One of the most important factors that I tell my clients to consider before pursuing any type of litigation is the cost involved in doing so. In the past, when this discussion has come up, I have observed numerous clients who dismiss this factor without proper consideration because many believe that if they are successful, the other party is required to reimburse them all the costs incurred in pursuing the litigation. This is only partially true and anyone considering legal proceedings should be aware of some general principles about costs awards.
The general rule is that that the successful party is entitled to their costs; however, a costs award is always in the discretion of the court. Simply put, just because your claim is wholly or partially successful does not mean that a judge will automatically grant you costs.
There are many factors that judges consider when deciding whether or not to grant a costs award. Some of those factors include: the result in the proceedings (who was successful), the amounts claimed and recovered, the importance of the issues, the complexity of the proceedings, the conduct of any party tending to shorten or unnecessarily lengthen the proceeding; a party’s refusal to admit anything that should have been admitted, and whether any step was improper, vexatious or unnecessary.
The second thing to be aware of is: Even when a judge does grant a costs award, it is rare that the amount of the award will actually reimburse you for all your out-of-pocket legal fees. In most cases, courts award costs on what is called a party-party basis and this award is only provides partial indemnity. In Alberta, judges use a schedule in the Alberta Rules of Court which outlines pre-determined amounts that can be recovered for each step taken in the proceedings. These amounts increase in accordance with the amount you are claiming; however, these amounts are typically only a fraction of what your legal fees actually are. In rare and exceptional cases, a judge will grant costs on a solicitor-client basis which results in full indemnity of your costs. This type of award may be granted when a party on the other side behaved in fraudulent or outrageous conduct before or during the proceedings.
The bottom line is that if you are thinking about pursuing legal proceedings, you need to seriously consider how much it will cost you and should never assume that, at the end of day, all of your costs will be recovered.
If you would like to discuss any of the things you should consider before pursuing litigation or any other general litigation matter, please contact myself at (403)488-8200 or any one of our other experienced lawyers in our Medicine Hat, Lethbridge, Fort McMurray, or Brooks offices.