There’s Always a Choice (Not to Sue)

Renowned criminal defense and civil rights lawyer and blawger, Norm Pattis, recently tweeted this amusing story about the failed “Crunchberry” lawsuit:

I’m no fan of Cap’n Crunch, Froot Loops or Lucky Charms for that matter, but frivolous lawsuits are the bane of any self-respecting civil lawyer (I also do not represent cereal killers). This Crunchberry lawsuit did get me thinking about the differences between the American and Canadian civil justice systems. While there are a number of significant differences, both in procedure and substantive law, the most interesting comparison is with respect to the issue of costs. With some exceptions, U.S. Federal and most state rules of civil procedure do not impose adverse cost consequences on unsuccessful litigants: each side pays its own freight, so to speak.

In Canada, the rules of court in provincial jurisdictions impose a “loser pays” rule: the party that loses a lawsuit (or motion) has to pay some (partial indemnity costs), most (substantial indemnity costs ) or, rarely all (full indemnity costs) of the opposing side. The “loser pays” rule of cost indemnification acts as a form of “checks and balances” in the civil justice system; it encourages reasonable settlement offers (with adverse cost consequences: e.g. Rule 49.10 of the Rules of Civil Procedure) and acts as a deterrent for frivolous or unmeritorious lawsuits. The inherent risk analysis for the client involves a two-step process: choosing to sue and then retaining and paying a lawyer to represent them in court (unless they cannot afford a lawyer and opt to be self-represented).

The downside, of course, is when the client is on the losing end and has to pay both his or her own costs (i.e. lawyer’s fees and disbursements), but also a proportion of the costs of the winning side. In today’s brief costs endorsement in 1117387 Ontario Inc. v. National Trust Company, 2010 ONCA 492, Justice Epstein of the Ontario Court of Appeal reminds civil lawyers that when it comes to litigation, there’s always a choice:

[8] In my view, the Receiver and National Trust are entitled to their reasonable and fair costs. I do not accept the submission of 1117387 Ontario Inc. and Mr. Ishac that they had no choice but to appeal due to the problem created by the application judge in approving the Receiver’s report and giving them the right to sue the Receiver. They had the alternative of simply not suing. [emphasis added]

As the saying goes: “A knowledgeable consumer is our best customer.”

5 Responses to “There’s Always a Choice (Not to Sue)”

  1. Colm Brannigan Says:

    It is unfortunate that the Court of Appeal did not endorse ADR as part of the choice.

  2. The Trial Warrior Says:

    I agree, Colm. I did find one Ontario Court of Appeal decision that does promote the use of ADR generally. In Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce, 1996 CanLII 413 (ON C.A., Finlayson, J.A. wrote:" Modern systems of alternative dispute resolution, commonly referred to as ADR, are designed to help parties solve disputes efficiently without resort to formal litigation and with a minimum of judicial interference."

  3. Adam Goodman Says:

    As a criminal practitioner, the issue of costs rarely comes up (there are limited circumstances where we can ask the Crown to cover costs, but the argument is of a zero-sum nature where being unsuccessful will not result in costs against us).The recent SCC decision in City of Vancouver v. Alan Cameron Ward may make it much more likely for criminal practitioners to venture into the civil/public law realm. Should we bring such an action on behalf of a client for a Charter violation, and are unsuccessful, any idea how the court may assess costs against our client?

  4. Adam Goodman Says:

    As a criminal practitioner, it's a rarity that we even endeavour to litigate the issue of costs against the Crown. It usually occurs when the Crown has caused a delay in the proceedings that goes beyond what is acceptable.The recent SCC decision in City of Vancouver v. Alan Cameron Ward may result in more criminal lawyers venturing into the civil/public law realm. Could you comment on how the issue of costs may be dealt with by the court if an action is brought for damages for a Charter violation.

  5. The Trial Warrior Says:

    Thanks for your comment, Adam. In my view, the issue of costs arising from a Charter violation may be approached from one of two perspectives. First, as criminal defence counsel, you may bring an application against the Crown for costs arising from a finding of a breach of your client's rights in the course of the criminal proceedings. Alternatively, you may bring an independent action for damages, including costs thrown away in the criminal proceedings, as a result of a breach of your client's Charter right(s) following Vancouver (City) v. Ward, based upon the test articulated by Chief Justice McLachlin. In either case, costs remain within the inherent jurisdiction of the court of competent jurisdiction, under the Courts of Justice Act.

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