Simon's Megalomaniacal Legal Resources

Civil Litigation Case Dicta - Costs - Non-Parties (2)

. Costa v. Seneca College of Applied Arts and Technology

In Costa v. Seneca College of Applied Arts and Technology (Ont CA, 2023) the Court of Appeal considered an interesting costs case where counsel for a public interest party had allegedly rode "the twin horses of advocate and interested party" by (in part) using the case to raise funds, and consequently had been personally assessed a large non-party costs award:

[7] ... JCCF says that the motion judge did not apply the proper tests for deciding whether a non‑party should pay costs and that those tests, properly applied, would not justify an award in this case.

[8] In response, Seneca says that in communications between it and JCCF prior to the costs submissions, it made it clear to JCCF that it would be seeking costs against JCCF. Seneca also says that it is appropriate to award costs against JCCF because it was the “motivating force” behind the litigation. It also points to the fact that JCCF persistently refused to advise Seneca whether it was indemnifying the students against any costs award.

[9] Three organizations, Canadian Civil Liberties Association, Canadian Constitution Foundation and Democracy Watch, were granted leave to intervene in this appeal. The interveners collectively express alarm that the motion judge’s award of costs, among other things, is rooted, at least in part, in the fact that JCCF raised funds for the litigation. They are concerned that the award, if upheld, could deter public interest organizations from raising funds for such litigation to assist with the costs of retaining counsel or, for that matter, from acting as counsel themselves in such litigation. The interveners say that the mere fact of fund raising should not expose a public interest organization to a costs award nor should it be so exposed if it provides, or assists in providing, counsel.

....

[11] ... in my view, the costs award here is fundamentally flawed and cannot stand. First, the motion judge failed to make any finding whether the litigation constituted public interest litigation. This was a necessary initial step in considering the proper disposition of costs. If the litigation was public interest litigation, then the principles applicable to awards of costs in such litigation had to be considered: see e.g., Friends of Toronto Public Cemeteries Inc. v. Ontario (Public Guardian and Trustee), 2020 ONCA 509, at para. 23. None of that took place. ...

[12] Second, there are established bases for determining when it is appropriate for an award of costs to be made against a non-party. As set out in 1318847 Ontario Ltd v. Laval Tool & Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641, there is both statutory jurisdiction to award costs and inherent jurisdiction to do so. These jurisdictions have different tests to be satisfied. For the statutory jurisdiction, the court must be satisfied that the “person of straw” test is met. That test is set out in Laval Tool, at para. 60:

The "person of straw" test is satisfied if:

1. The non-party has status to bring the action;

2. The named party is not the true litigant; and

3. The named party is a person of straw put forward to protect the true litigant from liability for costs.

[13] This test could not be made out in this case and Seneca does not suggest otherwise. JCCF would not have had status to bring the injunction motion nor was there any evidence that the students were put forward to protect JCCF from liability for costs.

[14] The inherent jurisdiction to award costs against a non-party invokes a different test. As set out in Laval Tool, at para. 66:

In particular, apart from statutory jurisdiction, superior courts have inherent jurisdiction to order non-party costs, on a discretionary basis, in situations where the non‑party has initiated or conducted litigation in such a manner as to amount to an abuse of process.

....

[17] It is not clear what the motion judge was intending to mean by his reference to JCCF not being a “dispassionate advocate”. In any event, it is difficult to see how the actions taken by JCCF, and referred to by the motion judge, could amount to an abuse of process. Fund raising would not satisfy that requirement nor would promoting the case on a website. JCCF was entitled to let the public know about the case and it was also entitled to raise funds to defray the costs of the case. As the interveners correctly point out, to hold otherwise would have a very chilling effect on the work of public interest organizations.

[18] If there was evidence that JCCF had instigated the motion for an improper purpose, that would satisfy the abuse of process requirement. Similarly, if there was evidence that JCCF was in the position of a “maintainer”, within the meaning of the tort of maintenance, that would also satisfy the abuse of process requirement: Laval Tool, at para. 75. However, there is insufficient evidence of either.

[19] If JCCF had agreed to indemnify the students against any costs award, that could be a proper factor for the motion judge to consider in deciding to make an award of costs against the students as parties, such as occurred, for example, in Servatius v. Alberni School District No. 70, 2022 BCCA 421. However, that fact would still not have justified an award of costs directly against JCCF.

[20] This raises a final issue. JCCF persistently refused to advise whether it was indemnifying the students against any costs award. In my view, JCCF was obliged to reveal that information and the motion judge ought to have required it to do so before making his costs award. I do note, on that point, that Seneca did not ask the motion judge to require JCCF to reveal that information, but the motion judge ought to have done it on his own. It was a relevant consideration in the proper disposition of costs in this type of proceeding. On that point, I agree with the general proposition set out in Servatius, at para. 276:

Therefore, where as here, a party is seeking to avoid the ordinary costs rule on the basis that the litigation is public interest litigation and on the basis that the named party cannot afford costs, it is necessary for the courts to know who is truly financing that party's lawsuit and who is truly at risk for the potential costs award.

. 9383859 Canada Ltd. v. Saeed

In 9383859 Canada Ltd. v. Saeed (Ont CA, 2023) the Court of Appeal considers (but does not rule on) a costs argument that appeal courts, despite being creatures of statute, have "implicit powers that derive from [their] power to control [their] own process":

Costs

[13] The respondents make a novel argument in support of their submission that a costs award should be made against Mr. Singh personally. That submission is premised on the proposition that appellate courts, while creatures of statute, nevertheless have “implicit powers that derive from [their] power to control [their] own process”: Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720, at para. 27. These powers include the ability “to make procedural orders to prevent an abuse of process and to ensure the just and efficient administration of justice”: Mukwa v. Farm Credit of Canada, 2022 ONCA 320, at para. 24.

[14] According to the respondents, 938’s litigation strategy, as implemented by Mr. Singh, amounts to an abuse of process. Therefore, to protect the court’s process, they submit that Mr. Singh should be ordered to pay costs personally, similar to orders made in the Superior Court against non-parties who are directors, shareholders, or principals of corporations, as described in 1318847 Ontario Limited v. Laval Tool & Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641.

[15] It is unnecessary for me to determine whether this court has the power to make such an order because I am not satisfied that Mr. Singh’s litigation strategy amounts to an abuse of process. Instead, it appears that Mr. Singh has used every appeal process available to 938. While I can understand the frustration the respondents are feeling with the delays in this litigation, this conduct does not qualify as an abuse of process. In any event, if this court does have the power to make the order sought, it should, in my view, be reserved for the clearest of cases.