Law Practice, Litigation

The Cost of Litigation

Jul 11th, 2013

By Barry Landy

One of the most frequent questions I am asked when a person has been sued is whether or not he or she can recover the cost of defending the lawsuit.

By way of example, imagine being sued for $50,000 for defamation and having to pay your lawyers $50,000 to mount a proper defence!

The general rule is that a party may not recover the cost of defending a lawsuit, unless the opposing party has engaged in abusive use of procedures. Examples are multiple and interminable discoveries, numerous amendments, numerous interlocutory applications and so on. In most instances, these types of procedural abuses are exceedingly rare.

However, as explained so well by the Honourable Justice Joel Silcoff of the Superior Court of Quebec in the case of Trudel v. Handfield 2013, QCCS 2955, there are other circumstances not involving abuse of procedures, which can give rise to demands for recovery of the cost of defending a lawsuit and it is worthwhile knowing what these rules are and how and when they apply:

  1. Firstly, where a proceeding is clearly unfounded, or frivolous or taken in bad faith, or the procedures used are excessive, a court can sanction the conduct of the offending party;
  2.  The sanctions range from dismissing the action, to subjecting  the continuance of the action to certain conditions, to ordering the offending party to pay the fees and extra-judicial costs of the opposing party;
  3. These rules apply where there is abuse or apparent abuse;
  4. In order for there to be abuse or apparent abuse, the proceedings have to be marked by temerity, meaning that the proceedings in question would not have been taken by a reasonable and prudent person, placed in the same circumstances, or who knew or ought to have known that the proceedings in question were groundless. In short, there is an element of blame-worthy conduct or fault connected with the notion of abusive proceedings.
  5. Where the opposing party can show abuse or apparent abuse in a summary way (that is, without conducting a lengthy proof), the burden of proof shifts and the offending party must then demonstrate (in a summary way) that this is not the case.
  6. If  there has been abuse, as opposed to the appearance of abuse, then the court may summarily dismiss the legal proceeding in question.
  7. If there is only an appearance of abuse, then a court cannot summarily dismiss the proceeding. However, in those cases, the court may impose other sanctions, including forcing the offending party to pay the legal costs and expenses incurred by the opposite party.

The lesson to retain from all of this: Your client may want you to “be tough” but beware of  acting in an abusive way. The costs to your client can be extraordinarily high!

Barry Landy is a senior litigation lawyer at Spiegel Sohmer who focuses his practice on commercial litigation and is also experienced in the area of media law.