All common party-party costs awards are intentionally well below full indemnity. Full indemnity (“solicitor-and-client”) costs are something higher and different so full indemnity costs proportional to the moderate amount sued over are an oxymoron, like the Swiss Navy. Or small giants.
Yet a recent decision suggests that courts should not give full-indemnity costs which exceed what is proportional to the amount sued over. More curiously, it says that disproportion wipes out a contract between the parties for full-indemnity costs. See Suri Hldg. v. Jung 2022 ABKB 714, JCC 2101 02252 (Oct 27) (¶’s 59-60). The decision even criticizes significant party-party costs, suggesting that they deter the party wishing to sue who is correct in the lawsuit. Yet binding appellate authority in Alberta says the opposite.
The first explicit reason which the Suri decision advances, is that judges have a wide discretion to choose what costs to award in each individual case. “They are not bound by any contractual arrangement between the parties” (¶ 59). That statement is patently wrong, and not supported by the case law, which is almost all to the contrary. (The Queen’s Bench Sully decision in 2021 briefly says contracts about costs do not bind, but cites only two decisions, which both say the opposite.)
The Suri decision also advances another different and somewhat inconsistent proposition. It suggests that when full-indemnity costs would be disproportionate to the amount sued over, that removes the binding effect of any contract about costs, even a contract for full indemnity costs. For that idea, the Suri decision merely cites two Ontario decisions, and one Alberta decision. The Alberta decision is contrary and binding.
There are many more authorities (a number of them binding) contrary to Suri's suggestions. They are found in the Stevenson & Cote Handbook (R. 10.31 n. I.2(a)(v)). Still more are cited in the decision of Wakeling J. in Alta. Treasury Br. v. 1401057 Alta. (#2) 2015 ABQB 548, 21 Alta LR(6th) 253 (nn. 12, 13).
The only Alberta authority I have found for weighing disproportion between contractual costs and the amount sued over, is one brief phrase in a Court of Appeal decision. The phrase is totally obiter, and contrary to the two earlier decisions which it cites. The other authorities which I have found clearly say two things:
a. Contracts as to costs ordinarily bind, and there is no law or public policy contrary to such contracts.
b. The only 3 exceptions to giving full-indemnity costs contracted for, are litigation misconduct by the party seeking such full indemnity, or harshness by starting unnecessary suits, or spending a lot of time on unnecessary, trivial issues. Or where the
losing party seeks to receive full indemnity costs. Some authorities say expressly that mere immoderate amount of costs does not override such a contract
I have found 5 Alberta Court of Appeal decisions supporting what I say above, and the 2015 Alta. Treasury Branch decision by Wakeling J. cites 2 others.
The Suri decision’s poor use of precedent also ignores the basic rule that decisions of the Court of Appeal bind other Alberta courts. This Suri decision was an appeal from a civil Provincial Court decision, and could leave Provincial Court judges (and maybe application judges) in a very embarrassing position.
– Hon. J.E. Côté
