Clarifying The Impact Of Informal Offers On Cost Calculations

• Published date: 17 August 2020
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Construction & Planning
• Law Firm: CLC (Canadian Litigation Counsel)
• Author: Mr Nabeel Peermohamed (Brownlee LLP)

Case Comment on ILI's Painting Services Ltd. v. Homes by Bellia Inc., 2020 ABQB 372

The construction law judgment in ILI's Painting Services Ltd. v. Homes by Bellia Inc., 2020 ABQB 372 clarifies the law on informal ("Calderbank") offers in the context of costs awards.

Facts

In this case, the Plaintiff painted two luxury homes, over a number of months, for the Defendant builder but was never paid for these services. As a result, the Plaintiff filed a lien on both properties and one trial was held to hear the actions with respect to both liens.

There were disputes between the parties as to the price agreed upon for the services and deficiencies in the Plaintiff's work. It was determined that because the Defendant allowed the Plaintiff to commence and complete the painting after having been told how much the services would cost by the Plaintiff, the price should be paid by the Defendant. On the topic of the alleged deficiencies the Defendant's witness was found to have credibility issues and on the whole the Defendant failed to make out the deficiencies. The Defendant also claimed that it had contracted with another business aside from the Plaintiff to paint one of the houses, but the other business testified that it was in fact a subcontractor for the Plaintiff.

Settlement Offers

The Plaintiff made two offers, in the same year, by way of letter to settle both disputes for $50,000, costs included. Accordingly, the Plaintiff requested tariff costs under Column 1 in the Alberta Rules of Court up to the date of the offer double costs from that point to the end of trial, and a further set of single costs for earlier steps relating to prosecution of the second lien before the actions were joined.

The Defendant argued that the letters did not meet the Calderbank criteria to trigger enhanced costs, and further, that the letters were marked 'without prejudice' and did not state that the offers would be used for obtaining costs after trial.

Analysis

The Court emphasized that offers to settle, both formal and informal, are consistent with Rules 1.2 and 4.29 of the Alberta Rules of Court and reflect a clear legislative intent to incentivize early resolution. However, as the offers in this case were not made in compliance with Rule 4.29, the Court needed to assess if the content of the offers was such that they would attract enhanced costs.

In determining if the offers met the Calderbank criteria, the Court stated that the law in Alberta no longer requires that an...