By: Mackenzie Coleman, Law Student at the University of Alberta
Cost awards are ordered by a judge where one party pays the other party at the conclusion of an action. The purpose is to at least partially “indemnify the successful party for some of the legal fees that they incurred during the course of an action”.[1] Costs can increase access to justice by mitigating “severe inequality between litigants”.[2] Judges have the discretion to determine if costs are appropriate, and how much should be given. Costs are often awarded by analyzing factors such as fairness, settlement, deterrence, efficiency, and legal accountability.[3]
Solicitor-client costs “aim to fully reimburse a party for all reasonable expenses incurred during a lawsuit”.[4] These costs are only granted in exceptional cases, considering factors like “case nature, party conduct, and fairness of legal fees”.[5]They are usually only awarded if the other sides behaviour is particularly bad or unreasonable.
On October 10th, 2024, Donna Cox received 95% of her legal costs in The Rural Municipality of Thompson et al v Cox.[6] Cox spent over $45,000 in legal fees to be reinstated as a councillor in Thompson. In October of 2022, Cox was elected as a councillor. The council, soon after she was elected, changed the meeting times to be in the morning so Cox could not attend. Cox was disqualified from the council in April 2023 for missing three committee meetings.[7] Justice Martin says that the “committee, council and councillors made no effort to accommodate or assist her, as a duly elected representative, with Council or Committee schedules… she had to decide between her job and fulfilling the duties of a councillor”.[8] He continued to say that the municipal council’s conduct can “unjustly and arbitrarily attempt to stifle an elected representative and thereby disenfranchise voters”.[9]
Justice Martin notes that the decision to set cost awards are not done in a vacuum. He says that the “overriding principle is that of reasonableness; otherwise, the result may be contrary to the fundamental objective of the access to justice”.[10]Justice Martin references British Columbia (Minister of Forests) v Okanogan Indian Band which states that costs can be awarded “as a tool in the furtherance of the efficient and orderly administration of justice” in order to modify litigants’ behaviour.[11] Along with that, Justice Martin notes a purpose of modern cost awards which include facilitating “access to justice, including access for impecunious litigants”.[12]
Justice Martin awarded costs of 95% of Cox’s legal bills and 100% of all disbursements and tax. Solicitor-client costs were not awarded as he was “mindful of the amount of taxpayer money the Municipality has already spent and want[ed] to avoid it incurring any further legal dees in an assessment process”.[13] Awarding almost full solicitor-costs is rare. Cox was awarded almost the full amount of legal expenses she incurred. Justice Martin likely awarded this to deter and discourage the council’s behaviour. The council purposefully changed meeting hours which forced Cox to miss meetings. Martin says that “she was bound to fail… Ms. Cox’s absences were not a matter of neglect, irresponsibility, or intention to flout her obligations to attend meetings”.[14] This colourful language points to an intention to deter future behaviour from council members. The cost awards are also to punish the “ill-conceived and failed venture” of the council not settling and incurring over $65,000 in legal representation fees.[15]
Unsurprisingly, legal professionals’ opinions on appropriate levels of compensations various. Generally, plaintiffs’ lawyers view the current approach of cost awards as being too high. They expressed “concern about the ‘chilling effect’ that significant costs could have on meritorious claims.[16] Defence lawyers, inversely, “suggested that costs were not high enough and should be increased to defeat frivolous claims”.[17] Cost awards as an access to justice issue center around the question, “does the costs regime currently in place discourage potential litigants from going to court to pursue valid claims?”.[18]
On one hand, rising legal fees may discourage litigation and, if successful litigants are likely only to receive 50% of their legal costs, it may be too expensive even if their case is likely to be ultimately successful.[19] However, if cost awards are too high, litigants may be deterred as well. Usually, the outcome of a lawsuit is not certain. A lawsuit may turn a bad situation into a worse one. Since “the risk of litigation is higher under indemnity regimes, this argument will have merit if risk-aversion is an important consideration for potential litigants”.[20] Namely, an indemnity rule “would discourage lawsuits that are uncertain because they involve novel legal arguments”.[21]
Awarding full, or almost full, legal costs has considerable access to justice considerations. The first is promoting fairness and accountability. Power imbalances are reduced because more powerful parties who can drive up costs may have to pay full costs for both parties. Moreover, if one party acts unjustly, such as acting in bad faith, they may be held financially accountable. Awarding solicitor-client costs also helps to uphold the integrity of the justice system by penalizing unethical behaviour. As a result, these costs help to address the disproportionate impact on vulnerable litigants.
Some scholars, however, note that costs are a double-edged sword from an access to justice perspective. Adil Abdulla argues that partial indemnity does not go far enough. The absence of “full indemnity prevents at least some plaintiffs from suing, even if they are 100% certain they would succeed at trial”.[22] No matter how meritorious, a partial indemnity regime prevents the plaintiff from returning to the position they would have been had the misconduct not occurred. They “will always be out of pocket at least the difference between their actual legal expenses and the magnitude of the costs award”.[23] This difference does not affect all parties equally. Powerful entities, such as governments and large corporations, are not impacted to the extent as a vulnerable plaintiff. Erik Knutsen, on the other hand, argues that the costs-shifting regime itself is too unpredictable and an unfortunate deterrent to civil litigation.[24]
[1] Alberta Civil Liberties Research Center, “Cost Awards in Litigation: Three Things you Should Know” (29 March 2024), online: < https://sultanlawyers.com/blog/key-facts-about-cost-awards-in-litigation/#:~:text=In%20Ontario%20and%20other%20jurisdictions,part)%20by%20the%20unsuccessful%20party.>.
[2] Alberta Civil Liberties Research Center, “Creative Costs Awards” (2021), online: < https://www.aclrc.com/creative-costs-awards#:~:text=The%20Supreme%20Court%20of%20Canada,Indian%20Bands%20at%20para%2031>.
[3] Daniella Marchand, “Understanding Legal Costs in Alberta” (7 November, 2023), online: < https://coachmycase.ca/blog/understanding-legal-costs-in-alberta/>.
[4] Wells Family Law, “What Does the Court Mean When it Awards Costs?” (2024), online: < https://www.wellsfamilylaw.com/2024/06/what-does-the-court-mean-when-it-awards-costs-updated-2024/>.
[5] Ibid.
[6] The Rural Municipality of Thompson et al v Cox, 2024 MBKB 152 [Cox].
[7] CTV News, “Court orders Manitoba community to pay councillor’s legal expenses following failed attempt at ouster” (10 October 2024), online: <https://winnipeg.ctvnews.ca/court-orders-manitoba-community-to-pay-councillor-s-legal-expenses-following-failed-attempt-at-ouster-1.7075751>.
[8] Ibid.
[9] Dave Baxter, “Thompson ordered to cover $40k legal bill in battle with councillor” (17 October 2024), online: < https://www.thespec.com/news/canada/thompson-ordered-to-cover-40k-legal-bill-in-battle-with-councillor/article_550be3ba-13f6-5b2c-8066-f4281e8c777c.html>.
[10] Cox, supra note 6 at para 8.
[11] British Columbia (Minister of Forests) v Okanogan Indian Band 2003 SCC 71 paras 25-26.
[12] Cox, supra note 6 at para 9.
[13] Ibid at para 39.
[14] Supra note 9.
[15] Ibid.
[16] Law Reform Commission of Saskatchewan, “Awards of Costs and Access to Justice” (July 2011), online: <https://lawreformcommission.sk.ca/AwardsofCosts&AccesstoJustice-FINAL.pdf>.
[17] Ibid.
[18] Ibid.
[19] Ibid.
[20] Ibid.
[21] Ibid.
[22] Adil Abdulla, “Incomplete Justice: The Costs of Partial Indemnity”, (2022) Windsor Y B Access Just at page 56.
[23] Ibid at page 57.
[24] Erik Knutsen, “The Cost of Costs: The Unfortunate Deterrence of Everyday Civil Litigation in Canada” (2010) 36 QLJ 113.