SPARTEK SYSTEMS INC v BROWN, 2015 ABQB 190
4.29: Costs consequences of formal offer to settle
10.30: When costs award may be made
10.31: Court-ordered costs award
10.33: Court considerations in making costs award
SCHEDULE C: Tariff of Recoverable Fees
The Plaintiff, Spartek, was successful as against the individual Defendants, Brown, Matthews, Holt, and the Third Party, Claveria. In the Trial Decision, Justice Ross also found that a corporate Defendant, Petroniks, was also a party to civil conspiracy. Another corporate Defendant, 1133098 Alberta Ltd. (“113”), was not directly liable for conspiracy, and was successful in counterclaiming against Spartek. However, 113 was found to be a mere alter ego to Brown, and the corporate veil between the two was pierced. Two other Defendants, Hartwell and Real Time Measurements Inc. (“RTM”), were not liable for conspiracy.
The parties applied for Costs following the issuance of the Trial Decision. Ross J. stated that the Court has the discretion to issue Orders for Costs pursuant to Rules 10.30(1), 10.31 and 10.33. The Court specifically noted that some of the Defendants were not represented by legal counsel at Trial. Justice Ross noted that under Rule 10.31(5), a self-represented litigant may receive Costs in some circumstances, but generally self-represented litigants should not receive Costs because the ordinary objective of indemnification for legal costs is not served.
The Court first considered Costs payable to Spartek from Brown, Matthews, 113, and Petroniks. Spartek was entitled to Costs against these unsuccessful Defendants under the default regime. Moreover, pursuant to Rule 10.31(3)(b), the Court could order a multiple of Schedule C Costs. Rule 10.33(2) lists a set of factors that the Court may consider in deciding whether to impose such an amount. Here, the Court considered the conduct of the parties impacting the length of the Action, the denial or refusal to admit facts that should have been admitted and whether the parties engaged in misconduct. The Court found that Brown and Matthews extended the length of the Trial, Brown refused to admit documents that were proven at Trial and Matthews engaged in misconduct by altering evidence. The Court also considered the nature and complexity of the Action. The Action was complex and difficult, and created extraordinary challenges for Spartek’s counsel. It is rare for a Plaintiff to establish civil conspiracy, and some increase in the usual scale for Costs may be justified. Ross J. further noted that an award of fees under Schedule C does not fully compensate a successful party for actual legal costs. The Trial was lengthened, and Spartek suffered the disadvantage of having to bear the difference between fees under the Schedule and actual legal costs. The Court ordered double Column 5 Costs plus disbursements against Brown, 113, Matthews and Petroniks.
The Court then considered Costs payable by Spartek to the successful Defendants. The Court declined to award Costs to 113 despite its success, because it was an alter ego to Brown and shared the same counsel. On the other hand, RTM was a public company that was not involved in the conspiracy. RTM was entitled to Costs as a successful party for the period of time in which it was jointly represented by the same counsel as Matthews. Because of the joint representation, the amounts recoverable by RTM were reduced by 50%. Hartwell was another successful Defendant who was represented by counsel and did not fall within the exceptions to the general rule that successful parties are entitled to Costs. The Court noted that Hartwell filed two Formal Offers of settlement which were not accepted by Spartek. As such, Hartwell was awarded double Column 5 Costs pursuant to Rule 4.29. Finally, the Court awarded disbursements only to Holt.
The Court then turned to the issue of whether a Sanderson or Bullock Order should be issued between the Defendants. A Sanderson or Bullock Order would result in an unsuccessful Defendant being liable to pay a successful Defendant’s Costs. The Court issued two Orders in favour of Spartek: a Sanderson Order against Brown and Matthews to pay directly to RTM the Costs payable by Spartek, and a Bullock Order against Brown and Matthews with respect to the Costs payable to Hartwell. The Bullock Order was a single Column 5 amount because Brown and Matthews were not responsible for Spartek’s liability for Double Costs. No Bullock or Sanderson Order was awarded with respect to the Costs awarded to Holt.
Finally, with respect to Third Party Costs, the Court noted that all Third Party Claims other than the Claim against Claveria were made against the Defendants, and all Trial issues proceeded together. As such, Hartwell and Holt, both successful Defendants and Third Parties, were not entitled to recover more than one set of Costs for the Trial. Holt was not awarded Third Party Costs. Hartwell was awarded Costs for defending the Third Party Claim as against RTM and Matthews jointly, and Costs as against Brown and 113 jointly with respect to pre-Trial steps that related exclusively to the defence of the Third Party Claim by Brown and 113. Claveria was awarded single Column 5 Costs for defending the Third Party Claim during the period that he was represented by counsel, and disbursements for the time he was self-represented, payable by Brown, Matthews, 113 and RTM. RTM was awarded a Sanderson Order as against Brown, 113 and Matthews for Third Party Costs payable to Claveria, and a Bullock Order against Brown, 113 and Matthews for Third Party Costs payable to Hartwell.View CanLII Details