Opportunity cost not condition precedent to an award of costs: Prince Edward Island Court of Appeal

To require proof ignores the fact that costs serve purposes other than indemnification, said Court

Opportunity cost not condition precedent to an award of costs: Prince Edward Island Court of Appeal
Time spent on work ordinarily done by counsel could have been spent with family

The Prince Edward Island Court of Appeal has ruled that opportunity cost is not a condition precedent to an award of costs, that a self-represented litigant is not entitled to the same costs as a litigant who retained counsel and that a finding of counsel’s conduct as a factor in the assessment of costs is not a finding of unprofessional conduct.

In Grafton Management Inc. v. Charlottetown (City), 2021 PECA 11, the appellant company, represented by its sole shareholder and lawyer Peter Ghiz, sought damages against the City of Charlottetown, alleging that the latter installed a replacement traffic light on its property. During trial, the appellant submitted a revised amended statement of claim to the City, to which the latter consented. The trial judge was thus left with the sole issue of costs.

In fixing costs, the trial judge found that Ghiz was a self-represented lawyer and sole shareholder of the appellant company and was therefore entitled to indemnity on an opportunity cost rationale. However, there must be evidence of opportunity cost, said the trial judge, and since there was none, she relied on other relevant factors in arriving at the assessed cost. One of these factors was Ghiz’s use of the Law Society Code of Conduct “in an inflammatory manner”. These two issues – professional misconduct and evidence of opportunity cost – were raised on appeal.

On the issue of unprofessional conduct, the Court of Appeal ruled that this finding was not one of professional misconduct. Courts do not have jurisdiction to entertain complaints or make findings of a breach of the Code of Conduct and neither was there a complaint of professional misconduct in this case, said Justice John Mitchell, the author of the decision. However, while judges may comment on counsel’s behaviour, judges should be careful in the language utilized so as not to unfairly mark a lawyer’s reputation.

As to opportunity cost, the Court found that while opportunity cost may be a factor, it is not a condition precedent to an award of costs. To require proof of opportunity cost as a precondition ignores the fact that costs serve several purposes and not just indemnification, said Mitchell.

Further, self-represented litigants are not entitled to costs on the same basis as a litigant who retains counsel. The time self-represented litigants spend doing work ordinarily done by counsel could have otherwise been spent on their business, careers or their personal lives. Justice therefore requires only that a self-represented litigant, lawyer or not, show that the time spent is time for functions ordinarily performed by a lawyer, said Mitchell.

“The time has come to bring this province in line with the majority of provinces in Canada and that is opportunity cost is not a pre-condition for awarding costs to a self-represented litigant whether or not that litigant is a lawyer”, said Mitchell.

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