Costs Awards: Your Entitlement To Indemnity For Legal Expenses

Published date15 February 2021
Subject MatterLitigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Construction & Planning
Law FirmMiller Thomson LLP
AuthorMs Alice Wong

More so than most other forms of litigation, construction litigation often involves multiple parties and multiple issues, all of which typically result in a significant amount of documentary evidence as well as necessitating the input of expert witnesses. As a result, the legal fees and disbursements associated with such protracted, document intensive litigation can be substantial, irrespective of the size of the claim.

Absent exceptional circumstances (such as conduct worthy of sanction, by either the successful or unsuccessful parties), costs awarded to the successful party in Alberta are "reasonable and proper costs" permitted under Rule 10.31(1)(a) of the Alberta Rules of Court, otherwise known as "party and party costs." Such costs are set out as tariff levels in Schedule C of the Alberta Rules of Court. Except for a set adjustment to account for the quantum range in which the claim falls, these Schedule C costs are generally applied without regard to the actual legal costs incurred by the successful party.

However, in McAllister v Calgary (City), 2021 ABCA 25 ("McAllister"), the Alberta Court of Appeal clarified that Schedule C is not the default rule for making costs awards.

Costs awards are discretionary and Courts are granted a wide degree of latitude in determining what costs they deem to be appropriate in each case. Nonetheless, such discretion is governed by the Alberta Rules of Court and the obligation of the Court to act reasonably. The applicable Rules are as follows:

  1. Rule 10.2(1) sets out the factors to be considered in determining whether a lawyer's fees are reasonable;
  2. Rule 10.33 sets out the factors to be considered by the Courts in determining the amount of a costs award; and
  3. Rule 10.31 sets out the types of orders the Court can make in awarding costs.

It is under Rule 10.31(3) that a Court is permitted to order a lump sum percentage of legal costs, if proper and reasonable in the circumstances, without reference to Schedule C.

This then leads to the question of what is the appropriate percentage to be applied if Rule 10.31(3) is held to be applicable. The Rules do not specify an explicit level of indemnification.

In answering this question, it is important to note that although the primary purpose of a costs award is to indemnify the successful party for expenses incurred as a result of validly pursuing or defending a claim, indemnification is not intended to be complete. In other words, often much to the surprise of litigants, the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT