Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff successfully resisted defendant's applications to dismiss for delay and for security for costs

• Significant disparity existed between the parties' costs proposals, differing by a factor of approximately 20

• Court declined to award immediate enhanced costs at a higher indemnity level given the uncertain outcome of the underlying litigation

• McAllister costs principles require more than simply presenting counsel invoices with a percentage multiplier—reasonableness must be demonstrated

• Interlocutory costs awards differ from post-proceeding awards because the eventual successful party remains undetermined

• Plaintiff's formal offer was not considered a genuine offer of compromise as the applications were essentially "all or nothing" in nature

Background of the dispute

This ruling from the Court of King's Bench of Alberta addresses the issue of costs arising from a special chambers application heard on October 2, 2025. The plaintiff, 9955544 Alberta Ltd., brought an action against defendants Cenovus Energy Inc. and Harvard International Resources Ltd., with the matter registered in Calgary. Cenovus Energy Inc. brought two applications: one to dismiss the action for delay pursuant to Rule 4.33, and a second seeking security for costs based on a legal assistant affidavit. Harvard International Resources Ltd. did not participate in these applications. The parties were able to speak to and resolve both applications within the scheduled afternoon session, and when they could not agree on costs, they proceeded by way of brief written submissions rather than booking time in morning chambers.

The costs positions of the parties

The plaintiff, having successfully resisted both of the defendant's applications, sought costs in the amount of $48,751.26, being what it says are 75% of its actual costs based on the principles in McAllister v Calgary (City), 2021 ABCA 25. The defendant proposed that it pay $2,531.50 as the unsuccessful party. As a result, the parties' costs suggestions differed by a factor of approximately 20.

The court's analysis on enhanced costs

Applications Judge J. Farrington noted that while the default rule is that the successful party on an application is typically entitled to costs, the quantum is left to the discretion of the Court. The court referenced Barkwell v McDonald, 2023 ABCA 87, which reminds that a party seeking indemnity based on actual costs incurred must do more than simply present a summation as to its counsel's invoices and apply a percentage multiplier—it must show that the costs are reasonable and proper for the legal task at hand. The court also cited Grimes v Governors of the University of Lethbridge, 2023 ABKB 432, which reminded of the continuing importance of Schedule C. Applying Rule 10.33 factors, the court found: as to complexity, there was nothing particularly complex about these applications; neither party made things more complicated than they needed to be or engaged in misconduct; the applications were certainly important in the sense that they were potentially dispositive of the action; and the plaintiff was wholly successful in resisting the applications.

The distinction between interlocutory and final costs awards

The court expressed reluctance to award immediate enhanced costs at a higher indemnity level when we do not know what the result of the action will be. Cross summary judgement applications were dismissed at an earlier stage in the proceeding, meaning either party could still prevail. The court reasoned that if the plaintiff is unsuccessful in the eventual cause, it would be inappropriate for the plaintiff to have earlier received a significant enhanced costs award when its claim was found to have had no merit—in effect, it would reward the plaintiff for delaying its inevitable loss on the merits.

The ruling and outcome

The court awarded costs in the cause of the action. This means if the plaintiff is successful in the action, the plaintiff is entitled to costs for these two applications calculated in the same fashion and methodology as any other costs that they are awarded by way of success in the proceedings. But if the plaintiff is not successful in the action, the plaintiff will not be entitled to costs of these two applications. In this manner, the plaintiff preserves its potential entitlement to enhanced costs if it otherwise receives enhanced costs in the proceedings, but it is not given a forthwith enhanced costs award which might otherwise not be warranted. For clarity, the moving defendant will not be entitled to any costs for these two applications, even if it is ultimately successful in the action. The court also noted that the plaintiff's formal offer was not the type of offer that would be a genuine offer of compromise triggering costs consequences, as these were all or nothing applications which did not lend themselves to compromise; it appears to have essentially been an offer to the effect that the defendants abandon their applications and the parties carry on. No specific monetary amount was awarded forthwith; the costs determination is deferred to the conclusion of the underlying action.