Executive Summary: Key Legal and Evidentiary Issues

• Mid-West filed two separate actions for unpaid invoices under construction contracts that contained identical general conditions including an agreement to arbitrate disputes, prompting the Applicant's successful stay applications under s 8 of the Arbitration Act.

• Enhanced costs were sought by the Applicant at 40% partial indemnity ($46,166.68) based on total legal costs of $113,251.45, which the court found excessive for a half-day special chambers hearing on a preliminary issue.

• Procedural disputes arose over additional pre-hearing briefs filed after referral to special chambers and Mid-West's motion to dismiss the application based on the Applicant's late-filed reply brief under Rules 391 and 395.

• The court held that the conduct of the parties was not blameworthy such that it would attract enhanced costs, noting the ambiguity in Rule 391 regarding additional briefs and the near-impossibility of meeting the filing deadline once the special chambers date was confirmed.

• No new principles of law were involved in the matter, and the Stay Applications did not resolve any of the substantive legal issues between the parties, undermining the justification for enhanced costs.

• Inflation since the tariffs were last updated and procedural complexity justified a 1.5 multiplier on tariff costs, resulting in total costs of $16,694.26 payable to the Applicant.

Background of the dispute

Mid-West Design and Construction Limited commenced two court actions against Inuvialuit Regional Corporation and Inuvialuit Development Corporation Construction Ltd. (collectively, the Applicant) in the Supreme Court of the Northwest Territories. The claims arose from unpaid invoices under two separate construction contracts. The general conditions in each contract were identical and included an agreement to arbitrate disputes. One was a signed contract while the other was unsigned, and each related to a different project with distinct legal issues arising on each. The Applicant responded by bringing applications to stay the court proceedings in favour of arbitration pursuant to s 8 of the Arbitration Act. The Applicant was successful on both Stay Applications, with the courts' decisions reported as 2025 NWTSC 35 and 2025 NWTSC 36.

The costs application and parties' positions

Following its success on the Stay Applications, the Applicant sought enhanced costs. The Applicant's total legal costs for the Stay Applications were $113,251.45, representing 187 total hours billed. The Applicant asserted that a strict application of the tariff would not lead to a just result because it would not meaningfully indemnify the Applicant for the costs incurred, and requested partial indemnity of 40%, being $46,166.68. The Applicant contended that Mid-West created complexity in the Stay Applications by commencing two court actions which they say were not necessary, filing a Claim of Lien that was out of time and was not perfected, filing additional briefs after the matter was referred to special chambers, and alleging that the Applicant had not complied with the Rules in filing their reply brief and seeking a dismissal. Mid-West, on the other hand, argued that the Stay Applications were straightforward chambers applications, that their conduct did not add unnecessary complexity or cost, and that the Applicant's legal costs are not reasonable and should not be used as a benchmark for calculating the costs award. Mid-West asserted that costs in accordance with the Schedule "A" tariff were appropriate.

Conduct of the parties and procedural complexity

The court examined the conduct of both parties carefully. Justice K.L. Taylor found that although the Applicant was successful in the Stay Applications, there was a legal question to be addressed about the applicability of the arbitration clause in these factual circumstances, and therefore could not find that the litigation was frivolous or vexatious. The filing of two separate actions was deemed not unreasonable given that there were two separate contracts relating to different projects with distinct legal issues, one signed and one unsigned. The referral to special chambers was at the request of the Court because there was not enough court time remaining in the day, and any increase in complexity arising from this referral could not be attributed to Mid-West. Rule 391 applies "unless ordered otherwise," and the court found it somewhat ambiguous whether, if briefs are filed in advance of regular chambers, additional briefs are required. Mid-West applied the Rule literally and filed additional briefs, which the court could not find to be blameworthy conduct given the ambiguity arising from the circumstances. Mid-West then sought a dismissal based on the Applicant's late-filed reply brief, which did add some procedural complexity. As pointed out by the Applicant, it was nearly impossible to meet the filing deadline once the special chambers date was confirmed. However, the remedy sought by Mid-West was one that was available to them under Rule 395(2). Ultimately, the relief was denied and the hearing proceeded as scheduled.

Analysis of enhanced costs and comparable case law

The court considered several factors relevant to enhanced costs, including the complexity of the suit, the amount of costs recoverable under the tariff compared to the actual costs incurred, the conduct of the other party or parties, and the importance of the issues raised for both the litigants and the broader community. No new principles of law were involved in the matter and the decision was not legally significant, leading the court to disagree that the matter was of sufficient importance to justify enhanced costs. The court distinguished the cases cited by the Applicant in support of enhanced costs. The McAllister decision, which the Applicant cited for the principle that party-to-party costs should represent partial indemnification of 40-50% of actual costs, was focused on the level of indemnification a successful party to protracted litigation should receive, and in the court's view does not translate directly to interlocutory applications such as this one. McAllister explicitly identifies the tariff as a useful tool in matters such as chambers applications. The Kore Meals case, where enhanced costs were awarded in the amount of $43,805.72, involved the enforceability of an international arbitration agreement and was distinguishable on the facts and complexity. In Ticketops, where all-inclusive costs of $40,000 were awarded, the dispute was governed by both the Ontario Arbitration Act and the International Commercial Arbitration Act and involved an analysis of four different agreements spanning three countries — a significantly more complex matter than the one before this court. By contrast, Mid-West cited several cases where costs were awarded in accordance with tariff amounts, including Azam v Multani Custom Homes Ltd, where the court considered a very similar stay application under s 7 of the Ontario Arbitration Act, called it an "unremarkable motion," described cost claims of $15,553 and $19,720 as "excessive," and ultimately awarded partial indemnity of $3,500 to the successful party.

Tariff calculation and the inflation adjustment

Having concluded that the facts do not support a claim for enhanced costs and that it was more appropriate to apply party-to-party costs, the court turned to calculating the proper measure of costs. The court reviewed the tariff items and removed certain entries from the Applicant's calculation: Item 19 (discovery did not occur), Item 20(a) (cross examination only occurred on the 360 file and should not be claimed on the 361 file), and Item 38(b) (this was a notice of withdrawal, not a court appearance, and the amount should be reduced accordingly). The corrected tariff amount was calculated at $9,790, and with fees, disbursements, and GST the total was $11,799.26. Drawing on the precedent in Blake v Kyikavichik et al, 2025 NWTSC 40, where the court adopted a line of authorities from Alberta and found inflation was a factor that could justify adjusting the tariff and a multiplier of 1.5 was applied, the court accepted that the passage of time since the tariffs have been updated is a valid consideration that could justify an adjustment. The Applicant did not submit evidence about inflation in this case; however, this factor, combined with the procedural complexity in the Stay Applications, justified an upward adjustment to the tariff.

Ruling and outcome

The court ordered that a 1.5 multiplier be applied to the tariff amount for a total of $14,685.00 plus fees and disbursements of $2,009.26. The total costs payable to the Applicant — Inuvialuit Regional Corporation and Inuvialuit Development Corporation Construction Ltd. — were $16,694.26. This amount represents a fraction of the $46,166.68 the Applicant had sought. The judgment was dated February 12, 2026, with a corrigendum issued on February 19, 2026 correcting the listing of counsel on the signature page. Counsel for the Plaintiff was John Evans, and counsel for the Respondents was Lindsay Rowell and Mitchell Folk.