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Costs - Self-Represented Parties

. Fuhgeh v. Stewart

In Fuhgeh v. Stewart (Div Ct, 2021) the Divisional Court stated the costs rule for successful self-represented parties:
[14] A self-represented lay litigant should receive only a “moderate” or “reasonable” allowance for the loss of time devoted to preparing and presenting the legal proceeding: Fong v. Chan, 1999 CanLII 2052 (ON CA), at para. 26. In my view, the hourly allowance of $50 proposed by Ms. Bernard is very reasonable as is her estimated loss of time of 10.75 hours. The time involved includes preparation for and participation in the November 20, 2020 case conference before Labrosse J. Given the number of orders challenged by Mr. Fuhgeh, it was to be expected that some time would be taken to prepare responding submissions. Mr. Fuhgeh shall pay Ms. Bernard forthwith costs fixed at $537.50.
. Benarroch v. Fred Tayar & Associates P.C.

In Benarroch v. Fred Tayar & Associates P.C. (Ont CA, 2019) the Court of Appeal considered cost awards and self-represented parties:
(b) Did the application judge err in his interpretation of Fong?

[19] In Fong, this court explained that self-represented litigants do not have an automatic right to recover costs. The trial judge retains “a discretion to make the appropriate costs award, including denial of costs”: at para. 25. The court went on to hold as follows:
[S]elf-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel. … [A]ll litigants suffer a loss of time through their involvement in the legal process. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by forgoing remunerative activity: at para. 26.
[20] In its discussion of the appropriate award that should be made in these circumstances, the court stated:
[A] self-represented lay litigant should receive only a “moderate” or “reasonable” allowance for the loss of time devoted to preparing and presenting the case. This excludes routine awards on a per diem basis to litigants who would ordinarily be in attendance at court in any event. The trial judge is particularly well-placed to assess the appropriate allowance, if any, for a self-represented litigant: Fong, at para. 26.
[21] The appellants argue that, since Fong, the case law has evolved such that only a nominal amount of costs is to be awarded to a self-represented litigant, even where lost opportunity costs have been proven. In that regard, the appellants rely on the statement in Mustang Investigations that, “[s]imply stated, no proof of opportunity costs, no nominal costs available”: at para. 27; see also Tiago v. Meisels, 2012 ONSC 5090, at para. 9, leave to appeal refused, 2012 ONSC 6829 (Div. Ct.). The appellants submit that the rates between $300 and $350 per hour awarded by the application judge are anything but nominal.

[22] In the alternative, the appellants argue that, even if self-represented litigants are entitled to a “moderate” or “reasonable” amount for lost opportunity costs rather than a “nominal” amount, the application judge’s award of $60,583.05 does not qualify as moderate or reasonable. That figure represents reimbursement for all of the time spent by the lawyers, at rates as high as $350 per hour. The appellants submit that what is “moderate” or “reasonable” should be assessed in light of costs that could be awarded to self-represented lay litigants in similar circumstances.

[23] For their part, the respondents maintain that all the time included in the bill of costs was spent working on the application as lawyers and that the rates claimed are appropriate partial indemnity rates. In the respondents’ submission, partial indemnity rates are, by definition, reasonable.

[24] In my view, the application judge erred in his interpretation and application of this court’s decision in Fong. His award thus cannot stand.

[25] As Fong makes clear, self-represented litigants, including lawyers, “are not entitled to costs calculated on the same basis as those of the litigant who retains counsel”: at para. 26. By awarding the respondents their costs on a partial indemnity basis, without making any adjustment for time that the respondents would have had to devote as “clients” if they had hired external counsel, the application judge effectively treated the respondents as counsel rather than as self-represented litigants. This approach constituted an error for several reasons.

[26] A basic principle in civil litigation is that successful litigants are normally awarded costs to indemnify them for the expenses they sustained: see British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371, at para. 21. Litigants receive no compensation for the time that they have devoted to the case or to the preparation of materials necessary to instruct the solicitor retained for the file. Similarly, litigants are not compensated for the time they may spend attending the proceedings.

[27] Fong explained that, where a litigant is self-represented, some compensation may be awarded for lost opportunity costs, even in the absence of payments made to a lawyer. That compensation, however, is not for the time and effort that any litigant would have devoted to the case. It is only for the work done by the self-represented litigant over and above the normal involvement of a client, and provided it concerns work that would ordinarily be accomplished by a lawyer. The self-represented litigant must also show that an opportunity cost was incurred because some remunerative activity was forgone.

[28] Where the self-represented litigant is a lawyer, he or she will not recover anything for the time spent on the matter that would necessarily have been devoted to the case had outside counsel been retained. There will likely be no clear way to differentiate between time devoted by the lawyer that would have been spent on the matter as “client” and time devoted in lieu of retaining an outside lawyer to deal with the matter. Some time is clearly either “client time” or “lawyer time”, but much of the time will be a blend of both.

[29] For example, in the present case, the respondents devoted considerable time to the reconstruction of the complete file, as the original file for which the appellants sought an assessment was no longer available. This function would normally be undertaken by the client. Indeed, the client will typically assemble the materials related to the claim and deliver the file to the lawyer.

[30] At the other end of the spectrum, the time devoted to a cross-examination on an affidavit filed by the opposing party is a function usually carried out by the retained lawyer, with limited involvement from the client.

[31] Other categories of work are more difficult to label, as they have elements of both client involvement and lawyer work. One such category is the drafting of affidavits. This task typically involves time spent by the client providing the factual information that will go into the affidavit. However, it also involves the lawyer drafting and reviewing the affidavit, as well as filing it in court. Where the lawyer is self-represented, it will be impossible to determine with mathematical precision how the time spent by the lawyer is to be allocated as between his or her role as “client” and “lawyer”. This difficulty is one of the reasons why, in Fong, this court suggested that a trial judge, or in this case the application judge, is better placed than an assessment officer to set the amount of costs for a self-represented party: at para. 26. It also explains the court’s use of an “allowance” rather than an award based on an hourly rate.

[32] A further caution made in Fong is that an award of lost opportunity costs should be “only a ‘moderate’ or ‘reasonable’ allowance for the loss devoted to preparing and presenting the case”: at para. 26. This signals that the court should avoid a straight application of a lawyer’s hourly rate. Regular hourly rates are of course relevant, as would be the daily rate of a self-represented labourer or the lost profits of a self-employed business person. These amounts should be taken into account in the analysis of a proper costs award, but they cannot be recovered as they would if a lawyer had been hired as external counsel.

[33] In summary, as explained in Fong, a trial or application judge retains the discretion to award or not to award costs. Where the judge determines that an award is warranted and, based on the record, the judge is satisfied that lost opportunity costs have been suffered because the self-represented party has forgone remunerative activity, the judge is either to assess and fix “moderate” or “reasonable” costs, or to provide clear guidelines to an assessment officer as to the manner in which costs are to be assessed.

[34] Where, as here, the self-represented party is a lawyer, the lawyer will be treated in substantially the same way as any other self-represented litigant. In other words, the self-represented lawyer will receive no compensation for the time that the lawyer would have devoted to the matter as a client if external counsel had been retained. In addition, the lawyer will not necessarily recover his or her regular or even partial indemnity rate for all of the time devoted to the work ordinarily done by a lawyer retained to conduct the litigation. He or she will only get an “allowance” for the lost opportunity to devote the time to remunerative activities.

[35] As is clear from the preceding discussion, although I have concluded that the award cannot stand, I disagree with the appellants’ submission that only nominal costs should be awarded. The case law cited by the appellants, which refers to “nominal” costs, does not signal a change in the law since Fong. Where there is little evidence of lost opportunity costs, any award the court may decide to make will likely be in a nominal amount. However, where the self-represented party has demonstrated that the lost opportunity costs were significant, as here, an award for an amount greater than mere nominal costs is justified.
. Pirani v Esmail

In Pirani v Esmail (Ont CA, 2014) the Court of Appeal made the following useful comments on the issue of cost awards to solicitors and other legally trained persons acting in their personal capacity:
[4] Mr. Jiwa was self-represented at trial. Because he is a lawyer he seeks recovery of virtually all of the time he spent dealing with the matter. In his bill of costs, he has applied what we assume is his regular hourly rate and then made adjustments to arrive at substantial and partial indemnity rates. He also seeks recovery for the time another lawyer and law clerks in his office spent dealing with the claim.

[5] The bulk of the claim is for Mr. Jiwa’s time. The respondent argues that virtually all of the time claimed by Mr. Jiwa was for time spent because he was a party. There is, in the respondent’s submission, little to suggest that the time being claimed was time when Mr. Jiwa was carrying out tasks requiring a lawyer. Further, Mr. Jiwa has not shown that any of the time spent was time lost to remunerative work. Finally, the respondent submits that the time claimed for activities such as research and document review is excessive. As a result, the respondent suggests a moderate award of costs in the amount of $1000.

[6] In my view the appropriate amount of costs lies somewhere between the submissions of the two parties. As explained by this court in Fong v. Chan 1999 CanLII 19943 (ON CA), (1999), 46 O.R. (3d) 330 (C.A.), lawyers who represent themselves in a lawsuit are entitled to costs. Self-represented litigants, however, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel.
… Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by forgoing remunerative activity.
[7] The bill of costs presented by Mr. Jiwa seeks recovery for virtually all of the time he and others in his office committed to the matter. He indicates in his submissions that the time he devoted to the lawsuit has had “significant financial implications when he could have spent time working on other files.”

[8] In our view, the trial issues in which Mr. Jiwa was involved were narrow and relatively straightforward. The bulk of the trial dealt with the dispute between the respondent and the Esmails and the amount of the claim advanced was relatively modest. From our review of the bill of costs, we also agree with the respondent that a significant amount of the time being claimed by Mr. Jiwa was for his participation as a party rather than as a lawyer. Taking all of this into account and weighing it against the fact that, inevitably, a significant amount of Mr. Jiwa’s time, and that of the other lawyer and the clerks, would have been devoted to work ordinarily done by a lawyer retained to conduct the litigation, we would award Mr. Jiwa trial costs fixed in the amount of $15,000 inclusive of HST and disbursements.




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