[1]               A trial of a civil action and counterclaim was held March 9 – 12, 2020.  My decision is reported at 2020 ABQB 369 (Decision). Costs could not be resolved by the parties and were addressed by written submissions. The Defendants retained other counsel after the Decision to address the issue of costs.

[2]               The Plaintiffs brought an action against the Defendants alleging that the parties entered into a franchise agreement. The Plaintiffs sought damages for failure to comply with the disclosure requirements of the Franchises Act, RSA 2000, c. F-23 (Act). In the alternative, the Plaintiffs claimed damages for unjust enrichment. The Plaintiffs also sued the Defendants for conversion of leased equipment (“Leased Equipment”) that the Defendants seized and sold.

[3]               The Defendants counterclaimed against the Plaintiffs and Farid Salame for damages alleging various breaches of contract. In addition, the Defendants brought two motions returnable the first day of trial: an application for security for costs and an application to strike the action because the Plaintiff, 1384334 Alberta Ltd. (“138”) had no authority to continue the action.

[4]               In my Decision, I concluded:

[5]               The Defendants argue that this is a case of mixed success. It cannot be said that the Plaintiffs were substantially successful. In this situation the general rule that the successful party is entitled to costs should not apply. Given the complexity of the claims under the Act and unjust enrichment, 138 did not achieve substantial success. It is appropriate for me to make no cost order on the basis that no party was substantially successful. In the alternative, if it is appropriate to apportion costs on the basis of success on the discrete issues, given the difficulty in apportioning the effort allocated to each issue, an order that each party bear their own costs is appropriate. Alternatively, the Defendants argue that costs be awarded on the basis of the percentage of time spent at trial on each issue. In determining the amount of effort devoted to each issue, an appropriate yardstick is the number of paragraphs devoted to each issue in my Decision.

[6]               The Plaintiffs argue that I should award one set of Column 1 costs to the Plaintiff, 138. This considers the offsetting successes on the Plaintiffs’ claims that were not successful and the counterclaim that was not successful. It recognizes the success of the Plaintiffs conversion claim. Further, when considering the factors in Rule 10.33 of the Alberta Rules of Court (“Rules”) an award of costs on a multiple of Column 1 or an increased award based on inflation is appropriate.

[7]               The general principles regarding costs are summarized by Renke J in AE v TE, 2017 ABQB 674, at paras 4-9, as follows:

[8]               Where success is divided and apportioning costs is difficult because the costs associated with each cause of action is not clearly delineated, there is authority for the view that an order that each party pay their own costs is appropriate: Clarke v Syncrude Canada Ltd., 2014 ABQB 439, at paras 12 – 16.

[9]               There is also authority relied on by the Defendants that where there is mixed success on discrete issues and there is difficulty in apportioning the effort allocation to each of the issues, it is appropriate that each bear their own costs: Portugal Cove-St. Phillips (Town) v Willcott (1997), 150 Nfld. & E.E.I.R. 183.

[10]           Another approach, relied on by the Defendants is the decision in Sagacity Professional Corp. v Buchanan Barry LLP, 2011 ABQB 58 where the Court allocated each party a percentage of the appropriate costs based on the time spent, amounts claimed and recovered and complexity of the various issues.

[11]           Based on the reasons set out below, considering all relevant factors, I conclude that the appropriate award is costs to the Plaintiffs under column 1 of Schedule C for all steps taken in the action against the Defendants Buster’s and Akeed Salame.

[12]           I do not agree with the Defendants that the number of paragraphs in my Decision devoted to each issue is an accurate reflection of the amount of time spent at trial on the issues. I also do not agree that the issues the Plaintiffs were not successful on were more complex than the other issues.

[13]           The Plaintiffs were unsuccessful in establishing entitlement to recover losses under the Act and for unjust enrichment. The basis for denying recovery under both the Act and unjust enrichment were the same; the Plaintiffs failed to prove an agreement reached with the Defendants. This was a factual issue that was neither complicated nor consumed a significant amount of trial time. I commented in the Decision that there were large evidentiary gaps on this issue. There was little evidence or argument by the parties regarding whether the parties reached an agreement. The action under the Act and for unjust enrichment turned on whether the parties reached an agreement. As I found that the parties did not reach an agreement, the claim under both the Act and unjust enrichment could not succeed.

[14]           The majority of trial time was spent on the issues of whether the Defendants were justified in locking the Plaintiffs out of the restaurant, whether the Defendants improperly seized the Plaintiffs’ assets, what damages the Plaintiffs sustained, and whether the Defendants were entitled to succeed on the counterclaim.

[15]           The Defendants’ counterclaim was for a significant amount, was brought not only against the two corporate Plaintiffs but also against Farid Salame and involved two very different claims. The first was a claim contained in the pleading for damages of slightly over $200,000.00. This claim was based on a breach of the agreement between 138 and Buster’s. At trial, the Defendants led evidence to establish a very different claim for almost $380,000.00 based on different contracts between TMR Development Ltd. (“TMR”) and Buster’s for wrongfully using funds and damages Buster’s incurred resulting from alleged breaches by TMR and Farid Salame of construction contracts. The Defendants did not apply to amend the counterclaim. The Plaintiffs did not object to the evidence and arguments regarding this very different counterclaim. Accordingly, the Decision addresses both the counterclaim, as pleaded, and the alternative counterclaim advanced at trial. Both were dismissed.

[16]           In determining costs under Rule 10.33 I may also consider the conduct of the parties and, in particular, whether the parties conduct tended to shorten the action. In this case there are several examples of conduct by the Defendants that did not shorten the action.

[17]           A significant amount of time was spent litigating the issue of whether the Defendants were justified in changing the locks on the restaurant and seizing the Plaintiffs’ assets and whether the Plaintiffs were in default under the agreement for the Leased Equipment. While the Defendants maintained they were justified in seizing the equipment, no admissible evidence was tendered in support. On the issue of whether the Plaintiffs were in default under the agreement for the Leased Equipment, the Defendants maintained the position that the Plaintiffs were in the face of overwhelming evidence that they were not in default and that the Defendants conspired with the lessor to wrongfully seize and sell the Leased Equipment. This issue should not have proceeded to trial. The Defendants compelled the Plaintiffs to bring an action to recover the value of the assets converted.

[18]           The Defendants also brought two motions, returnable the day of trial: a security for costs application and an application to strike the action on the basis that 138 had no authority to continue the action. The Defendants argued these motions should be heard before the trial. The Plaintiffs were not successful in two applications, one May 2019 and one in January 2020 to delay the trial. I refused to adjourn the trial to hear the security for costs application. I allowed the Defendants to argue the application to strike on the grounds that 138 was not an active company. I found in favour of the Plaintiffs on this issue. This was an important issue as the Plaintiffs would not be entitled to recover for conversion if 138 was not entitled to continue the action. No explanation was provided for why this application was brought at the last minute.

[19]           In summary, I am satisfied that considering all of the issues before the court, the complexity of the issues, the time spent on those issues, and the Defendants conduct in failing to concede matters that should have been conceded and bringing last minute applications that were not successful that the Plaintiffs are entitled to costs.

[20]           The Plaintiffs proposed to the Defendants costs under column 1 of Schedule C. The Defendants did not accept this proposal. In the Plaintiffs written submissions they seek costs under column 1 elevated for inflation or the Defendants’ conduct. Given that I have considered the Defendants conduct in determining to award costs to the Plaintiffs where there is mixed success, I conclude it is not appropriate to grant enhanced column 1 costs. However, I do consider it appropriate to grant the Plaintiffs costs of $1,000.00 for submitting a written brief on the issue of whether 138 has authority to maintain the action and $500.00 for submitting the brief on costs.

[21]           Alex Salame and Buster’s are jointly liable to pay costs to 138 as follows: