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Costs - Public Interest Litigation

. Know Your City Inc. v. The Corporation of the City of Brantford

In Know Your City Inc. v. The Corporation of the City of Brantford (Div Ct, 2021) the Divisional Court considered public interest costs awards:
[52] KYC is the unsuccessful party. It seeks to avoid a payment of costs on the basis of a public interest exception. The public interest exception is an exception that the courts have used to exempt public interest litigants from an adverse costs award where the litigants have no direct pecuniary or other significant interest in the outcome of the litigation.

[53] KYC submits that it falls into this category. It argues that the sale of the Arrowdale golf course was an important issue for the people of Brantford. The two directors of KYC have no pecuniary or other interest in the outcome of the litigation. Thus, KYC should be exempted from the payment of an adverse costs award.

[54] I accept that one of the bases for the evolution of the public interest exemption is the court’s recognition that there is an important public purpose that can be at stake when a member of the public commences a court action to ensure that politicians do not take advantage of their elected status to further their own interests. Politicians who do so should and must be held to account if our democratic process is to survive and flourish. For this reason, actions with this aim in mind should not be discouraged because of a fear of an adverse costs award.

[55] An example of a case where the Divisional Court declined to make an award of costs against an unsuccessful applicant on the basis of the public interest exemption is Magder v. Ford, 2013 ONSC 1842, 357 D.L.R. (4th) 191. In that case, the Court found that the applicant had been successful on one of the issues; that the issues raised were novel and important and had been clarified in the case; and, in the circumstances, it was reasonable for the applicant to pursue the application.

[56] The decision of Cooper et al v. Wiancko et al, 2018 ONSC 1654, 73 M.L.P.R. (5th) 235, contains a useful discussion of the principles and factors that govern the considerations involved in deciding whether a court should invoke the public interest exemption.

[57] In Cooper, supra, the Court weighed the following factors, discussed in the earlier case of St. James’ Preservation Society v. Toronto (City) (2006), 2006 CanLII 22806 (ON SC), 272 D.L.R. (4th) 149 (Ont. Sup. Ct.), rev’d on other grounds 2007 ONCA 601: (a) the nature of the unsuccessful litigant; (b) the nature of the successful litigant; (c) whether the litigation was in the public interest; (d) whether the litigation had an adverse effect on the public interest, and (e) the financial consequences to the parties.
. Stewart v. Toronto (Police Services Board)

In Stewart v. Toronto (Police Services Board) (Ont CA, 2020) the Court of Appeal considered the principles applicable to an award of substantial indemnity costs in the public interest:
[4] First, Mr. Stewart’s action does not satisfy the criteria for awarding special costs on a substantial indemnity basis in cases involving public interest litigants as set out by the Supreme Court of Canada in Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331, at paras. 137-140.

[5] Carter requires a litigant to satisfy two criteria for an award of public interest litigation special costs, the first of which is to demonstrate that his proceeding involved matters of public interest that are “truly exceptional” and he has no personal, proprietary or pecuniary interest in the litigation that would justify the proceeding on economic grounds: at para. 140. Mr. Stewart does not satisfy this first criterion. He had an encounter with members of the TPS that he alleged resulted in the violation of several of his rights guaranteed under the Canadian Charter of Rights and Freedoms. Mr. Stewart brought a civil suit seeking a remedy for those violations.

But, as the Supreme Court observed in Carter at para. 137, “[a]lmost all constitutional litigation concerns ‘matters of public importance’”. While Mr. Stewart advanced important Charter claims, we do not regard the matters raised in his proceeding as “truly exceptional”, within the meaning of Carter.

[6] Also, Mr. Stewart has not demonstrated that he has “no personal, proprietary or pecuniary interest in the litigation that would justify the proceedings on economic grounds”: Carter, at para. 140. On the contrary, the pleadings and history of this action show that Mr. Stewart had a personal and pecuniary interest in the litigation.

He initiated the lawsuit in the Small Claims Court but then transferred it to the Superior Court of Justice. At trial, Mr. Stewart sought damages for the violation of his personal rights in the amount of $100,000 which, at the time, was the upper limit for a monetary claim in a simplified procedure action under the Rules. While Mr. Stewart reduced his request for damages during the appeal to $50,000, and then to $20,000, monetary damages as compensation for a wrong to his personal rights remained a key element of his claim. Accordingly, his action does not satisfy the Carter criteria for an award of substantial indemnity costs for public interest litigation.

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