Clients and potential clients often ask whether or not they will have their legal costs paid by the opposition if and when they are successful in their court case.
The idea of paying for an opposing party’s legal expenses is called the Law of Costs. The general rule in Alberta is that a successful party is entitled to costs to be paid by the unsuccessful party. This applies whether you go to a court application or a full trial.
There are two general ways in which the Court calculates how much cost to award to a party: Schedule C costs and solicitor-client costs.
All costs awards are discretionary, meaning that Judges are fully able to choose not to apply the standard rules and make whatever costs award they deem fair.
Schedule C Costs
The general rule in Alberta, and the starting point for any calculation of costs, are the Schedule C costs. Schedule C is a chart that is located in the Alberta Rules of Court and it outlines how much money a successful party will obtain for each step in a litigation. For example, if a client has had to file a Statement of Claim, they may be entitled to $1,000 in Court costs. Schedule C contains six different columns and the costs increase as the column increases, i.e. column one costs are the lowest and column six costs are the highest. For matters which relate to a set amount of money, such as suing a person for $250,000, the column is chosen based on the amount of money at issue in the lawsuit. The general practice in Alberta is to award column one costs for family law matters that do not relate to money such as parenting and custody.
Schedule C costs are very low. Schedule C costs do not fairly compensate most parties for the actual costs that they pay their lawyers to represent them in their legal matters. Parties should understand that the default in Alberta is to be awarded Schedule C costs and the likelihood that Schedule C costs will fully cover your legal expenses is extremely minimal. What this means is that even being successful in a lawsuit, you will still be paying money out-of-pocket to your lawyer.
A party can be awarded double Schedule C costs or some other multiplier. Sometimes, the Court will grant a party costs in a higher column or otherwise multiply the costs award because of bad conduct or an unreasonable position taken by the opposing party. The most common way to have a multiplier applied is to obtain double Schedule C costs because of an offer. Generally, where the successful party made an Offer to Settle to the losing party prior to the application or trial and the losing party should have taken the offer because the winning party is more successful in Court than the offer, double costs will be awarded.
Sometimes a successful party can be awarded solicitor-client costs. Solicitor-client costs are more closely related to the actual fees that you pay your lawyer to represent you in your legal matter. Awards of solicitor-client costs are rare and are difficult to achieve.
One of the most common ways to obtain solicitor-client costs is because you are in a dispute related to a contract and the contract specifically sets out that one party will have to pay solicitor-client costs if they are unsuccessful in any dispute in court. Sometimes solicitor-client costs are awarded because of extreme bad faith and bad conduct by the losing party. The conduct of the losing party has to be beyond the pale and extremely improper to merit an award of solicitor-client costs and so this is extremely rare.