Jegou v Canadian Natural Resources Ltd, 2021 ABQB 943

Court of Queen’s Bench of Alberta Citation: Jegou v Canadian Natural Resources Ltd , 2021 ABQB 943 Date: 20211125 Docket: 1501 05244 Registry: Calgary Between: Michael Jegou Plaintiff - and - Canadian Natural Resources Ltd. Defendant _______________________________________________________ Reasons for Decision on Costs of the Honourable Mr. Justice G.H. Poelman _______________________________________________________ I. Introduction [ 1 ] This action is a wrongful dismissal claim brought by Mr. Jegou against Canadian Natural Resources Ltd. (“CNRL”).

Just cause was relied upon as a defence, and in my reasons for decision ( 2021 ABQB 401 ) I upheld CNRL’s defence. Provisionally, I assessed damages at $104,808.96. [ 2 ] There remains the issue of costs. CNRL seeks party and party costs of the action based on fifty percent of its solicitors’ bills

(less charges for related professional disciplinary proceedings that were not part of the litigation), plus reasonable disbursements. Mr. Jegou submits there should be no costs or, in the alternative, costs should be limited to a base amount calculated under

Schedule C of the Alberta Rules of Court . II. Entitlement to Costs [ 3 ] CNRL was wholly successful in its defence. Thus, presumptively it is entitled to costs from Mr. Jegou: rule 10.29(1); McAllister v Calgary (City) , 2021 ABCA 25 , paras 21-22 . [ 4 ] Mr. Jegou submits, in support of his argument that he should not pay costs, that he acted reasonably in the litigation and made a meaningful offer to settle for $125,000. These are not unusual circumstances for an unsuccessful party, however, and do not displace the presumptive entitlement to costs.

Successful litigants have a reasonable expectation to be partly compensated in costs from an unsuccessful party, even where that party acted reasonably. [ 5 ] Mr. Jegou also argues that he had reasonable grounds to bring the action because he was summarily dismissed from employment.

I do not say his claim was frivolous, but having some basis for a claim does not insulate a party from costs consequences if it is proved unmeritorious in the result. [ 6 ] I also do not accept the argument that this case involved a novel point of law because of relatively little authority on dismissal for cause of private health care employees. This was not an unusual wrongful dismissal action, even though each case has some unique facts.

At strongest, the legal point was novel in not having been decided in this specific factual context, but the law pointed strongly towards the outcome eventually determined – and in such cases, “a claim of novelty will have little or no impact on the costs awarded against the losing party”: Das v George Weston Limited , 2018 ONCA 1053 , para 245 , quoted in Elder Advocates of Alberta Society v Alberta Health Services , 2021 ABCA 67 , para 31 . [ 7 ] Finally, Mr.

Jegou raises a concern about the “chilling effect” of a cost award where an individual bears heavy costs for an unsuccessful action against a major corporation. In my view, that concern is misplaced when considering cost entitlement. The primary purpose of costs is to provide some compensation to a successful party who incurred expenses to overcome or defend against a position that, in retrospect, was unfounded. As stated in McAllister , para 22 , quoting B(

R) v Children’s Aid Society of Metropolitan Toronto , [1955] 1 S.C.R. 315, at 404-05 , “a successful litigant has a reasonable expectation that his or her costs will be paid by the unsuccessful party. The rationale for this rule is based on the fact that, had the unsuccessful party initially agreed to the position of a successful one, no costs would have been incurred by the successful party.” To the extent there is concern about a “chilling effect,” it comes into play when determining the amount of costs: McAllister , para 38 . [ 8 ] For these reasons, Mr. Jegou must pay costs of the action to CNRL.

III. “Reasonable and Proper Costs” [ 9 ] Long practice has considered party and party costs (that is, costs awarded between parties to litigation) as falling into three broad categories: partial indemnity, often referred to as party and party costs, calculated under the

Schedule C tariff or by some other method; solicitor-client costs; and solicitor and own client costs: Weatherford Canada Partnership v Artemis Kautschuk und Kunstoff- Technik GmbH , 2019 ABCA 292 , paras 11-14 . [ 10 ] CNRL seeks only partial indemnity costs and I agree that is the only proper basis for costs in this case. Therefore, I order payment of “the reasonable and proper costs . . . that a party incurred to participate in an . . . action” under rule 10.31(1). [ 11 ] The rules contemplate a variety of ways to fashion a costs award. When awarding “reasonable and proper costs,” rule 10.31(3) allows any one or more of an order referring to or not referring to

Schedule C, using

Schedule C in a variety of ways (including multiples or different columns than would presumptively apply), awarding all or part of the “reasonable and proper costs” with respect to any part of an action, and awarding a percentage of assessed costs. [ 12 ] Recently, the weight of authority has developed to the point “that party and party costs should normally represent partial indemnification of the successful party at a level approximating 40-50% of actual costs”: McAllister , para 41 , listing applicable authorities.

This trend was endorsed in McAllister , with the court stating that “we see no reason to depart from the 40-50% level of indemnification approved by this Court,” noting that it is a reasonable guideline for measuring “reasonable and proper costs” under rule 10.31(1)(a): para 51. Partial support for this conclusion was drawn from reports of the

Schedule C Committee which indicated that a target level of 40 to 50 percent of lawyers’ charges was a clear and appropriate reference point. The 40 to 50 percent guideline is intended to achieve the balance between fully compensating successful parties and the chilling effect on parties bringing or defending claims: McAllister , para 45 . [ 13 ]

Schedule C remains useful for some purposes, although need not be used at all ( McAllister , para 53 ) and when it is, there must still be consideration of whether it yields an appropriate level of indemnification (paras 58-63). In particular, use of

Schedule C rather than a percentage indemnity may be preferable where there is a significant imbalance between parties and to avoid impeding access to justice: paras 60 and cases cited. In Geophysical Service Incorporated v Falkland Oil and Gas Limited , 2019 ABQB 314 (a case cited in McAllister ), Woolley J. noted the benefits of

Schedule C in some types of cases. It “enhances fairness for one successful litigant to receive costs similar to another successful litigant, rather than having the indemnity vary based on how expensive a lawyer the successful party could afford to hire, or how much work they can afford to ask that lawyer to do. Using

Schedule C creates some equality and fairness across successful litigants, which awarding costs as a percentage of actual fees does not” (para 23, citing authority). [ 14 ] Of the factors rule 10.33(1) lists for consideration in making a cost award, those relevant here are the result of the action and success of either party; the amount claimed and the amount recovered; the importance of the issues; and the complexity of the action. As

noted, CNRL was entirely successful. The statement of claim, filed May 12, 2015, requested damages of $191,475, plus special damages, interest and costs. In closing submissions, Mr. Jegou argued for damages of $144,587, while in my judgment I provisionally set them at $105,000. The issues were of course important to the parties but have little broader significance. It was not a complex action. IV. Offers to Settle [ 15 ] In July 2015, CNRL’s counsel advised Mr. Jegou’s counsel by telephone that CNRL would pay an all-inclusive amount of $44,000 to settle the claim (two months earlier).

CNRL seeks additional costs for this telephone offer as a Calderbank offer. [ 16 ] I decline to consider this very early, informal offer for the purpose of calculating costs. As an oral offer, it was loosely described by counsel and there is no exact statement of what was said. I am unable to determine its exact nature and whether it was reasonable for Mr. Jegou to have expected that it would have cost consequences. [ 17 ] On July 31, 2018, CNRL served a formal offer for $1,000 plus a waiver by CNRL of its costs.

This offer came after close of pleadings, affidavits of records, questioning and setting down of the action for trial. By that time, basic

Schedule C costs of $11,025 (column 2) or $14,850 (column 3) had already been incurred. Thus, the offer represented a total value, when including the $1,000, of at least $12,025 or $15,850 plus disbursements. In my view, it represented the clarity and reasonable compromise required of a formal offer. (Even an offer that includes no more than waiver of costs may meet the test of an element of compromise: Rath v 4th Street Holdings Ltd , 2021 ABQB 201 , para 15 .) [ 18 ] Thus, a calculation of costs under

Schedule C must include the doubling of costs for steps after July 31, 2018, pursuant to rule 4.29. The double-costs effect does not apply if costs are awarded on the basis of an indemnity or a lump sum: rule 4.29(1) and (4). V. Range of Costs [ 19 ] The range of costs put forward in submissions may be summarized as follows: a. CNRL says its legal fees are approximately $325,000, plus disbursements of $5,333.47. It seeks fifty percent of those charges or $162,500 plus the disbursements. Forty percent would be $130,000 plus disbursements. b.

Schedule C costs under column 2 (claims up to and including $200,000) would generate fees of $46,925 with disbursements of $5,311.47. Doubling costs after the formal offer would increase the fees portion would be $71,075. c. The possibility of calculations under column 3 arose during oral submissions. The statement of claim, particularly when unspecified special damages are included, is at or above the upper limit of column 2. My calculations indicate that with doubling for the steps after the formal offer, column 3 costs would be $94,700 in fees. VI.

Conclusion [ 20 ] This is a case where the award of costs should be based on reasonable and proper costs incurred by the defendant, amounting to a partial indemnity. The main factors under rule 10.33(1), in my view, are that the amount claimed was not large and the issues were not complex. [ 21 ] I also take into account that the parties are far from equal in their resources. CNRL, the party entitled to costs, is a large, international corporation. Mr. Jegou, the party who must pay, was initially unemployed and is in a much weaker financial position.

These are factors that McAllister says are proper to take into account: para 60. (It is important to add that impecuniosity is not a justification for no liability in costs: Elder Advocates , para 49.) [ 22 ] Consideration of these factors persuades me that costs based on 40 to 50 percent of CNRL’s legal fees would be excessive. It is too much for this type of case, between these parties. [ 23 ] I conclude that

Schedule C, column 3, doubled for the formal offer, is the proper basis for costs in this case. Thus, Mr. Jegou is liable for costs in the amount of $94,700 plus disbursements of $5,311.47. There will be no costs of the costs hearing. Heard on the 17 th day of November, 2021. Dated at the City of Calgary, Alberta this 25 th day of November, 2021. G.H. Poelman J.C.Q.B.A.

Appearances: Jason Irwin for the Plaintiff Gina Ross for the Defendant