4.29: Costs consequences of formal offer to settle
10.29: General rule for payment of litigation costs
10.31: Court-ordered costs award
10.33: Court considerations in making costs award
10.42: Actions within Provincial Court jurisdiction

Case Summary

This was a Decision regarding the quantum of Costs payable to the Plaintiff following a Decision in respect of a failed real estate transaction.

Justice Labrenz began by citing Rule 10.29 for the presumption that the successful party is entitled to Costs from the unsuccessful party. The Plaintiff was the successful party at Trial, but the outcome was one of mixed success. The Plaintiff originally claimed for damages in an amount as high as $446,455.63. At Trial, the claim was reduced to a range from $253,024.63 to $391,455.63. The Plaintiff was ultimately awarded a fraction of that: $47,083.71. Despite this mixed success, Justice Labrenz made clear that His Lordship was not awarding Costs on a split-issue basis; the Plaintiff was successful, albeit modestly so. The Court stated that the issue of mixed success is relevant to the quantum of a Costs Award, but not whether or not a Costs Award should be made at all.

Justice Labrenz quoted Rule 10.33 for the factors to be considered in making a Costs Award. His Lordship also cited McAllister v Calgary (City), 2021 ABCA 25 for the general principle that a Costs Award of 40–50 per cent indemnification is implied by the phrase “reasonable and proper Costs” as found under Rule 10.31. The Plaintiff sought 60–80 per cent indemnification. Justice Labrenz stated that this rate of indemnification was not supported by the Plaintiff’s degree of success or the amount ultimately recovered, as contemplated by Rule 10.33.

The Defendant argued that the ultimate Trial damages award fell within the jurisdiction of the Provincial Court of Alberta, and that the Costs Award should be reduced accordingly pursuant to Rule 10.42. Justice Labrenz disagreed, observing that while the amount payable by this particular Defendant was within the jurisdiction of the Provincial Court, when taking into account the contribution of the Realtor Defendants, the total damages award was above the Provincial Court’s jurisdiction.

Justice Labrenz further observed that both parties spent unnecessary time at Trial on futile arguments, and that this must be accounted for in any Costs Award as contemplated by Rule 10.33.

Finally, Justice Labrenz dealt with the consequences of the Plaintiff’s Formal Offer to Settle in the amount of $50,000 inclusive of pre-Judgment interest, taxable Costs, and disbursements, as governed by Rule 4.29. The Plaintiff calculated his Schedule C Costs under Column 1 at $28,387.50 without doubling. Justice Labrenz found this to be excessive. The Court also noted that Rule 4.29 does not apply to mandate the doubling of a lump-sum Costs Award made pursuant to Rule 10.31(1)(b), but that a Formal Offer may still be considered in such circumstances, as observed in Jones v Gerosa, 2016 ABQB 614.

In this case, Justice Labrenz found it appropriate to award a lump sum of $12,500 pursuant to Rule 10.31(1)(b)(ii), and to double this amount notwithstanding the non-application of Rule 4.29.

The Court therefore ordered the Defendant to pay to the Plaintiff $25,000 in Costs and $3,553.45 in disbursements plus GST as applicable.

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