Tuesday, July 5, 2016

Personal Liability of Counsel for Costs

Rule 57.07 provides:



57.07 (1) Where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order,

(c) requiring the lawyer personally to pay the costs of any party.  O. Reg. 575/07, s. 26.


The law on the personal liability of counsel for costs is not normally seen as arising in the context of a proceeding being weak.  Lawyers may be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material was filed or excessive motions and applications were brought, and that the lawyer acted in bad faith in encouraging this abuse and/or delay. A lawyer is not to be deterred from bring forward an unpopular case because of the fear of personal costs.  The liability of a lawyer personally for costs is exceptional and is rarely imposed.


That said, in the remarkable case of Best v. Ranking, 2016 ONCA 492 makes clear counsel is not liable for costs for pursuing a weak action.


The Court notes:

[50]        I agree with the submission of the appellant that the fact that a lawyer starts an action which is unlikely to succeed is not, on its own, a basis to award costs personally against that lawyer. 

[51]        Rule 57.07 is "designed to protect and compensate a party who has been subjected to costs being incurred without reasonable cause, not to punish a lawyer": Galganov, at para. 14. 

That said, the Court also makes very clear that the conduct of litigation may lead to a personal liability, especially where the case itself may be seen as frivolous or weak:


[52]        The motion judge here did not make Mr. Slansky liable for costs personally simply because he started a case that was weak. As the motion judge pointed out, the nature of the proceedings is an important contextual factor in assessing whether costs wasted by a solicitor justify an order that he pay costs personally.

[53]        As this court held in Galganov, at para. 20:

[R]ule 57.07(1) requires an examination of "the entire course of litigation that went on before the application judge so that the application judge can put in proper context the specific actions and conduct of counsel." This holistic examination of the lawyer's conduct produces an accurate tempered assessment. [Citation omitted.]


The best take away from the decision is to be most cautious when pursuing a weak case and to ensure that no steps which may be criticized for being unnecessary or taken – of course that is good advice for any case!

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