Edmonton (City) v. Lovat Tunnel Equipment Inc. et al., (2002) 328 A.R. 314 (QB)

• Judge: Lee, J.
• Court: Court of Queen''s Bench of Alberta (Canada)
• Case Date: Friday March 01, 2002
• Citations: (2002), 328 A.R. 314 (QB);2002 ABQB 1033

Edmonton v. Lovat Tunnel Equipment (2002), 328 A.R. 314 (QB)

MLB headnote and full text

Temp. Cite: [2002] A.R. TBEd. DE.017

The City of Edmonton (plaintiff) v. Lovat Tunnel Equipment Inc. and Rotek Incorporated (defendants) and Lovat Tunnel Equipment Inc., Hoover Precision Products Inc. and Rotek Inc. (third parties)

(8803-05078; 2002 ABQB 1033)

Indexed As: Edmonton (City) v. Lovat Tunnel Equipment Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Lee, J.

November 22, 2002.

Summary:

The city contracted with Lovat for the purchase of a tunnel boring machine and a replacement bearing. Both the original and replacement bearings were manufactured by Rotek. The city commenced using the machine in 1976. The replacement bearing, stored until it was needed, was installed and used in 1986. One month later, the bearing failed. The city sued Lovat and Rotek. Lovat third partied Rotek. The city and Lovat entered into a Mary Carter agreement, whereby the city would not pursue its torts claim against Lovat and Lovat agreed to use its best efforts to cooperate with the city in pursuing the city's and Lovat's negligence claim against Rotek.

The Alberta Court of Queen's Bench, in a judgment reported (2000), 279 A.R. 1, dismissed the city's claim against Rotek for purely economic loss resulting from the negligent manufacture of the defective bearing. Rotek did not owe the city a duty of care. Had a duty of care been established, Rotek would have been liable for negligently manufacturing a defective bearing. The city's action against Lovat in contract was dismissed. The action was precluded by the expiration of the limitation period. The court held that had the city been successful in its claim against Lovat, Lovat would have been entitled to indemnity against Rotek. Further, any claim under the Sale of Goods Act for lack of merchantable quality or lack of fitness of the bearing for its intended purpose was precluded by the express warranty limiting liability. Rotek sought approximately $1.1 Million in costs against the city. The city conceded that Rotek was entitled to some costs, but disputed the amount claimed on the ground that the successful party (Rotek) was guilty of misconduct, various issues were inefficiently or unsuccessfully litigated and certain items in the draft Bill of Costs were unsubstantiated. The city also made a cross-application for costs against Rotek.

The Alberta Court of Queen's Bench determined the costs issues accordingly.

Practice - Topic 7004

Costs - Party and party costs - General and definitions - Scale of costs - Fixing of - [See Practice - Topic 7115 ].

Practice - Topic 7025

Costs - Party and party costs - Entitlement to party and party costs - Successful party - Exceptions - Failure to agree or use less expensive or simplified procedure - The defendant was successful at trial, but had refused to admit facts in the plaintiff's Notice to Admit - Most of the facts were subsequently proved by the plaintiff, at a cost of increased trial time and expense - The plaintiff sought solicitor and client costs - The Alberta Court of Queen's Bench penalized the successful defendant by awarding the plaintiff party and party costs relating to this issue - See paragraphs 242 to 249.

Practice - Topic 7115

Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - The plaintiff's action against the defendant was dismissed - The defendant sought party and party costs under the post 1998 Schedule C, column 5 (amount claimed over $1.5 million), plus application of a multiplier of 1.5 - The action was commenced before the 1998 Schedule C came into effect, but the trial was held after the new Schedule C was in effect - Only 1.5 days of the 31 day discovery was held after the new Schedule came into effect - The principal amount of the plaintiff's claim fell within column 4 - The Alberta Court of Queen's Bench awarded the defendant costs under column 4 of the new Schedule C - The request for a multiplier based on delay and extensive documentation was denied - There was no unreasonable delay and only a small percentage of the documents were referred to at trial - Further, although the trial was long and difficult, the issues were not overly complex - See paragraphs 14 to 25.

Practice - Topic 7118.1

Costs - Party and party costs - Special orders - Multiplier - [See Practice - Topic 7115 ].

Practice - Topic 7141

Costs - Party and party costs - Disbursements - Cost of expert advice - A successful defendant called only one of its experts as a witness at trial, but claimed costs respecting all experts - The Alberta Court of Queen's Bench agreed with the plaintiff that the other experts were not called on the issue of causation because the defendant feared that those experts would have been forced on cross-examination to acknowledge the weakness of the defendant's theory of causation, which was rejected by the court - The court denied the defendant costs related to the uncalled experts - See paragraphs 192 to 200.

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General (incl. what constitutes) - The plaintiff's action was dismissed in 2000 - In 1997, the defendant had offered to settle without costs in exchange for a filed Notice of Discontinuance - The plaintiff did not respond to the offer - The plaintiff submitted, inter alia, that since the defendant incurred minimal costs at the time of the offer, there was no serious settlement offer capable of warranting an award of double costs from the date of the offer - The Alberta Court of Queen's Bench awarded the defendant double costs - The court stated that "an offer to discontinue without costs was a serious offer of judgment with financial implications" - There were no "special reasons" under rule 174 to deny the defendant double costs - Over-indemnification of the defendant's legal costs did not constitute "special reasons" - See paragraphs 162 to 191.

Practice - Topic 7364

Costs - Costs of interlocutory proceedings - Costs of motions or applications - Prior to rule 607 being amended in 1998, the general rule was that costs of interlocutory proceedings were costs in the cause - After 1998, the general rule was that costs went to the successful party on the interlocutory proceeding - The Alberta Court of Queen's Bench held that it was bound by neither general rule - The court stated that "however, I am of the view that generally it is more equitable to award the costs for an interlocutory application to the party who succeeded on that application. Accordingly, that is my order. Obviously, this does not include any application where an alternate cost award was made." - See paragraphs 26 to 31.

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Improper, irresponsible or unconscionable conduct - The successful defendant alleged at trial that the plaintiff was involved in a secret side deal (Mary Carter-like agreement) to deceive the court and subvert the administration of justice - The plaintiff sought solicitor and client costs respecting applications involving this issue - The Alberta Court of Queen's Bench agreed that the defendant was overly tenacious in pursuing this matter and made intemperate and unnecessarily inflammatory written and oral submissions, some alleging impropriety by counsel - The court declined to award solicitor and client costs, finding that party and party costs were sufficient to censure the defendant's unacceptable conduct - See paragraphs 203 to 213.

Cases Noticed:

Rocky View No. 44 (Municipal District) v. Herron Estate et al., [2001] A.R. Uned. 5 (C.A.), refd to. [para. 12].

Kennedy (B.E.) Design Ltd. et al. v. Kibo Group Inc. et al. (2001), 304 A.R. 2 (Q.B.), refd to. [para. 12].

Canada Deposit Insurance Corp. v. Canadian Commercial Bank (1989), 95 A.R. 1 (Q.B.), refd to. [para. 12].

Toma v. Toma, [1996] A.J. No. 882 (Q.B.), refd to. [para. 13].

Sprung Instant Structures Ltd. v. Caswan Environmental Services Inc. et al. (1999), 232 A.R. 336; 195 W.A.C. 336 (C.A.), refd to. [para. 18].

Century Services Inc. v. Multi-Corp Inc. and Lobsinger (1998), 228 A.R. 103; 188 W.A.C. 103 (C.A.), refd to. [para. 19].

Edmonton Kenworth Ltd. v. Edmonton Cast Iron Repair Co. et al. (2001), 294 A.R. 365 (Q.B.), refd to. [para. 20].

Centrac Industries Ltd. v. Vollan Enterprises Ltd. (1989), 100 A.R. 301 (C.A.), refd to. [para. 28].

Faulkner v. Faulkner (1998), 228 A.R. 49; 188 W.A.C. 49 (C.A.), refd to. [para. 35].

26561 Alberta Ltd. v. King, [1999] A.R. Uned. 29 (C.A.), refd to. [para. 37].

Claudio's Restaurant Group Inc. and Lamonaco v. Calgary (City) (1993), 147 A.R. 355 (Q.B.), refd to. [para. 40].

Jackson and Parkview Holdings Ltd. v. Trimac Industries Ltd. et al. (1994), 155 A.R. 42; 73 W.A.C. 42 (C.A.), refd to. [para. 132].

Miller (Ed) Sales & Rentals Ltd. v. Caterpillar Tractor Co. et al. (1994), 170 A.R. 341 (Q.B.), refd to. [para. 133].

Veridian Inc. v. Dresser Canada Inc., [2001] A.J. No. 1112 (Q.B.), affd. [1998] A.J. No. 947 (C.A.), refd to. [para. 134].

Schuttler v. Anderson (1999), 246 A.R. 17 (Q.B.), refd to. [para. 144].

Pugsley v. Wong et al. (2000), 265 A.R. 80 (Q.B.), refd to. [para. 157].

Hughes v. Gillingham, [1999] A.J. No. 1158 (Q.B.), refd to. [para. 159].

Van Campenhout v. Saskatchewan (1960), 32 W.W.R.(N.S.) 332 (Sask. C.A.), refd to. [para. 159].

Budget Rent-A-Car of Edmonton Ltd. v. Security National Insurance Co. (2001), 277 A.R. 305; 242 W.A.C. 305 (C.A.), refd to. [para. 165].

Vysek v. Nova Gas International Ltd. et al. (2001), 298 A.R. 334 (Q.B.), refd to. [para. 166].

Collins v. National Life Assurance Co. of Canada (1995), 174 A.R. 206; 102 W.A.C. 206 (C.A.), refd to. [para. 168].

Edmonton Kenworth Ltd. v. Edmonton Cast Iron Repair Co. et al. (2001), 294 A.R. 365 (Q.B.), refd to. [para. 172].

Pettipas v. Klingbeil et al. (2000), 276 A.R. 24 (Q.B.), refd to. [para. 172].

Budget Rent-A-Car of Edmonton Ltd. v. Security National Insurance Co. (2001), 277 A.R. 305; 242 W.A.C. 305 (C.A.), refd to. [para. 172].

Lawler v. Ron's Coach & Bus Repair Inc. et al., [1998] A.R. Uned. 200 (Q.B.), refd to. [para. 174].

Blacklaws v. Morrow - see Blacklaws et al. v. 470043 Alberta Ltd.

Blacklaws et al. v. 470043 Alberta Ltd. (2000), 261 A.R. 28; 225 W.A.C. 28; 187 D.L.R.(4th) 614 (C.A.), refd to. [para. 175].

Reid v. Stein et al. (1999), 253 A.R. 90 (Q.B.), refd to. [para. 176].

Kirkeby v. Waddell (1996), 183 A.R. 350 (Q.B.), refd to. [para. 176].

Morris et al. v. Hunt Morris & Associates (1982) Ltd. et al. (1987), 78 A.R. 96 (Q.B.), refd to. [para. 178].

Mackie v. Wolfe (1996), 184 A.R. 339; 122 W.A.C. 339 (C.A.), refd to. [para. 179].

Mitran v. Guarantee RV Centre Inc. et al. (1999), 251 A.R. 77 (Q.B.), refd to. [para. 179].

Fox v. Alberta et al., [1998] A.R. Uned. 571 (Q.B.), refd to. [para. 181].

Foothills Decorating Ltd. v. Amigo Construction Ltd. et al. (2000), 285 A.R. 28 (Q.B.), refd to. [para. 182].

Greep v. Josephson et al. (2001), 285 A.R. 326 (Q.B.), refd to. [para. 183].

Shillingford v. Dalbridge Group Inc. et al. (2000), 268 A.R. 324 (Q.B.), refd to. [para. 184].

Jama et al. v. Bobolo et al., [2002] 7 W.W.R. 523; 311 A.R. 362 (Q.B.), refd to. [para. 184].

Papp v. Nakaska (1989), 96 A.R. 161 (Q.B.), refd to. [para. 193].

Nova, An Alberta Corp. v. Guelph Engineering Co. (1988), 89 A.R. 363 (Q.B.), refd to. [para. 193].

S.F.P. v. MacDonald et al. (1999), 242 A.R. 134 (Q.B.), refd to. [para. 196].

Argentia Beach (Summer Village) v. Warshawski and Conroy (1990), 106 A.R. 22 (C.A.), refd to. [para. 199].

Sidorsky et al. v. CFCN Communications Ltd. et al. (1995), 167 A.R. 181 (Q.B.), revd. (1997), 206 A.R. 382; 156 W.A.C. 382 (C.A.), refd to. [para. 199].

Lalli v. Chawla (1997), 203 A.R. 27 (Q.B.), refd to. [para. 199].

Strandquist et al. v. Coneco Equipment et al., [2000] A.R. Uned. 86 (C.A.), refd to. [para. 199].

Allied Signal Inc. v. Dome Petroleum Ltd. - see Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al.

Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al. (1994), 168 A.R. 126 (Q.B.), refd to. [para. 242].

Sidorsky et al. v. CFCN Communications Ltd. et al. (1997), 286 A.R. 382; 156 W.A.C. 382 (C.A.), refd to. [para. 242].

Gainers Inc. v. Pocklington Holdings Inc. (1996), 180 A.R. 392 (Q.B.), refd to. [para. 243].

Statutes Noticed:

Rules of Court (Alta.), Queen's Bench Rules, rule 169(1), rule 169(3), rule 174(1)(b) [para. 163]; rule 174(1.1), rule 174(1.2)(a) [para. 164]; rule 174(3)(b) [para. 163]; rule 607 [para. 27].

Counsel:

Doris Bonora and William Barclay (Reynolds, Mirth, Richards & Farmer), for the plaintiff;

Sandra Anderson (Field Atkinson Perraton), for the defendant/third party, Rotek Inc.

This application was heard between February 25 and March 1, 2002, before Lee, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on November 22, 2002.