Looseleaf Updates – August

The following looseleaf texts have been updated:

The Law of Costs – Mark M. Orkin and Robert G. Shipper
Release #5

What’s New?

Party-and-Party Costs – Definition – Generally – The judge in this case in the Superior Court of Justice for Ontario dismissed a motion by the plaintiffs for summary judgment against the defendant on their claim for damages of $113,000. The judge granted the summary motion of the defendants and dismissed the action. The purchasers’ claim was for the return of a “revival fee” on an expired agreement of purchase and sale for a home built by the defendant. The defendant sought its costs of the motion and the action which costs total $57,953.69 inclusive of taxes and disbursements. Most of this amount, namely $50,269.50, was substantial indemnity fees for the period after the defendant served its offer to settle. The defendant’s partial indemnity costs for the period before it made its offer was $855. The rest was taxes and disbursements. The defendant argued that its offer of $1000.00 plus costs of $750 should have been immediately accepted. The purchasers say that the defendants’ costs should be no more than $15,000. The goals of an award of costs are not limited to indemnity. There are broader, discretionary considerations involved, which are articulated in rule 57.01 of the Rules of Civil Procedure (Ont.). In discuss ing rule 51.07(7) of the Rules of Civil Procedure, the judge stated… “the court is to “…. devise and adopt the simplest, least expensive and most expeditious process for fixing costs… .“. The general principles for the exercise of my discretion in determining costs are set out in rule 57.01(1). Considering all of the factors the judge found a fair and reasonable amount that should be paid by the purchasers to be $30,000 for costs all-inclusive: Correa v. Vaistar Homes (Oakville Sixth Line) Inc., 2024 ONSC 5184, 2024 CarswellOnt 14131, 64 R.P.R. (6th) 333 (Ont. S.C.J.).

Party-and-Party Costs – Several Defendants – The Hague Convention – In April 2024, the trial judge, in this case before the Court of King’s Bench of Alberta, following a hearing of the father’s application under the Convention on the Civil Aspects of International Child Abduction, 1343 UNTS 89, Can TS 1983 No 35, 19 ILM 1501 (“Hague Convention”), found in favour of the father’s application. The father sought costs against the mother. The father requested costs on a full indemnity basis in the total amount of $41,426 or alternatively, party-party costs. As the trial judge noted, “The starting point for costs award in a Hague Convention proceeding is Article 26. The court notes: “Article 26 expressly provides the court authority to award costs outside those ordinarily provided for in family law litigation under the Rules of Court. However, the word “may” in Article 26 reinforces the discretionary nature of the costs award in Article 26. The discretion granted in Article 26 is broad. The broad discretion under Article 26 to order costs must be exercised judicially.” The judge then addressed costs principles in Alberta. The judge confirmed that Alberta courts have considerable discretion in setting reasonable and proper costs under rules 10.29, 10.31, and 10.33 of the Alberta Rules of Court. In this case, the judge found that there was an imbalance of power and significant financial disparity between the parties. In the judge’s view, the significant imbalance of power and means warranted a cost award that would achieve a more equitable result. The judge concluded on the balance of probabilities that this was not an appropriate case for costs on a full indemnity or solicitor-client basis under the rules. The judge did not find conduct of the mother that would justify the higher costs award. The judge also did not find that the father’s offer to settle satisfied the provisions of the rules. The judge found that the mother’s limited financial circumstances was a relevant factor among others in the rules and considered structuring a just and equitable costs award in this case. In the end, the judge awarded the father’s 60 % of his Canadian legal fees. The judge denied the father’s United States legal fees. The judge also denied the father’s claim for trial attendance costs and only allowed a portion of the travel expenses for return of the children. The judge allowed the mother to pay the costs award at the rate of $1000.00 a month: LY v. RY, 2025 ABKB 12, 2025 CarswellAlta 43, 11 R.F.L. (9th) 350 (Alta. K.B.).

The Oppression Remedy – David S. Morritt, Sonia L. Bjorkquist, and Allan D. Coleman
Release #1

What’s New?

Summaries of Representative Oppression Cases – Failure to Comply with Corporate Governance Requirements – Jahnke appealed from the Remedy Judgment on the basis he remedy ordered was inadequate and the only remedy that would be appropriate is a buy-out of her shares at a valuation of $1.9 million based on a liquidation value of the Company’s sole asset, less the value of the preferred shares and liabilities. Justice Griffin did not consider it a valid complaint that the judge decided on a remedy of his own making as opposed to choosing a remedy of his own making as opposed to choosing a remedy that matched the submissions of one of the parties. The judge had wide discretion under the BCA to fashion an appropriate remedy, In a case of this nature, a judge is not required to accept one of two proposals for a remedy as a binary choice between party A’s or party B’s proposed remedy. Nor is a judge required to run each permutation and combination of possible remedies by the parties before deciding what is appropriate. Justice Griffin explained that the overall problem with Jahnke’s position was that she never varied from seeking a remedy that would match what she asserted were her expectations, yet the judge concluded in the Liability Judgement that those expectations were not reasonable. Justice Griffin explained that Jahnke failed to appreciate she made arguments before the judge and the judge considered them, but in the end the judge’s conclusions as to the oppressive conduct were limited to two things: the failure to produce audited financial statements and the failure to organize and hold proper AGMs. There was no basis for interference with the judge’s refusal to conclude that other conduct was oppressive. The judge ordered a remedy that matched the oppressive conduct he found. Jahnke had not shown the judge erred in the exercise of his discretion: Jahnke v. 436537 B.C. Ltd., 2024 CarswellBC 2133, 2024 BCCA 276 (B.C.C.A.)

Summaries of Representative Oppression Cases – Mismanagement – The parties separated on March 24, 2021. Both parties’ incomes were principally derived from their jointly owned farming businesses. They equally owned a layer (egg) farm that they operated through a partnership. They also equally own a broiler (chicken) farm that they operated through a corporation. The Applicant and the Respondent were equal shareholders in and were the two sole directors of the Corporation. The Respondent claimed that the Applicant violated his reasonable expectations as a director and shareholder of the broiler farm Corporation. Justice Petersen was satisfied that the Applicant had exercised her powers as a director of the Corporation in a manner that was oppressive, or unfairly prejudicial to, or that unfairly disregarded the Respondent’s interests. Justice Petersen concluded that the Respondent had established his entitlement to equitable remedies for oppression and for the Applicant’s breach of her fiduciary obligations to him as a business partner. However, some of the remedies sought by the Respondent went beyond what was necessary to satisfy his reasonably held expectations, protect his legitimate business interests, deter fiduciary faithlessness, and preserve the integrity of the parties’ fiduciary relationship. In particular, the Respondent’s request for an order that the Applicant take no step in the management of the layer farm without consulting and obtaining his prior consent for any business decision, including all payments and receipts, was impractical to the point of being unworkable. The evidence suggested that the Applicant’s administrative decision-making authority should only be curtailed in respect of transactions involving her family members and payments made to herself. Similarly, the Respondent’s request for an or der entrusting him with the primary financial management of
the broiler farm Corporation would not be practical in the current circumstances, in which money regularly flowed be tween the two businesses. Realistically, until the parties’ interests in the two farms were disentangled, they needed to be managed by the same individual. The Applicant must be transparent in her decision-making and must not be permit ted to engage in business transactions with family members without the Respondent’s consent. The evidence did not suggest that she had acted contrary to the businesses’ best interests in dealings with arm’s length parties: Stickney v. Stickney, 2024 CarswellOnt 9483, 2024 ONSC 3581, 2024 A.C.W.S. 3214, 3 R.F.L. (9th) 134 (Ont. S.C.J.).

The Regulation of Professions in Canada – James T. Casey
Release #6

What’s New?

Appendix IF. Issues in Focus – Social media has proven to be a broadly-accessible platform for sharing content instantaneously, and on a global scale. For professionals, it can also serve as a too-convenient method for potentially running afoul of regulatory parameters touching upon advertising, professionalism in communication, constraints on off-duty conduct, and similar concerns. The interplay between professional regulation and the use (or misuse) of all type of social media is a nascent legal issue. Although the case law to-date has been scant, this memo addresses some of the current developments in this area, largely through illustrative rulings by disciplinary committees.

Conflicts of Interest – Eugene A.G. Cipparone and Ted Tjaden
Release #3

What’s New?

Words and Phrases – Conflict of Interest – A conflict of interest is an interest that gives rise to a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s duties to another current client, a former client, a third person, or the lawyer’s own interests: Neil at para. 31; Code, Chapter 1, Rule1.1-1: 0928772 B.C. Ltd. v. Ross (2024), 58 B.L.R. (6th) 31, 2024 BCSC 1436, 2024 CarswellBC 2286 (B.C. S.C.) at para. 229 Jackson, J.

Words and Phrases – Litigation Privilege – …litigation privelege…exists in the context of anticipated or actual litigation and applies to communications for the purpose of the dispute…: Gray v. 1534 Harwood Street (St. Pierre) Ltd. (2024), 2024 CarswellBC 1244, 2024 BCSC 742 (B.C. S.C.) at para. 11 Gomery J.