Executive Summary: Key Legal and Evidentiary Issues

• The Court characterized the March 12, 2025 consent order as an interlocutory procedural order rather than a final order, making it subject to variation under rule 9.15(4) of the Alberta Rules of Court.
• The Defendants’ former lawyer, NN, consented to multiple court orders and provided undertaking responses without instructions, without informing the Defendants of the orders, and without their approval, and this misconduct was a central factor in the Court’s decision to vary the March 12 Order.
• Justice Jugnauth found that a contempt remedy could not properly be granted where Brookfield could not prove the Defendants had actual knowledge of the orders they were alleged to have breached.
• Relying on Custom Metal Installations Ltd v Winspia Windows (Canada) Inc, the Court applied a discretionary, “what is just in the circumstances” approach to procedural consent orders rather than treating them as unalterable contracts.
• Brookfield’s concern about losing the ability to note the Defendants in default and pursue default judgment did not outweigh the Court’s view that it was just to vary the order, particularly given the Defendants’ prompt steps once they learned of the orders.
• As part of the variation, the Court ordered the Defendants to pay Brookfield’s reasonable thrown-away costs on a full indemnity, solicitor-and-client basis related to the earlier applications, and directed that each party bear its own costs of this application.

Factual background and lease dispute

Brookfield Place (Calgary) LP (Brookfield) brought an action against Cru Juice Inc carrying on business as Jusu Bars, Bruce Wayne Mullen, 8931429 Canada Inc formerly known as Jusu Bars Inc, and Better Plant Sciences Inc (collectively referred to as “893 Canada”). The dispute arose from Brookfield’s allegation that 893 Canada breached the terms of a commercial lease for retail space. Brookfield alleged that, as a result of an alleged “midnight move” in 2020, 893 Canada vacated the leased premises before the lease expired and Brookfield sued to enforce its rights under the lease. As part of this action, Brookfield sued both the corporate defendants (for which Mr. Mullen was the corporate representative) and Mr. Mullen personally. At all material times, all Defendants were represented by NN, a lawyer from a British Columbia firm.

Questioning, undertakings and the first consent order

On July 23, 2024, Mr. Mullen was questioned regarding undertakings that arose from his original questioning in 2023. This July 2024 questioning produced a further 53 new undertaking requests, some of which were accepted and others taken under advisement. On December 20, 2024, NN entered into a consent order on behalf of 893 Canada. This order was granted by Applications Judge Mattis and filed January 2, 2025. Among other obligations, it required 893 Canada to provide complete and proper responses to all undertakings requested at the July 23, 2024 questioning by January 17, 2025.

Contempt application and the second consent order

On January 28, 2025, Brookfield filed an application seeking to have Mr. Mullen and 893 Canada Inc held in contempt for not providing complete and proper undertaking responses in accordance with the January 2 Order. Brookfield also sought an order striking the Defendants’ Statement of Defence and an award of full indemnity costs. On February 13, 2025, NN consented to a further order that granted Brookfield’s contempt application in part. Under that February 13 Order, Mr. Mullen was directed to appear before the Court on March 12, 2025 to show cause why 893 Canada should not be held in contempt. The balance of the contempt application, including the liability and sanction phases and all remaining relief sought by Brookfield, was adjourned to March 12, 2025.

The March 12 order and automatic consequences for non-compliance

When the matter returned to court on March 12, 2025, NN consented to a third order (the March 12 Order). This order set a new deadline of March 21, 2025 for 893 Canada to provide complete and proper responses to all undertakings requested at the July 23, 2024 questioning of Mr. Mullen. The March 12 Order also imposed specific consequences if 893 Canada failed to meet this deadline: the Defendants’ Statement of Defence would be struck without the need for a further court order; Brookfield would be permitted to have the Defendants noted in default; and Brookfield would become entitled to full indemnity costs for the entire action.

NN’s handling of undertakings and lack of instructions

Between January 2 and March 28, 2025, NN exchanged written communications with Mr. Mullen and the former operations manager of Jusu Bars to obtain information and records responsive to the undertakings. On March 21, 2025, NN sent to Brookfield’s counsel a schedule of undertaking responses and attachments on behalf of her clients. However, NN did not seek instructions or approval from her clients for entering into any of the January 2, February 13, or March 12 orders. She did not provide copies of those orders to the Defendants or otherwise inform them of their existence. NN also did not inform, advise, or obtain approval for the specific undertaking responses she delivered on March 21, 2025.

Discovery of the orders, new counsel and NN’s affidavit

Mr. Mullen first learned of the existence of the January 2, February 13, and March 12 orders, and of the undertaking responses that had been given on his behalf, on August 10, 2025. After reviewing those responses, he concluded that some were incomplete or inaccurate. On August 19, 2025, the Defendants retained new counsel to bring the application before Justice Jugnauth. The relief sought was to vary the March 12 Order by extending the deadline to provide undertaking responses from March 21, 2025 to October 3, 2025, and to order that Brookfield receive its reasonable thrown-away costs on a full indemnity basis. The stated purpose of this extension was to give Mr. Mullen an opportunity to obtain the necessary records to provide complete and accurate responses to the undertakings initially requested by Brookfield. NN affirmed an affidavit on August 28, 2025 admitting to the conduct described. She deposed that she had been experiencing significant mental health challenges that affected her practice, that she had sought professional help, resigned from her firm, and was not currently practising law. The Law Society of British Columbia had been informed of her conduct.

Parties’ legal positions on varying the March 12 order

The Defendants relied on rules 9.15 and 13.5 of the Alberta Rules of Court, Alta Reg 124/2010, as the basis for the Court’s authority to vary the undertaking deadline set out in the March 12 Order. They argued that varying the order would promote a fair outcome by allowing the litigation to proceed and be decided on its merits, and that their offer to pay Brookfield’s reasonable thrown-away costs on a full indemnity basis would address any prejudice to Brookfield caused by changing the deadline. Brookfield, by contrast, maintained that the March 12 Order, though procedural in form, had substantive effect because non-compliance resulted in the striking of the Defendants’ Statement of Defence without further court intervention and triggered the ability to note them in default and claim full indemnity costs. On that basis, Brookfield argued the order should be treated similarly to a final order, with a strong interest in finality, and that varying it would unfairly remove the opportunity to proceed by default. Brookfield also argued that 893 Canada retained a remedy against NN, pointing to the uncontested facts in NN’s affidavit and asserting that they supported a negligence claim against her, who was insured by the British Columbia Lawyers Indemnity Fund.

Guidance from Custom Metal on procedural consent orders

Justice Jugnauth turned to the Alberta Court of Appeal’s decision in Custom Metal Installations Ltd v Winspia Windows (Canada) Inc, 2020 ABCA 333, as the primary authority. In Custom Metal, Custom Metal Installations Ltd and Winspia Windows (Canada) Inc had a supply agreement for a curtain wall system on a Calgary condominium project. After a dispute, Winspia filed builders’ liens and a Statement of Claim. During the litigation, Custom Metal obtained a consent order requiring Winspia’s corporate representative to attend for questioning on a specified date, with the consequence that failure to attend would result in Winspia’s Statement of Defence to Counterclaim being struck. The representative did not attend, and the Statement of Defence to Counterclaim was struck. An applications judge later dismissed Winspia’s application to vary the consent order and restore its defence. On appeal, a chambers judge restored the Statement of Defence to Counterclaim, treating the order as procedural and subject to the Court’s discretion under the Alberta Rules of Court. The Court of Appeal dismissed a further appeal, endorsing the chambers judge’s discretionary approach.

Final versus interlocutory consent orders and “what is just”

In Custom Metal, the Court of Appeal described three approaches to deciding whether to interfere with consent orders: a contractual method, a prejudice-based discretionary method, and a discretionary method aimed at the interests of justice in having disputes heard on their merits. Justice Jugnauth highlighted two key aspects of the Custom Metal reasoning. First, before deciding whether to vary a consent order, the Court must determine whether it is a final consent order or an interlocutory procedural consent order. Final consent orders are those that dispose of the dispute by settling the ultimate issues between the parties, whereas interlocutory procedural consent orders engage the Court’s power to govern and move the litigation forward. Final orders carry a greater risk that judicial intervention will upset the parties’ settlement, while interlocutory procedural orders do not carry such a risk because there is “no real contract between the parties” in that sense. Second, when an order is interlocutory and procedural, the Court of Appeal rejected the idea that it can only be varied on the same grounds that a contract can be set aside. Instead, the preferred approach is a discretionary one based on “what is just in the circumstances” when dealing with procedural consent orders.

Characterizing the March 12 order as interlocutory and procedural

Brookfield submitted that the March 12 Order was procedural but had substantive effect due to the automatic striking of the Statement of Defence and related consequences, and therefore should be treated like a final order. Justice Jugnauth rejected that characterization. The reasons state that the March 12 Order did not address the ultimate issues in the lease dispute, which included whether any liability attached to 893 Canada’s decision to cease operations and vacate the premises before the end of the lease term, and, if liability existed, what the appropriate quantum of damages would be. The March 12 Order did not speak to liability or damages; it only set a specific date by which 893 Canada had to provide complete and proper undertaking responses arising from the July 2024 questioning. The Court held that including a stipulated consequence, such as striking a Statement of Defence for non-compliance, does not transform a procedural consent order into a final consent order. Justice Jugnauth pointed to Custom Metal as an example where a consent order leading to the striking of a defence for non-attendance at questioning was still treated as an interlocutory procedural order governed by rule 9.15. The Court also referred to other authorities (Gates Estate v Pirate’s Lure Beverage Room, Atkins v Holubeshen, and BeeTown Honey Products Inc (Bankruptcy)) as reaching similar interpretations.

Distinguishing Brookfield’s authorities on client responsibility

Brookfield relied on four decisions—Chheng v Lovatt, Arslan v Sekerbank TAS, Correia v Danyluk, and Sign-O-Lite v Bugeja—to support the proposition that clients are bound by commitments their lawyers make on their behalf. Justice Jugnauth acknowledged this statement of law but distinguished these cases from the present one. The reasons explain that those decisions dealt with orders or settlement agreements that disposed of the litigation by resolving the ultimate issue between the parties or reflected negotiated settlements of interests, such as a Consent Final Property Order or a negotiated preservation order generally involving compromise. In Correia and Sign-O-Lite, the context was settlement agreements that ended the litigation and disputes over counsel’s authority to enter into those settlements. None of those authorities involved interlocutory procedural consent orders like the March 12 Order, and therefore they did not govern the exercise of discretion under rule 9.15(4) in this case.

Rule 9.15(4) and the effect of NN’s misconduct on contempt

Having concluded that the March 12 Order was interlocutory and procedural, the Court turned to rule 9.15(4), which permits the Court to vary an interlocutory order if information arose or was discovered after the order was made, with the agreement of every party, or on other grounds the Court considers just. Justice Jugnauth held that it was just in the circumstances to vary the March 12 Order as requested by 893 Canada and to award Brookfield its reasonable thrown-away costs on a full indemnity basis. One key factor was that, due to NN’s misconduct, Mr. Mullen did not discover the existence of the January 2, February 13, or March 12 orders until mid-August 2025, and it was common ground that NN had acted without instructions or approval when she consented to citing the Defendants in contempt and imposed obligations on them without their knowledge. Mr. Mullen’s discovery of this situation in August 2025 constituted information that arose or was discovered after the March 12 Order, satisfying rule 9.15(4)(a).

The Court also emphasized the broader context of the contempt application. The February 13 Order was entered after Brookfield had applied to hold the Defendants in contempt for not complying with the January 2 Order. When the matter returned on March 12, NN agreed to obligations the Defendants had never been told about. In these circumstances, any contempt application by Brookfield against the Defendants would have been bound to fail, since Brookfield could not prove that the alleged contemnors had actual knowledge of the court order they were said to have breached. The reasons note that the law of contempt, as stated in Carey v Laiken, requires proof of such knowledge. Justice Jugnauth concluded that it would not be equitable to grant, by varying the order, a remedial outcome that Brookfield could not have obtained lawfully after a proper contempt determination.

Judicial discretion, client responsibility and the Rules’ purpose

Brookfield argued that, under established case law, clients are generally held responsible for the acts and omissions of their lawyers. Justice Jugnauth accepted that principle but agreed with the chambers judge in Custom Metal that it “stretches that authority too far” to say a client must always be responsible in every circumstance. The reasons note that the existence of rules such as 9.15 and 13.5, which addresses variation of time periods, shows that the Rules contemplate judicial discretion to do what is just between the parties, including where issues arise because of one party’s counsel. The central holding in Custom Metal is described as reconciling potentially competing lines of authority by first determining whether the consent order is final or interlocutory, and then, for interlocutory procedural consent orders, allowing the Court to decide “what is just in the circumstances.” Justice Jugnauth further observed that the Alberta Rules of Court are intended to promote a fair and just determination of disputes on the merits, and while they do permit remedies that dispose of actions without a merits hearing, such outcomes are intended to be exceptions.

Clean hands, diligence and assessment of prejudice

The Court considered 893 Canada’s conduct after it became aware of NN’s actions. Mr. Mullen learned of the misconduct on August 10, 2025 when other lawyers at NN’s firm contacted him. By August 19, 2025 the Defendants had retained new counsel, and by August 27, 2025 the application to vary the March 12 Order had been filed and made returnable on September 5, 2025. Justice Jugnauth found that this swift and purposeful conduct supported granting a remedy, in contrast to a situation where an applicant is dilatory in seeking relief.

On prejudice, the Court focused on the Defendants’ willingness to pay Brookfield’s reasonable thrown-away costs on a full indemnity basis for legal expenses associated with the January 2, February 13 and March 12 orders. Justice Jugnauth concluded that this addressed Brookfield’s financial prejudice, leaving only the passage of a modest amount of time. The Court was not persuaded that denying Brookfield the opportunity to note the Defendants in default constituted prejudice sufficient to outweigh the reasons for varying the order. The decision explains that the net effect of the remedy is to restore Brookfield to the position it wanted to be in before 2025: having 893 Canada’s undertaking responses so it could advance the prosecution of its claim.

Ruling and overall outcome

In the result, Justice Jugnauth varied the Order of Justice S.A. Moore filed March 12, 2025, by replacing the date “March 21, 2025” in paragraphs 1–3 with “October 3, 2025.” The Court also ordered that 893 Canada forthwith reimburse Brookfield for its reasonable thrown-away costs, on a full indemnity solicitor-and-client basis, relating to Brookfield’s legal expenses associated with the applications underlying the January 2, 2025, February 13, 2025, and March 12, 2025 orders. Although 893 Canada was successful in the present application and would ordinarily be presumptively entitled to costs, the Defendants proposed that no costs be awarded in their favour. Justice Jugnauth accepted this as appropriate in the circumstances, noting that the objective was to remove prejudice to Brookfield arising from NN’s misconduct. Accordingly, each side was directed to bear its own costs in relation to this application. Counsel for 893 Canada was directed to prepare the Order arising from these reasons.