Canada: Awarding Costs Under Section 36 Of The Competition Act: 321665 Alberta Ltd. v. Exxonmobil Canada Ltd.

Last Updated: March 23 2012

Article by James B. Musgrove, Lisa Parliament and Kate MacDonald, articling student


In 321665 Alberta Ltd v ExxonMobil Canada Ltd,1 the Alberta Court of Queen's Bench recently issued the first reported decision seriously considering a claimant's entitlement to costs under section 36 of Canada's Competition Act (the "Act").2

Section 36 grants a civil right of action for any person who has suffered loss or harm as a result of breach of the Act's criminal provisions. To date, there have been only a handful of cases where a claimant has been successful in establishing a section 36 claim outside the context of a settlement. This has resulted in a corresponding lack of jurisprudence interpreting and applying the language of section 36 that allows a successful claimant to recover, in addition to an amount equal to the claimant's proven loss or damage, an amount "not exceeding the full cost to him Of Any Investigation In Connection With The Matter And Of Proceedings Under This Section."3

The Plaintiff in ExxonMobil argued that this language authorized a departure from the default legal principles governing awards of costs and prejudgment interest in Alberta civil litigation. Specifically, the Plaintiff relied on section 36 to seek costs of the proceeding (including legal fees) on a "solicitor-client" full indemnity basis, costs of funding the litigation, investigation costs, and compound interest for the entire period relevant to his damages.

In February 2012, the ExxonMobil Court released its decision on the issues of costs and interest and provided some guidance in this area of competition law. In its decision, the Alberta Court concluded that (i) a section 36 claimant is not entitled to costs of the proceeding on a solicitor-client full indemnity basis and instead standard court costs rules apply; (ii) the cost of a loan to advance the litigation is not compensable; (iii) investigation costs must be established by admissible evidence and do not include a claimant's costs of participating in the litigation; and (iv) the claimant was not entitled to compound interest.

"Full Cost" Of Section 36 Proceedings

In Alberta civil litigation, the standard rule is that litigation costs (including legal fees) may be recoverable on a "party and party" basis (i.e., a successful claimant may be partially indemnified for their costs). In ExxonMobil, however, the Plaintiff argued that the express reference to "full cost" in section 36 meant that this default rule was inapplicable and that the Act contemplated recovery of all costs on a "solicitor-client" full indemnity basis.

The Alberta Court noted there was a little direct precedent to assist the Court in interpreting and applying the statutory entitlement to costs set out in section 36.

Applying basic principles of statutory interpretation, the Court accepted the Defendants' argument that if Canada's Parliament had intended a successful section 36 claimant to recover solicitor-client costs, it could easily have said so. The Court also noted that in most other legal contexts, a reference to recovery of "full cost" has been interpreted as permitting recovery of costs on a party and party basis.4 "Full cost" had not been considered to be synonymous with full indemnity costs except where a special arrangement has clearly been made between the parties, or in expropriation proceedings. Accordingly, the Court concluded that the Plaintiff was entitled to recover only party and party costs pursuant to the standard rules of court.

The Court's interpretation is consistent with the limited judicial authority on section 36 costs awards. In Maritime Travel Inc v Go Travel Direct.Com Inc,5 for example, the Nova Scotia Court of Appeal had also confirmed an award of party and party costs in a section 36 claim.

Costs Of Funding The Litigation

In addition to legal costs, the Plaintiff sought recovery of interest on a loan obtained to fund the litigation. The Court noted that such claims had previously been determined to be non-compensable under Alberta law. The Court concluded that there was no basis for departure from this prior jurisprudence, and rejected this claim in its entirety.

Entitlement To Investigation Costs

The Plaintiff sought almost one million dollars in pre-litigation investigative costs.

The Court stated that pre-litigation investigative costs are not usually recoverable in Alberta civil actions. The Court noted, however, that entitlement to recovery of investigation costs was expressly referenced in section 36. The Court reasoned that Parliament would have known that successful claimants would be entitled to recover court costs, and that the clear reference to "costs of the investigation" must mean something different than, and in addition to, litigation costs.

At the same time, the Court recognized that the limited prior case law supported the position that any claim for investigation costs must be substantiated by admissible evidence. In this case, the Court found the Plaintiff's evidence to be of limited value. The Plaintiff had given sworn evidence of time spent on the investigation; however, his estimates of investigation time were not particularized and were not itemized. Further, the Plaintiff had failed to distinguish between investigation costs and his personal time dealing with his claim.

The Plaintiff was awarded only a small fraction of the claimed costs of the investigation. The Court found the following principles to be applicable to the Plaintiff's claim for investigation costs: (i) investigation costs can be claimed even if no complaint was made to the Competition Bureau; (ii) costs of investigation must relate to actual investigation of the claim, not merely participating in the litigation which is not compensable; (iii) any assessment of costs must recognize that an untrained investigator may take longer in the investigation; (iv) the assessment of costs must be viewed from the perspective of the claimant at the time they undertook the investigation, and not with the benefit of hindsight and full documentary disclosure; and (v) while there must be an evidentiary basis for such a claim, the court did not accept it as fair to apply a rigorous standard of record-keeping in these circumstances.

Calculation Of Interest On Section 36 Damages

In the hearing on costs and interest, the Plaintiff claimed entitlement to compound interest for the entire period of time over which damages at large were awarded.

Alberta law contemplates recovery of simple prejudgment interest on damages, calculated from when the loss actually occurs. The Plaintiff argued that the language of section 36 authorized a claim for compound interest.

The Court rejected the Plaintiff's claim for compound interest. The Court found that there was no express authority in section 36 for such an award. The Court explained that there was limited jurisdiction at common law to award compound interest.7 In any event, the Plaintiff's failure to seek this relief in the pleadings was fatal. The Court awarded simple interest in accordance with the normal rules governing interest claims in civil litigation.


As one of the very few decided cases examining the private remedies for breach of the Act, this case provided a rare opportunity for a court to offer guidance as to recovery of costs in section 36 of the Competition Act. The Court's decision confirms that, with the exception of the treatment of investigation costs, the normal rules for recovery of legal costs and interest generally apply in section 36 proceedings. With respect to the claim for costs of the investigation under section 36, the Court's analysis highlights the importance of proper record-keeping and particularization of incurred costs for such a claim to be fully compensable. Parties may well wish to consider their current evidentiary record, and their position on costs, in light of the Alberta's courts signals in ExxonMobil as to allowable costs recovery under section 36.


1 2012 ABQB 76.

2 Competition Act , RSC 1985, c-34, s 36 (1).

3 Ibid.

4 For example, the Court considered judicial interpretation of "full costs" as meaning "party and party" costs in the context of the BC Distress Act, RSBC 1996, c 403, and the Rent Distress Act, RSBC 1979, c 362, in Commalert Monitors Inc v Maple Ridge Business Centre Ltd , 1995 Carswell BC 2787 at paras 4-6.

5 2009 NSCA 42.

6 The Court applied the test set out by the Supreme Court of Canada in Bank of America Canada v Mutual Trust Co, 2002 SCC 43 at para 55. In the Bank of America case, the Supreme Court of Canada concluded that "[a]n award of compound pre- and post-judgment interest will generally be limited to breach of contract cases where there is evidence that the parties agreed, knew, or should have known, that the money which is the subject of the dispute would bear compound interest as damages. It may be awarded as consequential damages in other cases but there would be the usual requirement of proving that damage component."

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2012 McMillan LLP

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