The Appellant appealed the Trial Judge’s Decision which divided matrimonial property. The Court of Appeal allowed the Appeal and changed the outcome of the issues at hand. The Parties had argued the issue of Costs in their original Factums and the Trial Judge awarded the Respondent $397,653.22 in Costs, being 50% of his actual legal fees incurred to date plus disbursements. However, since the Appeal was allowed, the Court of Appeal recognized that new submissions needed to be made and provided general guidance on Costs in this Decision.

The Court of Appeal considered Rule 10.21, 10.33 and Costs under McAllister v Calgary (City), 2021 ABCA 25 (“McAllister”), particularly in relation to the discretion of Trial Judges in setting “reasonable and proper costs” under the Rules.

The Court of Appeal noted that while the use of Schedule C is not mandatory, it is often used as a benchmark in assessing Costs and provides Parties with greater certainty and avoids lengthy inquiries into the appropriate level of Costs. The overriding principle is proportionality, with the aim of balancing indemnity for the winning Party without unreasonably discouraging access to the Court or unduly penalizing the losing Party. The Costs Award should partially, but not fully indemnify the winning Party, and a rough rule of thumb is that the Costs Award should reflect 40 to 50% of the solicitor and client Costs.

The Court of Appeal highlighted that, if the Trial Judge decides to make a Costs Award based on a percentage of solicitor and client Costs, the analysis must go further. The question is not just whether the solicitor and client Costs are reasonable as between solicitor and client, but whether the quantum represents an amount that the losing Party in the litigation should reasonably be expected to pay to the winning Party. This involves a detailed analysis of all the factors that go into assessing solicitor's fees, as set out in Rule 10.2 and Rule 10.31(1). The winning Party should provide the Court, as a benchmark, an assessment of the fees that would be ordered under Schedule C whenever seeking a lump sum Costs Award. The Court of Appeal noted that the Trial Judge simply granted a Costs award of 50% of the face value of the legal fees claimed by the Respondent, without any further analysis and without a draft Bill of Costs based on Schedule C, which is not an approach directed by McAllister. The Court of Appeal ultimately asked the Parties to make supplemental submissions on Costs.