Executive Summary: Key Legal and Evidentiary Issues

• Justice Douglas R. Mah of the Alberta Court of King's Bench determined the scale and quantum of costs owed to two successful respondents following the dismissal of a pre-judgment attachment application.
   
• Proportionality emerged as the central organizing principle, guiding the court's assessment of whether enhanced costs were warranted.
   
• A&K Tiles & Drywall Ltd. sought 45% of its actual legal costs, while Dhothar Developments Inc. requested party-and-party costs calculated under Schedule C.
   
• Comparisons to a prior injunction case were rejected because that matter involved higher stakes and greater legal complexity.
   
• Disbursements, GST, and specific tariff items were reviewed individually to determine what could be recovered.
   
• No party succeeded in obtaining costs for preparing the written costs submissions themselves.
   

Facts of the case

This costs ruling follows Justice Mah's earlier decision in Pacific West Systems Supply Ltd v A & K Tiles & Drywall Ltd, 2026 ABKB 526. In one action, Pacific West Systems Supply Ltd. (Pac West) sued A&K Tiles & Drywall Ltd. (A&K) and Joga Dhothar (Joga) for a debt of approximately $802,000 arising from the supply of construction materials under a revolving line of credit; A&K was the principal debtor and Joga the guarantor. In a related action, Pac West sued Dhothar Developments Inc. (DDI) for knowing receipt of A&K funds that Pac West alleged should have gone toward paying down A&K's debt. In the underlying decision, Justice Mah dismissed Pac West's application for a pre-judgment Attachment Order under section 17 of the Civil Enforcement Act, which sought to freeze roughly $200,000 in net sale proceeds from a DDI property. The court found that Pac West would likely establish some debt against A&K, though the amount remained undetermined, but was unlikely to succeed against DDI given weak evidence and a possible limitation problem. DDI's offer to hold the disputed funds in trust further removed any risk of dissipation. Following that dismissal, the parties agreed that A&K and DDI, as successful respondents, were entitled to costs but could not agree on the scale or amount.

Policy and legislative provisions at issue

The ruling turned on Alberta's costs framework under the Alberta Rules of Court. Rule 10.31(1) establishes that the purpose of a costs award is to provide reasonable and proper indemnity to a successful party, while Rule 10.31(3) sets out the available scales, including Schedule C tariff amounts, multiples of Schedule C, or a percentage of actual legal costs. Rule 10.33 lists the factors relevant to determining the appropriate scale, including the result of the proceeding, the complexity and volume of the record, and the effort expended. Rule 5.24, addressing written interrogatories in place of continued oral questioning where parties consent, also arose in connection with one of A&K's claimed cost items.

Reasoning and analysis

A&K argued for 45% of its verified actual costs, amounting to $35,395.41 of a $66,150 total, relying on McAllister v Calgary (City), 2021 ABCA 25, and pointing to a comparator case, Southwest Design & Construction Ltd v Janssens, 2024 ABKB 698, involving an injunction application with a dense record and multiple defendants. DDI sought party-and-party costs under Schedule C, Column 3, itemizing specific tariff amounts alongside disbursements for transcripts and filing fees. Pac West countered that costs should be limited to Schedule C amounts only, using Column 4 for A&K and Joga given the $802,000 claim, and Column 3 for DDI given the $200,000 in disputed proceeds, and argued that nothing in the record showed Pac West had acted improperly so as to justify an enhanced scale. Justice Mah agreed that proportionality was the governing concept. He distinguished the Southwest Design comparator, noting that case involved fiduciary duty and confidential information claims of considerably greater factual and legal complexity, with higher stakes for the parties involved. Because A&K faced no actual jeopardy in the attachment application, which was ultimately confined to the $200,000 in DDI's proceeds, the court declined to award A&K 45% of its actual costs. On the disputed Items 5(1) and 5(2), the court found nothing in McAllister restricting these items to questioning on affidavits of records, and allowed them as claimed. The court also allowed A&K and Joga's claims for Item 5(4), covering written interrogatories under Rule 5.24, and Item 5(3), covering counsel's presence at questioning as an interested non-party.

Ruling and overall outcome

Justice Mah ruled that party-and-party costs, rather than an enhanced percentage of actual costs, were proportional and appropriate given the relative complexity of the case and the amount at stake. A&K and Joga were awarded their costs of the application based on Schedule C, single Column 4, for Items 5(1), 5(2), 5(3), 5(4), 7(2), and 8(1), plus disbursements and applicable GST. DDI was awarded its costs based on Schedule C, single Column 3, for Items 5(1), 5(2), 7(2), and 8(1), together with disbursements and GST as claimed in its written costs submission. The decision does not specify a final aggregate dollar amount for either party, as the awards are calculated by reference to Schedule C tariff items rather than a fixed sum. The court declined to recognize any further post-application steps, noting Pac West had not had an opportunity to respond to them, and awarded no costs to either A&K/Joga or DDI for preparing the written costs submissions themselves.