Two year ago, Grant Vogeli and I wrote a blog post discussing various approaches to calculating court costs in Alberta. In that post, we lamented that the Tariff of Recoverable Fees in Division 2 of Schedule C—the cost tariff which guides judges’ decisions on costs—had not been updated for over 20 years, leading increasingly to court cost awards that were only 10-15% of a successful party’s actual legal costs incurred. Oftentimes, cost awards were even less than that.
Earlier this year, the government amended the Alberta Rules of Court, and those amendments included an update to Division 2 of Schedule C. The amendments to the tariff became effective May 1, 2020 (See Order in Council 078/2020 here). These amendments follow the comments of multiple Judges from multiple courts in Alberta expressing similar frustrations with Schedule C’s increasing antiquity.
Prior to the amendment, in Styles v Caravan Trailer Lodges of Alberta Limited, 2019 ABQB 558, Justice Jones said (at para 48) “Unfortunately, the Court’s ability to achieve a fair and principled costs award has been increasingly hampered by the framework at its disposal, namely Schedule C to the Rules of Court, [which] has not been updated in over twenty years.” In Geophysical Service Incorporated v Falkland Oil and Gas Limited, 2019 ABQB 314, Justice Woolley said (at para 28) “Without some sort of inflationary adjustment Schedule C risks becoming merely an artifact.”
The outdated amounts listed in Schedule C gave rise to various lines of authority employing some unique approaches to court costs, in an attempt by judges to reach a more just result than could be obtained by reference to Schedule C alone, absent legislative intervention. For example, see the case of Weatherford Canada Partnership v. Addie, 2018 ABQB 571, where Justice Shelley summarized a number of cases that used various methods to calculate costs including a percentage of complete indemnity, an adjustment to the Schedule C tariff by changing the column, multiplying the column or applying an inflation factor to the tariff amount, or a hybrid approach where costs for different portions of the case are assessed differently.
As you might imagine given the length of time that Schedule C has been in force unamended, the new tariff provides for a significant increase in the costs awarded for each item listed in Schedule C, as well as the amount of recoverable fees for each item of work under every column. On average, the amounts to be awarded for tariff items have all been increased by 30-35%.
How has this update affected how Judges award costs with reference to Schedule C?
Recent cases confirm that cost awards are still highly discretionary. Since Schedule C’s amendment, the Alberta Court of Queen’s Bench has held that Schedule C should still be considered a guide to determining quantum, but “the Court may exercise a discretion to award a lump sum, or all or a portion of Schedule C costs” (2020 ABQB 519).
In SJ v Parkland School Division No 70, 2020 ABQB 498, the Respondent sought enhanced costs, after Schedule C’s recent amendment came into effect. Justice Ross noted that “the amendments included re-definition of the appropriate Columns,” and that previous decisions awarding enhanced costs were made in light of a Schedule C that was then out of date. In denying the Respondent’s application for enhanced costs under the amended Schedule C, Justice Ross held:
[. . .] many of the cases in which courts have granted enhanced costs were decided in the context of applying a Schedule C that was substantially out of date. Prior to the May 2020 amendment, Schedule C tariff amounts were last amended in 1998. In recent cases, this concern led to the application of an inflation factor: McCallister v Calgary (City), 2018 ABQB 999, at para 20 (costs grossed up by 46.60%); R & R Consilium Inc v Talbot, 2019 ABQB 275, at para 70 (enhanced costs further increased by 40% as adjustment for inflation). The May 2020 amendment grossed up costs by 35%.
Justice Ross explained that prior to Schedule C’s amendment, Courts, at times, addressed outdated Schedule C costs by calculating the percentage of indemnity to “check” the award. Referring to Justice Mason’s reasoning in Trizec Equities Ltd v Ellis-Don Management Services Ltd, 1999 ABQB 801, a case decided shortly after Schedule C was last amended in 1998, Justice Ross noted that considering “percentage of indemnity” when addressing inflation in legal fees was the intent of the Schedule C Committee which developed the amendments adopted back in 1998. At paragraph 22 of Trizec, Justice Mason quoted from the Interim Report of the Committee:
In formulating the revised schedule, the Committee aimed at providing 40% to 50% indemnity in a typical case. In circumstances where the revised schedule meets that target there will generally be no need for the Court to exercise its discretion. When the Court does exercise its discretion, reference to a proportion of solicitor and client costs can provide valuable guidance for the Court and other litigants.
When it comes to Schedule C’s 2020 amendment, Justice Ross points out that there is nothing to indicate—this time around—that the Rules of Court Committee recommending the changes to Schedule C believed that the amendments would provide a 40% to 50% indemnity for today's legal fees. As a result, Justice Ross opines that “the appropriateness of continuing to apply this approach after the May 2020 amendments is, in my view, very much in doubt” (para 29).
Notably, Justice Ross confirmed that the Court retains discretion to award “some other enhancement of costs” (para 31), and that discretion is governed by the factors set out in Rule 10.33(1) and (2). In SJ v Parkland School Division No 70, the complexity of the appeal and the lack of merit of certain allegations led Justice Ross to enhance costs by assessing them under column 4 instead of column 3.
While the amended Schedule C has, to some extent, lessened the need for Courts to find unique solutions to cost enhancements (for instance, by applying a multiplier to achieve a certain percentage of indemnity), the case of SJ confirms that enhanced costs may still be awarded where the factors of Rules 10.33(1) and (2) are proven.
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