Proportionality and Costs of Litigation

I referred to the proportionality principle in the introduction to this Summary of Findings and Recommendations. Although this section is somewhat repetitious, the issue of proportionality is central to this undertaking. Proportionality, in the context of civil litigation, simply reflects that the time and expense devoted to a proceeding ought to be proportionate to what is at stake. It should be expressly referenced in the Rules of Civil Procedure as an overarching, guiding principle when the court makes any order.

In my view, the civil justice system somehow has to recognize the principle of proportionality as having a broad application to all civil proceedings, so that courts and parties deal with cases in a manner that reflects what is involved in the litigation, its jurisprudential importance and the inherent complexity of the proceeding. To that end, costs rules should be amended to clearly direct courts to consider, in awarding costs at the conclusion of a proceeding, not only what time and expense may be involved in the proceeding but also what time and expense were justified, given the circumstances of the case.

In addition, counsel should as a matter of routine provide clients with a pro forma budget setting out, albeit in a somewhat imprecise way, the estimated cost (legal fees and disbursements, including expert witness fees) of commencing or defending a proceeding. Periodic updates should also be provided. There is, of course, no need for this in personal injury litigation where contingency fee arrangements are typical. Nor would this requirement be applicable to defence counsel retained by property (casualty) insurers who have developed their own methods of controlling solicitor and client cost exposure.

I stop short of specifically recommending that distributive cost orders (based on a party's relative success in the litigation) should be open to the court to a degree that does not apply now. It does, however, seem odd that a litigant who raises eight issues and loses on seven of them should receive a full set of costs if successful only on issue eight. Perhaps the settlement offer provisions of the rules provide a good enough answer. It is my hope that the Civil Rules Committee will see fit to revisit this issue.

Recommendations (Proportionality)

  • The Rules of Civil Procedure should include, as an overarching principle of interpretation, that the court and the parties must deal with a case in a manner that is proportionate to what is involved, the jurisprudential importance of the case and the complexity of the proceeding.
  • Counsel should be required to prepare a litigation budget and review it with a client prior to commencing or defending any proceeding. This budget should be updated at least when examinations for discovery are completed. The Law Society of Upper Canada should also consider making this an express requirement for the profession under the Rules of Professional Conduct.
  • The Civil Rules Committee should consider whether rule 57.01 should be amended to add, as a factor for the court to consider when making a cost award, the relative success of a party on one or more issues in the litigation in relation to all matters put in issue by that party. I make this recommendation not in the context of distributive cost orders (a subject on which the Court of Appeal has spoken), but rather in the context of court time which has been wasted in advancing frivolous claims or defences. It is one thing to advance claims or defences that manifestly have no merit. It is another thing to waste time doing it. Perhaps rule 57.01 (1) (e) is broad enough to capture my concern. I leave that to the Rules Committee.