Executive Summary: Key Legal and Evidentiary Issues

• Whether the Independent Contractor Agreement (ICA) between the parties entitled Yegpro Realty Ltd. to solicitor-and-own-client, full-indemnity costs.
   
• Interpretation of the phrase "reasonable legal fees" in para 5(c) of the ICA was central to determining the applicable costs scale.
   
• Rule 10.42 of the Alberta Rules of Court, which caps costs for actions within Court of Justice (COJ) jurisdiction, required consideration given the low dollar value of the claim.
   
• Ms. Dhillon's conduct during litigation, including refusal of Calderbank settlement offers and alleged obstruction, was assessed as a factor affecting costs.
   
• Proportionality between the costs sought and the value of the judgment was weighed against the principle of indemnifying the successful party.
   
• Responsibility for the transfer of the action from the COJ to the Court of King's Bench, and its effect on the applicable costs framework, was also disputed.
   

Facts of the case

This costs endorsement follows Justice Douglas R. Mah's earlier decision in Yegpro Realty Ltd v Dhillon, 2026 ABKB 438 (the Decision), in which Yegpro Realty Ltd. (YegPro) succeeded against its former independent contractor, Kirandeep Dhillon. After the Decision was issued, the parties could not agree on the costs payable by Ms. Dhillon to YegPro, and written submissions were made in accordance with para 84 of the Decision. YegPro sought costs on a solicitor-and-own-client, full-indemnity basis, pointing to para 76 of the Decision, YegPro's Calderbank settlement offers that Ms. Dhillon refused, and conduct by Ms. Dhillon that YegPro characterized as obstructive, including refusing a Streamlined Trial, refusing to admit facts or exhibits, and raising a late jurisdictional challenge. Ms. Dhillon responded that the ICA did not provide for solicitor-client costs on enforcement, that she had recovered an unpaid commission of $1,400 through her counterclaim, that she had been prepared to proceed in the COJ before that court transferred the matter to King's Bench on its own motion, and that a large costs order would be prejudicial to her as an individual. She also argued that Rule 10.42 capped the costs recoverable given the claim's value.

Policy and legislative provisions at issue

Central to the dispute was para 5(c) of the ICA, which provided that Ms. Dhillon must pay "any and all costs including court costs, litigation expenses and reasonable lawyers' fees" related to collection of amounts owing under the agreement. YegPro argued this language, combined with the Court's earlier comment at para 76 of the Decision, supported an award of solicitor-client costs. The Court also considered Rule 10.29(1), under which a successful party is presumptively entitled to costs, and Rule 10.33, which lists factors relevant to a costs award, including result, complexity, and the conduct of the parties. Rule 10.42 was also directly at issue: it limits costs in King's Bench actions falling within COJ jurisdiction to 75% of Column 1 of Schedule C for steps up to judgment, and 100% of Column 1 for post-judgment steps, unless the Court orders otherwise.

Reasoning and analysis

The Court clarified that its earlier comment at para 76 of the Decision concerned legal fees YegPro incurred dealing with the Canada Revenue Agency under the ICA's indemnity clause, not litigation costs against Ms. Dhillon under para 5(c), and that the two engaged different analyses. Drawing on Manson Insulation Products Ltd v Crossroads C & I Distributors, 2019 ABQB 684, and West Edmonton Mall Ltd v McDonald's Restaurants of Canada Ltd, 1995 ABCA 503, the Court found the wording of para 5(c) functionally similar to phrases considered in those cases and concluded it was not clear enough to sustain an award of solicitor-client costs. Applying a plain and ordinary reading, the Court held that "reasonable lawyers' fees" in para 5(c) meant party-and-party costs assessable under the Rules of Court, not full indemnity. Turning to other factors, the Court accepted that Ms. Dhillon's refusal of multiple Calderbank offers justified some enhancement of costs, but found her litigation conduct did not rise to the level of reprehensible, scandalous, or outrageous conduct required for solicitor-client costs, citing Goldstick Estates (Re), 2019 ABCA 508. The Court noted Ms. Dhillon's recovery of her $1,400 counterclaim was conceded by YegPro from the outset and did not amount to mixed success. While the COJ transferred the matter to King's Bench on its own motion, the Court found this occurred because of a defence Ms. Dhillon raised that ultimately proved immaterial, warranting some effect on costs. The Court also observed that YegPro's requested full-indemnity fees represented roughly 130% of the judgment's value, engaging the proportionality principle underlying Rule 10.42. The Court found Rule 10.42 applicable but exercised discretion to deviate from its guideline percentages, given the unusual circumstance that YegPro had commenced its action in the COJ and only ended up in King's Bench involuntarily.

Ruling and overall outcome

The Court awarded costs to YegPro, the successful party, structured as follows: costs for steps taken in the COJ under the COJ Tariff; costs for steps taken in King's Bench up to and including trial at 75% multiplied by 1.5 of Column 1 of Schedule C; costs for post-judgment steps in King's Bench at 100% multiplied by 1.5 of Column 1 of Schedule C; and actual disbursements plus applicable GST. The 1.5x enhancement was applied specifically to reflect Ms. Dhillon's rejection of YegPro's Calderbank offers. The decision does not set out a fixed total dollar figure for the costs award — the amount is to be calculated according to the tariff-based formula described above, with any continuing disagreement over the amount referenced at para 76 of the underlying Decision to be resolved by the Assessment Officer.