Over the past several decades, successful litigants have routinely argued that Schedule C of the
Alberta Rules of Court does not adequately reflect the true costs of litigation and have sought
enhanced costs awards as a result.

As discussed in our prior publications on costs (see Parts 1, 2, and 3 of our Costs Series), the
Court retains broad discretion in determining an appropriate costs award following a trial or
application. While Schedule C provides a standardized framework for partial indemnification of
legal fees and disbursements, it often fails to capture the full financial burden borne by a litigant
engaged in contested proceedings.

Historically, Alberta courts applied Schedule C in a relatively rigid fashion. However, the Alberta
Court of Appeal’s decision in McAllister v Calgary (City), 2021 ABCA 25 (“McAllister”), marked
a significant shift from that approach.

In McAllister, the trial judge declined the plaintiff’s request for an award representing 40-50% of
his actual legal fees and instead awarded costs under Column 3 of Schedule C in the amount of
$70,294.70. This figure stood in sharp contrast to the plaintiff’s total legal fees of $389,711.78.
On appeal, the Court of Appeal held that Schedule C is only one of several methods available
for assessing costs and cautioned against its routine and uncritical application. The Court
confirmed that trial judges may, in the exercise of their discretion, award 40-50% of reasonably
incurred legal fees, provided that the fees were properly incurred and no aggravating or
mitigating factors are present.

The rationale underlying the Court’s departure from Schedule C in McAllister was its conclusion
that Schedule C did not adequately reflect the reasonable and necessary costs incurred by Mr.
McAllister in the litigation. The Court reaffirmed that the central consideration in deciding
whether to depart from Schedule C remains whether the costs claimed by the successful party
constitute “reasonable costs, reasonably incurred.” A departure from Schedule C must therefore
be justified by exceptional circumstances, such as the complexity of the matter or misconduct by
one of the parties during the litigation process.

Two years later, following in the wake of McAllister, the Alberta Court of Appeal further refined
this analytical framework in Barkwell v McDonald, 2023 ABCA 87 (“Barkwell”). Building upon
the principles articulated in McAllister, the Court reaffirmed that judges retain broad discretion to
award “reasonable and proper costs,” which may be calculated under Schedule C, as a lump
sum, or as a percentage of the legal fees incurred. The decision in Barkwell provided additional
clarity for litigants regarding the framework governing lump sum and percentage-based costs
awards.

Importantly, the Court in Barkwell clarified that the frequently cited 40-50% guideline is not
necessarily tied to the actual legal fees paid by the client. Rather, it reflects what legal costs
would have been reasonably incurred in the circumstances of the case. Although the Court
acknowledged that the prevailing “rule of thumb” suggests that an award of costs should
typically fall within 40-50% of the legal fees incurred by the successful party, it emphasized that
this benchmark must rest on an objective assessment of what fees were reasonable, rather than
what amounts happened to be paid.

The Court also emphasized that proportionality remains the overarching consideration in any
costs award. A party seeking a lump sum or percentage-based award must demonstrate that
the costs claimed are both reasonable and proportionate, having regard to the circumstances of
the case. This assessment must be guided by the factors enumerated in Rules 10.2 and 10.33
of the Alberta Rules of Court, including the importance and complexity of the issues, the nature
and extent of the legal services provided, the conduct of the parties, counsel’s rates, and the
manner in which the legal work was performed. The Court reiterated that success in litigation,
while relevant, cannot justify an excessive or disproportionate award of costs: “success is not a
justification for disproportionate litigation.”

The decision in Barkwell further reinforced the procedural expectation that a draft Bill of Costs
based on Schedule C should be provided, even when a party seeks an elevated or percentage-
based award. Schedule C continues to serve as a foundational reference point that enables the
Court to assess whether the quantum of costs claimed is both reasonable and proportionate. In
Barkwell, the trial judge erred by awarding 50% of the respondent’s legal fees without
undertaking a sufficiently rigorous inquiry into the reasonableness of those fees or engaging
with Schedule C. The Court of Appeal stressed that McAllister does not authorize percentage-
based awards in the absence of a principled and analytical framework.

Conclusion
The decisions in McAllister and Barkwell represent a meaningful evolution in the jurisprudence
governing costs awards in Alberta. While Schedule C remains the starting point for assessing
costs, the courts have shown a growing willingness to depart from its strict parameters where
circumstances justify enhanced compensation. McAllister confirmed the availability of costs
awards representing 40-50% of reasonably incurred legal fees as a general guideline, while
Barkwell clarified the evidentiary and procedural foundations required to support such awards.

Going forward, counsel seeking elevated costs must ensure that their submissions rest on both
compelling arguments are supported with the evidentiary foundation as articulated by the Court
of Appeal. Without adherence to these principles, efforts to obtain enhanced costs are unlikely
to succeed.