Case Bites for January 15, 2024

Last week’s Court Rulings from the Alberta Court of King’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek and Christie Dewar
V.L.M. v Dominey Estate, 2023 ABCA 382
Costs | Percentage of Fees Incurred

This was an Alberta Court of Appeal decision recapping the law on costs. The appellant sought costs for successfully overturning an order refusing to certify the action as class action. Plaintiff counsel was retained on a contingency but wanted a costs award based on a percentage of fees incurred in accordance with the McAllister decision. 

[7]               McAllister is an example of litigation where the Court confirmed that after a lengthy trial a costs award based on a percentage of fees reasonably incurred might be appropriate. At an interlocutory stage the entitlement to some level of indemnification is less clear because overall success is unknown: McAllister at para. 64. For example, while certification is an important step in a class proceeding, there is no assurance that the class will ultimately be successful because certification does not engage an examination of the merits of the claim: Class Proceedings Act, SA 2003, c. C-16.5, s. 6(2).

The ABCA explained requirements for McAllister Costs:

[8]               With respect to any costs award, particularly one based on a percentage of solicitor and client fees, the issue is not what counsel actually charged the successful litigant, but what costs should have been incurred in the litigation having regard to all of the relevant circumstances. The issue is not whether the fee charged to the client is fair to the client, but what amount the unsuccessful party can fairly be expected to contribute: Barkwell (#1) at paras. 57-59; Barkwell v McDonald (#2)2023 ABCA 183at paras. 74-75Kantor v Kantor2023 ABCA 329 at paras. 12-13.

[9]               The overriding issue is proportionality. The rules on costs aim to balance indemnity of the winner without unreasonably discouraging access to the court, or unduly penalizing the losing party: McAllister at para. 45Barkwell (#1) at para. 57. One of the dangers of a costs award based on a percentage of solicitor and client fees is that there is no clear disincentive to overly zealous, inefficient, or disproportionate litigation. In short, success is not a justification for disproportionate litigation.

[10]           The primary factors relevant to setting a costs award are listed in R. 10.33:

10.33(1) In making a costs award, the Court may consider all or any of the following:

(a) the result of the action and the degree of success of each party;

(b) the amount claimed and the amount recovered;

(c) the importance of the issues;

(d) the complexity of the action;

(e) the apportionment of liability;

(f) the conduct of a party that tended to shorten the action;

(g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate.

As noted, it is conceded that the appellant was the successful party on the appeal.

The Court went on to identify that simply asserting an entitlement is not enough to triggerMcAllister type costs, and a detailed justification is needed:

[13]           Even where the Court exercises its discretion to make a costs award based on a percentage of solicitor and client fees actually charged, it is not sufficient for the successful party to simply assert entitlement to the total obtained by multiplying hours times hourly rate: Barkwell (#1) at para. 60. Some justification is required for all the components of the fees claim, such as the hourly rate, the number of hours worked, the number of counsel involved, and the proportionality of the litigation. The appellant claims a costs award of 75% of total fees of $307,626.50, based on 661.4 hours worked by his counsel and paralegal. This magnitude of costs for an appeal of moderate complexity called for a detailed justification which was not provided. Alberta deposes that its counsel and paralegal recorded 243 hours responding to the appeal. It notes that the fee under Column 5 for “All steps taken to file Notice of Appeal” is $800, whereas the appellant claims 15 times that amount. No justification is provided for the involvement of third counsel from Ontario, or the hourly rates charged by that counsel.

The Court declined to award McAllister type costs, and instead awarded Schedule “C” costs.