KMECH v DOROSH, 2023 ABKB 457
9.12: Correcting mistakes or errors
10.31: Court-ordered costs award
The parties were beneficiaries under their late mother’s estate. The Applicant had originally brought forth a Motion to have the Respondent removed as personal representative, due to the alleged mishandling of the estate. The Respondent also filed a caveat on the land that comprised the former family home, claiming an interest as a beneficiary under the Intestate Succession Act RSA 2000, c I-10. The litigation was seemingly resolved by a Consent Order issued by Justice Michalyshyn on November 27, 2020 (the “November Order”). However, the parties later disagreed on whether the November Order reflected the intent of the parties and how it should be implemented. The parties attended a Special Chambers Application to determine the issues forming the November Order, namely whether the Respondent: i) had to pay 50% of either the gross or net proceeds of the sale of certain property; ii) was entitled to an assessment under the Rules of the Applicant’s full-indemnity legal fees; and iii) was in Contempt of the November Order for failing to pay all of the 50% of gross proceeds of sale and failing to pay the full-indemnity legal costs. Among other things, the Court considered whether the Applicant was required to reimburse the estate for the legal fees related to the removal of the caveat.
The Respondent argued that the November Order contained a drafting error, and Justice Mah should exercise discretion under Rule 9.12 to correct the change from gross proceeds, back to net proceeds. The Respondent relied on the defence of non est factum. Justice Mah, citing from the Alberta Court of Appeal’s decision in Farm Credit Canada v Chan, 2021 ABCA 168 found that the Respondent was careless and was thus foreclosed from using the non est factum defence. Justice Mah noted that non est factum does not exist to allow people to escape an obligation by saying they did not read a document properly or because they failed to notice something.
The Court went on to consider whether the Respondent was entitled to assess the legal fees under the Rules. The Applicant’s position was that the Respondent was apprised in advance of the approximate full-indemnity Costs and signed the November Order saying they would pay. The Respondent was told varying anticipated Costs of the total amount of legal fees, none of which were the actual amount billed by opposing counsel. Justice Mah found that being advised in advance of the probable amount of the Costs did not amount to an acceptance of the final total rendered, nor did it waive the right of assessment under the Rules. Further, no specific amount was mentioned in the November Order, meaning the final amount was left open. The November Order did not say that the Costs may be assessed, nor that they could be assessed. Therefore, Justice Mah found that the Rules should apply by default, and that the November Order provided that Costs would be assessed pursuant to Rule 10.31. The Respondent was entitled to a Bill of Costs under Rule 10.35, and was also entitled to have the Bill of Costs assessed in accordance with Rules 10.36(2) and 10.41.
Finally, the Court turned its attention to the question of whether the Respondent should be held in civil Contempt for not adhering to the terms of the November Order. Justice Mah was not convinced that the Respondent’s actions had met the requisite intent, namely, a wilful and deliberate flaunting of the Order beyond a reasonable doubt. The Court found it reasonable to believe the Respondent thought that the word “gross” was a drafting error, as the Respondent paid the net sale of the proceeds, and then instructed counsel to make an Application under Rule 9.12 to relieve them of the obligation to pay the remaining balance. Similarly, because the November Order did not specify the terms of the Costs, it was reasonable for the Respondent to wait for Costs to be assessed.
In obiter, the Court questioned whether the failure to carry out a settlement in the form of a Consent Order, which involves distributing the sale proceeds of an estate asset, falls within the meaning of “an Order to pay money”, which is the exception set out in Rule 10.52(3)(a)(i).
The Court concluded that the Respondent had to pay the gross proceeds of the sale, was entitled to the assessment of Costs and was not to be held in civil Contempt. The Applicant did not have to reimburse the estate for the legal fees related to the removal of the caveat. Each party was responsible for bearing their own Costs for the proceedings from the November Order to the date of the Special Chambers Application.View CanLII Details