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PROCEEDINGS - Practice and procedure - Costs

Tuesday, February 07, 2017 @ 9:51 AM  


Appeal by the defendants, the PrimeWest companies and TAQA, from an order of full-indemnity costs payable to the plaintiff, Pillar Resource Services. The underlying litigation arose from the plaintiff's claim for unpaid amounts under a cost-plus construction agreement in respect of a complex project involving a sour gas processing plant. Following a lengthy trial, the trial judge awarded the plaintiff approximately $850,000 for breach of contract. In a separate decision, the plaintiff was awarded full indemnity costs due to misconduct by the defendants. The trial judge cited the cumulative effect of the defendants' misleading requests for further information during pre-litigation negotiations, the defendants' attempts to introduce additional evidence in their post-trial written argument, the additional trial time necessitated by the defendants' refusal to admit facts ultimately not in issue, and unproven allegations of fraud maintained until trial, but not addressed by the defendants at trial. The defendants appealed the costs award.

HELD: Appeal dismissed. The trial judge did not err in ordering the defendants to pay full-indemnity costs. The trial judge appreciated that a full indemnification award was appropriate only in rare and exceptional circumstances. The trial judge's determination that pre-litigation conduct was sufficient to ground an award of full-indemnity costs on its own was not supportable. However, the remaining blameworthy litigation conduct cited by the trial judge was sufficient to support the costs award. Her conclusion did not result from misapplication of the relevant principles and was not plainly wrong. The defendants needlessly wasted the resources of the other parties and the publicly funded court system by forcing the plaintiff to prove its case when the defendants did not intend to contest any part of it. The defendants' litigation strategy lengthened a likely three-day straightforward trial into a 14-day proceeding. The defendants' conduct justified severe costs consequences.

Pillar Resource Services Inc. v PrimeWest Energy Inc., [2017] A.J. No. 41, Alberta Court of Appeal, J.D.B. McDonald, M.B. Bielby and T.W. Wakeling JJ.A., January 20, 2017. Digest No. 3637-002