Documentation:Torts/Legal costs

TORT LAW
CASEBOOK
Introduction
Dignitary Torts
Defamation • Discrimination • Harassment • Intentional infliction of mental suffering • Invasion of privacy • Trespass to the person
Property Torts
Interference with goods • Interference with land • Non-natural use of land • Private nuisance • Public nuisance
Negligence Tort
Duty of care • Breach of duty • Damage • Causation • Remoteness
Negligence Categories
Employment • Environmental pollution • Harmful products • Hosting patrons and guests • Infliction of mental injury • Misrepresentation • Occupation of premises • Professional services • Public authorities • Pure economic loss • Relational economic loss • Rescuers • Shoddy goods or structures • Treatment of indigenous children • Unborn children
Dishonesty & Abuse of Position Torts
Abuse of process • Breach of confidence • Conspiracy • Fraud • Inducing breach of contract • Injurious falsehood • Intimidation • Malicious prosecution • Misfeasance in public office • Passing off • Spoliation • Unlawful interference with economic interests
Strict Liability
Keeping dangerous animals • Non-natural use of land • Ultrahazardous activities • Vicarious liability
Defences
Apportionment of liability • Consent • Defamation defences • Defence of property • Denials • Excuses • Illegality • Legal authority • Limitation • Necessity • Self-defence
Remedies
Apologies • Damages • Injunctions • Insurance • Legal costs • Mitigation • Proprietary
Tort Law & Legal Systems
Charter values • Class actions • Concurrent actions • Constitutional torts • Indigenous dispute resolution • No-fault compensation schemes
Tort Theory
Instrumental theories • Constructive theories • Critical theories • Reflexive theories
Study Resources
1L strategy • Answer exercises • Quizzes • Beswick's course site • Opening Up Tort Law Project
Index

Legal costs

When a party becomes involved in litigation, there are certain costs they may incur, including lawyers' fees and disbursements (fees incurred by lawyers on a client's behalf). Most of the time, the prevailing party of a trial will have some or most of their legal fees covered by the unsuccessful party, while the successful party must bear the full burden of their own fees.

Determining legal costs

Attorney Fees: What Happens After You Win a Lawsuit?
In this episode of Aaron Hall, Attorney’s podcast, Hall discusses the American rules in awarding legal costs. As expressed by Hall, an award of legal costs is not the norm in the United States.

Costs are money awards made by a court or tribunal for expenses in bringing or defending a legal proceeding or a step in a proceeding. Costs may also be ordered against a party, in favour of the other, for failing to follow the court's directions or instructions before or during a step in the case. Costs are typically awarded to the successful party after a judgment has been delivered.

The "traditional purpose" of awarding legal costs is to compensate the successful party for costs they incurred while either defending a claim that was unfounded, or in pursuing a "valid legal right". This makes the "legal system more accessible to litigants who seek to vindicate a legally sound position".

The rules as to awards of costs vary by jurisdiction.

In Ontario, the general principle set out by the Ontario Court of Appeal in Zesta Engineering Ltd. v. Cloutier is to require the unsuccessful party to pay an amount that reflects fair and reasonable legal costs rather than an amount that directly reflects the costs incurred by the unsuccessful party.

It is also possible "that an unsuccessful party will not be ordered to pay the costs of the successful party". The power to award costs is within the discretion of the court, subject to limits created by "various provincial statutes and rules of civil procedure". In Jones v. Tsige, for example, the Ontario Court of Appeal made no order as to legal costs such that each party would bear the costs of their own legal fees. The Court found that this was appropriate given the novelty of the invasion-of-privacy tort at issue.

Types of legal costs

Partial Indemnity Costs

Partial indemnity costs are awarded in civil matters against a party to pay some of the legal expenses incurred by the other party. This is "the most commonly awarded" type of costs. In British Columbia, an assessment of partial indemnity costs may take into account the difficulty of the case and any offers to settle prior to trial, both of which may increase the amount of costs awarded pursuant to the Supreme Court Civil Rules.

Appendix B of the Rules provides that each step of litigation is assigned some number of units, which are then used in conjunction with the scale of costs to calculate the successful party's total award claimed. Scale A provides $60 per unit, Scale B provides $110 per unit, and Scale C provides $170 per unit, with higher rates assigned to more difficult cases. For example, in Gokey v. User, the British Columbia Supreme Court fixed the scale of costs at Scale C, the highest rate, due to the difficulty of the case.

The Court also awarded the successful defendants double costs in accordance with Rule 9–1 of the Rules because the defendants had made reasonable settlement offers prior to trial, which the unsuccessful party had declined to accept. Acceptance a settlement offer would have saved the defendants substantial legal fees and saved the judiciary valuable time.

Substantial Indemnity Costs

Substantial indemnity costs are awarded in civil matters against a party to pay most, but not all, of the actual legal expenses incurred by the other party (e.g., lawyer's fees). As substantial indemnity costs are greater than partial indemnity costs, they are often awarded when the court wishes to express its disapproval of the conduct of a party to the litigation. An award of costs can "act as a disincentive to those who might be tempted to harass others with meritless claims".

Full Indemnity Costs

Full indemnity costs are awarded in "rare instances", such as when a party has added "delay and costs to the proceedings, is less than forthright with documentary disclosure, repeatedly lies under oath, fraudulently creates documents and/or attempts to perpetrate a fraud on the plaintiff and the court."

Limitations on costs

Twitter headquarters in San Francisco, CA.

Even when courts choose to award legal costs, there are limits as to what can reasonably be awarded in the circumstances.

In 2022, UBC law professor Joel Bakan commenced legal proceedings against Twitter when the platform refused to host paid tweets relating to his documentary, The New Corporation. Bakan and his co-counsel Sujit Choudhry sought costs on a substantial indemnity basis as Twitter had "pressed forward, invoked the jurisdiction of the court on the merits of the claim, and lost". However, the Ontario Superior Court awarded costs lower than what Bakan and Choudhry had claimed. Despite Bakan being a senior lawyer and a "renown[ed] academic", it was not reasonable for him to "bill at senior rates for performing time-intensive tasks of document preparation."

In light of recent technological advances, such as the ability to attend legal proceedings virtually, courts are also more reluctant to award costs which were incurred to appear in-person at a hearing. "Virtual proceedings save people from needless costs", and as such it is not reasonable to "expect the other side" to pay for travel costs unless there are solid grounds supporting the need to travel and be physically present.

Advance costs for public interest litigants

At their discretion, courts might sometimes award costs in advance if a litigant is pursuing a strong public interest claim and is able to sufficiently demonstrate impecuniosity (i.e., "genuinely cannot afford to pay for the litigation"). However, the threshold for impecuniosity is high and difficult to meet. To assess such a claim for advance costs, the court:

• "[I]dentif[ies] the applicant’s pressing needs;
• "[D]etermine[s] what resources are required to meet those needs";
• "[A]ssess[es] the applicant’s financial resources"; and
• "[I]dentif[ies] the estimated costs of funding the [forthcoming] litigation."

Generally, granting costs in advance is reserved only for "rare and exceptional” cases, where refusing to award such costs would result in a great injustice ensuing. As always, even if costs are awarded it shall not constitute an "unfair burden" on the other party, and there should be scrutiny of how the "litigant spends the opposing party’s money".

Discussion questions

• Do you think courts should closely scrutinize the legal costs that a party is claiming, and demand that these costs be kept at a modest amount?
• In Jones v. Tsige, Jones incurred $127,607 in legal fees pursuing her tort claim, but was awarded only $10,000 in damages. As between a plaintiff who succeeds on a novel theory of tort liability, and a defendant who is found liable for a novel tort, who should bear the costs burden?
• Why do you think courts might award costs in advance if a litigant is pursuing a claim that is in the "public interest" and they have demonstrated impecuniosity?
• Do you think more relaxed standards for granting advance costs to public interest litigants could "create a parallel system of legal aid", as mentioned in Anderson?
• Why might courts tend to be wary of awarding advance costs in litigation? What are the risks? What other options may be available to an impecunious party to fund their legal action?