1995]
L. FRIEDLANDER – COSTS
Costs and the Public Interest Litigant
Lara Friedlander*
With its decisions in Thorson, MacNeil, Bor-
owski, and Finlay, the Supreme Court of Canada ush-
ered in a new period of liberalized standing rules.
These cases, known collectively as the “standing
quartet”, expanded the categories of parties with a
right to challenge a law beyond persons with a strictly
personal or private interest. This development has
provided an impetus for litigation in the public inter-
est. The author argues, however, that while standing
rules have been relaxed, costs rules remain inflexible.
This rigidity is the most significant practical barrier to
those who, in the public interest, seek to challenge
legislation.
The American system, which represents a “no-
way” costs rule, with each side paying its own costs,
and the English system of “costs-in-the-cause”,
in
which the losing party pays most of the costs of the
winning party, are contrasted with the prevailing Ca-
nadian costs regime. The Canadian system is based on
a partial indemnity of the winner by the loser accord-
ing to a tariff of costs. The Canadian “party-and-
party” costs approach is intended to encourage set-
tlement without hindering access
to the courts.
Nonetheless, costs awards may still act as a disincen-
tive to some risk-averse
individuals or groups.
Moreover, new statutory costs regimes in British Co-
lumbia and Nova Scotia could result in an increase in
party-and-party costs awards. The author suggests
that a no-way costs rule be applied to public interest
cases in concert with a statutory scheme that would
fund public interest litigants. This approach would
give practical effect to the important principles im-
plied by the standing quartet and encourage public
participation in the judicial process.
La Cour supreme, dans les affaires Thorson,
MacNeil, Borowski et Finlay est entrde dans une nou-
velle p6riode de libdralisation des rigles d’int&6rt. Ces
arr~ts, qui sont connus collectivement sous le nom de
une loi au-delh des personnes ayant un int6ret stricte-
ment personnel ou priv6. Ce d6veloppement a donn6
un dlan aux poursuites lies h l’intdr~t public. Selon
‘auteur, alors que les r;gles sur l’intdr& ont 6t6 as-
souplies, celles relatives aux coots sont demeur~es in-
flexibles. Cette rigidit6 constitue la barfie la plus
importante pour ceux qui, dans l’int&ret public, tentent
de contester une loi.
Le syst~me am6ricain, oal chaque partie paie ses
propres coots, et le syst~me anglais, oti la partie per-
dante paie la plupart des coots de la partie gagnante,
sont compards au rdgime canadien sur les cooits. Ce
dernier est fond6 sur une indemnit6 partielle du ga-
gnant par le perdant, 6tablie selon des tarifs de coots.
L’approche canadienne <(party-and-partyo est conque
pour encourager les ententes sans entraver 'acc;-s aux
tribunaux. Toutefois, l'imposition des coots peut en-
core d~courager quelques individus on groupes qui
craignent le risque. De plus, les nouveaux rdgimes
statutaires sur les coots de la Colombie-Britannique et
de la Nouvelle-Fcosse pourraient entraner une aug-
mentation de ces cofits fond6s sur 'approche
aux ttats-Unis, en vertu de laquelle chaque partie pale
ses coots, soit adopt~e lorsqu’il s’agit d’affaires oi
l’intdrt public est en cause et que l’on y ajoute un
syst~me statutaire qui financerait les parties ayant un
int6rdt public. Cette approche contribuerait A mettre
en pratique les principes fondamentaux qu’impliquent
le quatuor sur l’intdr&t et encouragerait la participa-
tion publique au processusjudiciaire.
” Student-at-Law, McMillan Binch. The author wishes to thank Professor Kent Roach for his
guidance and helpful commentary.
McGill Law Journal 1995
Revue de droit de McGill
To be cited as: (1995) 40 McGill LJ. 55
Mode de r6f6rence: (1995) 40 R.D. McGill 55
56
McGILL LAW JOURNAL / REVUE DE DROITDE MCGILL
[Vol. 40
Synopsis
Introduction
A.
Introduction to the Common Law of Costs in Public Interest
Litigation
B. The Canadian Costs Rule and Public Interest Litigation
I. Responses to Public Interest Cases
A. The American Rule
B. The English Rule
C. The One-Way Rule: Costs Awards to Unsuccessful Litigants
II. New Statutory Regimes
A. The British Columbia Rules
B. The Nova Scotia Rules
C. Analysis of the British Columbia and Nova Scotia Rules
MI. Other Models
A. Legal Aid Test Case Funding
IV Analysis
V. The Case for Subsidization of Public Interest Litigants
A. Ontario’s Intervenor Funding Project Act, 1988
B. Proposals for Reform
C. The Use of the No-Way Rule in Public Interest Litigation
Conclusion
19951
Introduction
L. FRIEDLANDER – COSTS
Canada’s new approach to standing has marked a profound transformation
of the perception of the role of the courts in this country. The quartet of
standing cases, Thorson, McNeil, Borowski and Finlay,’ has increased access to
the courts, a right previously limited to persons with personal or private
interests.2 The quartet provided Canadians with a new opportunity to litigate in
the public interest. Much of Canadian law had previously been immune from
legal challenge because of stringent standing rules or other barriers to access
for potential litigants, such as lack of funds, lack of access to legal services or
fear of reprisal. The standing quartet addressed some of these problems by
recognizing the value of public interest litigation. Finlay, for example, was
hailed by some as “a new beginning” in this respect? Yet liberalized standing
rules address only part of the problem facing potential public interest litigants.
Costs,
the most formidable barrier to participation, remain a powerful
disincentive to public interest litigation.
This article examines the appropriate relationship between costs rules and
public interest litigation. We will first survey traditional costs rules and then
comment on the impact of these rules on public interest litigation. The
following section will survey the common law treatment of public interest
cases and examine some new statutory costs regimes. In addition, we will
discuss some existing funding schemes and evaluate the arguments in favour of
different costs rules for public interest litigation. Finally, we will advance a
“no-way” rule for public interest cases in combination with a statutory funding
regime.
‘Thorson v. Canada (A.G.) (No. 2) (1974), [1975] 1 S.C.R. 138, 43 D.L.R. (3d) 1 [hereinafter
Thorson]; MacNeil v. Nova Scotia (Board of Censors), [1976] 2 S.C.R. 265, 12 N.S.R. (2d) 85
[hereinafter MacNei]; Canada (A.G.) v. Borowski, [1981] 2 S.C.R. 575, [1982] 1 W.W.R. 97
[hereinafter Borowskl]; Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607, (sub nom.
Canada (Minister of Finance) v. Finlay) 33 D.L.R. (4th) 321 [hereinafter Finlay].
2 See discussion of standing accompanying notes 170ff, below.
3 L.M. Fox, Case Comment on Canadian Civil Liberties Association v. Canada (Attorney-
General) (1991) 45 Admin. L.R. 107.
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A.
Introduction to the Common Law of Costs in Public Interest
Litigation
In the early history of the common law, a successful litigant did not have a
right to costs. 4 By the late thirteenth century, successful litigants were entitled
to costs in common law courts while courts of equity had discretion with
respect to costs awards. Today, Canadian courts have unlimited discretion in
this regard. This discretion is codified in provincial statues, such as Ontario’s
Courts of Justice Act5 which states
13 1(1) Subject to the provisions of an Act or rules of court, the costs
of and incidental to a proceeding or a step in a proceeding are in the dis-
cretion of the court, and the court may determine by whom and to what
extent the costs shall be paid.
As a general rule, a successful litigant has a reasonable expectation to be
awarded costs, and such an expectation will be satisfied unless there is a
compelling reason to do otherwise.6 This rule is called the “costs-in-the-cause”
rule or the “English rule”.
Costs in Canada are awarded on a party-and-party basis which means that
the successful party is entitled to a partial indemnity. Costs will occasionally be
awarded on a solicitor-and-client basis, a higher scale of costs, in cases of
misconduct by one of the parties or by their solicitors. 7 The judge may choose
4 Much of this section is derived from M. Orkin, The Law of Costs (Aurora, Ont.: Canada Law
Book, 1993). See also N. Gold, “Controlling Procedural Abuses: The Role of Costs and Inherent
Judicial Authority” (1977) 9 Ottawa L. Rev. 44 ; G.D. Watson & P. Lantz, “Bringing Fairness to
the Costs System – An Indemnity Scheme for the Costs of Successful Appeals and Other Pro-
ceedings” (1981) 19 Osgoode Hall L.J 447.
5S.O. 1992, c. 7. An example of a statutory provision imposing costs is found in subsection
178(2) of the Income Tax Act, S.C. 1970-71-72, c. 63 which requires the Minister of National
Revenue to pay the costs of an appeal from a decision of the Tax Review Board where the
amount of tax in issue is less than $2,500. SeeR. v. Creamer, [1977] 2 F.C. 195, [1977] C.T.C. 20
(T.D.); R. v. Sills, [1985] 2 EC. 200, [1985] 1 C.T.C. 49 (C.A.); LeClerc v. R., [1983] 2 F.C. 231,
[1982] C.T.C. 338 (C.A.); Dresden Farm Equipment Ltd. v. M.N.R., (1989] 1 C.T.C. 99, 91 N.R.
325 (F.C.A.).
6 See Orkin, supra note 4 at 1-1.
7 Gold, supra note 4. See also P Lantz, “Costs as a Regulatory Device” (1981) 2 Advocates’ Q.
396; Roberge v. Bolduc, [1991] 1 S.C.R. 374,78 D.L.R. (4th) 666; Mobil Oil Canada, Ltd. v. Ca-
nadian Superior Oil Ltd. (1979), 21 A.R. 111, 105 D.L.R. (3d) 355 (Q.B.). Some cases refer to a
third level of indemnification, “solicitor-and-own-client” costs, which can be considered a varia-
tion on solicitor-and-client costs. See McCarthy v. Calgary Roman Catholic Separate School
District No. 1 (No. 2) (1980), 30 A.R. 208 (sub nom. McCarthy v. Calgary Roman Catholic
Separate School District No. 1), [1980] 5 W.W.R. 524 (Q.B.).
19951
L. FRIEDLANDER – COSTS
to award costs in a lump sum or may have them taxed according to tariff
schedules. Tariff schedules set out costs of each aspect of litigation (for
example, the cost of a statement of claim) and establish various levels of cost
determinations based on the amount in issue.’
The party-and-party costs rule in Canada is a compromise position between
the English and American systems. In England, courts follow the costs-in-the-
cause rule, but award almost complete indemnification for costs. By contrast,
the United States follows a “no-way” or “American rule” by which each party
pays its own costs regardless of the outcome of the litigation. The English
approach is a “damage theory of costs” which views costs as compensation for
the expense of vindicating a legal right:
[A] successful plaintiff has been put to a legitimate and necessary expense
in order to pursue its claim, and so he should be made whole by recovering
not only the amount of the claim but the additional expenses as well. The
requirement that the unsuccessful defendant pay these expenses arises di-
rectly from the findings of fault made by the courts on the substantive is-
sues.9
An important consequence of this approach is its ability to limit unmeritorious
litigation and encourage settlement.’0 Furthermore, it is an appropriate way to
decrease the case load of an overburdened system, at least when the purpose of
a lawsuit is to settle a private dispute rather than to establish a principle.
In contrast to the English rule, the American rule originated from the
concept that all citizens have a right of access to the courts, a right that some
have argued is guaranteed by the Fourteenth Amendment.” Monroe argues that
the purpose of the rule was not to encourage frivolous litigation but “to fulfil
the unique American concern that an individual’s basic rights never be
diminished. Unfettered access to the courts was deemed an essential element in
‘ For a description of the functioning of tariffs, see R.C. Stevenson, “Party-and-Party Costs: The
New Approach” (1993) 14 Advocates’ Q. 129, which describes the new tariff system in New
Brunswick.
9 R. Anand & I. Scott, “Financing Public Participation in Environmental Decision Making”
(1982) 60 Can. Bar Rev. 81 at 98. See also London Scottish Benefit Society v. Chorley (1884), 13
Q.B.D. 872 at 875: “I should have thought that a person wrongfully brought into litigation ought
to be indemnified against the expenses to which he is unjustly put.”
“Gold, supra note 4 at 59.
“See ibid. at 57, although some authors have traced the American Rule back to “a pervasive
antipathy towards attorneys as a class, together with the suspicion that they charged oppressive
fees” (P.A. Monroe, “Comment: Financial Barriers to Litigation: Attorney Fees and the Problem
of Legal Access” (1981) 46 Albany L. Rev. 148 at 151 [references omitted]).
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the protection of such rights.” 2
B. The Canadian Costs Rule and Public Interest Litigation
Canada’s partial indemnity rule is said to encourage settlement without
destroying the accessibility of the courts. However, as Anand and Scott point
out, the English and Canadian approaches presume
that the individual who is pursuing or protecting his private economic in-
terest will be properly influenced and guided by the economic impact of
legal costs and that only claims that are justifiable on economic grounds
will be litigated. 3
Clearly this assumption is not always true in public interest litigation,
where different motivations hold sway.
Public interest litigation defies precise definition, although Fox defines it as
litigation having a wide impact, either because of the importance of the is-
sues raised or due to the extent of the practical impact of the proceedings
on others, especially where the plaintiff or applicant does not stand, per-
sonally, to achieve a financial or economic benefit from the proceedings. 4
It has also been described as “any action in which a plaintiff who individually
has no protected interest seeks to represent the public interest whether or not
the challenged … action affects him differently than any other person,”‘ 5 and
more simply as “proceedings which are or may be recognised as having a
public element.”‘ 6 Anand and Scott define public interest
litigation as
“comprising those views which are not otherwise adequately represented by
parties with a significant personal or economic stake in the outcome of the
,2 Monroe, ibid. at 153 [references omitted].
,Anand & Scott, supra note 9 at 98. For models that predict the incidence of civil litigation
based on economic incentives, see S. Shavel, “Suit, Settlement, and Trial: A Theoretical Analysis
Under Alternative Methods for the Allocation of Legal Costs” (1982) 11 J. Legal Stud. 55; W.M.
Landes, “An Economic Analysis of the Courts” (1971) 14 J. of L. & Econ. 61; R.A. Posner, “An
Economic Approach to Legal Procedure and Judicial Administration” (1973) 2 J. Legal Stud.
399; J.P Gould, “The Economics of Legal Conflicts” (1973) 2 J. Legal Stud. 279.
“L.M. Fox, “Costs in Public Interest Litigation” (1989) 10 Advocates’ Q. 385.
” A. Homburger, “Private Suits in the Public Interest in the United States of America” (1973-
74) 23 Buff. L. Rev. 343 at 387.
16 Law Reform Commission of Australia, Standing in Public Interest Litigation (Canberra:
Australian Government Publishing Service, 1985) at 26.
1995]
L. FRIEDLANDER – COSTS
proceeding.”‘ 7 Although we will adopt Anand and Scott’s definition of public
interest litigation, it is clear that all definitions lead to one conclusion: public
interest litigation will not frequently produce significant financial gain for the
plaintiffs and the risks of litigating are therefore increased. 8 The use of the
English Rule (costs-in-the-cause) to discourage cases in which the possibility of
pecuniary gain is insufficient to counterbalance the costs of litigating means not
only that all types of litigation will be reduced, but also that public interest
cases will be discouraged in a manner disproportionate to other types of
litigation. This will be due to the minimal likelihood that potential success will
offset financial risk.
Under the present system in Canada, there are two major financial barriers
to public interest litigation. First, public interest litigants must obtain funding to
cover their own legal costs and possibly those of the other side should they
lose. Although some financial aid is available to public interest litigants from
organizations such as Women’s Legal Education and Action Fund (“LEAF’)
and the Canadian Environmental Defence Fund (“CEDF’), these resources are
limited in application to both subject matter and quantum. 9 For example,
groups such as the Center for Equality Rights in Accommodation may be able
to offer the services of a staff lawyer and some administrative help without
charge to the plaintiff, yet will be unable to absorb an adverse cost award. It is
sometimes possible to obtain prior indemnification from a government source,
but this is difficult when the amount of the award is not only unknown but
unpredictable.20 If the winning party is the Attorney General, it may be possible
to bargain down an adverse cost award, but this is an unpredictable route.2′ The
risk of an adverse cost award is increased in complex cases such as Charter22
challenges where public interest litigants may plead against a large and
expensive law firm or well-funded corporate legal department.
Second, public interest litigation is also discouraged by the potential
obligation to provide security for costs. As with other cost orders, the court has
‘7 Anand & Scott, supra note 9 at 82.
‘Ontario Law Reform Commission, Report on the Law of Standing (Toronto: Ministry of the
Attorney General, 1989) at 153 [hereinafter Report on Standing].
” For a brief description of these two organizations, see Fox, supra note 14 at 399-402.
20 Interview with M. Truemner, staff lawyer for the Centre for Equality Rights in Accommoda-
tion (13 August 1993) Toronto.
21 For example, in the spring of 1994 Elizabeth Symes was in the process of negotiating costs
with the Attorney General’s office. Symes challenged the non-deductibility of child care expenses
from business income in Symes v. M.N.R., [1993] 4 S.C.R. 695, 110 D.L.R. (4th) 470.
2′ Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being
Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 [hereinafter Charter].
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McGILL LAW JOURNAL / REVUE DE DROITDE MCGILL
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absolute discretion with regard to security for costs. Rule 56.01 of Ontario’s
Rules of Civil Procedure states:
In a proceeding where it appears that,
(a) the plaintiff or applicant is ordinarily resident outside Ontario;
(b) the plaintiff or applicant has another proceeding for the same
relief pending in Ontario or elsewhere;
(c) the defendant or respondent has an order against the plaintiff or
applicant for costs in the same or another proceeding that re-
main unpaid in whole or in part;
(d) the plaintiff or applicant is a corporation or a nominal plaintiff
or applicant, and there is good reason to believe that the plain-
tiff or applicant has insufficient assets in Ontario to pay the
costs of the defendant or respondent;
(e) there is good reason to believe that the action or application is
frivolous and vexatious and that the plaintiff or applicant has
insufficient assets in Ontario to pay the costs of the defendant
or respondent; or
(f) a statute entitles the defendant or respondent to security for
costs,
the court, on motion by the defendant or respondent, may make
such order for security for costs as is just.
The obligation to provide security for costs may bring impending litigation to a
halt if the plaintiff does not have adequate financial resources. Defendants may
thus ask for security as a stalling tactic.2
In Kennett v. Health Sciences Centre,24 the plaintiffs intended to challenge
the constitutionality of certain provisions of Manitoba’s Child and Family
Services Act 5 which allowed the hospital to apprehend a young Jehovah’s
Witness to give him a blood transfusion. The defendants requested security for
costs on the grounds that the plaintiffs were not residents of Manitoba. The trial
judge denied the security request on the grounds that the issues were important,
L.A. Vandor, “Security for Costs: Stopping Plaintiffs in Their Tracks” (1988) 7:2 Advocates’
Soc. J. 26 at 29.
21 (1991), 76 Man. R. (2d) 47,83 D.L.R. (4th) 744 (C.A.) [hereinafter Kennett cited to D.L.R.].
2 S.M. 1985-86, c. 8.
19951
L. FRIEDLANDER – COSTS
the family was unable to pay costs, and the family had not gone to a Manitoba
hospital by choice but by virtue of an arrangement between the governments of
Ontario and Manitoba. The Court of Appeal reversed the trial judgment,
this
finding
constitutional challenge must be counter balanced with the responsibility of
securing their costs’ ’26 and ordered the Kennetts to pay a total of $46,000 in
security for costs. This case clearly illustrates the potential power of security
for costs as a litigation strategy.
the individual defendants
that “[t]he
in
right to
involve
The case law also provides, however, counterexamples to Kennett. For
example, in John Wink Ltd. v. Sico Inc.,27 the Court took a more sympathetic
view. The defendant demonstrated that the plaintiff did not have the financial
resources to bear costs if unsuccessful. The plaintiff did not dispute this, but
argued that to stop the action because of the inability to bear costs would be a
“gross injustice”. Reid J. agreed:
[U]nless a claim is plainly devoid of merit, it should be allowed to proceed
… While the adoption of this standard might allow some cases to go to trial
and that the trial will prove should not have proceeded, nevertheless the
danger of injustice resulting from wrongly destroyed claims that should
have been permitted to go to trial is to my mind a greater injustice?
A more recent Nova Scotia case directly considered the impact of security
for costs on public interest litigation. In Coalition of Citizens for a Charter
Challenge v. Metropolitan Authority,2 9
the
constitutionality of a waste incinerator on the grounds that the resulting damage
to public health and to the environment would contravene sections 7 and 15 of
the Charter. The defendant requested security on the basis that the citizens’
group was a “nominal plaintiff’. Glube J. stated that there is “apparently no
case law supporting the position that a public interest group is a ‘nominal
plaintiff’ and therefore should provide security for costs.”3
the plaintiffs
challenged
To order security for costs where a public interest action arises would, as
was argued on behalf of the Coalition, have “serious and chilling results”.
It would affectively [sic] end any such actions. It would be anomalous to
grant standing and then effectively bar the action by ordering security for
Kennett, supra note 24 at 749.
(1987), 57 O.R. (2d) 705, 15 C.PC. (2d) 187 (H.C.J.) [hereinafter John Wink cited to O.R.].
“Ibid. at 708-709.
29 (1993), 122 N.S.R. (2d) 1, 103 D.L.R. (4th) 409 (S.C.T.D.) [hereinafter Coalition of Citizens
cited to N.S.R.].
30Ibid. at 22.
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costs at this time.3
the weight of
The disparate impact of security for costs on low-income plaintiffs has
caused at least one court to find that orders for security violate section 15 of the
Charter.2 However,
the
constitutionality of security for costs,33 the rationale being that it creates
equality between the litigants because both sides can enforce judgment for
costs without additional expense and inconvenience.34 The result is that public
interest litigation can be diverted by strategic manoeuvers on the part of the
defendants.
supports
the
jurisprudence
intervention strategies.
Third, costs also affect
In most Canadian
jurisdictions, intervenors may participate as friends of the court (anicus curiae)
or as parties to litigation. 35 Friends of the court usually present only written
submissions, whereas parties are entitled to present evidence and to conduct
cross-examination.36 The degree of participation in the proceedings usually
31 Ibid.
32 Kask v. Shimizu (1986), 69 A.R. 343, 28 D.L.R. (4th) 64 (Q.B.) [hereinafter Kask cited to
A.R.].
33 See e.g. Crothers v. Simpson Sears Ltd. (1988), [1988] 4 W.W.R. 673, 51 D.L.R. (4th) 529
(Alta. C.A.); Kiyon v. Gagnon (1988), 67 Sask. R. 238, 25 C.P.C. (2d) 242 (Q.B.); Garnett v. Zu-
rich Insurance Co. (1987), 83 N.B.R. (2d) 121 (Q.B.).
34 Kask, supra note 32 at 355.
35The relevant sections of Ontario’s Rules of Civil Procedure are:
13.01(1) Where a person who is not a party to a proceeding claims,
(a) an interest in the subject matter of the proceeding;
(b) that he or she may be adversely affected by a judgment in the pro-
ceeding; or
(c) that there exists between him or her and one or more of the parties
to the proceeding a question of law or fact in common with one or
more of the questions in issue in the proceeding.
13.02
the person may move for leave to intervene as an added party.
Any person may, with leave of a judge or at the invitation of the pre-
siding judge or master, and without becoming a party to the proceed-
ing, intervene as a friend of the court for the purpose of rendering as-
sistance to the court by way of argument.
36 For more on these two types of intervention, see K. Busby, “Interventions Under the New
Manitoba Rules: Merry v. Manitoba and Law Society of Manitoba v. Lavrie” (1990) 11 Advo-
cates’ Q. 372; P. Muldoon & D. Scriven, “Intervention as Added Party: Rule 13 of The Ontario
Rules of Civil Procedure” (1985) 6 Advocates’ Q. 129; D. Scriven & P. Muldoon, “Intervention
as Friend of the Court: Rule 13 of the Ontario Rules of Civil Procedure” (1986) 6 Advocates’ Q.
448.
19951
L. FRIEDLANDER – COSTS
determines whether or not an intervenor will be liable for costs.37 As a general
rule, parties to the litigation will be liable for and may be awarded costs, while
friends of the court are neither liable for costs nor can they be awarded costs.38
In Sunburst Coaches Ltd. v. Romanchuck,39 where Ocean Accident and
Guarantee Corporation was a third party, Egbert J. said:
The third party, on its own application, became a party to and actively de-
fended the action, and by so doing made itself subject to costs. I see no rea-
son why the plaintiff should not have judgment against the third party as
well as against the defendant, for its costs. 0
There is little indication that costs rules for intervenors are applied
differently in the context of public interest intervention.4′ Davison J. in Hines v.
Nova Scotia (Registrar of Motor Vehicles) 42 stated that a court would consider
whether an intervenor’s interest was public or private in awarding costs, 43 but
the implications of this statement are not apparent in the judgment. In Hines,
Judge Davison awarded costs to a successful intervenor, the Canadian Diabetes
Association, on the ground that “it had a very real concern about the
outcome.”44 It is unclear whether this “real concern” refers to the degree of the
intervenor’s participation in the proceedings, its motive, or some other factor. It
is also unclear whether this concern would have led the trial judge to award
costs against the intervenor had the plaintiff lost the case. In Hi-Fi Novelty Co.
37Orkin, supra note 4 at 2-9.
38P. Muldoon, The Law ofIntervention: Status and Practice (Aurora, Ont.: Canada Law Book,
1989) at 108, 153. See e.g. Beard v. Darmouth (City of9 (1981), 49 N.S.R. (2d) 465, 23 C.P.C.
161 (S.C.T.D.); Milina v. Bartsch (1985) 63 B.C.L.R. 122, 1 C.P.C. (2d) 269 (S.C.).
” (1953), 9 W.W.R. (N.S.) 385 (Ala. T.D.).
40 ibid. at 392.
4′ See e.g. Re Lavigne & O.P.S.E.U. (No. 2) (1987), 60 O.R. (2d) 486, 41 D.L.R. (4th) 86
(H.C.J.) [hereinafter Lavigne cited to O.R.], discussed infra note 57 and accompanying text;
B.(R.) v. Children’s Aid Society of Metropolitan Toronto (1992), 10 O.R. (3d) 321, 96 D.L.R.
(4th) 45 (C.A.) [hereinafter B.(R.) v. Children’s Aid Society cited to O.R.], discussed infra note 90
and accompanying text. This case was appealed to the Supreme Court of Canada. The appeal was
dismissed, as was the cross-appeal regarding costs (B.(R.) v. Children’s Aid Society of Metropoli-
tan Toronto (27 January 1995), Ottawa 23298 (S.C.C.)). Cost issues are also relevant to motions
to intervene. In John Doe v. Ontario (Information & Privacy Commissioner) (1992), 53 O.A.C.
236, 7 C.P.C. (3d) 33 (Div. CL), the Canadian Civil Liberties Association’s application for status
as an added party as a friend of the court was dismissed with costs on the grounds that it was act-
ing partly in the public interest and partly in its own interest.
42 (1990), 99 N.S.R. (2d) 167,78 D.L.R. (4th) 162 (S.C.T.D.).
48 Costs ruling: (1992), 105 N.S.R. (2d) 240 at 247, 284 A.P.R. 240 (S.C.T.D.) [hereinafter Hi-
nes cited to N.S.R.].
“Ibid.
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v. Nova Scotia (A.G.),45 the trial judge agreed with the “very real concern” test
formulated in Hines, yet still awarded a decreased level of costs to the
intervenors on the ground that they did not participate in the proceedings to the
same extent as did the parties.
Thus, the jurisprudence on costs for public interest intervenors provides
little practical guidance. To the extent that predictability exists, individuals or
groups intervening in the public interest will have to significantly curtail their
participation if they do not have the financial resources to risk an adverse cost
award.
46
41 (1993), 121 N.S.R. (2d) 63,335 A.P.R. 63 (S.C.T.D.).
The use of costs as a litigation strategy is also well-illustrated by the SLAPP (Strategic Law-
suits Against Public Participation) suit, an American phenomenon which could spread to Canada.
A SLAPP counter-suit is “a meritless action … whose primary goal is not to win the case but
rather to silence or intimidate citizens or public officials who have participated in proceedings re-
garding public policy or public decision making” (J.E. Sills, “SLAPPS (Strategic Lawsuits
Against Public Participation): How Can the Legal System Eliminate Their Appeal?” (1993) 25
Conn. L. Rev. 547 at 548-49). SLAPP suit plaintiffs, who are typically defendants in suits involv-
ing public interest litigants, usually base their actions on common law torts of defamation, mali-
cious prosecution, abuse of process, interference with contractual relations or interference with
prospective advantage (Note, “Counterclaim and Countersuit Harassment of Private Environ-
mental Plaintiffs: The Problem, Its Implications, and Proposed Solutions” (1975) 74 Mich. L.
Rev. 106 at 107).
The kind of intimidation produced by a SLAPP suit serves to persuade the public interest
plaintiff to drop the original lawsuit, to dissuade other potential plaintiffs from bringing similar
lawsuits, and to drain the resources of public interest groups. Although SLAPP counter-suits
rarely reach trial (ibid. at 108), they deter participation through the threat of large damage awards,
sometimes running into the tens of millions of dollars (ibid.). They also deter participation be-
cause plaintiffs often cannot afford the expense of defending protracted SLAPP counter-suits in
addition to the initial public interest suit. Even if the public interest plaintiff is likely to win the
lawsuit, the expenses incurred along the way may either be too high for the organization to absorb
or may result in diversion of resources from other activities (T.A. Waldman, “SLAPP Suits:
Weaknesses in First Amendment Law and in the Courts’ Responses to Frivolous Litigation”
(1992) 39 U.C.L.A. L. Rev. 979 at 993-94). As a result, according to some commentators,
SLAPP suits are a threat to political expression, and possibly a violation of the First Amendment.
See also S.A. McEvoy, “‘The Big Chili’: Business Use of the Tort of Defamation to Discourage
the Exercise of First Amendment Rights” (1990) 17 Hastings Constitutional L.Q. 503; F. Schauer,
“Fear, Risk and the First Amendment: Unravelling the ‘Chilling Effect’
(1978) 58 Boston U. L.
Rev. 685.
1995]
L. FRIEDLANDER – COSTS
I. Responses to Public Interest Cases
A. The American Rule
The Canadian common law response to public interest cases has been one
of uncertainty with few articulated principles. However, if a general position
can be identified, it is that the American, or no-way, rule will be applied to
cases litigated in the public interest. Many judges will decide not to award costs
when an issue is novel47 or of importance to the public.48 The jurisprudence
gives some clues as to the rationale for this general tendency. The most
frequently cited reason is that costs would discourage potential litigants from
bringing forward claims the resolution of which would benefit the public.
A classic example of such an order is the trial judgment in Allman v.
Northwest Territories.49 In this case, Alman unsuccessfully challenged the
constitutionality of voter eligibility under a statute purporting to regulate the
vote regarding the possible division of the Northwest Territories. De Weerdt J.
noted that costs-in-the-cause was the general rule but chose instead to order that
each side pay its own costs. The novelty of the issues was somewhat
responsible for the judge’s order, but the thrust of his reasoning was that the
applicants should not be penalized for attracting judicial consideration to a
question of significant interest to the general public. According to Justice De
Weerdt, the “issues were entirely novel and of possibly far-reaching public
to be submitted for judicial
importance. And
consideration.”‘
It was particularly significant that the issues at stake
implicated the Charter:
they clearly deserved
” E.g. Jensen v. Canadian National Railways, [1943] 2 W.W.R. 209, 56 C.R.T.C. 89 (Sask.
C.A.); Poizer v. Ward (1947), 55 Man. R. 214, [1947] 4 D.L.R. 316 (C.A.); Abramovic v. Cana-
dian Pacific Ltd. (1989), 69 O.R. (2d) 487 (H.C.J.); Re Rizzo & Rizzo Shoes Ltd. (1991), 6 O.R.
(3d) 441, 11 C.B.R. (3d) 246 (Ont. Ct. (Gen. Div.)); Columbos v. Carroll (1985), 50 O.R. (2d)
593, 1 C.P.C. (2d) 59 (S.C.); Re Blainey & Ontario Hockey Association (1985), 52 O.R. (2d) 225,
21 D.L.R. (4th) 599 (Div. Ct.); Stewart v. Mississauga (City of) Fire Marshal (1988), 64 O.R.
(2d) 403, 28 O.A.C. 29 (Div. Ct) [hereinafter Stewart].
4′ Dalhousie University v. Halifax (City of) (1976), 9 N.S.R. (2d) 643, 53 D.L.R. (3d) 610
(S.C.A.D.); Chater v. Dartmouth (City of) (1975), 20 N.S.R. (2d) 34, 62 D.L.R. (3d) 122
(S.C.T.D.); Re Lochhead & Minister of Correctional Services (1978), 22 O.R. (2d) 673, 94
D.L.R. (3d) 274 (Div. Ct); Stewart, ibid.; Ozog v. Ontario (Registrar of Motor Vehicles) (1979),
26 O.R. (2d) 178, 102 D.L.R. (3d) 147 (H.C.J.).
41 [1983] N.W.T.R. 32,44 A.R. 170 (S.C.); costs ruling: [1983] N.W.T.R. 231,46 A.R. 61 (S.C.)
[hereinafter Allman cited to N.W.T.R.].
” Ibid. at 232.
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I do not intend to go so far as to suggest that costs should be denied to a
government or its representative in all cases where a citizen has unsuccess-
fully, and yet in good faith and reasonably, sought a remedy from the court
on the basis of the Canadian Charter of Rights and Freedoms, or on other
constitutional grounds. But at this stage in the life of the Charter, given its
wide impact on all facets of our legislation, it is at least incumbent upon the
court to consider whether, in all the relevant circumstances, costs should
follow the event 5’
The Court then took guidance from the Supreme Court’s treatment of
Borowski, where leave was granted on the condition that Borowski’s solicitor-
and-client costs be paid by the Crown regardless of the outcome of the case.
Therefore, in Allman, the argument for the no-way rule rested not on an
equality rationale but on the principle that Charter interpretation is of benefit to
Canadians in general. As De Weerdt J. said, “a citizen acting in the general
interest and not merely on his own behalf should not have to bear the burden of
costs where he has reasonably and in good faith brought before the courts a
question as to the validity of legislation which is the subject of public
controversy.”52 An appeal from the judgment was dismissed by the British
Columbia Court of Appeal 53 but the Court was not in agreement with the
opinion of the trial judge regarding costs. It did not discuss costs directly as this
was not the subject of the appeal; but the Court did award appeal costs to the
government.
In Harrison v. University of British Columbia, 4 the plaintiff sought to
challenge the constitutionality of the university’s mandatory retirement policy.
The defendants were successful at trial and requested costs. However, Taylor J.
stated:
The plaintiffs have facilitated the prompt and economic disposition at trial
of issues of very wide national concern and in so proceeding with this
matter have rendered a service to the public at large. The matters raised can
only be resolved by the higher courts, and must be resolved there, and I do
not believe that the trial decision will be of particular significance in the
ultimate resolution of these issues. To burden the plaintiff and petitioner
with the university’s costs, in addition to their own, would serve only to
impede them in proceeding with this important litigation and would not, in
my view, serve the interests ofjustice. 5
51 Ibid. at 234.
52 Ibid.
53 Allman v. Northwest Territories, [1984] N.W.T.R. 65,50 A.R. 161 (C.A.).
‘ [1986] 6 W.W.R. 7,30 D.L.R. (4th) 206 (B.C.S.C.).
5” Harrison v. University of British Columbia, [19871 2 W.W.R. 378 (B.C.S.C.): application by
defendant for costs at trial.
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L. FRIEDLANDER – COSTS
Again, the Court seems motivated by the desire to facilitate the interpretation of
the Charter for the benefit of Canadians in general. Although Taylor J. did not
present any evidence on this point, the judge seemed reluctant to order costs for
fear of jeopardizing the suit. The case eventually reached the Supreme Court of
Canada; however, as in Allman, the costs ruling by the trial judge was not
affirmed. The Supreme Court gave costs to the successful party, the University
of British Columbia.56
In Lavigne57 the Court emphasized the importance of access to justice for
potential Charter litigants. In that case, the appellant alleged that his freedom
of association had been violated by a compulsory union dues check-off
provision. The High Court of Justice, deciding in favour of the plaintiff,
ordered that he should receive sixty per cent of his costs as he was sixty per
cent successful. Costs were to be paid not only by the OPSEU but also by the
Canadian Labour Congress, the Ontario Federation of Labour and the National
Union of Provincial Government Employees, all of whom were acting as
intervenors.
The respondent made two arguments regarding the imposition of costs.
First, Lavigne should not recoup costs as he had not spent any of his own
money. The Court had found as fact that “[s]ubstantially all of the costs of the
applicant in bringing this application have, to date, been paid for by the
National Citizens Coalition [“NCC”]”, that the “arrangement between the
applicant and the NCC is such that any costs ordered against the applicant
would be discharged by the NCC as far as the NCC is able” and that “[a]ny
proceeds of a costs award to the applicant would be paid over by the applicant
to the NCC. ‘ 8 The respondent also argued that the important and novel nature
of the case precluded a costs order.
White J. held that a costs order for Lavigne, the successful applicant, was
appropriate and rejected the idea that support from an interest group should
affect cost awards:
In my view, it is desirable that Charter litigation not be beyond the reach of
the citizen of ordinary means. The citizen of ordinary means is a term that
covers, of course, the vast bulk of Canadians. There are few individuals,
regardless of their walk of life, who could afford Charter litigation of the
[1990] 3 S.C.R. 451,77 D.L.R. (4th) 55.
s7See also Southam v. R. (1985), 1 W.D.C.P. 254 (Ont. H.C.J.).
ss Lavigne, supra note 41 at 523.
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type experienced in this application.59
I prefer to rest the exercise of my discretion on the principle that individual
Canadians, who would otherwise find the costs of Charter litigation be-
yond their means, should not be discouraged from asserting their Charter
rights simply because, if they accept third party financial assistance, they
will be deprived of the costs of the litigation. I, therefore, have determined
that costs may be awarded in this case.’
Lavigne was appealed to both the Ontario Court of Appeal and the
Supreme Court of Canada. 6′ At the Court of Appeal, the majority ruled against
Lavigne and ordered him to pay costs to the OPSEU and to the intervenors.
The Supreme Court denied the appeal and affirmed the costs order of the court
below without further discussion. Thus, not only did the Supreme Court refuse
to consider White J.’s analysis of interest group funding as a reaction to the
deterrent effect of costs, but it increased the harshness of its costs order by
ordering Lavigne to pay intervenor costs as well. The case represents a valuable
but missed opportunity to lay down basic costs principles, especially since the
lower courts had already explored the issue.
Development of the law is not the only motivation for the use of the no-
way rule in public interest litigaton. In Sierra Club of Western Canada v.
British Columbia (A.G.), 62 the Sierra Club wished to make representations to
the Chief Forester before a new forest management plan was approved. The
respondents had already granted permits to logging companies, permits which
the Sierra Club requested be set aside. The respondents won and asked for
costs. The Court refused to order costs against the environmental group as it
was concerned that costs orders in controversial public cases would bar such
disputes from the courtroom. The Court stated:
Disputes involving environmental issues, such as this one, are all too liable
to provoke confrontations outside the law. In my opinion it would not be
conducive to the proper and legal resolution of this case which is one of
significant public interest, to penalize the petitioners who have acted re-
sponsibly by attempting to resolve the issues according to law, through
awarding costs against them.63
‘9 Ibid. at 526.
‘Ibid. at 528.
61 Lavigne v. O.S.E.U. (1989), 67 O.R. (2d) 536, 56 D.L.R. (4th) 474 (C.A.), aff’d [1991] 2
S.C.R. 211, 81 D.L.R. (4th) 545.
62 (1991), 83 D.L.R. (4th) 708 (B.C.S.C.).
6’lbid. at 716.
1995]
L. FRIEDLANDER – COSTS
Here, the Court recognized the need for access to justice for all individuals and
groups on the ground that such access is needed to encourage legal resolution
of conflicts and to preserve law and order. The court is seen as an institution
which serves to aid the proper functioning of the democratic process.
B. The English Rule
Some courts have abandoned the no-way rule and awarded costs in public
interest cases. There are various reasons for this. Sometimes costs-in-the-cause
belies the difference between public interest litigation and other types of
litigation. In other instances, judges have wished to avoid perceived unfairness
to the defendant. Use of costs-in-the-cause may also reflect the court’s
discomfort with a distributional role, as will be discussed below.
In Canada Deposit Insurance Corp. v. Canadian Commercial Bank,6 the
Court was required to determine the validity of agreements between the
Canadian Commercial Bank (“C.C.B.”) and other institutions. The C.C.B.,
through various agreements, had divided its loans between various institutions;
it was subsequently put into liquidation. The Canada Deposit Insurance
Corporation (“C.D.I.C.”) challenged the agreements and lost. Wachowich J.
noted that the situation was analagous to Allman in that “both cases involve
important legislation and the issues are of possibly far-reaching public
importance,” yet the judge refused to deny costs to the C.C.B. and “penalize the
successful participants, who have been innocent of any wrongdoing.” 65
Allman was also considered in Welk v. Saskatchewan Social Services
Appeal Board6 where
the applicant requested judicial review for the
termination of social assistance. The applicant was
successful, but
Saskatchewan Social Services argued that costs should not be awarded because
the litigation was in the public interest. Grotsky J. disagreed. Subsequent
jurisprudence has interpreted this case as a rejection of Allman,67 yet the Court
decided to award costs in this case precisely because, unlike in Allman,
Saskatchewan Social Services could not be seen as operating in the public
interest.6 Furthermore, the Court may have been influenced by the fact that the
6′(1986), 44 Alta. L.R. (2d) 285, [1986] 4 W.W.R. 451 (Q.B.); costs ruling: (1987), 50 Alta.
L.R. (2d) 1, [1987] 3 W.W.R. 160 (Q.B.) [hereinafter CD.LC. cited to Alta. L.R.].
6 C-DJ.C., ibid. at 5.
(1986), 44 Sask. R. 252, [198612 W.W.R. 333 (Q.B.) [hereinafter Welk cited to Sask. R.].
67 R. v. Allen (1987), 87 A.R. 332 (Q.B.).
In Welk, supra note 66 at 261, Grotsky J. wrote: “I am satisfied that in bringing the applica-
tion, the applicant was not motivated by a desire to have s. 10(2) of the Regulations interpreted as
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no-way rule would deny costs to a social assistance recipient, whereas, in
Allman, use of the rule denied costs to the government.
Comments on costs in public interest litigation are also found in obiter
dicta in Turner-Lienaux v. Nova Scotia (A.G.).69 In this case a laboratory
technician challenged the results of a job competition conducted by the Civil
Service Commission and the Victoria General Hospital in Halifax. The Court
rejected all arguments made by the plaintiff, including the suggestion that costs
not be awarded in a case where the issues are novel. Madam Justice Roscoe
held that the issues were neither in the public interest, nor were they novel, and
that even if they were, the Crown would still have been entitled to costs. 70
the applicants
(individuals and public
The leading case rejecting differential treatment of public interest litigants
is perhaps Reese v. Alberta (Minister of Foresny, Lands and Wildlife).7
‘ In this
case,
interest groups advocating
environmentalism) requested judicial review of forest management agreements
between Alberta and Daishowa Canada Corporation. The applicants were
denied judicial review and the respondents requested costs. The applicants
argued that their request was of public benefit as no one else would have
challenged the agreements. Furthermore, they argued that the threat of adverse
costs awards would effectively undermine the possibility of public interest
standing.
Justice McDonald considered the economic implications of using the no-
way rule:
the Crown, or, “Alberta” –
[TMhe successful party here –
has a purse the
contents of which are raised from the taxpayers of Alberta. If the court
were to decide that no costs be recovered by the Crown from the unsuc-
cessful applicants, that would amount to requiring the taxpayers to foot the
entirety of the bill of successfully defending the validity of an act of gov-
emment.’
McDonald I felt that it would be unfair to impose taxes on ratepayers who
had not chosen to proceed with the litigation. However, the judge immediately
a matter of public interest. He had a personal interest, albeit in the result the public interest may
too be served.”
(1992), 115 N.S.R. (2d) 200, 314 A.P.R. 200 (S.C.T.D.) [hereinafter Turner-Lienaux cited to
N.S.R.].
70 Ibid. at 214.
71 (1992), 85 Alta. L.R. (2d) 153, 87 D.L.R. (4th) 1 (Q.B.); costs ruling: (1992), 5 Alta. L.R.
(3d) 40, [1993] 1 W.W.R. 450 (Q.B.) [hereinafterReese cited to Alta. L.R.].
‘Ibid. at 45-46.
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L. FRIEDLANDER – COSTS
backtracked, stating that funding burdens should not be the “paramount
consideration”, but should merely be a factor in costs decisions. McDonald J.
seemed willing to use the no-way rule in “close cases” but was adamant that
the case at bar was not such a case.
The second branch of Justice McDonald’s analysis was the perception that
the courts were being used as a political forum:
To the extent of such extraneous and essentially political, non-judicial ele-
ments of the applicants’ case, the applicants’ plea that no order that they
pay costs be made, if accepted, would encourage such public interest
groups to use the court as a forum to make what would be essentially a
political statement The proper forum for such groups to do so is in the
political process –
through advocacy within and outside political parties,
and to government and the legislature.73
This view is not uncommon] 4 The costs ordered by McDonald J. in Reese
were, nevertheless, a compromise. The appellants requested no costs and the
respondents requested costs at the level of Column 6 of Alberta’s tariff
. awarded costs at Column 3 (a less expensive level),
schedules. McDonald
and thus clouded the significance of the judgment. Andrea Moen, representing
the Crown, said that the decision would force public interest groups to “think
very carefully before they take a case to court.”75 Yet Eric Groody, representing
the appellants, said that the case was merely an affirmation of the general rule
in costs awards.76
Once the no-way rule has been rejected in these cases, the focus shifts from
whether or not to award costs at all to the question of the applicability of
solicitor-client costs. A classic example of this debate occured in Canadian
Newspapers Co. v. Canada (A.G.).7 The applicants deliberately contravened a
new Criminal Cod 8 search and seizure provision so as to facilitate a review of
its constitutionality. The applicants were successful in their legal challenge and
argued for solicitor-and-client costs on the basis that high legal fees impede the
use of the courts to vindicate Charter rights. Osler J. considered that the
7’3 Ibid. at 48.
74See e.g. the discussion infra notes 159-61 and accompanying text
M. Zapf, “Alta. Judge Orders Group to Pay Gov’t’s Costs” 12:21 The Lawyers Weekly (2
October 1992) 9.
76 M. Zapf, “Suit Was ‘Paper Thin’,” 12:21 The Lawyers Weekly (2 October 1992) 1.
(1986), 55 O.R. (2d) 737, 32 D.L.R. (4th) 1992 (H.C.J.); costs ruling: (1986), 56 O.R. (2d)
240, 12 C.P.C. (2d) 203 (H.CJ.) [hereinafter Canadian Newspapers cited to O.R.].
78R.S.C. 1985, c. C-46 [hereinafter Criminal Code].
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Attorney General of Canada had admitted to a prima facie Charter violation
and that the issue “had wider implications for the community at large and that
there was nothing of a frivolous nature about the challenge.”79 However, the
Court maintained that solicitor-and-client costs should be used only in the case
of misconduct by one of the parties and that “the Crown should not be treated
as an unlimited source of funds with the result that marginal applications would
be encouraged.”‘
A similar view was expressed in Reform Party of Canada v. Canada
(A.G.).'” The Reform Party alleged that several provisions of the Canada
Elections Act 2 were in violation of subsection 2(b) of the Charter. They were
successful at trial and requested solicitor-and-client costs because the issue was
of public importance. Again the Court held that solicitor-and-client costs were
to be reserved for cases of misconduct by one of the parties. Moshansky J. did,
however, award the plaintiffs increased party-and-party costs due to the
“fundamental importance to the Canadian public of the issues raised by the
plaintiffs and … the very real complexity of the litigation.”83
C. The One-Way Rule: Costs Awards to Unsuccessful Litigants
Cost awards to unsuccessful litigants are extremely rare and are usually
provoked by misconduct on the part of the successful party. However, there is
some jurisprudence that indicates a shift in this approach. Schachter v. Canada
(Minister of Employment and Immigration)5 is perhaps the most promising
case regarding costs jurisprudence, not only because the cost award was
somewhat radical, but also because it is one of the few cases in which the
Supreme Court laid out its reasoning regarding costs. Schachter had challenged
the constitutionality of a benefits package for mothers and adoptive parents
under the Unemployment Insurance Act.8″ The Federal Court declared the plan
a violation of section 15 of the Charter that could not be saved by section 1.
The Court gave a declaration of relief and extended the benefits package. The
Legislature changed the provision while the Supreme Court was deliberating
79 Canadian Newspapers, supra note 77 at 241.
‘0 Ibid. at 242.
8 (1992), 7 Alta. L.R. (3d) 1, 13 C.P.C. (3d) 344 (Q.B.) [hereinafter Reform Party cited to Alta.
L.R.].
‘2 R.S.C. 1985, c. E-2.
‘3 Reform Party, supra note 81 at 58.
84 Orldn, supra note 4 at 2-20ff.
‘5 [1992] 2 S.C.R. 679, 93 D.L.R. (4th) 1 [hereinafter Schachter cited to S.C.R.].
‘ 6R.S.C. 1985, c. U-1.
1995]
L. FRIEDLANDER – COSTS
the matter. Lamer C.J.C. wrote:
Despite the fact that the respondent has lost in this Court, I do not feel it
appropriate that he should bear the costs. He did win with respect to the s.
15 issue at trial and the subsequent litigation has, upon the concession of
the appellants, centred only on choice of remedy. According to this con-
cession, the respondent by his claim brought a deficiency to the attention of
Parliament which has since been remedied by the repeal and replacement
of the impugned provision. He should not be penalized now because of a
dispute solely with respect to remedy. I therefore award the respondent his
solicitor-and-client costs.”
This is clearly a radical change from traditional costs rulings both in terms of
the content and the reasoning of the judgment. Chief Justice Lamer based his
decision on the fact that the claim had been at least partially successful and that
it had “brought a deficiency to the attention of Parliament.” As well, he
awarded solicitor-and-client costs instead of party-and-party costs, perhaps as a
reward for having instigated legislative action. Although the Supreme Court of
Canada had previously hinted at the possibility of a costs order rewarding
public interest litigants who facilitate the settlement of a point of law,”
Schachter is the only Supreme Court case to have addressed the issue directly.
It has yet to be seen whether other courts will follow the Schachter approach or
whether its effects will be limited to appeals on the remedy alone.”
The other Canadian case which contemplates an award of costs to an
unsuccessful litigant is B.(R.) v. Children’s Aid Society. The key issue in this
87 Schachter, supra note 85 at 726. For commentary on the remedial aspects of the case, see N.
Duclos & K. Roach, “Constitutional Remedies as “Constitutional Hints”: A Comment on R. v.
Schachter” (1991) 36 McGill L.J. 1.
8 In R. v. Trask, [1987] 2 S.C.R. 304,59 C.R. (3d) 179 [hereinafter cited to S.C.R.], McIntyre J.
remarked that:
from time to time, when the Crown wishes to appeal a summary conviction matter
in order to settle a point of law, [the Court] will require the Crown to pay the re-
spondent’s costs. This is because it is the public-at-large who are the beneficiaries
of such a step and it is not considered just that one individual should be put to sub-
stantial expense when it is the Crown that seeks to effect a valid social purpose by
taking the appeal (ibid. at 307).
The Supreme Court of Canada has also awarded costs to the applicant prior to hearing the case
in order to ensure continued participation in the action. See Skapinker v. Law Society of Upper
Canada, [1984] 1 S.C.R. 357, 9 D.L.R. (4th) 161 [hereinafter Skapinker cited to S.C.R.] dis-
cussed infra note 148 and accompanying text; Borowski, supra note 1.
‘ K. Roach, ConstitutionalRemedies in Canada (Aurora, Ont.: Canada Law Book, 1994) at 11-
44.
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case was the constitutionality of sections of the Child Welfare Act” which
permitted the Children’s Aid Society to assume wardship of a child over the
parents’ objections. The Society had obtained a court order granting wardship
for a child of Jehovah’s Witnesses. During the wardship, the child had received
a blood transfusion as treatment for glaucoma. At the district court level,
Whealy J. found against the parents but ordered the Attorney General of
Ontario to pay costs.9′
The costs award was cross-appealed by the Attorney General who argued
the following points: the Attorney General was the successful party; it had
exhibited no misconduct; available resources are irrelevant, and even if they are
relevant, that no evidence had been adduced; the award would encourage
marginal applications; and the case was brought for the benefit of the parents
and of other Jehovah’s Witnesses. Justice Tarnopolsky, writing the majority
judgment on the merits, upheld the lower court’s costs order and did not order
any costs on the appeal. First, he stated that there was nothing either in the
Courts of Justice Act 19842 or the Rules of Civil Procedure to preclude such an
order.93 He then affirmed and elaborated on what he perceived to be the three
reasons for the lower court decision. Tamopolsky J.A. also noted that the
parents had not initiated the action but had merely been responding. This,
however, was not held to be determinative of the costs order, the emphasis
being placed instead on the importance of the issue. The judge stated that the
parents “rose up against state power because of their religious beliefs,” and that
as the Charter presents religious freedom as a “fundamental freedom”, the
issue is “important” as defined by Rule 57.01(1)(d).94 He emphasized that the
issue in the case was of national, and not merely provincial, importance.
Finally, Tarnopolsky J.A. characterized the appeal to the district court as
essentially a re-trial with new evidence and he rejected the idea that this type of
cost award would encourage marginal litigation.
Goodman J.A. agreed with Tarnopolsky J.A. and allowed the costs order to
stand because he was reluctant to override the discretion of the lower court
judge. He stated that some exceptional cases might call for a costs award to an
unsuccessful litigant, and that he remained unconvinced that this was not such a
90 R.S.O. 1980, c. 66.
9 B.(R.) v. Children’s Aid Society of Metropolitan Toronto (1988), 63 O.R. (2d) 385, 47 D.L.R.
(4th) 388 (Dist. Ct).
9S.O. 1984, c. 11.
93 B.(R.) v. Children’s Aid Society, supra note 41 at 354-56.
‘, This rule allows a court to consider the “importance of the issues” when detennining costs.
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L. FRIEDLANDER – COSTS
case.95 This cannot be interpreted, however, as a clear endorsement of the view
of Mr. Justice Tarnopolsky. Houlden J.A. disagreed vehemently with the
majority, saying that such an order would provide a “dangerous precedent”.96 It
is unclear whether “dangerous precedent” refers to the precedent of awarding
costs to unsuccessful litigants in general or awarding costs against an Attorney
General defending legislation.
The cautious approach of Goodman and Houlden JJ.A. will make it easier
for other courts to avoid careful consideration of B.(R.) v. Children’s Aid
Society. Furthermore, although the judgment of Tarnopolsky J.A. appeared to
endorse a radical approach to costs in public interest litigation, the scope of his
judgment remains unclear. Under Justice Tarnopolsky’s regime, would all
unsuccessful Charter applicants be awarded costs? Or would costs be justified
only for applicants whose arguments rested on “fundamental freedoms”?
Would such an award include any applicant with a case of national importance?
Although the judgment is laudable for its attempt to design a costs award
reflecting the unique nature of public interest litigation, it failed to set out clear
principles to guide the application of costs awards.
H. New Statutory Regimes
The above survey demonstrates the murky nature of the principles for costs
awards in public interest cases. Although it appears that the majority of judges
endorses a no-way rule for public interest cases, significant case law exists that
supports the use of the costs-in-the-cause rule. It is this second line of
jurisprudence that seems to have inspired the new statutory regimes in British
Columbia and Nova Scotia. Although the increase in public interest litigation
was hardly the impetus for these new tariffs,” the likely result of the new rates
will be an increase in party-and-party costs awards rather than a rejection of
them.
B.(R.) v. Children’s Aid Society, supra note 41 at 356.
96 Ibid. at 360.
97 The British Columbia tariffs were in part a reaction to criticisms that the level of indemnifi-
cation for all cases was inadequate under the previous rules. See Metchosin (District of) v.
Metchosin Board of Variance (1992), 11 M.P.L.R. (2d) 165 (B.C.S.C.) [hereinafter cited to
M.P.L.R.]; costs ruling: (1992), 11 M.P.L.R. (2d) 180,9 C.P.C. (3d) 241 (B.C.S.C.).
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A. The British Columbia Rules
Prior to September 1, 1990, the costs regime in British Columbia was
similar to that in the rest of Canada. Tariffs were updated every few years to
reflect inflation and rising legal costs, yet these rates inevitably fell behind
current costs and resulted in low compensation.98 British Columbia now has
three types of costs: ordinary, increased and special. Under “ordinary costs”
there are five scales. The court is to have regard to the following when
determining the applicable scale:
(a) Scale 1 is for matters of little difficulty
(b) Scale 2 is for matters of less than ordinary difficulty
(c) Scale 3 is for matters of ordinary difficulty or importance
(d) Scale 4 is for matters of more than ordinary difficulty or impor-
tance
(e) Scale 5 is for matters of unusual difficulty or importance.”
The rules further state that:
In fixing the appropriate scale under which costs will be assessed,
the court may take into account the following:
(a) whether a difficult issue of law, fact or construction is involved;
(b) whether an issue is of importance to a class or body of persons,
or is of general interest;
(c) whether the result of the proceeding effectively determines the
rights and obligations as between the parties beyond the relief
that was actually granted or denied.’
Scale 3 is the default scale. Further, if the court feels that an order under
scales 1 through 5 would be “unjust”, it may order “increased costs” under
section 7 of Appendix B. These costs are a proportion of special costs. “Special
costs” refers to “those fees that the registrar considers were proper or
reasonably necessary to conduct the proceeding to which the fees relate.” The
registrar is to consider the complexity, difficulty and novelty of the issues, the
skill of the solicitor, the amount at stake in the proceeding, the time expended,
the conduct of the parties, the importance of the proceeding to the party and the
benefit of the solicitor’s service to the party.’0 ‘ Special costs are considered the
Ibid. at 165.
” British Columbia, Rules of Court, appendix B, s. 2.
‘0 Ibid., s. 2(2).
0! Ibid., s. 3.
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L. FRIEDLANDER – COSTS
equivalent of solicitor-and-client costs.10 2
The rules are producing new jurisprudence on the subject of costs. One of
the earliest cases under the new rules was Bradshaw Construction Ltd. v. Bank
of Nova Scotia. Bradshaw Construction alleged that the Bank of Nova Scotia
had cancelled its loan too soon and forced the company into bankruptcy.
Bradshaw won damages of $450,000 for breach of contract. It requested a
higher scale of damages on the ground that the issues had been difficult. Bouck
J. interpreted “importance” in the new rules to mean that “the litigation must be
important to the public at large or at least to other litigation of a similar nature.
It does not mean important to the individual litigant since every litigant
considers his or her case important.”‘ 03 The judge held that the case was not
“important” under the new rules. Nevertheless, Justice Bouck did award
increased costs.’0 The reasoning for the award is, however, somewhat unclear.
One rationale appears to have been the level of difficulty of the case, yet Justice
Bouck also noted the comparative resources of the law firms involved,
indicating that this may be an additional factor to consider:
[The plaintiff and his lawyer] were up against the power and resources of a
national bank … With all its resources, the bank retained a large and com-
petent Vancouver law firm. The litigation was hard fought on both sides.
Nonetheless, Mr. Taylor and his client persevered and ultimately prevailed.
In all the circumstances, there would be an unjust result if the plaintiff only
recovered ordinary costs on Scale 3 or 420’
One commentator asks whether the decision is
(a] harbinger of a future judicial propensity to use the provision for
“increased costs” in s. 7 of Appendix B as a remedial device to correct the
perceived unfairness of certain aspects of the operation of the adversarial
litigation process, especially as it concerns the great disparity in the re-
sources available to parties to finance litigation.'”
The author further remarks that the decision could betray “an unarticulated
policy of punishing national banks through an award of increased costs against
them where they are the losing party.”‘ 7
‘ 2Bradshaw Construction Ltd. v. Bank of Nova Scotia (1991), 54 B.C.L.R. (2d) 309 at 323,48
C.PC. (2d) 74 (S.C.) [hereinafter Bradshaw cited to B.C.L.R.].
“03 Ibid. at 317.
“4 Ibid. at 325.
‘0’ Ibid. at 324.
6F.M. Irvine, Annotation (1991) 48 C.P.C. (2d) 76 at 79.
107 Ibid.
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Several cases have affirmed the proposition that the importance of an issue
must be determined objectively. 8 This rule was further interpreted in Ter
Neuzen v. Korn,’O’ which was the first case in Canada to examine an allegation
that an individual had become HIV-positive due to medical negligence. The
plaintiffs wanted costs on Scale 5, but the Court only allowed costs on Scale 4.
The Court noted that jury awards are not an effective precedent and that
Bradshaw seemed to “require importance to a class or body of persons and a
determination which sets no precedent does not seem to fit within that
definition.” “o However, the Court seemed dissatisfied with this reasoning and
awarded the plaintiffs costs on Scale 4, stating: “I cannot think the rules were
drafted to prevent parties to a jury trial from ever being awarded costs on Scale
5. On that basis, it is difficult to see why the test of importance should be
entirely objective and not subjective in any way.””‘
B. The Nova Scotia Rules
Similar developments have occured
in Nova Scotia since the 1989
implementation of new tariffs. Under Nova Scotia’s Civil Procedure Rules, the
Court shall consider the following factors in determining the applicable tariff:
(a) where the main issue is a monetary claim which is allowed in
whole or in part, an amount determined having regard to
the amount involved
the complexity of the proceeding, and
(i)
(ii)
(iii) the importance of the issues;
(b) where the main issue is a monetary claim which is dismissed,
an amount determined having regard to
(i)
the amount of damages provisionally assessed”
by the court, if any,
the amount claimed, if any,
(ii)
(iii) the complexity of the proceeding, and
(iv) the importance of the issues;
(c) where there is a substantial nonmonetary issue involved and
whether or not the proceeding is contested, an amount deter-
mined having regard to
(i)
(ii)
the complexity of the proceeding, and
the importance of the issue;
See Lankenau Estate v. Dutton (1991), 57 B.C.L.R. (2d) 327 (S.C.).
“9 (1991), 64 B.C.L.R. (2d) 125, [1992] 3 W.W.R. 469 (S.C.) [hereinafter cited to B.C.L.R.].
“o Ibid. at 127.
111 Ibid.
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L. FRIEDLANDER – COSTS
(d) an amount agreed upon by the parties. ‘ 2
One of the first cases to interpret the new rules was Hines. At issue was a
section 15 Charter challenge to provisions of the Motor Vehicle Act ‘ which
effectively prohibited individuals with diabetes from operating large trucks.
Davison J. held that, in determining costs for a non-monetary issue, the Court
should emphasize complexity of the proceedings rather than importance of the
questions, because the time spent by counsel on the case is the most important
factor in determining the cost of representation. Thus in Hines, Davison J.
noted that, although the issue was of considerable importance, the complexity
of the proceedings was not exceptional and therefore a moderate tariff was
appropriate.
14
In Landymore v. Hardy,”5 the Court rejected the Hines formula and held
that equal weight should be given to complexity and importance of the issues.
In Hawker Siddely Canada Inc. v. Nova Scotia (A.G.)” 6 and Nova Scotia
(Minister of Community Services) v. Keeble,'” 7 the importance of the issues was
also a significant factor in costs awards.
C. Analysis of the British Columbia and Nova Scotia Rules
Courts in British Columbia and Nova Scotia are still attempting to adjust to
these new costs regimes; the new rules have not been in place long enough to
predict, in any confident manner, the direction of costs awards in public interest
litigation. However, the language of the provisions, as well as some of the case
law, suggests that costs awards will be higher in cases which are important to
the public. In fact, in light of Davison J.’s comments in Hines, that complexity
is more determinative of the actual cost of litigation than is its importance to
the public, we may infer that the legislatures inserted the importance factor to
address the growth of public interest litigation by providing potentially higher
cost awards for successful public interest litigants.
These new statutory regimes may, however, punish as much as they reward
public interest litigants. Increased costs awards for important and complex
,,2 Nova Scotia, Civil Procedure Rules, s. 63.04.
,’R.S.N.S. 1989, c. 293.
“, Hines, supra note 43 at 246.
,,7 (1992), 112 N.S.R. (2d) 410,307 A.P.R. 410 (S.C.T.D.).
“1(1991), 110 N.S.R. (2d) 426,299 A.P.R. 426 (S.C.T.D.).
“, (1992), 114 N.S.R. (2d) 155 (Far. Ct.).
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cases will provide financial compensation to successful public interest litigants
but will also increase the risk of adverse costs awards. Increased risk may be
avoided if courts adopt the approach of Bouck J. in Bradshaw and consider the
comparative resources of the parties before ordering costs. This appears
unlikely given that both statutes exclude financial position as a relevant factor,
and that the judiciary is frequently reluctant to engage
in a directly
distributional role.”8 A more plausible way to free public interest litigants from
the danger of large adverse costs awards is to use the statutes to decrease rather
than increase costs awards based on the importance of the issues at stake. The
present case law, however, gives no indication that British Columbia and Nova
Scotia courts will follow this alternative approach.
M. Other Models
Before providing an analysis of costs rules in public interest litigation, a
brief survey of government funding mechanisms is in order. Class actions are a
means of increasing access to justice by allowing representative litigants to
bring forward claims on behalf of a group of people.” 9 Although class actions
are not possible under the common law in Canada,2 ‘ Ontario’2′ and Quebec’
have, however, enacted legislation allowing class action suits. Ontario’s Class
Proceedings Act results in partial subsidization of public interest litigants.
Class action suits and public interest litigation are not identical. Class
actions serve to bring together many individuals with the same claim. This
claim, by itself, may have no impact on the public interest. Sometimes, as in
the case of Canadians who contracted HIV from contaminated blood, class
action claims may overlap with public interest litigation. As a result, public
interest litigants may find funding under the Class Proceedings Act.
Class actions have the following benefits:
“‘See text accompanying note 209, below.
1, See Ontario Law Reform Commission, Report on Class Actions (Toronto: Queen’s Printer,
1982); A.C. Hutchinson, Access to Civil Justice (Toronto: Carswell, 1990); G. Watson & M.
McGowan, Guide to Case Management and Class Proceedings (Toronto: Carswell, 1993).
‘”0Naken v. General Motors of Canada Ltd., [1983] 1 S.C.R. 72, 144 D.L.R. (3d) 385.
121 S.O. 1992, c. 6.
Act respecting the Class Action, R.S.Q. 1977, c. R-2.1. Some commentators say the Ontario
Act is “more liberal” than the Quebec legislation. See e.g. A. Roman, “The Role of Public Inter-
est Litigation and Other Alternatives” (1991) 17 Can.-U.S. L.J. 387 at 390.
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L. FRIEDLANDER – COSTS
achieving a result that is good for the community as a whole, delivering
widespread compensation, scrutiny or “policing” of the marketplace and
even satisfying certain needs that the community may have for “justice”
where widespread harm has been caused.'”‘
The Class Proceedings Act allows one or more members of a class of persons
to litigate for the entire class.24 The litigants are required to file a motion for
certification at which time the court will consider whether there is a cause of
action, the class is identifiable, the claims raise a common issue, and whether a
class proceeding is the preferable procedure to resolve the issues. At this time
the court will also determine whether the representative plaintiff or defendant
fairly and adequately represents the interests of the class, has a plan to represent
and notify the members of the class, or has any conflict of interest with other
members of the class.’2′
When a costs order is at issue, subsection 31(1) of the Class Proceedings
Act specifically allows the court to consider “whether the class proceeding was
a test case, raised a novel point of law or involved a matter of public interest.”
Furthermore, subsection 31(2) prohibits a cost order for an individual to exceed
that individual’s claim. 126 Therefore, although the court retains discretion to
award costs-in-the-cause, the fact that the legislation invites argument on the
issue indicates that courts may be more willing to abandon the rule in the face
of persuasive argument.
The legislation does not adopt the recommendations of the Ontario Law
Reform Commission (“O.L.R.C.”) with respect to costs in class action suits.
The O.L.R.C. argued that the costs recoverable in a class action would either be
too small to risk an adverse costs ruling or would induce the plaintiff to initiate
an individual rather than a class action suit. In contrast to the stance taken in its
Report on Standing, discussed above,’ 27 the O.L.R.C. recommended that the
traditional party-and-party rule be replaced by a no-costs rule for class
actions.’ This is particularly meaningful in light of a more significant reform:
the establishment of the Class Proceedings Fund. 29
‘2 M.G. Cochrane, Class Actions (Aurora, Ont.: Canada Law Book, 1993) at 6.
‘4 Class Proceedings Act, supra note 121, s. 2(1).
“5 Ibid., ss. 2(1), 5(1).
126 As Cochrane, supra note 123 at 79, points out, subsection 31(2) requires that if an amount
falls within the jurisdiction of Small Claims Court, the cost award must be calculated according to
the tariffs of that court.
‘” See supra note 18ff and accompanying text.
128 Ontario Law Reform Commission, supra note 119 at 704.
“9 Law Society Amendment Act (Class Proceedings Funding), S.O. 1992, c. 7.
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The Fund, administered by the Law Society of Upper Canada, will provide
funding for litigation expenses and indemnification for unsuccessful plaintiffs,
although it will not provide for solicitor’s fees.3 The Class Proceedings
Committee of the Law Society considers applications for funding, having
regard to factors such as the merits of the case, the plaintiff’s effort to find
funding and the financial responsibility exhibited by the plaintiff with regard to
the disbursement and administrative control of the funds. 3′ The representative
plaintiff, however, is responsible for reimbursing the Fund for disbursements
used and for transferring ten per cent of a successful settlement or judgment.’
The legislation also allows the use of contingent fees on a non-percentage
basis.”‘
A. LegalAid Test Case Funding
Since 1977, the Ontario Legal Aid Plan has provided legal certificates for
“test cases”, a subset of public interest litigation.’3 The Plan is administered by
the sub-committee of the Legal Aid Committee of the Law Society of Upper
Canada. The sub-committee is an advisory body composed of volunteers from
the legal community and the public. In deciding whether to grant a legal aid
certificate, it considers factors such as availability of private funding, efforts to
obtain private funding, novelty, importance and benefit of the case to others. It
can recommend total or partial assistance. Parties who receive funding from the
sub-committee can apply to the Director for reimbursement of costs in case of
unsuccessful litigation. 35 Reimbursement is not automatic, however.36 In the
1990
it
recommended certificates for twenty-nine cases. 37
the sub-committee
fiscal year,
received
forty applications;
Legal aid certificates are only available to potential litigants who meet
financial eligibility criteria. Efforts to expand the test case program
to
encompass all public interest litigation, regardless of the financial status of the
applicants, crystallized into a proposal for a two-year pilot project; funding for
‘0Ibid. ss. 59.1(2), 59(3).
131 Ibid. s. 59.3(4); 0. Reg. 771/92, s. 5.
1320. Reg. 771/92, s. 10.
‘ Class Proceedings Act, supra note 121, s. 33.
‘3 Much of this description is taken from Fox supra note 14 at 393-96.
“5 R.R.O. 1990, Reg. 710, s. 118(1).
‘* See e.g. MacFarland v. Law Society of Upper Canada (1973), 2 0.R. (2d) 704 (Div. CL).
117 Ontario Legal Aid Plan, Annual Report Croronto: Law Society of Upper Canada, 1990) at
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L. FRIEDLANDER – COSTS
the project was denied by the Law Foundation in May 1989.138
Legal Aid certificates for test cases and the class actions regime in Ontario
demonstrate that government funding can effectively and fairly encourage
public interest litigation.’39 The programs have enunciated guidelines and have
enacted formalized application procedures. They enable decision-makers to
compare the relative merits of various applications while retaining judicial
neutrality. ‘ These qualities are essential to the argument below that a no-way
costs rule coupled with government funding is the best way to encourage public
interest litigation.
IV. Analysis
The above survey of responses to public interest cases demonstrates
confusion over the desired level of public interest litigation in Canada and over
the most effective means to achieve that desired level. The following analysis
will address those two issues.
Public interest litigation can be said to serve the following purposes: to
enhance the quality of judicial decision-making and the development of the
law, to supplement the democratic process, and to vindicate individual and
social rights. These three functions present different and perhaps conflicting
conceptions of the role of costs awards.
First, public participation benefits the development of the law by bringing
different types of cases to court and by providing otherwise unavailable legal
argumentation. As Prichard suggests,
[i]f differential incentives to litigate under different systems of cost, fee,
and financing rules do systematically affect the substantive law, the process
and pace of legal change, the nature of legal reasoning, and the role of
judges and their relationship to other law-making institutions then the de-
bate on fee shifting and related issues takes on a new significance.”‘
.3 Fox, supra note 14 at 396.
.39 See also Part VA, below.
‘4 See Part IVA, below on the Intervenor Funding Project Act where intervenor funding be-
comes a “cost of doing business” rather than a normative pronouncement on the merits of the ar-
guments.
“‘ J.R.S. Prichard, “A Systemic Approach to Comparative Law: The Effect of Cost, Fee, and
Financing Rules on the Development of the Substantive Law” (1988) 17 J. Legal Stud. 451 at
474.
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If disincentives to wider public participation exist, it is foreseeable that those
who are able to bear the costs of litigation will have an exaggerated impact on
judicial decision-making. Business groups, for example, will be able to present
their arguments in court more frequently than will other groups,
thus
heightening judicial awareness of business concerns. 4
1 If other concerns are not
articulated, judges may be more inclined to view business’ claims with favour.
Public interest litigants and intervenors can provide the court with the evidence
and arguments necessary for a full consideration of all the issues. The ever-
present threat of an adverse costs award may, however, deter stakeholders from
participating in the litigation.
The changing nature of litigation emphasizes the need to expand the
information available to judges. In his seminal article, Chayes argues that
litigation has begun to move away from its traditional bi-polar, party-centered
roots. Litigation frequently implicates many parties; it is no longer “confined to
the persons at either end of the right-remedy axis.”‘ 44 It may even be described
as a process of negotiation. 45 This is particularly true in public interest cases
where remedies must be fashioned to take account of all stakeholders. For
example, a judge considering a structural injunction to respond to sexism in a
workplace must have information regarding the effects of the injunction on
employees and management, both female and male, in order to make a fair
decision. Accurate information on this point may not be available from the
parties themselves.
Public interest litigants are particularly important to this information
gathering process as they represent interests that are important to society yet
that would not otherwise be represented in court. For example, although many
Canadians are concerned about the environment, these concerns are diffused
throughout the population. Many environmental problems seldom affect
individuals enough to spur litigation. Public interest litigants are necessary to
counteract this dearth of collective action. Without public interest litigants,
some significant issues will never be brought to court.
The judiciary has not been oblivious to the potentially beneficial effect of
‘4 A. Petter, ” he Politics of the Charter” (1986) 8 Sup. Ct. L. Rev. 473 at 487.
‘,’J. Welch, “No Room at the Top: Interest Group Intervenors and Charter Litigation in the Su-
preme Court of Canada” (1985) 43 U.T. Fac. L. Rev. 204 at 226-27.
‘” A. Chayes, “The Role of the Judge in Public Law Litigation” (1976) 89 Harv. L. Rev. 1281
at 1289.
“‘ Ibid. at 1299.
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L. FRIEDLANDER – COSTS
public participation on the development of the law. As noted above, judges
have frequently refused to order costs in cases where a novel or important point
has been brought forward.1 46 In some cases, courts have tailored costs orders
specifically to reflect the value of the participation of the party or the
intervenor. For example, in Schachter the Court expressed its thanks to the
applicants for bringing the issue of discriminatory parental benefits “to the
attention of Parliament.’ 47
Skapinker v. Law Society of Upper Canada,’48 one of the earliest Charter
cases, could have been the springboard for a comprehensive judicial strategy on
the subject of costs. 49 The Supreme Court might have used the opportunity to
decide that public interest litigants could present arguments for costs before the
commencement of the next stage of litigation. Public interest litigants might be
more willing to bring cases forward if they knew the risk of an adverse costs
award before committing to continuing litigation. For example, if the Court
decided that one of the conditions of leave to appeal was that no costs would be
awarded, then the public interest litigant might be more willing to continue the
action.
Skapinker alleged that the Law Society’s requirement that members be
Canadian citizens was contrary to subsection 6(2)(b) of the Charter. Since he
became a Canadian citizen during the proceedings, he was given leave to
withdraw, which he declined. By the same order, Richardson, an American
citizen making the same allegations, was granted intervenor status. Skapinker’s
continued participation in the action enabled it to proceed uninterrupted. The
alternative would have been to initiate another action, this time with
Richardson as plaintiff, which would have taken several years to reach the
Supreme Court. Thus the Court gave costs to Skapinker, and also to the
intervenor, on the motion for application for leave to appeal, and in the Ontario
Court of Appeal. That order essentially required each party to pay its own costs
at the motion and in the Court of Appeal.
It is clear that public interest litigants help ensure healthy development of
‘4’ See supra notes 47, 48.
‘4 Schachter, supra note 85 at 726.
,41 Supra note 88.
14′ B. Crane & H.S. Brown, Supreme Court of Canada Practice: 1991-1992 (Scarborough,
Ont.: Carswell, 1991) at 75, state that “it is not unusual for the Court to order costs … to one of the
parties in any event as a condition of granting leave”, although according to anecdotal evidence,
this is not a common occurrence in Charter cases. See Borowski, supra note 1, for a well-known
example of this phenomenon.
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the law. The question to be determined, then, is the degree to which costs
awards should encourage public interest litigation with a view to
the
development of jurisprudence.
The participation of public interest litigants is necessary to solidify the
courts’ role in a democratic society. On one hand, the role of the courts as the
protector of democracy has long been recognized. Since the eighteenth
century”‘0 courts have been assigned the role of protector, ensuring that
legislatures do not abuse the power given to them by the electorate. In Canada
the courts are expressly required by section 1 of the Charter to determine what
is justifiable in a free and democratic society. They are expected to protect the
classical liberal foundations of democracy in Canada, particularly freedom of
expression, freedom of association and liberty, as well as the more modem
requirements of protection against discrimination. As Shilton explains, “groups
litigate to force government to address directly the issues raised by the
litigation, to examine government policies, and to bring them into line with
Charter standards.”‘ 51
Monahan, building on the work of John Hart Ely,5 2 argues that the very
function of judicial review is “to ensure that the political process is open to
those of all viewpoints on something approaching an equal basis.”’53 Monahan
states:
The judiciary should interpret constitutional guarantees in such a way that
the opportunities for public debate and collective deliberation are en-
hanced. To put the matter simply, constitutional adjudication should be in
the name of democracy, rather than right answers.”
In a society where big government can choke or even defy input from voters,
opportunities for public debate and collective action through the court system
See J. Locke, The Second Treatise of Government (New York: Bobbs-Merrill, 1952); C.
Montesquieu, De l’esprit des lois (Paris: Flammarion, 1961).
“‘ E.J. Shilton, “Charter Litigation and the Policy Processes of Government: A Public Interest
Perspective” (1992) 30 Osgoode Hall L.J. 653 at 655. See also C.K. Rowley, The Right to Jus-
tice: The Political Economy of Legal Services in the United States (Aldershot, England: Edward
Elgar, 1992); D. Wittman, “Why Democracies Produce Efficient Results” (1989) 7 J. of Pol.
Econ. 1395.
‘ J.H. Ely, Democracy and Distrust: A Theory of Judicial Review (Cambridge: Harvard Uni-
versity Press, 1980).
.. P.J. Monahan, “Judicial Review and Democracy: A Theory of Judicial Review” (1987) 21
U.B.C. L. Rev. 87 at 89.
’54 Ibid.
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L. FRIEDLANDER – COSTS
become increasingly important. 5″ If one of the functions of the judiciary is to
ensure the proper functioning of democracy, it must hear from those individuals
who have been excluded from or ignored by political discourse.
to
Furthermore, exposure
litigation can render political decisions
legitimate. So long as the public perceives the judicial process as fair,
controversial legislation, which may not meet with widespread social approval
despite its endorsement by the House of Commons, is more likely to engender
public acceptance. This type of legitimacy requires public participation. Courts
are an attactive arena in which to bring forward policy arguments because
judges are perceived as deciding the merits of the case without regard for the
financial resources or social connections of the litigants. Canadian judges are
not responsible to voters, but rather to the legal community. We view judges as
intelligent, experienced individuals charged with considering the impact of
policies not only on society as a whole but also on individuals. As Bryden has
pointed out: “Everyone knows that judicial decisions create winners and losers.
And nobody likes to lose. At the same time we have a strong sense that losing
is not quite so bad if we have had a fair chance at playing the game.’ 156
Conversely, courts were not designed as mini-legislatures but rather as a
venue for the settlement of disputes between private parties. In Canada’s
adversarial system, it is the responsibility of the parties to define the dispute.
The judge then decides the dispute on the basis of the evidence and arguments
presented by the parties.’57 Bryden points out that “[p]eople have a right to
come to court to resolve disputes expeditiously and at a minimum cost.’ 58 The
courts are thus structured to decide disputes as between parties, yet are also
implicitly charged with deciding social policy. Perhaps this dilemma represents
a flaw in traditional liberalism; liberal philosophers rely on the courts to serve
as a limit on abuse of power by the executive, yet courts were structured as
vehicles for the settlement of private disputes or for criminal law enforcement.
It is therefore not surprising that courts are reluctant to act as alternative
legislatures, existing primarily to provide a forum for those who have been, or
“‘ L.L. Jaffe, “The Citizen as Litigant in Public Actions: The Non-Hohfeldian or Ideological
Plaintiff’ (1968) 116 U. Pa. L. Rev. 1033 at 1044.
‘0 PL. Bryden, “Public Interest Intervention in the Courts” (1987) 66 Can. Bar Rev. 490 at 508.
“‘ For a commentary, see N. Brooks, “The Judge and the Adversary System” in A.M. Linden,
ed., The Canadian Judiciary (Toronto: York University, 1976) 89.
“‘ Bryden, supra note 156 at 514. See also Canada (A.G.) v. Aluminium Co. of Canada, [1987]
3 W.W.R. 193 (B.C.C.A.); W.A. Bogart, “Understanding Standing, Chapter IV: Minister of Fi-
nance of Canada v. Finlay” (1988) 10 Sup. Ct. L. Rev. 377 at 394.
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feel that they have been shut out of the political system. In Everywoman’s
Health Centre Society v. Bridges,’59 the plaintiff, the first free-standing abortion
clinic in British Columbia, sought an injunction to prevent the obstruction of
access to their premises by the defendants. The plaintiffs won at trial and on
appeal, and asked for special costs. They argued that the defendants put
forward arguments “clearly beyond this Court’s domain … without laying the
factual basis for these arguments,” and that the appeal “was an attempt to use
the Court to wage a political battle.”‘iW The Court agreed with the plaintiffs’
submissions, and awarded special costs. According to Southin J.A., “[tlhe
Court was being used as a political forum. Debates on political issues are the
stuff of democracy but the courtroom is not the place for such debates.””
These statements demonstrate the temptation to use costs as a device to
shield the court from being engulfed by political rhetoric. It is indisputable,
however, that Canadian courts confront issues which require an examination of
political interests, particularly in the context of Charter litigation. Increasingly,
courts are engaging in a dialogue with legislatures on issues at which politics
and law intersect.’ 62 Duclos and Roach argue that the concept of courts
supplying “constitutional hints” to legislatures is already built into Canadian
law through the reference system, and through sections 1 and 33 of the
Charter.’63 Courts must therefore make political judgments; it can even be said
that those judgments are an inherent part of the courts’ mandate. An appropriate
costs
inevitability and necessity of political
argumentation in the courts without stripping the judiciary of the tools with
which to control abuse of process.
recognizes
regime
the
Finally, the participation of public interest litigants and intervenors in
litigation facilitates the vindication of individual and group rights. These
participants are necessary to ensure that all members of society have the
opportunity to be represented in court. Public interest organizations may
represent groups in society that do not ordinarily have access to the court
system due to language barriers, lack of awareness of legal opportunities, fear,
or lack of financial resources. For example, advocacy groups representing
refugees or children may realistically be the only parties to bring forward
“9 (1991), 54 B.C.L.R. (2d) 294, 47 C.P.C. (2d) 97 (C.A.) [hereinafter Everyvoman’s Health
Centre cited to B.C.L.R.].
’60 Ibid. at 297.
… Ibid. at 299.
” 2 Chayes, supra note 144 at 1316.
‘6 Duclos & Roach, supra note 87 at 26.
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L. FRIEDLANDER – COSTS
claims for these groups.’6
Although access to justice concerns are rarely discussed in the costs
jurisprudence, they are of tremendous importance. It is trite to say that legal
protection of poor and disadvantaged groups is only effective if these groups
have real access to the justice system. As Tribe suggests, “decisionmaking
processes made essential by the government must not simultaneously be denied
because of poverty of those who are obliged to rely upon such processes.”’65
Liberal standing rules for parties and intervenors, which make it possible for
any group with relevant arguments to come before the court, are an effort to
increase access to justice. Formidable economic barriers, however, make the
argument for subsidization compelling.
V. The Case for Subsidization of Public Interest Litigants
Those who oppose subsidization for public interest litigants argue that
subsidization will cause the court system to be frustrated by verbose, self-
aggrandizing public interest groups who needlessly consume the time and
resources of the court and other litigants.’ As Justice Cory stated in Canadian
Council of Churches:
It would be disastrous if the courts were allowed to become hopelessly
overburdened as a result of the unnecesary proliferation of marginal or re-
dundant suits brought by well-meaning organizations pursuing their own
particular cases certain in the knowledge that their case is all important.’67
However, the costs rules are a rather blunt instrument when applied to
decrease caseloads. As Tribe argues, “[a] fee can be an effective screening
device only if the decision whether or not to pay it is voluntary, or if inability to
pay in itself identifies a quality sought to be screened out.” 68 The judiciary has
other more effective tools at its disposal to control the incidence of litigation.
64 Canadian Council of Churches v. Canada (Minister of Employment and Immigration),
[1992] 1 S.C.R. 236, 88 D.L.R. (4th) 193 [hereinafter Canadian Council of Churches cited to
S.C.R.].
” L.H. Tribe, American Constitutional Law (Mineola, N.Y: Foundation Press, 1978) at 1008.
‘6 Bryden, supra note 156 at 492. See also Solosky v. R., [1978] 1 FC. 609 at 612, 7 N.R. 92
(C.A.).
167 Canadian Council of Churches, supra note 164 at 252.
” Tribe, supra note 165 at 1101.
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The argument that a costs regime favourable to public interest litigants will
result in a litigation explosion is flawed because judges can use standing
criteria to prevent frivolous litigation. As previously stated, Canadian courts
have historically required private or personal interest as a prerequisite for
standing.’69 Since the standing quartet, 170 courts have expanded standing rules to
include public interest litigants. According to Canadian Council of Churches,
in order to qualify as a public interest litigant, a party must demonstrate:
1. that a serious issue of invalidity exists
2. that the party has a genuine interest in the issue
3. that there is no other reasonable and effective way to bring the issue be-
fore the courts.’
This
test acknowledges
that the traditional characterization of civil
litigation as an interpartes dispute does not apply to the public interest litigant.
The willingness of the court to grant standing to the applicant, despite the effect
of such a grant on judicial resources, indicates the belief of the court that
judicial resolution of the case will benefit the public. It is thus unfair and
inappropriately punitive for one party to bear the costs of the entire process
when the public (and both parties) benefits from the hearing of the case.
The screening process established in Canadian Council of Churches also
provides an opportunity for courts to control less worthy litigation apparently
spurred by less onerous cost policies. The “serious issue” criterion will screen
out the litigant who pursues frivolous
litigation. The “genuine interest”
criterion will respond to defendants who intend to harass plaintiffs through
litigation (for example, by SLAPP counter-suits). 72 Most importantly, the “no
other reasonable and effective way” criterion alerts judges to the need for
public interest litigation, avoids duplication and ensures that litigation in the
public interest is necessary. There are already indications that the Supreme
Court of Canada has used these criteria for intervention to contain litigation.’7
1
If Canada does see a litigation explosion, the substance-oriented approach in
Canadian Council of Churches is far superior to an approach contingent on the
financial resources of the potential litigants.
“9 B.C. Crane, “Procedural Developments in Administrative Law” (1988) 9 Advocates’ Q. 22
at 26-30. See also M. Pickard, “Why Joseph Borowski Has Standing” (1986) 36 U.T.L.J. 19.
… For commentary on the standing quartet, see J.M. Evans, “Developments in Administrative
Law: The 1986-87 Term” (1988) 10 Sup. Ct. L. Rev. 1.
‘.’ Canadian Council of Churches, supra note 164 at 253.
” See supra note 46.
,3 H.S. Fairley, “Is the Public Interest Falling From Standing?” (1993) 11 The Philanthropist
28. See e.g. Hy and Zel’s Inc. v. Ontario (A.G.). [1993] 3 S.C.R. 675, 107 D.L.R. (4th) 634.
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L. FRIEDLANDER – COSTS
Manipulation of standing rules to control litigation need only apply to
parties seeking public interest standing. Courts can control other types of
litigation by manipulating costs in response to traditional abuse of process
concerns. This tactic is already a fixture in the costs jurisprudence as solicitor-
and-client costs have long been used to control vexatious litigation. For
example, in Everywoman’s Health Centre, the Court awarded special costs in
response to perceived abuse of the courts by the defendants. Furthermore, the
court can strike out vexatious claims or proceedings by virtue of its inherent
power. 74 Moreover, the possibility of an increase in litigation is not in itself a
valid reason to limit access to the courts. The O.L.R.C. notes that “arguments
of this nature are almost invariably presented in opposition to proposed changes
that will improve access by individuals to the courts.’ 75 Yet there is little
evidence to suggest that substantive or procedural changes to access barriers
will provoke an explosion of litigation because “most individuals do not find
the prospect of litigation enticing.”‘ 176 In light of the courts’ ability to control
litigation with other tools, the threat of increased litigation is not an effective
argument against the encouragement of public interest litigation through
manipulation of costs awards. The crucial question to be decided is how to best
encourage public interest litigation.
A. Ontario’s Intervenor Funding Project Act, 1988
Ontario’s Intervenor Funding Project Act’ 77 provides
for
intervenors’ costs in certain public hearings, particularly in administrative
hearings. This is probably due to the great utility and high expense of
participation in this context. The potential usefulness of public participation in
these hearings has long been acknowledged. For example, in the early 1980s
the British Columbia Utilities Commission awarded hundreds of thousands of
dollars in costs to intervenors to ensure that the Commission was fully
informed before it rendered its decisions regarding hydro-electric dams.7
funding
1
“4 Law Reform Commission of Australia, supra note 16 at 110-12.
‘7’ Report on Standing, supra note 18 at 45.
176 Ibid. at 46.
“n R.S.O. 1990, c. 1.13.
,71 The Alberta Energy Resources Conservation Board, the Porter Royal Commission on Elec-
tric Power Planning and the Ontario Environmental Assessment Board have also funded interve-
nors. See R.W. Shorthouse, “The Demise of Public Funding: Cost Awards to Public Interest In-
tervenors Before the B.C. Utilities Commission” (1985) 43 Advocate 601; J. Keeping,
“Intervenors’ Costs” (1989) 3 Can. J. of Admin. L. Prac. 81; SJ. McWilliams, “Ontario’s Inter-
venor Funding Project Act: The Experience of the Ontario Energy Board” (1992) 5 Can. J. of
Admin. L. Prac. 203 at 222-23.
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Evans writes that “[ilt is now widely accepted that well-prepared and presented
arguments by ‘public interest’ groups, or competitors, are essential … to the
quality of the agency’s decision.”’79 However, it can be enormously expensive
to participate in such hearings as they are often lengthy and demand detailed,
comprehensive and costly studies.
Ironically, however, even in the administrative context where public
participation is often considered crucial, jurisprudence regarding costs awards
has not strayed far from the common law. In the key case on point, Bell
Canada v. Consumers’ Association of Canada8 Bell Canada wished to
overturn a costs order
for a Canadian Radio-Television and Tele-
communications Commission (“C.R.T.C.”) rate hearing in which Bell was
ordered to pay approximately $200,000 in counsel fees to the respondent and to
the intervenors, the National Anti-Poverty Association and Inuit Tapirisat. 8′
Bell argued that the C.R.T.C. had exceeded its jurisdiction as counsel fees for
each organization were already paid by other means and therefore a costs order
would not serve as indemnification for expenses incurred. At the Federal Court
of Appeal, 8 2 the majority held that costs at C.R.T.C. hearings should be limited
by the principle of indemnification, although in this instance there was
insufficient evidence
to show that the principle had been violated. The
dissenting judgment of Urie J.A., however, held that costs of such a hearing are
qualitatively different from those of civil litigation and therefore should not be
limited by indemnification. He stated that
the purpose of a hearing in such a proceeding is to obtain meaningful reac-
tion from concerned and interested parties affected by the rate fixing,
whether adversely or positively … Such contributions to a better under-
standing of the issues should, as I see it, be encouraged and rewarded.'”
r
At the Supreme Court, Le Dain J. wrote what has been called a “rather
“4 where he adopted a compromise position. Justice
disappointing judgment”,
Le Dain held that costs in such an administrative hearing should be limited by
the principle of indemnification: they “cannot be construed to mean … a
subsidy to a participant in proceedings without regard to what may reasonably
‘9 J.M. Evans, “Developments in Administrative Law: The 1985-86 Term” (1987) 9 Sup. Ct. L.
Rev. I at 38.
… [1986] 1 S.C.R. 190,26 D.L.R. (4th) 573 [hereinafter Bell Canada cited to S.C.R.].
,81 Roman, supra note 122 at 389.
“8 Bell Canada v. Consumers’ Association of Canada, [1984] 1 EC. 79, 147 D.L.R. (3d) 37
(C.A.) [hereinafter cited to EC.].
“3 Ibid. at 84-85.
‘” Evans, supra note 179 at 42.
1995]
L. FRIEDLANDER – COSTS
to be
incurred for such participation..’..
be considered
Nevertheless, the Court held that reasonable costs could be awarded, regardless
of whether they had actually been incurred. I6
the expense
In Bell Canada, the Supreme Court relied on Re Regional Municipality of
Hamilton-Wentworth and Hamilton-Wentworth Save the Valley Committee,
Inc.’8′ in which residents’ groups wished to make submissions regarding the
placement of a new road. The intervenors asked for costs before the hearing in
order to secure their participation. The Court had to determine whether the
tribunal, a Joint Board, had jurisdiction to order costs in advance. The Court set
out a now well-known list of the characteristics of legal costs:
(1) They are an award to be made in favour of a successful or de-
serving litigant, payable by the loser.
(2) Of necessity, the award must await the conclusion of the pro-
ceeding, as success or entitlement cannot be determined be-
fore that time.
(3) They are payable by way of indemnity for allowable expenses
and services incurred relevant to the case or proceeding.
(4) They are not payable for the purpose of assuring participation
in the proceedings. ‘
The Court held that the intervenors’ request for an advance ruling of costs was
tantamount to intervenor funding and that the Joint Board had therefore
exceeded its jurisdiction.’9
Ontario’s response to these cases was the Intervenor Funding Project Act, a
statute which specifically allows some tribunals’9 to award costs to intervenors,
payable by the funding proponent.’9′ The intervenor must apply to a panel
‘ Bell Canada, supra note 180 at 207-208.
196Ibid.
“‘ (1985), 51 O.R. (2d) 23, 19 D.L.R. (4th) 356 (Div. Ct.) [hereinafter Hamilton-Wentworth
cited to O.R.].
Ibid. at 32.
See also Reference Re National Energy Board Act (Canada), [1988] 2 F.C. 196, 48 D.L.R.
(4th) 596 (C.A.); Re Proposed Transmission Plan of Ontario Hydro for Southwestern Ontario
(1987), 1 C.E.L.R. 261 (Ont. Cons. Hearings Brd.). For other cases on indemnification, see Ed-
monton v. Public Utilities Board (1985), 36 Alta. L.R. 37 (C.A.); Erlendson v. Ashern Freighters
Ltd. (1989), 58 Man. R. 250 (C.A.); Feldman v. Law Society of Upper Canada (1989), 68 O.R.
(2d) 157,33 C.P.C. 213 (H.C.J.).
“o E.g. Joint Board hearings under the Environmental Assessment Act, R.S.O. 1990, c. E.18; the
Environmental Protection Act, R.S.O. 1990, c. E.19; or the Ontario Water Resources Act, R.S.O.
1990, c. 0.40.
… A funding proponent “means a proponent who has been named by a funding panel as a
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(different from the one actually hearing the case) for funding.”9 The panel will
award funding if the case will “affect a significant segment of the public”, and
if it will “affect the public interest and not just private interests.”’93 The panel
will consider factors such as whether the intervenor represents a clearly
ascertainable interest that should be represented at the hearing, whether a
separate representation of that interest would contribute substantially to the
hearing, whether the intervenor has adequate financial resources to represent
the interest, whether the intervenor has made efforts to raise funds, whether the
intervenor has an established record of concern for the interest, whether the
intervenor has attempted to include related interests in an umbrella group,
whether the intervenor has a clear proposal for use of the funds requested, and
whether the intervenor has the financial safeguards to enable accountability for
the funds.’9 Note however that it is not necessary for the intervenor to meet
each of these criteria.’ 95 The panel may choose to reduce or retract the award
should the burden on the funding proponent be too harsh.’ 96
Although we have argued that judges (or members of tribunals) should not
have the authority to subsidize public interest groups, the Intervenor Funding
Project Act is the exception that proves the rule. Tribunals that regulate public
utilities have a mandate to subsidize public intervention. This mandate stems
from two facts. First, the cost of subsidizing intervenors will be passed on to
the public through utility rates,’ 9′ and therefore the disproportionality of forcing
one party to absorb intervention costs is avoided. Litigation costs, including
intervenor funding, are merely one of the many expenses of doing business.
However, this is not the only argument in favour of subsidization because any
government party, including the Attorney-General, can be said to be capable of
transferring costs to the public. Moreover, the public utility is different from
other public bodies as regulatory tribunals are specifically charged with the
responsibility of setting rates in the public interest. Therefore, unlike the
Attorney-General who pursues litigation with only the most indirect consent
from taxpayers (i.e. taxpayers’ implicit consent to defend legislation), these
regulatory boards have a direct mandate from the public to hold hearings to
ensure that rates are reasonable.
funding proponent.” A funding panel “means an intervenor funding panel appointed under [the]
Act’ (Intervenor Funding Project Act, supra note 177, s. 1).
,” Ibid., s. 3(1).
’93 Ibid., s. 7(2).
” Native Council of Canada v. Environmental Assessment Board (19 October 1990), Ottawa
18044/90 (Ont. Ct. (Gen. Div.)).
,96Intervenor Funding Project Act, supra note 177, s. 8(3).
‘7 McWiliams, supra note 178 at 221.
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L. FRIEDLANDER – COSTS
B. Proposals for Reform
The O.L.R.C. supports the elimination of liability for costs of public
interest plaintiffs, but advocates the replacement of the costs-in-the-cause rule
with a one-way costs rule. This would mean that if the plaintiff is successful,
the defendant would be required to pay party-and-party costs, but if the
defendant is successful, each party would pay its own costs.’9 The one-way
rule would be applied only if four conditions are met:
(a) the proceeding involves issues the importance of which ex-
tends beyond the immediate interests of the parties;
(b) the person has no personal, proprietary or pecuniary interest in
the outcome of the proceeding or, if he or she has such an in-
terest, it clearly does not justify the proceeding economically;
(c) the issues have not previously been determined by a court in a
proceeding against the same defendant; and
(d) the defendant has a clearly superior capacity to bear the costs
of the proceeding.'”
In addition, the one-way rule will not apply if “the conduct of the person who
commences the proceeding is vexatious, frivolous or abusive. ‘ ‘2
The O.L.R.C.’s decision to endorse a one-way rule rather than a no-way
rule is based on a number of factors. First, the O.L.R.C. determined that
government funding for public interest litigants was “a partial solution at
best.’ 20′ The reasons for this conclusion are threefold. First, despite the
existence of funding plans such as the Ontario Legal Aid Plan, the authors of
the O.L.R.C. Report doubted that the government would reimburse costs given
the expense involved. Second, the costs of implementing a new administrative
structure would be prohibitive. Third, reliance on government funding would
render the plan vulnerable to budget-trimming.’2
The second factor in the O.L.R.C. decision to endorse a one-way costs rule
was that potential public interest litigants would still be deterred from initiating
litigation as they would remain liable for their own costs. A no-way costs rule
1′ Report on Standing, supra note 18 at 157-60. Professor Kent Roach, supra note 89 at 11-42
to 11-47, also endorses a variant of this approach.
Report on Standing, ibid. at 177B.
Section 5(1) of the “Draft Act: Access to Courts Act, 19” in Report on Standing, ibid. at 184-
85.
2. Report on Standing, ibid. at 155.
211Ibid.
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would not encourage the risk-averse individual who is considering litigation for
the first time to begin a lawsuit. The O.L.R.C. argues that a no-way rule affects
plaintiffs and defendants unequally because although both parties have to fund
expensive litigation, plaintiffs generally have fewer economic resources than do
defendants.
203
The O.L.R.C.’s proposal does much to address inequality of access to the
court system, yet its advocacy of the one-way rule is perhaps too ambitious.
First, in order for plaintiffs to qualify for the one-way rule, they must show the
court that they have no personal or pecuniary interest in the outcome of the
case. However, many plaintiffs will have mixed motives for pursuing a case; in
most public interest litigation the plaintiff will have some, albeit small, personal
or pecuniary interest in the outcome. It is difficult to see why a defendant
should have to pay costs where a plaintiff has no pecuniary interest, yet should
not have to pay costs where a plaintiff has a small pecuniary
interest.
Furthermore, even if the one-way costs rule is altered to encompass small
pecuniary interest, where should the line be drawn between ordinary costs and
one-way costs cases? When does lack of pecuniary interest become severe
enough to merit the application of a one-way costs rule?
Second, the O.L.R.C. recommendations may not have much impact on
public interest litigation due to an increase in uncertainty with respect to costs
awards. The requirements of absence of pecuniary interest on the part of the
plaintiff, and substantial economic resources on the part of the defendant,
would still be subject to the discretion of an individual judge. Additional costs
would be incurred as arguments and evidence would have to be adduced to
argue these points. The resulting uncertainty might have a deterrent effect,
counteracting the incentive engendered by the potential application of a one-
way rule.
Third, the O.L.R.C. assumes that a no-way rule will operate unequally
between the public interest plaintiff and the defendant. The plaintiff may be “an
individual of modest resources or a person who rarely, if ever, engaged in
‘one shotter’ .’24 The defendant, in contrast, is
litigation –
characterized as a “repeat player” who is more willing to absorb the costs of
litigation. These circumstances do not occur universally, however. Public
interest litigants are not always lone individuals fighting the big corporation or
the government; they may be interest groups with a long history of litigation
a so-called
205
20’Ibid. at 160.
2
1, Ibid.
“5 Ibid.
1995]
L. FRIEDLANDER – COSTS
experience. This is particularly true in the case of an intervenor with party
status who wishes to help defend legislation, an increasingly prevalent
situation. 6 These groups may be more familiar with the law in an area and
may even have access to superior lawyers. Although they will not have the
financial resources of a large corporation, these groups may have enough
funding to make them risk-neutral rather than risk-averse.
Fourth, the impossibility of adequate government funding is debatable.
Certainly no government will be anxious to spend more taxpayers’ dollars on
any project, yet Ontario’s class action fund and the Ontario Legal Aid Plan
evidence the conceivability of the establishment of a costs fund. The O.L.R.C.
also contends that the administrative costs of setting up such a plan would be
too high, but the existence of the class action fund and the legal aid plan
weaken that argument.
Finally, the O.L.R.C. fears the vulnerability of public interest litigation to
government cost-saving measures. Yet the response to this vulnerability is not
to tax defendants for being the object of public interest litigation. By definition,
public interest litigation is beneficial to the public. A defendant’s substantial
economic resources should not spawn an implication that the defendant is the
appropriate party to absorb costs that should arguably be borne by the
population as whole.
A desirable alternative to the O.L.R.C. recommendation may be the
application of the one-way rule to government or quasi-government bodies
only, as these institutions are financed by and responsible to the public. The
Supreme Court’s record on civil Charter cases indicates that the one-way rule
is often applied to government defendants.27 However, this is problematic as
well. The application of a no-way rule to government bodies entails a lack of
equity ‘ between plaintiffs who sue government or quasi-government bodies
and plaintiffs who sue private actors, especially because the identity of the
defendant is not a matter of choice. In addition, applying a no-way rule to
. As Shilton, supra note 151 at 658, notes, “[a]s an instrument to promote equality for the dis-
advantaged, section 15 is getting a far more vigorous workout as a shield than as a sword.” A sur-
vey of interventions in Charter cases between 1988 and 1990 found that interventions in opposi-
tion to Charter claimants outnumbered interventions in support of Charter claimants by almost
two to one (F.L. Morton, “The Charter Revolution and the Court Party” (1992) 30 Osgoode Hall
L.J. 627 at 635).
” L. Friedlander, ‘Towards a Cost Awards Policy in Civil Charter Litigation” (1994) Windsor
Rev. Legal & Soc. Issues (forthcoming).
2C’ This is argued by the Law Reform Commission of Australia, supra note 16 at 167, in the
context of equity between relators and private individuals.
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government may produce an “adverse selection” problem. Government
departments, which frequently face pressure to cut costs, may choose to reduce
enforcement of public rights in order to save money. Consequently, for
example, the Attorney General may only consent to relator proceedings when
the chance of winning is high.
C. The Use of the No-Way Rule in Public Interest Litigation
We therefore propose that a no-way rule is appropriate in public interest
litigation. In order to qualify for a no-way rule, a plaintiff, defendant or
intervenor will have to request public interest standing, perhaps on the basis of
a more relaxed version of the guidelines set out in Canadian Council of
Churches. Although the no-way rule is currently being invoked much more
broadly, this requirement will provide certainty for potential litigants. Once
standing is determined, a public interest litigant will not have to fear an adverse
cost award. Furthermore, the no-way rule will ensure that differential cost rules
are not applied in an overly broad or unduly narrow manner, as standing and
costs will be directly connected. Such an approach, in combination with the
statutory funding regimes described above, should provide a principled
framework for costs in public interest litigation.
The no-costs rule removes decisions regarding public interest litigation
funding from the hands of judges. This approach offers several advantages.
First, courts are uncomfortable with overtly distributional decisions. Costs-in-
the-cause allows a court to legitimately transfer wealth from one party to
another because the award is based on the objective and socially accepted basis
of success in litigation. However, a costs award based on rewarding public
participation in litigation rests on the assumption that the participation of a
certain group is good for society. Courts may be reluctant to make that
judgment because it is based on normative characterizations. Courts readily
acknowledge the utility of the information presented by intervenors, yet
explicitly reject the idea that costs can be awarded to encourage participation
rather than merely to indemnify litigants. The Divisonal Court’s emphasis on
“intervenor funding”
in Hamilton-Wentworth, a phrase with a distinctly
political undertone, indicates that the “political” nature of such costs awards
makes courts uncomfortable. In Reese, the Court noted that an award which
required the winning party, the Crown, to pay the costs of Reese would be
unfair because it would transfer the costs of the action to the taxpayers without
their consent or legal justification.209 Similar reasoning also applies to cases
.Reese, supra note 71 at 45-46.
19951
L. FRIEDLANDER – COSTS
between private parties.2 The advantages of public participation in the legal
process do not outweigh the inappropriateness of allocational decisions made
by the courts.2 ‘ A costs award to one party without regard to the legal merits of
that party’s position (as measured by success in the action), may violate the
judiciary’s traditional neutrality. Such a costs award could be perceived as
favouritism toward one of the parties.
Furthermore it is difficult for a judge to decide in an isolated instance
whether a particular plaintiff or defendant should be funded at the expense of
other potential litigants. Funding decisions are better left to an independent
agency that can review all applications.212 This is particularly true for “mixed
motive” cases where a plaintiff may gain somewhat from successful litigation,
yet is litigating primarily out of interest in a particular issue. As Bryden
comments,
[i]t is often true, of course, that people’s conception of the public interest
coincides conveniently with their own private economic or other interests,
and a lively debate can be conducted on the question of whether there is
such a thing as a ‘public’ interest that is distinct from the ‘private’ interests
of the members of society.213
An agency will have the resources and experience to determine if the litigation
would be beneficial to the public, whereas a judge might have to conclude that
the plaintiff should not qualify for a no-way costs rule due to the possibility of
pecuniary gain.
Finally, the combination of a no-way rule and agency funding is proactive
rather than reactive, and thereby provides a necessary certainty for public
interest litigants. The decision to proceed is facilitated if potential litigants
know in advance that they will not be faced with an adverse costs award. Even
211 If these parties are companies which provide products to the public, the costs of the litigation
could be indirectly borne by the public through increased prices, as McWilliams, supra note 178
at 221, notes in the context of public utilities. The exception to this rationale is rate increase
hearings for utility companies where it is argued that “if the customers of the utility have to pay
the utility’s lawyers to argue that the rates should be increased, it is in the interest of these same
customers to pay consumer advocates to present the opposite side of the case” (Roman, supra
note 122 at 389).
2. Law Reform Commission of Australia, Grouped Proceedings in the Federal Court
(Canberra: Australian Government Publishing Service, 1988) at 110: “Mhe principle of the
‘heads I win, tails you lose’ approach to costs is unacceptable.” See also P.J. Mause, “Winner
Takes All: A Re-examination of the Indemnity System” (1960) 55 Iowa L. Rev. 26.
212 Law Reform Commission of Australia, supra note 16 at 166-67.
2 3Bryden, supra note 156 at 490-91.
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if potential litigants would have escaped costs due to success or to a one-way
rule, the mere risk of an adverse costs ruling could be enough to deter litigation.
A priori funding means that potential litigants need not risk financial resources
on litigation; they need only do preliminary research in order to apply for
funding from, for example, the Legal Aid sub-committee on test cases.
Conclusion
Canada is currently witnessing an increase in public interest litigation
which has widespread implications. Although the courts have recognized the
desirability of this different brand of legal action through rules on standing,
they have been slow to adapt costs rules to this new reality. Old assumptions
regarding economic incentives to litigate do not apply to the public interest
litigant and may ultimately result in inadequate public representation in judicial
decision-making. Courts must adopt different principles to encourage the
participation of public interest litigants and intervenors.
We have argued that the appropriate costs rule for public interest litigation
is a no-way rule where each party pays its own costs regardless of outcome. It
is conceded that a no-way rule is not an incentive to litigate; rather, coupled
with government funding, it is intended to eliminate the inherent disincentive to
litigate created by our costs system. However, given concerns of judicial
neutrality, effective allocation of resources as between different litigants and
predictability, this proposal will most effectively fulfil the aspirations of the
standing quartet.
