What is a Cost Award?
In a court case, a cost award is a sum of money that a judge may order one party to pay to the other during or at the conclusion of a court case. The primary purpose for this is to help compensate the winning party for some of the legal expenses they had to pay. The idea behind it is that if you win a lawsuit, you were right, so you should not have to deal with the stress and cost of going to court all on your own. Therefore, the party that loses the case has to pay the winner some money to cover some of these costs. However, a cost award usually does not cover all of the legal fees that were incurred during the case.
What is a Bill of Costs?
A Bill of Costs is a detailed list of all the legal actions taken by a law firm on behalf of a party, as well as the expenses incurred during a legal proceeding. It’s prepared once the case ends, whether through settlement or a court judgment, or sometimes after a specific legal application is completed.
What is a Schedule “C”?
Schedule “C” is a part of the Alberta Rules of Court that lists various legal steps and assigns a monetary value to each. This helps determine the maximum amount a party can claim back as reimbursement for their legal costs. Schedule C includes 5 columns, the column used for the Bill of Costs depends on the settlement amount or court judgment. The court may decide to award multiples of these amounts if justified, or even a fraction of them.
Schedule C is formatted as a table with range of amount specified across the top under different column numbers. A particular column is used based on the damages awarded by the court. The procedural steps are listed on the left side under the column heading “Item number”. In the judgment, the judge usually specifies the column number to be used to determine the costs to be paid. The winning party then compiles a Bill of Costs detailing each legal action undertaken during the lawsuit and assigns the corresponding amount for each legal step as per Schedule C. The other party is obligated to pay these costs, along with any other court-ordered payments, as part of the court’s judgment. Schedule C states that unless the Court decides otherwise, cases that do not involve monetary amounts will fall under Column 1 for cost determination.
Types of Costs
- Party-Party Costs
In Alberta, party-to-party costs refer to legal expenses one party might have to pay to another. These costs are awarded by the court and are based on a tariff detailed in Schedule C of the Alberta Rules of Court to partially compensate the winning party for their litigation expenses. Overall, these costs are designed to help cover some of the expenses of the successful party, but they do not cover all costs involved in the legal proceedings. - Solicitor-Client Costs
Solicitor-client costs aim to fully reimburse a party for all reasonable expenses incurred during a lawsuit. This includes fees not typically covered under standard party-to-party costs, such as those resulting from misconduct or unreasonable actions by the opposing side. These costs can also serve as a punishment or deterrent when the court deems the other party’s behavior particularly severe or in bad faith. However, they are rare and granted only in exceptional cases, with courts considering factors like case nature, party conduct, and the fairness of legal fees. They provide full indemnity to the winning party, compensating them for the financial impact of litigation, but are infrequently awarded compared to standard costs under Schedule C.”Solicitor-client costs” allow the winning party to recover all reasonable legal expenses incurred during the litigation. However, it does not cover the contingency fee. On the other hand, “solicitor and own client costs” require the losing party to fully reimburse the winning party for all their reasonable legal expenses, including any contingency fees, providing complete indemnification for the litigation costs incurred.
Costs in the Cause vs. Costs in Any Event of the Cause
“Costs in the cause” means that costs are awarded to the winning party in a lawsuit based on the matter’s outcome. They cover the costs incurred during the litigation process and are typically granted to the party that succeeds on the substantive issues of the case. In contrast, “Costs in any event of the cause” means the successful party in the application gets the costs paid immediately, without waiting for the trial’s outcome. They often hinge on factors like settlement offers and the conduct of the parties during the legal proceedings, aiming to encourage fair settlements and discourage unnecessary litigation costs.
Important Cases
British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 (CanLII), [2003] 3 SCR 371
This landmark case established that interim costs awards can be given in exceptional circumstances to promote access to justice and mitigate inequality between litigants. The Supreme Court of Canada held that in public interest litigation, special concerns might justify deviating from traditional cost rules.
McAllister v. Calgary (City), 2021 ABCA 25
This case notes that when a trial judge considers awarding costs based on a percentage of solicitor and client costs, the assessment must be thorough. It is not solely about determining if the solicitor and client costs are reasonable within that context, but also whether the amount reflects what the losing party reasonably should pay to the winning party in the litigation.
MYW v DTW, 2021 ABQB 713 (CanLII)
In this case, the Court ordered the father to pay solicitor-client costs because he didn’t provide sufficient financial disclosure for more than two years. Despite a court order to disclose the financial information, the father’s compliance was inadequate and appeared to be a deliberate attempt to avoid his obligations. His actions led to multiple court hearings being necessary, adding to the legal process and costs.
DS v PA, 2018 ABPC 217 (CanLII)
In this case, the Court ordered the child’s paternal grandparents to pay indemnity costs for disobeying a court order to hand over the child to their maternal grandparents. The paternal grandfather’s testimony that he would only follow court orders he deemed appropriate was considered extremely unacceptable and scandalous by the Court.
Key Takeaways
- The successful party is usually awarded costs, but the amount can vary based on the circumstances of the case.
- Courts in Alberta emphasize the importance of proportionality and reasonableness in awarding costs to ensure they are fair and just.
- Misconduct or unreasonable behavior by a party can result in higher cost awards, including solicitor-and-client costs.
Conclusion
Understanding how court costs are determined in Alberta is essential for those involved in litigation. The courts prioritize fairness and consider the nature of the case, emphasizing proportionality and reasonableness in cost awards. Landmark rulings and notable cases offer valuable guidance on how costs are decided, underscoring the influence of case complexity and parties’ conduct. It’s vital for litigants to grasp these nuances. Seeking advice from legal experts can help navigate these rules and their implications in individual cases. To learn more, reach out to our litigation team for assistance.