Cornelson v. Alliance Pipeline Ltd., (2015) 613 A.R. 43 (QB)

• Judge: Verville, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: March 02, 2015
• Citations: (2015), 613 A.R. 43 (QB);2015 ABQB 152

Cornelson v. Alliance Pipeline Ltd. (2015), 613 A.R. 43 (QB)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. MR.097

Dennis Cornelson (plaintiff) v. Alliance Pipeline Ltd. (defendant)

(0101 13083; 2015 ABQB 152)

Indexed As: Cornelson v. Alliance Pipeline Ltd.

Alberta Court of Queen's Bench

Judicial District of Calgary

Verville, J.

March 5, 2015.

Summary:

Cornelson was the President and CEO of Alliance Pipeline Ltd. from October 1996 to October 1999 at which point he was terminated without cause. He claimed pay in lieu of reasonable notice or severance under his contract beyond the amount that Alliance had paid him. The action was complex. The most difficult issue was Cornelson's entitlement under the long term incentive program.

The Alberta Court of Queen's Bench issued a decision reported at [2014] A.R. Uned. 521. Cornelson, on balance, was successful. The parties were unable to agree on the terms of the formal judgment and whether Cornelson was entitled to pre-judgment interest. Each party claimed to be entitled to costs. An issue was whether Alliance's "without prejudice" offer to settle, made on December 1, 2000, should be considered. Alliance's formal offer, made in March 2010, was within approximately $61,000 of the judgment.

The Alberta Court of Queen's Bench declined to strike the informal offer from the record, finding that it was a relevant document to consider. Cornelson was entitled to pre-judgment interest from December 1, 2000, and to 80% of his costs.

Evidence - Topic 3626

Documentary evidence - Private documents - Letters or documents written without prejudice - Settlement negotiations - [See Practice - Topic 9872 ].

Interest - Topic 5004

Interest as damages (prejudgment interest) - General principles - Discretion of judge - The parties were unable to agree on whether the plaintiff was entitled to pre-judgment interest - Each claimed to be entitled to costs - The defendant had made a "without prejudice" informal offer to settle - It submitted that s. 3 of the Judgment Interest Act applied not only to a formal offer but also an informal offer - In the alternative, it argued that the Court could use its discretion under s. 2(3)(a) of the Act to deny pre-judgment interest - The Alberta Court of Queen's Bench stated that "[i]n my view, judgment interest and costs are not directly related. In some circumstances there may be an award of judgment interest but not costs or vice versa. ... [T]he law is clear that a without prejudice offer is simply a factor to consider when considering costs. In my view, it would be a stretch in the circumstances of this case to interpret s. 3 as suggested by [the defendant]. However, it is clear that s. 2(3)(a) gives the Court discretion and that discretion is broad enough to include consideration of informal offers." - See paragraphs 22 and 23.

Interest - Topic 5008

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Entitlement - The plaintiff's employment was terminated in October 1999 - The defendant (Alliance)'s informal offer to settle for $2.8 million (open ended) was made in December 2000, six months before the litigation was commenced - The plaintiff did not respond - Alliance filed a formal offer in March 2010 for $814,102 - The net judgment amount, excluding judgment interest, was $875,322 - The judgment provided that the plaintiff was entitled to pre-judgment interest on the amounts to which he was entitled from the date the entitlement arose - Each claimed to be entitled to costs - Alliance cut its losses with respect to pre-judgment interest by making certain payments to the plaintiff - The Alberta Court of Queen's Bench found that the plaintiff was entitled to judgment interest from December 1, 2000 - "While the without prejudice Offer and the near Formal Offer that have now been revealed may be factors to consider when exercising my discretion, I am mindful that to allow Alliance to use it as a sword both with respect to judgment interest and costs ... would effectively result in a double penalty. Alliance's arguments in this regard are more appropriately addressed in relation to costs" - See paragraphs 26 to 31.

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General - [See Practice - Topic 9872 ].

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - The plaintiff claimed pay in lieu of reasonable notice or severance under his employment contract beyond the amount that the defendant had paid him - The most difficult issue was the plaintiff's entitlement under the long term incentive program (LTIP) - The action was complex - On balance, the plaintiff was successful - The defendant argued that the plaintiff should be deprived of costs because its $2.8 million informal offer to settle, made in 2000, was unambiguous; was provided to counsel; was made before the litigation commenced; was open ended; and was almost $1 million more than what the plaintiff was awarded - The defendant's formal offer, made in March 2010, fell short approximately $61,000 of the judgment - The Alberta Court of Queen's Bench awarded the plaintiff 80% of his costs - The LTIP issues were difficult to resolve - The informal offer was made prior to valuations of the LTIP unit - The basis for the LTIP amount would not have been clear at the time the offer was made - Further, the defendant had years to formalize the offer - See paragraphs 43 to 49.

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - The Alberta Court of Queen's Bench, in determining the cost award, considered the impact of offers to settle - "Each case must be decided on its own peculiar facts. In my view the impact offers have with respect to costs should be measured on a continuum. In the continuum there are oral offers, without prejudice offers, with prejudice offers, and formal offers made pursuant to the Rules of Court in effect at the time they are made. Where a formal offer pursuant to the Rules of Court is made, counsel has an obligation to advise the client that the repercussions are severe if the judgment received is less than the amount offered. Consequently a formal offer often generates the result desired, namely settlement. With less formal offers, the repercussions may, depending on the fact situation, be less serious." - See paragraphs 40 to 42.

Practice - Topic 9867

Settlements - Disclosure (incl. privilege and admissibility issues) - [See Practice - Topic 9872 ].

Practice - Topic 9872

Settlements - Confidentiality - In relation to costs, an issue was whether the defendant's affidavit containing the "without prejudice" settlement offer should be considered - The defendant argued that once the litigation was concluded, the reason for the "without prejudice" settlement privilege was ordinarily spent and settlement offers could be referred to when costs were addressed - The Alberta Court of Queen's Bench declined to strike the offer from the record, finding that it was a relevant document to consider - "While the outcome on the reconsideration of Mahe [v. Boulianne (2010) (Alta. C.A.)] is pending, in my view the proposition in Blank [v. Canada (Minister of Justice) (2006) (S.C.C.)] is applicable as the lawsuit before this Court has been, in essence, fully and finally determined with the exception of costs and pre-judgment interest. The Court has a responsibility to deal with the issue of costs with all relevant materials in hand. Given the current state of the law, I am bound by Mahe." - See paragraphs 13 to 20.

Cases Noticed:

Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319; 352 N.R. 201; 2006 SCC 39, refd to. [para. 14].

Sable Offshore Energy Inc. et al. v. Ameron International Corp. et al., [2013] 2 S.C.R. 623; 446 N.R. 35; 332 N.S.R.(2d) 1; 1052 A.P.R. 1; 2013 SCC 37, refd to. [para. 15].

Alberta Permit Pro et al. v. Booth et al. (2008), 459 A.R. 320; 2008 ABQB 167, refd to. [para. 17].

J.R. v. University of Calgary et al. (2012), 551 A.R. 395; 2012 ABQB 774, refd to. [para. 17].

Mahe et al. v. Boulianne, [2010] A.R. Uned. 25; 84 C.P.C.(6th) 263; 2010 ABCA 74, refd to. [para. 17].

McAteer et al. v. Devoncroft Developments Ltd. et al. (2003), 340 A.R. 1; 2003 ABQB 425, refd to. [para. 18].

Fullowka et al. v. Pinkerton's of Canada Ltd. et al. (2008), 437 A.R. 390; 433 W.A.C. 390; 2008 NWTCA 9, refd to. [para. 18].

Fullowka v. Royal Oak Ventures Inc. - see Fullowka et al. v. Pinkerton's of Canada Ltd. et al.

Tomich Estate, Re, [2011] A.R. Uned. 344; 70 E.T.R.(3d) 1; 2011 ABCA 257, refd to. [para. 18].

Koma v. Tomich - see Tomich Estate, Re.

Chisholm v. Lindsay (2013), 560 A.R. 97; 2013 ABQB 157, leave granted, [2014] A.R. Uned. 63 (C.A.), refd to. [paras. 18, 19].

Melnychuk v. Moore and Associated Beer Distributors Ltd., [1989] 6 W.W.R. 367; 57 Man.R.(2d) 174 (C.A.), refd to. [para. 24].

216927 Alberta Ltd. v. Fox Creek (Town) (1990), 104 A.R. 321 (C.A.), refd to. [para. 24].

Rayani v. Yule & Co. (Hong Kong) Ltd. (1996), 178 A.R. 231; 110 W.A.C. 231 (C.A.), refd to. [para. 25].

Botan v. St. Amand (2012), 538 A.R. 307; 2012 ABQB 260, affd. (2013), 553 A.R. 333; 583 W.A.C. 333; 2013 ABCA 227, refd to. [paras. 36, 37].

Sutherland v. Encana Corp. et al. (2014), 597 A.R. 230; 59 C.P.C.(7th) 177; 2014 ABQB 601, refd to. [para. 48].

J.R. v. University of Calgary et al. (2012), 551 A.R. 395; 2012 ABQB 774, refd to. [para. 48].

Statutes Noticed:

Judgment Interest Act, R.S.A. 2000, c. J-1, sect. 2(1), sect. 2(3), sect. 3 [para. 21].

Rules of Court (Alta.), rule 10.33 [para. 32].

Counsel:

Les R. Duncan Q.C., for Cornelson;

Donald W. Dear Q.C., and James P. Flanagan (McLennan Ross), for Alliance.

This matter was heard on March 2, 2015, before Verville, J., of the Alberta Court of Queen's Bench, who delivered the following memorandum of decision on costs and pre-prejudgment interest, dated at Calgary, Alberta, on March 5, 2015.