This case dealt with an award of costs against Legal Aid Ontario (LAO) due to its failure to properly monitor proceedings for which it provides funding.
The applicants in this case are the sons and litigation guardians of their father, Kim Hunt. Hunt was involved in an ATV accident in 2011 wherein he sustained a catastrophic brain injury. Hunt was required to remain in the hospital for four months, wherein he underwent a capacity assessment and was found incapable of making decisions regarding his own welfare. The Public Guardian and Trustee became Hunt's statutory guardian pursuant to a Certificate of Incapacity to Manage Property, with guardianship turned over to his sons on application.
Prior to his accident Hunt had been in on again/off again relationship with Kathleen Worrod. Differences between them arose in 2010. The two prepared an agreement which outlined that they wanted to end their cohabitation and resolve any property claims between them, with Hunt purchasing Worrod's share of the down payment on the home that they bought together. This purchase took the form of a lump sum payment, with the balance being credited to Hunt for his previous payment of Worrod's legal fees arising from multiple DUI charges and acting as her recognizance surety.
Three days after Hunt was released from the hospital into the care of his sons, he was picked up on the roadway outside of his home by Worrod's uncle, unbeknownst to them. Worried, Hunt's sons eventually tracked him down to a hotel, where they learned that arrangements had been made for Hunt to marry Worrod and that the wedding had already taken place. Hunt's sons were appointed his litigation guardians, and commenced an application for a declaration that the marriage was void ab initio, a declaration that their father was the sole owner of home and to remove Worrod's name from title (as she had claimed an interest in the home notwithstanding the agreement), and an order prohibiting further contact between Worrod and Hunt. They were successful on all claims.
Worrod then moved to BC, where it appeared she worked a minimum-wage job and did not hold any significant assets. The court now had to decide the entitlement of the applicants to, and the amount of, costs against Worrod and whether the conduct of LAO or Worrod's attorney entitled the applicants to costs or any contribution thereof.
The court found that the fees charged by the applicant's lawyers were reasonable, with the costs of their services totaling $309,296. In 2014, Worrod requested an expert report from a clinical neuropsychologist. The report, which was funded by LAO, clearly supported the applicants' position that Hunt lacked the capacity to consent to a marriage. The Court did not second-guess the decision of the applicants not to bring a motion for summary judgement based on the report, as the issue of capacity was never conceded and there were unresolved monetary issues requiring a trial, such as ownership of the house. Nevertheless, the court applied a reduction based on the applicants not claiming costs associated with various steps taken throughout the proceedings at the time these steps were taken as per the Family Law Rules (FLR); and due to the applicant's law clerk rates being unreasonably high. Thus, the court fixed costs at approximately $300,000 plus $39,000 in HST, with disbursements and HST thereon bringing the final amount to $385,279.54.
The court noted that this was a case that cried out for full recovery of costs. Per the court, Worrod took advantage of a vulnerable individual suffering serious cognitive deficits for selfish gain, sparking a six-year period of litigation exacting a substantial emotional and financial toll on the Hunt family. Worrod refused several offers to settle which would have more than doubled her relatively small contribution to the down payment of the home at issue. The court considered the rules regarding cost consequences of a failure to accept an offer, and found that the applicants were entitled to full costs against Worrod. However, the evidence strongly suggested that Worrod was not and never would be in a financial positon to pay any costs.
Subsequently, the applicants argued that Worrod's lawyer failed to meet his reporting obligations to LAO, as Worrod's claim was completely without merit. However, the court found that because it was not privy to the lawyer's discussions with LAO or Worrod, being privileged, it had no basis for finding that he acted improperly in his reporting obligations. Therefore, the court was not prepared to make an order of costs against him personally.
Regarding the issue of entitlement to costs from LAO, the court cited 1318847 Ontario Ltd v Laval Tool & Mould Ltd, 2017 ONCA 184 (Laval Tool) for the proposition that while s. 131 of the Courts of Justice Act confers statutory jurisdiction to award costs against parties, the broad and permissive language of the provision does not encroach upon court's inherent jurisdiction to award costs against non-parties via its power to control its own processes. This allows the court to award costs against a non-party where their conduct amounts to an abuse of the court's process. Subsequently, the Court of Appeal in Laval Tool referred to the Supreme Court case of Behn v Moulton Contracting Ltd, 2013 SCC 26 (Behn). Behn describes conduct which comprises an abuse of process as "the bringing of proceedings that are unfair to the point that they are contrary to the interest of justice," or "oppressive" or "vexatious" treatment that undermines "the public interest in a fair and just trial process and the proper administration of justice".
The court noted that there had been no previous decision where costs had been awarded against LAO. There was a decision where the court declined to do so because it thought LAO did not act improperly, but notably this decision did not deny the court's inherent jurisdiction to award costs against a non-party. LAO submitted that it was shielded from costs due to s. 83(2) of the Legal Services Act which provides that its decisions are final and shall not be the subject to an appeal or judicial review. The court declined to characterize costs as an appeal or judicial review, and noted that the section would not limit the court's inherent jurisdiction to prevent an abuse of process regardless.
Nevertheless, the court emphasized that caution must be exercised in awarding costs against a non-party, and only in circumstances that are exceptional and clearly constitute an abuse of process. This must be more than mere negligence on the part of the non-party, but involve conduct that is improper, vexatious, unconscionable or in bad faith.
The court held that Hunt's circumstances were not ordinary, as Ontario stood in a special relationship to him by virtue of his vulnerability. Furthermore, LAO would have been aware it was dealing with a vulnerable individual as it would have noticed the certificate of incapacity when filing a lien on the house at issue. The court did not question LAO's decision to issue Worrod a legal aid certificate, however LAO's expert's own report was a complete answer to the capacity issue raised for trial. The only funds available to Hunt for litigation were those from his insurer set aside for his care. The court held that LAO should not have forced Hunt into a situation where he was obligated to use said funds to defend himself against meritless claims.
The court emphasized that LAO is under a statutory obligation to monitor the cases in which it has granted funding, and can withdraw said funding at any time on the basis that the recipient is acting unreasonably or taking an unreasonable position. The court held that LAO failed to properly and conscientiously monitor the lengthy and costly proceedings, thus contributing significantly to the hardships faced by the Hunt family. Additionally, the failure of LAO amounted to a massive waste of judicial time and resources. The court held that LAO should have terminated funding for Worrod's litigation after it received the expert report, and that its actions in funding the six-year proceedings therefore amounted to an abuse of process undermining the public interest in a fair trial and the proper administration of justice.
The court went so far as to say that if it was Worrod's "intention to wreak financial havoc on Mr. Hunt and his family from the security of her residence in British Columbia, she could not have found a more cooperative and loyal ally than Legal Aid Ontario." As such, the court invoked its inherent jurisdiction and ordered LAO to contribute 50% of the full indemnity costs fixed against Worrod, namely $192,639.77 payable on a joint and several basis.