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A recent decision says that impecuniosity is not a basis to refuse costs, but is a relevant consideration in determining “quantum or amount of costs”. For the latter, it cites only four cases, three of which are Alberta Queen’s Bench decisions, one from 2005 and two from 2019. And it cites an Ontario Court of Justice (Provincial Court) decision.

The passages cited from the Alberta decisions are very brief and not on point. All three are about whether to use Schedule C or to use a percentage of full indemnify costs.

The Ontario decision cited is on point. It cites a 2003 decision of the Ontario Court of Appeal (albeit using a different form of name hard to look up). It says that the Ontario Rules of Court govern. Furthermore, the current Alberta Rules of Court give exact long lists of factors relevant to choosing a level or amount of costs. None of those have anything to do with financial situation or ability to pay. The Ontario Court of Appeal decision emphasized that was about a child support suit, so that costs might reduce the amount of money spent on the child, who of course is never a litigant.

Despite this skimpy citation of authority in this recent Alberta decision, there is a good deal of Alberta case law on point. Some of it is binding Court of Appeal decisions.

Having or lacking funds is irrelevant to party-party costs: D.J.H. v. L.P. 1987 ABCA 200, 81 AR 276 (¶ 4); Canadian Centre for Bio-Ethical Reform v. Grande Prairie (City) (#2) 2018 ABCA 254, [2018] 10 WWR 116 (¶ 5); cf. M.M.P. v. T.W.Z. 2023 ABKB 355 (¶ʼs 23-24).

Alberta case law makes it clear that inability to pay costs is irrelevant as to whether to award costs against a party. (A host of Alberta decisions say that, and the recent decision does not dispute that.) If lack of funds is irrelevant to paying any costs, it is difficult to see why it would become a significant factor in setting the amount. It is clear law that costs are usually in no sense a punishment or penalty for misconduct. It is trite law that one of the most important reasons to award party-party costs is to indemnify the party who was right all along in the lawsuit: McCargar v. Métis Settlements Gen. Council 2025 ABCA 33 (one JA Feb 4) (¶ʼs 47-49). And to deter excessive or undesirable litigation: Canadian Centre for Bio-Ethical Reform v. Grande Prairie, supra. To deny costs, or most costs, to a party who was right all along, is to deny much of what is justly due to him or her. That is because if no party-party costs are payable, or only a small amount is payable, then the net recovery to the winner after paying his or her lawyer, may be very small or even negative. Besides, Alberta party-party costs were designed to yield only 40% to 50% of the winner’s legal bills. In actual practice, given fixed amounts in Schedule C and constant inflation, most often full party-party costs yield a good deal less than 50%. So expenses the winner alone shoulders are a good deal over 50%. If ability to pay were to be weighed, then how sensible had been the conduct of the losing party throughout the suit, would have to be assessed.

Some of the Alberta decisions point out that impecunious people above anyone else, should not engage in dubious litigation, should run litigation as simply as possible on clear topics, and try hard to settle out of court. That is especially true of a plaintiff. Every plaintiff starts the lawsuit, and can get out of it at any time. See McCargar v. Métis Settlements, supra; Trinity Christian School Assn. v. Schienbein 2021 ABQB 218, 29 Alta LR (7th) 62 (¶ʼs 37-39).

– Hon. J.E. Côté

NOMINAL COSTS?