In Alberta, a successful party is presumptively entitled to recover a portion of their legal costs from the unsuccessful party. While costs are always within the discretion of the Court to assess, the successful party’s costs will, in most cases, be calculated pursuant to a tariff schedule under Schedule C of the Alberta Rules of Court, Alta Reg 124/2010. These are otherwise referred to as “party-and-party costs” and they are not intended to fully indemnify the successful party for their legal expenses. Rather, the tariff schedule under Schedule C was originally intended to indemnify the successful party for approximately 40-50% of their actual legal costs (see Weatherford Canada Partnership v. Addie, 2018 ABQB 571 at paras 54-57).
Since 1998, Schedule C has not been substantively modified. Over the passage of time, inflation gradually reduced the relative value of costs awards under Schedule C, to the point that the Court became more willing to apply “inflation factors” and other modifiers to increase the quantum of costs payable (see e.g. RVB Managements Ltd. v. Rocky Mountain House (Town), 2015 ABCA 304).
Schedule C is set to receive its first major overhaul in 22 years.
Effective May 1, 2020, a revised tariff schedule will come into effect which will increase the various tariff amounts for the first time since 1998 by approximately 35%. In a recent decision on costs, Madam Justice Fagnan confirmed that the increase is intended to account for inflation since 1998 (see Lemay v. Canadian Natural Resources Ltd., 2020 ABQB 250 at para 35).
In addition to increasing all of the tariff amounts by approximately 35% each, the columns have also been adjusted upwards. For example, Column 1 previously applied to claims valued up to $50,000, and that has now been increased to $75,000.
For any standard award of costs made after May 1, 2020, the revised tariff amounts and columns will apply, regardless of whether the particular litigation steps being assessed occurred before or after May 1, 2020. However, if a successful party made a formal offer under Part 4, Division 5 of the Alberta Rules of Court before May 1, 2020, and ultimately beats that offer at a trial which concludes after that date, the costs consequences arising from the formal offer are to be calculated using the “old” schedule which was in place before May 1, 2020.
The tariff fee for trial preparation has also been modified to allow the successful party to claim an entitlement to a portion of the trial preparation fee if the matter is set down for a trial or summary trial, and is resolved less than three months before the scheduled starting date.
The revisions to Schedule C of the Alberta Rules of Court will better approximate the tariff schedule’s original intent to indemnify the successful party for approximately 40-50% of their actual legal costs. This will eliminate the need for the Court to apply “inflation factors” and other modifiers to Schedule C for the time being, and will better compensate successful litigants for their legal expenses.