PRIVATE ALTERNATE DISPUTE RESOLUTION
Family Law in Alberta: Arbitration Agreements – Solicitor – Client Costs
When parties enter into the arbitration process, they sign an agreement with the arbitrator which forms a legal and binding contract that cannot later be unilaterally terminated by one party. Parties should review the mediation/arbitration in full and be prepared to negotiate the terms, just as with any contract. Our group of Alberta family lawyers at The Calgary Team are here to assist you to navigate these matters.
Areas of Legal Concern in Family Law Arbitration Agreements
3. Solicitor-Client Costs
In both the Court process and in the alternate dispute resolution process, successful parties may be entitled to partial or full indemnification for their legal fees, known as “costs”. In Court proceedings, costs are highly discretionary and based on a variety of factors. Judges often rely upon Schedule C of the Alberta Rules of Court for guidance on the appropriate quantum but are not bound by that Schedule.
The two main types of cost awards are party-and-party costs and solicitor-client costs. Party-and-Party costs indemnify the successful party for only a portion of their legal fees. For example, a contested application in Family Chambers normally attracts a costs award of $675, payable by the losing party to the winner.
By contrast, solicitor-client costs provides some indemnification for legal fees by one party to the other. Courts have ruled that a departure from party-party costs should only occur in rare and exceptional circumstances as punishment for misconduct. Some of reasons that Courts have given for awarding solicitor-client costs were set out in the recent case of JWS v CJS, 2021 ABQB 411, and include:
1. Cases where one individual engaged in blameworthiness in the conduct of the litigation;
2. Cases where anything less than full indemnification would be an injustice;
3. Cases where there is evidence that the plaintiff did something to hinder, delay or confuse the litigation, or where a misconducting party was “contemptuous” of the aggrieved party and forced them to exhaust legal proceedings to obtain that which was obviously theirs;
4. Cases where a defendant attempt to delay, deceive and defeat justice, or required the plaintiff to prove facts that should have been admitted, thus prolonging the trial, or concealed material documents from the plaintiffs;
5. Cases where the defendants were guilty of positive misconduct;
6. Cases where defendants acted fraudulently and in breach of trust;
7. Cases where the defendants’ engaged in fraudulent conduct; and
8. Cases where parties have made clearly untrue or scandalous allegations
Costs awarded during arbitration may be either discretionary or contractual. Section 53 of the Arbitration Act (Alberta) indicates that the arbitrator may award costs on a solicitor-and-client basis, party-and-party basis or on any other basis, with party-and-party being the default if no basis is specified in the mediation/arbitration agreement. Parties should be aware that when costs are addressed in mediation/arbitration agreements, solicitor-client costs are most often the default. Although this is intended to be a deterrent towards high conflict parties, it effectively attempts to fetter the discretion of the Court if there is an appeal.
When reviewing a mediation/arbitration agreement, parties should be examining the following sections closely:
- Costs of enforcement of award
As arbitration is a private process, parties must take an additional step after an arbitration award is made in order to turn the award into a court order, either by consent or upon application to the court. In the event that either party must file a court application to enforce the award, the standard mediation/arbitration agreement template provides that they will their receive solicitor-client costs of that application.
- Costs of appeal
Another area in the standard mediation/arbitration agreement template that addresses costs is the costs of appeal. In the event that a party files an appeal of an arbitration award to the Court of King’s Bench and is not successful, the agreement may automatically award solicitor-client costs to the other party.
In the recent case of Suri Holdings Inc v Jung, 2022 ABKB 714, the Appellant’s appeal of a Provincial Court judgment that failed to include solicitor-client costs was dismissed, although solicitor-client costs were provided for in the lease agreement between the parties. In upholding the lower court’s discretionary costs award, the court stated that trial courts have wide discretion in choosing how costs are awarded and are not bound by any contractual arrangement between the parties.
The decision in Suri Holdings Inc. makes it clear that although the existence of a contractual term governing costs in a mediation/arbitration agreement will be considered by the Court, it does not oust the Court’s discretionary control over the award of costs during the litigation process.
If you are looking for a family lawyer in Calgary to discuss an arbitration agreement you may have already entered into, or one that you are considering entering into or want to discuss any other issues relating to family law in Alberta, contact our Alberta law firm, The Calgary Legal Team, for a free consultation.