FIC REAL ESTATE FUND LTD v LENNIE, 2014 ABQB 105
2.24: Lawyer of record
9.6: Effective date of judgments and orders
10.29: General rule for payment of litigation costs
10.30: When costs award may be made
10.31: Court-ordered costs award
10.52: Declaration of civil contempt
11.17: Service on lawyer of record
11.20: Service of documents, other than commencement documents, in Alberta
11.21: Service by electronic method
The Plaintiff commenced an action against three Defendants for non-payment of funds upon closing a real estate transaction. The Plaintiff mistakenly discharged its own caveat and the lands were transferred. The Plaintiff, upon discovering its mistake, applied for an Order requiring that the two individual Defendants immediately pay the funds into Court. The Order was served on Counsel of Record for both of the individual Defendants in accordance with the Rules. The Plaintiff applied to enforce the terms of the Order against one of the individual Defendants, which resulted in the freezing of that Defendant’s accounts, and a warrant was issued to hold the Defendant in contempt. The Defendant learned of it and voluntarily came forward to deal with the matter, worked to comply with the terms of the Order and accounted for most of the funds received. The Plaintiff sought a declaration that the individual Defendant was in contempt of the Order and sought solicitor and client costs for the enforcement proceedings.
Justice Graesser considered whether the initial service of the Order had been effective. His Lordship noted that an Order is not a commencement document as defined in the Rules, nor is a Notice of Application, so service may be effective in a number of different ways. Justice Graesser reviewed Rules 2.24, 11.17, 11.20 and 11.21, and stated that it was clear from Rule 11.17 that subsequent documents in an action can be served on a Lawyer of Record. Justice Graesser clarified that Orders speak from pronouncement (Rule 9.6): appeal periods may in some cases not run until the formal Order or Judgment has been filed and served, but when a Justice makes an Order in Court, the Order is not “in limbo and ineffective” until the terms are completed and the Order filed and served. The Order is therefore “valid unless and until it is set aside or varied”.
Justice Graesser considered Rule 10.52 pertaining to civil contempt. His Lordship reviewed the common law requirements for contempt and stated that the language of Rule 10.52 was clear: it is not necessary to prove that the person has actual knowledge of an Order; it is sufficient if the Order has been served in accordance with the Rules. Graesser J. opined that Rule 10.52(3)(a) has replaced the common law in Alberta. Justice Graesser considered the Defendant’s argument that he did not know about the Order. Noting that the Rules allow for contempt to be found even in the absence of personal knowledge, Justice Graesser was satisfied that the Defendant had provided a reasonable excuse for not complying with the Orders, and even if the timing of events was suspicious with respect to the transfer of funds, suspicions were not a proper basis for a finding of contempt. The individual Defendant was found not guilty of contempt.
His Lordship also considered whether solicitor and client costs were appropriate in the circumstances. The Plaintiff argued that they had been put to considerable expense to get compliance with the Order. Justice Graesser considered the provisions of Rules 10.29 through 10.31 and stated that costs were always at the discretion of the Court. Further, it was clear from Rule 10.31 that the Court has the jurisdiction to award a range of costs. His Lordship cited prior leading authority on solicitor and client costs pursuant to prior Rule 601(1). In the result, the fees and disbursements were payable by the Defendant on a full indemnity basis for those portions which related to the enforcement of the initial Order. Justice Graesser noted that it would be inappropriate in the circumstances to require the Plaintiff and its lawyers to justify “every bit of research and minute of time spent pursuing appropriate remedies”.View CanLII Details