Costs to be borne by both sides in constitutional appeal of auto insurance law: B.C. Appeal Court

Law360 Canada (October 31, 2022, 9:43 AM EDT) -- British Columbia’s top court has ruled both sides involved in a constitutional challenge of the province’s automobile insurance regime should bear their own costs, with a lawyer saying the decision changes the incentives and strategic considerations involved in bringing public interest litigation.

The decision comes as a result of an unsuccessful challenge brought by the Trial Lawyers Association of British Columbia (TLABC) and several motor vehicle plaintiffs that the B.C. government’s decision to send certain personal injury cases to the province’s Civil Resolution Tribunal (CRT) offended s. 96 of the Constitution Act, 1867, by infringing on the jurisdiction of the superior courts (Trial Lawyers Association of British Columbia v. British Columbia (Attorney General) 2022 BCCA 163).

And the B.C. Court of Appeal has now ruled that both sides in the case bear their own costs, noting that public interest litigation attracts special considerations that have led courts to develop factors to guide the exercise of their discretion to depart from the usual rule that costs follow an event (British Columbia (Attorney General) v. Trial Lawyers Association of British Columbia 2022 BCCA 354).

“Insulating an unsuccessful public interest plaintiff from an adverse cost award by ordering that each party bear its own costs represents less of a derogation from the usual rule than an award of interim costs, an award of costs to an unsuccessful party, or an award of special costs to a successful litigant,” the court wrote.

In Carter v. Canada (Attorney General) 2015 SCC 5, the Supreme Court set a strict test for awarding special costs to a successful public interest litigant which involves asking whether the issues are of exceptional public importance, whether the litigant had a personal, proprietary or pecuniary interest which justified the proceedings on economic grounds, and whether it would have been impossible to pursue litigation with private funding.

But the Court of Appeal wrote it would be contrary to the interests of justice to apply such a high standard in a case where an unsuccessful litigant with public interest standing seeks simply to bear its own costs.

“We are not convinced that it was the Court’s intention in Carter to apply this higher standard to all public interest litigation. Doing so would run contrary to the considerations that inform the court’s discretion with regard to such orders on the facts of each case,” the court wrote. “We also note the… argument that such an approach may have a deterrent effect on meritorious public interest litigants. For such litigants, the disincentive to bring an action of public importance arising from the potential of an adverse costs award is stronger than the incentive effect of securing costs in the cause.”

Aubin Calvert of Hunter Litigation Chambers, who represented TLABC and some individual plaintiffs, said the court clarified a “really important point of significance” by saying that not all deviations from the ordinary costs rule are created equal. She noted one of the issues raised in the case was whether the Carter test applied when a public interest litigant has lost.

“In each situation, whether you are talking awarding costs to an unsuccessful party or special costs or insulating an unsuccessful public interest litigant from an adverse costs award, the analyses are going to be different and engage different considerations,” she said.

“The court was concerned that exposure to an adverse costs award is a disincentive or deterrent to meritorious public interest litigation, so to the extent that more favourable cost treatment when it comes to insulating public interest litigants from adverse awards will help in alleviating that deterring effect. I think that does change the incentives and the strategic considerations involved in bringing public interest litigation.”

In a statement, a spokesperson for B.C.’s Ministry of Public Safety and Solicitor General said the province was pleased the Court of Appeal upheld the constitutionality of the CRT’s jurisdiction over certain motor vehicle accident claims in British Columbia.

“[The CRT] provides disputes resolution processes separate from the courts in the event a customer disagrees with an aspect of their claim, such as the fault assessment, their entitlement to receive certain benefits, and the determination of whether an injury is a minor injury and if so, the determination of those claims,” the statement said. “The CRT process was put in place to be a more efficient and easy-to-use process for customers and to provide them with an increased opportunity for a fair and fast resolution of their claim.”

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