to the start of the lawsuit foreshadowed the appellants proceeding to require the plaintiff to prove facts that were not in dispute, and aggressively defending claims to which it ultimately offered no defence. 13 Fraudulent conduct falls within the seventh and eighth examples offered in Trimac Industries. While the trial judge found fraudulent intent, an apparent contradiction arises between paragraph 160 of her merits decision in which she states that no allegations of fraud were advanced and paragraph 18 of her subsequent costs decision in which she concludes that the appellants made unproven allegations of fraud. An examination of the statement of claim and trial transcript reveals that any error must be in relation to her comments in the merits decision, which is not the subject of this appeal, and thus does not undermine or impugn her subsequent conclusion that fraud was alleged but ultimately unproven, although not in those express terms. It therefore has no effect on this appeal. The statement of claim alleges facts which would constitute fraud if proven, while the trial transcript shows the respondent’s accounting wit- 250 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

ness to have been pressed in a manner relevant only if the appellants were attempting to uncover facts to support fraud yet they did not then proceed to argue that fraud had been made out. 14 During case management of this litigation prior to trial, costs awards were made in relation to three separate interim applications. While Jus- tice Romaine did not expressly address those costs awards in her costs decision, it must be interpreted so as to exclude the litigation steps and events embraced by those separate costs awards from which no appeal has been taken and which thus remain standing. 15 The appeal is dismissed. Messrs. Solomon, Q.C. and Ho, of Jensen Shawa Solomon Duguid Hawkes LLP, appellants’ appeal counsel, were not appellants’ trial counsel. Lawyers from another firm acted for the appellants at trial.

Thomas W. Wakeling J.A. (concurring): I. Introduction 16 The appellants appeal an order making them responsible for the respondent’s costs on a solicitor-client or full-indemnity basis.1 This will be a substantial obligation. The trial alone lasted fourteen days.

II. Questions Presented 17 Justice Romaine ordered the appellants to fully indemnify the respondent for the costs the respondent incurred in prosecuting its action for unpaid amounts on what she determined was a cost-plus-construction contract. She did so because the appellants purposely delayed payment for as long as possible, attempted to introduce additional evidence in the guise of argument after trial, consumed unnecessary trial time because of their let-the-plaintiff-prove-its-case litigation strategy and alleged fraud on the part of the respondent without any basis, an allegation that was not withdrawn until after the trial started. 18 Did the trial judge err in ordering the appellants to fully indemnify the respondent for its legal costs?

III. Brief Answers 19 Justice Romaine did not err in ordering the appellants to pay full- indemnity costs. Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 251

20 In Canada, a superior court, on account of blameworthy prelitigation or litigation conduct, may order the unsuccessful party to substantially or fully indemnify the successful party. 21 I am completely satisfied that the appellants’ litigation conduct2 was blameworthy and warranted a full-indemnity costs order. 22 Even though the appellants never challenged at trial any aspect of the respondent’s accounts, including third-party expenditures, they forced the respondent to prove the bases of its claims. This tactic probably increased trial time by close to 400%. 23 The appellants’ litigation strategy — make the other side prove its case — is not consistent with the duty imposed on them by r. 1(2) of the Alberta Rules of Court.3 After the respondent had completed the work the appellants assigned to it and the parties met to discuss the respondent’s accounts, the appellants should have been in a position to determine that their obligation to Pillar Resource far exceeded what the appellants had paid. They were obliged to “identify ... the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense”.4 24 In the new litigation era that commenced on November 1, 2010 — the date the new Alberta Rules of Court came into force — a party that needlessly wastes the resources of other litigants and the publicly funded court system by forcing the plaintiff to prove its case when the defendant does not intend to contest any part of it can have severe costs consequences. 25 Litigation is not an activity that should be undertaken for an illegiti- mate purpose. It is not a sport. It is designed to resolve, as quickly and inexpensively as possible, disputes that the parties themselves cannot settle. 26 The trial judge was also entitled to react negatively to the appellants’ attempt to camouflage new evidence by inserting it as an addendum to its trial brief. The evidence and argument phases of a trial serve completely different purposes and should not be used inappropriately. 27 As well, Justice Romaine justifiably imposed the contested costs sanction as a consequence of the appellants alleging in their defence that “by intentionally or negligently inflating their [sic] costs in order to claim a higher mark-up account”, a position not abandoned until one of the appellants’ trial witnesses expressly denied that they were alleging fraud. 252 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

IV. Statement of Facts A. The Contract Between Pillar Resource and PrimeWest 28 PrimeWest Energy Inc. and PrimeWest Gas Corp.5 owned and operated a sour gas processing plant near Grande Prairie, Alberta. 29 Sometime before 2004 the appellants decided to increase the capacity and throughput of the plant. 30 PrimeWest retained Equinox Engineering Ltd. as the project engi- neer. Equinox Engineering had a special expertise in the use of biological sulphur recovery technology that PrimeWest wished to incorporate into their plant. 31 Equinox Engineering, having worked with Pillar Resource Services Inc. before, recommended that PrimeWest utilize Pillar Resource for a substantial component of the construction project. 32 Pillar Resource offered to undertake the project work in a January 21, 2004 letter. It proposed a “reimbursable cost plus fixed markup” contract.6 The fixed markup was fifteen percent and applied to labour, material and rentals, regardless of the source. 33 Equinox Engineering notified Pillar Resource on January 30, 2004 that Pillar Resource had a contract with PrimeWest to “do the work necessary to incorporate ... [high and low pressure skids and a bioreactor] into the existing plant, to provide pilings and foundations for the skids and a secondary containment dyke and liner system”.7 34 Justice Romaine concluded that “the contract between Pillar and PrimeWest was formed on January 30, 2004, [and] that it was a reimbursable, cost-plus fixed mark-up contract”.8

B. Pillar Resource’s Work Under the Contract 35 Within a matter of days of being retained, Pillar Resource submitted to Equinox Engineering a very preliminary cost estimate of $391,357.30. According to the trial judge,9 [m]any of the costs estimates bear the notation “not enough information at this time”. Some of them assumed that PrimeWest would be supplying material. The cost schedule incorporated various assumptions. ... [18] [Pillar Resource’s letter] ... assumed a certain number of pilings and ... that the dyke would have certain measurements. ... [The estimate] did not include a cost estimate for the hauling or setting of the Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 253

two main skids or the large bio-tank “as there is not enough information at this time to make a reasonable estimate”. ... [19] [Pillar Resource’s] letter also indicated that ... [the estimate did not include] a cost for the supply of piping material ... or a cost for the insulation or “utilidor” as more detail was required for a reasonable estimate. Mr. Dobberthein [of Pillar Resource] testified that the drawings he was provided did not provide enough detail to prepare a proper estimate, as they were basically just a plot plan. 36 Weeks passed on this fast-track project without Equinox Engineering producing the detailed drawings that Pillar Resource asked for. 37 On March 15, 2004, Equinox Engineering delivered “issued for construction drawings” to Pillar Resource and insisted that the latter provide the former with a revised schedule and cost estimates.10 38 Pillar Resource responded quickly. On March 18, 2004, it provided Equinox Engineering with a second costs estimate. The new costs estimate, excluding Pillar Resource’s fifteen percent markup, was $500,540.51. This document, as the trial judge found, clearly stated that this estimate was incomplete and could not be relied upon as Pillar Re- source’s estimate of project costs:11 The estimate again noted that a number of items were “best guess at this time”, and some sub-trade estimates were marked as “supplied by PrimeWest”. ... [T]here was still no detail available for items like the culverts for the sulphur loading areas, the walkways, stairs and door landings. [38] ... [R]educing the estimated weld inches from 1500 as set out in the preliminary estimate to 1100 would reduce manpower requirements in the estimate by eight days ...... [42] Mr. Dobberthein [of Pillar Resource] noted that, at this point, the project still lacked a number of the details that were necessary to do a proper estimate, but he was trying to respond to pressure from Equinox. From this point on, the time schedule kept sliding and the work required of Pillar kept changing. The scope of work became a moving target, and [Pillar Resource] did not prepare another estimate. 39 At a March 25, 2004 meeting, Pillar Resource advised PrimeWest and Equinox Engineering that the March 18, 2004 estimate for $500,541.51 was “preliminary, as there continued to be insufficient detail for a complete estimate”.12 254 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

40 The scope of Pillar Resource’s work changed dramatically over time.13 Equinox Engineering regularly asked Pillar Resource to undertake more tasks and assume responsibility for ever-more complicated components.14 41 Pillar Resource’s work force arrived at the site on March 29, 2004. 42 As soon as Pillar Resource commenced work at the site, it provided PrimeWest with daily tickets that recorded Pillar Resource’s manpower and most third-party costs.15 This data should have allowed PrimeWest to track a substantial part of Pillar Resource’s project costs on a daily basis.16 43 The trial judge held that Pillar Resource did what it promised to do when it promised to do it and that PrimeWest was more than satisfied with Pillar Resource’s work until Pillar Resource sued the appellants for breach of contract.17 44 At an August 24, 2004 meeting senior representatives of PrimeWest informed their Pillar Resource counterparts, according to the trial judge, that18 PrimeWest was very happy with Pillar’s work, given the amount of work to be done on a very tight schedule and that they were happy with Pillar’s flexibility in addressing project issues and scope changes. PrimeWest was happy with the quality of the work. Nothing appears to have been done by Pillar that was not required and PrimeWest was pleased with the crew performance and experience. 45 Pillar Resource left the site on June 1, 2004.

C. Pillar Resource’s Invoices and PrimeWest’s Payments 46 Pillar Resource submitted invoices totaling $1,801,278.13. The first invoice was delivered May 6, 2004. It was for $460,580.60.19 By the end of April 2004, Pillar Resource’s costs were in the vicinity of $500,000.20 This meant that the appellants’ costs were higher — the markup and taxes. 47 The trial judge concluded that the respondent’s invoices and daily tickets provided the appellants with the information they needed to moni- tor project costs on a daily basis:21 The first invoice was issued slightly over a month after work commenced, not an unreasonable period of time, particularly given that the daily tickets provided PrimeWest with the ability to track costs other than third-party costs and provided some information even on those. It is noteworthy that more than two-thirds of the ultimate Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 255

amount of third-party costs could have been identified from information provided on Pillar’s daily tickets. There was no contractual obligation or request from PrimeWest to provide earlier or more frequent invoices. 48 Nonetheless, PrimeWest informed Pillar Resource in a September 22, 2004 letter that PrimeWest was only prepared to pay $488,316.78 plus GST for a total of $522,498.95.22 A cheque for this amount came with the letter. 49 At an October 27, 2004 meeting attended by senior representatives of the appellants and the respondent,23 Mr. Miller conceded that the appellants had made up their minds not to pay anything more.24 50 Justice Romaine provided this assessment of PrimeWest’s conduct following Pillar Resource’s completion of its contract work:25 Mr. Miller testified that during these post-completion meetings, he was “trying to understand” Pillar’s invoices and why they differed from the initial estimates. This is disingenuous and not credible. Mr. Miller clearly did not want to pay Pillar’s costs for a project that had gone badly off budget for PrimeWest, primarily due to poor communication and reporting among Mr. Eidt, the Equinox personnel and Mr. Miller. Mr. Miller conceded that he understood the Pillar contract to be a reimbursable contract, with a fixed mark-up and that he knew the Bug Skid project was a fast-track project with the inherent risk of a reimbursable contract where the scope and details of the project were not clear before start-up. He also conceded that after the first six to eight weeks after start-up, when it became apparent to him that there was not a steady stream of communication, he took steps to become more personally involved. It is clear that Mr. Miller had failed to deliver a functioning project within budget, and was attempting to negotiate down Pillar’s invoices as a result. 51 On June 1, 2007, PrimeWest paid Pillar Resource an additional $423,828.73 to bring the total payments to $946,327.68. This payment reduced the outstanding invoices to $854,950.45 plus interest.26

D. Pillar Resource’s Action Against the Appellants 52 On November 15, 2004, Pillar Resource commenced an action against PrimeWest Energy Inc. and PrimeWest Gas Corp. for the amounts unpaid under the reimbursable-cost-plus contract and accrued interest. 53 On December 21, 2004, PrimeWest Energy Inc. filed a statement of defence and counterclaim. 256 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

54 Each party subsequently amended their pleadings. 55 After a fourteen-day trial, Justice Romaine filed reasons for judgment.27 She found in favour of Pillar Resource and gave it judgment for breach of contract in the amount of $852,036.73 plus prejudgment interest. The appellants do not appeal this part of the trial judgment. 56 Justice Romaine awarded the respondent full-indemnity costs. She stated her reasons in the following passage:28 [22] I find that the following conduct of ... [PrimeWest], when viewed as a whole, warrants the exceptional relief of an award of solicitor - client costs, subject to assessment and disbursements, including expert fees and the expenses of having Messrs. Guenther and Milliner give evidence. a) [PrimeWest’s] ... misleading requests for further information from Pillar during post-completion negotiation, when clarification was not really an issue, and its delays in such negotiation; b) [PrimeWest’s] ... attempt to introduce additional evidence in its written argument after trial; c) the additional trial time necessitated by ... [PrimeWest’s] refusal to admit facts that ultimately were not in issue; d) the unproven allegations of fraud that continued until trial, but were not addressed by ... [PrimeWest] at trial...... [24] I am persuaded by these factors taken together that this is a case where justice can only be done by a complete indemnification of the successful plaintiff’s costs. In the present climate of expensive litigation and scarce judicial resources, [PrimeWest’s] ... efforts to delay the trial and prolong its length must be denounced and deterred.

V. Applicable Provisions of the Court of Queen’s Bench Act and the Alberta Rules of Court 57 Section 21 of the Court of Queen’s Bench Act29 is as follows: 21 Subject to an express provision to the contrary in any enactment, the costs of and incidental to any matter authorized to be taken before the Court or a judge are in the discretion of the Court or judge and the Court or judge may make any order relating to costs that is appropriate in the circumstances. Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 257

58 Parts of rr. 1.2, 6.37, 10.31 and 10.32 of the Alberta Rules of Court30 are set out below: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way. (2) In particular, these rules are intended to be used (a) to identify the real issues in dispute, (b) to facilitate the quickest means of resolving a claim at the least expense, ..... (e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments. (3) To achieve the purpose and intention of these rules the parties must, jointly and individually during an action, (a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense, ..... (c) refrain from ... taking proceedings that do not further the purpose and intention of these rules, and (d) when using publicly funded Court resources, use them effectively...... 6.37(1) A party may, by notice in Form 33, call on any other party to admit for the purposes of ... [a] trial, either or both of the following: (a) any fact stated in the notice, including any fact in respect of a record; (b) any written opinion included in or attached to the notice, which must state the facts on which the opinion is based...... (3) Each of the matters for which an admission is requested is presumed to be admitted unless, within 20 days after the date of service of the notice to admit, the party to whom the notice is addressed serves on the party requesting the admission a statement that (a) denies the fact or the opinion, or both ... and sets out in detail the reasons why the fact cannot be admitted or the opinion cannot be admitted, as the case requires, or 258 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

(b) sets out an objection on the ground that some or all of the matters for which admissions are requested are, in whole or in part, (i) privileged, or (ii) irrelevant, improper or unnecessary...... (6) A party may amend or withdraw an admission or denial made under this rule only (a) with the Court’s permission, or (b) by agreement of the parties...... 10.31(1) After considering the matters described in rule 10.33 ... the Court may order one party to pay to another party, as a costs award, one or a combination of the following: ..... (b) any amount that the Court considers to be 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...... 10.33(1) In making a costs award, the Court may consider all or any of the following: (a) the result of the action and the degree of success of each party; ..... (g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate. (2) In deciding whether to impose, deny or vary an amount in a costs award, the Court may consider all or any of 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; (b) a party’s denial of or refusal to admit anything that should have been admitted; Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 259

..... (g) whether a party has engaged in misconduct.

VI. Analysis A. Principles Governing Costs Awards 59 There are several principles that govern costs awards.31

1. Costs Awards Are the Product of Rational Deliberation 60 First, the Court of Queen’s Bench of Alberta is responsible for settling the amount of costs, including lawyer’s fees, payable by one litigant to another in a proceeding before the Court.32 61 Second, the Court of Queen’s Bench has a discretion to order a party to pay another party’s lawyer’s fees and related costs, if there is no express provision in an enactment to the contrary.33 62 All Canadian superior courts have similar jurisdictions.34 So do Cana- dian appellate courts.35 All English superior courts have also had this responsibility since 1875.36 Australian37 and New Zealand38 courts of this nature are responsible for costs awards. Some American courts, federal and state, — in stipulated cases — have jurisdiction to order a party to pay an adversary’s attorney’s fees.39 63 Third, “a court, in exercising its discretion, must act in a principled manner. A cost inquiry must be conducted within a logical framework. The absence of such a framework introduces arbitrariness and uncertainty.”40 It is the responsibility of appellate courts to construct a logical framework.41 This opinion pursues this object. 64 Fourth, in Canada,42 England,43 New Zealand44 and Australia45 the successful party is usually entitled to an order that obliges the unsuccessful party to pay it a sum in recognition of the fact that the prevailing party has incurred legal fees and other expenses to protect its interests. This principle has ancient roots. “The first statute which gave the plaintiff his costs, and the one on which the whole law on the subject was based until 1875, was the Statute of Gloucester [6 Edw. 1, c.1]”.46 In most American jurisdictions litigants are responsible for their own lawyer’s fees regardless of the outcome of the action.47 This is called the “American rule”.48 65 But there may be circumstances that make it appropriate to deny the successful party its costs.49 260 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

66 Fifth, cost orders are made to indemnify the successful party for a portion of its lawyer’s fees.50 This has been a central feature of the common law for over 700 years. “It has not been doubted since 1278, when the Statute of Gloucester introduced the notion of costs to the common law, that costs are awarded by way of indemnity ... for professional legal costs actually incurred in the conduct of litigation”.51 They are not granted as a sanction for the purpose of punishing past misconduct and altering the future behaviour of the litigants or the community subject to the court’s jurisdiction.52 67 Sixth, now and for some time almost all costs orders amount to only a partial indemnity of the payee’s obligation to its lawyer.53 A payment under a typical costs order covers only a small portion of the recipient’s counsel’s fees. This is and has been the Canadian,54 English,55 Austra- lian56 and New Zealand57 experience. 68 Seventh, in exceptional cases a court will direct the payor to pay a sum that substantially or fully indemnifies the payee for its lawyer’s fees and other costs of litigation. An order of this nature — under Canadian,58 English,59 New Zealand,60 Australian,61 and American62 law — usually manifests judicial criticism of the payor’s conduct.63 But its primary purpose remains compensatory, and not punitive, in nature.64 Of course, no costs award makes the payee whole. Left uncompensated is the stress, inconvenience and distraction litigation causes.65 69 Eighth, a party ordered to indemnify another party for its litigation costs is responsible for those acts that increase the likelihood that the purpose of the retainer will be achieved and are not unnecessary.66

B. Blameworthy Conduct Justifies Extraordinary Costs Awards 70 Exceptional circumstances that justify a substantial or full-indemnity costs order include67 blameworthy conduct on the part of the payor. This is the law even in the United States.68 71 And what are the benchmarks of blameworthy conduct for the purpose of assessing costs? 72 It is beyond doubt that the manner in which the litigation is conducted may constitute blameworthy conduct.69 We are not aware of any Cana- dian, English, New Zealand or Australia judgment that has questioned this proposition. 73 In addition, case law in Canada70 and other common law jurisdic- tions71 strongly supports the proposition that the acts or omissions on Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 261

which a suit is based also may justify an enhanced costs order. But there are some courts that disagree.72

1. Prelitigation Misconduct a. Alberta Jurisprudence 74 Panels of this Court have expressed different opinions on whether prelitigation misconduct may justify full-indemnity costs orders.73 75 In 2016 Justices Bielby and Schutz opined in FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd.74 that prelitigation misconduct may be the basis for a full-indemnity costs award. They relied on Sidorsky v. CFCN Communications Ltd.,75 a 1997 decision of this Court that advanced several examples of prelitigation conduct that warranted an enhanced costs award. 76 In the last ten years two other panels — Polar Ice Express Inc. v. Arctic Glacier Inc.76 and Walsh v. Mobil Oil Canada77 — either impliedly or expressly opined that only litigation misconduct may attract a full-indemnity costs order. 77 The Polar Ice Express Inc. v. Arctic Glacier Inc. panel said this:78 The trial judge said that he was giving [solicitor-client costs] for the appellant’s bad pre-suit conduct, and he relied upon Young v. Young, [1993] 4 S.C.R. 3.... In our view, that case is virtually diametrically opposed to that proposition, especially if one looks at the Court of Appeal decision .... If that case leaves any doubt on the subject .... other binding authorities hold that in general solicitor-client costs for misconduct must relate to conduct during the suit, not the pre-suit conduct sued over. 78 The Court appears to have concluded that the following paragraphs from Young v. Young79 supports its position: The Court of Appeal’s [cost] order was based on the following principles, with which I agree. Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties. Accordingly, the fact that an application has little merit is no basis for awarding solicitor-client costs; nor is the fact that the cost of the litigation may have been paid for by others. The Court of Appeal meticulously considered all the proceedings in the light of these principles to arrive at its conclusion that only partial solicitor-client costs were justified. Finding no error in the reasoning or conclusion of the Court of Ap- peal on this question, I conclude that its order for costs should re- 262 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

main, save to the extent different conclusions on the merits in this Court require that an adjustment be made. 79 I fail to see how this passage supports the claim made by the Polar Ice Express panel that the Supreme Court held in Young v. Young that only litigation misconduct warrants a solicitor-client costs award. 80 In Young v. Young80 the Supreme Court stated that “[s]olicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”. Nothing in this sentence suggests that blameworthy prelitigation conduct of a party cannot be “reprehensible, scandalous or outrageous conduct”. Nor is there a plausible reading of this sentence that supports the view that litigation misconduct cannot be “reprehensible, scandalous or outrageous conduct”. Without a doubt, the Supreme Court intended both forms of misconduct to serve as foundations for an indemnity costs award.81 81 Had Justice McLachlin, as she then was, who was writing for all but one of the seven-member Court on this point,82 intended to narrowly de- fine misconduct and include only litigation misconduct, she would have said so. 82 Seven Canadian appellate courts — British Columbia, Saskatchewan, Manitoba, Ontario, Prince Edward Island, Newfoundland and Yukon — have unequivocally opined that blameworthy prelitigation conduct may justify an indemnity costs award.83 Superior courts in the other provinces and territories have come to the same conclusion.84 83 Given that Justice McLachlin relied heavily on Justice Cumming’s Young v. Young judgment in the British Columbia Court of Appeal,85 it merits study. 84 Justice Cumming’s judgment gave prominence to Justice Hinds’ opinion in McEvoy v. Ford Motor Co. [1990 CarswellBC 101 (B.C. S.C.)] the key parts of which are set out below:86 The principles to be applied with respect to an award of solicitor- and-client costs have been considered in British Columbia .... In Stiles v. B.C. (W.C.B.)... Lambert J.A. reviewed ... some of the more recent cases which dealt with solicitor-and-client costs. What he said commencing at p. 310 bears repeating: ..... The principle which guides the decision to award solicitor-and-client costs in a contested matter where there is no fund in issue and ... the parties have not agreed on solici- Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 263

tor-and-client costs in advance, is that solicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement. ... After reading ... Stiles... and the British Columbia authorities referred to by counsel ..., I conclude that solicitor-and-client costs should be awarded only in exceptional cases where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties deserving of chastisement. 85 Justice Hinds’ opinion on this question is unmistakable.87 Either reprehensible prelitigation or litigation conduct may be the basis for a solicitor-client costs award. 86 As one would expect, given that Justice Hinds’ formulation is the law in Canada, it is still applied in British Columbia.88 The British Columbia Court of Appeal, in Dockside Brewing Co. v. Strata Plan LMS 3837,89 said this: “The authorities do not establish any rigid rule that would prohibit an award of special costs where pre-litigation conduct is ‘reprehensible’ and warrants rebuke. As Lambert, J.A. noted ... however, ‘special costs are usually awarded only in relation to misconduct during the course of the litigation itself’”. 87 The Polar Ice Express panel also stated that Tree Savers International Ltd. v. Savoy90 is “binding [authority for the proposition] ... that in general solicitor-client costs for misconduct must relate to conduct during the suit, not the pre-suit conduct sued over”.91 My colleagues sin- gled out this passage from Tree Savers International, part of which reads as follows: “The respondents sought solicitor-client costs. They are normally awarded for misconduct in the suit, or because contracted for, and are not normally used as additional or exemplary damages. The lack of forthrightness and disposal of some documents by some of the defendant appellants are not to be commended. But we will not award solicitor- client costs where the trial judge, who observed these witnesses, did not”.92 88 Three observations may be advanced. First, this decision predates the Supreme Court of Canada’s Young v. Young decision. In our opinion, Young v. Young clearly stands for the proposition that blameworthy litigation or prelitigation conduct may attract full-indemnity costs. Second, the cited passage simply says that “normally” — most of the time — trial misconduct is the explanation for an enhanced costs award. This may well be the case. We have not checked to see which rationale for an in- 264 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

demnity costs order is most prevalent. The Tree Saver panel opinion does not preclude attaching costs consequences to prelitigation misconduct when it occurs. Third, the Tree Saver panel provides no authority for the statement that prelitigation conduct may not be the basis for a full-indemnity costs award. It cited no authority in the costs portion of its judgment. 89 Polar Ice Express also favourably cited Sidorsky v. CFCN Communications Ltd.93 But we read Sidorsky as authority for the proposition that prelitigation misconduct may warrant a full-indemnity costs award. Sidorsky expressly states that “a departure from party and party costs should only occur in rare and exceptional cases” and that “[e]xamples of [rare and exceptional] ... circumstances [are] outlined in Jackson v. Trimac Industries Ltd.”.94 As already noted, Jackson v. Trimac Industries Ltd.95 lists several examples of prelitigation misconduct that merit the award of full-indemnity costs. And Justice Hutchin- son, the trial judge in Jackson v. Trimac Industries Ltd.96 awarded the plaintiff full-indemnity costs on account of the defendant’s prelitigation misconduct: Where the positive misconduct of the party which gives rise to the action is so blatant and is calculated to deliberately harm the other party, then despite the technically proper conduct of the legal proceedings, the very fact that the action must be brought by the injured party to gain what was rightfully his in the face of an unreasonable denial is in itself positive misconduct deserving of indemnification whether punitive damages are awarded or not...... I find that this lengthy trial came about as a result of the fault of one man within the Trimac organization, the man who held the ultimate power and who refused to recognize a commitment which he had personally given to the plaintiff Jackson. ... I find JR’s conduct to have been calculated to force Jackson to exhaust the legal proceedings to obtain that which was obviously his. 90 While it is true that the Court of Appeal in Sidorsky v. CFCN Communications Ltd. set aside the trial judge’s order directing, the plaintiff to pay the defendant’s costs on a “solicitor-client” basis, it did so because the plaintiff’s prelitigation conduct that the trial judge relied on to justify an enhanced costs award did not affect the defendants. If the plaintiff landowner had deceived the occupants of his trailer park, as the defendant broadcaster maintained in its coverage, this did not adversely affect the interests of the broadcaster defendant who reported the plain- Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 265

tiff’s alleged misdeeds. This was obviously an irrelevant fact, a point the panel emphatically made in the following passage:97 [T]he trial judge erred ... in considering the plaintiff’s conduct towards the tenants (who were not parties to the litigation). Mr. Sidor- sky’s treatment of his tenants may result in independent actions for damages being brought by the tenants themselves, but it should form no basis for awarding such costs to the respondents. Similarly, ... the trial judge considered Mr. Sidorsky’s actions in relation to several tenants and unrelated broadcasters. Again, these people are not parties to the action. In our view, these factors are not proper considerations in assessing an award of solicitor-client costs to these respondents. 91 The Polar Ice Express panel also opined that Professional Sign Crafters (1988) Ltd. v. Seitanidis98 is authority for the view that full- indemnity costs may not be awarded as a consequence of prelitigation misconduct. Again, we cannot agree. Professional Sign Crafter assumed that prelitigation misconduct may trigger a full-indemnity costs award. The Professional Sign Crafter panel simply concluded that there was no prelitigation misconduct:99 The trial judge said that he was ordering ... solicitor/client costs because of the outrageous, blatant and inappropriate conduct of the appellant .... He did not elaborate on the specific acts which he was describing by those words. But reading his judgment as a whole, it is clear that he could not have been referring to post-pleading conduct, since in his reasons for judgment he said he did not know the history of the file. Therefore, the conduct on which he focussed was the conduct resulting in the lawsuit to begin with. There is nothing, in our view, in Stanley’s conduct in initiating the proceedings and his conduct thereafter that comes within the class of a rare and exceptional case warranting solicitor/client costs. 92 The Polar Ice Express opinion also relied on the Supreme Court of Canada’s Entreprises Ludco lt´ee c. Canada100 decision. I do not find this case to be helpful. At issue was the validity of Revenue Canada’s decision that taxpayers could not make the deductions they claimed. The Su- preme Court sided with the taxpayers. But it rejected their request for “special costs”. The Court concluded that Revenue Canada did not act improperly. It did not indicate whether this was an assessment of prelitigation or litigation misconduct. The Court said this: “In general, special costs ought to be awarded only on the grounds of misconduct connected with the litigation or other exceptional circumstances”.101 Is prelitigation conduct not “connected with the litigation”?102 If not, is it not captured 266 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

by the phrase “other exceptional circumstances”? If the sentence under review does refer to litigation misconduct, the phrase “in general”, supports the view that it does not preclude prelitigation misconduct. In any event, the Supreme Court of Canada made no mention of Young v. Young. The likelihood that the Supreme Court intended to revisit the issue decided by Young v. Young without reference to Young v. Young or any other policy questions that are engaged by this question is extremely low. There are many other superior court judgments that, pre and post Young v. Young, have granted full-indemnity costs against unsuccessful parties whose prelitigation conduct was blameworthy.103 93 The majority of the panel hearing Walsh v. Mobil Oil Canada104 accepted the appellant’s argument that “the conduct must have occurred during the course of the litigation” and stated, without explanation, that “the reviewing judge erred in principle in awarding [full indemnity] costs based on Mobil’s pre-litigation conduct”. This disposition is inconsistent with Young v. Young.105

b. There Is No Valid Reason To Distinguish Between Prelitigation and Litigation Misconduct i. Statutory Interpretation 94 Section 21 of the Court of Queen’s Bench Act106 proclaims that “the costs of and incidental to any matter authorized to be taken before the Court ... are in the discretion of the Court ... and the Court ... may make any order relating to costs that is appropriate in the circumstances”. This section is drawn in the broadest terms and authorizes the Court to award costs based on a party’s blameworthy prelitigation or litigation conduct.107 No provision in the Alberta Rules of Court108 denies the court the jurisdiction to use a substantial or full-indemnity costs order as a tool to express its strong disapproval of a party’s prelitigation conduct109 and order a party to fully or substantially reimburse an adversary whose interests were harmed by blameworthy prelitigation conduct. 95 The text of these statutory standards supports enhanced costs orders for both prelitigation and litigation misconduct. 96 Statutory interpretation principles do not justify drawing a distinction between prelitigation misconduct and litigation misconduct when assessing costs.110

ii. There Are No Adverse Practical Consequences 97 Nor are there any practical reasons111 to do so. Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 267

98 In order to appreciate the impact costs have on litigants and the greater community one must understand how potential and actual costs obligations affect the behaviour of members of the community who may come into contact with the civil justice system. 99 Competent counsel retained by a client who has a dispute with another or anticipates that one may materialize and is considering commencing an action or who has been sued or anticipates being sued will deliver several key messages to the client. First, the lawyer will want the client to understand that there is always a risk that a court may not grant the client the relief that the client seeks.112 Second, the experienced lawyer will emphasize that litigation is invariably expensive.113 The lawyer will also ensure that the client understands that the client must pay him or her no matter what the outcome.114 In addition, the lawyer will advise the client that a court has jurisdiction to order the unsuccessful party to pay some or all of the legal expenses the adversary incurs. This may be a very substantial burden.115 100 There are very few clients who have sufficient resources that they are able to make decisions about litigation without regard to the financial aspects of available options. Most clients do not have the luxury of adopting a strategy to establish a principle or to punish an adversary. 101 The course a prudent client adopts will be affected by the fact that litigation is expensive and the outcome may be difficult to predict. That a court may order the client to pay the adversary’s legal costs complicates things. 102 These factors may cause a client to seek accommodation and decline to initiate litigation or be predisposed to settle suits commenced against it if the likelihood of ultimate success is not high enough to satisfy the client’s risk tolerance and the financial consequences of defeat are too onerous. 103 It is obvious that the magnitude of the possible obligation to indemnify an adversary for its legal costs is an important consideration for the vast majority of litigants or potential litigants. As the quantum of the potential costs burden escalates, so must the likelihood that the court will validate the client’s position increase in order to justify a decision to proceed with litigation and not pursue alternate dispute resolution options, such as settlement. In other words, there is a direct correlation between the magnitude of the costs burden, the merits of the client’s case and the client’s propensity to participate in the civil justice system. 268 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

104 Courts must take this into account when formulating the principles that govern the quantum of costs.116 105 It is safe to predict that as the cost burden and the risk of loss rise, the likelihood that a person will adopt a strategy that gives a civil court a prominent role in dispute resolution will diminish. Those deterred are most likely to be those with the least resources. The size of the pool of potential litigants may be directly affected by the wealth of a disputant. 106 At the same time, even with the knowledge that the potential cost of litigation may shrink the size of the pool of persons willing to litigate, courts accept that it is generally fair117 to relieve the successful party of the burden to pay all its legal costs associated with advancing a meritorious position. A party whose position the court has vindicated and who has expended its resources to protect its legal interests is entitled to transfer some of those costs to its adversary whose intransigence has caused the successful party to expend its resources on lawyer and litigation-related service providers.118 “If the litigation had not been brought or defended by the unsuccessful party the successful party would not have incurred the expense which it did”.119 107 For hundreds of years courts have adjudged that the unsuccessful party should make a reasonable contribution120 to reduce the financial burden that the successful party has incurred because the former has failed to foresee that a court would not recognize its position as more meritorious than the latter’s. They do this aware of its likely impact on future disputants. 108 What constitutes a reasonable contribution on the part of the unsuccessful party who has not engaged in either prelitigation or litigation misconduct will be influenced by the answer to this question: what potential burden will cause a reasonable person of average means121 to abandon a defensible legal position — prospects of success are forty percent or more122 — on a controversy objectively assessed to be of significance to the person — because the costs associated with the risk of failure — up to sixty percent — are too great to justify submitting the dispute for adjudication under the protocols utilized by our civil justice system. Surely the law ought not to ignore cost consequences so onerous that they will deter a reasonable person of average means from seeking judicial vindi- cation of a defensible legal position of a controversy significant to the person. 109 Historically, courts have concluded that a relatively modest contribution from the vanquished litigant is reasonable.123 This means that the Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 269

victor remains responsible for a greater proportion of its legal costs than the adversary and that the latter is solely responsible for its own legal costs and a modest portion of the victor’s. Suppose that A and B, the two litigants, each spent $X on legal fees and disbursements. A wins. B loses. The court issues a costs order requiring B to pay A a sum that equals $.4X. In the end A, the victor, pays $.6X in legal fees and disbursements to his or her lawyer to acquire $Y in damages; B, the vanquished, pays A $Y for damages and $.4X to reimburse A for part of A’s legal costs. In addition, B had to pay his or her own lawyer $X.124 110 But the key point is this: the contribution the law compels the unsuccessful party to make to the successful party must not be so onerous as to be the principal reason why a reasonable person of average means with a defensible legal position decides not to submit the difference for determination by our civil justice system. 111 One of the messages this modest loser-pay transfer system sends to the greater community is that litigation is expensive and that it may be desirable to find other methodologies — such as mediation — to resolve differences. This is not a bad message. While our civil justice system is a hallmark of a democratic state committed to the rule of law, it is not the ideal mechanism for the resolution of every dispute. 112 It is within this analytical framework that one considers the wisdom of attaching significant and elevated costs consequences to blameworthy behaviour of a party that shows blatant disregard of an adversary’s legal interests. 113 Will the prospects of a costs award on a substantial or full-indemnity basis cause a reasonable person of average means with a defensible legal position not to submit a dispute for judicial resolution? 114 The answer is no. 115 Awards of this magnitude are extremely rare. While I am not aware of any empirical data, I am convinced that the likelihood that extraordinary cost orders will have any adverse impact on the target audience is close to zero. 116 I am satisfied that indemnity orders based on the payor’s blameworthy conduct — whether it consists of prelitigation or litigation misconduct — will not cause reasonable persons of average means to decline to submit a defensible legal position on an issue of importance to them to our civil justice system. 270 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

117 But I do believe that extraordinary costs awards attributable to blameworthy conduct do have a positive effect on the community. 118 They send an unequivocal message that there will be severe costs consequences for those who blatantly disregard the legal interests of others whether they do so during the course of litigation or in the acts or omissions that are the subject of the action. 119 Persons in positions similar to that of prior payors of substantial or full-indemnity costs awards will be put on notice that similar behaviour on their part may be costly. This may cause them to alter their business model and delete or alter the criticized practices. This is a positive development. If the explanation for the extraordinary costs award is litigation misconduct, a person may wish to think twice about the wisdom of re- taining counsel who is reputed to be an in-close broken-bottle fighter. Decreased demand for lawyers who are architects of litigation misconduct would be another positive development. It may cause this small band of litigation warriors to abandon offensive tactics that have no place in the toolboxes of today’s top-tier litigators. 120 That statutes, rules of court and case law in other common law jurisdictions with shared values have declined to distinguish between blameworthy prelitigation and litigation conduct gives me reason to believe that I have not overlooked something of importance before concluding that there is no practical reason to treat the two types of blameworthy conduct differently.

c. Relevant Prelitigation Misconduct 121 Having explained why prelitigation misconduct may justify an indemnity costs award, I will discuss in more detail some of the issues raised by the focus on prelitigation misconduct. 122 Parties whose prelitigation acts demonstrate blatant disregard for the rights of an adversary engage in blameworthy prelitigation conduct.125 Only prelitigation conduct that is the basis of the action may be considered.126 This is easy to illustrate. Suppose that A sues B Bank for wrongful dismissal. B Bank defends alleging that A engaged in misconduct — assaulted C, a customer — that warranted the summary dismissal of A. A succeeds. A called C to testify. C testified that he was very unhappy with B Bank and admitted that he assaulted A. The court concludes that C assaulted A. A seeks full-indemnity costs because C’s evidence disclosed that B Bank engaged in misleading advertising. B Bank’s misleading ad- vertisements did not adversely affect A’s interests. Because B Bank’s Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 271

misleading advertising had no bearing on the assessment of whether B Bank had cause to terminate A’s employment without reasonable notice or pay in lieu of reasonable notice, the court cannot take into account B Bank’s misleading advertising when assessing A’s requests for enhanced costs.127

2. Litigation Misconduct 123 At an abstract level, parties whose litigation conduct, viewed as a whole, demonstrates blatant disregard for their obligations under the Al- berta Rules of Court128 and court orders, and the rights of other parties or undermines the integrity of the trial process engage in blameworthy litigation conduct.129 124 More particularly, a party that (a) alleges fraud, without any reasonable basis,130 (b) fails to observe time lines imposed by the Alberta Rules of Court and court orders, (c) seeks adjournments for no valid reason and otherwise unreasonably delays the litigation process,131 (d) files material just before hearings in order to deny an adversary the right to cross-examine the affiant or otherwise properly respond to other documents,132 (e) misleads the court — consistently misrepresents the facts or law,133 (f) conceals, destroys or fabricates evidence or otherwise thwarts the purpose of the discovery process,134 (g) maintains positions or brings applications that are patently in- defensible — the likelihood they will succeed is very low,135 (h) presents dishonest witnesses,136 (i) behaves in an uncivil manner137 or (j) engages in other misconduct that undermines the integrity of the trial process138 commits acts that may be characterized, either individually or collectively, as blameworthy litigation misconduct. 125 Blameworthy litigation conduct may either be the proper characterization of a pattern of misconduct that occurred at one or more stages of the litigation spectrum — pleadings, discoveries, applications or trials — or, if the misconduct is sufficiently egregious, a single act — alleging in 272 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

argument, either written or oral or both, without foundation, that the adjudicator and opposing counsel are corrupt139 — may be sufficient. This last example is sufficiently egregious because the attack undermines essential attributes of our justice system.140 The public and the parties accept decisions of judges because the judges are perceived to be impartial and competent. Challenges to the integrity of counsel must also be noted. Counsel are officers of the court and play an important role in the delivery of justice. An unjustifiable attack on judges and legal counsel imper- ils the judicial system’s capacity to fairly try disputes.141 126 On these occasions, courts order the party responsible for blameworthy conduct to pay the payee an amount that is intended to reduce the victorious party’s out-of-pocket legal costs to close to zero or relieve the unsuccessful party of costs obligations.142 While orders of this nature express the court’s strong disapproval of the payor’s conduct, they should not be regarded as penal in nature. They simply make the payee whole in one limited respect — the pocketbook.

C. The Different Function of Punitive Damages and Indemnity Costs Orders 127 It is an error to equate an indemnity costs order with punitive damages. The latter are penal in nature143 and have nothing to do with the amount of the successful party’s legal obligations to its counsel. Justice Cory explained the function of punitive damages in Hill v. Church of Scientology of Toronto:144 Punitive damages may be awarded in situations where the defendant’s misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. 128 The fact that a full-indemnity costs award based on specified forms of misconduct may cause others to think twice before adopting a similar strategy145 does not change the fundamental nature of a full-indemnity costs award. 129 There is probably a strong likelihood that a party who is the beneficiary of a punitive damages order will also be the payee under a full-indemnity costs award. A party that has engaged in misconduct of a nature Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 273

that justifies a punitive damages sanction has most likely acted in a sufficiently offensive manner to warrant a full-indemnity costs order.146 But the reverse is not true. A court may conclude that a party’s behavior is sufficient to trigger a full-indemnity costs order without meeting the level of egregiousness reserved for punitive damages.147 130 Costs awards that are the function of blameworthy litigation misconduct deliver a message to lawyers who engage in litigation and are primarily responsible for litigation strategy and its execution. They fore- warn barristers that there are some litigation strategies that are so completely unacceptable that they will attract severe cost consequences.148

D. Application of Costs Principles to This Appeal 131 Justice Romaine understood that she was responsible for settling the costs issue and that she must exercise her discretion in accord with established principles. 132 The trial judge appreciated that a costs award that compelled the appellants to fully indemnify the respondent would be appropriate only in “rare and exceptional” circumstances. 133 Her conclusion that the appellants must fully indemnify the respondent for its costs is not plainly wrong.149 Indeed, this is a clear case for a full-indemnity costs award. 134 Justice Romaine’s determination was based principally on her assessment of the appellants’ litigation conduct. Even though the appellants had no grounds to challenge any aspect of the respondent’s account on the basis that the work performed or third-party expenses incurred were unnecessary to the completion of the project and must have known this no later than shortly after the conclusion of questioning,150 they never informed the respondent that this no longer was a divisive issue and, by their silence, forced the respondent to spend approximately eleven days proving facts that the appellants never intended to contest. Litigation is not a game.151 135 The trial judge recognized that the appellants’ insistence that the respondent prove its case — that the services and materials for which it billed were necessary to the completion of the appellants’ project — when the appellants had no intention of contesting the necessity of any cost for which Pillar Resource sought reimbursement harmed not only the respondent but the greater community served by our publicly funded court system. The harm caused the respondent is obvious. It had to pay 274 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

its legal team and ask witnesses to participate in the trial for no good reason. And the deleterious consequences of the appellants’ trial strategy for the community is equally apparent. Other disputants who were on the runway waiting for their opportunity to have their trial take off were forced to endure longer delays than was necessary. 136 While there may have been a period when a litigant was entitled to adopt a trial strategy that compelled the other party to prove its case, without attracting costs consequences, that era has passed.152 The foundational rules unequivocally reject the legitimacy of the tactics of the in- close broken-bottle-fighter model of advocacy.153 Rule 1.2(3) of the Al- berta Rules of Court compels the parties to “identify ... the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense”. 137 Had the appellants informed the respondent that there was only one issue that divided them — was the construction contract a reimbursable- cost-plus contract or something else — the trial would not have utilized fourteen days. We suspect, as counsel for the respondent confirmed during oral argument, that three days would have been more than enough to resolve this relatively straight-forward issue. 138 Mr. Solomon, appellant’s counsel, emphasized the fact that the respondent never served the appellants with a notice to admit facts. Mr. Gruber, respondent’s counsel, acknowledged that this was an option open to him.154 But the respondent decided not to do so. The appellants’ post assignment conduct evidenced an intractable position and no doubt led the respondent to conclude that the time required to prepare a notice to admit facts could be better spent on other trial preparation activities.155 Senior representatives of Pillar Resource had devoted large chunks of time to explaining to Mr. Miller of PrimeWest all of the costs for which Pillar Resource sought reimbursement and how these activities were for the benefit of the project — all without success. Mr. Miller was adamant that PrimeWest would not pay Pillar Resource another cent. 139 Following this theme, the appellants also could have argued that the respondent could have applied for summary judgment.156 This would have forced the appellants’ hand. They would have had to put their best case forward or face the consequences.157 140 I am satisfied that the respondent’s decision not to serve the appellants with a notice to admit facts or take any other step that could have expedited the resolution of this action does not relieve the appellants of their obligation under r. 1.2(3) to identify the real issues in dispute and Pillar Resource Services Inc. v. PrimeWest Energy Inc. Wakeling J.A. 275

under r. 1.2(d) “to communicate honestly, openly and in a timely way”.158 Once questioning was complete and the appellants were in a position to evaluate whether all of the billed costs contributed to the project, they should have notified the respondent within a reasonable period of time that they admitted that all the costs covered by the respondent’s accounts are the appellants’ responsibility if the court rejects their argument that the agreement binding both parties was not a reimbursable- cost-plus contract.159 141 Had the appellants done this they would have had to carefully consider whether their claim that their contract with Pillar Resource was something other than a reimbursable-cost-plus construction contract had any merit. 142 Had they focused on the only real issue that divided then, the two parties may have been able to resolve their differences.160 From our van- tage point, the appellants’ position was difficult to defend. Mr. Miller must be a capable business leader or he would not have occupied the senior position he held. He acknowledged at trial that an owner who engages a contractor on a reimbursable-cost-plus construction contract bears the burden of unanticipated costs. If the appellants had valued cost certainty more than expedition, they never would have entered into a reimbursable-cost-plus construction contract with Pillar Resource. All the evidence inexorably leads to the conclusion that Mr. Miller and his colleagues were willing to assume the risk of higher-than-anticipated costs in return for an expedited construction schedule. They must have concluded that the benefits associated with increased throughput at an early date would exceed the burden associated with the risks inherent in a reimbursement-cost-plus construction contract. 143 I am also satisfied that the trial judge was justifiably troubled by PrimeWest’s attempt to pass off expert evidence as argument. Had PrimeWest wanted the trial judge to take this information into account they should have led it through an expert. 144 Justice Romaine’s conclusion that the appellants pled fraud is not only reasonable but indisputably correct. “Fraud” is defined by Web- ster’s Third New International Dictionary161 this way: “an intentional misrepresentation ... for the purpose of inducing another in reliance upon 276 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

it to part with some valuable thing belonging to him or to surrender a legal right”. Here is the pleading: 15. ... [T]he Plaintiff committed substantial breaches of the Contract by [...] (e) ... intentionally ... inflating their costs in order to claim to a higher mark-up amount. 145 A contractor bound by a reimbursable-cost-plus contract who knows that it has claimed costs that are not attributable to the proper execution of the contract commits a fraudulent act. Suppose that in the early spring A retains B to replace the concrete surrounding her pool. A wants this work done immediately because she wants the pool deck to be the plat- form for her daughter’s summer outdoor wedding. B is unwilling to do the work for a fixed price because he does not know whether any of the outdoor water, electrical and gas lines are under the concrete and what other complications — pool leaks — may be encountered. When B completed similar projects on a fixed price basis he did not make enough profit. But B is willing to do the work right away and bump other customers if A agrees to pay him on a cost-plus twenty-five percent basis. B tells A that he can only guess as to what the all-in cost may be - $50,000. The project goes very well. B is able to remove the concrete without damaging A’s pool and garden and there are no surprises under the concrete. There are no lines of any kind to complicate the work. B’s costs are $30,000. On this basis A’s obligation to B is $37,500. B adds to his costs C’s concrete charges for another small project B retained C to do, along with the rebar for two other fixed price projects B had on the go for D and E. These additional charges add another $10,000 to B’s costs and another $12,500 to A’s bill. B sends A a bill for $50,000, enclosing his claimed costs. B has engaged in fraud at A’s expense. 146 The appellants have claimed that Pillar Resource engaged in fraud. 147 I cannot agree with the trial judge’s conclusion that the appellants’ prelitigation conduct constituted blameworthy conduct. The appellants were entitled to seek an explanation from the respondent as to why all the amounts they were asked to pay were reasonable and necessary for the completion of the project. 148 Having determined that the trial judge’s assessment of the appellants’ prelitigation conduct is not supportable and it not being clear from her reasons that she regarded the other aspects of the appellants’ misconduct as sufficient cause to justify her costs order, I must conduct my own assessment of the appellants’ litigation conduct. Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 277

149 The appellants’ decisions to allege in their pleadings, without any reasonable basis, that Pillar Resource acted in a fraudulent manner162 and to force Pillar Resource to prove facts that PrimeWest did not take issue with163 and, as a consequence, consume trial time for no good reason, would, by themselves, have been sufficient reason to order PrimeWest to fully indemnify Pillar Resource for its trial costs.164 I also hold that the appellants’ attempt to introduce expert evidence into its written argument was an additional reason that buttresses the conclusion that the appellants must fully indemnify Pillar Resource for its costs in prosecuting its claim. 150 I agree with my colleagues that the interlocutory costs orders, which were not appealed, remain standing.

VII. Conclusion 151 This appeal is dismissed. 152 I acknowledge counsel’s excellent written and oral arguments.

J.D. Bruce McDonald J.A. (dissenting): VIII. Introduction 153 I have read both the Memorandum of Judgment of my colleague Mr. Justice Wakeling and the Memorandum of Judgment of my colleague Madam Justice Bielby. I agree with the facts as set forth in Mr. Justice Wakeling’s Memorandum. I also agree with my colleague Madam Jus- tice Bielby that the law does not permit a trial judge to base an award of solicitor-client costs on pre-litigation conduct alone, independent of any other circumstances. I further support the comments in paragraph 14 of her Memorandum of Judgment with respect to the interlocutory costs in question. 154 Other than the foregoing, however, I am unable to agree with my colleagues and for the reasons set out below, I would have allowed the appeal.

II. Standard of Review 155 A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 (S.C.C.) at para 27. 278 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

III. Analysis 156 In coming to her decision to award the respondents solicitor-client costs, the trial judge summarized her reasons as follows: [22] I find that the following conduct of Primewest, when viewed as a whole, warrants the exceptional relief of an award of solicitor-client costs, subject to assessment and disbursements, including expert fees and the expenses of having Messrs. Guenther and Milliner give evidence. a) Primewest’s misleading requests for further information from Pillar during post-completion negotiation, when clarification was not really an issue, and its delays in such negotiation; b) Primewest’s attempt to introduce additional evidence in its written argument after trial; c) the additional trial time necessitated by the [sic] Primewest’s refusal to admit facts that ultimately were not in issue; d) the unproven allegations of fraud that continued until trial, but were not addressed by Primewest at trial. 157 Significantly, in awarding solicitor-client costs, the trial judge did not base her decision on the lack of credibility of the appellants’ main witness at trial. Indeed she specifically rejected that as a basis to award solicitor-client costs in this case as her reasons make clear: [5] Pillar submits that Primewest’s witnesses provided misleading and disingenuous testimony in an attempt to buttress an untenable theory of the case. [6] It is true that in my judgment, I found the testimony of Primewest’s main witness, Mr. Miller, not to be credible. This lack of credibility has already had its effect in the trial findings of fact in Pillar’s favour. It should not also serve as a rationale for a more severe costs award. 158 As stated above, I agree with Madam Justice Bielby’s analysis and conclusion that pre-litigation conduct in and of itself standing alone does not permit an award of solicitor-client costs and I further agree with her statement that this court’s decision in FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd. [2016 CarswellAlta 1962 (Alta. C.A.)] is not authority that it can. See also Colborne Capital Corp. v. 542775 Alberta Ltd., 1999 ABCA 14, 228 A.R. 201 (Alta. C.A.) at para 292; Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280, 206 A.R. 382 (Alta. C.A.) at paras 34-36 and 39. Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 279

159 It therefore follows that if the three additional grounds listed by the trial judge (namely b - d above) in support of her award of solicitor-client costs are unsustainable, then that award cannot stand. I will now analyze in turn the three further grounds.

• The appellant’s attempt to introduce additional evidence in its written argument after trial. 160 The respondent argued that some of the appendices included in the appellants’ final written argument contained expert evidence, which had not been entered at trial. For its part, the appellants argued that these appendices were simply a summary of existing evidence. The appellants’ argument was rejected by the trial judge who concluded that it was essentially expert evidence without having been tendered by an expert in the proper manner at trial. 161 Interestingly, the trial judge downplayed the importance of this factor as paragraph 10 of her Costs Decision makes clear: [10] Pillar also refers to Primewest’s attempt to improperly introduce appendices to its written argument that should properly have been evidence during the trial. Despite Primewest’s attempt to reargue the nature of these appendices in its costs submission, Pillar is correct that these appendices included evidence improperly sought to be entered after the trial was over. I did not rely on the appendices in making my decision. Thus, the attempt was thwarted at that stage, and the process was not subverted. (emphasis added) 162 Ultimately, this issue involves an admissibility ruling. I agree with counsel for the appellants that an admissibility ruling ought not to found an award of solicitor-client costs. The additional costs of this evidentiary dispute were nominal at best. This ground is without merit.

• The additional time necessitated by the appellant’s refusal to admit facts that ultimately were not in issue 163 With respect to this ground advanced in support of an award of solicitor-client costs, it is instructive to bear in mind that there was both an Agreed Statement of Facts entered at trial, together with 79 exhibits that were entered by consent. On the other hand, the respondents never filed a Notice to Admit. 280 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

164 It is trite law that an award of solicitor-client costs is an extraordinary remedy and is generally reserved for cases of serious litigation misconduct: Reeder v. Woodward, 2016 ABCA 91 (Alta. C.A.) at para 30. 165 In Reeder v. Woodward, at the conclusion of his oral reasons in an action involving a claim for adverse possession, the trial judge in a very summary fashion stated: 35. Given the conduct of the Defendants in this action I am satisfied that the Plaintiffs are entitled to their costs on a solicitor and client basis excepting the preparation and the attendances at the summary judgment application. 166 There being no further reasons advanced by the trial judge in Reeder v. Woodward to support of his award of solicitor-client costs, on appeal, counsel was required to justify this award. The respondents argued, inter alia, that the appellants had failed to admit facts contained in a Notice to Admit which lengthened the trial. 167 As pointed out by this court in Reeder v. Woodward at para 33, “Fail- ure to admit facts is a relevant consideration in awarding costs, but a failure to admit facts would rarely justify solicitor and client costs, at least beyond the costs of proving the disputed fact”. This reasoning applies with even greater force and effect in the case at bar since the respondent at no time ever prepared a Notice to Admit for service upon the appellants. The rule providing for a Notice to Admit is an important and useful rule and its use should be encouraged. Specifically in the case at bar, counsel for the respondent at trial should have employed a Notice to Admit with respect to the disputed invoices. 168 Finally, even if one were to construe the trial judge’s comments as suggesting a lack of merit on the part of the appellants’ defence, a lack of merit is not sufficient to justify an award of solicitor-client costs: Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.) at 134. 169 Therefore this ground cannot justify an award of solicitor-client costs.

• Unproven allegations of fraud that continued until trial but were not addressed by the appellant at trial 170 In justifying her award for solicitor-client costs, the trial judge in the decision under appeal asserted that the appellants had pled fraud. This was based in part upon para 15(d) of the Amended Statement of Claim: (15) PEI states, and the fact is, that the Plaintiff committed substantial breaches of the Contract by: ... Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 281

d) by intentionally or negligently inflating their costs in order to claim a higher mark-up amount. 171 This ground is puzzling in light of the comments contained at paragraph 160 of the Merits Decision165 where the trial judge expressly stated: [160] PrimeWest submits that the packing slips would be critical evidence that would go a long way to proving reliability. The packing slips, of course, are also hearsay evidence, and would require evidence from the third-party packing the materials in order to become direct evidence. To require this degree of evidence to a standard business practice on a large project involving many suppliers would be to complicate this kind of litigation beyond reason particularly where there are no allegation of inaccuracy or fraud. The impracticabil- ity of this requirement illustrates the root of the common law exception. (emphasis added) 172 Three comments are in order here. First, to constitute an allegation of fraud, a pleading need not literally employ the word “fraud”. Second, there is a significant difference between the situation where a pleading contains what arguably is an allegation of fraud that was never pursued on the one hand, with a claim of fraud that was pursued without success to the end of trial. Third and most importantly, having previously found in the Merits Decision that there was no fraud alleged by the appellants, the trial judge cannot now take a contrary position when deciding costs. 173 Trial counsel for the appellants had made it clear with his submissions at trial that fraud was not an issue as the following statement makes clear: My Lady, I wish to make it clear, at this point, that the defendants are not alleging that Pillar committed fraud. It’s not in our pleadings. We’re not suggesting they committed fraud. What we are requiring Pillar to do is prove their case, and that has been the situation from day one. (trial transcript p 442) 174 Subsequently, counsel further clarified his position as the following two excerpts illustrate: They destroyed — and I — I say destroyed intentionally because it was an intentional act, but that’s not to suggest they were committing a fraud or something of that nature. (trial transcript p 449) 282 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Later on: So in summary, My Lady, it’s submitted that in the circumstances of this case, where really critical evidence has been destroyed, albeit not suggesting fraud or intentional destruction to — to hid something, the fact is it’s gone, and where they now want to rely on it as if it was there, that in the circumstances that’s not appropriate, and they should be required to meet the usual requirements of adducing evidence; that is, called the makers of documents to give evidence of, in this case, quantities, costs, delivery to site. (trial transcript p 455-456) 175 To reiterate, having found fraud not to have been an issue in the Mer- its Decision, the trial judge erred in finding that it was in the Costs Deci- sion. This ground is also without merit.

IV. Conclusion 176 A trial judge possesses a wide discretion when it comes to awarding costs. That said, in the case at bar, there is simply not “enough meat on the bone” to produce a proper broth, especially when determining what is recognized as an exceptional award. In my view, the reasons advanced to justify an award of solicitor-client costs in this case are without merit. 177 Accordingly, I would have allowed the appeal, set aside the award of solicitor-client costs and instead have awarded costs on the basis of Col- umn 4 of Schedule C, except for those steps in the proceedings where costs had been previously decided prior to the commencement of trial. As noted in para 15 above, Messrs. Solomon, Q.C. and Ho of Jensen Shawa Solomon Duguid Hawkes LLP, appellants’ appeal counsel, were not appellants’ trial counsel. Lawyers from another firm acted for the appellants at trial. Appeal dismissed.

Footnotes

1 A court that intends by its order to compel a party to indemnify another party for its litigation costs should say so in plain English. Rule 10.31(1)(b)(i) of the Alberta Rules of Court, Alta. Reg. 124/2010 expressly states that a court may order one party to pay “an indemnity to ... [another party] for that party’s lawyer’s charges”. E.g., Bizon v. Bizon, 2014 ABCA 174 (Alta. C.A.), ¶ 86; [2014] 7 W.W.R. 713 (Alta. C.A.), 792 (“The appellant must pay the costs of the respondents on a full-indemnity basis”) & T. (E.) v. Rocky Mountain Play Therapy Institute Inc., 2016 ABCA 320 (Alta. C.A.), Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 283

¶ 19 (“E.T. must pay Mr. Kwan’s costs on a full-indemnity basis”). See The Civil Procedure Rules 1998, S.I. 1998/3132 (in force April 26, 1999), r. 44.3(1) (the Court may award costs on the “standard” or “indemnity” basis). Rule 57.01 of Ontario’s Rules of Civil Proce- dure, R.R.O. 1990, Reg. 194 authorizes the court to award costs on a “substantial indemnity” or “full indemnity” basis. It is confusing to utilize terms of art — solicitor and own client, solicitor and client and attorney and client — that not all lawyers and only a few parties understand. Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 79 (Justice Veit catalogues the confusion associated with such imprecise terms as “solicitor-client” and “solicitor and his own client” costs) & E.M.I. Records Ltd. v. Ian Cameron Wallace Ltd., [1983] Ch. 59 (Eng. Ch. Div.), 74 (“For the future, however, if an application for solicitor and own client costs against the other side in litigation is being made or resisted, I hope that counsel will bear in mind ... that there may well be some uncertainty about the meaning and effect of such an order”). 2 Messrs. Solomon, Q.C. and Ho, of Jensen Shawa Solomon Duguid Hawkes LLP, appellants’ appeal counsel, were not appellants’ trial counsel. Lawyers from another law firm acted for the appellants at trial. 3 Alta. Reg. 124/2010. 4 Id., r. 1.2(3)(a). 5 This judgment generally refers to PrimeWest Energy Inc. and PrimeWest Gas Corp. collectively as the appellants or PrimeWest. 6 Pillar Resource Services Inc. v. PrimeWest Energy Inc., 2014 ABQB 317 (Alta. Q.B.), ¶ 12; (2014), 33 C.L.R. (4th) 263 (Alta. Q.B.), 268. 7 Id. at ¶ 14; 33 C.L.R. 4th at 268. 8 Id. ¶ 205; 33 C.L.R. 4th at 303. See also id. ¶¶ 35 & 148; 33 C.L.R. 4th at 272 & 293. 9 Id. ¶¶ 17-19; 33 C.L.R. 4th at 269. 10 Id. ¶ 34; 33 C.L.R. 4th at 272. 11 Id. ¶¶ 37, 38 & 42; 33 C.L.R. 4th at 273. See also id. ¶¶ 217 & 218; 33 C.L.R. 4th at 306. 12 Id. ¶ 55; Id. ¶ 55; 33 C.L.R. 4th at 276. 13 Id. ¶¶ 47, 64, 82, 94, 103 & 210; 33 C.L.R. 4th at 274, 277, 281, 283-284, 285 & 304. 14 Id. ¶¶ 76 & 87; 33 C.L.R. 4th at 280 & 282. 15 Id. ¶¶ 44 & 84; 33 C.L.R. 4th at 274 & 281-82. 284 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

16 Id. ¶¶ 45, 213 & 216; 33 C.L.R. 4th at 274 & 305-06. 17 Id. ¶¶ 89 & 212; 33 C.L.R. 4th at 283 & 304-05. 18 Id. ¶ 131; 33 C.L.R. 4th at 290. 19 Id. ¶ 95; 33 C.L.R. 4th at 284. 20 Id. ¶ 74; 33 C.L.R. 4th at 280. 21 Id. ¶ 216; 33 C.L.R. 4th at 305-06. 22 Id. ¶¶ 138 & 139; 33 C.L.R. 4th at 291. 23 Id. ¶¶ 140-45; 33 C.L.R. 4th at 291-92. 24 Id. ¶ 145; 33 C.L.R. 4th at 292. 25 Id. ¶ 146; 33 C.L.R. 4th at 292. 26 Id. ¶ 147; 33 C.L.R. 4th at 292-93. This is the difference between accounts totalling $1,801,278.13 and total payments of $946,327.68. 27 2014 ABQB 317, 33 C.L.R. (4th) 263 (Alta. Q.B.). 28 2016 ABQB 120 (Alta. Q.B.), ¶¶ 22 & 24; (2016), 52 C.L.R. (4th) 37 (Alta. Q.B.), 41 & 42. 29 R.S.A. 2000, c. C-31. 30 Alta. Reg. 124/2010. 31 See generally Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶¶ 17-47; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 191-208; Scherer v. Counting Instruments Ltd., [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)), 621 & Colgate- Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Australia Fed. Ct.), ¶ 24; (1993), 46 F.C.R. 225 (Australia Fed. Ct.), 232-34. 32 Court of Queen’s Bench Act, R.S.A. 2000, c. C-31, s. 21; Alberta Rules of Court, Alta. Reg. 124/2010, r. 10.31 & Danoil Energy Ltd. v. Olson, [1993] 7 W.W.R. 385 (Sask. C.A.), 392 (“The authority to award costs is part of the general powers of the Court”). 33 Court of Queen’s Bench Act, R.S.A. 2000, c. C-31, s. 21 (“Subject to an express provision to the contrary in any enactment the costs of and incidental to any matter ... are in the discretion of the Court or judge”); Alberta Rules of Court, Alta. Reg. 124/2010, r. 10.31(1) (“the Court may order one party to pay to another party ... any amount that the Court considers to be appropriate in the circumstances”); Sidorsky v. CFCN Communications Ltd., [1998] 2 W.W.R. 89 (Alta. C.A.), 98 (“Costs are discretionary”); Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 129 (“The award of costs lies in the court’s discretion”) & Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 78 (“In Alberta, the rules allow a trial judge great discretion in awarding costs”). Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 285

34 Supreme Court Civil Rules, B.C. Reg. 168/2009, r. 14-1(9) (“Sub- ject to subrule (12), costs of a proceeding must be awarded to the successful party unless the court otherwise orders”); The Queen’s Bench Rules, r. 11-1(1) (Sask.) (“Subject to the express provision of any enactment and notwithstanding any other rule, the Court has discretion respecting the costs of or incidental to a proceeding or step and may make any direction or order respecting costs that it considers appropriate”); The Queen’s Bench Act, C.C.S.M., c. C280, s. 96(1) (“Subject to the provision of an Act or the rules, the costs of or incidental to a proceeding ... are in the discretion of the court and the court shall determine liability for costs and the amount of the costs”); Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1) (“Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding ... are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid”); Rules of Court, N.B. Reg. 82-73, R. 59.01(1) (“Subject to any Act and these rules, the costs of a proceeding ... are in the discretion of the court and the court may determine by whom and to what extent costs shall be paid”); Judicature Act, R.S.P.E.I. 1988, c. J-2.1, s. 60 (“Subject to the express provisions of any statute, the costs of and incidental to a proceeding authorized to be taken in a court are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid”); Civil Procedure Rules, R. 77.02(1) (N.S.) (“A presiding judge may, at any time, make any order about costs as the judge is satisfied will do justice between the parties”); Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, r. 55.02(1) (“Notwithstanding the provisions of rules 55.02 to 55.14, the costs of any party, the amount thereof, the party by whom, or the fund or estate ... out of which they are paid, are in the discretion of the Court”); Rules of the Supreme Court of the Northwest Ter- ritories, N.W.T. Reg. 010-96, r. 206 (“Notwithstanding the costs consequences out in rules 192 and 201, the Court may make any order or disposition with respect to costs that it determines to be in the interests of justice in the circumstances of the case”); Supreme Court Act, R.S.Y. 2002, c. 211, s. 4(2) (“The Court shall ... have and may exercise in all cases, all the powers, duties and functions that were vested in the Territorial Court of the Yukon Territory immediately before the commencement of this Act”) & Federal Courts Rules, S.O.R./98-106, R. 400(1) (“The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid”). 35 E.g., Court of Appeal Act, R.S.A. 2000, c. C-30, s. 12 (“Subject to an express provision to the contrary in any enactment, the costs of 286 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

and incidental to any matter authorized to be taken before the Court or a judge are in the discretion of the Court or judge”; Court of Ap- peal Act, R.S.B.C., 1996 c. 77, s. 23 (“Unless the court or a justice otherwise orders, the party who is successful on an appeal is entitled to costs of the appeal”) & Supreme Court Act, R.S.C. 1985, c. S-26, s. 47 (“The Court may, in its discretion, order the payment of the costs of the court appealed from, of the court of original jurisdiction, and of the appeal ... whether the judgment is affirmed, or is varied or reversed”). 36 The Supreme Court Rules 2009, No. 1603 (L.17), r. 46(1) (in force October 1, 2009) (“The Court may make such orders as it considers just in respect of the costs of any appeal, application for permission to appeal, or other application to or proceeding before the Court”); Senior Courts Act 1981, c. 54, s. 51(1) (“Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings ... in the civil division of the Court of Appeal, ... the High Court, and ... any county court, shall be in the discretion of the court”); The Civil Procedure Rules 1998, S.I. 1998/3132 (L.17), r. 44.2(1) (in force April 26, 1999) (“The court has discretion as to ... (a) whether costs are payable by one party to another”); P.Simms v. Law Society, [2005] EWCA Civ 849 (Eng. & Wales C.A. (Civil)), ¶ 15 (“Under CPR 44.4 the Court had a discretion to award costs on the ‘standard’ or the ‘indemnity’ basis”); Rules of the Supreme Court 1965, S.I. 1965/1776 (in force October 1, 1966), Ord. 62, r. 2(4) (“The powers and discretion of the Court as to costs under ... the Act (which provides that the costs of and incidental to proceedings of the Supreme Court shall be in the discretion of the Court and that the Court shall have full power to determine by whom and to what extent the costs are to be paid) ... shall be exercised subject to and in accordance with this Order”); The Rules of the Supreme Court, 1883 (in force October 24, 1883), Ord. LXV, r. 1 (“Subject to the provisions of the Acts and these Rules, the costs of and incident to all proceedings in the Supreme Court ... shall be in the discretion of the Court or judge”) & Rules of Court, Ord. LV (in force Novem- ber 1, 1875) (“Subject to the provisions of the Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the Court ... [p]rovided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial for good cause shown, the Judge before whom such action or issue is tried or the Court shall otherwise order”). 37 High Court Rules 2004, r. 50.1 (“Subject to the provisions of any law of the Commonwealth and to these Rules, the costs of and incidental to all proceedings in the Court are in the discretion of the Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 287

Court or a Justice”); Uniform Civil Procedure Rules 2005, r. 42.1 (N.S.W.) (“Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs”); Uniform Civil Procedure Rules 1999, s. 681(1) (Qld.) (“Costs of a proceeding ... are in the discretion of the court but follow the event, unless the court orders otherwise”); Supreme Court Act 1986, S. Vict., No. 110, s. 24(1) (“Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court ... is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid”); Supreme Court (Gen- eral Civil Procedure) Rules 2015, S.R. No. 103/2015, R. 63.03(1) (Vict.) (“The Court may, in any proceeding, exercise its power and discretion as to costs”); Supreme Court Rules 2000, S.R. 2000, No. 8, r. 839(d) (Tasmania) (“If costs are awarded to a party, the Court or a judge may ... direct by and to whom ... the costs are to be paid”); Rules of the Supreme Court 1971, Ord. 66, r. 1(1) (W. Austl.) (“Sub- ject to the express provisions of any statute and of these rules the costs of and incidental to all proceedings ... shall be in the discretion of the Court”); Supreme Court Civil Rules 2006, r. 264(1) (S. Austl.) (“The Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate”) & Federal Court of Australia Act 1976, s. 43(2) (“Except as provided by any other Act, the award of costs is in discretion of the Court or Judge”). 38 Supreme Court Rules 2004, r. 44(1) (“The Court may, in its discretion, make any orders that seem just concerning the whole or any part of the costs and disbursements of a civil appeal”); Court of Appeal (Civil) Rules 2005, S.R. 2005/69, r. 53 (“The Court may, in its discretion, make any orders that seem just concerning the whole or any part of the costs and disbursements of ... an appeal”) & High Court Rules 2016, L. I. 2016/225, r. 14.1 (“All matters are at the discretion of the court if they relate to costs ... of a proceeding”). 39 E.g., Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 45-46 (a federal District Court has inherent jurisdiction to order a party or counsel that has acted in “bad faith, vexatiously, wantonly, or for oppressive reasons” to pay another party’s attorney’s fees); Civil Rights Attorney’s Fee Award Act of 1976, 42 U.S.C. § 1988 (“In any action or proceeding to enforce a provision of ... title VI of the Civil Rights Act of 1964 ... the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee as part of the costs”); Bonnes v. Long, 599 F.2d 1316 (U.S. C.A. 4th Cir. 1979), 1319 (“This inquiry [as to whether the applicant is a ‘prevailing 288 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

party’] is properly a pragmatic one of both fact and law that will ordinarily range outside the merits of the basic controversy”); Rules of Civil Procedure, SCO 5 October 9, 1959, r. 82(a) (Alas.) (“Except as otherwise provided by law or agreed to by the parties, the prevailing party in a civil case shall be awarded attorney’s fees calculated under these rules”); Code of Civil Procedure § 128.5(a) (Cal.) (“A trial court may order a party ... to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay”); Code of Civil Procedure § 1021.5 (2016) (Cal.) (“Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest [under stipulated circumstances]”); Folsom v. Butte County Assoc. of Governments, 32 Cal. 3d 668 (U.S. Cal. Sup. Ct. 1982), 687; 652 P.2d 437 (U.S. Cal. Sup. Ct. 1982), 451 (the Court affirmed the trial court’s ruling that the transit-dependant taxpayer plaintiffs were “successful parties” in an action affecting the “public interest” and entitled to an award of attorneys’ fees under § 1021.5); Nev. Rev. Stat. § 18.010(2) (“In addition to the cases where an allowance is authorized by specific statute, the court may make an allowance of attorney’s fees to a prevailing party”); Ga. Code Ann. § 20-1404 (“Expenses of litigation may be allowed where the defendant has acted in bad faith, been stubbornly litigious, or caused the plaintiff unnecessary trouble and expense”); Raybestos-Manhattan, Inc. v. Friedman, 156 Ga. App. 880 (U.S. Ga. Ct. App. 1981), 883; 275 S.E.2d 817 (U.S. Ga. Ct. App. 1981), 821 (“In contract actions, the bad faith referred to has consistently been held by Georgia courts to refer to the conduct of the defendant out of which the cause of action arose, not to his conduct in defending the suit”); 22 New York Codes, Rules and Regulations § 130-1.1(a) (“The court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court, except where prohibited by law, costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney’s fees, resulting from frivolous conduct as defined in this Part”) & 150 Centreville LLC v. Lin Associates Architects, PC, 39 Misc. 3d 513, 963 N.Y.2d 819 (U.S. Dist. Ct. S.D. N.Y. 2013), 834 (the Court, under 22 NYCRR, ordered the plaintiffs to pay the defendants’ reasonable attorney fees on account of the plaintiffs’ “frivolous conduct”). 40 Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶ 29; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 196. See also Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 289

(Alta. Q.B.), 166 (“a trial judge has a very wide discretion when awarding costs provided that such discretion is exercised judicially”); Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 130 (“While the allocation of costs of a lawsuit is always in the discretion of the court, the exercise of that discretion must be consistent with the established principles and practice”); Stiles v. British Columbia (Workers’ Compensation Board) (1989), 38 B.C.L.R. (2d) 307 (B.C. C.A.), 310 (“The discretion [to order costs] must be exercised judicially, i.e., not arbitrarily or capriciously”); World Printing & Publishing Co. v. Vancouver Printing & Publishing Co. (1907), 13 B.C.R. 220 (B.C. C.A.), 223 (“to deprive the successful litigant of costs [the court] ... must find good cause”); Edmanson v. Chelie (1914), 7 W.W.R. 96 (Sask. S.C. en banc), 96 (“Where a plaintiff comes to enforce a legal right and completely succeeds and has been guilty of no misconduct, there are no materials upon which the court can exercise a discretion and the plaintiff is entitled to his costs”); Byers v. Kidd (1906), 13 O.L.R. 396 (Ont. K.B.), 397 (“There must be some reason ... for depriving a person who has the verdict of the jury of the ... indemnity that usually results from such verdict”); Campbell & Co. v. Pollak, [1927] A.C. 732 (U.K. H.L.), 776 (“the discretion ... is a judicial discretion”); Scherer v. Counting Instruments Ltd., [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)), 621 (“This discretion is not one to be exercised arbitrarily; it must be exercised judicially, that is to say, in accordance with established principles and in relation to the facts of the case”); Civil Service Co- operative Society v. General Steam Navigation Co., [1903] 2 K.B. 756 (Eng. K.B.), 765 (the trial judge could not deprive the defendant of its rights to costs because the defendant had insisted that the action be tried according to law and declined the judge’s offer to arbitrate the dispute); Cooper v. Whittingham (1880), 15 Ch. D. 501 (Eng. Ch. Div.), 504 (“where a plaintiff comes to enforce a legal right, and there has been no misconduct on his part ... the Court has no discretion, and cannot take away the plaintiff’s right to costs”); Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 65; (1998), 193 C.L.R. 72 (New South Wales S.C.), 96 (“Although the statutory discretion [to award costs] is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation”) per McHugh, J.; NMFM Property Pty. Ltd. v. Citibank Ltd., [2001] FCA 480 (Australia Fed. Ct.), ¶ 53; (2001), 109 F.C.R. 77 (Australia Fed. Ct.), 92 (“The discretion to award indemnity costs is a judicial one which must be exercised in accordance with principle”) & 150 290 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Centreville LLC v. Lin Associates Architects, PC, 39 Misc. 3d 513 (U.S. Dist. Ct. S.D. N.Y. 2013), 533; 963 N.Y.2d 819 (U.S. Dist. Ct. S.D. N.Y. 2013), 835 (“The amount of any award for reasonable attorneys fees cannot be plucked out of a hat or from thin air”). 41 Latoudis v. Casey, [1990] H.C.A. 59 (Australia H.C.), ¶ 27; (1990), 170 C.L.R. 534 (Australia H.C.), 558 (“Where a statute con- fers an unqualified discretion, an appellate court should ... point out those considerations which ought to guide the exercise of the discretion in the ordinary case so that, as far as possible, like cases will be decided in like manner”) per Dawson, J. & Norbis v. Norbis (1986), 161 C.L.R. 513 (Australia H.C.), 519 (“But the need for consistency in judicial adjudication, which is the antithesis of arbitrary and capri- cious decision-making, provides an important countervailing consideration supporting the giving of guidance by appellate courts, whether in the form of principles or guidelines”) per Mason and De- ane, JJ. 42 Vriend v. Alberta (1996), 141 D.L.R. (4th) 44 (Alta. C.A.), 48 (“the customary rule [is] that the successful party is entitled to costs”); Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 (Alta. Q.B.), 166 (“The general rule is that costs follow the event”); Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 130 (“It is traditionally accepted in Canada’s common law provinces that as a general rule the successful party recovers its costs from the unsuccessful party”); Petrogas Processing Ltd. v. Westcoast Transmission Co. (1990), 73 Alta. L.R. (2d) 246 (Alta. Q.B.), 255 (“The general rule is that litigation costs are awarded on a party-and-party basis against the unsuccessful party”); Canada Deposit Insurance Corp. v. Canadian Commercial Bank (1987), 76 A.R. 271 (Alta. Q.B.), 274 (“the general rule [is] that costs follow the event”); Supreme Court Civil Rules, B.C. Reg. 168/2009, r. 14.1(9) (“Subject to subrule (12), costs of a proceeding must be awarded to the successful party unless the Court orders otherwise”); Macfie v. Cater (1920), 57 D.L.R. 736 (Ont. H.C.), 739 (“the successful party should have his costs; and that rule should not be departed from ... for anything but very good reasons”) aff’d (1920), 64 D.L.R. 511 (Ont. H.C.); Kerr v. Danier Leather Inc., 2007 SCC 44 (S.C.C.), ¶ 63; [2007] 2 S.C.R. 331 (S.C.C.), 363 (“Those who inflict .... [protracted litigation] on others in the hope of significant personal gain and fail can generally expect adverse cost consequences”) & L. Abrams & K. McGuinness, Cana- dian Civil Procedure Law 1408 (2d ed. 2010) (“the general rule across Canada with respect to costs is that, in the ordinary case, costs follow the event”). Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 291

43 The Civil Procedure Rules 1998, S.I. 1998/3132 (L.17), r. 44.2(2)(a) (“the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party”); Campbell & Co. v. Pollak, [1927] A.C. 732 (U.K. H.L.), 814 (“there is ... a settled practice of the Courts that in the absence of special circumstances a successful litigant should receive his costs”) per Lord Atkinson; Scherer v. Counting Instruments Ltd., [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)), 621 (“The normal rule is that costs follow the event. That party who turns out to have unjustifiably either brought another party before the court, or given another party cause to have recourse to the court to obtain his rights is required to recompense that other party in costs”) & Jones v. Curling (1884), 13 Q.B.D. 262 (Eng. Q.B.), 267 (“unless there is good cause shewn ... costs ... must follow the event”). 44 Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 3 (the “invariable practice” is to award the successful party its costs); Bradbury v. Westpac Banking Corp., [2009] NZSC 234 (New Zea- land C.A.), ¶ 6; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 404 (“Ordinarily the loser must pay the winner’s costs according to scale”) & High Court Rules, r. 14.2(a) (“The following general principles apply to the determination of costs (a) the party who fails with respect to a proceeding ... should pay costs to the party who succeeds”). 45 Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 66; (1998), 193 C.L.R. 72 (New South Wales S.C.), 96 (“A successful litigant is generally entitled to an award of costs”) per McHugh, J.; Uniform Civil Procedure Rules 2005, r. 42.1 (N.S.W.) (“Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs”); Commonwealth of Australia v. Gret- ton, [2008] NSWCA 117 (New South Wales C.A.), ¶ 38 (“The general rule is that costs follow the event (see UCPR r 42.1) and are assessed on the ordinary basis: UCPR r 42.2 (the phrase ‘the ordinary basis’ has replaced the previously used expression of ‘party/party costs’”); Uniform Civil Procedure Rules 1999, r. 681(1) (Qld.) (“Costs of a proceeding ... are in the discretion of the court but follow the event, unless the court orders otherwise”); Cosgrove v. Chevron Queensland Ltd., [2000] QCA 157 (Queensland S.C.), ¶ 9 (“The ordinary consequence for the unsuccessful party is an order to pay party and party costs. Some unusual circumstance is required to warrant the court departing from that course”); Rules of the Supreme Court 1971, Ord. 66, r. 1(1) (W. Austl.) (“the Court will generally 292 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

order that the successful party to any action ... recover his costs”); Supreme Court Civil Rules 2006, r. 263(1) (S. Austl.) (“As a general rule, costs follow the event”) & Masha Nominees Pty. Ltd. v. Mobil Oil Australia Pty. Ltd., [2006] VSC 56 (Australia Vic. Sup. Ct.), ¶ 9 (“The general rule ... is that costs follow the event”). 46 Goodhart, “Costs”, 38 Yale L.J. 849, 852 (1929). See also Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 63; (1998), 193 C.L.R. 72 (New South Wales S.C.), 95 (“At common law, courts had no jurisdiction to award costs”) per Mc- Hugh, J.; 4 W. Holdsworth, A History of English Law 536 (3d ed. 1945) (“But, though from an early date the Chancellor, in the exercise of his equitable jurisdiction, had assumed the fullest power to order the defeated party to pay costs, it was only by degrees that the principle made its way into the common law”); J. Hullock, Law of Costs 1 (1793) (“Before the Statute of Gloucester, [6 Edw. 1, c. 1] no person was entitled to recover any costs of suit either in plea real, personal or mixed: but, by the common law, if the plaintiff failed in his action, he was amerced [ordered to pay a fine to the Crown] ..., if he succeeded, the defendant was in misericordia for his unjust detention of the plaintiff’s right, but was not liable to the payment of any costs of suit”); Latoudis v. Casey, [1990] H.C.A. 59 (Australia H.C.), ¶ 26; (1990), 170 C.L.R. 534 (Australia H.C.), ¶ 26 (“In equity from an early date, there was the fullest power to order a defeated party to pay costs, but it was only gradually, and by statute, that any such power found its way into the common law”); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (U.S. C.A. 9th Cir. 1967), 717 (“As early as 1278, the courts of England were authorized to award counsel fees to successful plaintiffs in litigation. Similarly, since 1607 English courts have been empowered to award counsel fees to defendants in all actions where such awards might be made to plaintiffs”) & Driffill v. McFall (1878), 42 U.C.Q.B. 597 (Ont. H.C.), 598 (“The rule after the statute [of Gloucester] was, that the plaintiff in all actions in which he recovers damages shall also recover his costs of suit”). 47 Federal Rules of Civil Procedure, R. 54(d)(1) (“Unless a federal statute, these rules, or a court order provides otherwise, costs — other than attorney’s fees — should be allowed to the prevailing party”); Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242 (U.S. Sup. Ct. 2010), 252-53 (“‘Our basic point of reference when considering the award of attorney’s fees is the bedrock principle known as the ‘American Rule’. Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise”); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 293

(U.S. C.A. 9th Cir. 1967), 718 (“since litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit, and that the poor might be unjustly discouraged from insti- tuting actions ... if the penalty for losing included the fees of their opponents’ counsel”); Arcambel v. Wiseman, 3 U.S. 306 (U.S. Sup. Ct. 1796), 306 (“The general practice of the United States is in oppo- sition to [ordering the unsuccessful party to pay the successful party’s legal fees] ... and even if that practice were not strictly correct in principle, it is entitled to the respect of the court, till it is changed or modified by statute”); Slawik v. State, 480 A.2d 636 (U.S. Del. S.C. 1984), 639 (“Under the so-called ‘American Rule’, the remedy of fee shifting is ordinarily not available to a prevailing litigant absent statutory authority to award costs, including counsel fees”); State Line Democrat v. Keosauqua Independent, 161 Iowa 566, 143 N.W. 409 (U.S. Iowa S.C. 1913) (“As costs were not taxable at common law, it is fundamental that they cannot now be taxed in the absence of a statute providing therefor, and as a rule, statutes granting the power are strictly construed, and implied authority to tax is not generally recognized”) & Estate of Urbach, Re, 252 A.D.2d 318 (U.S. N.Y.A.D. 3rd Dept. 1999), 321; 683 N.Y.S.2d 631 (U.S. N.Y.A.D. 3rd Dept. 1999), 633 (“Established New York common law requires that all parties to a controversy, the victors and the vanquished, pay their own counsel fees”). For a list of federal statutes sanctioning an award of attorney’s fees see Burlington (City) v. Dague, 505 U.S. 557 (U.S. Sup. Ct. 1992), 562. 48 In Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (U.S. C.A. 9th Cir. 1967), 718 Chief Justice Warren provided several defences of the American rule. First, the determination of reasonable attorney fees is a difficult and time consuming task. Second, the English costs practice increases the risk to an unacceptable degree that a person may decline to advance a reasonable legal position because of a potential future obligation to pay the other side’s costs. Third, an unsuccessful litigant is not necessarily blameworthy. An extraordinary cost burden should not be imposed on a party who is not blameworthy. The results of litigation are not sufficiently predict- able to allow a person to assess the strengths of his or her legal position. In 1872 the United States Supreme Court in Oelrichs v. Spain, 82 U.S. 211 (U.S. Sup. Ct. 1872), 231 provided this explanation: “The parties ... are upon a footing of equality [- neither a plaintiff nor a defendant are entitled to reimbursement of attorney’s fees if they succeed]. There is no fixed standard by which the honorarium can be measured. Some counsel demand much more than others. Some clients are willing to pay more than others. More counsel may be em- 294 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

ployed than are necessary. When both client and counsel know that the fees are to be paid by the other party there is a danger of abuse. A reference ... might be necessary to ascertain the proper amount, and this grafted litigation might possibly be more animated and protracted than in the original cause. It would be an office of some deli- cacy ... to scale down the charges, as might be necessary”. The American rule has its detractors. E.g., Ehrenzweig, “Reimbursement of Counsel Fees and the Great Society”, 54 Cal. L. Rev. 792, 794 (1966) (Professor Ehrenzweig railed against the unfairness of the American rule, describing it as “a festering cancer in the body of our law without whose excision our society will not be great”); Judicial Council of Massachusetts, First Report, 11 Mass. L.Q. 1, 63-64 (1925) (“On what principle of justice can a plaintiff wrongfully run down on a public highway recover his doctor’s bill but not his lawyer’s bill?”) & Comment, “Court Awarded Attorney’s Fees and Equal Access to the Courts”, 122 U.Pa.L.Rev. 636, 639 (1974) (“The American Rule for the recovery of attorney’s fees has been challenged unavailingly on numerous occasions in both state and federal courts”). It also has academic supporters. E.g., Comment, “Distribu- tion of Legal Expense Among Litigants”, 49 Yale L.J. 699, 703 (1940) (“It seems clear that the English system is not in accord with the American conception that every man has an inalienable right to go to law”). 49 155569 Canada Ltd. v. 248524 Alberta Ltd., 1999 ABQB 682 (Alta. Q.B.), ¶ 5; (1999), 251 A.R. 393 (Alta. Q.B.), 395 (“a court can, exceptionally, deprive a successful litigant of costs because of substantive wrongdoing”); The Queen’s Bench Rules, r. 11-1(2)(a) (Sask.) (a Court may order a successful party to pay costs); Mayhew v. Adams, [1931] 1 D.L.R. 611 (Sask. C.A.), 613 (“A mortgagee ... who has been guilty of vexatious or oppressive misconduct, may be deprived of his costs or some part of them”); Rules of Civil Proce- dure, R.R.O. 1990, Reg. 194, r. 57.01(2) (“The fact that a party is successful in a proceeding ... does not prevent the court from awarding costs against the party in a proper case”); Germscheid v. Valois (1989), 68 O.R. (2d) 670 (Ont. H.C.), 688 (the Court granted the plaintiff summary judgment on the liability issue but ordered the plaintiff to pay the defendants’ costs on a full-indemnity basis because he declined to participate in another action against the defendants that raised the same liability issue”); Watson v. Holyoake (1986), 15 C.P.C. (2d) 262 (Ont. H.C.), 268 (“A Court may exercise a discretion to deprive a successful plaintiff of costs in a situation where the successful plaintiff has made unfounded or unsubstantiated charges of fraud”); Harris v. Petherick (1879), 4 Q.B.D. 611 (Eng. C.A.) (the Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 295

Court upheld the trial judge’s cost order requiring the plaintiff who received only a very small portion of the damages sought to pay the defendant’s costs); Cotterell v. Stratton (1972), (1872-73) L.R. 8 Ch. App. 295 (Eng. Ch. Div.) (a successful party may be deprived of costs for “misconduct”); Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd., [1951] 1 All E.R. 873 (Eng. K.B.), 874 (a successful party may be deprived of costs or obliged to pay those of the unsuccessful party if “he has been guilty of some sort of misconduct”); Goodhart, “Costs”, 38 Yale L.J. 849, 861-62 (1929) (“a party who brings a vexatious or unnecessary action, even if he succeeds to some extent, may be ordered to pay the whole costs of the other side”); Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 69; (1998), 193 C.L.R. 72 (New South Wales S.C.), 97 (“The traditional exceptions to the usual [costs] order ... focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion”) per McHugh, J. & L. Abrams & K. McGuinness, Canadian Civil Procedure Law 1410-11 (2d ed. 2010) (courts have awarded costs against successful parties “in significant public interest cases such as Canadian Charter of Rights and Freedoms cases”). 50 This has been a central feature of the common law for centuries. Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.), 135 (“The basic principle on which costs are awarded is as compensation for the successful party”) (emphasis is in original); Wenden v. Trikha (1992), 1 Alta. L.R. (3d) 283 (Alta. Q.B.), 293 (“[party-and-party costs] are not designed for the purpose of punishing, penalizing or benefitting a party to an action”); Maple Leaf Lumber Co. v. Caldbick (1918), 14 O.W.N. 99 (Ont. C.A.), 100 (“costs are awarded as an indemnity, and not as a debt due from the losing party to the successful party”); Harold v. Smith (1860), 157 E.R. 1229 (Eng. Exch.), 1231 (“Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them”); Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zea- land C.A.), ¶ 32 (a costs order, whether or not it constitutes full indemnification is “not a punishment imposed on the losing party”); L. Abrams & K. McGuinness, Canadian Civil Procedure Law 1398 (2d ed. 2010) (“The English/Canadian approach to the award of costs en- courages parties to pursue apparently meritorious claims (and defences) to a successful conclusion by securing to them a reasonable prospect of reimbursement for a substantial portion of the cost of doing so.”); Comments, “Distribution of Legal Expense Among Liti- gants”, 49 Yale L.J. 699, 699 (1940) (“Costs are theoretically given 296 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

to indemnify the winning party against the expense of maintaining his cause and to punish the losing party for subjecting his opponent to the expense of an unfounded claim or defense”) & 15 Corpus Juris 19 (1918) (“Costs are certain allowances authorized by statute to reimburse the successful party for expenses incurred in prosecuting or defending an action or special proceeding”). Because costs are meant to indemnify the payee, they can never exceed the liability of the payee to his counsel and other third parties. Petrotrade Inc. v. Texaco Ltd., [2001] 4 All E.R. 853 (Eng. & Wales C.A. (Civil)), 856 & High Court Rules 2016, L.I. 2016/225, r. 14.2(f) (N.Z.) (“an award of costs should not exceed the costs incurred by the party claiming costs”). 51 Cachia v. Hanes (1994), 179 C.L.R. 403 (Australia H.C.), 410 per Mason, C.J. & Brennan, Deane, Dawson & McHugh, J.J. & G. Mor- gan & E. Wurtzburg, A Treatise on the Law of Costs in the Chancery Division of the High Court of Justice 1 (2d ed. 1882) (“The Statute of Gloucester, passed in the 6th Ed. I, was the foundation of the Com- mon Law jurisdiction as to costs”). 52 Reid Minty v. Taylor, [2001] EWCA Civ 1723 (Eng. & Wales C.A. (Civil)), ¶ 20; (2001), [2002] 2 All E.R. 150 (Eng. & Wales C.A. (Civil)), 155 (“an award of costs on an indemnity basis is not intended to be penal”); Oshlack v. Richmond River Council, [1998] HCA 11 (New South Wales S.C.), ¶ 44; (1998), 193 C.L.R. 72 (New South Wales S.C.), 89 (“It may be true in a general sense that costs orders are not made to punish an unsuccessful party”) per Gaudron & Gummow, JJ. & ¶ 67; 193 C.L.R. at 97 (“Costs are not awarded to punish an unsuccessful party”) per McHugh, J. & Latoudis v. Casey, [1990] H.C.A. 59 (Australia H.C.), ¶ 13; (1990), 170 C.L.R. 534 (Australia H.C.), 543 (“costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings”) per Mason, C.J. New York has adopted the sanction model. 22 New York Codes, Rules and Regulations § 130-1.1(a) (“In addition to or in lieu of awarding costs, the court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part which shall be payable as provided in section 130-1.3 of this Part”) & Levy v. Carol Management Corp., 260 A.D.2d 27, 698 N.Y.2d 226 (U.S. N.Y.A.D. 1st Dept. 1999) (“Sanctions [a fine paid to the state] are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large. The goals include preventing the waste of judicial resources, and deter- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 297

ring vexatious litigation and dilatory or malicious litigation tactics”). The New York protocol can be traced to the ancient practice of amercement. See J. Hullock, Law of Costs 1 (1793). 53 Cachia v. Hanes (1994), 179 C.L.R. 403 (Australia H.C.), 410-11 (“[Costs] were never intended to be comprehensive compensation for any loss suffered by a litigant. As Coke observed of the Statute of Gloucester, the costs which might be awarded to a litigant extended to the legal costs of the suit, ‘but not to the costs and expences of his travell and losse of time’”) per Mason C.J. & Brennan, Deane, Daw- son & McHugh, JJ. 54 I estimate that most Alberta costs payments represent less than twenty percent of the payee’s actual costs. The ratio decreases as the hourly rate of the lawyer increases. See Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co. (1998), 216 A.R. 304 (Alta. C.A.), 307 (a court order awarding a successful party its tariff costs generally represents “a fraction of solicitor-client costs”); Wenden v. Trikha (1992), 1 Alta. L.R. (3d) 283 (Alta. Q.B.), 293 (“In Alberta, except in unique circumstances, party-and-party costs will not approach indemnification of the successful party and thus it is more accurate to describe the awarding of costs as a contribution to the successful party’s expense in prosecuting or defending the action”); Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 130 (“[party-and- party costs] are not intended [to give] ... the successful party ... full indemnification of those fees and disbursements which it would be charged by its counsel”); Canada Deposit Insurance Corp. v. Canadian Commercial Bank (1987), 76 A.R. 271 (Alta. Q.B.), 276 (“party-party costs are not intended to be a complete indemnification of the successful party”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 80 (“Even a successful litigant is normally left to pay a portion of the cost of taking an issue to court in recognition of the fact that there was objectively an issue of fact or law that had to be determined by the court”); McCarthy v. Calgary Roman Catholic Separate School District No. 1, [1980] 5 W.W.R. 524 (Alta. Q.B.), 525 (“[an award of party-party costs] does not serve to completely indemnify the successful party”); Williams v. Steinwand, 2015 NWTSC 3 (N.W.T. S.C.), ¶¶ 34-35 (the Court noted that the petitioner’s actual legal costs were over $20,000 and her entitlement under the standard party-and-party rate was $5,800 or twenty-nine percent); L. Abrams & K. McGuinness, Cana- dian Civil Procedure Law 1456 (2d ed. 2010) (in Ontario “a successful litigant will normally recover ... one-third to 40 percent of actual legal fees and disbursements”)& 1 M. Orkin, The Law of Costs 2-8 298 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

(2d ed looseleaf release no. 61 August 2016) (“Partial indemnification is intended by the usual award of party-and-party costs”). 55 Huck v. Robson, [2002] EWCA Civ 398 (Eng. & Wales C.A. (Civil)), ¶ 73; [2002] 3 All E.R. 263 (Eng. & Wales C.A. (Civil)), 277 (“The general policy stance traditionally adopted in this country is that a claimant who obtains all he asks for should be awarded his costs on a basis which does not amount to full recovery”); McPhilemy v. Times Newspapers Ltd., [2001] EWCA Civ 933 (Eng. & Wales C.A. (Civil)), ¶ 20; [2001] 4 All E.R. 861 (Eng. & Wales C.A. (Civil)), 872 (“an award of costs on the standard basis will, almost invariably, lead to the successful claimant recovering less than the costs which he has to pay to his solicitor”) & Note, 82:19 Sol. J. 366 (1938) (an award of party-and-party costs usually equalled two- thirds of the payee’s actual solicitor’s costs). 56 Masha Nominees Pty. Ltd. v. Mobil Oil Australia Pty. Ltd., [2006] VSC 56 (Australia Vic. Sup. Ct.), ¶ 9 (“The ‘gap’ between the amount of costs in fact paid by a successful litigant and the amount of party and party costs which are recoverable is often substantial”) & Colgate-Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Aus- tralia Fed. Ct.), ¶ 4; (1993), 46 F.C.R. 225 (Australia Fed. Ct.), 226 (“It is a matter of notoriety that the indemnity for costs which one party recovers from another pursuant to the common [party-and-party costs] order ... does not very often provide the party entitled to the benefit of the order with anything approaching a full indemnity for the costs which have in fact been incurred. That is particularly so in long complex cases”). 57 Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶¶ 7 & 8; [2005] 2 N.Z.L.R. 467 (New Zealand S.C.), 470-71 & Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd., [1991] 3 N.Z.L.R. 457 (New Zealand P.C.), 460 & 61 (standard costs orders capture a relatively modest portion of a litigant’s lawyer’s fees). 58 Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.), 134 (“Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”); Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.), ¶ 28; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 98 (“as a general rule a departure from party and party costs should only occur in rare and exceptional circumstances”); Canada Deposit Insurance Corp. v. Canadian Commercial Bank, 1989 ABCA 150 (Alta. C.A.), ¶ 18; (1989), 61 D.L.R. (4th) 161 (Alta. C.A.), 170 (“The court awards costs to a successful party on a solicitor-and-client basis only in rare instances, usually to express disapproval of the conduct of a Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 299

party in the litigation or to compensate one party for unnecessary proceedings caused by another”); Jacobi v. Newell (County No. 4) (1994), 153 A.R. 241 (Alta. Q.B.), 248 (“Costs on an indemnification basis should be awarded only in rare and exceptional cases”); Petrogas Processing Ltd. v. Westcoast Transmission Co. (1990), 73 Alta. L.R. (2d) 246 (Alta. Q.B.), 255 (“indemnity costs will only be awarded in rare and exceptional cases”); Cominco Ltd. v. Westinghouse Canada Ltd. (1980), 16 C.P.C. 19 (B.C. S.C.), 22 (“[solicitor-client costs] awards should only be made in circumstances where there has been scandalous conduct by the responsible party or some such exceptional incident”); McDonald Dure Lumber Co. v. Marston Holdings Ltd. (1976), 66 D.L.R. (3d) 375 (Man. C.A.), 380 (“solicitor-client costs should not be awarded except in exceptional cases”); Evaskow v. B.B.F. (1969), 9 D.L.R. (3d) 715 (Man. C.A.), 720 (“it must be a rare and most exceptional case in which costs will be awarded on a solicitor-client basis rather than on a party-and-party basis”) & L. Abrams & K. McGuinness, Canadian Civil Procedure Law 1429-30 (2d ed. 2010) (“full indemnification is reserved for situations in which the court wishes to impose a penalty for reprehensible conduct on the part of the party against whom costs are awarded [citing Young v. Young and Hamilton v. Open Window Bakery Ltd.]”). See also Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 57.01 (“In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, ... the principle of indemnity ... [and] the amount of costs that an unsuccessful party could reasonably expect to pay”). 59 The Civil Procedure Rules 1998, r. 44.3 (the Court may award costs “on the standard basis; or ... on the indemnity basis”); P.Simms v. Law Society, [2005] EWCA Civ 849 (Eng. & Wales C.A. (Civil)), ¶ 16 (a court will order costs on an indemnity basis as opposed to a standard basis under r. 44.4 of The Civil Procedure Rules 1998 if “there is some element of a party’s conduct of the case which de- serves some mark of disapproval”); Excelsior Commercial & Industrial Holdings Ltd. v. Salisbury Hammer Aspden & Johnson, [2002] C.P. Rep. 67 (Eng. & Wales C.A. (Civil)), ¶¶ 19, 31 & 32 (Lord Woolf discusses the different consequences associated with a standard and indemnity costs order under r. 44.3) & Kiam II v. MGN Ltd., [2002] EWCA Civ 66 (Eng. & Wales C.A. (Civil)), ¶ 12; [2002] 2 All E.R. 242 (Eng. & Wales C.A. (Civil)), 246 (a court may order costs on an indemnity basis for “unreasonable [conduct] to a high degree” even though it does not deserve “moral condemnation”). 300 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

60 Court of Appeal (Civil) Rules, S.R. 2005/69, r. 53E(3); High Court Rules, r. 14.6(4) (N.Z.) & District Court Rules 2014, r. 14.6(4) (N.Z.) (“The court may order a party to pay indemnity costs if — (a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing or defending a proceeding or a step in a proceeding; or (b) the party has ignored or disobeyed an order or direction of the Court or breached an undertaking given to the Court or another party ...”); Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 6; [2005] 2 N.Z.L.R. 467 (New Zealand S.C.), 470 (“In New Zealand, costs have not been awarded to indemnify successful litigants for their actual solicitor and client costs, except in rare cases generally entailing breach of confidence or flagrant misconduct”); Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zea- land C.A.), ¶ 28; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 410 (“Indemnity costs ... are exceptional and require exceptionally bad behaviour”) & Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zealand C.A.) (the Court awarded the plaintiff exemplary damages for flagrant and outrageous prelitigation misconduct and also ordered the defendant employer to pay a sum of roughly $175,000 representing eighty percent of the plaintiff’s lawyer’s fees and disbursements). 61 Uniform Civil Procedure Rules 1999, r. 703(1) (Qld.) (“The court may order costs to be assessed on the indemnity basis”); Cosgrove v. Chevron Queensland Ltd., [2000] QCA 157 (Queensland S.C.), ¶ 9 (a full indemnity costs order may be appropriate if a party, without reason, alleges fraud, engages in trial misconduct that consumes extra time for no valid purpose, adopts a position unsupportable or commences an action for an ulterior motive); Supreme Court Civil Rules 2006, r. 264(5)(b) (S. Austl.) (“In exercising its general discretion as to costs, the Court may ... award costs on the basis of an indemnity”) & Uniform Civil Procedure Rules 2005, r. 42.2 (N.S.W.) (“Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis”). 62 Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 50; Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (U.S. Sup. Ct. 1975), 258 & F.D. Rich Co. v. United States, 417 U.S. 116 (U.S. Sup. Ct. 1974), 129-30 (the United States Supreme Court has repeatedly confirmed that a federal District Court has the inherent jurisdiction to order an unsuccessful party that has engaged in egregious conduct to pay the successful party’s attorney’s fees); Raybestos-Manhattan, Inc. v. Friedman, 156 Ga. App. 880 (U.S. Ga. Ct. App. 1981), 883; 275 S.E.2d 817 (U.S. Ga. Ct. App. 1981), 821 Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 301

(“In contract actions, the bad faith referred to has been consistently held by Georgia courts to refer to the conduct of the defendant out of which the cause of action arose, not to his conduct in defending the suit”) & Nev. Rev. Stat. § 18.010(2)(b) (a court may order the unsuccessful party to pay the successful party’s attorney’s fees “in all appropriate situations to punish for and deter frivolous or vexatious claims and defenses because such claims and defenses overburden limited judicial resources, hinder the timely resolution of meritorious claims and increase the costs of engaging in business and providing professional services to the public”). 63 Reid Minty v. Taylor, [2001] EWCA Civ 1723 (Eng. & Wales C.A. (Civil)), ¶ 28; (2001), [2002] 2 All E.R. 150 (Eng. & Wales C.A. (Civil)), 156 (“If costs are awarded on an indemnity basis, in many cases there will be some implicit expression of disapproval of the way in which the litigation has been conducted. But I do not think that this will necessarily be so in every case”); G. Morgan & E. Wurtzburg, A Treatise on the Law of Costs in the Chancery Division of the High Court of Justice 5 (2d ed. 1882) (“Costs as between solicitor and client are ... occasionally awarded ... in cases of scandal or misconduct, by way of marking ... [the Court’s] disapproval”) & Watson, “A Rationale of the Law of Costs”, 16 Central L.J. 306, 306 (1883) (“the laws of Rome required the author of a groundless action to reimburse his adversary for all losses and expenses he might incur in the defense of his legal rights; but this rule was not based on any acknowledged right in the defendant to be made whole, but rather upon the ground that the abuse of a privilege of citizenship was, per se, a violation of the law, punishable, not alone by the imposition of costs, but also by other and far more severe penalties, among which was loss of status as a Roman citizen”). 64 This point is also discussed below at ¶¶ 127-130. 65 McPhilemy v. Times Newspapers Ltd., [2001] EWCA Civ 933 (Eng. & Wales C.A. (Civil)), ¶ 20; [2001] 4 All E.R. 861 (Eng. & Wales C.A. (Civil)), 872 (“neither costs on an indemnity basis nor interest ... will compensate the successful claimant for the inconvenience, anxiety and distress of proceedings or (where the claimant is a corporation) the disruption caused by the diversion of senior management from their normal duties”). 66 Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶¶ 40 & 42; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 202-05. “A step may be unnecessary even if it increases the likelihood the purpose of the retainer will be achieved. For example, a lawyer may decide to devote time in the early stages of a file to 302 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

researching the law governing unlikely problems which may arise to reduce the risk that the unlikely problems will adversely affect the final outcome”. Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶ 42; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 204-05. See also Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.), ¶ 42; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 103 (“The unsuccessful party should not bear the burden of 4 counsel simply because the successful party could afford to have them and the court finds them of some assistance”); Petrogas Processing Ltd. v. Westcoast Transmission Co. (1990), 73 Alta. L.R. (2d) 246 (Alta. Q.B.), 258 (“This [full-indemnity costs award] is subject to the [indemnitee] ... satisfying the taxing officer that the services performed were reasonably necessary and that the amounts charged were reasonable”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 79 (costs incurred that are “reasonably connected to the proceedings ...” are covered by a full-indemnity costs award); Imperial Elevator & Lumber Co. v. Olive (1914), 7 Sask. L.R. 35 (Sask. S.C. [In Chambers]), 38 (“between party and party ... only those charges will as a general rule be allowed which are strictly necessary for the prosecution of the litigation”); MacKinnon v. Ontario (Municipal Employees Retirement Board), 2007 ONCA 874 (Ont. C.A.), ¶ 92; (2007), 288 D.L.R. (4th) 688 (Ont. C.A.), 710 (a full-indemnity costs order excludes costs unreasonably incurred); Apotex Inc. v. Egis Pharmaceuticals (1991), 4 O.R. (3d) 321 (Ont. S.C.J.), 325 (a full-indemnification costs award does not include “the costs of extra services judged not to be reasonably necessary”); Seitz, Re (1974), 53 D.L.R. (3d) 223 (Ont. H.C.), 227-28 (the Court declared that costs covered by a full-indemnity order are those “essential to and arising within the four corners of the litigation”); Magee v. Ottawa Separate School Board (1962), 32 D.L.R. (2d) 162 (Ont. H.C.), 165-66 (solicitor and client costs paid by a third party cover “those costs that are necessary for the proper presentation of the case” or “those costs that were fairly incurred in making a proper preparation and presentation of the case”); L. Abrams & K. McGuinness, Canadian Civil Procedure Law 1429 (2d ed. 2010) (a full-indemnification costs award does not capture “wasteful, extravagant or frivolous” costs); The Civil Procedure Rules 1998, S.I. 1998/3132 (L.17), r. 44.3 (“the court will not ... allow costs which have been unreasonably incurred or are unreasonable in amount”); Kazakhstan Kagazy Plc v. Zhunus, [2015] EWHC 404 (Eng. Comm. Ct.), ¶ 13 (“where very large amounts of money are at stake, it may be entirely reasonable from the point of view of a party incurring costs to spare no expense that might possibly help to Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 303

influence the result of the proceedings. It does not follow, however, that such expense should be regarded as reasonably or proportion- ately incurred or reasonable and proportionate in amount when it comes to determining what costs are recoverable from the other party”); E.M.I. Records Ltd. v. Ian Cameron Wallace Ltd., [1983] Ch. 59 (Eng. Ch. Div.), 71 (“I do not see why the loser should have to pay for absurd extravagances of the winner”); Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zealand C.A.), ¶ 14 (a full- indemnity costs order does not oblige the payor to indemnify the payee for costs unreasonably incurred); National Australia Bank Ltd. v. Petit-Breuilh, [2000] VSC 291 (Australia Vic. Sup. Ct.), ¶ 25 (a beneficiary of a full-indemnity costs order is not entitled to reimbursement for costs that “are of an unreasonable amount or have been unreasonably incurred”); Supreme Court Civil Rules 2006, r. 264(5)(b) (S. Austl.) (“In exercising its general discretion as to costs, the Court may ... award costs on the basis of an indemnity (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation except to the extent that the party liable for the costs shows them to have been unreasonably incurred”); Federal Court Rules 2011, r. 40.06 (Austl.) (costs that have been incurred “improperly, unreasonably or negligently” are not recoverable); Degmam Pty. Ltd. v. Wright (No. 2), [1983] 2 N.S.W.L.R. 354, 359 (Sup. Ct.) (Austl.) (a party bound by a full- indemnity costs order should not have to pay for “costs extravagantly incurred”) & 15 Corpus Juris 146 (1918) (“In actions at law the court has power in the exercise of its discretion to disallow a party any costs which he has caused unreasonably and unnecessarily to be accumulated”). 67 Courts have awarded enhanced costs in other circumstances. E.g., Montreal Trust Co. v. Tottrup (1990), 82 Alta. L.R. (2d) 363 (Alta. Q.B.), 365 (the Court awarded full indemnification costs to an unsuccessful party for portions of the case dealing with an important Char- ter issue); Dennis, Re (1987), 78 A.R. 81 (Alta. Surr. Ct.), 96 (the Court granted full-indemnity costs because the applications raised new, interesting and important points of law related to compulsory care orders under the Dependent Adults Act) & T. (F.) v. Alberta Children’s Guardian (1987), 55 Alta. L.R. (2d) 103 (Alta. Q.B.), 117 (the Court awarded solicitor-client costs because the “applicant presented a comprehensive and thorough argument on a matter left unclear in the Act”). 68 Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 45-46 (a federal District Court has inherent jurisdiction to order a 304 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

party or counsel that has acted in “bad faith, vexatiously, wantonly or for oppressive reasons” to pay another party’s attorney’s fees). 69 Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.), 134 (“Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”); Scherer v. Counting Instruments Ltd., [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)), 621 (“The grounds must be connected with the case. This may extend to any matter relating to the litigation and the parties conduct in it, and also to the circumstances leading to the litigation, but no further”) (emphasis added); Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 5; [2005] 2 N.Z.L.R. 467 (New Zealand S.C.), 470 (“Unreasonable conduct in litigation or giving rise to it may affect the availability or the amount of costs”) (emphasis added) & Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 69; (1998), 193 C.L.R. 72 (New South Wales S.C.), 97 (a court, in assessing costs, may take into account “misconduct relating to the litigation, or the circumstances leading up to the litigation”) per McHugh, J. 70 Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (S.C.C.), ¶ 26; [2004] 1 S.C.R. 303 (S.C.C.), 312-13 (the Court adopted the Young v. Young standard); Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.), 134-35 (“Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”); M. (W.A.) v. Alberta (Minister for Child, Youth and Family Enhancement Act), 2017 ABCA 14 (Alta. C.A.), ¶¶ 33 & 34 (the Court ordered the director under the Child, Youth and Family Enhancement Act to pay the costs of the unsuccessful appellant on an indemnity basis, in part, because of the director’s prelitigation misconduct); M. (W.A.) v. Alberta (Minister for Child, Youth and Family Enhancement Act), 2017 ABCA 14 (Alta. C.A.), ¶¶ 33 & 34 (the Court ordered the director under the Child, Youth and Family Enhancement Act to pay the costs of the unsuccessful appellant on an indemnity basis because of the director’s prelitigation misconduct); FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd., 2016 ABCA 303 (Alta. C.A.), ¶ 4 (prelitigation conduct may be the basis for a full-indemnity award); Colborne Capital Corp. v. 542775 Alberta Ltd., 1999 ABCA 14 (Alta. C.A.), ¶¶ 301-02; (1999), 228 A.R. 201 (Alta. C.A.), 262 (the Court upheld a solicitor-client costs award against the appellants based on prelitigation misconduct and ordered the appellants to pay the respondents appeal costs on a solicitor-client basis, even though the appellants’ appeal succeeded on several important issues); Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 305

C.A.), ¶ 28; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 98 (the Court described several examples of prelitigation conduct that warranted an enhanced costs award); Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 (Alta. Q.B.), 174 (the trial judge ordered the defendant to pay costs on a full-indemnity basis because of the defendant’s prelitigation misconduct), aff’d, 1994 ABCA 199 (Alta. C.A.), ¶ 29; [1994] 8 W.W.R. 237 (Alta. C.A.), 249 (the Court upheld the solicitor-costs award: “the litigation was not over an honest difference of opinion, but rather was a deliberate decision by the defendants to keep Jack- son from the fruits of his bargain for as long as possible. ... [The costs order] does not display any error in principle, and in the right circumstances [prelitigation misconduct] ... can be a proper ground for solicitor-client costs); Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶ 34; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 199 (“Blameworthy litigation or prelitigation conduct may create a rare and exceptional case”) (emphasis added); Alberta (Provincial Court Judge) v. Alberta (Provincial Court Chief Judge), 1999 ABQB 639 (Alta. Q.B.), ¶ 36; (1999), [2000] 4 W.W.R. 92 (Alta. Q.B.), 104 (the Court awarded costs on a full-indemnification basis because of the defendant chief judge’s blameworthy prelitigation conduct); Sturrock v. Ancona Petroleums Ltd. (1990), 111 A.R. 86 (Alta. Q.B.), 114 (“In view of the fraudulent conduct of the defendants ... costs will be awarded against them on a solicitor-and-client basis”); Animal Welfare International Inc. v. W3 International Media Ltd., 2016 BCCA 372 (B.C. C.A.), ¶ 3; (2016), 90 C.P.C. (7th) 215 (B.C. C.A.), 218 (the Court never questioned the validity of the trial judge’s conclusion that “reprehensible pre-litigation ... misconduct may warrant special costs); Evergreen Building Ltd. v. IBI Leaseholds Ltd., 2009 BCCA 275 (B.C. C.A.), ¶ 29; (2009), 93 B.C.L.R. (4th) 77 (B.C. C.A.), 85 (a court may award special costs on account of prelitigation misconduct); Dockside Brewing Co. v. Strata Plan LMS 3837, 2007 BCCA 183 (B.C. C.A.), ¶ 90; (2007), 239 B.C.A.C. 33 (B.C. C.A.), 50 (the Court concluded that “[t]he authorities do not establish any rigid rule that would prohibit an award of special costs where pre-litigation conduct is ‘reprehensible’ and warrants rebuke”); Sun Life Assurance Co. of Canada v. Ritchie, 2000 BCCA 231 (B.C. C.A.), ¶ 54; (2000), 184 D.L.R. (4th) 635 (B.C. C.A.), 651-52 (“Special costs are usually awarded only in relation to misconduct in the course of the litigation itself. However, there may arise circumstances where special costs may be awarded because of reprehensible conduct giving rise to the litigation”) (emphasis added); Siemens v. Bawolin, 2002 SKCA 84 (Sask. C.A.), ¶ 118; [2002] 11 W.W.R. 246 (Sask. C.A.), 281 (“solicitor and client 306 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

costs may be awarded in exceptional cases [of prelitigation misconduct] to provide the other party complete indemnification for costs reasonably incurred”); Fernandez v. Tan, 2009 MBCA 113 (Man. C.A.), ¶¶ 7 & 8 (the Court upheld an award of solicitor-client costs noting that the defendants’ “egregious conduct includes ... actions ... that preceded the litigation and ... that occurred during the course of the litigation”) (emphasis added); Winnipeg Mortgage Holdings Ltd. v. Allard (1980), 20 B.C.L.R. 179 (B.C. S.C.), 180 (the Court awarded solicitor-client costs against the petitioner because its agent “acquiesced in the importuning of Mrs. Allard by her solicitor Mc- Mullen, in the knowledge that the benefit of McMullen’s misconduct would enure to the benefit of his own company ... and to his principal ... and in the knowledge of the enormous risk that he knew the respondent to be improvidently yet unconsciously undertaking”); Oz Optics Ltd. v. Timbercon Inc., 2012 ONCA 735 (Ont. C.A.), ¶ 16 (the Court awarded the applicant trial costs on the substantial indemnity scale because “the conduct of Timbercon in rigging the bids prior to the commencement of the litigation is sufficient to justify such an award”) (emphasis added); Davies v. Clarington (Municipality), 2009 ONCA 722 (Ont. C.A.), ¶ 30; Davies v. Clarington (Municipal- ity) (2009), 312 D.L.R. (4th) 278 (Ont. C.A.), 287; Hunt v. TD Securities Inc. (2003), 66 O.R. (3d) 481 (Ont. C.A.), 509 & Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (Ont. C.A.), 23 (the three panels approved Dr. Orkin’s statement that “solicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement”) (emphasis added); Beaver Lumber Co. v. 222044 Ontario Ltd. (1996), 5 C.P.C. (4th) 253 (Ont. Gen. Div.), 256 (“Costs on a solicitor and client scale throughout will be awarded where there is a form of reprehensible conduct either in the circumstances giving rise to the cause of action or in the proceedings themselves ... as a mark of the court’s disapproval of the [party’s] ... conduct”) (emphasis added); Kepic v. Tecumseh Road Builders (1987), 23 O.A.C. 72 (Ont. C.A.), 74-75 (the Court varied the trial judge’s costs award and gave solicitor-client costs to a plaintiff because the plaintiff was victimized by the defendant’s fraudulent prelitigation conduct and the defendant presented deceptive statements of account at trial); Brace v. Snow, 2012 NLCA 24 (N.L. C.A.), ¶ 24; (2012), 322 Nfld. & P.E.I.R. 90 (N.L. C.A.), 96 (“Reprehensible conduct ... may occur either in the circumstances giving rise to the action or in the conduct of the litigation”) (emphasis added); Pelley v. Pelley, 2003 NLCA 6 (N.L. C.A.), ¶ 40; (2003), 221 Nfld. & P.E.I.R. 1 (N.L. C.A.), 22 (the Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 307

Court approved this proposition: “The reprehensible, scandalous or outrageous conduct that merits an award of solicitor-client costs must occur either: (i) in the circumstances giving rise to the cause of action; or (ii) in the proceedings themselves”) (emphasis added) & Perry v. Heywood (1998), 175 Nfld. & P.E.I.R. 253 (Nfld. C.A.), 280 (the Court upheld the trial judge’s full-indemnity costs order on the basis of the defendant’s pre-trial misconduct — “oppressive conduct on the part of the appellants and a determined effort ... to avoid the method of resolution of problems which had been agreed among them”). 71 England: The Civil Procedure Rules 1998, S.I. 1998/3132 (6.17), r. 44.2(4) & (5) (a court, in deciding whether to order standard or indemnity costs, must consider “conduct before, as well as during, the proceedings”) (emphasis added); Campbell & Co. v. Pollak, [1927] A.C. 732 (U.K. H.L.), 815 (“in exercising his jurisdiction under Or- der LXV, r. 1, in a case heard by a jury, a judge is not confined to the consideration of the defendant’s conduct in the actual litigation itself”); Scherer v. Counting Instruments Ltd., [1986] 1 W.L.R. 615 (Eng. & Wales C.A. (Civil)), 621 (“The grounds must be connected with the case. This may extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further”) (emphasis added); Jones v. McKie, [1964] 1 W.L.R. 960 (Eng. C.A.) (the Court upheld the trial judge’s decision not to grant the successful defendant costs because of prelitigation conduct of the defendant); Bostock v. Ramsey Urban DC, [1900] 2 Q.B. 616 (Eng. C.A.), 625 (a court may deprive a successful party before a jury of its costs for “good cause”: ‘good cause’ is not confined to causes founded upon the conduct of the successful party in the course of litigation”) (emphasis added) & Harnett v. Vise (1880), 5 Ex. D. 307 (Eng. C.A.), 310-11 (the Court held that Order LV of the 1875 Rules of Court authorized an order depriving a successful plaintiff of costs for prelitigation misconduct). Australia: Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 69; (1998), 193 C.L.R. 72 (New South Wales S.C.), 97 (a court, in assessing costs, may take into account “misconduct relating to the litigation, or the circumstances leading up to the litigation”) (emphasis added) per McHugh, J.; Masha Nominees Pty. Ltd. v. Mobil Oil Australia Pty. Ltd., [2006] VSC 56 (Australia Vic. Sup. Ct.), ¶¶ 15-18 (the Court concluded that prelitigation conduct could be the basis for an indemnity costs order); Ali v. Hartley Poynton Pty. Ltd., [2002] VSC 292 (Australia Vic. Sup. Ct.), ¶ 10 (“On any view, however, the wrongs done to the successful party will provide the context within which to judge the subsequent con- 308 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

duct leading up to and during any subsequent litigation”); Australian Guarantee Corp. v. De Jager, [1984] V.R. 483 (Australia Vic. Sup. Ct.), 502 (the Court awarded a defendant costs on a full-indemnity basis because of the plaintiff’s “high-handed” prelitigation conduct) (emphasis added); National Australia Bank Ltd. v. Petit-Breuilh, [2000] VSC 291 (Australia Vic. Sup. Ct.), ¶ 23 (the Court ordered the plaintiff bank to pay the defendants costs on a full-indemnity basis because of its “unconscionable” and “inexcusable” prelitigation conduct in securing the defendants signatures to a guarantees) & Cummings v. Lewis, 1992 FCA 334 (Australia Fed. Ct.), ¶ 22 (“in considering the matter of costs, the Court is entitled to look beyond the actual conduct of the case and have regard to the circumstances out of which it arose”). New Zealand: Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 5; [2005] 2 N.Z.L.R. 467 (New Zea- land S.C.), 470 (“unreasonable conduct in litigation or giving rise to it may affect the availability or the amount of costs”) (emphasis added) & Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zea- land C.A.) (the Court awarded the plaintiff substantial indemnity costs on account of the employer defendants’ flagrant and outrageous prelitigation misconduct). United States: Fox v. Vice [594 F.3d 423 (U.S. Sup. Ct. 2011)], No. 10-114, at 1 (“Federal law authorizes a court to award a reasonable attorney’s fee to the prevailing party in certain civil rights cases. ... We have held that a defendant may receive such an award if the plaintiff’s suit is frivolous”); Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 45-46 (a federal court has the inherent power to “assess attorney’s fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons”); Vaughan v. Atkinson, 369 U.S. 527 (U.S. Sup. Ct. 1962), 530-31 (the Supreme Court ordered defendant shipowners that breached their contract with a sailor to pay the sailor’s attorney’s fees because they were “callous in their attitude, making no investigation of ... [the sailor’s] claim and by their silence neither admitting nor denying it. As a result of that recalcitrance, ... [this sailor] was forced to hire a lawyer and go to court to get what was plainly owed him under laws that are centuries old. The default was willful and persis- tent”); Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC (November 23, 2010), Doc. 10-2327 (U.S. C.A. 7th Cir.), at 10 (“We conclude that a case under the Lanham Act [a successful party may be awarded attorney’s fees in “exceptional cases” involving trade- marks and unfair competition litigation] is “exceptional”, in the sense of warranting an award of reasonable attorney’s fees to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 309

defense yet persisted in the trade-mark infringement or false advertising for which he was being sued, in order to impose costs on his opponent”); McEnteggart v. Cataldo, 451 F.2d 1109 (U.S. C.A. 1st Cir. 1971), 1112 (even though the Court allowed the employer’s appeal and held that the defendant employer had reasons to dismiss the plaintiff from employment the court awarded the plaintiff his attorney’s fee “since [the] plaintiff was forced to go to court to obtain the statement of reasons to which he was constitutionally entitled”); Bell v. School Board of Powhatan County, 321 F.2d 494 (U.S. C.A. 4th Cir. 1963), 500 (the Court ordered a Virginia school board that operated segregated public schooling to pay the reasonable attorney’s fees of black school children whose wish to attend a desegregated school was thwarted by “long continued pattern of evasion and ob- struction ... thus casting a heavy burden on the children and their parents [to seek judicial remedies]”) & Raybestos-Manhattan, Inc. v. Friedman, 156 Ga. App. 880 (U.S. Ga. Ct. App. 1981), 883; 275 S.E.2d 817 (U.S. Ga. Ct. App. 1981), 821 (“In contract actions, the bad faith referred to has consistently been held by Georgia courts to refer to the conduct of the defendant out of which the cause of action arose, not to his conduct in defending the suit”) (emphasis added). 72 Larter v. Solid Rock Free Lutheran Church of Camrose, 2012 ABCA 292 (Alta. C.A.), ¶ 8 (the Court declared that prelitigation misconduct “cannot be the basis for an award of solicitor-client costs”); Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20 (Alta. C.A.), ¶ 21; (2009), 446 A.R. 295 (Alta. C.A.), 301 (the Court stated by implication that prelitigation misconduct may not be the basis for an indemnity costs award); Walsh v. Mobil Oil Canada, 2008 ABCA 268 (Alta. C.A.), ¶ 113; (2008), 296 D.L.R. (4th) 178 (Alta. C.A.), 219 (the Court held that “the reviewing judge erred in principle in awarding [full indemnity] costs based on Mobil’s prelitigation conduct”); Gerula v. Flores (1995), 126 D.L.R. (4th) 506 (Ont. C.A.), 527 (“solicitor-and-client costs should relate to the conduct of the action and not to the conduct which might have been the subject of punitive damages”); Hypec Electronics Pty. Ltd. v. Mead, [2004] NSWSC 731 (New South Wales S.C.), ¶ 46 (“A connection with litigation, which takes the form of being the facts themselves the subject matter of litigation, is not a relevant type of connection for the purposes of making an indemnity costs order”); NMFM Property Pty. Ltd. v. Citibank Ltd., [2001] FCA 480 (Australia Fed. Ct.), ¶ 56; (2001), 109 F.C.R. 77 (Australia Fed. Ct.), 92 (“The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant. But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant 310 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

to an assessment of his or her conduct as litigant”) & Harrison v. Schipp, [2001] NSWCA 13 (New South Wales C.A.), ¶ 139 (the Court set aside the trial judge’s full indemnity costs order because it was not based on litigation misconduct). 73 Several have held that prelitigation misconduct may just an indemnity costs award. M. (W.A.) v. Alberta (Minister for Child, Youth and Family Enhancement Act), 2017 ABCA 14 (Alta. C.A.), ¶¶ 33 & 34 (the Court ordered the director under the Child, Youth and Family Enhancement Act to pay the costs of the unsuccessful appellant on an indemnity basis because of the director’s prelitigation misconduct); FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd., 2016 ABCA 303 (Alta. C.A.), ¶¶ 4 & 10 (“In this appeal, while he might have done so on the facts as found by the trial judge, FIC’s counsel did not attempt to rely on evidence which suggests that solicitor-client costs were justified because Phoenix had been guilty of positive misconduct of a quasi-fraudulent nature or breach of trust”); Colborne Capital Corp. v. 542775 Alberta Ltd., 1999 ABCA 14 (Alta. C.A.), ¶ 300; (1999), 228 A.R. 201 (Alta. C.A.), 262 (the Court upheld a solicitor-client costs award against the appellant based on prelitigation misconduct); Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.), ¶ 28; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 98 (the Court expressly stated that prelitigation misconduct may constitute “rare and exceptional circumstances” and warrant an indemnity costs order) & Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 (Alta. Q.B.), 173 (“Where the positive misconduct of the party which gives rise to the action is so blatant and is calculated to deliberately harm the other party, then despite the technically proper conduct of the legal proceedings, the very fact that the action must be brought by the injured party to gain what was rightfully his in the face of an unreasonable denial is in itself positive misconduct deserving of indemnification whether punitive damages are awarded or not”) (emphasis added), aff’d, [1994] 8 W.W.R. 237 (Alta. C.A.), 249. So have some Court of Queen’s Bench costs awards. Sturrock v. Ancona Petroleums Ltd. (1990), 111 A.R. 86 (Alta. Q.B.), 114 (“In view of the fraudulent conduct of the defendants ... costs will be awarded against them on a solicitor-and-client basis”) & Dusik v. Newton (1984), 51 B.C.L.R. 217 (B.C. S.C.), 219 (the Court ordered a defendant to pay solicitor- client costs to a plaintiff who was victimized by the defendant’s failure to discharge his duties as a corporate director). Several panels have either implicitly or expressly stated that only litigation misconduct may justify an indemnity costs order. Reeder v. Woodward, 2016 ABCA 91 (Alta. C.A.), ¶ 30; (2016), 67 R.P.R. (5th) 14 (Alta. Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 311

C.A.), 23 (“An award of solicitor and clients costs ... is generally reserved for cases of serious litigation misconduct”); Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20 (Alta. C.A.), ¶ 21; (2009), 446 A.R. 295 (Alta. C.A.), 301 (“in general solicitor-client costs for misconduct must relate to conduct during the suit, not the pre-suit conduct sued over”); Larter v. Solid Rock Free Lutheran Church of Camrose, 2012 ABCA 292 (Alta. C.A.), ¶ 8 (the Court followed Polar Ice Express) & Walsh v. Mobil Oil Canada, 2008 ABCA 268 (Alta. C.A.), ¶¶ 112-13; (2008), 296 D.L.R. (4th) 178 (Alta. C.A.), 219 (the Court declared that “the reviewing judge erred in principle in awarding [full indemnity] costs based on Mobil’s prelitigation conduct”). 74 2016 ABCA 303 (Alta. C.A.), ¶¶ 4 & 10 (“Generally, an award of solicitor-client costs is based on misconduct that occurs during the course of litigation. However, that is not an invariable rule. ... In this appeal, while he might have done so on the facts as found by the trial judge, FIC’s counsel did not attempt to rely on evidence which suggests that solicitor-client costs were justified because Phoenix had been guilty of positive misconduct of a quasi-fraudulent nature or breach of trust pre-litigation, although these factors were recognized in Sidorsky as separate reasons justifying such an award”) (emphasis added). 75 1997 ABCA 280 (Alta. C.A.), ¶ 28; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 98. 76 2009 ABCA 20 (Alta. C.A.), ¶ 21; (2009), 446 A.R. 295 (Alta. C.A.), 301. See also Larter v. Solid Rock Free Lutheran Church of Camrose, 2012 ABCA 292 (Alta. C.A.), ¶ 8 (the Court, following Polar Ice Express, declared that prelitigation misconduct “cannot be the basis for an award of solicitor-client costs”). 77 2008 ABCA 268 (Alta. C.A.), ¶ 112; (2008), 296 D.L.R. 4th 178 (Alta. C.A.), 219. 78 2009 ABCA 20 (Alta. C.A.), ¶ 21; (2009), 446 A.R. 295 (Alta. C.A.), 301. 79 [1993] 4 S.C.R. 3 (S.C.C.), 134-35. 80 [1993] 4 S.C.R. 3 (S.C.C.), 134. See R. v. Sellars, [1980] 1 S.C.R. 527 (S.C.C.), 529-30 & Newfoundland Assn. of Provincial Court Judges v. Newfoundland (2000), 191 D.L.R. (4th) 225 (Nfld. C.A.), 260 & 336-37 (obiter statements of principle of the Supreme Court of Canada have authoritative effect). 81 This observation brings to mind Justice Thomas’ pithy statement in Connecticut Nat. Bank v. Germain, 503 U.S. 249 (U.S. C.A. 2nd 312 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Cir. 1992), 253-54: “courts must presume that a legislature says in a statute what it means and means in a statute what it says there. ... When the words of a statute are unambiguous, then, the first canon is also the last: ‘judicial inquiry is complete’”). 82 Id. 25, 107 & 110. 83 British Columbia (Dockside Brewing Co. v. Strata Plan LMS 3837, 2007 BCCA 183 (B.C. C.A.), ¶ 90; (2007), 239 B.C.A.C. 33 (B.C. C.A.), 50); Saskatchewan (Siemens v. Bawolin, 2002 SKCA 84 (Sask. C.A.), ¶ 118; [2002] 11 W.W.R. 246 (Sask. C.A.), 281); Mani- toba (Fernandez v. Tan, 2009 MBCA 113 (Man. C.A.), ¶¶ 7 & 8); Ontario (Oz Optics Ltd. v. Timbercon Inc., 2012 ONCA 735 (Ont. C.A.), ¶ 16); Prince Edward Island (M. (D.E.) v. M. (J.M.), 2011 PECA 16 (P.E.I. C.A.), ¶¶ 27 & 28; (2011), 4 R.F.L. (7th) 1 (P.E.I. C.A.), 10-11 (the Court upheld the motion judge’s substantial-indemnity costs order based on the respondent’s out-of-court misconduct) & Ellis v. MacPherson, 2005 PESCAD 19 (P.E.I. C.A.), ¶ 21-25; (2005), 248 Nfld. & P.E.I.R. 123 (P.E.I. C.A.), 128-29 (the Court upheld the motions judge’s order directing the payment of substantial indemnity costs because of the unsuccessful party’s blameworthy prelitigation misconduct — refusal to complete a transaction in accordance with a binding agreement)); Newfoundland (Brace v. Snow, 2012 NLCA 24 (N.L. C.A.), ¶ 24; (2012), 322 Nfld. & P.E.I.R. 90 (N.L. C.A.), 96) & Yukon (Calandra v. Henley, 2009 YKCA 6 (Y.T. C.A.), ¶ 34; (2009), 271 B.C.A.C. 162 (Y.T. C.A.), 170 (the Court upheld the trial judge’s special costs order based on blameworthy prelitigation conduct). See also L. Abrams & K. McGuinness, Cana- dian Civil Procedure Law 1458 (2d ed 2010) (“full indemnification costs should not be awarded unless it is shown that there was some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, sufficient to make such costs a desirable deterrent to the institution of like proceedings”) (emphasis added). 84 New Brunswick (Anderson v. Lawrence, 2013 NBQB 21 (N.B. Q.B.), ¶ 53; (2013), 398 N.B.R. (2d) 223 (N.B. Q.B.)3, 239 (the Court awarded the plaintiff solicitor-client costs because the defendant failed to disclose to the plaintiff purchaser that the house he sold the plaintiffs had rot, mold and moisture issues — prelitigation misconduct) & Black v. Norris, 2012 NBQB 387 (N.B. Q.B.), ¶¶ 9-14; (2012), 403 N.B.R. (2d) 22 (N.B. Q.B.), 27-28 (the Court implied that blameworthy prelitigation conduct could ground a full-indemnity costs award)); Nova Scotia (Elmsdale Landscaping Ltd. v. Nova Scotia (Minister of Environment), 2010 NSSC 127 (N.S. S.C.), ¶¶ 17 & 19; (2010), 289 N.S.R. (2d) 366 (N.S. S.C.), 370 (the Court ac- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 313

knowledged that prelitigation misconduct might justify an award on a solicitor-and-client basis)) & Northwest Territories (Williams v. Steinwand, 2015 NWTSC 3 (N.W.T. S.C.), ¶ 18 & Woodley v. Yellowknife Education District No. 1, 2000 NWTSC 7 (N.W.T. S.C.), ¶¶ 5 & 32; (2000), 22 Admin. L.R. (3d) 237 (N.W.T. S.C.), 239 & 243-44 (the Courts acknowledged that blameworthy prelitigation conduct may justify full-indemnity costs orders but did not conclude that the unsuccessful party’s prelitigation conduct justified the requested costs order)). 85 (1990), 75 D.L.R. (4th) 46 (B.C. C.A.), 89. 86 Id. 89-90 (emphasis added). 87 [1993] 4 S.C.R. 3 (S.C.C.), 134-35. 88 Evergreen Building Ltd. v. IBI Leaseholds Ltd., 2009 BCCA 275 (B.C. C.A.), ¶¶ 24 & 29. 89 2007 BCCA 183 (B.C. C.A.), ¶ 90; (2007), 239 B.C.A.C. 33 (B.C. C.A.), 50. 90 1992 ABCA 34 (Alta. C.A.), ¶ 30; (1992), 120 A.R. 368 (Alta. C.A.), 375. 91 2009 ABCA 20 (Alta. C.A.), ¶ 21; (2009), 446 A.R. 295 (Alta. C.A.), 301. 92 (1992), 120 A.R. 368 (Alta. C.A.), 375 (emphasis added). 93 1997 ABCA 280, [1998] 2 W.W.R. 89 (Alta. C.A.). 94 Id. ¶ 28; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 98. 95 (1993), 138 A.R. 161 (Alta. Q.B.), 172-73. 96 Id. 173-74 (emphasis added). 97 1997 ABCA 280 (Alta. C.A.), ¶ 35; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 100-01. 98 1998 ABCA 303 (Alta. C.A.). 99 Id. ¶ 5. 100 2001 SCC 62, [2001] 2 S.C.R. 1082 (S.C.C.). 101 2001 SCC 62 (S.C.C.), ¶ 79; [2001] 2 S.C.R. 1082 (S.C.C.), 1116. 102 Supra notes 70 & 71. 103 E.g. Vogel v. Brazeau (Municipal District) No. 77 (1996), 183 A.R. 121 (Alta. Q.B.), 12 (the Court awarded full indemnity costs to the unsuccessful party who failed in his challenge to the validity of an election on the ground that “[t]his election was carried out in a most careless manner”); Ferris v. Rusnak (1984), 54 A.R. 319 (Alta. Q.B.), 320 (the Court ordered a lawyer to indemnify the former-client plaintiff for prelitigation misconduct) & Beaver Lumber Co. v. 314 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

222044 Ontario Ltd. (1996), 5 C.P.C. (4th) 253 (Ont. Gen. Div.), 256 (“Costs on a solicitor and client scale throughout will be awarded where there is a form of reprehensible conduct either in the circumstances giving rise to the cause of action or in the proceedings themselves ... as a mark of the court’s disapproval of the [party’s] ... conduct. Ontario courts have awarded costs on a solicitor and client scale throughout in cases that have involved breach of fiduciary duty, breach of trust, conspiracy, misrepresentation and other similar forms of reprehensible conduct”). See also The Civil Procedure Rules 1998, S.I. 1998/3132 (L.17) r. 44.2(4) & (5) (in deciding whether to award standard or indemnity costs the court must have regard to “the conduct [of the parties] before, as well as during, the proceedings”). 104 2008 ABCA 268 (Alta. C.A.), ¶¶ 112-13; (2008), 296 D.L.R. (4th) 178 (Alta. C.A.), 219. 105 [1993] 4 S.C.R. 3 (S.C.C.), 134-35. 106 R.S.A. 2000, c. C-31. 107 See Doucet v. Spielo Manufacturing Inc., 2011 NBCA 44 (N.B. C.A.), ¶ 154; (2011), 332 D.L.R. (4th) 407 (N.B. C.A.), 491 (the Court described R. 59.01 of New Brunswick’s Rules of Court as “drafted in the broadest of terms to preserve the discretion of trial judges”). 108 Alta. Reg. 124/2010. 109 This has been the practice in the modern era. E.g., Harnett v. Vise (1880), 5 Ex. D. 307 (Eng. C.A.), 310 (“the jurisdiction as to costs given to the judge by Order LV. is not confined ... to the conduct of the parties in the litigation itself”) & National Australia Bank Ltd. v. Petit-Breuilh, [2000] VSC 291 (Australia Vic. Sup. Ct.), ¶ 23 (the Court ordered the plaintiff bank to pay the defendants costs on a full- indemnity basis: “the initial unconscionable action of the plaintiff in obtaining the signatures of the defendants to the guarantee ... before and after the signatures were obtained are inexcusable”). Contra NMFM Property Pty. Ltd. v. Citibank Ltd., [2001] FCA 480 (Austra- lia Fed. Ct.), ¶¶ 60-62; (2001), 109 F.C.R. 77 (Australia Fed. Ct.), 93-94 (Lindgren, J. disagreed with the proposition that a full-indemnity costs award could be based “on nothing more than the bank’s antecedent conduct”). 110 There must be a principled basis to distinguish between blameworthy prelitigation and litigation conduct. See Latoudis v. Casey, [1990] H.C.A. 59 (Australia H.C.), ¶ 11; (1990), 170 C.L.R. 534 (Australia H.C.), 542 (“there is no sound basis for drawing a distinction in relation to the award and costs against an unsuccessful in- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 315

formant between summary proceedings instituted by a police or other public officer and those instituted by a private citizen”). 111 A court must always be mindful of the effects of its determination. E.g., Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, No. 10-2327, at 7 (7th Cir. Nov. 23, 2010) (“A more practical concern is the potential for businesses to use Lanham Act litigation for strategic purposes — not to obtain a judgment or defeat a claim but to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor”). 112 Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (U.S. C.A. 9th Cir. 1967), 718 (“since litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit”) & Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd., [1991] 3 N.Z.L.R. 457 (New Zealand P.C.), 460 (“litigation is often an uncertain process in which the successful party has not acted unreasonably and should not be penalised by having to bear the full party and party costs of his adversary as well as his own solicitor and client costs”). 113 E.g., Kazakhstan Kagazy Plc v. Zhunus, [2015] EWHC 404 (Eng. Comm. Ct.), ¶ 6 (the alleged fraudsters’ legal tab for a two-day hearing devoted to the plaintiff’s tracing application was roughly £945,000) & Kerr v. Danier Leather Inc., 2007 SCC 44 (S.C.C.), ¶ 63; [2007] 3 S.C.R. 331 (S.C.C.), 363 (“protracted litigation has become the sport of kings in the sense that only kings or equivalent can afford it”). 114 A different message will be appropriate if the client and the lawyer have a contingency fee agreement. 115 Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 68; (1998), 193 C.L.R. 72 (New South Wales S.C.), 97 (“one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved”). 116 Alberta (Provincial Court Judge) v. Alberta (Provincial Court Chief Judge), 1999 ABQB 639 (Alta. Q.B.), ¶ 35; (1999), [2000] 4 W.W.R. 92 (Alta. Q.B.), 104 (“In awarding costs, the courts generally attempt to strike a balance between the competing interests of the unfairness of having the successful party pay its costs while, at the same time, not dissuading potential litigants from asserting or defending their rights by visiting the unsuccessful party with enormous costs”); Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 133 (“the level of party and party costs ... should not be such as to dis- 316 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

courage future prospective [litigants] ... when the application is reasonably meritorious but there is a risk of failure”) & Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714 (U.S. C.A. 9th Cir. 1967), 718 (“the poor might be unjustly discouraged from insti- tuting actions to vindicate their rights if the penalty for losing included the fees of their opponents’ counsel”). 117 Huck v. Robson, [2002] EWCA Civ 398 (Eng. & Wales C.A. (Civil)), ¶ 73; [2002] 3 All E.R. 263 (Eng. & Wales C.A. (Civil)), 277 (“There is a case for having a general policy stance that ... a [successful] claimant should be awarded his costs on the indemnity basis. However, that has not been the traditional stance adopted in this country”). 118 Cachia v. Hanes (1994), 23 N.S.W.L.R. 304 (Australia H.C.), 318 aff’d (1994), 179 C.L.R. 403 (Australia H.C.) (“The limited indemnity provided to a successful represented litigant for expense incurred and time lost reflects a compromise between the interests of successful and unsuccessful litigants”). 119 Oshlack v. Richmond River Council, [1998] H.C.A. 11 (New South Wales S.C.), ¶ 67; (1998), 193 C.L.R. 72 (New South Wales S.C.), 97. 120 Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 6; [2005] 2 N.Z.L.R. 467 (New Zealand S.C.), 470 (“Except in [extraordinary] ... cases ... orders for party and party costs have been limited to a reasonable contribution to the costs of the successful party”) & Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd., [1991] 3 N.Z.L.R. 457 (New Zealand P.C.), 460 (“the guiding principle has been that, except where there is special reason for awarding costs on a solicitor and client basis, orders should be limited to a reasonable contribution towards the successful party’s costs on a party and party basis”). 121 According to Credit Suisse Research Institute’s Global Wealth Databook 106 (2016), there are 27,995,000 adults in Canada with a mean wealth per adult of US $270,179 and a median wealth of US $96,664. Almost fifty percent of Canadian adults have wealth over US $100,000 and four percent in excess of US $1,000,000. Roughly a quarter of Canadian adults have wealth between US $10,000 and US $100,000. Wealth is individual net worth. Net worth, according to the Credit Suisse Research Institute, is the “marketable value of financial assets plus non-financial assets (principally housing and land) less debts”. Global Wealth Databook 5 (2016). The median net worth in the United Kingdom is US $107,865; in the United States US $44,977. The mean wealth in the United Kingdom is US Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 317

$288,808; in the United States US $344,692. In the United Kingdom, slightly more than fifty percent of adults have net worth in excess of US $100,000; in the United States the proportion is just shy of thirty- seven percent. Global Wealth Databook 109 (2016). 122 This means that the prospects of failure do not exceed sixty percent. See also Reese v. Alberta (1992), 133 A.R. 127 (Alta. Q.B.), 133 (the case must be “reasonably meritorious”) & Doucet v. Spielo Manufacturing Inc., 2011 NBCA 44 (N.B. C.A.), ¶ 117; (2011), 332 D.L.R. (4th) 407 (N.B. C.A.), 472 (“A costs award should properly compensate the successful party and ... not deter plaintiffs from pursuing meritorious claims”). 123 Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.), ¶ 32; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 99 (“If the price of losing includes excessively high costs, it soon operates to prohibit the access of ordinary citizens to the court”) & Reese v. Al- berta (1992), 133 A.R. 127 (Alta. Q.B.), 130 (“if the unsuccessful party is required to bear all the costs of the successful party, citizens will be unduly hesitant to sue to assert their rights (even valid ones) or to defend their rights when sued”). 124 The assessment A and B retroactively make of their investment in the civil justice system depends, in large part, on the size of X and Y, their own resources and the nature of the dispute. Suppose that A and B are very large technology companies engaged in protracted litigation alleging patent violations. Both A and B spend $10 million on their legal teams and A secures a judgment against B for $250 million. A is satisfied that its investment - $10 million less $4 million (the amount B was ordered to pay A in costs) — was justifiable. While B is disappointed that it lost, B realizes that this expenditure - $14 million plus $250 million — is a cost of doing business and that if it had not defended its position the damages may have been greater. And the fact that it aggressively defended its position may deter a future adversary from suing it. The sums A and B paid to litigate will not deter them from appearing before the courts in the future. Suppose that A and B are wealthy medical specialists and are parties to a defamation suit. B said at a medical conference that A had the highest failure rate for high risk lung transplant surgery. That was incorrect. C did. A had the second highest failure rate. The court finds in A’s favour and awards her $1,000. Both sides retained top- notch litigators and expended $200,000 on legal fees and disbursements. Regardless of the costs order, the only victory A and B can claim is pyrrhic in nature. A and B might behave differently in the future. Suppose that A and B operate small farms. They cannot agree who is the owner of a plot of scrub land that is worth no more than 318 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

$25,000. They seek counsel. The lawyers advise their clients that their chances of success are fifty-fifty. A commences an action against B claiming ownership of the contested property. A prevails. Each side pays his lawyer $25,000. The court orders B to pay A $10,000 in costs. This costs order meant that B could not contribute to her daughter’s university tuition. A and B will never litigate again. In retrospect, they wished that they had tossed a coin or arm wrestled to resolve their dispute. 125 FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd., 2016 ABCA 303 (Alta. C.A.), ¶ 4 (“Generally, an award of solicitor-client costs is based on misconduct that occurs during the course of litigation. However, that is not an invariable rule”); Alberta Treasury Branches v. 1401057 Alberta Ltd., 2013 ABQB 748 (Alta. Q.B.), ¶ 34; (2013), [2014] 3 W.W.R. 180 (Alta. Q.B.), 199 (“Blameworthy litigation or prelitigation conduct may create a rare and exceptional case”); Alberta (Provincial Court Judge) v. Alberta (Provincial Court Chief Judge), 1999 ABQB 639 (Alta. Q.B.), ¶ 36 (1999), [2000] 4 W.W.R. 92 (Alta. Q.B.), 104 (the Court awarded full indemnity costs because the defendant’s prelitigation conduct was “unilateral”, “outside of the constitutional framework”, without “good faith” and not “conscientious conduct”); Jacobi v. Newell (County No. 4) (1994), 153 A.R. 241 (Alta. Q.B.), 249 (“the conduct of the Aqueduct defendants cannot be characterized as a flagrant disregard of the plaintiffs rights. It does not have that quality of blameworthiness necessary to attract costs on an indemnity basis”); Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 (Alta. Q.B.), 173 (“Where the positive misconduct of the party which gives rise to the action is so blatant and is calculated to deliberately harm the other party, then despite the technically proper conduct of the legal proceedings, the very fact that the action must be brought by the injured party to gain what was rightfully his in the face of an unreasonable denial is in itself positive misconduct deserving of indemnification whether punitive damages are awarded or not); Sturrock v. Ancona Petroleums Ltd. (1990), 111 A.R. 86 (Alta. Q.B.), 114 (the Court awarded solicitor-and-client costs against defendants because they engaged in fraudulent pre-litigation conduct); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 80 (the trial judge ordered a person who, without excuse, filed a fraudulent proof of loss to pay “solicitor-client” costs); Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (the Court ordered solicitor-client costs on account of the defendant’s “distasteful” pre-litigation conduct and its “abhorrent” litigation conduct — failure to admit obvious facts and unnec- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 319

essarily using trial time, “unnecessary adjournments, concealing material documents ... and failing to produce material documents in a timely fashion”); Masha Nominees Pty. Ltd. v. Mobil Oil Australia Pty. Ltd., [2006] VSC 56 (Australia Vic. Sup. Ct.), ¶¶ 15-18 (the Court concluded that prelitigation conduct could be the basis for an indemnity costs order); Australian Guarantee Corp. v. De Jager, [1984] V.R. 483 (Australia Vic. Sup. Ct.), 502 (the Court awarded a defendant costs on a full-indemnity basis because of the plaintiff’s “high-handed” prelitigation conduct); National Australia Bank Ltd. v. Petit-Breuilh, [2000] VSC 291 (Australia Vic. Sup. Ct.), ¶¶ 23 & 25 (the Court ordered the plaintiff bank to pay the defendant’s costs on an indemnity basis because the bank’s steps to secure the defendant’s signature to a guarantee were “inexcusable”); Prebble v. Huata, [2005] NZSC 18 (New Zealand S.C.), ¶ 6; [2005] 2 N.Z.L.R. 467 (New Zealand S.C.), 470 (“In New Zealand, costs have not been awarded to indemnify successful litigants for their actual solicitor and client costs, except in rare cases generally entailing breach of confidence or flagrant misconduct”) & Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zealand C.A.) (the Court awarded the plaintiff employee exemplary damages for the defendant employer’s flagrant and outrageous prelitigation misconduct and ordered the defendant to pay eighty percent of the plaintiff’s lawyers’ fees and disbursements). 126 E.g., Sidorsky v. CFCN Communications Ltd., 1997 ABCA 280 (Alta. C.A.), ¶ 35; (1997), [1998] 2 W.W.R. 89 (Alta. C.A.), 100-01 (the Court concluded that the trial judge erred in focussing on the harm the plaintiff landowner caused to his tenants, as opposed to the defendant broadcaster). 127 Campbell & Co. v. Pollak, [1927] A.C. 732 (U.K. H.L.), 812 (a court cannot refuse a successful party its costs “on the grounds of some misconduct wholly unconnected with the cause of action”); Jones v. McKie, [1964] 1 W.L.R. 960 (Eng. C.A.) (the Court upheld the trial judge’s decision to deny the successful defendant its costs in a collision case because the defendant allowed its workers to drive its vehicles on personal time); King v. Gillard, [1905] 2 Ch. 7 (Eng. C.A.), 11, 13 & 14 (the trial judge wrongly denied costs to the successful defendant in a passing off action because he thought that the defendant had falsely claimed that its product had received specific industry awards); Ritter v. Godfrey, [1920] 2 K.B. 47 (Eng. C.A.), 53, 63 & 68 (the court, having decided for the physician defendant in a medical malpractice suit, could not deny the successful defendant his costs because, after the medical treatment complained of, the physician wrote an inappropriate letter to the plaintiff) & Paper Reclaim 320 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Ltd. v. Aotearoa International Ltd., [2006] NZCA 27 (New Zealand C.A.) ¶ 160; [2006] 3 N.Z.L.R. 188 (New Zealand C.A.), 219 (“His Honour not only took into account conduct which had never been pleaded as wrongful but also took it into account with respect to costs, to which it could never have been relevant”). 128 Alta. Reg. 124/2010. 129 Fleck v. Stewart (1991), 118 A.R. 345 (Alta. Q.B.), 362 (“An award of solicitor-client costs ... express[es] a court’s disapproval of the conduct of the litigation by a party to it”); Fiege v. Cornwall General Hospital (1979), 117 D.L.R. (3d) 152 (Ont. H.C.), 155 (the Court castigated counsel who failed to disclose a highly relevant document, declaring that counsel is “making a game of the case”); Dondi Properties Corp. v. Commerce Savings and Loan Association, 121 F.R.D. 284 (U.S. Dist. Ct. N.D. Tex. 1988), 288 (“Those litigators who ... [view] themselves solely as combatants, or who perceive that they are retained to win at all costs without regard to fundamental principles of justice, will find that their conduct does not square with the practices we expect of them. Malfeasant counsel can expect [to be sanctioned]”); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (U.S. Sup. Ct. 1975) (the Court recognized that federal courts have the inherent power to order a party that has wilfully disobeyed a court order or has acted egregiously to pay the successful party’s attorney’s fees) & F.D. Rich Co. v. United States, 417 U.S. 116 (U.S. Sup. Ct. 1974), 129-30 (“The American Rule has not served, however, as an absolute bar to the shifting of attorneys’ fees in the absence of statute or contract. The federal judiciary has recognized several exceptions to the general principles that each party should bear the costs of its own legal representation. .... [A]ttorneys’ fees may be awarded to a successful party when his opponent has acted in bad faith, vexatiously, wantonly or for oppressive reasons”). 130 Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (S.C.C.), ¶ 26; [2004] 1 S.C.R. 303 (S.C.C.), 313 (“When, as here, a party makes such allegations unsuccessfully at trial and with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent ... costs on a solicitor-client basis are appropriate”); Animal Welfare International Inc. v. W3 International Media Ltd., 2016 BCCA 372 (B.C. C.A.), ¶ 46; (2016), 90 C.P.C. (7th) 215 (B.C. C.A.), 233 (“Special costs are an appropriate rebuke to allegations of fraud that are baseless, motivated by spite, vindictiveness, or other forms of ill-will”); Chaplin v. Sun Life Assurance Co. of Canada, 2004 BCSC 116 (B.C. S.C.), ¶ 28 (an award of special costs is appropriate if “examination of all circumstances show the allegations of fraud were unwarranted and com- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 321

pletely unfounded”); Apotex Inc. v. Egis Pharmaceuticals (1990), 2 O.R. (3d) 126 (Ont. Gen. Div.), 130 (the Court awarded solicitor- and-client costs in an interlocutory injunction application because the applicant alleged fraud, deceit and conspiracy “without any acceptable evidentiary basis”); Watson v. Holyoake (1986), 15 C.P.C. (2d) 262 (Ont. H.C.), 268 (“A Court may exercise a discretion to deprive a successful plaintiff of costs in a situation where the successful plaintiff has made unfounded or unsubstantiated charges of fraud); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), n. 16 (“pleading fraud knowing it to be false”); Colgate-Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Australia Fed. Ct.), ¶ 24; (1993), 46 F.C.R. 225 (Australia Fed. Ct.), 233 (the Court stated that a full-indemnity costs award is warranted if a party knowingly falsely alleges fraud) & Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zealand C.A.), ¶ 29; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 410 (the Court adopted the Colgate-Palmolive protocol). 131 Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (“This is a case which ... justifies a departure from the general rule that restricts an award of costs to a party/party basis for there was ... an attempt to delay ... and defeat justice”) & 22 New York Codes, Rules and Regulations § 130- 1.1(c)(2) (“conduct is frivolous if ... it is undertaken primarily to delay or prolong the resolution of litigation, or to harass or maliciously injure another”). A party who fails to appear for questioning or disclose documents when obliged to do so unreasonably delays the litigation process. 132 Michael Wilson & Partners Ltd. v. Nicholls, [2009] NSWSC 669 (New South Wales S.C.), ¶ 21 (the trial court ordered the plaintiff to pay on a full-indemnity basis the defendant’s costs required by the plaintiff’s disclosure of a “trolley load” of documents at the last minute). 133 Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (“This is a case which justifies a departure from the general rule ... for there was an attempt to ... deceive and defeat justice”); 22 New York Codes, Rules and Regulations § 130- 1.1(c)(3) (“conduct is frivolous if ... it asserts material facts that are false”) & 150 Centreville LLC v. Lin Associates Architects, PC, 39 Misc. 3d 513 (U.S. Dist. Ct. S.D. N.Y. 2013), 533; 963 N.Y.2d 819 (U.S. Dist. Ct. S.D. N.Y. 2013), 834 (the Court ordered the plaintiffs to pay the defendants’ reasonable attorney fees, in part, because the plaintiff falsely informed the court that it was compiling answers to interrogations when it was not). 322 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

134 Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20 (Alta. C.A.), ¶ 23; (2009), 446 A.R. 295 (Alta. C.A.), 301 (the Court ordered full indemnity costs for the trial, in part, because of the “improper denial of discovery of records on a material point”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 81 (the trial judge criticized a defendant who only produced at trial a document repeatedly requested at discoveries); Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (the Court criticized the defendant for “concealing material documents from the plaintiff and failing to produce material documents in a timely fashion”); Davis v. Davis (1981), 9 Man. R. (2d) 236 (Man. Q.B.), 266 (the Court awarded solicitor-and-client costs against a defendant who acted fraudulently); Kepic v. Tecumseh Road Builders (1987), 23 O.A.C. 72 (Ont. C.A.) (the Court awarded solicitor-and-client costs against defendants who acted fraudulently); Union Carbide Canada Ltd. v. Vanderkop (1976), 1 C.P.C. 114 (Ont. H.C.), 121 (the Court ordered a defendant who forged documents to pay full-indemnity costs); Fiege v. Cornwall General Hospital (1979), 117 D.L.R. (3d) 152 (Ont. H.C.), 158 (the trial judge awarded the plaintiff costs on a “solicitor-and-his-client basis” because “the failure to produce the ... [incident report] extended the time of trial and ... has needlessly wasted time and money”) & Brawley v. Marczynski, [2002] EWCA Civ 1453 (Eng. & Wales C.A. (Civil)), ¶ 10; [2002] 4 All E.R. 1067 (Eng. & Wales C.A. (Civil)), 1071 (the Court concluded that the defendant’s failure to disclose relevant and important documents justified an indemnity costs award). 135 Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (“The conduct of the defendant that this court found particularly abhorrent and which should not be tolerated was the requirement imposed upon the plaintiff to prove major structural defects and other facts that should have been admitted”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 80 & 81 (the trial judge awarded full-indemnity costs to the plaintiff, in part, because “it was apparent to me at the end of the trial that there was no serious issue of fact or law which required these lengthy, expensive proceedings ... [and that the defendants] were then contemptuous of the plaintiff in requiring the plaintiff to go to trial to get its money”); Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.) (the Court ordered a party to pay full indemnity costs because he knew his position was untenable); Noorani v. Calver, [2009] EWCA Civ 592 (Eng. Q.B.), ¶ 33 (the Court awarded the defendant his costs on a full-indemnity basis because the plain- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 323

tiff’s case was “hopeless ... from the outset [and] ... the claimant knew it”); Farm Credit Canada v. Boss´e, 2014 NBCA 34, 419 N.B.R. (2d) 1 (N.B. C.A.) (the Court dismissed the appeal and ordered the appellant to pay costs on a solicitor-and-client basis because the grounds of appeal were frivolous); Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zealand C.A.), ¶ 24; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 409, 410 (“an indemnity award may be made where a party persists with what proper consideration would have shown was a hopeless case”) & ¶ 29 (an indemnity award may be granted if the payee’s misconduct “causes loss of time to the court and to other parties”); Baulderstone Hornibrook Engineering Pty. Ltd. v. Gordian Runoff Ltd. (No. 2), [2009] NSWCA 12 (New South Wales C.A.), ¶ 4 (“a party should pay costs on an indemnity ... basis when it appears that an action (here an appeal) has been commenced or continued in circumstances where the moving party, properly advised, should have known that it had no chance of success”); Chaina v. Alvaro Homes Pty. Ltd., [2008] NSWCA 353 (New South Wales C.A.), ¶ 111 (the Court observed that “more recent case-law generally shows a tendency to grant indemnity costs orders more readily than was the case in the past. That may be seen to be an element of a broader policy directed to litigation of cases where there are no reasonable prospects of success”); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), n. 16-17 (the Court observed that “making assertions of facts which are patently groundless” and adopting a position that is “patently hopeless” exposes the malefactor to an enhanced costs award); Cosgrove v. Chevron Queensland Ltd., [2000] QCA 157 (Queensland S.C.), ¶ 9 (a full-indemnity costs award may be appropriate if a party adopts an unsupportable position); Commonwealth Bank of Australia v. Dalle Cort, [2015] Que. S.C. 41 (Queensland S.C.) (the Court awarded costs against the defendants and counterclaimants because, in part, “they should have known that they had no real defence to CBA’s claim or any legally sustainable counterclaim”); Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. (1988), 81 A.L.R. 397 (Australia Fed. Ct.), 401 (“it is appropriate to consider awarding ... “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law”); Colgate- Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Australia Fed. 324 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Ct.), ¶ 24; 46 F.C.R. 225 (Australia Fed. Ct.), 233 (the Court stated that a full-indemnity costs award is warranted if a party engages in misconduct “that causes loss of time to the Court and to other parties”); Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd., [1991] 3 N.Z.L.R. 457 (New Zealand P.C.), 460 (“If a party has acted unreasonably — for instance by pursuing a wholly unmeritorious and hopeless claim or defence — a more liberal award may well be made in the discretion of the Judge”) & 22 New York Codes, Rules and Regulations § 130-1.1(c)(1) (“conduct is frivolous if ... if it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law”). 136 Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20 (Alta. C.A.), ¶ 25; 2009 ABCA 20 (Alta. C.A.), 301-02 (the Court awarded full-indemnity costs for the trial, in part, because the appellant’s witness was dishonest); FIC Real Estate Fund Ltd. v. Phoenix Land Ventures Ltd., 2016 ABCA 303 (Alta. C.A.), ¶¶ 7, 22 & 24 (the Court upheld an award of solicitor-client costs based, in part, upon the trial judge’s “[s]evere almost scathing adverse credibility findings”); Lavoie v. Wills, 2002 ABCA 240 (Alta. C.A.), ¶ 3; (2002), 312 A.R. 373 (Alta. C.A.), 374 (“The trial judge censured the appellant’s conduct and credibility at trial, and awarded solicitor-client costs”); Harnden v. Kosir (1995), 26 O.R. (3d) 588 (Ont. Gen. Div.), 592 (the Court awarded full indemnification costs against a defendant who burned down the plaintiff’s home and “lied in this proceeding in an attempt to avoid liability for it”) & Degmam Pty. Ltd. v. Wright (No. 2), [1983] 2 N.S.W.L.R. 354, 358 (Sup. Ct. 1983) (Austl.) (the Court ordered the defendant to pay costs on a full-indemnity basis in part, because “she so conducted herself in the proceedings, by multiplying allegation upon allegation, and by prevari- cating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonably have expected to incur in litigation of genuine issues”). 137 Dor´e c. Qu´ebec (Tribunal des professions), 2012 SCC 12 (S.C.C.), ¶ 61; [2012] 1 S.C.R. 395 (S.C.C.), 428 (the Court adopted a commentator’s definition of incivility: “potent displays of disre- spect for the participants in the justice system, beyond mere rudeness or discourtesy”); Dondi Properties Corp. v. Commerce Savings and Loan Association, 121 F.R.D. 284 (U.S. Dist. Ct. N.D. Tex. 1988), 286 (“with alarming frequency, we find that valuable judicial and attorney time is consumed in resolving unnecessary contention and sharp practices between lawyers. Judges and magistrates of this court Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 325

are required to devote substantial attention to refereeing abusive litigation tactics that range from benign incivility to outright obstruc- tion”) & Unique Concepts, Inc. v. Brown, 115 F.R.D. 292 (U.S. Dist. Ct. S.D. N.Y. 1987), 293 & 294 (the Court sanctioned an attorney with a costs award to be paid personally for conduct that “was harassing wasteful, vexatious, and ruined the usefulness of the ... deposition. [The attorney’s conduct] ... was a sad and embarrassing display of unprofessionalism”). 138 An advocate’s obligation to zealously defend his or her client’s interest does not authorize professional misconduct that brings the profession and the administration of justice into disrepute. R. v. Lyt- tle, 2004 SCC 5 (S.C.C.), ¶¶ 43-44; [2004] 1 S.C.R. 193 (S.C.C.), 207 (an advocate who is engaged in the vitally important task of cross-examination has no right to harass the witness); Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130 (S.C.C.), 1200-01 (“Judges rely on commitments and undertakings given to them by counsel. Our whole system of administration of justice depends upon counsel’s reputation for integrity”); T. (E.) v. Rocky Mountain Play Therapy Institute Inc., 2016 ABCA 320 (Alta. C.A.), ¶ 18 (the Court ordered a self-represented litigant who accused another party and counsel of serious criminal acts, for no reason whatsoever, to pay costs on a full-indemnity basis); Bizon v. Bizon, 2014 ABCA 174 (Alta. C.A.), ¶ 84 [2014] 7 W.W.R. 713 (Alta. C.A.), 752 (the Court ordered a self-represented litigant who, without warrant, alleged that opposing counsel were obstructing justice and unethical and described a Queen’s Bench justice as dishonest to pay costs on a full- indemnity basis); College of Physicians & Surgeons (Alberta) v. H. (J.), 2009 ABQB 48 (Alta. Q.B.), ¶ 44; [2009] 7 W.W.R. 150 (Alta. Q.B.), 159 (“Dr. Ritchie is a person whose integrity is essential to his job. Making allegations of bias against a professional investigator is more serious than making allegations of bias against someone whose integrity is less critical to his work”); Groia v. Law Society of Upper Canada, 2016 ONCA 471 (Ont. C.A.), ¶ 119 (“Civility is not merely aspirational. It is a codified duty of professional conduct enshrined in the Conduct Rules and ... an essential pillar of the effective functioning of the administration of justice”); Vanderclay Development Co. v. Inducon Engineering Ltd. (1968), 1 D.L.R. (3d) 337 (Ont. H.C.), 344 (the Court ordered a plaintiff who, without any basis, alleged that the defendant had induced a solicitor the plaintiff had retained to breach the solicitor’s fiduciary duties to pay costs on a solicitor-and-client basis); McPhilemy v. Times Newspapers Ltd., [2001] EWCA Civ 933 (Eng. & Wales C.A. (Civil)), ¶ 29; [2001] 4 All E.R. 861 (Eng. & Wales C.A. (Civil)), 874 (the court noted that “to argue their case on 326 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

perversity must inevitably have brought the administration of justice into disrepute among right thinking people”); Simpson, Ex parte (1809), 33 E.R. 834 (Eng. Ch. Div.) 835 (the Court ordered the solicitor who drafted an affidavit containing a groundless allegation that another party had engaged in criminal behaviour “to pay the costs of the application, and all the costs, out of pocket, to be taxed as between solicitor and client”); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), n. 16 (the Court criticized a litigant who made “wild and contu- melious allegations”); Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 76 (“Our [Federal Rules of Civil Procedure] ... permit sanctions [for blameworthy litigation conduct] because much of the conduct of the sort encountered here degrades the profession and disserves justice”) per Kennedy, J. & Kentucky Bar Ass’n v. Wal- ler, 929 S.W.2d 181 (U.S. Ky. S.C. 1996), 183 (the Court suspended a lawyer for six months who referred to a judge who had recused himself as an incompetent jurist). 139 T. (E.) v. Rocky Mountain Play Therapy Institute Inc., 2016 ABCA 320 (Alta. C.A.), ¶ 18 (the Court ordered a self-represented litigant who accused another party and counsel of serious criminal acts, for no reason whatsoever, to pay costs on a full-indemnity basis) & Bizon v. Bizon, 2014 ABCA 174 (Alta. C.A.), ¶ 84; [2014] 7 W.W.R. 713 (Alta. C.A.), 752 (the Court ordered a self-represented litigant who unjustifiably accused counsel of obstructing justice, ly- ing in court and being unethical and a judge of being dishonest to pay costs on a full-indemnity basis). 140 Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 138 O.A.C. 201 (Ont. C.A.), 236 (court- room civility is “of profound importance to the administration of justice and its standing in the eyes of the public”). 141 See Code, “Counsel’s Duty of Civility: An Essential Component of Fair Trials and an Effective Justice System”, 11 Can. Crim. L. Rev. 97 (2007). 142 Groia v. Law Society of Upper Canada, 2016 ONCA 471 (Ont. C.A.), ¶ 100 (“a presiding trial judge, in the exercise of his or her discretion, is empowered to take those lawful and reasonable steps that he or she concludes are necessary to control uncivil or other unacceptable conduct by all participants in open court, including advo- cates”) & Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 138 O.A.C. 201 (Ont. C.A.), 245 (although the Court dismissed the plaintiff’s appeal against the trial judge’s determination that the defendant obstetrician was not Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 327

negligent, given the respondent’s oral submissions to the effect that they would not pursue the plaintiff for the $2.1 million costs award — no doubt because of the unprofessional conduct of defence counsel — the Court varied the cost order to relieve the plaintiff of any obligation to pay the defendants’ $2.1 million party-and-party costs award). 143 Petrotrade Inc. v. Texaco Ltd., [2002] 1 W.L.R. 947 (Eng. & Wales C.A. (Civil)), 949 (“The ability of the court to award costs on an indemnity basis ... should not be regarded as penal because orders for costs, even when made on an indemnity basis, never actually compensate a claimant for having to come to court to bring these proceedings. ... A claimant would be better off had he not become involved in court proceedings”) & Burridge v. Stafford, [2000] 1 W.L.R. 927 (Eng. & Wales C.A. (Civil)), 932 (“an award of indemnity costs is compensatory and not penal”). 144 [1995] 2 S.C.R. 1130 (S.C.C.), 1208. See also Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 (S.C.C.), 645 (“Punitive damages are ... imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour”) (emphasis in original). 145 Parties who are either willing or unwilling participants in the litigation process are entitled to expect that the court will utilize a range of remedies, including full-indemnity costs orders to deter their ad- versaries from committing litigation misconduct in the portion of the litigation spectrum not yet complete and as a consequence for past blameworthy litigation conduct. College of Physicians & Surgeons (Alberta) v. H. (J.), 2009 ABQB 48 (Alta. Q.B.), ¶ 39; [2009] 7 W.W.R. 150 (Alta. Q.B.), 159 (“a chill effect is exactly what an award of solicitor and client costs is intended to do: discourage inappropriate conduct”); Dusik v. Newton (1984), 51 B.C.L.R. 217 (B.C. S.C.), 219 (the Court awarded solicitor-client costs to deter others from acting as the defendant did) & Vanderclay Development Co. v. Inducon Engineering Ltd. (1968), 1 D.L.R. (3d) 337 (Ont. H.C.), 344 (the court’s jurisdiction to award full-indemnity costs “does afford a real deterrent to persons who may be disposed to make wanton, scandalous and vicious charges against persons with whom they are in conflict”). 146 E.g. Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 (S.C.C.), 663 (the jury awarded the plaintiff $1 million in punitive damages and the trial judge ordered the insurance company to pay the plaintiff $320,000 in solicitor-client costs); Leenen v. Canadian Broadcasting 328 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Corp. (2001), 54 O.R. (3d) 612 (Ont. C.A.), 625 (the Court rejected the appellant’s argument that the contested burden to pay punitive damages and solicitor-and-client costs constituted “double” punishment: “The impact on the appellants may be the same but the fact is that the conduct in question may quite properly be the origin of both an award of ... punitive damages and an award of solicitor and client costs”); Harnden v. Kosir (1995), 26 O.R. (3d) 588 (Ont. Gen. Div.), 592-93 (the Court awarded punitive damages against a defendant who burned down the plaintiff’s home to punish the defendant and solicitor and client costs to indemnify the plaintiff for costs incurred “to recover their loss”) & Binnie v. Pacific Health Ltd., [2003] N.Z.C.A. 69 (New Zealand C.A.) (the Court awarded the plaintiff employee exemplary damages for the defendant employer’s flagrant and outrageous prelitigation misconduct and also ordered the defendant to pay eighty percent of the plaintiff’s lawyer’s fees and disbursements). See also Norberg v. Wynrib, [1992] 2 S.C.R. 226 (S.C.C.), 301 (McLachlin and L’Heureaux-Dˆub´e JJ. would have granted a drug dependant plaintiff taken advantage of by the defendant doctor punitive damages and solicitor and client costs; the majority ordered party-and-party costs throughout). 147 Jackson v. Trimac Industries Ltd. (1993), 138 A.R. 161 (Alta. Q.B.), 173 (“Where the positive misconduct of the party which gives rise to the action is so blatant and is calculated to deliberately harm the other party, then despite the technically proper conduct of the legal proceedings, the very fact that the action must be brought by the injured party to gain what was rightfully his in the face of an unreasonable denial is in itself positive misconduct deserving of indemnification whether punitive damages are awarded or not”); Beaver Lumber Co. v. 222044 Ontario Ltd. (1996), 5 C.P.C. (4th) 253 (Ont. Gen. Div.), 256 (“the issues of punitive damages and solicitor client costs are separate and the denial of an award of punitive damages does not preclude an award of solicitor and client costs throughout”); Gerula v. Flores (1993), 16 C.P.C. (3d) 362 (Ont. Gen. Div.), 365 (the Court ordered a surgeon to pay full indemnity costs up to the point in the litigation where he admitted that he operated on the wrong vertebra and had misled the plaintiff’s lawyer about his error even though no punitive damages were awarded) & Anderson v. Lawrence, 2013 NBQB 21 (N.B. Q.B.), ¶ 54 (the Court awarded the plaintiff solicitor-client costs because of the defendant’s prelitigation misconduct but declined to grant punitive damages). 148 Pacific Mobile Corp. v. Hunter Douglas Canada Ltd., [1979] 1 S.C.R. 842 (S.C.C.), 845 (“the Court should make use of its power to order costs payable by solicitors personally, in accordance with prin- Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 329

ciples which were fully stated by the House of Lords in Myers v. Elman, and need not be restated here”); Ridehalgh v. Horsefield, [1994] 3 All E.R. 848 (Eng. & Wales C.A. (Civil)), 856-57 (counsel who fail to perform as officers of the court may be sanctioned by a personal costs award); Myers v. Elman, [1940] A.C. 282 (U.K. H.L.), 319 per Lord Wright (“the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally”); 22 New York Codes, Rules and Regulations § 130-1.1(b) (“The court, as appropriate, may make such award of costs ... against either an attorney or a party to the litigation or both”); Richmond, “The Ethics of Zealous Advocacy: Civility, Candour and Parlor Tricks”, 34 Tex. Tech. L. Rev. 3, 18 (2003) & Arnold, “Ad Hominem Attacks: Possible Solu- tions for a Growing Problem”, 8 Geo. J. Legal Ethics 1075 (1995). 149 A costs award may be set aside if the trial judge erred in principle or made an award that is plainly wrong. Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (S.C.C.), ¶ 27; [2004] 1 S.C.R. 303 (S.C.C.), 313. See also Walsh v. Mobil Oil Canada, 2008 ABCA 268 (Alta. C.A.), ¶ 111; (2008), 296 D.L.R. (4th) 178 (Alta. C.A.), 218- 19 (“An appellate court may interfere only if the trial judge made a palpable error in assessing the facts or erred in law by failing to apply, or misapplying, the appropriate criteria”); P.Simms v. Law Soci- ety, [2005] EWCA Civ 849 (Eng. & Wales C.A. (Civil)), ¶ 20 (“This court is normally reluctant to interfere with the judge’s exercising of discretion as to the basis on which costs are awarded”); Petrotrade Inc. v. Texaco Ltd., [2002] 1 W.L.R. 947 (Eng. & Wales C.A. (Civil)), 952 (Lord Woolf M.R. declined to set aside a costs award even though he disagreed with it because of its discretionary nature); McPhilemy v. Times Newspapers Ltd., [2001] EWCA Civ 933 (Eng. & Wales C.A. (Civil)), ¶ 7; [2001] 4 All E.R. 861 (Eng. & Wales C.A. (Civil)), 866-867 (“The court must resist the temptation to substitute its own view for that of the judge unless satisfied that his discretion has been exercised on a basis which is wrong in law; or that the conclusion which he has reached is so plainly wrong that his exercise of the discretion entrusted to him must be regarded as flawed”); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), ¶ 32 (“Generally speaking, an error of principle must be shown in the way the discretion was exercised or some substantial injustice must be established in the result allowed at.”) & Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zealand C.A.), ¶ 32; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 411 (“the award will not be upset unless con- 330 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

trary to principle, as by adopting a wrong approach or disregarding a material factor, or wholly wrong”). 150 See Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.) (the Court ordered a party who knew, at the latest, after discoveries were concluded that his position was untenable to pay full-indemnity costs); Bradbury v. Westpac Banking Corp., [2009] NZCA 234, [2009] 3 N.Z.L.R. 400 (New Zealand C.A.) (the Court upheld a trial judge’s award of close to $1 million in full-indemnity costs against a plaintiff who should have known at the outset that his claim was without merit) & Oversea-Chinese Banking Corp. Ltd. v. Malaysian Kuwaiti Investment Co. SDN BHD, [2004] VSC 351 (Australia Vic. Sup. Ct.), ¶ 99 (“By the time the trial commenced the Defendant had received each Plaintiff’s Reply to its amended defence. It was provided with a written opening of the Plaintiffs. The weakness of the Defendant’s legal position which should long have been apparent was now spelt out in explicit terms”). 151 Goodhart, “Costs”, 38 Yale L.J. 849, 865 (1929) (“The purpose of the courts is to administer justice and not to referee a game between two players”). 152 Writing in 1927, a group of leading American judges and scholars asserted that “[n]either party should be permitted to tender or take issue upon any fact not honestly in controversy”. They lamented the current American practice: “The defendant, when he can do so without perjury, puts the plaintiff to the proof of any allegation regardless of whether he really denies or doubts its existence”. E. Morgan, Z. Chaffee, R. Gifford, E. Hinton, C. Hough, W. Johnston, E. Sunder- land & J. Wigmore, The Law of Evidence: Some Proposals for its Reform 2 & 3 (1927). See Foulis v. Robinson (1978), 92 D.L.R. (3d) 134 (Ont. C.A.), 142 (“Under our system defendants are entitled to put the plaintiff to the proof, and there is no obligation to settle an action ... The fact that the issue of liability was not seriously contested at trial, that the defendant did not give evidence, that he pleaded guilty to criminal negligence [in the operation of a motor vehicle], and that no evidence was called by the defendant and third party on the issues of liability and damages are not factors which, by themselves, merit punitive action in the award of costs”) & Goodhart, “Costs”, 38 Yale L.J. 849, 868 (1929) (“The English rules [The Rules of the Supreme Court, 1883 (in force October 24, 1883)] place this exorbitant cost on the party who unreasonably puts his opponent to the proof”). Values change. In response, rules change. When this happens, cases interpreting the old rules are of minimal value. Myers v. Defries (1880), 5 Ex. D. 180 (Eng. Exch.), 184 (speaking after the Supreme Court of Judicature Act, 1875, 38 & 39 Vict., c. 72 came Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 331

into effect, the Court opined that “the old law as to costs is gone”) & Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.), 763 (the Court noted that Foulis v. Robinson predated the new Rules of Civil Procedure that introduced provisions designed to disclose pre-trial the strength of an opponent’s case); Reid Minty v. Taylor, [2001] EWCA Civ 1723 (Eng. & Wales C.A. (Civil)), ¶ 13; (2001), [2002] 1 W.L.R. 2800 (Eng. & Wales C.A. (Civil)), 2804 (“Being a new procedural code, the ... [Civil Procedure Rules] are not to be taken as embodying or taking on board the baggage of the old rules; and generally speaking, although there are exceptions, most of the procedural cases decided under the ... [Rules of the Supreme Court] ... are not of relevance — or certainly not of central relevance — to an interpretation of these new rules”) & Baron v. Lovell, [1999] C.P.L.R. 630 (Eng. & Wales C.A. (Civil)), 640 “The whole thrust of the ... [Civil Procedure Rules] is to require the parties to behave reasonably towards each other in the conduct of litigation. The old antagonistic point scoring, which used to drag personal injury cases out and run up the costs, should now be at an end”). 153 Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.), 763 (the Court awarded full-indemnity costs against a litigant who knew that he had a hopeless case after discoveries concluded). 154 E.g., NMFM Property Pty. Ltd. v. Citibank Ltd., [2001] FCA 480 (Australia Fed. Ct.), ¶ 46; (2001), 109 F.C.R. 77 (Australia Fed. Ct.) (the plaintiff served six notices to admit facts before a seventy-two day trial commenced). 155 Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 363 & 372 (the Court, without criticizing the plaintiff for failure to file a notice to admit facts, imposed solicitor- client costs because the defendant required the plaintiff to “prove major structural defects and other facts that should have been admitted, thus prolonging the trial”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 80 & 81 (the trial judge, without criticizing the plaintiff for failure to file a notice to admit facts, awarded full-indemnity costs to the plaintiff, in part, because “it was apparent to me at the end of the trial that there was no serious issue of fact or law which required these lengthy, expensive proceedings”) & Gray v. Dougherty, 25 Cal. 266 (U.S. Cal. Sup. Ct. 1864), 281-82 (the Court concluded that the conduct of a litigant “warrant[ed] the conclusion that an express demand for further performance would have been fruitless”). See also Sidorsky v. CFCN Communications Ltd. (1997), 206 A.R. 382 (Alta. C.A.), 154 (“We are aware that a notice to admit is often not employed in suit for reasons particular to that suit. We do not suggest that failure to so use 332 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

the notice is improper in any way. It may well be that, on occasion, counsel conclude that the use of the notice is more troublesome than its value”). 156 Summary judgment is available if the moving party’s position is unassailable. A position is unassailable if the moving party’s prospects of success are very high and those of the nonmoving party very low. Access Mortgage Corp. (2004) Ltd. v. Arres Capital Inc., 2014 ABCA 280 (Alta. C.A.), ¶ 45; (2014), 584 A.R. 68 (Alta. C.A.), 78 (“A party’s position is unassailable if it is so compelling that the likelihood of success is very high.”) adopting Beier v. Proper Cat Construction Ltd., 2013 ABQB 351 (Alta. Q.B.), ¶ 61; (2013), 564 A.R. 357 (Alta. Q.B.), 374. See also Ghost Riders Farm Inc. v. Boyd Distributors Inc., 2016 ABCA 331 (Alta. C.A.), ¶ 11 & Stout v. Track, 2015 ABCA 10 (Alta. C.A.), ¶ 48; (2015), 62 C.P.C. (7th) 260 (Alta. C.A.), 278 per Wakeling JA (“The likelihood the moving party’s position will prevail is very high if the comparative strengths of the moving and nonmoving party’s positions are so disparate that the likelihood the moving party’s position will prevail is many times greater than the likelihood that the nonmoving party’s position will carry the day”). 157 Beier v. Proper Cat Construction Ltd., 2013 ABQB 351 (Alta. Q.B.), ¶ 67; (2013), 564 A.R. 357 (Alta. Q.B.), 376 (“the nonmoving party may be at risk of losing the summary judgment application if it fails to present a version of the facts that is inconsistent with that relied on by the moving party”). 158 See Chambers v. Nasco, Inc., 501 U.S. 32 (U.S. C.A. 5th Cir. 1991), 57 (the Court agreed with the District Court that the purchaser plaintiff in a specific performance suit could not be criticized for its failure to seek summary disposition of the dispute because of the un- cooperative conduct of the defendant vendor). 159 See Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.), 763. 160 See Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20 (Alta. C.A.), ¶ 26; (2009), 446 A.R. 295 (Alta. C.A.), 302 (the Court suggested that the defendant’s failure “to give full and honest discovery” directly contributed to the excessive length of the trial) & Fiege v. Cornwall General Hospital (1979), 117 D.L.R. (3d) 152 (Ont. H.C.), 155 (the Court speculated that the failure of the defendant to produce a highly relevant document — the incident report — may have contributed to the inability of the parties to settle the liability issue). 161 1971. Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 333

162 Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (S.C.C.), ¶ 26; [2004] 1 S.C.R. 303 (S.C.C.), 313 (“When, as here, a party makes such allegations unsuccessfully at trial and with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent ... costs on a solicitor-client basis are appropriate”); Animal Welfare International Inc. v. W3 International Media Ltd., 2016 BCCA 372 (B.C. C.A.), ¶ 46; (2016), 90 C.P.C. (7th) 215 (B.C. C.A.), 233 (“Special costs are an appropriate rebuke to allegations of fraud that are baseless, motivated by spite, vindictiveness, or other forms of ill-will”); Chaplin v. Sun Life Assurance Co. of Canada, 2004 BCSC 116 (B.C. S.C.), ¶ 28 (an award of special costs is appropriate if “examination of all circumstances show the allegations of fraud were unwarranted and completely unfounded”); Apotex Inc. v. Egis Pharmaceuticals (1990), 2 O.R. (3d) 126 (Ont. Gen. Div.), 130 (the Court awarded solicitor- and-client costs in an interlocutory injunction application because the applicant alleged fraud, deceit and conspiracy “without any acceptable evidentiary basis”); Watson v. Holyoake (1986), 15 C.P.C. (2d) 262 (Ont. H.C.), 268 (“A Court may exercise a discretion to deprive a successful plaintiff of costs in a situation where the successful plaintiff has made unfounded or unsubstantiated charges of fraud); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), n. 16 (“pleading fraud knowing it to be false”); Colgate-Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Australia Fed. Ct.), ¶ 24; (1993), 46 F.C.R. 225 (Australia Fed. Ct.), 233 (the Court stated that a full-indemnity costs award is warranted if a party knowingly falsely alleges fraud); Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zealand C.A.), ¶ 29; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 410 (the Court adopted the Colgate-Palmolive protocol) & Fane v. Fane, 13 Ch. Div. 228, 231 (1879) (“The claim [gross breach of trust] which must have caused the greatest anxiety to the Defendant ... has been abandoned, and it is a matter of course that all the costs occasioned by these allegations should be paid by the Plaintiff”). 163 Olson v. New Home Certification Program of Alberta (1986), 69 A.R. 356 (Alta. Q.B.), 372 (“The conduct of the defendant that this court found particularly abhorrent and which should not be tolerated was the requirement imposed upon the plaintiff to prove major structural defects and other facts that should have been admitted”); Max Sonnenberg Inc. v. Stewart, Smith (Canada) Ltd., [1987] 2 W.W.R. 75 (Alta. Q.B.), 80 & 81 (the trial judge awarded full-indemnity costs to the plaintiff, in part, because “it was apparent to me at the end of the trial that there was no serious issue of fact or law which required 334 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

these lengthy, expensive proceedings ... [and that the defendants] were then contemptuous of the plaintiff in requiring the plaintiff to go to trial to get its money”); Shier v. Fiume (1991), 6 O.R. (3d) 759 (Ont. Gen. Div.) (the Court ordered a party to pay full indemnity costs because he knew his position was untenable); Noorani v. Calver, [2009] EWCA Civ 592 (Eng. Q.B.), ¶ 33 (the Court awarded the defendant his costs on a full-indemnity basis because the plaintiff’s case was “hopeless ... from the outset [and] ... the claimant knew it”); Farm Credit Canada v. Boss´e, 2014 NBCA 34, 419 N.B.R. (2d) 1 (N.B. C.A.) (the Court dismissed the appeal and ordered the appellant to pay costs on a solicitor-and-client basis because the grounds of appeal were frivolous); Bradbury v. Westpac Banking Corp., [2009] NZCA 234 (New Zealand C.A.), ¶ 24; [2009] 3 N.Z.L.R. 400 (New Zealand C.A.), 409, 410 (“an indemnity award may be made where a party persists with what proper consideration would have shown was a hopeless case”) & ¶ 29 (an indemnity award may be granted if the payee’s misconduct “causes loss of time to the court and to other parties”); Baulderstone Hornibrook Engineering Pty. Ltd. v. Gordian Runoff Ltd. (No. 2), [2009] NSWCA 12 (New South Wales C.A.), ¶ 4 (“a party should pay costs on an indemnity ... basis when it appears that an action (here an appeal) has been commenced or continued in circumstances where the moving party, properly advised, should have known that it had no chance of success”); Chaina v. Alvaro Homes Pty. Ltd., [2008] NSWCA 353 (New South Wales C.A.), ¶ 111 (the Court observed that “more recent case-law generally shows a tendency to grant indemnity costs orders more readily than was the case in the past. That may be seen to be an element of a broader policy directed to litigation of cases where there are no reasonable prospects of success”); P.C.R.Z. Investments Pty. Ltd. v. National Golf Holdings Ltd., [2002] VSCA 24 (Australia Vic. Sup. Ct.), n. 16-17 (the Court observed that “making assertions of facts which are patently groundless” and adopting a position that is “patently hopeless” exposes the malefactor to an enhanced costs award); Cosgrove v. Chevron Queensland Ltd., [2000] QCA 157 (Queensland S.C.), ¶ 9 (a full-indemnity costs award may be appropriate if a party adopts an unsupportable position); Commonwealth Bank of Australia v. Dalle Cort, [2015] Que. S.C. 41 (Queensland S.C.), ¶ 12 (the Court awarded costs against the defendants and counterclaimants because, in part, “they should have known that they had no real defence to CBA’s claim or any legally sustainable counterclaim”); Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. (1988), 81 A.L.R. 397 (Australia Fed. Ct.), 401 (“it is appropriate to consider awarding ... Pillar Resource Services Inc. v. PrimeWest Energy Inc. McDonald J.A. 335

“indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law”); Colgate- Palmolive Co. v. Cussons Pty. Ltd., 1993 FCA 536 (Australia Fed. Ct.), ¶ 24; (1993), 46 F.C.R. 225 (Australia Fed. Ct.), 233 (the Court stated that a full-indemnity costs award is warranted if a party engages in misconduct “that causes loss of time to the Court and to other parties”); Kuwait Asia Bank EC v. National Mutual Life Nominees Ltd., [1991] 3 N.Z.L.R. 457 (New Zealand P.C.), 460 (“If a party has acted unreasonably — for instance by pursuing a wholly unmeritorious and hopeless claim or defence — a more liberal award may well be made in the discretion of the Judge”) & 22 New York Codes, Rules and Regulations § 130-1.1(c)(1) (“conduct is frivolous if ... if it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law”). 164 Goodhart, “Costs”, 38 Yale L.J. 849, 872 (1929) (a defendant that “forces his opponent to prove facts which are not in dispute ... will have to pay, and pay heavily”). 165Pillar Resource Services Inc. v. PrimeWest Energy Inc., 2014 ABQB 317 (Alta. Q.B.) 336 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

[Indexed as: 926 Capital Corp. v. Petro River Oil Corp.] 926 Capital Corp. (Respondent / Cross-Appellant / Plaintiff) and Petro River Oil Corp. (Appellant / Cross-Respondent / Defendant) Alberta Court of Appeal Docket: Calgary Appeal 1601-0108-AC 2016 ABCA 393 Frans Slatter, Patricia Rowbotham, Brian O’Ferrall JJ.A. Heard: December 7, 2016 Judgment: December 8, 2016 Civil practice and procedure –––– Limitation of actions — Principles — Statutory limitation periods — General principles –––– Master in chambers determined that claim originally advanced by landlord was barred by passage of limitation period, but allowed amendment to statement of claim to add different claim that was arguably not barred — Appeal was dismissed — Tenant appealed and landlord cross-appealed — Appeal and cross-appeal dismissed — Master dealt with amendment issue first, and allowed landlord to add claim for shortfall in rent after premises were re-let to new tenant — There was no reviewable error in that approach — Even if original claim had first been summarily dismissed, meaning that for moment in time there was no meritorious action outstanding, that would not preclude immediate addition of new related claim, because there would still be “proceeding previously commenced” in existence — As regards tenant’s argument that landlord’s new “damage” claim was also barred by limitation period, that issue was not resolved, but rather was referred to trial — It was not error for master and judge to conclude that evidence and arguments before them were insufficient to decide issue summarily — As regards landlord’s cross-appeal of summary dismissal of its original claim for unpaid rent, tenant had not paid any rent for over two years by time action was commenced — There was no reviewable error shown in dismissing that portion of claim. Civil practice and procedure –––– Pleadings — Amendment — Grounds for amendment — To raise new cause of action or defence — Miscellane- ous –––– Master in chambers determined that claim originally advanced by landlord was barred by passage of limitation period, but allowed amendment to statement of claim to add different claim that was arguably not barred — Appeal was dismissed — Tenant appealed and landlord cross-appealed — Appeal and cross-appeal dismissed — Master dealt with amendment issue first, and allowed landlord to add claim for shortfall in rent after premises were re-let to new ten- 926 Capital Corp. v. Petro River Oil Corp. 337

ant — There was no reviewable error in that approach — Even if original claim had first been summarily dismissed, meaning that for moment in time there was no meritorious action outstanding, that would not preclude immediate addition of new related claim, because there would still be “proceeding previously commenced” in existence — As regards tenant’s argument that landlord’s new “damage” claim was also barred by limitation period, that issue was not resolved, but rather was referred to trial — It was not error for master and judge to conclude that evidence and arguments before them were insufficient to decide issue summarily — As regards landlord’s cross-appeal of summary dismissal of its original claim for unpaid rent, tenant had not paid any rent for over two years by time action was commenced — There was no reviewable error shown in dismissing that portion of claim. Cases considered: Boyd v. Cook (2013), 2013 ABCA 27, 2013 CarswellAlta 82, 542 A.R. 160, 566 W.A.C. 160, 84 Alta. L.R. (5th) 359, [2013] A.J. No. 43 (Alta. C.A.) — referred to Kopr v. Kopr (2006), 2006 ABQB 405, 2006 CarswellAlta 711, 59 Alta. L.R. (4th) 99, 28 R.F.L. (6th) 446, 24 C.B.R. (5th) 205, [2006] A.J. No. 673, 403 A.R. 29 (Alta. Q.B.) — followed Pearson Finance Group Ltd. v. Takla Star Resources Ltd. (2002), 2002 ABCA 84, 2002 CarswellAlta 459, [2002] 5 W.W.R. 637, 22 B.L.R. (3d) 174, 299 A.R. 351, 266 W.A.C. 351, 100 Alta. L.R. (3d) 223, [2002] A.J. No. 422 (Alta. C.A.) — followed Smiechowski v. Preece (2015), 2015 ABCA 105, 2015 CarswellAlta 426 (Alta. C.A.) — referred to Stout Estate v. Golinowski Estate (2002), 2002 ABCA 49, 2002 CarswellAlta 277, [2002] 4 W.W.R. 588, 43 E.T.R. (2d) 117, 100 Alta. L.R. (3d) 5, 18 C.P.C. (5th) 146, 299 A.R. 13, 266 W.A.C. 13, [2002] A.J. No. 247 (Alta. C.A.) — followed Statutes considered: Limitations Act, R.S.A. 2000, c. L-12 Generally — referred to s. 3(1) — considered s. 6(1) — considered

APPEAL and CROSS-APPEAL from judgment reported at 926 Capital Corp. v. Petro River Oil Corp. (2016), 2016 ABQB 194, 2016 CarswellAlta 575, 82 C.P.C. (7th) 277, 34 Alta. L.R. (6th) 399 (Alta. Q.B.), dismissing appeal from decision of Master.

T. Stathakos, for Respondent / Cross-Appellant E.J. Bodnar, for Appellant / Cross-Respondent 338 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Per curiam (orally):

1 This appeal and cross–appeal concern whether a landlord’s claims against a tenant are barred by the Limitations Act, RSA 2000, c. L–12. A Master in Chambers concluded that the claim originally advanced by the landlord was barred by the passage of the limitation period, but allowed an amendment to the statement of claim to add a different claim that was arguably not barred: 926 Capital Corp. v. Petro River Oil Corp., 2015 ABQB 431, 76 C.P.C. (7th) 430 (Alta. Q.B.). An appeal to a Queen’s Bench judge was dismissed: 926 Capital Corp. v. Petro River Oil Corp., 2016 ABQB 194, 82 C.P.C. (7th) 277 (Alta. Q.B.). The extensive reasons already rendered allow us to decide this appeal summarily. 2 The Master dealt with the amendment issue first, and allowed the landlord to add a claim for the shortfall in rent after the premises were re–let to a new tenant. There is no reviewable error in that approach. In any event, even if the original claim had first been summarily dismissed, meaning that for a moment in time there was no meritorious action outstanding, that would not preclude the immediate addition of a new related claim, because there would still be a “proceeding previously commenced” in existence. 3 Just because a defendant is “immune from liability” on the original claim does not mean the proceeding is void or beyond amendment. This conclusion is reinforced by the wording of s. 3(1) and s. 6(1) which focus on the defendant being immune from liability. The modern approach is that procedural shortcomings, even those of a fundamental nature, do not render proceedings a nullity: . . . It is, in my view, in keeping with current legislation and the principle that ought to be applied, that the court, in deciding whether to add or substitute a party to an action, ought not concern itself with whether the action is a “nullity”, but whether the amendment results in prejudice, bearing in mind express limitation periods and the principles behind them . . . This is not to deny the existence of error nor to say that error is always curable. Moreover, error is often attributable to lack of care and we do not encourage carelessness. I will return to that point in disposing of the costs of these appeals. Error, however, must not be compounded into injustice and the almost invariable result of charac- terizing proceedings as a nullity with automatic consequences tends to that end . . . : Frank v King Estate (1987), 56 Alta LR (2d) 289 at p. 300–301, 88 AR 241 (CA). 926 Capital Corp. v. Petro River Oil Corp. O’Ferrall J.A. 339

This principle was affirmed in Stout Estate v. Golinowski Estate, 2002 ABCA 49 (Alta. C.A.) at paras. 76– 82, (2002), 100 Alta. L.R. (3d) 5, 299 A.R. 13 (Alta. C.A.); Pearson Finance Group Ltd. v. Takla Star Resources Ltd., 2002 ABCA 84 (Alta. C.A.) at para. 21, (2002), 100 Alta. L.R. (3d) 223, 299 A.R. 351 (Alta. C.A.), and Kopr v. Kopr, 2006 ABQB 405 (Alta. Q.B.) at paras. 21–2, (2006), 59 Alta. L.R. (4th) 99, 403 A.R. 29 (Alta. Q.B.), and is reflected in R. 1.5. 4 Secondly, the tenant argues that the landlord’s new “damage” claim is also barred by the limitation period. That issue was not resolved, but rather was referred to trial. It was not an error for the Master and judge to conclude that the evidence and arguments before them were insufficient to decide the issue summarily. 5 Finally, the landlord cross–appeals the summary dismissal of its original claim for unpaid rent. The tenant had not paid any rent for over two years by the time the action was commenced, and there is no reviewable error shown in dismissing that portion of the claim. The possibility that the defendant is insolvent or judgment proof does not extend the limitation period: Smiechowski v. Preece, 2015 ABCA 105 (Alta. C.A.) at para. 2; Boyd v. Cook, 2013 ABCA 27 (Alta. C.A.) at para. 16, (2013), 84 Alta. L.R. (5th) 359, 542 A.R. 160 (Alta. C.A.). Statutes of limitation are statutes of repose. It is consistent with the public interest, and in the particular interests of debtors that they be allowed to put old obligations behind them, and get on with their economic lives. Here Petro River’s financial circumstances improved significantly when it participated in a reverse takeover. If participation in that type of corporate reorganization had the effect of reviving statute barred debts, no such re–organizations would be practical, and the whole purpose of the limitation statute would be defeated. 6 In summary, no reviewable error has been shown, and the appeal and cross–appeal are dismissed.

O’Ferrall J.A.(concurring in the result):

7 With respect to the tenant’s appeal of the chambers judge’s order per- mitting the landlord’s Statement of Claim to be amended to include a claim for foregone rent, I concur with the majority completely. 8 With respect to the landlord’s cross-appeal of the chambers judge’s dismissal of the landlord’s claim for unpaid rent, I also concur with the majority on the basis that the landlord conceded that the limitation peri- 340 ALBERTA LAW REPORTS 46 Alta. L.R. (6th) ods for the unpaid rent under this lease, which provided for periodic monthly rental payments, ran from each and every failure by the tenant to make a monthly rent payment. Given that concession, I also agree with the majority that the tenant’s financial situation was not a circumstance which warranted the landlord refraining from seeking a remedial order or orders. Appeal and cross-appeal dismissed. R. v. R. (J.F.) 341

[Indexed as: R. v. R. (J.F.)] Her Majesty the Queen (Respondent) and J.F.R. (Appellant) Alberta Court of Appeal Docket: Calgary Appeal 1501-0150-A 2016 ABCA 340 Ronald Berger, Patricia Rowbotham, Brian O’Ferrall JJ.A. Heard: June 22, 2016 Judgment: November 2, 2016 Criminal law –––– Youth offenders — Youth Criminal Justice Act — Sen- tencing — Adult sentence and election — Miscellaneous –––– Accused young person was convicted of second-degree murder after stabbing man in back with steak knife at party — Accused was handed down adult life sentence with no possibility of parole for seven years — Accused appealed sentence — Appeal allowed — Sentence of four years custody and three years supervision was imposed — Accused was entitled to credit for time served on her adult sentence — Sentencing judge erred in finding that Crown rebutted presumption of diminished moral blameworthiness — Expert reports spoke favourably of accused’s progress at young offenders centre since offences and of her genuine remorse — Sentencing judge erred when placing considerably greater emphasis on accused’s actions on night of offences than was placed on accused’s personal circumstances as documented by several expert doctors — Following factors influenced accused’s behaviour at time of offences: accused was suffering at low cognitive level; she was suffering from symptoms compatible with diagnoses of conduct disorder, attention deficit hyperactivity disorder, major depressive disorder, post-traumatic distress disorder and substance abuse; she suffered verbal and physical abuse by her mother; she was functioning as dependent, immature adolescent with level of functioning below what was expected of her age; she was subject to extrinsic influences given her heightened vulnerability — Events leading up to offences could be explained by accused’s immaturity, lack of judgment, and sense of invincibility, all of which were common characteristics of many young persons — Crown’s alternative explanation did not rebut presumption and sentencing judge erred in finding so. The accused young person was a 17 year old first time offender who attended a house party with a group of young people. A disagreement arose between her group and other attendees and when police arrive, her group left. The accused was insulted by her treatment at the party. At her instigation, she and other returned several hours later and entered the house through an unlocked door. The accused was armed with a steak knife. A young man in attendance at the party 342 ALBERTA LAW REPORTS 46 Alta. L.R. (6th) was already suffering from six stab wounds (perpetrated by another person) when the accused stabbed him once in the back. The accused later disposed of the knife and deleted a series of text messages in which she organized the return to the home. The accused was convicted of second-degree murder and was sentenced to adult life sentence with no possibility of parole for seven years. In addition to the life sentence, the accused received a concurrent five-year sentence as a party to aggravated assault, assault causing bodily harm, and assault. The sentencing judge held that the Crown discharged its burden of rebutting the presumption that the accused had diminished moral blameworthiness or culpability. Sentencing judge concluded that a youth sentence would not be of sufficient length to hold the accused accountable for her behaviour. In doing so, the sentencing judge rejected the recommendation of an expert who opined that an Intensive Rehabilitation, Custody and Supervision (IRCS) sentence would be beneficial to the accused would her accountable. The accused appealed her adult life sentence. Held: The appeal was allowed. Per Rowbotham J.A.: The appeal was allowed and a sentence of four years custody and three years supervision was imposed. The accused was entitled to credit for the time served on her adult sentence. The sentencing judge erred in finding that the Crown rebutted the presumption of diminished moral blameworthiness. The expert reports spoke favourably of the accused’s progress at young offenders centre since offences and of her genuine remorse. The sentencing judge erred when placing considerably greater emphasis on the accused’s actions on the night of the offences than were placed on accused’s personal circumstances as documents by several of the expert doctors. Although there were differences in their views, the overall view of the experts was that the following factors influences that accused’s behaviour at the time of the offences: accused was suffering at a low cognitive level; she was suffering from symptoms compatible with diagnoses of conduct disorder, attention deficit hyperactivity disorder, major depressive disorder, post-traumatic distress disorder and substance abuse; she suffered verbal and physical abuse by her mother; she was functioning as a dependent, immature adolescent with a level of functioning below what was expected of her age; she was subject to extrinsic influences given her heightened vulnerability. For purposes of sentencing, Parliament legislated a presumption of diminished moral responsibility for young persons. The events leading up to the offences could be explained by accused’s immaturity, lack of judgment, and sense of invincibility, all of which were common characteristics of many young persons; the Crown’s alternative explanation did not rebut the presumption and the sentencing judge erred in finding so. Accused’s age at time of offences and the passage of time rendered it impossible to imposed an IRCS sentence. Per Berger J.A. (concurring in the result): The appeal was allowed. Not all young people were similarly situated. Presumption was not incapable of being R. v. R. (J.F.) 343 rebutted. The sentencing judge’s primary concerns were the prospect of recidivism and the protection of the public. The critical issue on appeal was accused’s prospects for rehabilitation. The sentencing judge did not adequately consider the option of ordering the young accused person to serve a sentence not to exceed four years in custody with the balance to be served under conditional supervision in the community. As such, the maximum youth sentence without credit for pre-sentence custody was sufficient to hold the accused accountable for her offending behaviour. The appropriate sentence was four years in custody and three years supervision Per O’Ferrall J.A. (dissenting): The appeal should be dismissed. The sentencing judge’s reasons were comprehensive and reflected thoughtful attention to the balancing of the requisite factors under the Youth Criminal Justice Act. The sentencing judge was correct in concluding that the presumption of diminished moral blameworthiness or culpability was rebutted. There was no palpable and overriding error in the sentencing judge’s weighing of the evidence. The circumstances of the offence were as important a factor as the circumstances of the young person. The sentencing judge did not err in placing considerable emphasis on the circumstances of the offence in assessing the accused’s vulnerability. Ac- cused was the instigator of the armed home invasion and the fatal consequences that followed. The sentencing judge did not err in her consideration of the expert evidence. Even if the sentencing judge erred by giving too much weight to the circumstances surrounding the offence, her finding that the presumption was rebutted was still unimpeachable. Taken together, the accused’s age, the fact that she was not being manipulated by other, the fact that she was making rational decisions about her home and living conditions, and the accused’s capacity to discern the moral consequences of her actions, were capable of rebutting the presumption of reduced moral blameworthiness or culpability. The sentencing judge did not err finding a youth sentence would not be of sufficient length to hold the accused accountable. The harm done in this case was the taking of the life of an innocent young man. The sentencing judge’s reasons showed she was alive to the principles she was bound to apply in coming to her decision on accountability. It was clear the sentencing judge weighed relevant factors and came to a principled conclusion; there was no palpable and overriding error requiring appellate intervention. The case demonstrated difficulty in balancing principle of accountability with presumption of diminished moral blameworthiness or culpability in context of s. 72 of Act. Cases considered by Patricia Rowbotham J.A.: R. v. B. (D.) (2008), 2008 SCC 25, 2008 CarswellOnt 2708, 2008 CarswellOnt 2709, 56 C.R. (6th) 203, 231 C.C.C. (3d) 338, 374 N.R. 221, 293 D.L.R. (4th) 278, [2008] S.C.J. No. 25, 237 O.A.C. 110, [2008] 2 S.C.R. 3, 171 C.R.R. (2d) 133, 92 O.R. (3d) 399 (note) (S.C.C.) — considered 344 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

R. v. C. (C.H.) (2009), 2009 ABQB 125, 2009 CarswellAlta 301, 465 A.R. 240, [2009] A.J. No. 225 (Alta. Q.B.) — referred to R. v. E. (D.) (2008), 2008 ABPC 231, 2008 CarswellAlta 1141 (Alta. Prov. Ct.) — referred to R. v. E. (D.) (2010), 2010 ABCA 69, 2010 CarswellAlta 395, 252 C.C.C. (3d) 469, (sub nom. R. v. Estacio) 474 A.R. 360, (sub nom. R. v. Estacio) 479 W.A.C. 360 (Alta. C.A.) — considered R. v. T. (D.D.) (2010), 2010 ABCA 365, 2010 CarswellAlta 2350, 36 Alta. L.R. (5th) 153, [2011] 4 W.W.R. 455, [2010] A.J. No. 1385, 265 C.C.C. (3d) 49, 493 A.R. 167, 502 W.A.C. 167 (Alta. C.A.) — referred to R. v. T. (D.M.) (2012), 2012 ABCA 142, 2012 CarswellAlta 798, [2012] A.J. No. 446, 522 A.R. 180, 544 W.A.C. 180, 73 Alta. L.R. (5th) 136 (Alta. C.A.) — referred to R. v. W. (M.B.) (2008), 2008 ABCA 317, 2008 CarswellAlta 1246, (sub nom. R. v. Williams) 437 A.R. 325, (sub nom. R. v. Williams) 433 W.A.C. 325, [2008] A.J. No. 1024 (Alta. C.A.) — considered

Cases considered by Ronald Berger J.A.: R. c. Lacasse (2015), 2015 SCC 64, 2015 CSC 64, 2015 CarswellQue 11715, 2015 CarswellQue 11716, [2015] S.C.J. No. 64, [2015] A.C.S. No. 64, 86 M.V.R. (6th) 1, 24 C.R. (7th) 225, (sub nom. R. v. Lacasse) 478 N.R. 319, [2015] 3 S.C.R. 1089, 333 C.C.C. (3d) 450, 396 D.L.R. (4th) 214 (S.C.C.) — considered R. v. B. (D.) (2008), 2008 SCC 25, 2008 CarswellOnt 2708, 2008 CarswellOnt 2709, 56 C.R. (6th) 203, 231 C.C.C. (3d) 338, 374 N.R. 221, 293 D.L.R. (4th) 278, [2008] S.C.J. No. 25, 237 O.A.C. 110, [2008] 2 S.C.R. 3, 171 C.R.R. (2d) 133, 92 O.R. (3d) 399 (note) (S.C.C.) — considered

Cases considered by Brian O’Ferrall J.A. (dissenting): R. v. B. (D.) (2008), 2008 SCC 25, 2008 CarswellOnt 2708, 2008 CarswellOnt 2709, 56 C.R. (6th) 203, 231 C.C.C. (3d) 338, 374 N.R. 221, 293 D.L.R. (4th) 278, [2008] S.C.J. No. 25, 237 O.A.C. 110, [2008] 2 S.C.R. 3, 171 C.R.R. (2d) 133, 92 O.R. (3d) 399 (note) (S.C.C.) — considered in a minority or dissenting opinion R. v. E. (D.) (2010), 2010 ABCA 69, 2010 CarswellAlta 395, 252 C.C.C. (3d) 469, (sub nom. R. v. Estacio) 474 A.R. 360, (sub nom. R. v. Estacio) 479 W.A.C. 360 (Alta. C.A.) — considered in a minority or dissenting opinion R. v. M. (C.A.) (1996), 46 C.R. (4th) 269, 194 N.R. 321, 105 C.C.C. (3d) 327, 73 B.C.A.C. 81, 120 W.A.C. 81, [1996] 1 S.C.R. 500, 1996 CarswellBC 1000, 1996 CarswellBC 1000F, [1996] S.C.J. No. 28, EYB 1996-67066 (S.C.C.) — considered in a minority or dissenting opinion R. v. M. (S.H.) (1989), [1989] 2 S.C.R. 446, [1989] 6 W.W.R. 385, 100 N.R. 1, 69 Alta. L.R. (2d) 209, 100 A.R. 321, 50 C.C.C. (3d) 503, 71 C.R. (3d) 257, R. v. R. (J.F.) 345

1989 CarswellAlta 138, 1989 CarswellAlta 618, [1989] S.C.J. No. 93, EYB 1989-66922 (S.C.C.) — considered in a minority or dissenting opinion R. v. O. (A.) (2007), 2007 CarswellOnt 1181, [2007] O.J. No. 800, 2007 ONCA 144, 222 O.A.C. 38, 218 C.C.C. (3d) 409, 84 O.R. (3d) 561 (Ont. C.A.) — considered in a minority or dissenting opinion Statutes considered by Patricia Rowbotham J.A.: Youth Criminal Justice Act, S.C. 2002, c. 1 s. 3(1)(a) — considered s. 3(1)(b) — considered s. 3(1)(b)(ii) — considered s. 3(2) — considered s. 38 — considered s. 39 — considered s. 42(2)(q)(ii) — considered s. 64(1) — considered s. 72(1) — considered s. 89 — considered

Statutes considered by Ronald Berger J.A.: Youth Criminal Justice Act, S.C. 2002, c. 1 s. 42(2)(q)(ii) — considered s. 72(1)(b) — considered s. 89 — considered

Statutes considered by Brian O’Ferrall J.A. (dissenting): Criminal Code, R.S.C. 1985, c. C-46 s. 718.1 [en. R.S.C. 1985, c. 27 (1st Supp.), s. 156] — considered Young Offenders Act, R.S.C. 1985, c. Y-1 Generally — referred to s. 16(9) — considered s. 16(10) — considered Youth Criminal Justice Act, S.C. 2002, c. 1 Generally — referred to s. 3(1)(a)(ii) — considered s. 37 — referred to s. 37(4) — considered s. 38(1) — considered s. 38(2)(c) — referred to s. 38(3)(a) — considered s. 38(3)(b) — considered s. 42(2)(q)(ii) — considered s. 42(2)(r)(iii) — considered 346 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

s. 64(1) — considered s. 64(1.1) [en. 2012, c. 1, s. 176(1)] — considered s. 64(1.2) [en. 2012, c. 1, s. 176(1)] — considered s. 72 [am. 2012, c. 1, s. 183] — considered s. 72(1) [rep. & sub. 2012, c. 1, s. 183(1)] — considered s. 72(1)(a) [rep. & sub. 2012, c. 1, s. 183(1)] — considered s. 72(1)(b) [rep. & sub. 2012, c. 1, s. 183(1)] — considered

APPEAL by accused young person from adult life sentence with no possibility of parole for seven years imposed following conviction for second-degree murder.

S. Clive, for Respondent I. McNish, D. Tan, for Appellant

Patricia Rowbotham J.A.: I. Introduction 1 The appellant, a young person convicted of second-degree murder, appeals her adult life sentence with no possibility of parole for seven years. 2 The appellant was a 17-year-old first time offender who attended a house party with a group of young people. Her group had not been invited. A disagreement arose between her group and other attendees and when police arrived, her group left. The appellant was insulted by her treatment at the party. At her instigation, she and others returned several hours later and entered the house through an unlocked door. The appellant was armed with a steak knife. 3 A young man in attendance at the party was already suffering from six stab wounds (perpetrated by another person) when the appellant stabbed him once in the back. She later disposed of the knife and deleted a series of text messages in which she had organized the return to the home. 4 In addition to the life sentence, the appellant received a concurrent five-year sentence as a party to aggravated assault, assault causing bodily harm, and assault; no appeal arises in that regard.

II. Sentencing Decision 5 The Crown applied pursuant to section 64(1) of the Youth Criminal Justice Act, SC 2002, c 1 [YCJA] for an order that the appellant be liable to an adult sentence. It sought a life sentence with no possibility of parole R. v. R. (J.F.) Patricia Rowbotham J.A. 347

for seven years. The appellant argued in favour of the maximum youth Intensive Rehabilitation, Custody and Supervision (IRCS) order of seven years, with no credit for 846 days of presentence custody. 6 The main focus of the submissions before the sentencing judge and before this court is section 72(1) of the YCJA. 72(1) The youth justice court shall order that an adult sentence be imposed if it is satisfied that (a) the presumption of diminished moral blameworthiness or culpability of the young person is rebutted; and (b) a youth sentence imposed in accordance with the purpose and principles set out in subparagraph 3(1)(b)(ii) and section 38 would not be of sufficient length to hold the young person accountable for his or her offending behaviour. 7 The sentencing judge held that the Crown had discharged its burden of rebutting the presumption that the appellant had diminished moral blameworthiness or culpability. She further concluded that a youth sentence would not be of sufficient length to hold the appellant accountable for her behaviour. In so doing she also rejected the recommendation of an expert who opined that an IRCS sentence would be beneficial to the appellant and would hold her accountable for her behaviour.

III. Grounds of Appeal and Standard of Review 8 The appellant contends that the sentencing judge erred in holding that: (1) the presumption of diminished moral blameworthiness or culpability of the young person was rebutted; and (2) a seven-year IRCS youth sentence imposed in accordance with the purpose and principles set out in subparagraph 3(1)(b)(ii) and section 38 would not be of sufficient length to hold the young person accountable for her offending behaviour. 9 R. v. W. (M.B.), 2008 ABCA 317 (Alta. C.A.) at para 10, (2008), 437 A.R. 325 (Alta. C.A.), held that the “standard of review for a decision under section 72 of the YCJA to sentence a young offender as an adult is deferential”, relying on the following passage from R. v. B. (D.), 2008 SCC 25 (S.C.C.) at para 101, [2008] 2 S.C.R. 3 (S.C.C.): Section 72(1) of the YCJA sets out a number of matters to be considered by the youth justice court in reaching its opinion about whether a youth sentence would be sufficient. The reasons for sentence of the 348 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

trial judge reflect that he did so. His weighing of these matters to reach his opinion about sufficiency is a task that must attract deference in this court. The Crown does not suggest that he acted on an improper principle or considered extraneous matters. It essentially argues that he did the weighing wrongly. In my view, that is not enough to warrant the setting aside of his decision......

IV. Analysis A. Legislation 10 In addition to section 72(1) the following sections of the YCJA are relevant: 3(1) The following principles apply in this Act: (a) the youth criminal justice system is intended to protect the public by (i) holding young persons accountable through measures that are proportionate to the seriousness of the offence and the degree of responsibility of the young person, (ii) promoting the rehabilitation and reintegration of young persons who have committed offences, and (iii) supporting the prevention of crime by referring young persons to programs or agencies in the community to address the circumstances underlying their offending behaviour; (b) the criminal justice system for young persons must be separate from that of adults, must be based on the principle of diminished moral blameworthiness or culpability and must emphasize the following: (i) rehabilitation and reintegration, (ii) fair and proportionate accountability that is consistent with the greater dependency of young persons and their reduced level of maturity, (iii) enhanced procedural protection to ensure that young persons are treated fairly and that their rights, including their right to privacy, are protected, (iv) timely intervention that reinforces the link between the offending behaviour and its consequences, and (v) the promptness and speed with which persons responsible for enforcing this Act must act, given young persons’ perception of time; R. v. R. (J.F.) Patricia Rowbotham J.A. 349

[...] (emphasis added) (2) This Act shall be liberally construed so as to ensure that young persons are dealt with in accordance with the principles set out in subsection (1). [...] 38 (1) The purpose of sentencing under section 42 (youth sentences) is to hold a young person accountable for an offence through the imposition of just sanctions that have meaningful consequences for the young person and that promote his or her rehabilitation and reintegration into society, thereby contributing to the long-term protection of the public. (2) A youth justice court that imposes a youth sentence on a young person shall determine the sentence in accordance with the principles set out in section 3 and the following principles: (a) the sentence must not result in a punishment that is greater than the punishment that would be appropriate for an adult who has been convicted of the same offence committed in similar circumstances; (b) the sentence must be similar to the sentences imposed in the region on similar young persons found guilty of the same offence committed in similar circumstances; (c) the sentence must be proportionate to the seriousness of the offence and the degree of responsibility of the young person for that offence; (d) all available sanctions other than custody that are reasonable in the circumstances should be considered for all young persons, with particular attention to the circumstances of aborigi- nal young persons; (e) subject to paragraph (c), the sentence must (i) be the least restrictive sentence that is capable of achieving the purpose set out in subsection (1), (ii) be the one that is most likely to rehabilitate the young person and reintegrate him or her into society, and (iii) promote a sense of responsibility in the young person, and an acknowledgement of the harm done to victims and the community; and (f) subject to paragraph (c), the sentence may have the following objectives: (i) to denounce unlawful conduct, and 350 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

(ii) to deter the young person from committing offences. (3) In determining a youth sentence, the youth justice court shall take into account (a) the degree of participation by the young person in the commission of the offence; (b) the harm done to victims and whether it was intentional or reasonably foreseeable; (c) any reparation made by the young person to the victim or the community; (d) the time spent in detention by the young person as a result of the offence; (e) the previous findings of guilt of the young person; and (f) any other aggravating and mitigating circumstances related to the young person or the offence that are relevant to the purpose and principles set out in this section.

B. The Experts 11 In addition to the Youth Presentence Report prepared to assist the court in determining whether to sentence the appellant as an adult or young person, the sentencing judge had the benefit of two expert reports whose authors also testified at the sentencing hearing. 12 The Psychological, Psychiatric and Risk Report was prepared jointly by Dr. Day (clinical psychologist) and Dr. Naylor (consulting psychia- trist). The authors read and were familiar with the conviction reasons of the sentencing judge. Their psychiatric assessment of the appellant was as follows: at the time of the report the appellant was medicated with anti-depressants and insomnia medication and she was diagnosed as having chronic problems with inattention and impulsivity which were consistent with a diagnosis of Attention Deficit Hyperactivity Disorder — Inattentive Type (ADHD) which was treated with a psychostimulant. Her intellectual abilities were in the low average range. She had a highly neg- ative world view; her profile was consistent with adolescents who are troubled by their intense and variable moods, by a restless nervousness, by periods of dejection and self-deprecation, and by episodes of isolation and anger. Her profile was also consistent with low self-esteem. In short, she presented like youths who have been diagnosed with a mood disorder. The doctors summarized that her profile was consistent with substance abuse difficulties as a way of attempting to self-medicate her R. v. R. (J.F.) Patricia Rowbotham J.A. 351

mood disorder. They also noted that she suffered from many of the symptoms associated with PTSD. 13 The report’s authors noted that the appellant expressed genuine remorse for the victims and their families. Her involvement “can best be understood as the result of a youth who was acutely intoxicated and got caught up in an escalating conflict that ultimately led to incredibly poor decisions with tragic consequences”. In the context of whether an adult or a youth sentence was appropriate, the authors noted that the difference in time served would likely be negligible but an adult sentence would place her on parole for the rest of her life whereas supervision would end at the conclusion of the seven-year youth sentence. They concluded that her risk for general recidivism was low and her risk to commit an act of violence was rated to be low-moderate. They recommended substance abuse treatment, individual therapy, and psychiatric management. 14 These experts acknowledged in cross-examination that they were mistaken about the appellant’s level of intoxication at the time of the offences. The appellant was intoxicated during the first visit to the home. The sentencing judge found that the appellant was only a little bit intoxicated when she returned to the home several hours later. 15 A second expert report was prepared by Dr. Gupta, a child psychia- trist in the Alberta Hospital Turningpoint Program. He summarized his conclusions as follows. First, he agreed that the appellant had conduct disorder, major depressive disorder, post-traumatic stress disorder, and substance abuse (alcohol and marijuana). He did not see signs of ADHD. Given the Day/Naylor report’s conclusion that there would be a negligible difference between the period of incarceration of an adult and youth sentence, he assessed the appellant’s suitability for an IRCS sentence and concluded that: [The appellant] is also clearly in need of therapeutic and psycho- pharmacological intervention... [that] can be part of the therapeutic interventions that she receives as part of the IRCS. In view of the above the treatment team would respectfully recom- mend that [the appellant] be made the subject of an IRCS sentence. It is also respectfully recommended that if she was to be made the subject of an IRCS sentence then she should not be given any [credit for] time served. It is respectfully recommended that [the appellant] should serve the entire sentence under the auspices of IRCS sentence in order to facilitate appropriate duration of treatment and supervision. 352 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

16 The appellant’s proposed IRCS Plan took into account that she had been remanded in custody since January 2013 and had already expressed her willingness and suitability to participate in treatment. She would therefore immediately be in Phase II (intensive treatment) at the Alberta Hospital in secure custody (the Turningpoint program) for at least 18 to 24 months. About 12 months before release from custody, a sentence review to open custody would be considered to facilitate the third phase (reintegration). Thereafter the process of gradual transitioning into the community would begin with a comprehensive transitional plan and risk managed conditions. Recommendations would be made to the court in consultation with the IRCS coordinators, the probation officer and other identified stakeholders. 17 All of the reports spoke favourably of the appellant’s progress at the Calgary Young Offenders Centre since the offences and of her genuine remorse.

C. Presumption of Diminished Moral Blameworthiness or Culpability 18 The YCJA recognizes that the criminal justice system for young persons must be separate from that of adults, based upon the principle of diminished moral blameworthiness. Emphasis is on accountability that is consistent with the reduced level of maturity of young persons: section 3(b)(ii). The Supreme Court has also recognized that “because of their age, young people have heightened vulnerability, less maturity and a reduced capacity for moral judgment. This entitles them to a presumption of diminished moral blameworthiness or culpability” B. (D.) at para 41. 19 In line with the Supreme Court’s instruction, the sentencing judge looked at three factors: heightened vulnerability, reduced maturity level, and reduced capacity for moral judgment. 20 With respect to heightened vulnerability the sentencing judge noted Dr. Gupta’s opinion that the appellant relied upon others for guidance and a sense of security. He opined that because the appellant was dependent upon others, she was highly sensitive to their criticism and disapproval and that she had an intense need for acceptance and might become angry when that need was unfilled. The sentencing judge commented that while Dr. Gupta’s profile might provide some explanation (albeit un- satisfactory) as to why the appellant reacted so extremely and irrationally on the night of the offence, it did not explain why the appellant needed the acceptance of strangers and why she would react so violently when it was denied. R. v. R. (J.F.) Patricia Rowbotham J.A. 353

21 The sentencing judge then went on to consider at length the circumstances of the offence. The sentencing judge observed that upon the first visit to the home, the appellant was not intimidated; she wandered about the house; when asked to leave, she took offence and shoved a man much larger than her; and that she refused to back down even though she was much younger and smaller than the others. The sentencing judge described the appellant as scheming to return to the house for revenge by calling friends to come and help her. Even when the appellant returned to the home for the second time and found herself among a number of much larger and somewhat older male occupants, the appellant did not retreat. The sentencing judge found that the appellant did not display helplessness, powerlessness, dependency, or susceptibility to influence or intimidation. 22 In assessing the appellant’s reduced maturity level, the sentencing judge found that the appellant’s plan of attack and efforts to avoid detection were ill-conceived and na¨ıve. There was evidence from the party goers and the police that the appellant seemed young and immature. Drs. Naylor and Day reported that the appellant had failed to progress in a number of prosocial avenues and that her level of functioning was below that expected for her age. Against this evidence the sentencing judge noted that at the time of the offence, the appellant was making adult decisions, “albeit not the best ones.” The appellant decided with which parent she should live, what school to attend, and whether she should stay out all night. The sentencing judge again emphasized the appellant’s conduct on the night of the offence. She also relied upon a comment by Dr. Gupta that the appellant appeared to be her stated age. She concluded that the appellant did not have a reduced level of maturity. 23 The final factor for consideration is whether the young person has a reduced capacity for moral judgment. In other words, is the capacity to understand right from wrong reduced because of the offender’s age? The sentencing judge said this: In this regard, I note that [the appellant] manipulated or inspired her group under the charge or banner of it “being wrong to hit girls”. This displays a capacity for moral judgment, albeit it also displays a complete immoral decision or reaction in the face of her morals or values being seemingly affronted. 24 The sentencing judge concluded that overall the Crown had rebutted the presumption of reduced moral capacity. 354 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

25 As emphasized in B. (D.), because of their age, young people have heightened vulnerability, less maturity, and a reduced capacity for moral judgment. That is why there is a separate legal and sentencing regime for them. It is widely acknowledged that age plays a role in the development of judgment and moral sophistication. The restrictions on custody in sections 38 and 39 also reflect the reduced maturity and moral sophistication of young persons. Nevertheless, an adult sentence may be imposed if the seriousness of the offence and the circumstances of the offender justify it, notwithstanding the age of the offender. 26 I am mindful of the standard of appellate review and the discretion afforded to the sentencing judge in weighing the various factors necessary to rebut the presumption. However, I conclude that the sentencing judge erred. She placed considerably greater emphasis on the appellant’s actions on the night of the offences than were placed on the appellant’s personal circumstances as documented by Drs. Naylor, Day, and Gupta. Although there were differences in their views of whether the appellant suffered from ADHD, the overall view of the experts was that the following factors influenced the appellant’s behavior at the time of the offences: a. She was functioning at a low cognitive level; b. She was suffering from symptoms compatible with diagnoses of conduct disorder, attention deficit hyperactivity disorder, major depressive disorder, post-traumatic distress disorder and substance abuse; c. She had suffered verbal and physical abuse by her mother; d. She was functioning as a dependent, immature adolescent with a level of functioning below what was expected for her age; e. She was subject to extrinsic influences given her heightened vulnerability. 27 In any event, even if the focus is on the circumstances of the offences, these circumstances can be seen in an entirely different, and in my view more supportable, manner. Invincibility, bravado, and poor judgment are the hallmarks of immaturity. The appellant’s actions can certainly be seen in that light. The sentencing judge remarked that upon the first visit to the home, the appellant was not intimidated. When asked to leave the party, she pushed and shoved a man considerably larger than her. She threatened someone, saying, “You don’t know who my fucking family is. I could have you killed in a second.” When she returned to the home the R. v. R. (J.F.) Patricia Rowbotham J.A. 355

second time and found herself among a number of much larger and older males, she did not retreat. When others in her group departed, she jumped further into the fray. The entire plan of returning to the home because of an insult and because it was wrong to hit girls is completely irrational. The sentencing judge acknowledged as much when she stated that the “plan of attack and the efforts to avoid detection were ill conceived and na¨ıve.” 28 I am cognizant that in convicting the appellant, the sentencing judge was not prepared to see the appellant’s actions “through a lens of immaturity” that would render her incapable of forming the requisite intent for second degree murder. Indeed, on the version of the events which the sentencing judge accepted, the appellant stabbed the victim in the back. 29 However, for purposes of sentencing, Parliament has legislated a presumption of diminished moral responsibility for young persons. The events leading up to the offences can be explained by the appellant’s immaturity, lack of judgment, and sense of invincibility, all of which are common characteristics of many young persons. The Crown’s alternative explanation did not rebut the presumption and the sentencing judge erred in so finding. 30 We were referred to several cases in which young persons were sentenced for second degree murder. Some were sentenced as adults; some as young persons. The cases vary largely because of the different circumstances of the offender, and not because of the circumstances of the offence. By way of example, in R. v. E. (D.), 2010 ABCA 69, 474 A.R. 360 (Alta. C.A.), aff’g R. v. E. (D.), 2008 ABPC 231, [2008] A.W.L.D. 3606 (Alta. Prov. Ct.), this court upheld a decision to sentence a young person as an adult. The young person was 17. Like the appellant he stabbed the victim at a party to which he had not been invited. He had dropped out of school and distanced himself from his family. He was a member of a gang and had achieved some success as a drug trafficker. He did not have a criminal record but during his IRCS assessment he admitted to having stabbed people before in previous, unreported inci- dents connected to his trafficking and gang activities. He also showed no remorse, and indeed was proud of his actions. Even in custody he maintained his gang connections. In contrast, the appellant has no such history, has taken steps to change her life, and is genuinely remorseful for her conduct. 31 Accordingly, I conclude that the sentencing judge erred in finding that the Crown had rebutted the presumption of diminished moral blame- 356 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

worthiness. In light of this conclusion, it is unnecessary to consider the second ground of appeal. The appellant ought not to have been sentenced as an adult.

D. Fit Sentence 32 The appellant submits that we ought to impose the IRCS sentence which was proposed at the time of sentencing in 2015. The IRCS sentence presented by Dr. Gupta and endorsed by Drs. Naylor and Day was based upon the maximum youth sentence of four years custody and three years supervision with 18 to 24 months of intensive counselling at the Turningpoint program at the Alberta Hospital. The intensive therapy provided at the Turningpoint was the main reason for the endorsement of the experts. However, an offender must be discharged from the Turningpoint program prior to their 21st birthday. The appellant turned 21 on July 3, 2016 and as a result is no longer eligible for the program. There is nothing in the record which assists in crafting a sentence which includes the intensive therapy essential to an IRCS sentence. In the result, the appellant’s age at the time of the offences and the passage of time renders it impossible to impose an IRCS sentence. 33 Where a young person is convicted of second degree murder the court shall order the young person to serve a sentence not to exceed four years custody with the balance to be served under conditional supervision in the community: section 42(q)(ii). In my view the maximum youth sentence without credit for presentence custody is sufficient to hold the appellant accountable for her offending behaviour. Credit for pre-sentence custody is discretionary: R. v. T. (D.M.), 2012 ABCA 142 (Alta. C.A.) at para 11, (2012), 522 A.R. 180 (Alta. C.A.) and R. v. T. (D.D.), 2010 ABCA 365 (Alta. C.A.) at para 33, (2010), 493 A.R. 167 (Alta. C.A.). A court can decline to give credit for pre-sentence custody if doing so would effectively exhaust the custodial portion of the sentence or would fail to hold the young person sufficiently accountable: see T. (D.D.) at paras 56-57; R. v. C. (C.H.), 2009 ABQB 125, 465 A.R. 240 (Alta. Q.B.).

V. Conclusion 34 I allow the appeal and impose a sentence of four years custody and three years supervision. This is the sentence that ought to have been imposed at the date of sentencing. The appellant is entitled to credit for the time served on her adult sentence from May 19, 2015 to the date of this judgment. This credit is to be deducted from the custodial portion of her R. v. R. (J.F.) Ronald Berger J.A. 357

sentence. The appellant’s age triggers the consequences contemplated in section 89 of the YCJA. I anticipate that those charged with the responsibility of placing young persons can appropriately address the appellant’s circumstances.

Ronald Berger J.A.:

35 I have had the advantage of reading in draft form the competing Rea- sons for Judgment of my colleagues. 36 O’Ferrall, J.A. addresses the rebuttable presumption of diminished moral blameworthiness or culpability and concludes, inter alia, that the presumption may be incapable of being rebutted. He adds that: “We may have a situation where the imposition of an adult sentence is practically impossible.” 37 With great respect, I disagree. Not all young people are similarly situ- ate. Abella, J. in R. v. B. (D.), [2008] 2 S.C.R. 3 (S.C.C.) spoke of the heightened vulnerability, immaturity and reduced capacity for moral judgment of young persons. I am certain that she understood full well that such indicia are variable and always a matter of relative degree. Nor are the foundational factors exhaustive. The components of the trio of indicia cited by Abella, J., I suggest, include: diminished empathy, heightened impulsiveness, susceptibility to peer pressure and diminished ability to reason and appreciate the consequences of one’s actions. All of these must be assessed on an individualized basis by the sentencing judge whose task is both delicate and difficult. 38 O’Ferrall, J.A. concedes, as did the sentencing judge, that the actions of the appellant in orchestrating the home invasion in the case at bar “was not a reliable measure of her maturity.” (paragraph [12] of Justice O’Ferrall’s judgment). The judge below, accordingly, relied upon the young offender’s capacity to make informed decisions and, in the light of Dr. Gupta’s report which concluded “that she had insight and judgment congruent with her stated age”, found that the presumption had been rebutted. 39 In my opinion, that adjudication is entitled to deference and is unassailable on appeal given the standard of review. 40 The youth court judge then addressed section 72(1)(b) of the Youth Criminal Justice Act (the “YCJA”) and found that a youth sentence was of insufficient length to hold the young person accountable. 358 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

41 The difficulty in this case is the following: The appellant was 17 years old when the offence was committed. Yet she was almost 20 when she was sentenced on May 19, 2015. As Justice O’Ferrall points out, given her age “she was destined to be placed in an adult correctional facility even if the youth sentence option was imposed. Four years of intensive rehabilitative custody in a youth facility was out of the question.” Accordingly, he concludes that appellate intervention is not warranted and the adult sentence of life imprisonment with no possibility of parole for seven years must stand. 42 Again, I respectfully disagree. Two less punitive options were available (as set out in paragraph [17] of Justice O’Ferrall’s judgment. The first option is that the court can impose a custodial sentence not exceeding four years followed by a placement under conditional supervision to be served in the community: as section 42(2)(q)(ii). Al- ternately, the court could make an intensive rehabilitative custody and supervision order for a period not exceeding 7 years consisting of 4 year of intensive rehabilitative custody and a placement under conditional supervision to be served in the community for the remaining 3 years of the 7-year sentence: section 42(2)(r)(iii). It was this second option which was put before the trial judge in this case by the appellant. 43 The sentencing judge’s primary concerns were the prospect of recidivism and the protection of the public. She was of the view that the appellant needed longer supervision than a youth sentence could provide. That drove the adult sentence because the judge had doubts as to whether a rehabilitative custody and supervision sentence was available. If she imposed a youth sentence, the appellant’s responsibility for her crimes would end when she was almost 27 years of age. At that time supervision would end and, in the judge’s words, “regardless of where she is along her path to rehabilitation and regardless of whether she continues to pose a risk to society...” 44 As I see it, the critical issue on appeal is the appellant’s prospects for rehabilitation. She had never before been convicted of a criminal offence. Everyone, the experts and the judge alike were persuaded that JFR was a good candidate for a sentence of “intensive rehabilitative custody and supervision.” 45 In the recent case of R. c. Lacasse, [2015] 3 S.C.R. 1089, 2015 SCC 64 (S.C.C.) (CanLII), both the majority and Justice Gascon (in dissent) reminded us of the desire of Parliament to give increased prominence to R. v. R. (J.F.) Brian O’Ferrall J.A. 359

the principles of restraint and proportionality, particularly as they apply to young persons with no criminal record. As Justice Gascon explained: [134] Furthermore, [translation] “the objective of general and even specific deterrence does not relate exclusively to the severity of a sentence considered in the abstract. Deterrence can work through conditions tailored to fit the offender or the circumstances of the offender, as the ... Court noted in Proulx”: Dadour, at p. 8 (footnote omitted). This principle is even more important in the case of a young person with no criminal record: Priest. As Twaddle J.A. observed in R. v. Leask (1996), 113 Man. R. (2d) 265 (C.A.), at para. 3, “the transition from statutorily defined young person to adult should not be marked by an immediate abandonment of rehabilitation as the primary goal in cases where the prospect of successful rehabilitation is real”. Lacasse, para. 134 46 I acknowledge that this was a difficult case. I am of the view, however, that the sentencing judge did not adequately consider the option of ordering this young person to serve a sentence not to exceed four years in custody with the balance to be served under conditional supervision in the community: section 42(q)(ii) of the YCJA. Accordingly, insofar as that ground of appeal is concerned I share the opinion of Rowbotham, J.A. that the maximum youth sentence without credit for pre-sentence custody is sufficient to hold the appellant accountable for her offending behaviour. 47 In the result, I would also allow the appeal and impose a sentence of 4 years in custody and 3 years supervision. I would accord to the appellant credit for the time served on her adult sentence from May 19, 2015 to the date of this judgment, to be deducted from the custodial portion of her sentence. 48 Mindful that the appellant’s age triggers the consequences contemplated by section 89 of the YCJA, I am confident that every effort will be made by those charged with the responsibility for placing JFR to provide her with the opportunity to benefit from rehabilitative measures when in custody and following her release.

Brian O’Ferrall J.A. (dissenting): I. Introduction 49 This case illustrates the tension in the Youth Criminal Justice Act, SC 2002, c 1 [YCJA] between the requirement that young offenders be held 360 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

accountable for their offending behaviour (the legislated purpose of sentencing young persons) and the presumption that young persons are less blameworthy for their acts than adults. Accountability and diminished responsibility seemingly are at the opposite ends of the spectrum. 50 This case also begs the question of how the Crown could ever discharge the onus of rebutting the presumption of diminished moral blameworthiness or culpability without placing considerable emphasis on the circumstances of the offence and the offender’s participation in it. 51 Finally, this case raises the question of whether any young person less than 18 years of age is sufficiently mature to rebut the presumption. Par- liament has decreed that the presumption of diminished blameworthiness or culpability is rebuttable. But if, because of the development of adolescent brains, the presumption is incapable of being rebutted in fact, then we may have a situation where the imposition of an adult sentence is practically impossible, even where the youth sentence may not provide the necessary degree of public protection. 52 Finally, there does not appear to have been any Supreme Court authority on what is required to rebut the presumption of diminished moral blameworthiness or culpability since section 72 of the YCJA was amended in 2012 by the Safe Streets and Communities Act, SC 2012, c 1. Of course, helpful guidance was provided by Madam Justice Abella prior to the amendment in R. v. B. (D.), 2008 SCC 25, [2008] 2 S.C.R. 3 (S.C.C.). Indeed, it was R. v. B. (D.) which prompted the 2012 amend- ments of section 72.

II. Disposition 53 In my view, absent a change in the law, there is nothing in the trial judge’s decision ordering that an adult sentence be imposed in this case which justifies appellate intervention. I see no error in principle and, un- like the majority, no disproportionate emphasis on the circumstances of the offence versus the circumstances of the offender in the trial judge’s determination that the presumption of diminished moral blameworthiness or culpability had been rebutted. The trial judge’s reasons are comprehensive and reflect thoughtful attention to the balancing of the requisite factors under the YCJA.

III. Facts 1 54 The facts of this case are that the appellant, at the age of 17 /2, crashed a house party with some friends. The appellant and her friends were not R. v. R. (J.F.) Brian O’Ferrall J.A. 361

invited. An altercation took place when the appellant and her friends were asked to leave. Some of the appellant’s friends left of their own accord, but the appellant left only when asked to do so by the police. 55 The appellant left angry over the treatment the group had received. She spent the next couple of hours rounding up a second group of friends to go back to the house where the party had been held to exact revenge. The appellant armed herself and an older, adult member of her group with steak knives. At 3:00 in the morning, after the party was over and most of the guests had gone home and some of the occupants had gone to bed, the appellant and her friends broke in through an unlocked door and mayhem ensued. The appellant’s adult friend stabbed a young man six times and while the young man was still standing, the appellant stabbed him in the back. The young man bled to death from his wounds. 56 The appellant was convicted of second-degree murder as a principal. In addition, she was convicted of being a party to an aggravated assault, an assault causing bodily harm, and a common assault — charges arising from injuries suffered by three other individuals who were stabbed or injured by the appellant’s adult friend. The victim of one of the assaults suffered life-threatening injuries and remains permanently disabled.

IV. The sentencing judge’s decision 57 Prior to sentencing, the Crown applied under section 64(1) of the YCJA for an order that the appellant be sentenced as an adult. If granted, the Crown’s application would have resulted in the appellant being sentenced to life imprisonment, with the right to apply for parole after seven years. To obtain an order that an adult sentence be imposed, the court had to be satisfied that the requirements of section 72(1) of the YCJA were met. 72(1) The youth court shall order that an adult sentence be imposed if it is satisfied that (a) the presumption of diminished moral blameworthiness or culpability of the young person is rebutted; and (b) a youth sentence imposed in accordance with the purpose and principles set out in subparagraph 3(1)(b)(ii) and section 38 would not be of sufficient length to hold the young person accountable for his or her offending behaviour. 58 The onus of satisfying the court that these requirements had been met was on the Attorney General. 362 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

A. The presumption of diminished moral blameworthiness or culpability 59 In considering whether the Crown had rebutted the presumption of diminished moral blameworthiness or culpability in section 72(1)(a) of the YCJA, the sentencing justice considered the appellant’s vulnerability, maturity, and capacity for moral judgment, a test she drew from Justice Abella’s dicta in B. (D.) at paragraph 41: ...because of their age, young people have heightened vulnerability, less maturity and a reduced capacity for moral judgment. This entitles them to a presumption of diminished moral blameworthiness or culpability. [emphasis in original] 60 The sentencing judge found, in both the appellant’s personal circumstances and in the circumstances surrounding the offences, that the presumption of heightened vulnerability or immaturity had been rebutted. She found that the appellant gave no indication, through her actions, that she was vulnerable or that at the time of the offences she was being manipulated by others. Indeed, the trial judge found that the appellant was the instigator of the armed home invasion, motivated by a desire to exact revenge. In her conviction decision, the trial judge had found: The accused intended, designed and orchestrated the joint attack: she gathered her friends and weapons; and under the banner of teaching someone a lesson for hitting girls, she encouraged and incited her friends, including Harkus [appellant’s co-accused], to attack the occupants of the Brisebois house. 61 With respect to the appellant’s maturity, the trial judge quite properly found that the fact that the appellant orchestrated this deadly invasion was not a reliable measure of her maturity. She noted that while engaging in criminal acts is evidence of immaturity, the same could be said for “mature” adults who engage in such behaviour. So the trial judge instead assessed the appellant’s maturity in terms of the adult decisions she was making about where and with whom she would live and what type of school she would attend to better enabled her to graduate. She found that in these areas the appellant was making mature decisions. 62 In dealing with the appellant’s capacity for moral judgment, the trial judge held: Was she capable of understanding right from wrong? Was this capacity reduced because of her age? In this regard, I note that [the appellant] manipulated or inspired her group under the charge or banner of it “being wrong to hit girls.” This displays a capacity for moral judg- R. v. R. (J.F.) Brian O’Ferrall J.A. 363

ment, albeit it also displays a complete immoral decision or reaction in the face of her morals or values being seemingly affronted. The expert reports show that [the appellant’s] IQ is average to low average, and she had no significant mental health problems or major stressors prior to the offence. Her diagnosis of PTSD and misconduct disorder arise because of the offences. The report of Dr. Naylor and Dr. Day at page 142 suggest that [the appellant] is capable of, and was at the time of the offence, capable of exercising moral judgment. Dr. Gupta’s report concluded that she had insight and judgment congruent with her stated age. Overall, I find that the evidence rebuts the presumption of reduced moral capacity. 63 In light of these finding with respect to vulnerability, maturity and moral capacity, the sentencing judge concluded that the presumption of diminished moral blameworthiness or culpability had been rebutted.

B. Sentence of sufficient length to hold the appellant accountable? 64 The trial judge then turned to the other half of the test, set out in section 72(1)(b), namely whether a youth sentence would be of sufficient length to hold the appellant accountable for her offending behaviour. She applied the definition of “accountable” found in the Ontario Court of Ap- peal’s decision in R. v. O. (A.), 2007 ONCA 144, 222 O.A.C. 38 (Ont. C.A.). After citing the decision of the Supreme Court of Canada in R. v. M. (C.A.), [1996] 1 S.C.R. 500, 105 C.C.C. (3d) 327 (S.C.C.) the court in O. (A.) held in that: In our view, for a sentence to hold a young offender accountable in the sense of being meaningful it must reflect, as does a retributive sentence, “the moral culpability of the offender, having regard to the intentional risk-taking of the offender, the consequential harm caused by the offender, and the normative character of the offender’s conduct” (underlining omitted). We see no other rational way for mea- suring accountability. (para 47) 65 In applying these factors, the sentencing judge noted that the appellant’s propensity for intentional risk-taking was “enormous” as was the consequential harm arising from her conduct. Regarding the normative character of the appellant’s conduct, the sentencing judge stated: These offences arose because of an armed home invasion in the early morning hours. Brett Weise [the murder victim] was unknown to any of those in the group who invaded the Brisbois home. He was an innocent bystander, waiting for a cab to take him home. Few of soci- 364 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

ety’s values rank as high as the sanctity and value of life and the security of our homes. The Crown has referred me to the Alberta Court of Appeal’s decision of Matwiy which eloquently sets out society’s expectations and rights to the sanctity of our homes. 66 In determining whether a youth sentence imposed in accordance with the YCJA is of sufficient length to hold the young person accountable for his or her offending behaviour, a sentencing court must consider what sentence options the law provides. Subsections 42(2)(q)(ii) and 42(2)(r)(iii) of the YCJA prescribe two options for sentencing young persons who commit second-degree murder. The first option is that the court can impose a custodial sentence not exceeding four years followed by a placement under conditional supervision to be served in the community: s. 42(2)(q)(ii). Alternately, the court could make an intensive rehabilitative custody and supervision order for a period not exceeding seven years consisting of four years of intensive rehabilitative custody and a placement under conditional supervision to be served in the community for the remaining three years of the seven-year sentence: s. 42(2)(r)(iii). It was this second option which was put before the trial judge in this case by the appellant. 67 The adult sentencing option was life imprisonment with no eligibility for parole for seven years. This option was urged by the Crown. 68 Both parties were agreed that no credit should be given for pre-sentence custody if the youth sentence option was adopted. 69 However, the reality facing the trial judge was that because the appellant was almost 20 when she was sentenced on May 19, 2015, she was destined to be placed in an adult correctional facility even if the youth sentence option was imposed. Four years of intensive rehabilitative custody in a youth facility was out of the question. 70 In considering these options, the trial judge addressed the issue of accountability as well as the issues of rehabilitation, reintegration, and the long-term protection of the public — matters she was obliged to consider under sections 3(1)(a)(ii) and 38(1) of the YCJA. The sentencing judge considered the conclusions found in the various expert reports, the appellant’s conduct while incarcerated, her attempts to express remorse (which the sentencing judge found lacking), the availability of rehabilitation while incarcerated in both the youth and adult systems, and the availability of supervision upon release. 71 In the end, the sentencing judge concluded that while the period of incarceration would be similar regardless of which sentencing regime R. v. R. (J.F.) Brian O’Ferrall J.A. 365

was chosen, in order to prevent recidivism the appellant was in need of more (lengthier) ongoing supervision than the youth sentence option permitted. As a consequence, the trial judge found that a youth sentence would not be of sufficient length to hold the appellant accountable for her offending behaviour. Having come to that conclusion, the trial judge was compelled by section 72 of the YCJA to order that an adult sentence be imposed. She sentenced the appellant to a life sentence without the opportunity for parole for seven years on the second-degree murder conviction. She sentenced the appellant to five year’s incarceration for the assault convictions, to be served concurrently with the sentence for murder.

V. Grounds of appeal 72 The appellant’s grounds of appeal are set out at paragraph 8 of the majority decision. In response, the Crown argued that the presumption of diminished moral blameworthiness or culpability was rebutted and the sentencing judge was properly satisfied that a youth sentence would not be of sufficient length to hold the appellant accountable for her offending behaviour.

VI. Standard of Review 73 Section 37(4) of the YCJA provides for an appeal from the imposition of an adult sentence on a young offender. Significantly it also provides for an appeal from a refusal by the youth justice court to order that an adult sentence be imposed. Clearly Parliament intended appellate scrutiny of these types of decisions, no matter which way they went. 74 The majority relies on two cases decided before the 2012 amend- ments to the YCJA, which included changes to the appeals provision (section 37). Those cases essentially hold that the standard of review to an appeal of a sentence imposed on a young offender by a youth justice court is deferential. That is, absent an error in principle, a failure to consider a relevant principle, or an overemphasis of an appropriate factor, an appellate court should only intervene if the sentence is demonstrably un- fit. As both parties agree with this standard, I intend to apply it. 75 That said, I note that Justice McLachlin (as she then was) questioned this standard of review in the context of an appellate court reviewing a transfer order under the old Young Offenders Act in R. v. M. (S.H.), [1989] 2 S.C.R. 446 (S.C.C.) at 465-466. Section 16(9) and (10) of the Young Offenders Act expressly conferred upon the appellate court a duty 366 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

to review the youth court decision and a discretion to confirm or reverse the decision. Justice McLachlin’s conclusion that the reviewing court might substitute its view for that of the judge below may be inapplicable today. But even when there was enabling legislation, Justice McLachlin emphasized that deference ought to be given to the youth court decisions. I would question whether the same deference is owed to adult court decisions in youth criminal justice matters. The deference owed might be different from that owed to a youth court which adjudicates upon youth criminal justice matters day in and day out. In the appropriate case there might be some merit to the argument that an adult court’s decision to treat a young person as an adult for the purposes of sentencing might attract more appellate scrutiny. 76 However, having resurrected the issue, I should be quick to point out that in addition to hearing the viva voce evidence of witnesses, the trial judge in this case had the opportunity to observe the accused for at least 15 days over the course of a month-long trial in 2014. She saw her again during the course of a seven-day sentencing hearing in 2015. We saw her for about an hour during the course of the within appeal and, of course, did not see or hear the witnesses who testified.

VII. Analysis A. Principles of analysis 77 Before dealing with the appellant’s grounds of appeal, it is useful to consider some of the underlying principles that guide the interpretation and application of section 72(1) of the YCJA in this case. First, in applying section 72(1), a sentencing judge need only be satisfied that the criteria set out have been met on a balance of probabilities: O. (A.). With respect to the onus of satisfying the court that a youth sentence may not be of sufficient length to hold the young offender accountable, this court upheld a lower court’s decision describing the Crown’s onus as “not a heavy one”: R. v. E. (D.), 2010 ABCA 69 (Alta. C.A.) at para 13, (2010), 474 A.R. 360 (Alta. C.A.), relying on M. (S.H.). 78 Second, while the three matters considered by the sentencing judge — vulnerability, maturity and capacity for moral judgment — are useful tools of analysis, in the end the court must still consider, as a whole, whether the “presumption of diminished moral blameworthiness or culpability” has been rebutted. Does the young person have the intellectual capacity to appreciate the nature and consequences of his or her conduct, particularly when that conduct involves extreme violence? Does R. v. R. (J.F.) Brian O’Ferrall J.A. 367

the young person have sufficient intelligence and life experience to truly appreciate that the conduct is morally wrong, blameworthy or culpable? 79 Parliament has decreed that age also makes a difference. As Justice Abella stated in B. (D.), the presumption of reduced culpability arises because of the age of the young person. Section 64(1.1) of the YCJA suggests that Parliament intended that culpability increases with age because it requires the Crown (the Attorney General) to consider whether an adult sentence would be appropriate where the offence is a serious violent offence, such as murder, and the young person is over 14 years of age. It follows that the closer a young offender is to the age of majority, the easier it may have been intended to rebut the presumption of diminished moral blameworthiness or culpability. Section 64(1.2) permits the provinces to fix an age greater than 14 years, but not greater than 16, for the purposes of requiring the Attorney General to consider an adult sentence. From this it appears that Parliament contemplated that age be a factor in determining whether the presumption of diminished culpability had been rebutted. 80 Justice Jamie S. Campbell, an experienced youth court judge in Hali- fax prior to his appointment to the Nova Scotia Supreme Court, wrote a helpful article entitled “In Search of the Mature Sixteen Year Old in Youth Justice Court”.1 Among the lessons I took from the article, which I applied in this case, was that many of the factors which courts, such as ours in Estacio, have identified as indicating maturity and which have been found to be capable of rebutting the presumption of diminished moral blameworthiness or culpability could just as easily have been found to be indicators of immaturity and a lack of moral capacity. That is, most of the recognized indicators cut both ways. Justice Campbell’s observations beg the question then of how the Crown could ever rebut the presumption of diminished moral blameworthiness or culpability in a young person under 18. And in the context of this case, the question arises as to how the Crown could rebut the presumption without relying fairly heavily on the circumstances of the offence. 81 In my view, the circumstances of the offence may be as important a factor as the circumstances of the young person. And the circumstances of the offence are matters upon which the Crown is capable of adducing evidence. Justice Abella in B. (D.) said it was “the combination of the

1 19 Can Crim L Rev 47 (January 2015) 368 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

circumstances of the crime and the offender [which] warrant the imposition of an adult sentence” (para 5). Of course, Justice Abella’s comments were made in the context of the previous section 72(1) which expressly provided than on an application by the young person for an order that he or she not be sentenced as an adult for the presumptive offences, “the seriousness and the circumstances of the offence and the age, maturity, character, background and previous record of the young person and any other factors the court considers relevant” were the factors to be considered. Although the onus has shifted and the statutory prescription of factors to be considered removed, I would suggest that the relevant considerations remain the same. That is, the combination of the circumstances of the crime and of the offender may cause the presumption to be rebutted. 82 Also, while the two requirements of section 72(1) — rebutting the presumption of diminished moral blameworthiness or culpability and satisfying the trial judge that a youth sentence is not sufficiently long — and are intended to be discrete requirements, the question arises whether the sufficiency of the sentence might overwhelm the presumption of diminished culpability in a case where it is effectively impossible to rebut the presumption. In R. v. B. (I.D.), 2005 ABCA 99, 376 A.R. 215 (Alta. C.A.), for example, this court was confronted by a young person suffering from Fetal Alcohol Syndrome, Spectrum Disorder, Attention Deficit Hyperactive Disorder, and Impulse Control Disorder. It was clear from the evidence that the young person’s disabilities were so severe he would always be a danger to the public. In upholding a transfer to adult court and the imposition of an adult sentence, Justice Paperny held at paragraph 15: The evidence reinforces the inescapable conclusion that this youth’s condition is so severe that rehabilitation cannot be expected to reduce the risk of re-offending, nor can it provide the necessary supervision this condition requires for the rest of his life. From the totality of the evidence, it is clear that the two objectives of protection of the public and rehabilitation cannot be reconciled. Protection of the public accordingly must prevail.

B. Did the sentencing judge err in finding the presumption in section 72(1)(a) had been rebutted? 83 The appellant submits that in weighing the evidence to assess the appellant’s moral blameworthiness or culpability, the sentencing judge did not give enough weight to the appellant’s personal circumstances while, R. v. R. (J.F.) Brian O’Ferrall J.A. 369

at the same time, she overemphasized the circumstances of the offences and the appellant’s high degree of participation in them. The appellant submits, as well, that in underemphasizing the appellant’s personal circumstances, the sentencing judge did not give enough credit to the expert evidence of Dr. Naylor and Dr. Day concerning her general level of functioning, her ADHD diagnosis, and her immaturity. 84 With respect, I can see no palpable and overriding error in the trial judge’s weighing of the evidence. She considered the appellant’s personal circumstances. She also considered the circumstances of the offence and the appellant’s high degree of participation in them. I see nothing to suggest that she emphasized one over the other. 85 The question of whether a young person’s leadership and premedita- tion in committing the offence is indicative of moral capacity may be an issue requiring adjudication in any given case. But in this case, I am of the view that the sentencing judge did not err in placing considerable emphasis on the circumstances of the offence in assessing the appellant’s vulnerability. For an offender so close to the age of majority as the appellant, it was essential to know the extent to which the appellant was dependant on others, or being manipulated by them. In this case, it was clear that the appellant was the instigator of the armed home invasion and the fatal consequences that followed. As the sentencing judge noted, “she did not display helplessness, powerlessness or a susceptibility to influence or intimidation.” 86 Nor did the sentencing judge err in her consideration of the expert evidence. She considered the evidence of Drs. Day, Naylor and Gupta, but found that while much of the evidence was helpful, other parts were speculative and contradictory. It must be kept in mind that the opinions of all three experts had to do with the appellant’s mental state a year after the offence and a year before she was sentenced. In the end, the trial judge found that much of the opinion evidence was outweighed in its utility by the viva voce and circumstantial evidence she had before her. In reviewing the evidence of Drs. Naylor and Day, I also note that they had no opinion on whether the appellant had diminished moral blameworthiness or culpability. They simply deferred to the trial judge’s reasons for conviction when they dealt with the issue of the degree of responsibility of the appellant and what they termed the “intentionality” of the offences. Nor did they opine on the issue of whether or not a youth sentence was sufficiently long to hold the appellant properly accountable. They did however provide evidence with respect to a number of factors 370 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

which might be considered. But what is critical is that their reports appeared to be directing at showing how the appellant might benefit from a constellation of rehabilitative services which were only available through a youth court sentence. Their assessments and reports were done in 2014 when the appellant was 19, but by May of 2015, when the appellant was sentenced, their recommended youth sentencing option of a custodial sentence served in a youth facility was bound to be short-lived, if available at all. Clearly, the type and duration of intensive rehabilitative custody contemplated by Drs. Naylor, Day and Gupta was simply not going to be available to the appellant because she was just a year away from turning 21. 87 My colleagues suggest that even if the sentencing judge was correct in emphasizing the circumstances of the offence, those circumstances better demonstrate the appellant’s “immaturity, lack of judgment, and sense of invincibility all of which are common characteristics of many young persons.” As Justice Campbell pointed out in his article, the circumstances of the offence may indicate immaturity, but they may also indicate maturity. The circumstances of the offence will often be a two- edged sword. While the circumstances surrounding the offence could be used to infer immaturity, the same inference might be drawn with respect to anyone engaging in conduct of this character, regardless of age. At the risk of exaggerating to make the point, a possible consequence of my colleagues’ reasoning may be that it would be impossible to rebut the presumption of diminished moral blameworthiness or culpability if it were always assumed that in engaging in criminal conduct a young person is acting immaturely. Although the circumstances surrounding the offence and the appellant’s participation in it could support opposing in- ferences, in this case it was up to the sentencing judge to determine what inference was appropriate and whether the presumption had been rebutted on the basis of the evidence before her. 88 Even if it could be said the sentencing judge erred by giving too much weight to the circumstances surrounding the offences, her finding that the presumption was rebutted is still unimpeachable. The sentencing judge’s most significant finding, which is not challenged on this appeal, is that at the time of the offences the appellant was capable of exercising appropriate moral judgment. Thus, we have a young person, only a few months from the age of majority, who understands the difference between right and wrong and can appreciate the moral consequence of stabbing another person in the back with a knife. All the experts agreed that she was not suffering from a mental disability which would have im- R. v. R. (J.F.) Brian O’Ferrall J.A. 371

paired her capacity to assess the moral quality of her acts. This finding of moral capacity was also relevant to the issue of the appellant’s maturity as it indicates the capacity to make the moral choices expected of an adult. Indeed, it may be a far better measure of a young person’s maturity, for purposes of section 72(1) of the YCJA, than the fact the young person was engaged in criminal conduct that is inherently immature. 89 Taken together, the appellant’s age, the fact that she was not being manipulated by others (particularly by any adults), the fact that she was making rational decisions about her home and living conditions (appropriate for a young person of her age and circumstance), and the appellant’s capacity to discern the moral consequences of her actions, were capable of rebutting the presumption of reduced moral blameworthiness or culpability, as the sentencing judge found. This conclusion is entitled to deference. I would dismiss this ground of appeal.

C. Did the sentencing judge err in finding a youth sentence would not be of sufficient length to hold the appellant accountable? 90 The appellant submits that in assessing accountability the sentencing judge did not give appropriate weight to her personal circumstances, as outlined in the various pre-sentence and expert reports, or to her efforts at rehabilitation pending sentence. In addition, the appellant submits the sentencing judge erred by comparing a youth sentence to an adult sentence rather than simply considering whether the objectives of the YCJA could be met by imposing a youth sentence. In this regard, the appellant submits the sentencing judge did not consider properly whether a seven- year intensive rehabilitative custody and supervision sentence would be of sufficient length to hold the appellant accountable. 91 In my view, there is no merit to these arguments. The sentencing judge was obliged to consider a number of factors in assessing accountability in sentencing the appellant. The first and foremost was the purpose of sentencing set forth in section 38(1) of the YCJA, namely to hold young persons accountable for their offence through the imposition of just sanctions that have meaningful consequences for young persons and which promote their rehabilitation and reintegration into society. One of the principles of sentencing found in the YCJA is that sentences must be proportionate to the seriousness of the offence and the degree of responsibility of the young person for that offence: s. 38(2)(c). This is not un- like the fundamental principle of sentencing set forth in section 718.1 of the Criminal Code for sentencing adult offenders. Denunciation and spe- 372 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

cific deterrence are also principles of youth sentencing: s.38(2)(f). Other factors to be considered include the degree of participation by the young person in the commission of the offence and the harm done to victims and whether that harm was intentional or reasonably foreseeable: s. 38(3)(a) and (b). The harm done in this case was the taking of the life of an innocent young man and the serious and permanent injuring of another. And there appears to have been little doubt that the harm done to the victims was intentional. 92 It is apparent from her reasons that the sentencing judge considered the purpose of sentencing set forth in the YCJA, namely holding the young person accountable. It is also apparent from her reasons that she considered the statutorily prescribed sentencing principles and factors to be considered in holding the appellant accountable. She found the appellant’s propensity for risk, the catastrophic result of her actions, and the extent to which her behaviour exceed the societal norm, were significant matters to be taken into account in determining whether the appellant could be held properly accountable by applying a youth sentence. 93 The sentencing judge went on to balance these aspects of accountability against the appellant’s prospects of rehabilitation and reintegration. Here she considered the appellant’s personal circumstances outlined in the various reports before her. While she found these reports useful, she was concerned about several diagnostic inconsistencies in the reports, as well as a number of assertions regarding the appellant’s personal history that were contradicted by the viva voce evidence of her parents given in the sentencing hearing. The sentencing judge was also skeptical of the Day/Naylor Report because the authors attributed the appellant’s actions largely to acute intoxication that led to “escalating conflict that ultimately led to incredibly poor decisions.” This contradicted the sentencing judge’s explicit finding of fact that the appellant was not acutely intoxicated at the time she committed the offences. Also, the Day/Naylor Report was heavily qualified by concerns about “impression management” and a concern that the appellant tried “to portray herself in an un- realistically favourable light”. Drs. Day and Naylor also expressed a concern that their clinical assessment might have resulted in “an underestimation of her risk for recidivism”. 94 In dealing with the appellant’s rehabilitation and reintegration, the sentencing judge considered her behaviour while in custody and described it as being “positive, beyond reproach.” She also noted the appellant’s lack of a criminal record. The sentencing judge was nonetheless R. v. R. (J.F.) Brian O’Ferrall J.A. 373

concerned about the appellant’s ability to express appropriate and sincere remorse and her propensity to minimize her actions by claiming acute intoxication, despite the sentencing judge’s explicit finding the appellant was not acutely intoxicated at the time of the home invasion. The sentencing judge also considered whether rehabilitation and reintegration could be better accomplished in an adult institution and she did so in the context of determining whether rehabilitation and reintegration might be better accomplished by a youth sentence. She found that an adult sentence provided better prospects for rehabilitation and reintegration. 95 Finally, the trial judge assessed the issue of accountability in the context of a possible intensive rehabilitative custody and supervision sentence. Here she accepted, as the experts suggested, that the appellant was a good candidate for such a program. However, the trial judge was doubtful about the availability of such a sentence. The trial judge observed that once the appellant turned 21, she could no longer be a ward of the Alberta Hospital in Edmonton where there were intensive rehabilitative programs available. She also noted that the availability of an intensive rehabilitative custody and supervision sentence was only one factor to consider in the context of determining accountability and could not overwhelm the other considerations. 96 In the end, the sentencing judge concluded, in balancing all of the relevant factors: With a youth sentence, even without credit for pre-sentence custody, [the appellant’s] responsibility for these crimes would end when she was 26, almost 27. Supervision would end at that time regardless of where she is along her path to rehabilitation and regardless of whether she continues to pose a risk to society, particularly with her anger management and substance abuse. Her supervision would end regardless of whether the cause of her behaviour remained unexplained. An adult sentence will allow for continuing supervision and access to the community programs if [the appellant] so needs. This will allow for her rehabilitation and also contribute to the long-term protection of the public.

VIII. Conclusion 97 In my view, a review of the sentencing judge’s reasons shows she was alive to the principles she was bound to apply in coming to her decision on accountability. It is also clear that she weighed the relevant factors and came to a principled conclusion. I see no palpable and overrid- 374 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

ing error requiring appellate intervention. It follows I would have dismissed the appeal. 98 In closing, I reiterate that this case demonstrates the difficulty balancing the principle of accountability with the presumption of diminished moral blameworthiness or culpability in the context of section 72 of the YCJA. Further statutory direction or judicial guidance may be necessary. Appeal allowed. Nutting v. Franklin Templeton Investments Corp. 375

[Indexed as: Nutting v. Franklin Templeton Investments Corp.] Mitchell Nutting (Plaintiff) and Franklin Templeton Investments Corp. (Defendant) Alberta Court of Queen’s Bench Docket: Edmonton 1203-12717 2016 ABQB 669 Master R.P. Wacowich, In Chambers Heard: August 23, 2016 Judgment: November 25, 2016 Labour and employment law –––– Employment law — Termination and dismissal — Notice — Effect of contractual terms regarding notice –––– Em- ployer terminated employee’s employment without cause — Employee was bound by employment contract that stated he could be terminated without cause, at any time, with minimum notice or pay in lieu under applicable employment standards legislation, and that this would constitute full and final satisfaction of all rights and entitlements arising from termination — Employer paid employee two weeks’ pay in lieu of notice as required by Employment Standards Code and took position he was not entitled to anything more, so employee commenced action for wrongful dismissal damages — Employee brought application for summary judgment; employer brought cross-application for summary judgment dismissal case entirely — Application dismissed; cross-application granted — Employment contract was clear and unambiguous, and language of termination clause limited employee to minimum notice as required by Employ- ment Standards Code — Language in contract expressly limited employee to minimum notice of termination or pay in lieu prescribed by applicable employment standards legislation — This was necessary reference to s. 56 of Employ- ment Standards Code, which prescribed certain minimum notice — Agreement made it clear that common law requirements were overridden and ousted presumption of reasonable notice — Termination clause was valid and enforceable, and did not violate minimum notice prescribed by statute, but limited employee to statutory minimum notice upon dismissal without cause, so employee had no claim to further pay in lieu of notice — Employee also claimed damages for intentional infliction of emotional distress, loss of reputation, expenses in obtaining other employment and unpaid signing bonus, but these claims were also dismissed given the absence of evidence to support them. 376 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Cases considered by Master R.P. Wacowich, In Chambers: Hryniak v. Mauldin (2014), 2014 CarswellOnt 640, 2014 CarswellOnt 641, 37 R.P.R. (5th) 1, [2014] S.C.J. No. 7, 46 C.P.C. (7th) 217, 27 C.L.R. (4th) 1, (sub nom. Hryniak v. Mauldin) 366 D.L.R. (4th) 641, 2014 CSC 7, 453 N.R. 51, 12 C.C.E.L. (4th) 1, 314 O.A.C. 1, 95 E.T.R. (3d) 1, 21 B.L.R. (5th) 248, [2014] 1 S.C.R. 87, [2014] A.C.S. No. 7, 2014 SCC 7 (S.C.C.) — followed Joseph v. June Warren Publishing Ltd. (2007), 2007 ABPC 309, 2007 Carswell- Alta 1500, [2007] A.J. No. 1224 (Alta. Prov. Ct.) — considered Kosowan v. Concept Electric Ltd. (2007), 2007 ABCA 85, 2007 CarswellAlta 310, 404 A.R. 8, 394 W.A.C. 8, [2007] A.J. No. 266 (Alta. C.A.) — considered Machtinger v. HOJ Industries Ltd. (1992), 40 C.C.E.L. 1, (sub nom. Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd.) 53 O.A.C. 200, 91 D.L.R. (4th) 491, 7 O.R. (3d) 480n, (sub nom. Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd.) 136 N.R. 40, 92 C.L.L.C. 14,022, 1992 CarswellOnt 989, [1992] 1 S.C.R. 986, 1992 CarswellOnt 892, [1992] S.C.J. No. 41, 7 O.R. (3d) 480, 7 O.R. (3d) 480 (note) (S.C.C.) — referred to Miller v. A.B.M. Canada Inc. (2014), 2014 ONSC 4062, 2014 CarswellOnt 9232, 16 C.C.E.L. (4th) 294, 2014 C.L.L.C. 210-044, [2014] O.J. No. 3221 (Ont. S.C.J.) — considered Oudin v. Centre Francophone de Toronto, Inc. (2015), 2015 ONSC 6494, 2015 CarswellOnt 16476, 27 C.C.E.L. (4th) 86, 2016 C.L.L.C. 210-010 (Ont. S.C.J.) — considered Roden v. Toronto Humane Society (2005), 2005 CarswellOnt 4479, 46 C.C.E.L. (3d) 30, 259 D.L.R. (4th) 89, 2005 C.L.L.C. 210-043, 202 O.A.C. 351, [2005] O.J. No. 3995, 45 C.C.E.L. (3d) 30 (Ont. C.A.) — considered Simpson v. Global Warranty Management Corp. (2014), 2014 ONSC 724, 2014 CarswellOnt 2871 (Ont. S.C.J.) — considered Wernicke v. Altrom Canada Corp. (2009), 2009 BCSC 1533, 2009 CarswellBC 3044, [2009] B.C.J. No. 2242 (B.C. S.C.) — referred to Windsor v. Canadian Pacific Railway (2014), 2014 ABCA 108, 2014 Carswell- Alta 395, [2014] 5 W.W.R. 733, 94 Alta. L.R. (5th) 301, [2014] A.J. No. 256, 371 D.L.R. (4th) 339, 56 C.P.C. (7th) 107, (sub nom. Windsor v. Canadian Pacific Railway Ltd.) 572 A.R. 317, (sub nom. Windsor v. Canadian Pacific Railway Ltd.) 609 W.A.C. 317 (Alta. C.A.) — referred to Statutes considered: Employment Standards Act, 2000, S.O. 2000, c. 41 s. 8 — considered s. 5(2) — considered Employment Standards Code, R.S.A. 2000, c. E-9 Generally — referred to s. 3 — considered Nutting v. Franklin Templeton Investments Corp. Master R.P. Wacowich 377

s. 3(1) — considered ss. 55-57 — referred to

APPLICATION by employee for summary judgment in wrongful dismissal action; CROSS-APPLICATION by employer for summary judgment dismissing action.

Mathieu J. LaFleche, for Plaintiff Hugh J.D. McPhail, Q.C., for Defendant

Master R.P. Wacowich, In Chambers: Introduction 1 This case was heard by me in special chambers on August 23, 2016. At the end of the special chambers application I provided my Reasons orally. Since that time, counsel on the case have indicated that the case has attracted the interest of many parties. Accordingly, I am now providing my written Reasons. 2 This is an application for summary judgment brought by the Plaintiff, Mitchell Nutting, in a without–cause dismissal from his employment with the Defendant, Franklin Templeton Investments Corp. (“FTIC”). Mr. Nutting was dismissed without cause. It is his view that he is entitled to additional severance pay that he alleges he is entitled to receive at common law because of his dismissal. 3 There is a cross application by the Defendant who seeks summary judgment for dismissal of the entirety of the Plaintiff’s claim. The issue before the Court is one of contractual interpretation with statutory reference.

Facts 4 The Plaintiff’s employment commenced on December 9, 2009. The Plaintiff was terminated on April 12, 2012 without cause. 5 At all relevant times up to the time of his dismissal, the Plaintiff was bound by an employment contract, effective December 17, 2009, which contained the following provision: Additionally, your employment may be terminated at any time without cause upon the provision by FTIC of the minimum notice of termination, or pay in lieu of notice, benefits and, if applicable, severance pay prescribed by applicable employment standards legislation in the province in which you are employed. The provision of such 378 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

notice or pay in lieu of notice, benefits and severance pay constitutes full and final satisfaction of all rights or entitlements which you may have arising from or related to the termination of your employment (including notice, pay in lieu of notice, severance pay, etc.), whether pursuant to contract, common law, statute or otherwise. 6 The Agreement also contained an “entire agreement” and “no representations” clause: This offer letter and the attached Agreement collectively comprise all of the terms of your employment with FTIC. In accepting employment with FTIC, you agree to these terms and acknowledge that there are no other agreements, representations, or promises with respect to our employment or your ability to legally be employed on a permanent basis in Canada. 7 When the Plaintiff was terminated the Defendant provided the Plain- tiff with the amount of pay in lieu of notice required by the Employment Standards Code, RSA 2000, c E–9. 8 The employer submits that since Nutting’s service was more than two years but less than four years he was entitled to two weeks’ notice of termination of employment pursuant to sections 55–57 of the Employ- ment Standards Code, RSA 2000 c E–9.

Issues A. Is summary judgment available? B. What is a proper interpretation of the Agreement between the parties as affected by the Employment Standards Code?

Analysis A. What is the test for Summary Judgment? 9 Relying on the Supreme Court of Canada’s decision in Hryniak v. Mauldin, 2014 SCC 7 (S.C.C.), the Alberta Court of Appeal has stated that the test for a summary judgment (dismissal) is “whether there is a reasonable prospect that the claim will succeed”. 10 Following the Supreme Court of Canada, the Court of Appeal of Al- berta confirmed that a summary judgment is available where there is no genuine issue requiring a trial: Summary judgment is now an appropriate procedure where there is no genuine issue requiring a trial: There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the Nutting v. Franklin Templeton Investments Corp. Master R.P. Wacowich 379

merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. The modern test for summary judgment is therefore to examine the record to see if a disposition that is fair and just to both parties can be made on the existing record. Windsor v. Canadian Pacific Railway, 2014 ABCA 108 (Alta. C.A.)

B. Can a fair and just determination be made in this case? 11 The Agreement is clear and unambiguous. The language of the termination of clause limits the Plaintiff to the minimum notice required by the Employment Standards Code, RSA 2000, c E–9. 12 The Defendant complied with the Agreement and paid the Plaintiff what he was entitled to under the Agreement. 13 The relevant general principles of the law relating to termination clauses are clear. A termination clause may oust the presumption of reasonable notice, either expressly or impliedly, so long as the clause does not purport to violate the minimum notice periods in legislation: . . .I would characterize the common law principle of termination only on reasonable notice as a presumption, rebuttable if the contract of employment clearly specifies some other period of notice, whether expressly or impliedly. ... Absent considerations of unconscionability, an employer can readily make contracts with his or her employees which referentially incorporate the minimum notice periods set out in the Act or otherwise take into account later changes to the Act or to the employees’ notice entitlement under the Act. Such contractual notice provisions would be sufficient to displace the presumption that the contract is termina- ble without cause only on reasonable notice. Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.) at pp 998 and 1004–1005 380 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

14 In the case of Simpson v. Global Warranty Management Corp., 2014 ONSC 724 (Ont. S.C.J.), there was a wrongful dismissal suit involving a contractual notice clause. The agreement in that case stipulated: . . .unless an employee is terminated for cause, an employee’s employment may be terminated at the sole discretion of the Employer and for any reason whatsoever upon providing the employee with one (1) weeks notice or pay in lieu thereof, subject to any additional notice, pay in lieu thereof or severance that may be required to meet the minimum requirements of the Employment Standards Act, R.S.O 1990, c E–14, as amended from time to time. 15 The Court explained that there was no ambiguity and that contra proferentem could not apply absent an ambiguity. The Court found that the purpose of the clause was to limit notice and damages to the minimum amounts required by employment standards legislation. Ibid, at paras 76–77 16 In Roden v. Toronto Humane Society [2005 CarswellOnt 4479 (Ont. C.A.)], the Ontario Court of Appeal considered a termination clause in an employment agreement which read: . . .the Employer may terminate the Employee’s employment at any other time, without cause, upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation. Roden v The Toronto Human Society (2005), 259 DLR (4th) 89, 2005 CanLII 33578 (ONCA) at para 55 17 The Court concluded that this without cause provision was “precisely the type” which the Supreme Court of Canada had recognized as valid and which operated to limit the employee’s entitlement to the statutory notice period. Ibid, at paras 60–62 18 In Oudin v. Centre Francophone de Toronto, Inc. [2015 CarswellOnt 16476 (Ont. S.C.J.)], the Ontario Superior Court of Justice also considered an employment agreement containing a similar termination clause which read: s.9 Termination of Employment . . . The CFT may also terminate this agreement for any other reason by giving the employee 15 days notice or the minimum prescribed by the Employment Standards Act or by paying an amount of salary equal to the salary the employee would have had the right to receive during the notice period... Nutting v. Franklin Templeton Investments Corp. Master R.P. Wacowich 381

Oudin v Le Centre Francophone de Toronto, 2015 ONSC 6494 at para 35 19 The Court explained that parties were free at law to contract out of the implied obligation of reasonable notice, for a specific notice period by referencing statutory minimums and that a court should not engage in searching for a means to avoid the parties’ commitments. 20 The Agreement in this case contains a clear and unambiguous clause which limits the Plaintiff’s entitlements to the statutory minimums upon dismissal without cause. The Plaintiff has been paid the pay in lieu of notice required by the Agreement. Therefore, a fair and reasonable determination should be made that his claim for additional compensation for termination ought to be dismissed.

What is the test for enforcing a contractual notice clause? 21 In order to oust the presumed (or implied) term that reasonable notice impliedly provided upon notice of termination without cause, the agreement must expressly or implied specify “some other period of notice”: . . .the common law principle of termination only on reasonable notice as a presumption, [is] rebuttable if the contract of employment clearly specifies some other period of notice, whether expressly or impliedly. [emphasis added] Machtinger v HOJ Industries Ltd, [1992] 1 SCR 986 at p 998 at p 998 22 The Plaintiff heavily relies on the Alberta Court of Appeal’s decision in Kosowan v. Concept Electric Ltd., 2007 ABCA 85 (Alta. C.A.). 23 But the contractual provision at issue in Kosowan read: . . .Should you be terminated for reasons other [than] cause then you will be entitled to advance notice or severance pay thereof in accordance with the Employment Standards Act of Alberta. [Emphasis added] 24 The words “in accordance with” used in Kosowan neither specified, “some other notice period” nor limited notice to the specified period. The Court of Appeal confirmed that the language “does not, on its face, con- fine the Appellant to compensation [under the Code]”. Ibid at para 4 382 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

25 In its short judgment, the Court noted that section 3(1) of the Employ- ment Standards Code did not affect the employee’s right to the civil remedy of damages for reasonable notice: However, s. 3(1) of the Employment Standards Code expressly provides that: Nothing in this Act affects a) Any civil remedy of an employee or an employer: Ibid, at para 3 26 The words “in accordance with” merely recognizes an obligation to comply with the statue. Since section 3(1) left open the ability to pursue an action, the employee was entitled to bring his action for failure to provide reasonable notice. 27 In other words, it was in accordance with the Code to pursue a claim for reasonable notice at common law because the Code contemplated the continuance of that right. It is in accordance with the Code to pay the minimums but it is also in accordance with the Code to pay more. Being in accordance with the Code is essentially meaningless in that it is not restrictive. 28 That contrasts dramatically with a provision that refers to the minimum requirements of the Code. The Kosowan language did not attempt to limit the employee to the minimum requirements of the Code. That is important and is a point made by the Ontario Superior Court of Justice in Miller v. A.B.M. Canada Inc. [2014 CarswellOnt 9232 (Ont. S.C.J.)] where Glithero, J said: While counsel for the plaintiff submits that a termination clause simply stating that an employee is entitled to compensation in accordance with the legislation does not restrict the employee to the minimum notice period provided, that submission is based on Kosowan v Concept Electric Ltd, 2007 ABCA 85 (CanLII) Alberta The factual difference in that case is that the termination clause did not provide that the employee was to receive the “minimum” notice period as was provided for in the contract in this case. In this case the termination clause did specify that the minimum legislated notice was contemplated. Miller v ABM Canada Inc, 2014 ONSC 4062 29 The relevant clause in Miller read, “Regular employees may be terminated at any time without cause upon being given the minimum period of Nutting v. Franklin Templeton Investments Corp. Master R.P. Wacowich 383

notice prescribed by applicable legislation, or by being paid salary in lieu of such notice or as may otherwise be required by applicable legislation.” Ibid, at para 11 30 The Court held that where a clause sets out a lawful period of notice, that is effective to rebut the presumption of reasonable notice at common law. 31 The language in this Agreement limits the Plaintiff expressly to “the minimum notice of termination, or pay in lieu of notice, benefits and, if applicable, severance pay prescribed by applicable employment standards legislation in the province in which you are employed.” That is a necessary reference to s 56 which prescribes certain minimum notice requirements. An employer must provide “at least” those amounts of notice and those minimum standards cannot be avoided: s4. 32 In my view, Roden, Oudin, Miller, and Simpson cannot be distinguished on the basis of statutory differences. The Ontario Employment Standards Act contains provisions equivalent to s 3 of our Code in ss 8 and 5(2) of the ESA. Employment Standards Act, 2000, SO 2000, c 41. 33 This Court should respect that the Roden decision is from the Ontario Court of Appeal and, the appeal was dismissed in Oudin, a short while ago by the Ontario Court of Appeal. 34 Ontario is supported in this position. The Supreme Court of British Columbia also considered language which provided that the employer had to make all payments prescribed by legislation. The clause in question read: Altrom may terminate your employment. . . by giving you ... all payments or entitlements prescribed by the provincial employment standards legislation... The Court held that this provision was not ambiguous and limited the notice entitlement to the notice required by the employment standards legislation. Wernicke v. Altrom Canada Corp., 2009 BCSC 1533 (B.C. S.C.), at paras 49, 52, 56, 59 and 73 35 I was also referred to the case of Joseph v. June Warren Publishing Ltd., 2007 ABPC 309 (Alta. Prov. Ct.). This is the only case which was brought to my attention which is inconsistent with the position taken by the Defendant. However, the decision in Joseph is inconsistent with the Ontario cases and the Machtinger decision of the Supreme Court of Can- ada. Further, the facts are distinguishable because of the differences in 384 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

contractual language in the contract in that case. And the majority of the cases and the leading authorities, support the position I take. 36 Furthermore, the Agreement before this Court goes further than the Ontario cases and expressly makes clear that any possible common law right is overridden. It reads: . . .The provision of such notice or pay in lieu of notice, benefits and severance pay constitutes full and final satisfaction of all rights or entitlements which you may have arising from or related to the termination of your employment (including notice, pay in lieu of notice, severance pay, etc.), whether pursuant to contract, common law, statute or otherwise. 37 Additionally, the Plaintiff has claimed damages for intentional infliction of emotional distress, loss of reputation, expenses in securing other employment and an unpaid signing bonus. Given an absence of evidence, these elements of the claim must also be dismissed. A fair and reasonable determination can be made that all elements of the claim should be dismissed. There is no “reasonable prospect that the claim will succeed” 38 The Defendant has demonstrated that the Agreement contains a valid clause concerning notice of termination which meets the legal test for enforceability in that it: a) provides a prescribed period of notice which does not violate the minimums imposed by statue; and, b) expressly evi- dences the parties’ intention that the prescribed notice would oust any other notice requirement that may have otherwise been implied. 39 In my view, the agreement in this case contains a clear and an unambiguous clause which limits the Plaintiff’s entitlement to the statutory minimums upon dismissal without cause. The Plaintiff has been paid the amount required. 40 The Plaintiff’s application for summary judgment is dismissed. Fur- thermore, the action is dismissed in its entirety as requested in the Defen- dant’s cross application for summary dismissal. Application dismissed; cross-application granted; action dismissed. Regular v. Regular 385

[Indexed as: Regular v. Regular] Perry Regular (Applicant) and Sharon Regular (Respondent) Alberta Court of Queen’s Bench Docket: Edmonton 1503-18281 2016 ABQB 570 W.N. Renke J. Heard: August 25, 2016 Judgment: October 7, 2016 Civil practice and procedure –––– Trials — Place of trial — Application for change of venue — Grounds for change of venue –––– Pursuant to divorce and property contract between parties, wife claimed half of net sales proceeds of house in Fort McMurray — Also pursuant to contract, husband claimed set-off for certain amounts — Wife commenced action in Edmonton — Husband applied to have action transferred to Fort McMurray — Application dismissed — Action was properly commenced in Edmonton by wife — In application of balance of convenience test, location of counsel was not decisive factor — Loca- tion of house was not material to current issues — Contract was governed by Alberta law — Husband’s claims relied on cost of work performed by third parties and evidence provided by third parties would be important to application of contractual provisions — These factors pointed to Fort McMurray as appropriate trial venue — If, as was contemplated by parties, summary judgment applications would be determined on affidavit evidence, potential inconvenience of bringing witnesses from Fort McMurray to Edmonton was obviated — At this stage of litigation, Edmonton remained appropriate judicial centre — It would not be unreasonable to carry on action in Edmonton — Husband had not established that balance of convenience favoured transferring action to Fort McMur- ray at this time. Cases considered by W.N. Renke J.: Abou-Morad v. Aboumourad (2015), 2015 ABQB 584, 2015 CarswellAlta 1731 (Alta. Q.B.) — considered Apache Canada Ltd. v. Johnson (2005), 2005 ABCA 71, 2005 CarswellAlta 190, 5 C.P.C. (6th) 235, 363 A.R. 100, 343 W.A.C. 100, [2005] A.J. No. 148, 5 C.P.C. (4th) 235 (Alta. C.A.) — followed Canadian Imperial Bank of Commerce v. Nemeth (2013), 2013 ABQB 290, 2013 CarswellAlta 660, 88 Alta. L.R. (5th) 418, 562 A.R. 193 (Alta. Q.B.) — referred to 386 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Christensen v. Proprietary Industries Inc. (2002), 2002 ABQB 97, 2002 CarswellAlta 132, 309 A.R. 201, [2002] A.J. No. 104 (Alta. Q.B.) — followed S. (C.) v. J. (A.) (2004), 2004 ABQB 73, 2004 CarswellAlta 383, 50 Alta. L.R. (4th) 91 (Alta. Q.B.) — followed Schafer v. Lenhardt (1998), 1998 CarswellAlta 154, [1998] A.J. No. 163, 1998 ABCA 47 (Alta. C.A.) — followed Silver Springs Oil Recovery Inc. v. UMA Engineering Ltd. (2004), 2004 ABQB 942, 2004 CarswellAlta 1724, [2004] A.J. No. 1476 (Alta. Q.B.) — followed Siver v. Siver (2010), 2010 ABQB 755, 2010 CarswellAlta 2683 (Alta. Q.B.) — followed Wickstrom v. Wetter (2007), 2007 ABQB 402, 2007 CarswellAlta 799, 50 C.P.C. (6th) 90, 419 A.R. 393 (Alta. Q.B.) — considered 325303 Alberta Ltd. v. Prime Property Management (2011), 2011 ABQB 817, 2011 CarswellAlta 2313, 531 A.R. 204 (Alta. Q.B.) — considered Rules considered: Alberta Rules of Court, Alta. Reg. 124/2010 R. 3.3 — considered R. 3.5 — considered R. 3.5(a) — considered R. 6.17 — considered R. 7.1 — considered R. 7.5 — considered R. 10.33 — considered

APPLICATION for transfer of action.

Jordan Henrie, for Applicant Stewart Brownlee, for Respondent

W.N. Renke J.:

1 I confirm that pursuant to my direction in Chambers on August 25, 2016, Mr. Regular’s application to transfer this action from the judicial centre of Edmonton to the judicial centre of Fort McMurray was to be dealt with by way of written submissions followed by a written decision. I have received and reviewed Mr. Henrie’s correspondence of September 9, 2016 and Mr. Brownlee’s correspondence of September 16, 2016. 2 My decision is that a) the action not be transferred from the judicial centre of Edmonton to the judicial centre of Fort McMurray at this time; Regular v. Regular W.N. Renke J. 387

b) Mr. Regular’s application under rule 3.5 may be renewed once this action ready to be set down for trial; and c) Mr. Regular’s application under rule 3.5 may be renewed as part of an application for the hearing of viva voce testimony from third party witnesses in the course of a summary judgment hearing, a hearing respecting a particular issue under rule 7.1, or a summary trial under rule 7.5. My reasons are as follows: 3 Mr. Regular resides in Fort McMurray. Ms. Regular resides in Spruce Grove. The action was properly commenced in Edmonton by Ms. Regu- lar under rule 3.3. 4 Under rule 3.5, The Court may order that an action be transferred from one judicial centre to another (a) if the Court is satisfied that it would be unreasonable for the action to be carried on in the judicial centre in which it is located ... 5 It is clear that the onus of proof lies on the party applying for the transfer of an action to another judicial centre: Christensen v. Proprietary Industries Inc., 2002 ABQB 97 (Alta. Q.B.), Watson J, as he then was, at para 60; Wickstrom v. Wetter, 2007 ABQB 402 (Alta. Q.B.), Graesser J at para 8; 325303 Alberta Ltd. v. Prime Property Manage- ment, 2011 ABQB 817 (Alta. Q.B.), Michalyshyn J at para 19; Abou- Morad v. Aboumourad, 2015 ABQB 584 (Alta. Q.B.), Veit J at para 1. 6 There are two lines of authority respecting the interpretation of the “unreasonableness” criterion in rule 3.5. In Siver v. Siver, 2010 ABQB 755 (Alta. Q.B.), Justice Veit adopted a literal or plain meaning approach to rule 3.5. The inquiry under rule 3.5 concerns whether carrying on the action in the current judicial centre is “unreasonable,” in the sense of being arbitrary or irrational, having “no logical grounding:” at paras 14 - 16. This test is highly deferential to the original judicial centre selection. Alternatively, satisfying this test is difficult for a party seeking to change the judicial centre. 7 The weight of authority is that rule 3.5 imposes a “balance of convenience” test. This test was imported from authorities that considered the preceding version of the rules. The authorities do not discuss whether the language of rule 3.5 should entail a revised approach to rule 3.5. Regard- 388 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

less, the “balance of convenience” approach is supported by Abou-Morad v. Aboumourad at para 1; 325303 Alberta Ltd. v. Prime Property Man- agement at paras 19 and 27; and Wickstrom v. Wetter at para 5. Earlier authorities include Christensen v. Proprietary Industries Inc. at para 60; Apache Canada Ltd. v. Johnson, 2005 ABCA 71 (Alta. C.A.) at para 5; Schafer v. Lenhardt, 1998 ABCA 47 (Alta. C.A.) at para 3; Silver Springs Oil Recovery Inc. v. UMA Engineering Ltd., 2004 ABQB 942 (Alta. Q.B.) at para 6; and S. (C.) v. J. (A.), 2004 ABQB 73 (Alta. Q.B.). 8 In the application of the balance of convenience test, the location of counsel is not a decisive factor: Christensen v. Proprietary Industries Inc. at para 61; Silver Springs Oil Recovery Inc. v. UMA Engineering Ltd. at para 7 (contra, Siver v. Siver at para 18; but in that case, because of conflicts, counsel in the proposed judicial centre may not have been available: at para 20). 9 Factors important in the application of the balance of convenience test include the following: a) the number of parties or witnesses in the current judicial centre and the proposed judicial centre: Schafer v. Lenhardt at para 2; Silver Springs Oil Recovery Inc. v. UMA Engineering Ltd. at para 7; Wickstrom v. Wetter at para 15; 325303 Alberta Ltd. v. Prime Property Management at paras 24 and 27. b) the nature of the issues in the lawsuit: Apache Canada Ltd. v. Johnson at para 7. c) the relationship between the parties in respect of the issues in the lawsuit (e.g. where relevant interactions between the parties relating to issues took place): Apache Canada Ltd. v. Johnson paras 7 and 9. d) the parties’ respective financial resources: Siver v. Siver at para 19. e) the stage of proceedings: Siver v. Siver at para 22. The following additional factors are relevant, although of lesser weight: f) the convenience of location for pre-trial motions: Christensen v. Proprietary Industries Inc. at para 62. g) the location of relevant assets: Christensen v. Proprietary Industries Inc. at para 63; see Canadian Imperial Bank of Regular v. Regular W.N. Renke J. 389

Commerce v. Nemeth, 2013 ABQB 290 (Alta. Q.B.), Schlosser M at para 28. 10 In this case, the issues concern the interpretation and application of the Divorce and Property Contract of April 19, 2010 between the parties. Pursuant to the Contract, Ms. Regular claims half of the net sales proceeds of a house in Fort McMurray. Also pursuant to the Contract, Mr. Regular claims set-off (or reimbursement) for certain amounts, reducing the amount of sales proceeds otherwise payable to Ms. Regular. 11 It is true that the parties had cohabited in Fort McMurray, divorce proceedings were commenced and finalized while they lived in Fort Mc- Murray, and the Contract was negotiated while the parties lived in Fort McMurray. These matters are not material to the current issues. 12 It is true that the house in question was in Fort McMurray. The house, though, has been sold. The sales proceeds are being held in trust. The location of the house is not material to the current issues. 13 The issues of contractual interpretation do not depend on particular location factors. The Contract is governed by Alberta law. 14 Mr. Regular’s claims, though, rely on the cost of work performed by third parties. The individuals who performed the work and who could testify to the work performed and its value all reside in Fort McMurray. Moreover, a realtor who witnessed the condition of the house and whose testimony could support Mr. Regular’s contention that the work was required to sell the house resides in Fort McMurray. The evidence provided by the third parties would be important to the application of the Contractual provisions. These factors do point to Fort McMurray as the appropriate trial venue. 15 Nonetheless, in response to a summary judgment application by Ms. Regular, Mr. Regular made a summary judgment application of his own. He relied on affidavit evidence only. A transfer of the action to Fort Mc- Murray was requested, but only if the Court declined to grant summary judgment. If, as was contemplated by the parties, the summary judgment applications will be determined on affidavit evidence, the potential inconvenience of bringing witnesses from Fort McMurray to Edmonton is obviated. 16 Mr. Regular will bear the cost and inconvenience of attending the summary judgment applications, should he decide to do so. He could lis- ten in by telephone. Ms. Regular would bear similar cost and inconvenience were matters to be heard in Fort McMurray. Mr. Regular’s cost 390 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

and inconvenience does not, by itself, demonstrate that hearing the summary judgment applications in Edmonton would be unreasonable. 17 I do not know whether either party will be Questioned on Affidavit in preparation for the summary judgment applications. If Ms. Regular wishes to Question Mr. Regular on his affidavit, she will be required to pay the appropriate allowance under rule 6.17. The cost and inconvenience to Mr. Regular is therefore mitigated. Ms. Regular would bear corresponding cost and inconvenience were the action transferred to Fort McMurray. 18 At this stage of the litigation, Edmonton remains the appropriate judicial centre. It would not be unreasonable to carry on the action in Edmonton. Mr. Regular has not established that the balance of convenience favours transferring the action to the judicial centre of Fort Mc- Murray at this time. 19 If this matter proceeds to trial or if third party witnesses are required to participate in pre-trial proceedings (i.e. witnesses other than Mr. or Ms. Regular), it could well be found that the balance of convenience would tilt to transferring the action to the judicial centre of Fort McMur- ray. That eventuality can be dealt with if it arises. Mr. Regular may renew his application once the matter is ready to be set for trial. He may also renew his application as part of an application for viva voce evidence by third party witnesses to be heard in connection with a summary judgment, rule 7.1, or rule 7.5 proceeding. See Siver v. Siver at para 23 and Christensen v. Proprietary Industries Inc. at paras 66 and 70 - 72. 20 No costs are awarded for this application. Ms. Regular was successful in resisting Mr. Regular’s application. I have considered rule 10.33. This is still a relatively unsettled area of law, given the lack of sustained consideration of the language of rule 3.5. In any event, determinations under rule 3.5 are case specific. While Ms. Regular’s action was brought in a legally correct judicial centre, given the history of the parties, an expectation that further proceedings would be brought in Fort McMurray was understandable. Depending on how matters unfold procedurally, a further application by Mr. Regular would be expected. Application dismissed. Athabasca Minerals Inc. v. Syncrude Canada Ltd. 391

[Indexed as: Athabasca Minerals Inc. v. Syncrude Canada Ltd.] Athabasca Minerals Inc. (Plaintiff / Respondent) and Syncrude Canada Ltd. (Defendant / Applicant) Alberta Court of Queen’s Bench Docket: Calgary 1201-13727 2017 ABQB 47 C.M. Jones J. Heard: October 13-14, 2016 Judgment: January 24, 2017 Civil practice and procedure –––– Preservation of property rights pending litigation — Interim preservation of property –––– Defendant carried on oil sands extraction and processing operation — Plaintiff managed removal of sand and gravel on behalf of province from certain deposit (“pit”) — Plaintiff commenced action against defendant, asserting that defendant removed surface materials from pit and failed to pay for those materials, and for full amount of management fees payable to plaintiff — Defendant responded with counterclaim, alleging that plaintiff wrongfully permitted excavation, removal and use of reclamation material from area of defendant’s mineral lease that overlapped with area under management by plaintiff — Defendant brought applications for preservation order, attachment order, and Mareva injunction — Applications dismissed — Requirements of tripartite test for injunctive relief were not satisfied, and it was not appropriate to grant preservation order attaching plaintiff’s management fees — There was serious issue to be tried — Evidence did not establish that defendant would suffer irreparable harm if preservation order was not granted — Evidence established that preservation order that attached to plaintiff’s cash flow from its operations at pit would adversely impact plaintiff’s ability to perform its duties under second management contract — That might operate to frustrate province’s intention that sand and gravel be made available for public use. Debtors and creditors –––– Garnishment — Attachability — Prejudgment attachment orders –––– Defendant carried on oil sands extraction and processing operation — Plaintiff managed removal of sand and gravel on behalf of province from certain deposit (“pit”) — Plaintiff commenced action against defendant, asserting that defendant removed surface materials from pit and failed to pay for those materials and for full amount of management fees payable to plaintiff — Defendant responded with counterclaim, alleging that plaintiff wrongfully permitted excavation, removal and use of reclamation material from 392 ALBERTA LAW REPORTS 46 Alta. L.R. (6th) area of defendant’s mineral lease that overlapped with area under management by plaintiff — Defendant brought applications for preservation order, attachment order, and Mareva injunction — Applications dismissed — Attachment order was not granted — Test for attachment order was contained entirely in s. 17(2) of Civil Enforcement Act — Fact that defendant’s counterclaim so vastly overwhelmed plaintiff’s ability to satisfy that claim should not in itself be viewed as justification for attaching plaintiff’s assets — If defendant was only moderately successful in its counterclaim, it would put plaintiff out of business — Attachment order at this stage of action would not appear to significantly enhance defendant’s chances of recovery. Remedies –––– Injunctions — Availability of injunctions — Mareva injunctions — Threshold test — Strong prima facie case –––– Defendant carried on oil sands extraction and processing operation — Plaintiff managed removal of sand and gravel on behalf of province from certain deposit (“pit”) — Plaintiff commenced action against defendant, asserting that defendant removed surface materials from pit and failed to pay for those materials and for full amount of management fees payable to plaintiff — Defendant responded with counterclaim, alleging that plaintiff wrongfully permitted excavation, removal and use of reclamation material from area of defendant’s mineral lease that overlapped with area under management by plaintiff (“overlapping area”) — Defendant brought applications for preservation order, attachment order, and Mareva injunction — Applications dismissed — Defendant’s request for Mareva injunction was denied — There was more than sufficient doubt about outcome of trial court’s attempt to reconcile various agreements impacting on overlapping area to prevent court from concluding that defendant would probably prevail at trial — Defendant had not established strong prima facie case — Court was not, from evidence submitted, prepared to find that there was real risk that plaintiff would dissipate assets. Natural resources –––– Oil and gas — Practice and procedure — Miscella- neous –––– Applications for pre-judgment relief. Cases considered by C.M. Jones J.: Adler Firestopping Ltd. v. Rea (2008), 2008 ABQB 95, 2008 CarswellAlta 153, 41 B.L.R. (4th) 87, 88 Alta. L.R. (4th) 160, 441 A.R. 18, [2008] A.J. No. 124 (Alta. Q.B.) — referred to Aetna Financial Services Ltd. v. Feigelman (1985), [1985] 1 S.C.R. 2, 15 D.L.R. (4th) 161, [1985] 2 W.W.R. 97, 56 N.R. 241, 32 Man. R. (2d) 241, 29 B.L.R. 5, 55 C.B.R. (N.S.) 1, 4 C.P.R. (3d) 145, 1985 CarswellMan 19, 1985 CarswellMan 379, [1985] S.C.J. No. 1 (S.C.C.) — considered Agrium Inc. v. Pocha (2000), 2000 ABCA 296, 2000 CarswellAlta 1200, [2000] A.J. No. 1271 (Alta. C.A.) — referred to Athabasca Minerals Inc. v. Syncrude Canada Ltd. 393

Alberta Treasury Branches v. Pocklington (1998), 1998 CarswellAlta 918, 231 A.R. 84, 68 Alta. L.R. (3d) 52, [1998] A.J. No. 1091, 1998 ABQB 810 (Alta. Q.B.) — considered American Cyanamid Co. v. Ethicon Ltd. (1975), [1975] A.C. 396, [1975] 1 All E.R. 504, [1975] F.S.R. 101, [1975] R.P.C. 531, 119 Sol. Jo. 136, [1975] 2 W.L.R. 316, [1975] UKHL 1 (U.K. H.L.) — followed Bell ExpressVu Ltd. Partnership v. Tedmonds & Co. (1999), 1999 CarswellOnt 3145, [1999] O.J. No. 3679 (Ont. S.C.J.) — referred to Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34, 166 N.R. 44, 75 F.T.R. 240 (note), 1994 CarswellNat 1332, [1994] F.C.J. No. 68 (Fed. C.A.) — considered Chipewyan Prairie First Nation No. 470 v. Kent (2008), 2008 ABQB 157, 2008 CarswellAlta 459, 443 A.R. 56 (Alta. Q.B.) — considered Chitel v. Rothbart (1982), 39 O.R. (2d) 513, 30 C.P.C. 205, 69 C.P.R. (2d) 62, 141 D.L.R. (3d) 268, 1982 CarswellOnt 508, [1982] O.J. No. 3540 (Ont. C.A.) — considered Cho v. Twin Cities Power-Canada U.L.C. (2012), 2012 ABCA 47, 2012 CarswellAlta 193, 522 A.R. 154, 544 W.A.C. 154 (Alta. C.A.) — referred to Dunkeld Ranching Ltd. v. Banco Ambrosiano Holding S.A. (1987), 85 A.R. 278, 1987 CarswellAlta 537 (Alta. C.A.) — considered Eli Lilly Canada Inc. v. Novopharm Ltd. (2010), 2010 FC 241, 2010 Car- swellNat 508, 82 C.P.R. (4th) 401, 364 F.T.R. 265 (Eng.) (F.C.) — considered First Mortgage Fund (V) Inc. (Receiver of) v. Boychuk (2003), 2003 ABQB 217, 2003 CarswellAlta 878, 44 C.B.R. (4th) 64, [2003] A.J. No. 713, (sub nom. First Mortgage Fund (V) Inc. v. Boychuk) 336 A.R. 319 (Alta. Q.B.) — referred to Foundation Capital Corp. v. Saxon (2011), 2011 ABQB 102, 2011 CarswellAlta 210, 85 B.L.R. (4th) 60, 60 Alta. L.R. (5th) 31 (Alta. Q.B.) — referred to Front Carriers Ltd. v. Atlantic & Orient Shipping Corp. (2006), 2006 FC 18, 2006 CarswellNat 35, 2006 CF 18, 2006 CarswellNat 1683, [2006] F.C.J. No. 26 (F.C.) — considered Gemba Fund One LLC v. Tolosa Development Corp. (2016), 2016 ABCA 241, 2016 CarswellAlta 1508, 42 Alta. L.R. (6th) 74 (Alta. C.A.) — considered Gilks v. Green Clean Squad Inc. (2015), 2015 ABQB 83, 2015 CarswellAlta 166, 610 A.R. 186 (Alta. Q.B.) — considered Greater Vancouver Sewerage & Drainage District v. Ambassador Industries Ltd. (1982), 41 B.C.L.R. 292, 1982 CarswellBC 340, [1982] B.C.J. No. 2092 (B.C. C.A.) — considered HF1 Fuels Ltd. v. Olsen (2001), 2001 ABQB 117, 2001 CarswellAlta 226, [2001] A.J. No. 196, 10 C.P.C. (5th) 385 (Alta. Q.B.) — referred to 394 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Industrial Rewind & Supply Inc. v. Kuntz & Kramer Services Inc. (2001), 2001 ABQB 123, 2001 CarswellAlta 231, 11 C.P.C. (5th) 76, [2001] A.J. No. 201 (Alta. Q.B.) — considered Interclaim Holdings Ltd. v. Down (1999), 1999 CarswellAlta 644, [1999] A.J. No. 823, 1999 ABCA 214 (Alta. C.A.) — considered Interclaim Holdings Ltd. v. Down (1999), 1999 CarswellAlta 1063, 250 A.R. 94, 213 W.A.C. 94, [1999] A.J. No. 1302, 40 C.P.C. (4th) 62, 15 C.B.R. (4th) 207, 1999 ABCA 329 (Alta. C.A.) — considered Kroontje v. Q Private Jets Limited Partnership (2015), 2015 ABCA 158, 2015 CarswellAlta 812, (sub nom. Quikjets Inc. v. Q Private Jets Limited Partner- ship) 600 A.R. 229, (sub nom. Quickjets Inc. v. Q Private Jets Limited Part- nership) 645 W.A.C. 229 (Alta. C.A.) — referred to Lyons v. Creason (2008), 2008 ABQB 550, 2008 CarswellAlta 1219, [2008] A.J. No. 990 (Alta. Q.B.) — referred to MacMillan Bloedel Ltd. v. Simpson (1996), [1996] 8 W.W.R. 305, 22 B.C.L.R. (3d) 201, 137 D.L.R. (4th) 633, 109 C.C.C. (3d) 259, (sub nom. MacMillan Bloedel Ltd. v. Greenpeace Canada) 199 N.R. 279, [1996] 2 S.C.R. 1048, (sub nom. MacMillan Bloedel Ltd. v. Greenpeace Canada) 79 B.C.A.C. 135, (sub nom. MacMillan Bloedel Ltd. v. Greenpeace Canada) 129 W.A.C. 135, 2 C.P.C. (4th) 161, 22 C.E.L.R. (N.S.) 1, 1996 CarswellBC 2301, 1996 Car- swellBC 2302, [1996] S.C.J. No. 83, EYB 1996-67128 (S.C.C.) — considered Metalworks Canada Ltd. v. Warrack (2014), 2014 ABCA 389, 2014 Carswell- Alta 2107, 588 A.R. 54, 626 W.A.C. 54, 22 Alta. L.R. (6th) 168 (Alta. C.A.) — considered Modry v. Alberta Health Services (2015), 2015 ABCA 265, 2015 CarswellAlta 1530, 388 D.L.R. (4th) 352, [2015] 11 W.W.R. 81, 23 Alta. L.R. (6th) 247, 606 A.R. 373, 652 W.A.C. 373 (Alta. C.A.) — followed Moses v. Weninger (2006), 2006 ABCA 52, 2006 CarswellAlta 177, 55 Alta. L.R. (4th) 37, 380 A.R. 230, 363 W.A.C. 230, 29 C.P.C. (6th) 239, [2006] A.J. No. 160 (Alta. C.A.) — referred to Osman Auction Inc. v. Belland (1998), 235 A.R. 180, 1998 CarswellAlta 1376, [1998] A.J. No. 1307, 1998 ABQB 964 (Alta. Q.B.) — referred to Peregrym v. Peregrym (2015), 2015 ABQB 176, 2015 CarswellAlta 470, 16 Alta. L.R. (6th) 219, 608 A.R. 340 (Alta. Q.B.) — referred to Proprietary Industries Inc. v. Workum (2006), 2006 ABCA 225, 2006 Carswell- Alta 974, 30 C.P.C. (6th) 290, 63 Alta. L.R. (4th) 209, 271 D.L.R. (4th) 24, 397 A.R. 243, 384 W.A.C. 243 (Alta. C.A.) — considered RJR-MacDonald Inc. v. Canada (Attorney General) (1994), 164 N.R. 1, (sub nom. RJR-MacDonald Inc. c. Canada (Procureur g´en´eral)) 60 Q.A.C. 241, 54 C.P.R. (3d) 114, 111 D.L.R. (4th) 385, 1994 CarswellQue 120F, [1994] 1 S.C.R. 311, 1994 CarswellQue 120, [1994] S.C.J. No. 17, EYB 1994-28671, [1994] A.C.S. No. 17 (S.C.C.) — followed Athabasca Minerals Inc. v. Syncrude Canada Ltd. 395

Rasu Maritima SA v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (1977), [1977] 3 All E.R. 324, [1977] 2 Lloyd’s Rep. 397, [1978] Q.B. 644, [1977] 3 W.L.R. 518 (Eng. C.A.) — considered Rea v. Patmore (1999), 1999 ABQB 759, 1999 CarswellAlta 1438, [1999] A.J. No. 1168 (Alta. Q.B.) — considered Ridge Development Corp. v. Crestwood Condominiums Inc. (2008), 2008 ABQB 599, 2008 CarswellAlta 1329, 74 R.P.R. (4th) 145, 98 Alta. L.R. (4th) 369, [2008] A.J. No. 1074, 463 A.R. 341 (Alta. Q.B.) — referred to Sprung Instant Structures Ltd. v. Royal Bank (2008), 2008 ABQB 30, 2008 CarswellAlta 56, 87 Alta. L.R. (4th) 111, [2008] A.J. No. 44, 41 C.B.R. (5th) 304, (sub nom. Sprung Instant Structures Ltd. v. Caswan Environmental Services Ltd.) 439 A.R. 334 (Alta. Q.B.) — considered Tracy v. Instaloans Financial Solution Centres (B.C.) Ltd. (2007), 2007 BCCA 481, 2007 CarswellBC 2392, 285 D.L.R. (4th) 413, 48 C.P.C. (6th) 157, [2007] B.C.J. No. 2182, 246 B.C.A.C. 296, 406 W.A.C. 296 (B.C. C.A.) — referred to Tycholis v. Teem Energy Ltd. (2007), 2007 ABCA 219, 2007 CarswellAlta 1391, [2007] A.J. No. 961, 417 A.R. 135, 410 W.A.C. 135 (Alta. C.A.) — considered Vaccaro v. Twin Cities Power-Canada, U.L.C. (2013), 2013 ABCA 252, 2013 CarswellAlta 1177, 97 Alta. L.R. (5th) 193 (Alta. C.A.) — considered 518152 Alberta Ltd. v. Helmut Berndt Professional Corp. (2005), 2005 ABCA 151, 2005 CarswellAlta 545, [2005] A.J. No. 458 (Alta. C.A.) — considered 1007374 Alberta Ltd. v. Ruggieri (2013), 2013 ABQB 278, 2013 CarswellAlta 596 (Alta. Q.B.) — considered 1007374 Alberta Ltd. v. Ruggieri (2013), 2013 ABQB 420, 2013 CarswellAlta 1423, 565 A.R. 329, 1 Alta. L.R. (6th) 343 (Alta. Q.B.) — referred to 1400467 Alberta Ltd. v. Adderley (2014), 2014 ABQB 439, 2014 CarswellAlta 1208, 55 C.P.C. (7th) 303, 591 A.R. 40 (Alta. Q.B.) — considered 1482221 Alberta Ltd. v. Haney Farms (1985) Ltd. (2009), 2009 ABQB 760, 2009 CarswellAlta 2181, 62 C.B.R. (5th) 55, 20 Alta. L.R. (5th) 75, 486 A.R. 12 (Alta. Q.B.) — considered 1498587 Alberta Inc. v. Devani (2012), 2012 ABQB 324, 2012 CarswellAlta 2379, 540 A.R. 335 (Alta. Q.B.) — referred to 1773907 Alberta Ltd. v. Davidson (2015), 2016 ABQB 2, 2015 CarswellAlta 2414 (Alta. Q.B.) — considered 3058354 Nova Scotia Co. v. On*Site Equipment Ltd. (2007), 2007 ABQB 695, 2007 CarswellAlta 1650, 84 Alta. L.R. (4th) 358, [2008] 5 W.W.R. 183 (Alta. Q.B.) — referred to Statutes considered: Civil Enforcement Act, R.S.A. 2000, c. C-15 Generally — referred to s. 17 — considered 396 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

s. 17(1) — considered s. 17(2) — considered s. 17(2)(b) — considered s. 17(2)(b)(i) — considered s. 17(6) — considered Environmental Protection and Enhancement Act, R.S.A. 2000, c. E-12 Generally — referred to Judicature Act, R.S.A. 2000, c. J-2 s. 13(2) — referred to Rules considered: Alberta Rules of Court, Alta. Reg. 124/2010 R. 6.25 — considered Regulations considered: Public Lands Act, R.S.A. 2000, c. P-40 Dispositions and Fees Regulation, Alta. Reg. 54/2000 s. 8 — considered

APPLICATIONS by defendant for preservation order, attachment order, and Mareva injunction.

Marco Poretti, for Plaintiff / Respondent Joshua A. Jantzi, for Defendant / Applicant

C.M. Jones J.: I. Introduction 1 This matter involves two participants in the Alberta oil sands and concerns the rights conferred on them under various agreements with and approvals issued by the Province of Alberta. 2 The participants are Syncrude Canada Ltd. (“Syncrude”) and Athabasca Minerals Inc. (“AMI”). Syncrude carries on an oil sands extraction and processing operation. AMI manages the removal of sand and gravel on behalf of the Province from a deposit in northern Alberta known as “the Susan Lake pit”. 3 In 2012, AMI commenced an action against Syncrude, alleging an outstanding debt in the approximate amount of $620,000.00. AMI asserts that Syncrude removed surface materials from the Susan Lake pit and failed to pay for those materials and for the full amount of management fees payable to AMI. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 397

4 Syncrude responded with a counterclaim in the amount of $68 million, alleging that AMI wrongfully permitted excavation, removal and use of reclamation material from an area of Syncrude’s mineral lease that overlaps with the area under management by AMI (the “Overlapping Area”). Syncrude asserts a right to exclusive use and possession of that material for purposes of meeting its reclamation obligations. The resulting litigation will require interpretation of various agreements, directions, approvals and licences. 5 Syncrude seeks prejudgment relief. Briefly, it wants the Court to attach AMI’s assets and management fees. With certain exceptions described below, it also wants the Court to prohibit further extraction of sand and gravel from the Overlapping Area. 6 AMI claims that Syncrude’s request is a litigation tactic designed to put it out of business and deprive it of the financial resources it will need to advance its action against Syncrude.

A. Syncrude’s Application 7 Syncrude seeks the following interim and interlocutory orders: 1. Preserving all reclamation soil — in situ and stockpiled subsoil and overburden – within the boundaries of Mineral Surface Lease 973220 granted by the Province in favour of Syncrude pending trial and judgment (the “Preservation Order”); 2. Alternately, directing AMI to pay $55 million or such other amount as the Court deems just, into Court, and delivering possession of the reclamation soil to Syncrude; 3. Attaching the assets of AMI pursuant to s. 17 of the Civil Enforce- ment Act, RSA 2000, c–15 (“CEA“), pending trial and judgment (the “Attachment Order”); 4. Enjoining AMI from dealing with, conveying, selling, encumber- ing or otherwise disposing of any interests in personal or real property or assets in its possession or control and wherever located, without further order of the Court, pending trial and judgment (the “Mareva Injunction”); and 5. Costs.

B. Arrangements with Other Parties 8 Syncrude’s application was attended initially by representatives of five entities that engage with AMI for removal of sand and gravel from 398 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

the Susan Lake pit (“G5”). Syncrude had not named the G5 as Respon- dents nor had the G5 sought intervener status. The Court was advised that the G5 do not represent all of the entities actively engaged with AMI. 9 The Court was advised that Syncrude had arrived at an understanding with the G5. They would neither consent to nor actively oppose the relief sought by Syncrude, provided that relief did not go beyond the provisions of an Order (the “Draft Order”) that they apparently had worked out with Syncrude. 10 The Draft Order narrowed somewhat the scope of relief sought by Syncrude in its original application. Subject to certain exceptions, the Draft Order contemplates, inter alia: (1) directions for preservation of any material currently in situ in the Overlapping Area; (2) an Order prohibiting AMI from dealing with cover soil stockpiled within the Over- lapping Area; (3) an Order prohibiting AMI from dealing with stockpiled sand and gravel within the Overlapping Area; (4) payment into Court of management fees collected by AMI at a specified rate for sand and gravel to be removed by specified persons; and (5) attachment of any legal or beneficial interest in all real and personal property of AMI. 11 Syncrude’s counsel acknowledged that the scope of the attachment provisions of the Draft Order, if granted, would render the Mareva In- junction sought in Syncrude’s application redundant. 12 AMI expressed the view that Syncrude’s application should not proceed unless the Province was named as a Respondent. One line of argument is that the Province’s conflicting grants to Syncrude and to AMI have created uncertainty regarding the parties’ respective rights to sand and gravel in the Overlapping Area. 13 I was advised that the Province was made aware of Syncrude’s application and had indicated in writing that it would not participate. It is the prerogative of the Province, the G5 and others who may have an interest in sand and gravel in the Susan Lake pit to decline to take part in Syn- crude’s application. As the Court advised the G5, they do so at their own risk.

II. Factual Background and Applicable Documents 14 As alluded to above, the dispute between these parties arises from their potentially competing rights under a series of leases, agreements and approvals. Accordingly, it is necessary to consider the terms of the applicable documents. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 399

A. Syncrude Mineral Surface Lease 15 Syncrude produces oil sands bitumen from lands encompassed by Mineral Surface Lease 973220 (the “Syncrude MSL”) initially issued on November 28, 1997 by the Alberta Department of Environmental Protec- tion, Land and Forest Service, Land Administration Division and subsequently amended on March 15, 2002, April 5, 2005 and November 28, 2008. 16 The 2008 amendment to the Syncrude MSL included the following provision: 4. The holder shall ensure that its operations do not conflict with the recovery of aggregate materials by AMI in their operation of the Su- san Lake Pit under SML 980110. Accordingly, the holder shall consult with AMI on an ongoing basis to discuss the status of their operating plan and completion schedule for removal of aggregate resources within the affected lands and provide written confirmation to the department prior to proceeding with any mining activity. 17 Attached to the original Syncrude MSL as Schedule A are “Condi- tions” setting out Syncrude’s reclamation obligations, both ongoing and at the end of operations. Paragraphs 23, 41, 38, 39 and 43 of these Condi- tions are of special interest. 18 Paragraph 23 requires Syncrude to strip and pile topsoil separately from any woody material and subsoil in such a manner that it can be distributed evenly over the disturbed area when operations have been completed. Paragraph 41 prohibits Syncrude from selling, removing or carrying away sand and gravel found in situ or from using any such sand and gravel in connection with any construction work except under authority granted by the Minister. Paragraph 38 requires that sand and gravel discovered during mining activity and not used for ancillary/construction purposes must be stockpiled while paragraph 39 provides that Syncrude must stockpile sand and gravel deposits greater than 1000 m3 in size and greater than 1m in depth. Finally, paragraph 43 requires Syncrude to obtain a surface materials license to use sand and gravel for construction purposes. These Conditions were carried through to the most recent version of the Syncrude MSL. 19 Syncrude asserts that the Syncrude MSL gives it “exclusive possession and use of all reclamation soil in the Syncrude MSL”. It also asserts that reclamation materials include subsoil and that subsoil, in turn, includes sand and gravel. 400 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

B. AMI Surface Materials Lease 20 AMI asserts that the Province granted it Surface Materials Lease 980110 (the “AMI SML”) on March 17, 1998. Despite attempts to acquire a copy from the Province, AMI cannot produce the AMI SML. Nevertheless, there is sufficient indirect evidence to satisfy me that it exists and is currently in force. Indeed, Syncrude acknowledged in argument that the AMI SML exists. However, Syncrude would have me draw the adverse inference that the AMI SML does not convey any property rights to AMI. 21 Syncrude alleges that an Encroachment Agreement between AMI and Syncrude entered into on October 14, 2008 was to permit Syncrude to enter the Overlapping Area to excavate, stockpile and use materials, including sand and gravel, in Syncrude’s mining operations. It takes the form of a letter from Syncrude to AMI’s predecessor, Aggregates Man- agement Inc., and provides that Syncrude may encroach on the AMI SML subject to two conditions. The conditions are (1) Syncrude shall ensure that its operations do not conflict with the recovery of aggregate materials by AMI in its operation of the Susan Lake pit under the AMI SML and (2) Syncrude shall consult with AMI on an ongoing or at minimum annual basis to discuss the status of their operating plan and completion schedule for the removal of aggregate resources within the affected lands and to provide written confirmation to the Department. 22 I find this Encroachment Agreement noteworthy because: 1) Syncrude acknowledges the existence of the AMI SML; 2) Whatever right to encroach on the AMI SML Syncrude may have been granted is subordinated to AMI’s right to recover sand and gravel; and 3) Syncrude agreed to consult with AMI regarding “their” plans and completion schedule. It is not clear on the face of the Encroach- ment Agreement if this means Syncrude’s plans or AMI’s.

C. First Management Contract 23 AMI manages the Susan Lake pit on lands owned by the Province. It collects a fee from all users and ensures that a royalty is paid to the Prov- ince as the owner of the sand and gravel. AMI entered into its first management contract with the Province on March 17, 1998. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 401

D. Second Management Contract 24 AMI entered into its second management contract (“Second Manage- ment Contract”) with the Province on December 1, 2007, for a term of 10 years, expiring in 2017. Clause 2(1) of the Second Management Contract provides that AMI is to “manage removal of surface materials for public use, and reclaim the tendered location in accordance with Schedule ‘A’.” 25 Schedule “A” sets out several of AMI’s obligations. Clause 8 provides that AMI is to manage and operate the Susan Lake pit so as to maximize utilization of the surface material resource. Clause 5 provides that AMI is to collect a royalty from all users and pay it to the Minister. Clause 2 provides that AMI and its affiliates shall not use the Susan Lake pit as a source of surface materials for their own purposes or to meet any contractual obligations made with third parties, other than for maintaining the Susan Lake pit and access roads. Clause 25 provides that AMI can permit users to establish and maintain stockpiles of material on the Susan Lake pit location while clause 33 provides that all surface material on the Susan Lake pit location, whether stockpiled or otherwise, remains the property of the Department until removed from that location and paid for by the user. Clause 3 provides that the term “surface material” has the meaning defined in s. 8 of the Dispositions and Fees Regulation, Alta AR 541/2000, as amended, which includes sand and gravel. 26 Schedule “A” deals extensively with reclamation obligations. Clause 4 provides that AMI is responsible for reclamation and re–forestation of the Susan Lake pit in accordance with applicable legislation and standards. Clause 10 states that “The Minister reserves the right to permit exploration and development of the oilsands resource on land within the tendered location. The Minister may, without compensation to [AMI], withdraw that portion of the lands from this Agreement by notice in writing to [AMI]. That portion of the lands withdrawn shall cease to be the responsibility of [AMI] with respect to reclamation. The reclamation plan shall be amended accordingly.” 27 This withdrawal appears to have occurred by virtue of a letter dated May 29, 2008 from Alberta Sustainable Resource Development, Land Division, to AMI’s predecessor, Aggregates Management Inc., stating that: The area covered by [AMI] SML — 980110, referred to as the Su- san Lake Gravel Pit, is an area that is scheduled to be part of an oil sands strip mining operation in the near future. The Department will 402 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

therefore not require you to conduct reclamation activity on any area of your lease that will be part of the mine or affiliated infrastructure. 28 The letter appears to implement a shift in reclamation obligations. Syncrude asserts that, notwithstanding this removal of AMI’s reclamation responsibility, AMI had an obligation to stockpile sand and gravel for use by Syncrude in its reclamation efforts. Syncrude asserts that AMI had such an obligation in recognition of the exclusive use and possession of sand and gravel conferred by the Syncrude MSL. AMI disputes that it had any such obligation or that Syncrude has any such right. 29 Clause 1 of Schedule “A” provides that AMI is to manage the removal of surface materials from the Susan Lake pit for public use in accordance with the Conservation and Reclamation Plan dated May 2006. Further, clause 32 requires AMI to submit an annual report and operating plan, including a summary of reclamation activities and a reclamation plan. Documents on this application included AMI’s plan dated March 1, 2015 and entitled “Susan Lake Gravel Pit SML 980110 2015 Operational Plan” (the “2015 Operational Plan”).

E. Syncrude Approvals 30 Syncrude’s activities also are governed by approvals issued under the Environmental Protection and Enhancement Act, RSA 2000, c E–12. Syncrude’s materials included one such approval dated June 24, 2007. Parts 3.2 and 6 of the “Terms and Conditions Attached to Approval” deal with “Land Conservation” and “Land Reclamation,” respectively. 31 Clauses 3.2.13 and 3.2.14 require Syncrude to place “coversoil” on disturbed land and to salvage “upland surface soil” to specified depths on disturbed land. Clauses 3.2.16 through 3.2.27 address salvage issues and provide, first, that Syncrude must reclaim the land so that the reclaimed soils and land forms are capable of supporting a self–sustaining, locally common boreal forest, regardless of the end land use and second, that Syncrude is to “place in reclamation” all coversoil and subsoil salvaged in accordance with Part 3. Clause 3.2.15 provides that where there is insufficient upland surface soil to meet the reclamation objectives in the approval, Syncrude must salvage other coversoil. 32 The definitions set out in Part 1 of the approval are relevant to this dispute. Clause 1.1.2(t) defines “coversoil” as (i) peat–mineral mix, (ii) organic horizon, or (iii) upland surface soil. Clause 1.1.2(jjj) defines “peat–mineral mix” in part as “a mixture of an organic horizon and the underlying mineral soil, or an organic horizon and mineral soil from an- Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 403

other source”. Clause 1.1.2(hhh) defines “organic horizon” as “the surface soil horizon in Organic soils containing more than 17% organic car- bon by weight.” Clause 1.1.2(cccc) defines “upland surface soil” as “a stratum salvaged from an upland soil that includes the LFH, A horizon and in some cases part or all of the B horizon”. All of these definitions make reference in some manner to “soil” which is defined in clause 1.1.2(sss) as “the naturally occurring, unconsolidated mineral or organic material at least 10 cm thick that occurs at the earth’s surface and is capable of supporting plant growth.” Syncrude alleges that coversoil includes sand and gravel.

F. Syncrude Surface Materials Lease 33 The current version of the Syncrude Surface Materials Lease (the “Syncrude SML”) is dated July 17, 2014. The following provisions of the Syncrude SML are relevant to this application. 34 The second recital states that “. . .the director may grant a lease of public land for removal of clay, marl, sand, gravel, silt, topsoil and peat.” Clause 1 provides that the Syncrude SML carries with it . . .. “the right to work and remove out of the surface thereof Sand and Gravel. . .”. This grant does not expressly refer to a right to exclusive use and possession. 35 Clause 6 provides that Syncrude “. . .shall pay the royalties, specified by the Regulation in force at the time the surface materials are removed. . .”. 36 Clause 20 provides that the Minister may, by order, authorize the Minister of Infrastructure, the Minister of Transportation or any other person to enter the land under a lease and remove surface materials required for the construction or maintenance of public roads or other public works. This would suggest that use of surface materials, including sand and gravel, is not exclusive to Syncrude. 37 Schedule “A” to the Syncrude SML sets out a number of conditions. Notably, clause c) states as follows: Schedule “B”, attached, lists any prior and subsisting authorizations and dispositions (prior rights) issued on the quarter sections included in this authority. The holder shall not conduct any activity on the land where prior rights have been issued without the consent of the holder of these prior rights. 38 Oddly, Schedule “B” does not list any prior authorizations. However, clause 7 of Schedule “A” provides that the “. . .purpose of this authority is for Surface Materials Extraction on lands under the related disposition 404 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

indicated.” The related disposition referenced is the Syncrude MSL. Clause 9 provides that Syncrude shall ensure that operations and reclamation for the Syncrude SML is consistent with the Syncrude MSL. As noted above, the 2008 amendment to the Syncrude MSL specifically provides that Syncrude’s operations may not conflict with the activities of AMI. 39 As noted above, the Encroachment Agreement entered into by Syn- crude and AMI on October 14, 2008, just before the current version of the Syncrude MSL was issued, provides that: The holder (Syncrude) shall ensure that its operations do not conflict with the recovery of aggregate materials by AMI in their operation of the Susan Lake Pit under Agreement with the crown and SML 980110. 40 In addition, in a letter from Alberta Sustainable Resource Develop- ment to AMI dated November 25, 2011, the Province notes the issue between AMI and Syncrude regarding Syncrude’s removal of aggregate materials from the Susan Lake Pit and states, inter alia: AMI can charge Syncrude user fees for the 432,948 1cm of mixed aggregate material deemed to be reclamation material. . . As AMI’s Agreement/SML with the Crown does constitute a prior and existing activity and in respect of that AMI requires access to all lands affected by it, Syncrude must ensure AMI has unlimited access, subject to agreed upon terms and coordination of activities. . . Syncrude has been advised of the clause noted determinations. . . As AMI manages these lands as a public pit on behalf of the Crown there should be no reason for AMI to refuse requests for aggregate materials from any operation.

III. Issues Arising in the Overlapping Area 41 The parties take the position that the existence of a shortfall in reclamation materials available to Syncrude and the scope of its right to exclusive use and possession of reclamation material are “threshold” issues which ultimately will determine the outcome of the litigation. 42 Syncrude’s request for prejudgment relief depends upon its claim that its “obligations” under the Syncrude MSL are, of necessity, accompanied by the “right” to exclusive use and possession of sand and gravel to satisfy its reclamation obligations. Syncrude asserts that exclusive use and possession flows as a necessary incident of its obligation to stockpile and reclaim. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 405

43 However, none of the documents discussed above appear to grant Syncrude exclusive use and possession of sand and gravel in the Over- lapping Area. Indeed, some of the provisions of those documents would seem to undermine Syncrude’s position. Interestingly, clause 1 of the 2008 amendment to the Syncrude MSL required Syncrude to provide an “Aggregate Management Plan” that identifies the location, quality and quantity of all gravel resources. This obligation seems consistent with the notion that the Province continues to assert ownership of sand and gravel. It would seem strange for Syncrude to be required to inventory gravel it discovers if it has exclusive use and possession. 44 Syncrude argues in its brief that “AMI has created a shortfall of reclamation materials, contrary to AMI’s reclamation requirements arising from its agreement with the Province . . .”. Syncrude asserts that AMI has failed to preserve adequate reclamation materials in the Overlapping Area which means that AMI is in breach of its obligations to the Prov- ince and that Syncrude must assume responsibility for AMI’s alleged default. 45 Syncrude states that the Alberta Energy Regulator (“AER”) has concluded that Syncrude presently suffers a deficit of 8.51 million cubic meters of reclamation material and points to an unsigned draft letter from the AER dated December 22, 2015. This deficit, Syncrude asserts, arises from AMI’s activities in Overlapping Area. 46 It is significant that the AER expressed the following view in the unsigned draft letter: The Alberta Energy Regulator recognizes that overlap between Sur- face Material Lease (SML 980110) of Athabasca Minerals Inc. (AMI) and dispositions (SML 000002 and Mineral Surface Lease; MSL 973220) of Syncrude Canada Ltd. (Syncrude) at the Aurora North mine has created a shortfall of reclamation material in stockpile for Syncrude. 47 The AER does not state that unlawful activity by AMI has created this shortfall, but that the “overlap” between various grants made by the Province has “created a shortfall of reclamation material. . .”. This suggests to me that, while the Province recognizes a possible shortfall of reclamation material, it at least leaves open the question of who, if anyone, is at fault. It could even be seen as implicit recognition that the Province’s grant of coincident rights has created the problem. 406 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

48 This recognition may be evidenced by this comment in the unsigned AER letter: The AER will accept reclamation to an end–pit lake (without fluid tailings) for the area that overlaps with Syncrude’s MSL. 49 This would appear to solve the reclamation problem, but Syncrude asserted in argument before me that fluid tailings cannot be placed in an end–pit lake and would have to be spread over a large area, with further disturbance to surface areas, requiring additional reclamation material. 50 AMI argues that any concerns about Syncrude’s obligations should be addressed with the Province. Further, AMI takes the position that there is no shortfall in any event and points to the data contained in the 2015 AMI Operational Plan. Clause 2.1.2 states that there is “suitable coversoil” on the Syncrude MSL lands sufficient to provide coversoil thick- ness of 0.32m and that test results indicate “very conservatively” that there are 11,965,259 m3 of overburden available on the Syncrude MSL for a minimum 1.2 m depth of material suitable for reclamation. 51 Appendix G to the 2015 AMI Operational Plan is entitled Susan Lake Public Pit, Reclamation Materials Assessment May 2015. This assessment is extensive, detailed and supported by sampling. It concludes that even when the strictest criteria and most conservative assumptions are applied in areas without data points, it is estimated that the Overlapping Area has sufficient coversoil and overburden to meet its reclamation obligations. 52 Clause 2.3 of the 2015 AMI Operational Plan provides that AMI has agreed with various oil sands companies that AMI shall salvage and stockpile “coversoil” but that it will remain stockpiled until it is ready to be used by the oil sands companies for reclamation. I deduce from this that AMI does not consider coversoil to include sand and gravel. This view is bolstered by clause 2.2.9 of the 2015 AMI Operational Plan entitled “Gravel Extraction” which provides that “AMI is required to sell aggregate used for its highest end use and to maximize the yield of the resource.” I note that this is also consistent with my view of the definition of “coversoil” in the Syncrude Approvals. 53 The 2015 AMI Operational Plan goes on to state that “The reclamation strategy has been developed to harmonize the future mining development plans of oil sands leases that overlap the pit lease with AMI development and reclamation plans. AMI will continue to progressively mine aggregates in a sequence that will maximize the resource while at Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 407

the same time being consistent with the plans of oilsands companies in the immediate area.” 54 Interestingly, the Volume Calculation included in the 2015 AMI Op- erational Plan indicates that “Aggregate includes gravel, mixed sand and gravel and sand. Aggregate is not considered suitable material for reclamation.” Clearly, AMI takes the position that sand and gravel are not, at least primarily, to be harvested for reclamation purposes. 55 It is important to note that the 2015 AMI Operational Plan is extensive and detailed and that its conclusions regarding the availability of coversoil and overburden suitable for reclamation in required quantities were based on a series of soil material testing projects. 56 AMI’s claim that Syncrude has sufficient reclamation material is supported by evidence of detailed analysis. By contrast, Syncrude’s shortfall claim is not. The AER’s expression of opinion in the unsigned draft letter provides no indication of what analysis underlies its conclusions regarding a shortfall of reclamation material. Accordingly, AMI’s evidence is to be preferred in this regard.

IV. Principles Governing Prejudgment Remedies 57 As noted above, Syncrude asserts that the Syncrude MSL gives it exclusive use and possession of sand and gravel in the Overlapping Area for reclamation purposes and that AMI’s operation of the Susan Lake pit has interfered with that right, notwithstanding that AMI has been con- ducting these operations pursuant to the Second Management Contract. Accordingly, the trial of this matter will involve, as a “threshold” issue, a determination of what rights, if any, the Syncrude MSL grants with respect to sand and gravel. Resolution of this issue will require reconcilia- tion of the terms and provisions of the Syncrude MSL, the Syncrude SML, the AMI SML and the Second Management Contract. 58 The Court’s task at this juncture is to determine what, if any, prejudgment relief should be granted to Syncrude. While this will require consideration of the documents referred to above, some restraint must be shown. The matter did not proceed before me as a trial, but only as an interlocutory application. I am deciding neither AMI’s claim nor Syn- crude’s counterclaim. While I am to assess the evidence before me for purposes of determining if injunctive relief is justified, I am not to make determinations that would fetter the discretion of the trial judge. 59 I turn now to the legal principles underlying the granting of preservation orders, attachment orders and Mareva injunctions. 408 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

60 There appears to be no dispute between the parties regarding the extraordinary nature of prejudgment relief. In one of its briefs, AMI asserts that “The Court exercises extreme caution in granting prejudgment relief. In fact, prejudgment relief is such an extraordinary remedy that there is a general rule against granting it.” In support of this proposition, AMI cites Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2 (S.C.C.) and quotes as follows from that case at para 43: There is . . . a profound unfairness in a rule which sees one’s assets tied up indefinitely pending trial of an action which may not succeed, and even if it does succeed, which may result in an award for far less than the caged assets. 61 AMI also cites this Court’s comment in Rea v. Patmore, 1999 ABQB 759 (Alta. Q.B.) at para 4 that “. . .the court will be guided by the ‘judicial abhorrence for prejudgment execution.’”

V. Preservation Order 62 This Court’s authority to make a preservation order is derived from Rule 6.25 of the Rules of Court, which provides that, on application, the Court may make an order for the preservation or custody of property that is in dispute or that may be evidence in an action. However, judicial restraint must be exercised when deciding, first, whether to grant a preservation order and, second, the appropriate scope of the order.

A. Test 63 The parties disagree on the appropriate test for the granting of a preservation order. 64 Syncrude argues that a preservation order is interlocutory injunctive relief and therefore the test is the well–known tripartite test established in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.). I note that in RJR-MacDonald, the Supreme Court of Canada adopted the tripartite test set out in American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504 (U.K. H.L.); whether one cites RJR-MacDon- ald or American Cyanamid, the test is the same: 1. there is a serious issue to be tried; 2. the applicant will suffer irreparable harm in the absence of relief; and Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 409

3. the balance of convenience favours granting relief. 65 AMI submits that the test for granting a preservation order is more onerous than the tripartite test. In addition to meeting the tripartite requirements, the applicant must also meet the requirements of the CEA. AMI relies on Interclaim Holdings Ltd. v. Down, 1999 ABCA 329, 250 A.R. 94 (Alta. C.A.) at paras 82–83: It is also arguable that [sections 16 and 17 of the CEA] are a codifica- tion of the requirements of the case law, without categorizations such as a Mareva injunction, a preservation order, or other like remedies at common law or in equity. Section 17 of the Act refers to an “attachment order,” a term not defined in the legislation. “Attachment” has been defined as (t)he act or process of taking, ap- prehending or seizing a person or property by virtue of a writ, sum- mons or other judicial order and bringing the same into custody of the court for the purpose of securing satisfaction of the judgment ultimately to be entered in the action. . . . We proceed on the basis that the existence of the [CEA] does not preclude the grant of a Mareva injunction or, by analogy, a preservation order, but we do not decide this is so. This issue was never squarely put before us or the learned chambers judge. But in granting either a Mareva injunction or a preservation order, a court should be guided by the principles of the [CEA]. Were it otherwise, the will of the Legislature might be thwarted. The following observation is apt: The best way to obtain a coherent, consistent system of prejudgment remedies for unsecured claimants is to replace the various existing prejudgment relief mechanisms with a single, well thought–out procedure for obtaining provisional relief. Our recommendations are intended to accomplish this result. Every claimant seeking a prejudgment remedy would be required to follow the same basic procedure and to satisfy the same general considerations in order to obtain relief. Once the claimant had made out a case for a remedy, the court could provide it by making what we shall call an “attachment order.” The proposed attachment order should not be confused with the present writ of attachment. The attachment order would be a flex- ible device by means of which the court, subject only to broad legislative constraints, could grant whatever sort of relief seemed most appropriate in the circumstances. . . . [Citations omitted.] 410 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

66 AMI also relies on Gilks v. Green Clean Squad Inc., 2015 ABQB 83, 610 A.R. 186 (Alta. Q.B.) in which Veit J. stated at para 4 that “[a]t a minimum, an applicant for a preservation or attachment order must satisfy the requirements of s. 17 of the [CEA].” Veit J. held at para 6 that an applicant for a preservation or attachment order must meet a higher standard than that for an interlocutory injunction: Moreover, every application for pre–judgment relief asks for exceptional relief and must meet general standards. For example, an applicant for an interlocutory injunction must satisfy a tri–partite test. When one party is, prior to a trial, asking the court to prevent another party from dealing with property which they could ordinarily dispose of, the application should be assessed in light of the requirements of an interlocutory injunction. Statutorily, an applicant for an attachment order must meet a higher test than the one set for an interlocutory injunction. An applicant for the latter type of relief must satisfy the court only that there is a serious issue to be tried, that they will suffer irreparable harm if the relief is not granted and that the balance of convenience favours the granting of the relief. An applicant for relief in the nature of a preservation or attachment order must satisfy the last two tests, but must satisfy a higher standard on the first test, i.e. that “there is a reasonable likelihood that the claimant’s claim against the defendant will be established”. 67 AMI’s position is that an applicant for a preservation order must establish the following: 1. there is a reasonable likelihood that the claim against the defendant will be established; 2. the applicant will suffer irreparable harm if the relief is not granted; 3. the balance of convenience favours the granting of the relief; and 4. there are reasonable grounds for believing that the defendant is dealing with the defendant’s exigible property, or is likely to deal with that property, (i) otherwise than for the purpose of meeting the defendant’s reasonable and ordinary business or living expenses, and (ii) in a manner that would be likely to seriously hinder the claimant in the enforcement of a judgment against the defendant. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 411

68 In Interclaim at para 39, the Court of Appeal said this about the test for a preservation order: There is some authority for the proposition that an injunction sought in a bankruptcy court is not subject to the requirements for a common law injunction such as irreparable harm and balance of convenience. ... This was not the position taken by the IR during the appeal, however. Accordingly, we proceed on the assumption that the test to be applied in relation to a preservation order is the tripartite test set out in [American Cyanamid], which requires firstly that there be a serious issue to be tried. ... [Emphasis added.] 69 Interpretation of this comment has given rise to two conflicting lines of authority. 70 The first, cited by Syncrude, is that Interclaim is authority for the proposition that the tripartite test applies to a preservation order: HF1 Fuels Ltd. v. Olsen, 2001 ABQB 117, 10 C.P.C. (5th) 385 (Alta. Q.B.) at para 13, cited in Ridge Development Corp. v. Crestwood Condominiums Inc., 2008 ABQB 599, 463 A.R. 341 (Alta. Q.B.) at para 25; Peregrym v. Peregrym, 2015 ABQB 176, 608 A.R. 340 (Alta. Q.B.) at paras 379–80. 71 I note that in 518152 Alberta Ltd. v. Helmut Berndt Professional Corp., 2005 ABCA 151 (Alta. C.A.), the Court of Appeal, at para 2, took no position on whether the tripartite test is the appropriate test, but assumed that it was and proceeded with the analysis on that basis. 72 Subsequently, Veit J. held in Gilks at para 23 that it is “appropriate” on a preservation order application to weigh an applicant’s compliance with s.17 of the CEA. She relied on the Court of Appeal’s statement at para. 83 of Interclaim that all prejudgment remedies ought to be guided by the principles of the CEA, though at para 29 she acknowledged the Court of Appeal in Interclaim “left open the issue of the existence of a preservation order application which is not governed by s.17 of the CEA”. 73 I adopt the first line of analysis because the Court of Appeal in Inter- claim did not require expressly that the provisions of s.17 of the CEA formed part of the test for a preservation order. Rather, the Court of Ap- peal said only that in granting preservation orders, courts ought to be guided by the principles of the CEA. 74 The trial judge in Interclaim had erred, not in granting a preservation order on the basis of the tripartite test, but in granting an order that was too broad. The Court of Appeal relied on the common law principle that prejudgment remedies should not tie up more assets than necessary to 412 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

respond to the applicant’s claim. The Legislature has codified this principle in s. 17(6) of the CEA. The Court of Appeal stated at paras 84–85: Our function is not to re–weigh the evidence before the learned chambers judge, but to determine whether she made an error of law or principle or a palpable and overriding error of fact. In our view, she did not. She was entitled to grant the order. For reasons already mentioned, however, she did not address s. 17(6) of the Act in the context of the Statement of Claim. To recapitulate, that section provides: (6) An attachment order shall not attach property that ex- ceeds an amount or a value that appears to the Court to be necessary to meet the claimant’s claim, including interest and costs, and any related writs, unless the Court is of the view that such a limitation would make the operation of the order unworkable or ineffective. Section 17(6) reflects a principle underlying the law prior to the enactment of the [CEA], namely, that a preservation order should only attach property of a value which reflects the value of the claim in relation to which there is a serious issue to be tried. 75 Accordingly, I find that Interclaim does not require an applicant for a preservation order to meet the provisions of the CEA, specifically s. 17(2). I note that s. 17(2) of the CEA refers to the “defendant’s exigible property”. A preservation order applies to property ownership of which is yet undetermined. Therefore, s. 17(2) of the CEA cannot apply to the type of property targeted by a preservation order.

B. Analysis 76 It is important to recall that an applicant for interlocutory relief must satisfy each of the three requirements of the tripartite test. If any one of the three elements is missing, the application will fail.

1. Serious Issue to be Tried 77 First, Syncrude argues that there is serious issue to be tried. Syn- crude’s alleged entitlement to exclusive use and possession of sand and gravel in the Overlapping Area remains to be litigated. In essence, its argument is that its reclamation duty under the Syncrude MSL engenders a right to exclusive use and possession of reclamation material. AMI’s position is that the various agreements, grants, approvals and licenses do not operate to vest that right in Syncrude and it disputes that Syncrude’s Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 413

claim to exclusive use and possession of sand and gravel constitutes a serious issue to be tried. 78 AMI asserts that the Province is the owner of the sand and gravel in the Overlapping Area and that Syncrude’s obligation to stockpile sand and gravel resources in accordance with the Syncrude MSL does not mean that the public no longer has rights to those resources. 79 Further, AMI argues that the absence of any right to exclusive use and possession vested in Syncrude in respect of sand and gravel in the Overlapping Area undermines Syncrude’s assertions that AMI has committed trespass in respect of sand and gravel or wrongfully converted sand and gravel. 80 The threshold for determining that there is a serious issue to be tried is low, requiring only that I am satisfied on a preliminary assessment of the merits of the case that the claim is not frivolous or vexatious; see RJR-MacDonald at para 49 and Foundation Capital Corp. v. Saxon, 2011 ABQB 102, 60 Alta. L.R. (5th) 31 (Alta. Q.B.) at para 9. Given the uncertainty arising from the interplay of the above–discussed documents, I find that there is a serious issue to be tried.

2. Irreparable Harm 81 Syncrude initially sought an order preserving all reclamation soil in situ and stockpiled, including sand and gravel, within the boundaries of the Overlapping Area. It argues that refusal to grant a preservation order will cause it irreparable harm in that its interests will be adversely affected in a manner that cannot be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application: RJR-MacDonald at para 58. 82 As noted above, this request was modified in the Draft Order negotiated among Syncrude and the G5. The Draft Order lists corporations that are to be permitted to purchase and remove sand and gravel currently stockpiled within the Overlapping Area. Further, those corporations are to be permitted to continue to excavate, process and stockpile sand and gravel in situ within the Overlapping Area. Essentially therefore, the Draft Order purports to allow a select group of users to continue their activities in the Overlapping Area provided any management fees otherwise payable to AMI are paid into Court or attached. 83 Syncrude asserts a proprietary claim to reclamation material, including sand and gravel and argues that there will be a permanent loss of this material if a preservation order is not granted. While Syncrude may lose 414 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

access to such material without a preservation order, it has not been established that such access is exclusive to Syncrude. The sand and gravel are owned by the Province, subject to various grants it may have made. 84 With respect to the potential for permanent loss of natural resources, AMI argues that sand and gravel is not unique or irreplaceable and that an award of monetary damages would be sufficient, obviating the risk of irreparable harm. 85 Syncrude argues that if the Susan Lake pit becomes exhausted in 2017, its shortfall in reclamation material will rise from 8.5 million cubic meters to 10.2 million cubic meters. The increase in shortfall from 8.5 to 10.2 million cubic meters is not trivial and the deficit cannot be recov- ered from users who have removed sand and gravel. Thus, a preservation order securing stockpiled or in situ sand and gravel would be of some value to Syncrude. This value, however, seems to me to be diluted by Syncrude’s agreement to allow the G5 to extract significant volumes of sand and gravel. 86 Further, Syncrude argues that sand and gravel in the required quantities cannot simply be purchased to fulfill its reclamation obligations. Yet the evidence before me is that Shell and Suncor have done exactly that, entering into agreements with AMI to purchase sand and gravel in the areas representing an overlap between their respective mineral surface leases and land governed by the Second Management Contract. Moreo- ver, in a letter dated November 25, 2011, Alberta Sustainable Resource Development refers to Syncrude paying user fees to AMI for mixed aggregate material at a price of $1.49 per cubic meter. Accordingly, it would appear that Syncrude could purchase reclamation material from AMI to the extent there remains sand and gravel capable of extraction from the Susan Lake pit. AMI asserts that the report appended to the 2015 Operational Plan, which found that Syncrude had adequate access to reclamation material to meet its obligations, took into account new reclamation obligations resulting from removal of reclamation material from other parts of the Syncrude MSL or SML. 87 I appreciate that Syncrude would prefer to utilize sand and gravel from the Overlapping Area, rather than purchasing reclamation material or acquiring it from other locations in the Syncrude MSL and SML. Nev- ertheless, I find that the sand and gravel in dispute is not an irreplaceable natural resource akin to the old growth forest at issue in MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048 (S.C.C.). Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 415

88 Syncrude also sought a direction that management fees otherwise payable to AMI under the Second Management Contract be paid into Court as part of a preservation order. This request is premised on the notion that these monies represent proceeds of sale of sand and gravel over which Syncrude asserts a proprietary claim. In oral argument, Syn- crude described these monies as “liquidated funds of sand and gravel that is removed from existing stockpiles”. 89 This characterization raises the appropriateness of a preservation order in these circumstances. A preservation order is intended to maintain the status quo pending determination of the ownership of an asset. If Syncrude has a proprietary interest in sand and gravel, that interest would extend to the proceeds of sale thereof: see Kroontje v. Q Private Jets Limited Partnership, 2015 ABCA 158, 600 A.R. 229 (Alta. C.A.) at para 17. 90 In my view, that analysis is not appropriate in this case. The Province, not AMI, owns the sand and gravel. AMI does not sell its sand and gravel to users, but facilitates removal of the Province’s sand and gravel from the Susan Lake pit, for which those users pay a royalty to the Prov- ince. AMI is not entitled to a royalty; it is paid a user fee “in consideration for services” pursuant to clause 8 of the Second Management Contract. 91 Accordingly, I do not believe that an order intended to preserve access to an asset pending determination of its ownership should be granted with respect to AMI’s management fees. Management fees are compensation for services rendered, not for transfer of an asset. 92 Further, since Syncrude takes the position that it cannot simply purchase sand and gravel for reclamation, the value attaching AMI’s cash flow is questionable. AMI notes that Syncrude has abandoned its request for a preservation order relating to stockpiled material, but continues to seek payment into Court of management fees arising from the sale of these materials. 93 AMI argues that this request effectively amounts to a request for security for Syncrude’s claim against AMI. Citing 1400467 Alberta Ltd. v. Adderley, 2014 ABQB 439, 591 A.R. 40 (Alta. Q.B.) at paras 51–53, AMI asserts that none of the three exceptional circumstances where security for judgment can be posted exists in this situation: 1) Security as a condition of being able to appeal; 2) Assets are being dealt with so as to escape judgment; 416 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

3) Where the court is “almost, but not quite, satisfied that the defendant has no defence”. 94 Syncrude asserts that it is trite law that harm is irreparable where damages cannot be collected, citing Moses v. Weninger, 2006 ABCA 52, 380 A.R. 230 (Alta. C.A.). AMI admits that it does not have sufficient funds to pay the $68 million Syncrude seeks in its counterclaim, but Syn- crude goes further, arguing that it will not be able to enforce any award because AMI is impecunious. 95 Of course, Syncrude’s argument on this front rests on the premise that its counterclaim is valid and that a Court will agree with its calculation of damages. The Supreme Court of Canada held in RJR-MacDonald at para 59 that one party’s impecuniosity does not automatically determine the application in favour of the other party, though it may be a relevant consideration. 96 AMI’s position is that its inability to pay $56 million into Court or to satisfy a judgment in that amount does not render it impecunious, especially given that Syncrude’s counterclaim remains to be adjudicated. The magnitude of Syncrude’s counterclaim compared to AMI’s assets cannot be allowed to overwhelm a reasoned consideration of the equities inherent in Syncrude’s request for prejudgment relief. Care must be taken to ensure the quantum of damages sought by counterclaim is not allowed to lead the Court inexorably to the conclusion that an unsatisfied judgment is inevitable. Further, given AMI’s admission that its resources would fall vastly short of discharging so large a damage award, one might conclude that the incremental value to Syncrude of a preservation order is de minimus. 97 Syncrude makes much of the irreparable harm its reputation will suffer if it cannot meet its reclamation obligations. Based on Syncrude’s representations, I fail to see how having what would otherwise be AMI’s cash flow from the Overlapping Area will address that concern, if it cannot purchase the necessary reclamation material elsewhere. 98 AMI argues that Syncrude must do more than merely assert the possibility of irreparable harm to its reputation and quotes as follows from Centre Ice Ltd. v. National Hockey League (1994), 166 N.R. 44 (Fed. C.A.) at para 11: Loss of good will, of reputation, of distinctiveness, if established after a full hearing at trial may well constitute irreparable harm and lead to the issuance of a permanent injunction. However, as this Court’s jurisprudence has shown, in the absence of clear evidence Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 417

that irreparable harm would result at this juncture, an interlocutory injunction should not be issued. 99 In addition, AMI argues in its brief that if it is responsible for Syn- crude’s inability to meet its reclamation obligations, that should not reflect adversely on Syncrude’s reputation. Conversely, if AMI is not responsible for Syncrude’s inability to reclaim, then any damage to Syncrude’s reputation is not caused by AMI. 100 Taking all of the foregoing into account, the evidence does not establish to my satisfaction that Syncrude will suffer irreparable harm if I do not grant a preservation order.

3. Balance of Convenience 101 With respect to the balance of convenience, Syncrude argues that the harm it will suffer if prejudgment relief is not granted, as outlined above, outweighs the harm to AMI if relief is granted. For its part, AMI asserts that a preservation order will put it out of business and points to para 59 of RJR-MacDonald where the Supreme Court of Canada held that a party put out of business has suffered irreparable harm. 102 Syncrude attempts to justify potentially putting AMI out of business on the basis that it may be heading that way in any event. AMI may indeed encounter difficulties continuing operations if its cash flow is attached by a preservation order. The evidence of AMI’s Chief Financial Officer, William Woods, suggests that operation of the Susan Lake pit is central to AMI’s economic survival. However, Syncrude has not provided persuasive evidence that AMI’s business is in jeopardy in the absence of a preservation order. In contrast to the case before the Court in Greater Vancouver Sewerage & Drainage District v. Ambassador Industries Ltd. (1982), 41 B.C.L.R. 292 (B.C. C.A.), I am not satisfied that AMI is not a going concern. I have not been presented with evidence to suggest that AMI’s contract regarding the Susan Lake pit will not be renewed when the Second Management Contract expires on November 30, 2017. Neither has Syncrude provided any persuasive evidence to support its assertion that AMI has no other potentially viable prospects. 103 Syncrude suggests in its brief that AMI is considering responding to a preservation order by “walking away from the management contract” or “selling any other assets”. Syncrude’s claim that these actions do not give rise to significant harm to AMI seems to ignore AMI’s claims that the impact of such an order cannot be overstated. 418 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

104 The cases cited by Syncrude suggesting that it is acceptable to force an entity to cease operations by means of an interlocutory injunction involved respondents that had acted in flagrant breach of some proprietary interest belonging to the applicant: Bell ExpressVu Ltd. Partnership v. Tedmonds & Co., [1999] O.J. No. 3679 (Ont. S.C.J.) at para 25; 3058354 Nova Scotia Co. v. On*Site Equipment Ltd., 2007 ABQB 695, 84 Alta. L.R. (4th) 358 (Alta. Q.B.); Adler Firestopping Ltd. v. Rea, 2008 ABQB 95, 441 A.R. 18 (Alta. Q.B.). It is by no means established that that has occurred in this case. 105 An additional factor is that, as AMI points out, the Second Manage- ment Contract requires it to manage the removal of surface materials from the Susan Lake pit for public use. Noting the Supreme Court’s comments at para 71 of RJR-MacDonald, AMI takes the position that when the authority involved is charged with protecting the public interest and the impugned action was taken pursuant to that responsibility, the court should in most cases assume that irreparable harm to the public interest would result from restraint of that action. 106 The evidence satisfies me that a preservation order that attaches AMI’s cash flow from its operations at the Susan Lake pit would adversely impact AMI’s ability to perform its duties under the Second Management Contract. That may operate to frustrate the Province’s intention that sand and gravel be made available for public use. It would indeed be ironic if the Province engaged AMI to make sand and gravel available to the public but prevented AMI from fulfilling that objective by granting Syncrude exclusive use and possession of that sand and gravel. 107 Based on the foregoing analysis, I find the requirements of the tripartite test for injunctive relief are not satisfied in this case. Further, as indicated earlier, I do not consider it appropriate to grant a preservation order attaching AMI’s management fees. 108 AMI asserts that, since a preservation order is inappropriate here, payment into Court in lieu of a preservation order is also inappropriate. In support of its view, AMI cites Vaccaro v. Twin Cities Power-Canada, U.L.C., 2013 ABCA 252, 97 Alta. L.R. (5th) 193 (Alta. C.A.) at para 16. There, the Court of Appeal noted that orders requiring the posting of security for judgments must meet the requirement for a strong prima facie case as well as the requirement for a real risk that assets within the jurisdiction are about to be removed, rendering nugatory any judgment obtained. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 419

109 I agree and decline to grant an order for payment into Court in lieu of a preservation order.

VI. Attachment Order 110 Syncrude attempts to overcome the objection to a preservation order in respect of management fees by seeking attachment under the provisions of the CEA of all of AMI’s assets, including management fees. 111 The purposes of preservation orders and attachment orders are different. A preservation order targets property the ownership of which is in dispute. Attachment orders target property that belongs to the respondent. This distinction recently was made by O’Ferrall J.A. in Gemba Fund One LLC v. Tolosa Development Corp., 2016 ABCA 241 (Alta. C.A.) at paras 20–21: As explained in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business & Technology . . ., a “proprietary” injunction is one granted to preserve an asset in the possession of a defendant which the plaintiff says belongs to it. The authority for making such an order in Alberta may be found in Rule 6.25(1)(a) which provides that the court may make an order for the preservation of property which is in dispute. The purpose of a proprietary injunction is to preserve the disputed property until trial so that the property will be available to be returned to the plaintiff if successful at trial. Other types of injunctions (for example, Mareva injunctions) do not involve a claim to ownership to the asset sought to be the subject of the injunction. The Mareva injunction typically restricts a defendant from dealing with assets which he or she clearly owns. Injunctions prohibiting a defendant from dealing with his own property are governed by section 17 of the [CEA]. Such injunctions represent an exception to the rule that the civil courts ordinarily have no jurisdiction to attach the assets of an alleged debtor for the protection of the claiming creditor prior to the creditor obtaining judgment: Lister & Co. v. Stubbs . . . [Citations omitted.]

A. Test 112 The parties disagree on the appropriate test for granting an attachment order. The issue is whether a common law test applies in addition to the statutory test. 420 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

113 Syncrude’s position is that the test for an attachment order is encompassed within the four corners of s. 17(2) of the CEA. Sections 17(1) and 17(2) of the CEA provide: 17(1) A claimant may apply to the Court for an attachment order where (a) the claimant has commenced or is about to commence proceedings in Alberta to establish the claimant’s claim, or (b) the claimant has commenced proceedings before a foreign tribunal to establish a claim if (i) a judgment or award of the foreign tribunal could be enforced in Alberta by action or by proceedings under an enactment dealing with the reciprocal enforcement of judgments or awards, and (ii) the defendant appears to have exigible property in Alberta. (2) On hearing an application for an attachment order, the Court may, subject to subsection (4), grant the order if the Court is satisfied that (a) there is a reasonable likelihood that the claimant’s claim against the defendant will be established, and (b) there are reasonable grounds for believing that the defendant is dealing with the defendant’s exigible property, or is likely to deal with that property, (i) otherwise than for the purpose of meeting the defendant’s reasonable and ordinary business or living expenses, and (ii) in a manner that would be likely to seriously hinder the claimant in the enforcement of a judgment against the defendant. 114 AMI’s position is that the tripartite test is only the starting point for an attachment order and that an applicant also must establish the requirements of s. 17(2) of the CEA. AMI submits that the four–part test it argued for a preservation order also applies to an attachment order. AMI argues that an attachment order is a form of injunctive relief, so it would be inappropriate not to consider the two branches of the tripartite test that are not included in s. 17 of the CEA: balance of convenience and irreparable harm. 115 I do not accept AMI’s argument that the requirements of s. 17(2) of the CEA are to be augmented with the tripartite test. In my view, s. 17(2) Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 421

of the CEA is the complete test for an attachment order, though I note that it is discretionary. The Court in Rea v. Patmore held at para 4: Although pre–judgment relief is incorporated into the [CEA], it remains an extraordinary remedy. Even a litigant who meets all the statutory prerequisites for the remedy may be denied the remedy: the court retains discretion to grant the remedy. While there is no cata- logue of factors that will necessarily apply in all situations, when deciding whether to grant the remedy, the court will be guided by the “judicial abhorrence for prejudgment execution”. In this case, while it is true that Mr. Patmore has dealt with the truck in a surreptitious and underhanded way, there is nothing to suggest that he is operating all of his business and personal affairs in such a way. The mere fact that Mr. Rea probably has a good action against Mr. Patmore is not reason enough to tie up a substantial amount of Mr. Rea’s property until judgment. 116 AMI did not cite any authority other than Gilks for its position. Gilks was an application for a preservation order, which Veit J. held was not appropriate. Her comments about the test for an attachment order are obiter and rely on a single sentence from Interclaim. As discussed above, Interclaim is not authority for AMI’s position nor, with respect, does it support the obiter comments in Gilks. 117 Further, in Chipewyan Prairie First Nation No. 470 v. Kent, 2008 ABQB 157, 443 A.R. 56 (Alta. Q.B.), Veit J. cited Industrial Rewind & Supply Inc. v. Kuntz & Kramer Services Inc., 2001 ABQB 123, 11 C.P.C. (5th) 76 (Alta. Q.B.), where the Court found that the balance of convenience favoured the applicants even though they had not met the requirements of s. 17(2) of the CEA. Nevertheless, she held at paras 65–66 that the tests for an injunction and for an attachment order are distinct, though possibly similar in application. 118 Much like AMI, the respondent in Alberta Treasury Branches v. Pocklington, 1998 ABQB 810, 231 A.R. 84 (Alta. Q.B.) argued that the Court is not compelled to grant an attachment order where the balance of convenience test is not met. At paras 34–36, the Court noted the discretion afforded by s. 17(2) of the CEA but left open the question of whether it compelled a consideration of irreparable harm or the balance of convenience. 119 The Court of Appeal, however, has taken a narrow view of the discretion afforded by s. 17(2). In Tycholis v. Teem Energy Ltd., 2007 ABCA 219, 417 A.R. 135 (Alta. C.A.), the Court of Appeal reversed Veit J.’s decision to deny an attachment order on the basis of “dissipation”. The 422 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

Court of Appeal stated at para 35 that as the CEA does not make dissipation a requirement, it is irrelevant in a technical and legal sense. This suggests that s. 17(2) of the CEA is a complete code. 120 Similarly, in 1773907 Alberta Ltd. v. Davidson (2015), 2016 ABQB 2 (Alta. Q.B.), one party sought to rely on a common law exception to obviate the requirement in s. 17(2)(b)(i) of the CEA. At para 83, this Court declined to adopt the common law exception because “the requirements for an attachment order are set out in statutory form and not in the common law”. 121 Finally, AMI argued that attachment orders are a form of injunctive relief and therefore the tripartite test cannot be ignored. This argument must fail as the Court of Appeal has held that attachment orders are not injunctions. In Proprietary Industries Inc. v. Workum, 2006 ABCA 225, 397 A.R. 243 (Alta. C.A.), the Court of Appeal held that a Master had jurisdiction to issue attachment orders under the CEA and stated at para 22: Though attachment orders have an injunctive element to them, they differ from injunctions in several material respects. Attachment orders are limited in that they are designed to preserve property and are of limited duration; until the matter goes to trial. They cannot restrain underlying wrongful conduct or compel a defendant to action unrelated to preservation of property. In addition, the legal test and the proof required to obtain an attachment order differs from the requirements for an injunction order. 122 Accordingly, I accept Syncrude’s position that the test for an attachment order is contained entirely in s. 17(2) of the CEA. There is no additional requirement that an applicant meet the tripartite test established in RJR-MacDonald.

B. Application 123 Turning to the criteria in s. 17(2) of the CEA, Syncrude asserts that it is reasonably likely that its claim in conversion against AMI will be established. Syncrude states in its brief that conversion may be described as a “wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner’s right of possession”. As noted above, Syncrude asserts that it has an exclusive right to use and possess reclamation material. 124 Syncrude also asserts in its brief that there is a reasonable likelihood that its counterclaim against AMI in trespass to chattels will be estab- Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 423

lished. It cites Sprung Instant Structures Ltd. v. Royal Bank, 2008 ABQB 30, 439 A.R. 334 (Alta. Q.B.) at para 15 for this proposition: A trespass to a chattel will be established where the plaintiff has possession or an immediate right of possession and that right of possession is wrongfully interfered with, physically, by the defendant, but without the intention or effect of denying or negating the plaintiff’s title. 125 I note, however, that while the Syncrude MSL requires Syncrude to stockpile reclamation material, including sand and gravel, I can find no reference therein to an exclusive right to use and possess sand and gravel. Rather, the evidence before me suggests that Syncrude’s rights have been subordinated to AMI’s right to operate the Susan Lake pit. 126 Regarding the second criterion, Syncrude asserts that there are reasonable grounds for believing that AMI is dealing with its exigible property, or is likely to deal with that property, other than for the purpose of meeting its reasonable and ordinary business expenses. 127 AMI denies this and explains decreases in its total assets, retained earnings and equity as the result of “one off” events, including the writing down of certain inventories and other assets. 128 Syncrude also asserts that there are reasonable grounds for believing that AMI’s dealings with its property are likely to seriously hinder Syn- crude’s ability to enforce judgment against AMI, but it has provided no evidence to support this assertion. 129 AMI asserts that these claims must be supported by evidence beyond merely Syncrude’s belief: First Mortgage Fund (V) Inc. (Receiver of) v. Boychuk, 2003 ABQB 217, 336 A.R. 319 (Alta. Q.B.) at para 30. It cites this Court’s comments in 1482221 Alberta Ltd. v. Haney Farms (1985) Ltd., 2009 ABQB 760, 486 A.R. 12 (Alta. Q.B.) at para 58: However, an attachment order cannot be granted simply on the basis that the defendant may not later be solvent enough to satisfy a judgment that may ultimately be awarded; the requirements of the Act must still be met: [First Mortgage], para 30. The Court must examine the debtor’s situation to determine whether the creditor is likely to be seriously hindered in the enforcement of its Judgment as a result of the manner in which the debtor is, or is likely to, deal with its property. 130 Syncrude asserts that AMI does not have sufficient funds to satisfy a judgment of $68 million and that it cannot raise such funds. AMI readily acknowledges that it does not have the resources to satisfy a $68 million 424 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

judgment. However, I believe there is danger in forging too strong a link between the quantum of an applicant’s claim for damages and a respondent’s balance sheet. 131 The fact that Syncrude’s counterclaim so vastly overwhelms AMI’s ability to satisfy that claim should not in itself be viewed as justification for attaching AMI’s assets. The reality here is that if Syncrude is only moderately successful in its counterclaim it will put AMI out of business. An attachment order at this stage of the action would not appear to significantly enhance Syncrude’s chances of recovery. 132 In the result, I decline to grant an attachment order.

VII. Mareva Injunction 133 A Mareva injunction would have essentially the same effect as an attachment order, ensuring that management fees are secured pending trial. Syncrude acknowledged that if I granted an attachment order, a Mareva injunction would not be necessary. Given that I have declined to grant the attachment order, however, Syncrude’s request for a Mareva injunction remains a live issue. 134 Authority to order a Mareva injunction derives from the Court’s equitable jurisdiction to grant injunctive relief pursuant to the Judicature Act, RSA 2000, c J–2, s 13(2): 1007374 Alberta Ltd. v. Ruggieri, 2013 ABQB 420, 565 A.R. 329 (Alta. Q.B.) at para 23. As with the attachment order application, the parties disagree on whether the tripartite test is relevant for a Mareva injunction.

A. Test 135 Syncrude’s position is that an applicant for a Mareva injunction must establish: (i) a strong prima facie case and (ii) a real and substantial risk that the respondent will dispose of its assets such that the applicant would be hindered or delayed in the recovery of judgment. Syncrude relies on Aetna at para 30 and on Agrium Inc. v. Pocha, 2000 ABCA 296 (Alta. C.A.) at para 2. 136 AMI’s position is that the applicant must establish: (i) a strong prima facie case, (ii) irreparable harm, and (iii) a real risk that the defendant will remove assets from the jurisdiction or dissipate those assets to avoid the possibility of a judgment. AMI relies on Aetna at para 30 and on Cho v. Twin Cities Power-Canada U.L.C., 2012 ABCA 47 (Alta. C.A.) at para 5. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 425

137 Both AMI and Syncrude cite Aetna as authority for the proposition that the applicant must establish a strong prima facie case. On a close reading, Aetna actually does not stand for that proposition. In Aetna, the Court surveyed U.K. and Canadian authority on Mareva injunctions and noted at para 29 that the Ontario Court of Appeal in Chitel v. Rothbart (1982), 39 O.R. (2d) 513 (Ont. C.A.) chose a different threshold from that in the U.K. The U.K. authorities required a “good arguable case”; see Lord Denning in Rasu Maritima SA v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, [1977] 3 All E.R. 324 (Eng. C.A.). The Ontario Court of Appeal held that the appropriate threshold was whether the applicant demonstrated a strong prima facie case. In Dunkeld Ranching Ltd. v. Banco Ambrosiano Holding S.A. (1987), 85 A.R. 278 (Alta. C.A.), an early Alberta Mareva injunction case, the Court declined to adopt the strong prima facie case threshold and held that Aetna had not decided the standard of proof required. In subsequent cases, however, Alberta has adopted the strong prima facie case threshold: Agrium at para 2; Cho at para 5; Vaccaro at para 16. Moreover, a strong prima facie case versus a good arguable case is likely a difference in words without practical consequences: Tracy v. Instaloans Financial Solution Centres (B.C.) Ltd., 2007 BCCA 481, 48 C.P.C. (6th) 157 (B.C. C.A.) at para 54. 138 The purpose of creating the attachment order remedy under the CEA was to eliminate the uncertainty surrounding the circumstances in which a Mareva injunction could be obtained: Alberta Institute of Law Re- search and Reform, Prejudgment Remedies for Unsecured Claimants, Report No 50 (Edmonton: ALRI, 1988) at 146–47. After the creation of the attachment order it was thought by some that while the Mareva injunction remained in existence in Alberta it would be granted in very rare occasions: Ray Rutmen et al, Creditors’ Remedies in Alberta, loose–leaf, 2d ed (Carswell, 1999), 6–2. This has not proved to be the case and Al- berta courts continue to grant Mareva injunctions: Interclaim at para 83; Ruggieri at para 24. 139 Mareva injunctions are granted, however, on the basis of a test that differs from that in s. 17(2) of the CEA. In Metalworks Canada Ltd. v. Warrack, 2014 ABCA 389, 588 A.R. 54 (Alta. C.A.) at para 25 the Court of Appeal held that the grounds for obtaining a Mareva injunction differ from those for obtaining an attachment order in two ways: (i) the strength of the plaintiff’s claim, and (ii) how probative the evidence must be that the respondent has dealt or will deal with the subject assets. 426 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

140 First, the strength of the applicant’s claim required for a Mareva injunction is higher than for an attachment order: 1498587 Alberta Inc. v. Devani, 2012 ABQB 324, 540 A.R. 335 (Alta. Q.B.) at para 22 citing Osman Auction Inc. v. Belland, 1998 ABQB 964, 235 A.R. 180 (Alta. Q.B.) at para 39; see also Lyons v. Creason, 2008 ABQB 550 (Alta. Q.B.) at para 10. An applicant for a Mareva injunction must show a strong prima facie case, whereas an applicant for an attachment order must show only that there is a reasonable likelihood that he will establish his claim against the defendant. 141 Second, Alberta courts require evidence that the respondent intends to remove, hide or dissipate assets in order to avoid judgment: Cho at para 10; Vaccaro at para 16. By contrast, s. 17(2)(b) of the CEA does not require intent to defeat judgment: Pocklington at para 25. 142 This brings me to the question of whether the tripartite test applies to Mareva injunctions. AMI relies on the following statement from Cho at para 5: The tests for a Mareva injunction are not new. There are a number of procedural requirements, and the usual tripartite test for ordinary injunctions probably also must be satisfied. On the merits, the plaintiff must show a strong prima facie case for his suit, and also that there is a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid execution (enforcement) under a judgment. See [Aetna] (para 30); Clark v. Nucare PLC, 2006 MBCA 101, 208 Man R (2d) 102 (para 41); Eli Lilly Can v. Novopharm, 2010 FC 241, 364 FCR 265, 82 CPR (4th) 401; Sharpe, Injunctions and Specific Performance, para 2.880 (looseleaf, Dec 2011 issue). 143 The Federal Court stated in Eli Lilly Canada Inc. v. Novopharm Ltd., 2010 FC 241, 364 F.T.R. 265 (Eng.) (F.C.) at paras 19–20: In summary, in Canada the following requirements for a Mareva injunction must be established: 1. The plaintiff must establish a strong prima facie case for potential success at trial: [Aetna] at 27; 2. The plaintiff must meet the five guidelines set out in Third Chandris Shipping as re–articulated and modified in Chitel, namely (a) full and frank disclosure, (b) particulars of the claim, (c) assets within the jurisdiction, (d) risk of removal or dissipation of assets in order to frustrate judgment, and (e) an undertaking as to damages; and Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 427

3. The plaintiff must satisfy the regular tripartite test for an interlocutory injunction described in [RJR–MacDonald] at 334, namely (a) the presence of a serious question to be tried, (b) irreparable harm should the injunction not be granted, and (c) that the balance of convenience favours the moving party. If the applicant fails to meet any of these, the Court should refuse the Mareva injunction. 144 AMI has not pointed to any authority since Cho where an Alberta court applied the tripartite test to a Mareva injunction. In fact, it is unclear whether the Court of Appeal has followed Cho. In Vaccaro, decided after Cho, O’Ferrall J.A. said at para 16 that the test for a Mareva injunction required only two things: a strong prima facie case and a risk of removal or dissipation of assets in order to frustrate any judgment. However, Vaccaro was a security for costs case, not an application for a Mareva injunction. 145 In 1007374 Alberta Ltd. v. Ruggieri, 2013 ABQB 278 (Alta. Q.B.), the respondent relied on Cho to argue that the tripartite test must be satisfied for a Mareva injunction. Hawco J. held at para 25 that requiring that the tripartite test be met in addition to the two–part Mareva injunction test did not result in a higher test. His reasoning is consistent with the general consensus that if the applicant establishes a strong prima facie case, it will have met the “less exacting” test of a serious issue to be tried: Interclaim at para 46 citing Aetna; see also Interclaim Holdings Ltd. v. Down, 1999 ABCA 214 (Alta. C.A.) at para 6. There is no authority, however, on whether the tests of irreparable harm and balance of convenience are subsumed within the Mareva injunction test. 146 In Cho and Eli Lilly, the Courts did not have to determine whether the tripartite test was met. In Eli Lilly, the applicant had not provided an undertaking as to damages. In Cho, the applicant failed to show that the respondents were removing, hiding or dissipating assets to avoid execution. 147 Interestingly, in Front Carriers Ltd. v. Atlantic & Orient Shipping Corp., 2006 FC 18 (F.C.), the Federal Court held at paras 33–37 that the serious issue to be tried test is subsumed within the requirement that an applicant set out the particulars of the claim. The Court held at para 15 that the three branches of the tripartite test “are merged with the separate distinct criteria of a Mareva injunction”. The Court granted a Mareva injunction without explicitly addressing balance of convenience and irreparable harm. Perhaps this is because if there is a real risk that the 428 ALBERTA LAW REPORTS 46 Alta. L.R. (6th)

assets will be dissipated or moved to avoid judgment, the applicant has established irreparable harm and the balance of convenience favours granting the order. 148 In summary, I find that an applicant for a Mareva injunction in Al- berta must establish (a) a strong prima facie case for potential success at trial, and (b) a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid a judgment. Further, the applicant must meet procedural requirements: (a) full and frank disclosure, (b) particulars of the claim, (c) assets within the jurisdiction, and (d) an undertaking as to damages. Finally, the applicant must satisfy two branches from the tripartite test: irreparable harm and balance of convenience.

B. Application 149 I note the comments of the Court of Appeal in Modry v. Alberta Health Services, 2015 ABCA 265, 606 A.R. 373 (Alta. C.A.) at para 37: For a definition of “strong prima facie case”, see IBM Canada Ltd v Almond, 2015 ABQB 336 at para 29 (a strong prima facie case is one that will “probably prevail at trial” or is “likely to succeed at trial”), . . . 150 Syncrude asserts that it has a strong prima facie case premised on its claim to exclusive use and possession of reclamation material. Can it be said at this stage that Syncrude will probably prevail at trial in its claims of conversion and trespass to chattels? 151 In my view, there is more than sufficient doubt about the outcome of the trial Court’s attempt to reconcile the various agreements impacting on the Overlapping Area to prevent me from concluding that Syncrude will probably prevail at trial. 152 Consequently, I find that Syncrude has not established a strong prima facie case. Further, I am not, from the evidence submitted, prepared to find that there is real risk that AMI will dissipate assets. 153 Syncrude’s request for a Mareva injunction is denied.

VIII. Conclusion 154 To summarize, Syncrude’s applications for a preservation order, for an attachment order and for a Mareva injunction are denied. If the parties are unable to agree on costs they may submit written argument within thirty days of the date of these Reasons. Athabasca Minerals Inc. v. Syncrude Canada Ltd. C.M. Jones J. 429

155 I mention in passing that AMI pointed out that a prejudgment preservation order should not be used as a tactical weapon against a defendant who has a valid defence to the claim: see 1773907 Alberta Ltd. v. David- son at para 73. I have had some disquiet at the fact that Syncrude’s response to AMI’s action against it included a counterclaim for more than one hundred times the amount sought by AMI. To be sure, Syncrude is free to assert a counterclaim in whatever amount it thinks fit. Neverthe- less, the Court must exercise great care to ensure that the quantum of an as yet unproven claim does not, by itself, influence the assessment of the merits of the application for prejudgment relief. Prejudgment relief, especially when it has the potential to limit the respondent’s ability to carry on business and to proceed with litigation, must not be allowed to be used improperly. Applications dismissed.