Court Costs – An Often Overlooked Part Of Litigation

In the recent Court of Queen's Bench of Alberta decisions of Weatherford Canada Partnership v. Addie, 2018 ABQB 571 and Remington v Crystal Creek Homes Inc, 2018 ABQB 644, the Court addressed how costs should be calculated following litigation. Although court costs are awarded at the end of court applications or trials and are almost always awarded in favour of the successful party, they should not be considered an afterthought. Determining court costs ought to be an important consideration for litigants and their counsel, and counsel can often take steps to significantly increase potential recovery and decrease potential exposure to awards of court costs. This post will address what court costs are, the ways they can be awarded, and steps that can be taken to address them.

What are court costs?

Court costs are the costs involved in handling a case by which Judges in all cases have the discretion to award court costs. All provinces in Canada and almost all common law jurisdictions have adopted the "English system" of "loser pays" court costs.

Historically, under the English system, successful litigants were awarded approximately 40-50% of their actual legal expenses. The purpose behind the policy was to:

Discourage frivolous claims, Encourage settlement of meritorious claims, and Allow a party that has successfully defended a claim to recover a portion of its legal costs. What factors inform how costs are awarded?

Judges have discretion to determine the amount of costs as well as the method for determining those costs based on several factors. Some of these factors include:

The parties' conduct during the litigation, The complexity of the case, The amount involved, and The importance of the case to the parties and society generally. It is very unusual for a party to be awarded all of its legal costs—referred to as full indemnity or solicitor-client costs. Full indemnity cost awards are rare and generally reserved for exceptional cases where a party's behaviour was dishonest, scandalous or outrageous.

In the vast majority of cases, judges award the successful party partial indemnity costs. In Alberta, judges frequently refer to a cost tariff known as Schedule C to the Alberta Rules of Court. Unfortunately, Schedule C has not been updated for over 20 years. Because the costs listed in Schedule C are so out-of-date as compared to current legal costs, applying the tariff results in cost awards of only 10-15% of the actual legal costs incurred...