{"id":6632,"date":"2024-04-09T15:45:08","date_gmt":"2024-04-09T19:45:08","guid":{"rendered":"https:\/\/www.millerthomson.com\/grimes-governors-of-the-university-of-lethbridge-2023-abkb-defence-schedule-c\/"},"modified":"2025-07-10T12:48:57","modified_gmt":"2025-07-10T16:48:57","slug":"grimes-governors-of-the-university-of-lethbridge-2023-abkb-defence-schedule-c","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/commercial-litigation\/grimes-governors-of-the-university-of-lethbridge-2023-abkb-defence-schedule-c\/","title":{"rendered":"Grimes v Governors of the University of Lethbridge,<\/i> 2023 ABKB 432: A defence of Schedule C"},"content":{"rendered":"\n

Litigation is often a lengthy and costly experience for those involved in commercial disputes. Parties often assume that if they are successful, their entire legal fees will be paid for by the losing side. However, in Alberta that is the exception\u2014not the norm.<\/p>\n\n\n\n

In Alberta costs are always at the discretion of the Court. Therefore, caselaw developments and trends in the law of costs is an ever-developing and important area for the savvy litigant to keep on top of.<\/p>\n\n\n\n

Since the release of the Alberta Court of Appeal\u2019s decision in McAllister v City of Calgary<\/em>, 2021 ABCA 25 (\u201cMcAllister<\/em><\/strong>\u201d),  many parties have argued that McAllister<\/em> stands for the proposition that a reasonable and proper costs award should indemnify the successful party for approximately 40-50% of their actual solicitor-client costs, absent exceptional circumstances such as litigation misconduct. This is a shift from the traditional approach of calculating cost using the fixed tariff system in Schedule C of the Alberta Rules of Court, <\/em>Alta Reg 124\/2010 [Rules of Court<\/em>], under which a party receives a specified amount for certain steps taken in the action.<\/p>\n\n\n\n

However, in the recent decision of Grimes v Governors of the University of Lethbridge<\/em>, 2023 ABKB 432 (\u201cGrimes<\/em><\/strong>\u201d), the Court of King\u2019s Bench has pushed back on this interpretation of McAllister<\/em>. In Grimes<\/em>, the respondent, the Governors of the University of Lethbridge (\u201cGUOL<\/strong>\u201d), asked for 70% of its solicitor-client costs, being $18,813.70 plus disbursements. GUOL relied on McAllister<\/em>, arguing that GUOL had been wholly successful and the applicant had rejected a reasonable offer to settle. The Court reviewed the history of the amendments to the Rules of Court<\/em>, in particular, Schedule C, noting that when the \u201cnew\u201d Rules of Court were updated in November 2010, no changes to Schedule C were proposed and that Schedule C had last been updated in 1998.[1]<\/a> The Court noted that, at that time, the Alberta Law Reform Commission was concerned about over-indemnification of litigants, and were of the opinion that a fixed tariff best reflected the principle of partial indemnity and minimized problems encountered in other jurisdictions using different party-party cost systems. Although they recognized that Schedule C should be adjusted for inflation, the Alberta Law Reform Commission left this issue for future discussions.[2]<\/a><\/p>\n\n\n\n

After the \u201cnew\u201d Rules of Court<\/em> were implemented in 2010, the Rules of Court Committee (the \u201cCommittee<\/strong>\u201d) began to review Schedule C and made recommendations about inflationary adjustments to the values listed therein. However, the Committee\u2019s recommendations did not change the underlying philosophy that there should partial indemnification using a fixed tariff as the norm. In 2014, the Committee issued their recommendation with respect to the adjustments to the values contained in Schedule C, which were incorporated in 2020. No increase was made to the inflationary multiplier in the intervening time. Therefore, the revised Schedule C was already five years out of date when it was updated.[3]<\/a><\/p>\n\n\n\n

In Grimes<\/em>, the Court found that before Schedule C was updated in 2020, Courts and litigants alike were frustrated with the dated tariff system due to increased inflation and litigation costs. Therefore, the decision in McAllister<\/em>, which the Court described as having been decided before Schedule C was revised,[4]<\/a> was, in the Court\u2019s view, a stop-gap measure to the forthcoming Schedule C update, not a fundamental shift in how the Court approaches costs.[5]<\/a><\/p>\n\n\n\n

The Court then conducted a review of Alberta caselaw and concluded that neither McAllister<\/em> nor  Barkwell<\/em> v McDonald<\/em>, 2023 ABCA 87 (which affirmed McAllister<\/em>), created a new costs regime where partial indemnity based on actual solicitor-client costs was the new model. Rather, the Court found that Schedule C remains the presumptive method for determining costs, and departing from it requires exceptional circumstances.[6]<\/a><\/p>\n\n\n\n

The Court went on to apply a 1.25 multiplier of the Schedule C amounts, based on the fact that there had been a 25% cost of living increase since 2014.[7]<\/a> The Court did not find that there had been any misconduct in the action, or a complexity, that warranted a higher level of indemnity in the circumstances.<\/p>\n\n\n\n

Although Grimes<\/em> does not overturn McAllister<\/em>, it drastically limits the application of McAllister<\/em> and affirms the use of Schedule C as the appropriate method for indemnification of successful parties engaged in normal litigation.<\/p>\n\n\n\n

Grimes<\/em> has been cited in a number of reported decisions since its release, including:<\/p>\n\n\n\n