Higher costs awards for Federal Court litigation are on the horizon, with the Canadian government consulting on proposed amendments to the costs structure in the Federal Courts Rules (the Rules). The proposed amendments are intended to increase costs awards by approximately 25%.
The current costs regime
Under the Rules, the Federal Courts can fix a costs award by following a tariff structure or by issuing a lump-sum award. The current tariff structure (Tariff B in the Rules) is based on a single table that lists 29 legal services and covers all Federal Court proceedings, including appeals. Each service is assigned a value through a unit and column system, in which five columns (Column I to Column V) allow for increasingly large numbers of units (and hence costs) to be awarded for a given service.
For many years, it has been recognized that costs awards based on Tariff B fall far short of actual litigation costs, particularly in intellectual property disputes. As a result, there has been an increasing trend, particularly in intellectual property disputes, for the Court not to rely on Tariff B when issuing a costs award, but instead to issue a lump sum award. However, there are concerns that this lump sum approach is less predictable.
Proposed changes to the costs tariff
The proposed amendments to the costs structure in the Rules (i.e., to Tariff B) include:
- converting the current table into four separate tables, each tailored to list services applicable to a single type of proceeding (actions, applications, appeals, motions);
- simplifying each table by reducing the number of columns from five to three, and avoiding overlap between the number of units allowable for each service from one column to the next;
- increasing the number of units for each service; and
- adding new services to reflect current litigation practice.
These amendments are intended to allow the Court to award tariff-based costs that would more closely match a lump sum award, providing a more consistent and predictable regime. Specifically, the amendments are intended to increase costs awards by approximately 25%, which may also provide a greater incentive for pre-trial resolution. However, the Regulatory Impact Analysis Statement accompanying the proposed amendments warns that the anticipated 25% increase in overall costs will not be uniform and will depend on the facts and circumstances of each case. Moreover, the Court will retain its full discretion over costs, including whether to fix them using Tariff B or a lump sum approach.
- The proposed amendments are set out in the Canada Gazette (Part I, v. 157): Rules Amending the Federal Courts Rules and the Federal Courts Citizenship, Immigration and Refugee Protection Rules.
- Those wishing to comment on the proposed amendments have until April 12, 2023 to do so.