LAY v LAY, 2017 ABQB 279


4.24: Formal offers to settle
10.33: Court considerations in making costs award

Case Summary

The Defendants were successful in having the Plaintiff’s claim Summarily Dismissed and were awarded Costs. The parties then sought an Order regarding quantum of the Costs. The Plaintiff’s Claim advanced multiple causes of action, including fraud and deceit, and sought damages of $2 million, including $250,000 of punitive damages. The Defendants had served a Formal Offer under Rule 4.24, offering to pay $10,000 for a Discontinuance without Costs, which was not accepted.

The Defendants sought either: full indemnity Costs; in the alternative two thirds partial indemnity costs; or in the further alternative, party and party Costs of three times Column 5 of Schedule C. The Plaintiffs argued that no multiplier was warranted, and that the Column 5 amount of Schedule C was appropriate.

Justice Millar found that, though the litigation did not proceed at a “robust pace”, the Plaintiffs’ conduct was not “reprehensible, scandalous or outrageous”, and therefore an award of full indemnity Costs was not warranted. Justice Millar also declined to award partial indemnity Costs, and held that the case was not complex, and that partial indemnity Costs awards were “reserved for cases that are overly complex and protracted”.

Millar J. considered the factors enumerated in Rule 10.33(1), and noted the Claim included allegations of fraud. Further, the Defendants were wholly successful in their Application for Summary Dismissal; the amount sought in the Action was $2 million; the issues raised had potentially significant consequences for the Defendants; the underlying facts of the Action dated back to 2002 and multiple causes of action had complicated the Action; no liability was found as against the Defendants; the Defendants had shortened the Action by providing a Formal Offer and by applying for Summary Dismissal. Justice Millar held that, given the factors from Rule 10.33, and the allegations of fraud, a multiplier of three times Column 5 was appropriate.

Justice Millar held that the Formal Offer was genuine and contained a sufficient element of compromise since it constituted a significant amount, and was made in light of a complete defence being maintained. Further, by the time the Formal Offer was served, multiple steps had occurred in the Action. Accordingly, His Lordship doubled the Costs that were incurred after the Formal Offer was served.

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