King v MacDonald, 2023 ABKB 407

Court of King’s Bench of Alberta Citation: King v MacDonald, 2023 ABKB 407 Date: 20230707 Docket: 4810 027536 Registry: Red Deer Between: Kassie Carol Elsie King Applicant/Respondent by Cross-Application - and - Nolan James MacDonald Respondent/Applicant by Cross-Application _______________________________________________________ Decision on Costs of the Honourable Justice Eleanor J. Funk _______________________________________________________ Introduction [ 1 ] The parties are engaged in a high-conflict, highly litigious family dispute.

In addition to the applications that form the basis of this decision, there has been a parenting application, an Emergency Protection Order application, Questioning, a JDR at the Court of Appeal, and an appeal of a Matrimonial Property Judgment. [ 2 ] The applications before me involved Ms. King’s application for interim child and spousal support and Mr. MacDonald’s cross application, in which he sought child support and to have Ms. King’s spousal support claim dismissed. A significant issue was a determination of Mr. MacDonald’s income.

[ 3 ] I found Mr. MacDonald failed to provide complete and reliable income information. Using the limited information I had, I imputed his income. I found Ms. King was entitled to spousal support. Because the parties share parenting of their two children, they both have child support obligations, based on the incomes that I set. I awarded costs in favour of Ms. King in the amount of 75% of her actual legal costs: King v MacDonald, 2022 ABKB 736 ; King v MacDonald , 2022 ABKB 849 . [ 4 ] After some delay, I now have the parties’ costs submissions, together with Ms. King’s Bill of Costs.

The parties are far apart on what Ms. King’s legal costs should be. In this decision, I will determine Ms. King’s “reasonable and proper costs”, 75% of which Mr. MacDonald will be required to pay. Relevant Law [ 5 ] As a general principle, a successful party is entitled to costs against the unsuccessful party, subject to the Court’s general discretion: Rule 10.29.

A judge’s discretion must be exercised judicially and in accordance with established principles and the Rules of Court : McAllister v Calgary (City) , 2021 ABCA 25 at para 18 . [ 6 ] While McAllister confirms that the discretion of the court to award costs extends to awarding a percentage of the solicitor and client costs incurred by the successful party, that does not mean that the successful party can simply assert the quantum of fees that were charged by counsel and paid by the client.

A detailed analysis is required to determine “reasonable and proper costs”: Barkwell v McDonald, 2023 ABCA 87 at para 55 . [ 7 ] The Court in Barkwell recognized the difference between solicitor and own client costs and solicitor and client costs. The former relates to those costs that counsel can charge to the client, and that the client is required to pay as a matter of contract. The latter represents the costs that a client should reasonably have incurred given the issues .

It is rarely appropriate to award solicitor and own client costs: Barkwell at paras 56 and 58 ; citing Luft v Taylor, Zinkhofer & Conway , 2017 ABCA 228 at paras 77-78 . [ 8 ] A successful party cannot simply claim an amount for fees if they are disproportionate to the issues and the amounts involved. An important feature of the tariff of fees included in

Schedule C is that it does not measure how much was paid but, rather, gives a rough measure of how much should have been incurred : Barkwell , at para 57 . [ 9 ] When the court decides to make a costs award based on a percentage of solicitor and client costs, the analysis must go further than simply awarding a percentage of the total fees charged to the client. The question is not just whether the costs are reasonable as between the lawyer and the successful party, but also whether the quantum of costs represents an amount that the unsuccessful party should reasonably be expected to pay.

This involves a detailed analysis of all the factors that go into assessing solicitors’ fees: McAllister , at paras 46, 48 ; Barkwell , at para 59 . [ 10 ] In other words, the issue is not simply how much the successful party spent, but how much that party can reasonably expect the other party to pay. The rates and amount of time spent must be justified. The amount actually charged to the client is not determinative, and not of dominant importance: Sutherland v Sutherland , 2023 ABCA 185 at para 4 . Background [ 11 ] Ms. King filed her application for interim child and spousal support on February 16, 2022.

On March 4 th , she filed an application for an order imputing Mr. MacDonald’s income. On April 4 th , Mr. MacDonald filed his cross application for child support. He also sought an order seeking to impute Ms. King’s income. Those applications came before me in a Special Chambers hearing on August 9, 2022. [ 12 ] On November 4 th , I released my reasons in relation to these applications. In those reasons, I invited the parties to make costs submissions within 30 days. In response to that invitation, Counsel for Ms.

King sought enhanced costs equivalent to triple the Column C tariff as follows: • “Commencement documents, affidavits, pleadings and related documents and amendments” in relation to the filing of two affidavits: $1,350/affidavit, enhanced to $8,100. • “Preparation for questioning, the equivalent of a ½ day attendance fee”: $675, enhanced to $2,025. • “First ½ day or portion of it for attendance for questioning”: $675, enhanced to $2,025. • “Applications when a brief is required or allowed by the Court, including preparation of confirming letters required for a Family Law Special Chambers”: $1,350, enhanced to $4,050. • “Review of opposite party documents, the equivalent of a ½ day attendance fee”: $3,500, representing the 10 hours spent reviewing the 800 pages of financial documents disclosed shortly before the Special Chambers hearing. [ 13 ] In total, Ms.

King sought costs in the amount of $19,700 plus GST. [ 14 ] Mr. MacDonald argued that he was the successful party and sought costs in accordance with

Schedule C as follows: • Interim application: $675. • Reply affidavit: $1,350. • Concise letter: $1,350.

• Update affidavit: $1,350 • Review documents: $650. • Disbursements: $500. • Special Chambers application: $675. [ 15 ] In total, Mr. MacDonald sought costs in the amount of $6,550, inclusive of GST. [ 16 ] Given the parties’ disagreement about who was successful and, accordingly, entitled to costs, on December 16 th , I released my Endorsement on Costs, in which I found Ms. King was the successful party. I additionally found that she was entitled to enhanced costs and ordered Mr. MacDonald to pay 75% of Ms. King’s actual costs incurred in these applications.

I invited the parties to address me in the event of a dispute over the quantum of those costs. [ 17 ] In response to this Endorsement, Counsel for Ms. King provided Counsel for Mr. MacDonald with a Bill of Costs that totalled $21,673 (75% of which would be $16,254.75). This Bill did not include any descriptions of the costs incurred and did not include any receipts or other supporting documents. It was simply a listing of statements of account from January of 2022 to September of 2022. [ 18 ] Counsel for Mr.

MacDonald objected to the quantum claimed on two bases: 1) the amounts claimed were excessive for a half- day Special Chambers application and 2) the lack of supporting documents to justify the amounts claimed. He suggested that a reasonable fee for the work performed would be $5,940, 75% of which would be $4,550. [ 19 ] I directed Counsel for Ms. King to provide an itemized Bill of Costs and invited the parties to make further submissions based on that Bill.

In the itemized Bill, the total costs claimed were $19,613.01, more than $2,000 less than the original Bill. 75% of the new Bill would be $14,709.75. [ 20 ] Mr. MacDonald continues to dispute the amount of costs claimed. He alleges many of the items in the Bill of Costs do not relate to the applications that were before me. He further alleges that Counsel for Ms. King deliberately tried to mislead the Court by submitting an original Bill of Costs that was more than $2,000 greater than the itemized Bill. Analysis a. Should Ms. King’s costs award be reduced for the alleged inflated costs? [ 21 ] Upon receipt of Ms.

King’s itemized Bill of Costs, and noting these costs were more than $2,000 less than in the original Bill, Mr. MacDonald alleged Ms. King was “not being forthcoming with respect to her invoices and a reduction of over 10% when she is forced to actually produce her accounts is bad faith, underhanded, and deserving of sanction”. Mr. MacDonald made this allegation without first seeking an explanation from Ms. King about the different amounts claimed in the two Bills of Costs. [ 22 ] In her submissions to me, Counsel for Ms. King explained there were inadvertent errors in their first Bill, in which Ms.

King was charged duplicate fees on a few occasions. These mistakes were due to errors in Counsel’s accounting software. Upon correcting those errors, the new Bill of Costs was less than the original Bill. Counsel further noted that there are several matters ongoing involving these parties, which has made matters “extremely convoluted and difficult to sort through”. [ 23 ] I have no reason to doubt or question Ms. King’s explanation. Accordingly, I decline to deduct from her Bill of Costs any amount as a sanction for what Mr. MacDonald has alleged are inflated costs. b. Should Ms.

King receive a costs award in the amount of 75% of her total Bill of Costs? [ 24 ] Ms. King seeks costs in the amount of 75% of her total Bill of Costs. When I examine the itemized Bill, I note that it includes items such as: review of correspondence received, call to client, review and catalogue emails, conducting legal research, telephone calls, emails, creation of physical Financials and Questioning Trial binders, and drafting and reviewing correspondence. In other words, the itemized Bill represents Ms.

King’s solicitor and own client costs. [ 25 ] In Barkwell , the trial judge awarded costs equal to 50% of the face value of the successful party’s claimed legal fees, without further analysis and without a draft Bill of Costs based on

Schedule C. The Court of Appeal concluded this approach was not sanctioned by McAllister: Barkwell , at para 61 . [ 26 ] From this starting point, it would be an error for me to award costs simply based on 75% of Ms. King’s total Bill of Costs. Instead, I must examine not only whether the costs claimed between Counsel and Ms. King are reasonable, but also whether the amount claimed represents an amount that Mr. MacDonald should reasonably be expected to pay: Barkwell , at para 59 ; McAllister at paras 46 and 48 . c.

What are “reasonable and proper costs” in these circumstances? [ 27 ] The parties have been involved in other litigation, in addition to the applications before me. Because of this, it is difficult for me to determine, on the face of Ms. King’s Bill, which costs were related to these applications, and which might be related to other court matters. [ 28 ] The first items in Ms. King’s Bill of Costs arise in early January 2022, about 6 weeks before any application was filed in relation to the matters before me. Mr.

MacDonald claims the majority of the costs claimed in January relate to reviewing financials, reviewing undertakings from Questioning, and updating what appears to be a trial binder. From the January items, Mr. MacDonald concedes only two are directly related to these matters:

• January 5, 2022: “drafting affidavit” - $1,320.00. • January 12, 2022: “drafting of pleadings – affidavit for child support” - $540.00. [ 29 ] Ms. King states that the “review of undertakings” included in the January 2022 statement of account was in relation to Mr. MacDonald’s financial disclosure, which was relevant to the applications before me. [ 30 ] Determining Mr. MacDonald’s income has been a significant and contentious issue.

Through his affidavits, answers to undertakings, and financial disclosure provided shortly before the applications before me, I found that he failed to provide complete and reliable financial disclosure. Against this backdrop, I accept that the following item from the January 2022 Bill of Costs is reasonably related to the matters before me: • January 9, 2022: “review of documents; financials of Nolan” - $150.00. [ 31 ] I decline to include the remaining items from the January 2022 Bill.

These items deal with correspondence and other communications, conducting unspecified legal research, and preparation of trial binders. To my mind, these items fall within the category of solicitor and own client costs that the Court of Appeal discussed in Barkwell , and do not form part of the costs that Mr. MacDonald should reasonably be expected to pay to Ms. King. [ 32 ] From Ms. King’s February itemized Bill, Mr.

MacDonald submits only the following costs relate to these applications: • February 16, 2022: “put together exhibits prepare for filing” - $150 (reduced by half from the $300 claimed, as a portion of this related to the Court of Appeal matter). • February 16, 2022: “file affidavit, letter to court” - $100. • February 18, 2022: “call to courthouse, service of documents” - $80. • February 22, 2022: “emails to and from counsel, adjournment” - $100. [ 33 ] The February Bill includes: review of correspondence and undertakings, updating a trial binder, review of pleadings (before Mr.

MacDonald filed any pleadings in these applications), drafting a formal offer to settle, and preparing a freeze order. Ms. King made no formal offer to settle and did not apply for a freeze order. [ 34 ] As with the January Bill of Costs, I decline to include any of the remaining items from the February Bill as they either do not appear to relate to the applications before me or otherwise fall into the category of solicitor and own client costs. [ 35 ] Mr. MacDonald acknowledges that the entirety of the March Bill of Costs amount of $3,475 relates to these matters.

When I review the items claimed in this Bill, I come to the same conclusion. [ 36 ] The next itemized Bill of Costs is from April of 2022. Mr. MacDonald states there was very little activity involving these applications during this month. He filed his response and cross application in April and concedes that review of those materials is properly claimed. He states there was no correspondence between counsel for part of the time claimed in the Bill. A parenting application was heard in May, and many items included in the April Bill must relate to that application. Mr.

MacDonald submits only the following relate to these applications: • April 4, 2022: phone call - $35. • April 4, 2022: phone call - $70. • April 4, 2022: review of pleadings from opposing counsel - $140. • April 4, 2022: phone call - $140. • April 4, 2022: email - $70. • April 8, 2022: double check filing deadlines cross app - $70. • April 11, 2022: draft letter - $175. • April 13, 2022: review correspondence received - $105. • April 14, 2022: correspondence, review orders - $175. [ 37 ] I decline to include any additional items from the April Bill of Costs beyond those that Mr. MacDonald identified.

Several items in this Bill relate to phone calls and other correspondence and reviewing a digital trial binder. There is insufficient detail provided in the Bill to allow me to determine if these items relate to the applications before me. These also appear to be costs that would fall in the category of solicitor and own client costs. [ 38 ] For the May 2022 Bill of Costs, Mr. MacDonald acknowledges that one item relates to these applications: • May 9, 2022: drafting of pleadings, confirming letter - $1,225. [ 39 ] Mr.

MacDonald submits the remaining items relate to the parenting application that was heard on May 18, 2022.

[ 40 ] I decline to include any additional items from the May Bill beyond those Mr. MacDonald identified. When I review the Bill, I note it includes: review of file, review of pleadings from opposing counsel, court rejection, orders, meet with client, updating the digital binder, and correspondence. These are matters that appear to either be unrelated to this file or are otherwise in the category of solicitor and own client costs for which Mr. MacDonald should not be responsible. [ 41 ] For the June 2022 Bill of Costs, Mr.

MacDonald submits the entirety of the entries relate to the parenting application except for: • June 30, 2022: resubmission of orders, call to courthouse - $175.00. • June 30, 2022: draft letter to opposing counsel - $175.00. [ 42 ] As with the May Bill, I decline to include any of the June entries beyond those that Mr. MacDonald has acknowledged. In this Bill of Costs, Counsel included: file review status of orders, correspondence, and trial binder. There is insufficient detail to allow me to conclude if these items relate to the applications before me.

These are also expenses in the category of solicitor and own client costs, for which Mr. MacDonald should not be expected to pay. [ 43 ] Mr. MacDonald acknowledges the total amount of $2,430 claimed in August of 2022 relates to these matters, as the Special Chambers hearing was heard that month. He further acknowledges that the amount of $560 claimed in September relates to these applications. Finally, Mr. MacDonald takes no issue with the non-taxable disbursements claimed in the amount of $307.73. Conclusion [ 44 ] For the reasons I have explained, I set Ms.

King’s costs for the purposes of these applications as follows: 1) January 2022 - $2,010. 2) February 2022 - $430. 3) March 2022 - $3,475. 4) April 2022 - $980. 5) May 2022 - $1,225. 6) June 2022 - $350. 7) August 2022 - $2,430. 8) September 2022 - $560. 9) GST - $573. 10) Non taxable disbursements - $307.73. 11) Total - $12,340.73 (75% of which is $9,255.55). [ 45 ] The Court in McAllister discussed the general rule that costs are intended to partially indemnify a successful litigant of 40- 50% of actual costs. The Court went on to explain that this level of indemnification was the objective of the

Schedule C Committee, whose mandate was to develop amendments to

Schedule C. The Committee indicated that the “target” level of indemnification of 40- 50%, reflected in

Schedule C, would provide a clear reference point and guidance to litigants with respect to an appropriate amount of indemnification: McAllister , at paras 41-44 . [ 46 ] I note the fees that I have set here are roughly double the

Schedule C tariff amounts that Counsel provided to me. When I consider the goal of

Schedule C, while not an accurate yardstick, to target 40-50% indemnification, together with my review of Ms. King’s actual Bill of Costs, I am satisfied that the amounts set here are “reasonable and proper costs” for the applications that were before me. [ 47 ] Based on these calculations, and pursuant to my earlier order in which I directed Mr. MacDonald to pay Ms. King 75% of her costs in relation to these applications, I now direct Mr. MacDonald to pay costs in the amount of $9,255.55 , payable forthwith. Heard on the 9 th day of August 2022. Dated at the City of Red Deer, Alberta this 7 th day of July 2023 .

Eleanor J. Funk J.C.K.B.A. Appearances: Julia R. Ibanescu for the Applicant/Respondent by Cross-Application David M. Boris for the Respondent/Applicant by Cross-Application