A recent costs decision from the Alberta Court of King’s Bench sets a significant precedent for cost awards in the context of interim injunction applications. In Southwest Design & Construction Ltd v Janssens, 2024 ABKB 698, Field Law’s Matt Vernon secured an award of 45% of the Respondents’ solicitor-client costs - fixed at $92,500 - after they successfully defended against an injunction application that sought to prevent them from bidding on certain construction projects and from soliciting the Applicant’s clients. Although the Southwest decision reinforces there is no presumption of 40-50% indemnity for successful litigants, the contextual factors inherent in a cost assessment may support a higher percentage-based indemnity award for a successful injunction application defense.

Key Principles from the Costs Decision

The Respondents sought an award of 50% of their solicitor - client costs. By contrast, the Applicant, Southwest, contended that costs should either be awarded in the cause, limited to the standard Schedule C tariff or, at most, be granted as a percentage of the Respondent's reasonable solicitor-client costs.

Justice Bourque acknowledged that it was reasonable for Southwest to commence the action and seek the injunction. However, this alone did not justify departing from the presumptive rule found in Rule 10.29, which generally provides that the unsuccessful party pays costs forthwith. Southwest also argued that a percentage indemnity costs award as endorsed in McAllister v Calgary (City), 2021 ABCA 25 was inappropriate, but Justice Bourque distinguished all the cases Southwest relied upon from the circumstances at hand.

Justice Bourque emphasized the discretionary nature of costs under Rule 10.33, which allows the Court to account for the result of the action, complexity of the matters, conduct of the parties, and proportionality of costs incurred amongst other factors. Here, the Respondents were entirely successful in defending against the injunction. Their defence also involved numerous respondents, extensive affidavit evidence, and several days of questioning, all of which added complexity and expense.  

The Court’s Approach to Percentage-Based Costs Awards

Instead of awarding costs based on Schedule C, the Court opted for a percentage-based indemnity, recognizing that Schedule C would have resulted in only about 5% of the Respondents’ actual solicitor-client costs. The decision to award approximately 45% reflects the Court’s acknowledgment of the significant effort and expense required to defend the complex application, as well as the Respondents’ ultimate success in resisting the injunction in its entirety. 

Justice Bourque’s approach is consistent with appellate level guidance in cases like McAllister v Calgary (City), 2021 ABCA 25, which supports percentage-based costs in circumstances where Schedule C fails to adequately compensate a party for reasonable costs incurred. The decision also addressed and distinguished contrary arguments stemming from BFL Canada Risk and Insurance Services Inc v Le, 2024 ABKB 338, among others, affirming that higher percentage-based indemnity awards may be appropriate even for interlocutory applications.

Takeaways for Employers + Litigants in Injunction Applications

This case serves as a powerful reminder for litigants seeking injunctions, particularly in employment and commercial disputes, to carefully weigh the merits and potential expenses of such an application. Where a respondent invests significant resources to defeat an unwarranted injunction, the Southwest decision demonstrates there is potential for a strong and meaningful cost recovery.

For assistance with defending or pursuing injunctions, managing litigation risks, or recovering legal costs, contact Ben Civil or Matt Vernon in Calgary, Joël Michaud in Edmonton, or any member of Field Law's Labour + Employment or Litigation Teams.