The Appellant, who was successful at Trial, appealed a Costs Award on the basis that it did not provide sufficient indemnification. The Costs Award being appealed was made pursuant to Rule 10.31(1)(a) and was not an exceptional or discretionary Costs Award pursuant to Rule 10.31(1)(b). The Appellant argued that the Costs Award only represented 17% of the actual legal fees that were incurred.

The Court of Appeal acknowledged that Trial Courts have wide discretion to award Costs under Rules 10.29(1), 10.30(1), 10.31, and 10.33. However, this discretion is subject to the need to act judicially, and Appellate Courts should intervene when there is an unreasonable exercise of that discretion.

The Court of Appeal found that the Trial Judge misperceived Schedule C as the default rule that applies absent misconduct or complexity. The Court of Appeal held that the Rules do not support such a characterization, and that Schedule C is merely one of several tools that may be used to arrive at a reasonable and proper Costs Award pursuant to Rule 10.31(1)(a).

The Court of Appeal observed that, in Alberta, the weight of authority is that Costs should generally represent partial indemnification of the successful party at a level of roughly 40–50% of actual legal fees incurred. The Court found no reason to depart from this general guideline.  The Court generally approved of the use of Schedule C, but emphasized that Trial Judges must consider whether a bare application of Schedule C will yield an appropriate level of indemnification when making a Costs Award.

Given the foregoing, the Appeal was granted, and the matter of Costs was remitted to the Trial Judge.