A clause said the loser pays every dollar. The court mostly agreed
A corporate trustee has won full indemnity for its legal costs after a mineral owner's failed bid to partially terminate a royalty trust.
The Court of King's Bench of Alberta released its costs decision on July 15, 2026, ordering the losing applicant to cover the trustee's legal bill in full.
The dispute began when a numbered Alberta company, acting as mineral owner, asked the court to declare certain royalty trusts partially terminated under Clause 22 of the governing trust agreements. It also sought direction on a pool of royalties that had been building up because the trustee had lost contact with beneficiaries and could not distribute them.
The court dismissed that application in an earlier decision, 2026 ABKB 255. Computershare Trust Company of Canada, the trustee, then asked to be repaid its full legal costs, pointing to section 7.1 of the supplemental agreement. That clause requires the mineral owner to indemnify the trustee, on a full indemnity basis, for costs tied to claims brought contrary to the trust agreements.
The applicant argued it should not have to pay. It said it had come to court in good faith and for the first time, on questions that mattered not only to itself but to the trustee and to other parties bound by similar agreements. Justice C.M. Jones rejected each of those arguments. While a win for the applicant might have helped mineral owners under comparable agreements, the judge found that was not reason enough to spare it a costs order. He agreed the section 7.1 criteria were met and that the trustee was entitled to indemnification.
For trust and estate professionals, the more useful part of the ruling is what the court said next. Citing earlier Alberta decisions, Justice Jones noted that a costs clause in a contract does not remove the court's power to decide costs, and that such a provision "does not oust the court's jurisdiction to set costs as it sees fit." Full indemnity, in other words, still leaves room for review: the court and its review officer must weigh whether the fees claimed are reasonable rather than harsh, excessive or improper.
With that caveat, the court awarded the trustee full indemnity costs, payable by the applicant and to be assessed by the review officer. If the review officer trims any part of the bill, the trustee may seek the shortfall from the trust property itself on a formal passing of accounts.
The takeaway for fiduciaries and the firms that advise them is straightforward. Indemnity provisions in trust and royalty agreements carry real weight and can leave a losing party facing the full cost of the fight. But they are not a blank cheque, and courts keep the last word on what is reasonable to charge.
