January 20, 2011

About the Author

  • Sacha R. Paul

    Sacha practices primarily in four areas of law-- Indigenous law, Public/Administrative law, Insurance Law, and Personal Injury.

    srp@tdslaw.com
    (204) 934-2571

Are Party and Party Costs a Barrier to the Courts?

Introduction

The issue of “access to justice” has been a pressing concern in the legal community for quite some time. When the courts are too expensive of an endeavour for the average person, a grave disservice is being done to Canadians. How the average citizen can have meaningful access to justice is not a simple question to answer. There are multiple reasons why access to justice has been hindered in recent times, including the cost of legal counsel and the increasing complexity of the law.

Many have turned their attention to lawyers and the costs they charge their clients when considering the issue of access. Undoubtedly, this is fair comment (though one should not forget the role of the state in providing funding for critical legal services at a meaningful level either). Yet, one should be looking holistically at the issue of access to justice. The issue of access to justice includes more than lawyers, but also the courts.

The purpose of this paper is to examine the possible impact that party and party costs has on access to justice. Costs are routinely considered as an afterthought, if they are considered at all. However, the amount of costs can be significant and has only increased in Manitoba through recent rule amendments. The potential then exists that with the increased quantum of costs, some people are taking the “grim” option of giving up so that their legal issues “wither on the vine.”

In considering the relationship of costs to access to justice, I begin by assessing the traditional purposes given for party and party costs. In my view, the courts have fettered their discretion on costs to the point that there is only one real rule and that is “loser pays.” The purposes for party and party costs then can serve to drive reasonable people from the courts because of the financial consequences of loss.

After considering the purposes behind costs, I then move on to consider one existing method of using costs to facilitate access to justice– interim cost awards. The Supreme Court recognized in the Okanagan Indian Band case that in rare circumstances a litigant can, before the conclusion of the case, get costs from the opposing litigant in any event of the cause. While this case created the hope that deserving litigants could receive funding to access the courts, the case has not resulted in any meaningful increase in court access.

Next, I consider the emergence in Canada of a “half-way point” between “loser pays” and interim costs– the “protective cost order” (PCO). The PCO has emerged in English law and has received some endorsement from our Supreme Court. PCOs allows litigants to address the issue of costs before the conclusion of the case and allows litigants to either cap or eliminate their costs exposure to the other side. Further, PCOs allows a litigant to get costs if they win, albeit at a more modest rate than under the usual cost rules. PCOs exist in Canadian law, but have not yet been ordered in anyone’s favour. However, I contend that there is much to commend in PCOs because it can allow litigants who raise public interest issues the ability to raise such issues without the prospect of a crippling cost liability in the event of loss.

Finally, I argue that PCOs are not enough because it is limited to public interest cases. For litigants with run of the mill civil disputes that will not change the law (e.g. a personal injury action or a judicial review to quash a tribunal’s decision for a breach of natural justice), there remains a concern about access to justice. In my view, we must see civil justice and the resolution of private disputes as a public good in itself. Drawing upon the recommendations of the Australian Law Reform Commission (ALRC) I contend that a “material effect” exception to the “loser pays” principle be introduced to the costs regime. Under such a rule, if a litigant can show that his/her ability to present his/her case or negotiate a fair settlement is adversely impacted by the prospect of cost liability then costs can be addressed like under a PCO– namely in advance and capping or reducing cost liability altogether.

It is my conclusion that courts should stop fettering their discretion on costs with the “loser pays” rule and return to a wide reaching discretion on costs to make sure that costs do not act as a barrier to justice but rather that costs are consistent with the goals of justice.


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