September 4, 2012

Cost Awards: When is a lawyer personally liable?

In June of this year, the Ontario Court of Appeal released an important decision clarifying the circumstances in which a court will award costs personally against a lawyer. The appeal in question stems from the costs decision of Justice Metivier in Galganov v. Russell (Township).1At issue was Her Honour’sorder requiring counsel, Mr. Kenneth Bickley (“Mr. Bickley”), to pay 40 percent of the $180,000.00 costs order made against his clients.

Mr. Bickley is an Ottawa based lawyer who was retained by Messrs Howard Galganov and Jean-Serge Brisson for the purposes of commencing two applications to quash the Township of Russell’s (the “Township”) by-law no. 49-2008 (the “By-law”). The By-law required the content of any new exterior commercial sign in the Township be in French and in English. The applications attacked the validity of the By-law on a number of grounds, including whether it infringed Messrs Brisson’s and Galganov’s rights to freedom of expression as guaranteed by s.2(b) of the Charter of Rights and Freedoms.2

Justice Metivier dismissed both applications and invited the parties to provide her with written submissions on the issue of costs.3 The Township, in conjunction with its written cost submissions, brought a motion against Mr. Bickley seeking an Order requiring him to pay costs personally. The Township argued that Mr. Bickley’s conduct throughout the two applications was “often highly inappropriate, incompetent, and the cause of unnecessary legal costs.” Mr. Bickley in response argued that he took no steps in the proceeding without the proper instructions and authority of his clients.

Justice Metivier awarded the Township costs of $180,000.00 (the “Costs Award”) and ordered that, pursuant to rule 57.07(1) of the Rules of Civil Procedure,4 Mr. Bickley was personally responsible for 40 percent of the Costs Award on a joint and several basis with his client. Her Honour held that while Mr. Bickley did not act in bad faith, his conduct, in particular his disorganized manner and lack of preparation, unnecessarily caused the Township to incur significant legal costs.

The Court of Appeal set aside the Costs Award against Mr. Bickley finding that Justice Metivier did not properly distinguish Mr. Bickley’s conduct from that of his clients and that she used hindsight to determine that Mr. Bickley’s conduct was improper.5 In support of its decision, the Court of Appeal adopted the Supreme Court of Canada’s decision in Young v. Young6and the Ontario Divisional Court’s decision in Carleton v. Beaverton Hotel.7

In Young, the Supreme Court of Canada establishes the governing principles for when a court may award costs personally against a lawyer. The basic principle is that costs are awarded as compensation for the successful party and not in order to punish a lawyer. The Young decision also confirms that courts must be extremely cautious in awarding costs personally against a lawyer, as lawyers are often retained to bring forward unpopular causes. A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with the fundamental duties of his or her calling.8

The Divisional Court’s decision in Carleton9 established a two-part test to determine when a lawyer’s conduct is deserving of a costs order. The first step requires a court to examine the entire course of litigation to provide context, while also considering specific incidents of conduct to determine whether it falls within the criteria of rule 57.07(1). 

The second step requires a court to consider and apply the extreme caution principle enunciated by the Supreme Court of Canada in Young. A court must be vigilant that costs awards made against lawyers be made sparingly, with care and discretion, only in clear cases, and not simply because a lawyer may appear to fall within the circumstances found in rule 57.07(1).10 

In considering and applying the decisions of Young and Carleton the Court of Appeal also found that a court must be conscious that rule 57.07(1) is not concerned with a lawyer’s professional conduct generally, but whether such conduct, including the conduct and course of the litigation, caused costs to be unreasonably incurred. Specifically, the Court of Appeal concluded that:

  • counsel should not be held responsible for advancing a weak case if instructed to do so by his or her clients11. A court should be cognizant that clients are not obliged to accept the judgment of their lawyer but are entitled to obtain the judgment of the court12;
  • hindsight cannot be used to evaluate whether a lawyer’s decision to proceed or not proceed with a particular step in litigation is proper13;
  • a court should not sanction a lawyer for his or her conduct vis-a-vis the opposing counsel prior to the commencement of the hearing14;
  • if an order of costs is based on negligence, then the negligence must be based on a breach of the objective standard of care of a reasonably competent lawyer in the same position15; and
  • rule 57.07(1) is not intended to allow for the frustration of opposing counsel to be taken out against a lawyer personally16.

It can be seen from the Court of Appeal’s decision in Galganov that courts should be reluctant to award costs against lawyers personally. These types of orders ought to be made sparingly and only in circumstances that fall squarely within the criteria of rule 57.07(1). The Galganov decision has built on the legal principles enunciated in Young and Carleton to provide further direction on the question of costs as against lawyers under rule 57.07(1) and provides clarification as to the circumstances in which they should be awarded

1 Galganov v. Russell (Township), 2012 ONCA 410 [Galganov].

2 Charter of Rights and Freedoms, Part I of the Constitution Act, 1982 being Schedule B to the Canada Act 1982 (UK), 1982, c.11.

3 Galganov, supra at para 2.

4 Rule 57.07(1), Rules of Civil Procedure R.R.O. 1990, Reg. 194 [Rule 57.07].

5 Galganov, supra, para 42

6 Young v. Young [1993] 4 S.C.R. at pp. 135-136 [Young].

7 Carleton v. Beaverton Hotel (2009), 96 O.R. (3d) 391 (Div. Ct.) at paras 21-24 [Carleton].

8Galganov, supra, para 13.

9 Carleton, supra, at paras 21-24.

10Galganov, supra, para 22.

11 Galganov, supra, para 29.

12 Galganov, supra, para 29.

13 Galganov, supra, para 33.

14 Galganov, supra, para 41.

15 Galganov, supra, para. 43.

16 Galganov, supra, para 43.