In Grimes v Governors of the University of Lethbridge, 2023 ABKB 432 (R.A. Graesser), the Alberta Court of King’s Bench interprets the “costs” decision of McAllister v City of Calgary, 2021 ABCA 25 to be more in line with traditional costs cases than it has sometimes been interpreted.
This post is a bit more technical than most of the material we post on, but its a very important case and we decided to leave it technical because simplifying this post in particular would have taken away some of its meaning and made it less useful for practitioners reading it.
Facts
The following were the facts summarized by the ABKB:
- Austin Grimes (referred to as “Rejeena” throughout the decision) had received a suspension from University of Lethbridge due to a series of communications with a professor Rejeena was unhappy with
- Rejeena was self-represented
- Rejeena had brought an application for judicial review to the Court of King’s Bench
- The University of Lethbridge had made a “Calderbank” offer to allow Rejeena to discontinue the judicial review application without costs before it went ahead, and Rejeena rejected that
- The application for judicial review was unsuccessful. The University of Lethbridge as respondent was successful on every issue, and according to Justice Graesser, there was no merit to any argument Rejeena raised, and it was “not close”
- Justice Graesser invited the parties to make submissions on “costs”, which is the decision summarized in this blog post
Analysis / Conclusion
The U of L argued that since it had made a reasonable Calderbank that was refused, and since the University was entirely successful, Rejeena (the unsuccessful Applicant) should have to pay 70% of its actual legal costs. The U of L relied on the Alberta Court of Appeal decision of McAllister v City of Calgary, 2021 ABCA 25 for the proposition that the purpose of costs awards should be to provide a level of indemnity to the successful party, and that there was little need to refer to Schedule C.
Justice Graesser started out with some comments about how McAllister has typically been interpreted:
[22] McAllister was decided in the period between the Committee recommendations and Government approval and was undoubtedly generated by the growing discontent over use of a tariff that was by then 12 years old. I initially viewed it as a stop-gap to Schedule C being updated. However, in looking at cost claims and awards since then, and case law surrounding McAllister, it appears that McAllister is being viewed as effecting a fundamental change in the approach to costs in civil litigation. It appears to endorse a new approach that leans towards partial indemnity costs based on a party’s actual solicitor client costs, as opposed to what they have been estimated to be in the Schedule C “fixed tariff”.
Justice Graesser noted that Barkwell v MacDonald, 2023 ABCA 87 was another Alberta Court of Appeal decision that recently cited McAllister.
The Justice went on to summarize principles from a number of earlier Court of Appeal and King’s Bench decisions which had relied on Schedule C of the Rules of Court as the benchmark for costs, with a judicial discretion to depart from that where appropriate.
This led to the following interpretation of McAllister and Barkwell and the current state of the law on costs in Alberta:
[55] Ultimately, I do not see that McAllister and Barkwell have any greater authority than the earlier decisions. I do not see that the comment in Weatherford about the “general rule” being that party party costs should be “between 40 and 50% of actual costs” fundamentally changed the law and made use of Schedule C the exception rather than the general rule. None of these decisions purport to overturn or modify the earlier authorities in any way. The earlier decisions were not even considered other than by way of brief reference for a couple of them, and not by way of any analysis. As such, they all must be read together and rationalized somehow.
[56] I will make some observations:
The appropriateness of a solicitor and own client bill has generally been the bailiwick of the Review Officers, who have considerable expertise in this area, as opposed to judges;
Cost awards outside the tariffs in Schedule C (solicitor and own client costs, solicitor and client costs, and partial indemnity costs) are very fact driven;
The basic principles of party party costs in the Rules of Courthave not changed since 1998. Only the amounts and tariff items have; and
Some Court of Appeal decisions, as cited above, treat Schedule C as the starting point for a party party cost award.
[57] From all this I conclude that McAllister is an example of a case where the strict application of Schedule C was not appropriate. It does not stand for any change in costs principles as previously outlined in earlier Court of Appeal decisions. I do not read either of the Barkwell decisions or Weatherford to say anything different.
[58] Specifically, I do not see that any of these decisions now requires that judges routinely compare what Schedule C would provide and what the parties have actually spent on their lawyers, absent exceptional circumstances. “Routine” or ordinary cases should continue to attract Schedule C costs, and in appropriate cases, with multipliers applied or an inflationary adjustment.
Justice Graesser specifically considered a comment in Barkwell where the Alberta Court of Appeal noted that Schedule C is “not a default method” for assessing costs, interpreting that comment as follows:
[63] Until the Court of Appeal perhaps clarifies what it means by “not a mandated default method”, I will proceed on the assumption that they are simply reiterating that since costs are highly discretionary, there are other methods of awarding costs that may be used when Schedule C is inappropriate.
[64] […] except in cases where indemnity costs based on solicitor and client costs are sought, Schedule C remains the starting point for any party party costs award. As stated in RVB Management, they are “presumptive”. A judge may ultimately choose to award costs using some other method, but Schedule C needs to be considered. Schedule C costs will be applied, perhaps with a multiplier or an inflationary adjustment, unless the use of Schedule C is determined to be inappropriate.
[65] In other words, departing from Schedule C for party party costs requires some exceptional circumstances. Complexity and misconduct during the litigation process have been found to be “exceptional” in the past. This factor will have to be analyzed on a case-by-case basis.
In the result, the Court of King’s Bench awarded costs to the U of L based on Column 1 of Schedule C, but added a multiplier of 1.25% to take into account the fact that Schedule C had not been updated recently. This worked out to a much smaller costs award than the U of L was seeking.
My Take
I have always understood “costs” to be within the discretion of the trial judge, and that Schedule C is the starting point for assessing costs. It is obviously appealing to a successful litigant to get substantive legal costs indemnity, but operating from that presumption is extremely problematic.
It encourages litigants to do “whatever it takes” to win, including spending dramatically more money on the legal work than is reasonable, adopting a winner-take-all attitude, and potentially even being less willing to settle prior to a trial – because in situations where a party has spent a high amount on legal fees, if they think they can get a high percentage of them back in a costs award, it could in some cases be more appealing to take that chance rather than arrive at a reasonable settlement prior to a trial.
As tempting as high indemnity recovery is, I think Grimes is the most sound interpretation and application of McAllister I have seen yet.
Bow River Law provides these regular legal blog articles for the purposes of legal news, education and research for the public and the legal profession. These articles should be considered general information and not legal advice. If you have a legal problem, you should speak to a lawyer directly.
Bow River Law is a team of knowledgeable, skilled and experienced lawyers handling employment law, human rights (discrimination) and labour law matters. Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.
