Clancy v. Gough et al., (2011) 523 A.R. 163 (QB)

• Judge: Bensler, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 26, 2011
• Citations: (2011), 523 A.R. 163 (QB);2011 ABQB 778

Clancy v. Gough (2011), 523 A.R. 163 (QB)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. DE.148

Michael Clancy and Catherine Clancy (plaintiffs) v. Mary Gough, Paul Gough, Heather Gough, Steven Gough, Sean Gough, Carol Bancroft, Barry Pearse, Cheryl Young, Doug Christensen, Kevin Christensen, Alvin Malin, Gerry Malin, Julie Gough, Terry Zimmerman, Drew Devries, Darryl Lyczewski, Sherry Lyczewski, Roger Blackwood, Jerry Blake, Albert Johnson and Robert Airth (defendants)

Mary Gough, Paul Gough, Heather Gough, Steven Gough, Sean Gough, Carol Bancroft, Barry Pearse, Cheryl Young, Doug Christensen, Kevin Christensen, Alvin Malin, Gerry Malin, Julie Gough, Terry Zimmerman, Drew Devries, Darryl Lyczewski, Sherry Lyczewski, Roger Blackwood, Jerry Blake, and Robert Airth (plaintiffs by counterclaim) v. Michael Clancy, Catherine Clancy, Interprovincial Lottery Corporation and Western Canada Lottery Corporation (defendants by counterclaim)

(0801-01802; 2011 ABQB 778)

Indexed As: Clancy v. Gough et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Bensler, J.

December 14, 2011.

Summary:

Elk Club members, including the plaintiffs, regularly participated in lottery draws. The pool was open to anyone who paid the $5 for a particular draw, with no requirement to participate in any particular draw. Over the years, some persons would put in money for an absent member of the group and collect from them later. The group participating in the draws was not always the same. A group member paid the plaintiffs' shares for the November 23, 2007, Lotto 649 draw, but not for the Super 7 draw that same night. Members of the Elks Club (defendants) who participated in the Super 7 draw won the $20,000,000 jackpot. They won nothing in the Lotto 649 draw. The plaintiffs sued the defendants, claiming entitlement to two shares in the lottery winnings. The plaintiffs claimed breach of contract, resulting or constructive trust, unjust enrichment and negligence, based on an alleged binding oral agreement amongst the members of the "core group" of lottery participants that someone would pay their share (and be later reimbursed) if the plaintiffs were absent and unable to pay their $5 shares for any particular lottery draw.

The Alberta Court of Queen's Bench, in a judgment reported 523 A.R. 138, dismissed the action. Although members of the group who regularly participated in the lottery draws often paid the share of another member not present to contribute, the plaintiffs failed to prove that there was a legally enforceable agreement to do so. The defendants sought costs, including double costs respecting a settlement offer not accepted by the plaintiffs. At issue was whether the settlement offer was genuine, whether second counsel fees were warranted and whether certain claimed disbursements were reasonable and proper.

The Alberta Court of Queen's Bench awarded the defendants party and party costs in the aggregate amount of $64,403.38 (inclusive of GST). The court declined to award double costs respecting the unaccepted settlement offer, declined to award second counsel fees and disallowed certain claimed disbursements.

Practice - Topic 7063

Costs - Party and party costs - Counsel fees - Special or additional counsel - The plaintiffs' action for a $1.7 million share of a $20 million lottery jackpot was dismissed - The defendants sought second counsel fees - The Alberta Court of Queen's Bench held that courts were reluctant to award a second counsel fee absent an established need based on the complexity of the issues or the law - Factors to be considered included: "(i) the general importance of the issue or issues to the parties or to others; (ii) the value of the case; (iii) the complexity and scope of the issues; (iv) the size of the trial record; (v) the manner in which opposing counsel conducts the case; (vi) whether second counsel addressed the court" - The court denied second counsel fees, stating that "this is not a case where second counsel fees are warranted. The issues were narrow, straightforward, and determined largely based on several key findings of fact. ... I am not of the opinion that the nature of this case was so complex, or the number of issues so voluminous, or the trial so intricate and difficult to manage that the involvement of second counsel rose above the desire for caution and into the realm of necessity." - See paragraphs 27 to 44.

Practice - Topic 7134

Costs - Party and party costs - Disbursements - Photocopies, scanning or printing - The plaintiffs' action for a $1.7 million share of a $20 million lottery jackpot was dismissed - The defendants claimed as a disbursement the cost of printing and photocopying - The Alberta Court of Queen's Bench allowed a reduced amount - The ability to print and photocopy was a necessary capability for any law office, so the costs were characterized as overhead - However, since the practice of law remained document intensive and paper-based, it was reasonable to allow some level of recovery for printing and photocopying directly related to a particular file - The defendants claimed a rate of 30 cents per page, which was more than three times what they would pay to a commercial printer (3-10 cents per page) - The court stated that "I find it unreasonable that the defendants seek to recover from the plaintiffs a 'disbursement' at least three times higher than if the work had actually been performed by a third party. ... If law firms are actually incurring 30¢ to produce every printed or photocopied page then lawyers should be prepared to submit evidence related thereto when attempting to recover these costs from their clients, or the other party. ... the cost [of] reproducing drafts, or the cost of copying documents such as pleadings, motions and affidavits compensated under another item in the costs schedule, is not recoverable." - See paragraphs 54 to 59.

Practice - Topic 7138

Costs - Party and party costs - Disbursements - Computer research - Successful defendants claimed disbursements for the cost of legal research and faxes - The Alberta Court of Queen's Bench disallowed these disbursements "on the basis that these costs are already reflected in the tariffs for recoverable fees, pursuant to s. 2(1)(h) of Division 1 within Schedule C... I find both computer research and fax charges fall squarely within the language of 'implied activity' and 'necessary services'. It is not reasonable to consider computer research or the use of fax machines independently from activity already compensated for within the Schedule C tariffs. ... Furthermore, neither computer research nor the cost of sending or receiving faxes are true disbursements as contemplated in Lynch. In other words, these are not expenses that are truly paid to third parties. Rather, the costs of subscribing to legal databases and purchasing and operating fax machines are overhead expenses necessary to run an effective legal practice in modern times. These expenses are similar in character to rent, office furniture, employee salaries and telecommunication services that are recovered as part of the legal fees charged to clients." - See paragraphs 50 to 53.

Practice - Topic 7150.3

Costs - Party and party costs - Disbursements - Faxes - [See Practice - Topic 7138 ].

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General - What constitutes and validity - The plaintiffs' action for a $1.7 million share of a $20 million lottery jackpot was dismissed - The defendants sought double costs under rule 4.29 based on a settlement offer not accepted by the plaintiff and subsequently withdrawn - The offer was for $100 plus the waiver of costs to that date ($18,000-$20,000) - The Alberta Court of Queen's Bench denied the defendants double costs - The settlement offer was not "genuine", as "it lacked an element of compromise that reflected the strength of the parties' positions at the time the offer was served and remained open" - The plaintiffs' claim had merit and raised a triable issue - The result of the action was not predictable, as the claim was based on a credibility determination - It was unreasonable for the defendants to expect the plaintiffs to abandon their $1.7 million claim in exchange for $100 and a costs waiver - The practical purpose of the offer was to trigger the double costs provision rather than to further the compromise goals of the settlement rules - Further, public policy favoured denying double costs and double costs were not available where the offer was withdrawn - See paragraphs 10 to 26.

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - [See Practice - Topic 7241 ].

Cases Noticed:

Rahmath v. Louisiana Land & Exploration Co. (1989), 104 A.R. 391 (C.A.), refd to. [para. 11].

Whittle v. Davies (1987), 104 A.R. 336 (C.A.), refd to. [para. 11].

Marathon Canada Ltd. v. Enron Canada Corp. (2008), 447 A.R. 89; 2008 ABQB 770, refd to. [para. 12].

Allen v. University Hospitals Board et al. (2006), 384 A.R. 23; 367 W.A.C. 23; 2006 ABCA 101, refd to. [para. 12].

Meyer v. Partec Lavalin Inc. et al. (2002), 303 A.R. 385; 273 W.A.C. 385; 2002 ABCA 114 (C.A.), refd to. [para. 18].

Budget Rent-A-Car of Edmonton Ltd. v. Security National Insurance Co. (2001), 277 A.R. 305; 242 W.A.C. 305; 2001 ABCA 71, refd to. [para. 18].

Strandquist et al. v. Coneco Equipment et al., [2000] A.R. Uned. 86; 2000 ABCA 138, refd to. [para. 21].

Alberta Mortgage and Housing Corp. v. Strathmore Investments Ltd. et al. (1995), 169 A.R. 286; 97 W.A.C. 286 (C.A.), refd to. [para. 27].

Watts Estate et al. v. Contact Canada Tourism Services Ltd. et al., [2001] A.R. Uned. 115; 2001 ABCA 207, refd to. [para. 27].

Alberta Productions Corp. v. Canada Lands Co. CLC Ltd. (2004), 346 A.R. 180; 320 W.A.C. 180; 2004 ABCA 25, refd to. [para. 28].

Viridian Inc. v. Dresser Canada Inc. et al., [1998] A.R. Uned. 578; 1998 ABCA 275, refd to. [para. 38].

Chapell v. Canadian Pacific Railway Co. (2011), 504 A.R. 361; 2011 ABQB 74, refd to. [para. 39].

V.A.H. v. Lynch et al. (2001), 277 A.R. 104; 242 W.A.C. 104; 2001 ABCA 37, refd to. [para. 47].

Marathon Canada Ltd. v. Enron Canada Corp. (2008), 447 A.R. 89; 100 Alta. L.R.(4th) 356; 2008 ABQB 770, refd to. [para. 52].

Pauli et al. v. Ace INA Insurance et al. (2003), 336 A.R. 85 (Q.B.), refd to. [para. 52].

Reid v. Stein et al. (1999), 253 A.R. 90 (Q.B.), refd to. [para. 52].

Sidorsky et al. v. CFCN Communications Ltd. et al. (1995), 167 A.R. 181 (Q.B.), refd to. [para. 52].

Statutes Noticed:

Rules of Court (Alta.), rule 4.29 [para. 10]; rule 10.31(1)(a), rule 10.33(1)(g) [para. 45].

Counsel:

Brian N. Clark (Clark & Associates), for the plaintiffs;

D. Brian Foster, Q.C., and Natasha E.A. Bazant (Fraser Milner Cagrain LLP), for the defendants.

This matter was heard on August 17 and September 26, 2011, before Bensler, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment on December 14, 2011.