RN CARDIUM OIL INC v LOYAL ENERGY (CANADA) OPERATING LTD

The Court was asked to determine costs following the Applicant’s successful Application for Summary Dismissal of the Respondent’s Action. The issue in dispute was quantum.

The Applicant argued for costs on a full indemnity basis due to the Respondent’s conduct during the course of the litigation. The Applicant took the position that the Respondent’s claim alleged serious impropriety on the part of the Applicant; and not only did the Respondent fail to prove these allegations, but it also made no effort to substantiate the allegations.

The Respondent took the position that solicitor-client costs would be inappropriate in the circumstances. Solicitor-client costs ought to only be awarded in exceptional circumstances or where there is reprehensible conduct on the part of one of the parties. The Respondent argued that while the Court may have disagreed with their arguments, that did not make their conduct reprehensible. The Respondent argued for Schedule C costs.

In considering the parties’ positions, the Court reviewed Rule 1.2 and a party’s inherent obligation to pursue the quickest means of resolving a claim at the least expense. In looking to how the Respondent commenced the Action and conducted themselves throughout, the Court determined that they had taken a far costlier route than was necessary, and expanded the scope of the litigation beyond what was needed to resolve the parties’ dispute.

Justice Jeffrey ultimately decided that in light of the Respondent’s overall approach to the litigation, the appropriate costs to award in these circumstances were something greater than Schedule C, but less than solicitor-client costs. The Court awarded costs equal to 85% of solicitor-client costs.