The Cost of Public Interest Litigation

October 26, 2020

By Brian Babcock

Determining that a proceeding is “public interest litigation” may have significant costs consequences. This is because courts recognize that access to justice has greater importance in public interest litigation than in disputes between private parties.

“Public interest” does not mean that the parties are always public bodies. Private citizens may advance cases of public importance, or be the target of such claims.

If you are contemplating suing over an issue which you think is of importance to the public interest, rather than to your personal financial interests, it is worth taking steps to increase your chances of arguing that your case is “public interest litigation”. Depending upon the facts of the case, the issues, and the conduct of the parties, public interest litigants might:

  • receive costs greater than normally awarded;
  • not have costs awarded against them if they lose; or
  • have any costs awarded against them reduced to reflect the public interest aspect of their case and the desire to encourage access to justice.

If you are sued in a situation where the opposing parties may claim to be conducting public interest litigation, you should be aware that:

  • even if you win, you might not be awarded costs;
  • if you recover costs, the amount may be reduced to reflect the other side’s public interest status;
  • even if you win, in some cases you might be required to pay the losing side’s costs if they acted reasonably in the public interest (especially if you are a public body, are publicly funded, or are seen as having conducted the lawsuit inappropriately).

Two recent Ontario Court of Appeal decisions on costs look at different aspects of these issues. Incidentally, the figures involved show that public interest litigation is far from cheap.

Friends of Toronto Public Cemeteries Inc. v. Public Guardian and Trustee considered ‘what is public interest status?’

The corporate Applicant (FTPC) was a not-for-profit corporation incorporated solely to bring a lawsuit against the Public Guardian and Trustee and Mount Pleasant Group of Cemeteries (MPGC). A Toronto city councillor, Kristen Wong-Tam, also was an individual Applicant, because the Charities Accounting Act requires two applicants. The Application dealt with whether the directors of MPGC were properly appointed; whether MPCG was a trust and in particular a charitable purpose trust; whether MPCG had exceeded its objects by operating a visitation centre, funeral home and crematorium;  and whether it was in the public interest that an investigation be conducted into the issues between the members of FTPC and MPGC.

The facts and issues were complex. What is important here is that MPGC was largely successful.

On the appeal, it sought it’s costs.

This was found be public interest litigation, but FTPC and Ms. Wong-Tam were ordered to pay some costs to MPGC. The amount of costs ordered was reduced from ordinary levels to reflect the public interest aspect and other factors.

The factors to be considered in determining whether an unsuccessful party should be excused from paying costs because it was acting in the public interest include:

  • the nature of the litigants,
  • whether the nature of the dispute was in the public interest,
  • whether the litigation had any adverse impact on the public interest, and
  • the financial consequences to the parties.

The application judge had found both FTPC and Ms. Wong-Tam to be public interest parties, but MPCG is a charitable corporation and a trust, not a public body. Ms. Wong-Tam had no monetary interest in the outcome. She had a long history of advocacy regarding MPCG.

Although the dispute had public interest attributes, it was not clear that there would have been public benefits even if the applicants had been successful.

It appears that the Court of Appeal wasn’t convinced that FTPC, most of the members of which were neighbours of the cemetery, was only acting in the public interest, but declined to overturn the original ruling on that point.

On balance, access to justice concerns favoured treating FTPC and Ms. Wong-Tam as public interest litigants. The story does not end there.

FTPC had agreed to post security for costs; and had indicated an intent to indemnify Ms. Wong-Tam if she was ordered to pay costs. Both these facts indicated that, even if the Applicants are public interest litigants, they expected that there was a risk that they may be ordered to pay costs.

There was no evidence as to FTPC’s ability or inability to pay a sizable costs award.

The initial application, not including the appeal, was determined to normally justify $400,000.00 in costs. FTPC was ordered to pay $200,000.00, or half what they would have paid if this was not public interest litigation. It was also ordered to pay $150,000.00 for the cost of the appeal, which did not reflect a reduction.

Ms Wong-Tam was ordered to pay $10,000 in costs related to the appeal only.

In Stewart v. Toronto (Police Services Board), Mr. Stewart sought damages for alleged breaches of his Charter rights during G20 protests. He was successful on appeal, but received damages of only $500.00. He received his costs of the appeal, but the important issue was which party, if either, would receive costs of the original seven day hearing.

The Toronto Police Services Board (TPS) had made an offer to settle of $10,000.00 plus interest and costs in 2017. That offer was considerably higher than Mr. Stewart’s awarded damages, so under the Rules of Civil Procedure, costs from the date of the offer would normally be payable to TPS. With a seven day trial, those costs would normally be assessed around $40,000.00. The Court of Appeal estimated that the result would be that Mr. Stewart would end up owing TPS $8,000 to $10,000 in net costs (his recoverable costs to 2017 set off against the TPS costs from 2017).

Mr. Stewart argued that he should be paid his costs of $114,584.61 right through the trial because he was a public interest litigant.

The court did not award Mr. Stewart public interest litigation costs, because he failed to meet the criteria, which are:

  • that the proceeding involved matters of public interest that are “truly exceptional”; and
  • that he has no personal, proprietary or pecuniary interest in the litigation that would justify the proceeding on economic grounds.

Almost all Charter claims concern matters of public importance. This case was not considered “truly exceptional”. Even if it was, by seeking damages, Mr. Stewart demonstrated a personal or pecuniary interest, in spite of his argument that he was more interested in an admission of liability than compensation.

Although Mr. Stewart was not purely a public interest litigant, the court considered the fact that his case “will contribute to a better understanding of the interplay between Charter rights and permissible police crowd control techniques”, which is in the public interest.

He had also made an offer to settle, but it was for $5,000 – more than he was awarded – and required an admission of liability. This was not a presumptive factor in setting costs under the Rules of Civil Procedure because Mr. Stewart recovered less than his offer; however, the offer was still a factor in the decision because Mr. Stewart did obtain the vindication which was important to him.

The court agreed with Mr. Stewart that a result where he vindicated his constitutional rights but was required to pay costs would be harsh and unfair.

As a result, TPS was ordered to pay Mr. Stewart $25,000 in costs for the original hearing, in addition to the costs of the appeal set at $20,000, a significant departure from the presumed or normal result.

These cases show the subtlety of a finding that a lawsuit is “public interest litigation”, and illustrate the factors you should consider in setting your strategy if you find yourself in a case which might fit the definition, or even come close.