The culture shift in the litigation process towards
"proportionality" was front and centre in a recent costs
decision by Mr. Justice Peter Michalyshyn in Sutherland v.
Encana Corporation, 2014 ABQB 601
("Sutherland"). The proportionality principle,
as stated in the important Supreme Court of Canada decision of
Hryniak v. Mauldin, 2014 SCC 7
("Hryniak"), "... means that the best form
for resolving a dispute is not always that with the most
painstaking procedure." Further, in the Alberta Civil
Procedure Handbook 2015, Hryniak is cited for the
following general proposition: Court process should not be
disproportionate (in expense and time) to the nature of the dispute
and the interests involved. That requires a shift in culture. (All
as cited by the Court in Sutherland at para. 58).
In Sutherland, the defendants issued a
Calderbank offer (an offer that can be used with prejudice
after trial for costs consequences) 100 minutes before the start of
the trial. It was rejected and the plaintiffs went on to beat that
offer by a mere $4,273.18 at trial. The plaintiffs argued that a
win was a win and that they should get all of the costs of the
nearly four-week trial. The defendants argued that such a
"small" win did not warrant awarding the plaintiffs their
full costs of trial. The court agreed with the defendants in
finding that a deviation from the usual rule that costs follow the
event was warranted in this case given that the plaintiffs beat the
defendants' position by just over 1% of what was offered. The
trial fee cost of $44,400 exceeded the net gain of the
plaintiffs' win by more than ten times.
In making its decision to reduce the plaintiffs' trial costs
award, the court also considered the parties' respective
efforts to settle short of trial. The plaintiffs were given credit
for pressing for a JDR earlier in the process. The defendants were
given as much credit if not more for their efforts to settle closer
to trial. These efforts included multiple and increasing offers
over the course of the litigation. Further, the defendants'
effort to settle on the eve of trial and suggestion of a brief
settlement adjournment before the start of trial was also
favourably taken into account by the court. Mr. Justice Michalyshyn
indicated that it is rarely if ever "too late" to pursue
settlement. The defendants also relied on Hryniak in its
costs submissions and the Court found those arguments to be
persuasive. Specifically, the court took note of the SCC's
comments that judges must actively manage the legal process in line
with the principles of proportionality. The court reduced the
plaintiffs' trial costs and disbursements by 25% based on the
above principles. In doing so, the court acknowledged that such a
decision may deter meritorious claims from proceeding to trial
however, in this case, that "chill" is outweighed by the
need to address the defendants' liability for a costs claim
that was greatly out of line with the plaintiffs' award
compared to what was offered for settlement on the eve of
This decision by the Alberta Court of Queen's Bench is yet
another in the shift towards active management of the litigation
process by the courts and the encouragement of settlement amongst
parties by attaching monetary consequences for failure to settle
where it makes sense. Failure to seriously consider a settlement
offer and ultimately accept it where the court process is
disproportionate to the "nature of the dispute and the
interests involved" may lead to costs consequences down the
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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