Dollars and cents: Budgeting to access justice

Law360 Canada (June 4, 2024, 2:11 PM EDT) --

Bo Kruk

Sharon Roberts

Amidst an ongoing crisis of “access to justice” — which was decried by entertainer Robin Williams, among others, 40 years ago — one potent, but often overlooked, means of increasing accessibility is a meaningful costs award.

Typically, an allocation of costs is framed by a court’s distinct rules. Rules outline factors courts may consider when determining costs (e.g., Rules 10.31 and 10.33 of the Alberta Rules of Court, Alta Reg 124/2010; Rule 400(3) of the Federal Courts Rules, SOR/98-106).

The Supreme Court outlined in British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, that the “modern” approach to cost awards seeks to go further than merely compensating the successful party. Costs awards can promote settlement, help guard against frivolous litigation and foster access to justice.

Yet, the court’s vision for furthering access to justice through costs awards in Okanagan was narrow: the majority found that a court’s discretion to award costs can help relieve the “harsh consequence of paying the other side’s costs” for a public interest litigant — but only in highly exceptional cases. This narrow vision of the “modern” approach to costs was echoed by the Alberta Court of Appeal over a decade later, in PricewaterhouseCoopers Inc v. Perpetual Energy Inc., 2021 ABCA 16: “Costs awards are designed to partially indemnify the successful party for the legal expenses incurred during the litigation. Party and party costs awards are deliberately set so that they do not fully indemnify the successful party.”

This take on the “modern” approach to costs awards raises a fundamental question about the 21st-century justice system. If partial indemnification is the baseline and elevated costs awards are only available in limited circumstances, how “accessible” is justice, particularly for public interest litigants or even persons of modest or limited means, whether defending an unmeritorious claim or advancing a meritorious one?

At least in Alberta, there is hope. The Court of Appeal in McAllister v. Calgary (City), 2021 ABCA 25, undertook a comprehensive review and summary of costs awards in the province. It held that the general principle of cost awards is to indemnify the successful party by 40-50 per cent — i.e., a “reasonable guideline” to interpreting the operative phrase “reasonable and proper costs” in the Alberta Rules of Court. However, the court recognized that the appropriate level of indemnification may be higher or lower, depending on the unique circumstances of a case.

A growing body of jurisprudence is pushing a functional approach to costs awards further. Courts have recognized that litigation can take many different forms and assessed costs against parties whose positions lack merit. In Ho v. Lau Estate, 2023 ABKB 15, Justice Lema expanded on Justice Thomas Wakeling’s concurring judgement in Pillar Resource Services Inc v. PrimeWest Energy Inc., 2017 ABCA 19, to find that “‘maintain[ing] positions or bring[ing] applications that are patently indefensible-the likelihood they will succeed is very low’ can amount to [litigation misconduct].” In Earth Drilling Co. Ltd. v. Keystone Drilling Corp., 2023 ABKB 17, Justice Lema distilled the principle further: “Lack of merit can affect the level of costs.”

In Plastk Financial and Rewards Inc. v. Digital Commerce Bank, 2023 ABKB 272, Justice Douglas Mah built on the approach initiated by Justice Michael Lema. In that case, Plastk brought an application to enforce a mandatory injunction that was previously granted earlier that year after Digital Commerce Bank unilaterally terminated the very services that were the subject matter of the mandatory injunction. Justice Mah awarded Plastk column 5 costs, with a multiplier of 3, having found that its application was unnecessary; DC Bank bore the onus to seek clarification from the court “before ploughing ahead, rather than force Plastk to enforce the [mandatory injunction].”

More recently, the McAllister principles were further developed in Barkwell v. McDonald, 2023 ABCA 87, which reinforced that bald assertions of amounts a party claims as costs are insufficient. Any amounts claimed in costs must be substantiated by evidence (see, e.g., 102125001 Saskatchewan Ltd v. Hutchings, 2024 ABKB 110).

In the most recent data from the National Self-Represented Litigants Project, 43.5 per cent of survey participants reported an annual income under $30,000. While vulnerable criminal and civil justice system participants often qualify for services such as legal aid or structured pro bono programs, those services are often subject to funding reductions. Loss of funding, and corresponding impacts on program budgets, lead to events like the 2022 Alberta Legal Aid work stoppage.

If the growing body of jurisprudence offers an indication, perhaps a broader adoption of this functional or “modern” approach to costs will, in time, promote the principles that the Supreme Court of Canada articulated in Okanagan Indian Band, and recognize the necessity of adequately funding legal aid programs.

Bo Kruk and Sharon Roberts practise at Sharon Roberts Law Group, in Edmonton, Alta. Kruk’s graduate work focused on the power of technology in the legal-centric world of today. Roberts is a commercial litigator. Sharon Roberts Law Group represented the plaintiff in Plastk Financial and Rewards Inc. v. Digital Commerce Bank, 2023 ABKB 272.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, LexisNexis Canada, Law360 Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Interested in writing for us? To learn more about how you can add your voice to Law360 Canada, contact Analysis Editor Richard Skinulis at Richard.Skinulis@lexisnexis.ca or call 437-828-6772.