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Monday Morning Case Bites for January 27, 2020

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Steven Graham

Delta Hotels No. 2 Holdings Ltd v Tyco International of Canada Ltd, 2020 ABCA 24
Pleadings | Amendments

Stone v Tkachyk, 2020 ABQB 24
Nuisance | Negligence | Property Damage | Flooding

Dirk v Toews, 2020 ABQB 16
Enhanced Costs | Formal Offers | Costs Awards at Trial

Delta Hotels No. 2 Holdings Ltd v Tyco International of Canada Ltd, 2020 ABCA 24

The Court of Appeal upheld the decision of a Case Management Judge to allow a Plaintiff to amend the Statement of Claim to add related businesses as claimants notwithstanding that the original claim was filed in 2011. The Case Management Judge allowed the amendment on the basis that the amendment only affected the allocation of damages as amongst the Plaintiffs. Further, the proposed Plaintiffs were related companies, and not “true strangers” to each other, because the “amendments involve the same allegation of breaches, the same damages and that the proposed Plaintiffs are related to DHL”.

Stone v Tkachyk, 2020 ABQB 24

This was a dispute between neighbours after the Defendants renovated their yard and shed, which the Plaintiff alleged resulted in flooding of her yard.  The case primarily focused on nuisance.  The Court commented that a subsequent owner can be liable for pre-existing water drainage issues:

[78]           Two points merit further mention. First, the evidence does not establish that the Tkachyks themselves set the grade of their garage pad or created the channel between their garage and the fence. However, a subsequent occupier of property can be liable for a nuisance that existed prior to acquiring the property, particularly if they have actual or constructive knowledge of the condition or permit the nuisance to continue:  Linden et al, Canadian Tort Law, 11 ed (LexisNexis Canada Inc., 2018) at §12.58-12.59 [Linden]. More importantly in this case, the two new elements, which have, quite literally, pushed the water over the edge, are the changes to the downspouts and the new shed. Those were both undertaken by the Tkachyks.

[79]           I also note that the survey evidence now reveals that the fence between the Stone and Tkachyk yards is not actually on the property line. It is on Ms. Stone’s property and the Tkachyk garage goes right up to the property line. So, the channel between the Tkachyk garage and the fence is actually, at least in part, on Ms. Stone’s property. This does not change the analysis. First, the fact that the water travels over areas that are not on Tkachyk property does not absolve them for liability for nuisance. The channel is still just one piece of the puzzle. Second, they controlled the area between the fence and the garage, and treated it as their own at all material times. In those circumstances, the true ownership of the land should not be a bar to the nuisance claim.

The Court also directed that using one’s property in the normal way does not absolve that party for liability as a result of water drainage issues:

[82]           The Tkachyks are lawfully using their property. They have complied with all of the directions received from the City in terms of building permits and the shed encroachment. They considered the water incursion problems previously experienced by their neighbour to the south. The Tkachyks are using their property in an ordinary way and there is nothing extraordinary about having a garage pad, eavestroughs or a shed on a residential lot. There is utility in maintaining their lot and updating their home and yard. After they became aware of Ms. Stone’s water ingress issues, the Tkachyks tried to move their downspouts to address her concerns. They also directed flow from their rain barrel to their back yard and added the cement bags.

[83]           However, using land in a natural and lawful way, and even acting reasonably, does not provide an immunity from a nuisance claim. I must also consider what Ms. Stone should be expected to tolerate in this residential urban area. She is not being overly sensitive in complaining, given the frequency, regularity, and severity of the incursions over four spring/summers as at the date of trial. She has actually suffered physical damage to her basement:  Antrim at para 50. While there is a general utility in the Defendants improving their lot, there is no evidence that they are unable to reasonably do so without causing damage to the neighbouring property. There were many suggestions by the Defendants that there is a general drainage problem in the neighbourhood, and Ms. Ladner supported this theory to some extent. However, the evidence does not establish that in order to have a home, garage and shed on their property of comparable quality to what the Tkachyks now have, Ms. Stone must suffer water incursions. In fact, the history between 2005 and 2015 suggests otherwise. The evidence of infill development and other neighbourhood changes is insufficient to establish that improvements without water incursions have become impossible. It is also relevant that, while the Tkachyks are using their property lawfully, their garage is right up to the property line and the shed required a relaxation permit. If homeowners wish to use every possible inch of their property, that is their choice, subject to municipal regulation. However, they may need to take additional steps to avoid causing a nuisance for the neighbour.

The Court concluded that the development of the property changed the natural flow of water, and on that basis the Defendants were liable in nuisance.

[86]           While the Tkachyks did not accumulate water on their land in purposeful ponds or ditches, the flow pattern outlined above had the effect of accumulating water, both from their own property and from elsewhere, on the Tkachyk side of the fence, and then spilling or deflecting it onto the Stone property. Their development changed the way that water flowed on their side of the fence, with material adverse impact on Ms. Stone’s use of her property. Accordingly, even by reference to these specific statements on surface water rights, the Tkachyks are liable for nuisance. The result is consistent with decisions on analogous facts in Berry v Trinidad Leaseholds (Canada) Ltd, [1953] OJ No 191 (CA) (QL); Berenyi v Castelino, [2000] OJ No 3592 (SCJ) (QL); Alfarano v Regina, 2010 ONSC 1538 and Dankiewicz v Sullivan, 2011 ONSC 3485 [Dankiewicz]

However, the Defendants were not liable in negligence, because they hired a reputable builder to assist them:

[90]           The Tkachyks are held to the standard of care of a reasonable homeowner in similar circumstances. I am not satisfied on the evidence that the Tkachyks breached the duty of care. They hired an experienced builder, who had successfully worked for them before. Ms. Tkachyk acknowledged that she had not really turned her mind to site drainage issues before August 2015, when Mr. Oberten showed her the water flowing along the south edge of the property. However, the Tkachyks followed the advice they received on drainage issues from Mr. Oberten, who they knew had consulted with an engineer. As a result, they installed not only a weeping tile system around their new addition but also a secondary weeping tile system at the edge of their patio. Until Ms. Stone alerted them to the problems she was having in August 2015, there were no warning signs that would have caused a reasonable person to foresee particular drainage problems for Ms. Stone. After she alerted them, the Tkachyks had Mr. Oberten attend at Ms. Stone’s property and he informed them unequivocally that the problem was not theirs.

[91]           With the benefit of hindsight, the Tkachyks ought to have had more professional assistance in designing the shed and obtained a full drainage analysis of their existing yard and planned renovation. However, I am not satisfied that the reasonable person would have taken these steps in similar circumstances.

Dirk v Toews, 2020 ABQB 16

This was an application for enhanced costs following a Trial arising out of a motor cycle collision.  The Court noted that while informal offers can be considered in a costs decision, the information tendered in support of the informal offers lacked clarity:

[7]               In terms of other informal offers, the parties produced various email strings or parts thereof, in an effort to demonstrate certain positions taken and offers made. While informal offers can be considered in awarding costs, one of the reasons there is a specific rule governing formal offers is to clarify, both to the other party and the Court, what constitutes an offer and what is simply a discussion or recommendation being taken back to the client. There were no other informal offers made by the parties which I can clearly carve out as offers and which would have any impact on the cost award.

The following Formal Offers were tendered:

[8]               The Defendant made a formal offer on September 7, 2018 of $553,000 including the $50,000 already advanced, plus costs. The Plaintiff made a formal offer on September 21, 2018 in the amount of $650,000 excluding the $50,000 advance plus interest of approximately $75,000 plus costs. When the advance of $50,000 and interest are taking into consideration, neither formal offer was close enough to the trial award to warrant any special consideration with respect to costs.

[9]               The Plaintiff served another formal offer to partially settle on June 26, 2018. This formal offer stated that the Plaintiff would accept “0% negligence and 0% contributory negligence and 0% liability for the collision”. This formal offer also included that the Plaintiff would have party-party costs and disbursements pertaining to the negligence issues up until the date of acceptance of the offer. The Plaintiff maintains that as this Court found that that there was no contributory negligence the Plaintiff is entitled to double costs from the date of the offer pursuant to r. 4.29. The Defendant states that the offer was not genuine as it did not reflect any element of compromise.

The Court directed that for a Formal Offer to have merit, there must be an element of compromise:

[14]           The most recent statement of the law by our Court of Appeal is as set out in Allen (Next Friend of). A finding that there is some element of compromise in the offer is “necessary and relevant” in order for the successful party to avail itself of the cost benefits of a formal offer: para 17.

[15]           Even assessing the contributory negligence claim to be relatively weak, the claim was not so without merit that no compromise was required by the Plaintiff concerning offers of settlement. In assessing all of the circumstances surrounding the formal offer, I find that the formal offer by the Plaintiff to accept no liability for contributory negligence was a no-risk litigation strategy without compromise, and was not realistic. The formal offer does not fall under r. 4.29.

[17]           While the nature of the claim involves contributory negligence rather than liquidated damages, the rationale provided by the majority in Allen (Next Friend of), still applies; namely that an element of compromise is required in order to fulfill the purposes of the rule. Paperny JA’s rationale was also dependent on the merits of the positions of the parties and I have already found that the claim of contributory negligence was not so meritless that compromise at that stage of the proceedings should not have been considered. Lastly, the majority in Allen (Next Friend of) at paragraph 15 was clear that simply foregoing future costs after service of the offer does not constitute compromise.

The Plaintiff argued that motor vehicle claimants were particularly disadvantaged by the current schedule of Costs:

[25]           The Plaintiff maintains that the Court must also consider that the inadequacy of the tariff negatively impacts, in particular, victims of motor vehicle collisions. The Plaintiff urges me to accept that the Plaintiff was forced to account in a “quadruple manner” for tax, CPP and EI premiums as well as for deductions for insurance benefits, in order to prevent over-recovery. The Plaintiff argues that the corollary to this is that she must also not be under compensated and only full indemnity for her legal expenses would be just and fair. The Plaintiff argues that to do otherwise discriminates against the “a special class” of plaintiffs, those whose benefits are reduced under the Insurance Act, RSA 2000, c I-3 because they litigated for compensation for injuries suffered in an automobile collision case. The Plaintiff maintains that no other plaintiffs are subject to these types of deductions from their pecuniary damages.

The Court rejected this argument on the following basis:

[27]           First, solicitor-client or enhanced costs should not be ordered on the basis that the Plaintiff is a personal injury claimant. The legislature did not create, as argued by the Plaintiff, a new class of plaintiffs by virtue of the Insurance Act amendments. As I stated in the liability and damages decision in this matter (Dirk v. Toews, 2019 ABQB 176 (CanLII) paragraph 303), the Insurance Act amendments demonstrated an intention to prevent double recovery from income replacement benefits. This is a separate issue from litigation cost indemnification which has different underlying purposes. A plaintiff, such as Ms. Dirk, may be in a vulnerable position in terms of obtaining access to legal counsel and ultimately access to justice due to her lack of funds and injuries. However, the legislature has not singled out this particular type of plaintiff to receive special consideration with respect to ordering costs.

The Court ultimately awarded an inflationary factor of 1.6 to costs on the following basis:

[30]           However, I agree with the approach taken in Geophysical Service Incorporated and McAllister. While the Schedule may be out of date, partial but fair indemnification can still be achieved through the use of an inflationary factor and, where appropriate, adjustments arising out of a consideration of the factors set out in r. 10.33.

[31]           I direct the Defendant to pay costs on a party-and-party basis in accordance with Column 4 of Schedule C. An inflation adjustment factor of 1.614, particularized to Alberta, as provided in the affidavit of Derek Aldridge, the Plaintiff’s economic expert, will be added to this amount.

[32]           In awarding costs pursuant to Column 4, I have also considered whether the litigation was sufficiently complex to warrant a higher column. While numerous experts were called to testify about Ms. Dirk’s injuries, there was nothing particularly difficult or complex about the litigation that would warrant an increase in the column. Costs incurred for the length of the trial are reflected in the allowance for each day of trial under Schedule C.

The Court also considered whether medical illustrations, which cost $17,000.90 and a fee of $6,030 for the Witness briefing was recoverable.  The Court ultimately reduced these fees on the basis that not all of the medical illustrations were helpful:

[40]           In considering all of the above, and in reviewing the actual amounts charged for the panels, I am reducing the disbursements for the illustrations by $6,550. I have deducted the amounts charged for the illustrations concerning head and brain injuries, the rib and wrist fractures, the left lower leg surgery, the possible future left ankle injections, the possible future left ankle replacement and possible future left ankle fusion. I have also correspondingly deducted the additional charge for the panels to be made from these illustrations. I would also deduct another $1,225, representing 50% of the “production” costs of the illustrations. The amount taxed on the above should also be deducted.

[41]           In making these deductions I am mindful that the Plaintiff when preparing the case may be unsure in terms of the level of expertise of the Court in understanding the medical terms, anatomy and concepts. However, as found above, the cost of some of the illustrations was disproportionate to their usefulness. The Plaintiff must have some confidence in their experts to explain basic concepts.

[42]           In terms of the $6,000.30 trial preparation and cancellation fee, this is somewhat excessive. While the medical illustrator could speak to how he created the drawings, any explanation of the actual anatomy or physiology is dependent upon explanations by the experts. I would expect the medical illustrator’s appearance at trial, if necessary at all, to be minimal. I understand that the Defendant, until just before trial, required the medical illustrator to testify and that the late cancellation resulted in certain additional fees. In considering all of these factors I reduce the amount for trial preparation and attendance for the medical illustrator by 25%.

The Plaintiff also called duplicate experts, or experts in the same field.  The Court disallowed some of the duplication.