The whys and wherefores of court costs

  • February 24, 2016

The Federal Court of Appeal and Federal Court Rules Committee is asking stakeholders in the legal system a philosophical question with practical implications – what is the purpose of court costs, and how best to assess them to fulfil that end?

And as with most philosophical questions, the answer changes depending on who’s giving the response.

In October the committee sent out a discussion paper to people in the legal community looking for feedback in a few general areas:

  • what is the general purposes of court awards (indemnification, discouraging abuse of court system, encouraging settlement, facilitating access to justice)
  • whether the Federal Courts Rules should provide different costs for different types of litigation
  • whether there should be specific rules and costs for vexatious litigants
  • whether the manner of calculating costs – and the court’s Tariff B – should be changed
  • whether there should be rules governing awarding costs to pro bono counsel

The committee asked specifically that the Federal Courts Rules be examined from the standpoint of access to justice.

The CBA’s Federal Courts Bench and Bar Liaison Committee sent the discussion paper out to the association’s Sections. The three responses it received,  from the Commodity Tax, Customs and Trade Law, Intellectual Property and Maritime Law sections, and sent on to the Rules committee, illustrate how the perception of appropriate costs assessment differs depending on the kind of law you practise. While none of the groups answered all of the questions, and they didn’t all answer the same questions, there were, however, some areas of accord.

On the question of vexatious litigants, neither the Commodity Tax nor Intellectual Property sections considered fees an effective deterrent.

“Volatile and unreasonable parties may use litigation as a tactic for harassment,” the Commodity Tax Section wrote. “These parties are unlikely to conduct dispassionate and reasonable risk analyses; so rule changes may not advance the goal of deterring bad behaviour.”

For its part, the Intellectual Property Section said the Rules and legislation already address “truly abusive litigation,” and “(a) jurisprudential and discretionary approach affords the court the requisite flexibility to appropriately address each case and preserves counsels’ ability to fully advance their clients’ interest without fear of punitive cost awards.”

On the question of tariffs, all three Sections approved of some sort of tariff model, but they also agreed that it was well past time that the court revised its Tariff B.

“The quantum of indemnification provided by the Tariff has not kept up with the pace of legal costs generally,” the Maritime Law Section wrote in its response, with dealt only with the tariff.

“A tariff is an appropriate method for calculating costs if it is clear and consistently applied,” the Intellectual Property Section wrote, and recommends keeping that method of calculation, but adds in general, “the costs under Tariff B are too low and do not reflect the current practice in intellectual property cases.”

For its part, the Commodity Tax Section says the “no-costs” approach, where costs are determined by a tariff, “may facilitate access to justice by decreasing financial risk, but that then goes against goals of indemnification and encouraging settlement.”

Moreover, “The existing tariff is confusing as a method for calculating costs and Tariff B amounts are so inconsequential as to be a non-consideration for any party other than an impecunious litigant. In that way, the Courts already have a no-cost system.”

In terms of pro bono cases, the Commodity Tax Section says that setting up agreements where pro bono counsel is entitled to payment might increase access to justice, but would undermine the spirit of pro bono. It suggests paying costs in pro bono cases into an access to justice fund. “Building a ‘war chest’ of accrued cost awards could be used to support pro bono organizations, fund projects that help inform unrepresented litigants or pay administrative costs of a duty counsel program.”

The Intellectual Property Section differs here, saying it would support an agreement saying counsel is entitled to the benefit of a cost award. “If not, there may be no basis for an award of costs to the party as they are not incurring any legal costs. This would unfairly shield the adverse party from potential cost consequences in the proceeding.”

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