Evolution Of Costs Awards In Alberta And Recent Amendments To Schedule C

Introduction

The Rules of Court provide that a successful party in litigation is entitled to its costs (Rule 10.29(1)(a)). In the absence of litigation misconduct, allegations of fraud, or a contractual entitlement, the Court often turns to Schedule C to assess the quantum of those costs. However, the Court always retains discretion (pursuant to the Judicature Act and Rule 10.31) to award reasonable and proper costs taking into account the circumstances of the case.

Prior to the wholesale amendment of the Rules of Court in 2010, some debate was stirring about whether the tariff amounts set out in Schedule C (which was adopted in 1998) were out of date. However, when Schedule C was incorporated, virtually as-is, into the new Rules in 2010, that debate was quieted (on the understanding that the legislature had the opportunity to update Schedule C but declined to do so).

Now, close to 10 years later, the debate has begun again.

In several recent cases, the Court has accepted arguments that Schedule C is out of date and has awarded costs in larger amounts. Two differing methodologies have been adopted to do so: One is to apply an inflationary factor to Schedule C and the other is to award a percentage of actual solicitor-client costs.

The debate ultimately captured the attention of the Legislature. On March 17, 2020, Order in Council 28/2020 was released, having the effect of amending several portions of the Rules of Court, including a nearly wholesale revision of Schedule C, effective May 1, 2020. As will be discussed below, the revised Schedule C is likely to put to rest any and all arguments for inflationary adjustments - at least for another 10 years.

Cases

In mid-2018, Madam Justice D.L. Shelley issued a decision on costs in an especially complex and high-value commercial dispute (Weatherford Canada Partnership v Addie, 2018 ABQB 571). In that decision, a number of authorities on the issue of costs were reviewed and Shelley J. concluded that the "common approach" to costs when Schedule C is deemed inadequate is that the costs awarded should "approximate 40-50% indemnity of a winning party's actual costs", adjusted up or down depending on elements of misconduct, complexity, and the amount in dispute.

In early 2019, Madam Justice N. Dilts issued a decision on costs stemming from a coverage dispute (Intact Insurance Company v Clauson Cold & Cooler Ltd, 2019 ABQB 225). In that case, Dilts J. noted specifically the effect of Schedule C being...