Cost Recovery for In House Counsel
The recent decision of Grand & Toy v. Aviva Canada discussed whether a party, represented by salaried in-house counsel, could recover costs and, if so, to what extent.
Aviva
Grand & Toy took the position that as Aviva had been represented by its salaried, in-house counsel, to the extent a cost order was made, it should be on the basis of the actual costs incurred by the successful party – and this would involve Aviva disclosing the salaries of the in-house counsel, so a proper determination of actual cost could be made.
The court rejected the argument that because in-house counsel was used, the type of cost order available was limited and pointed to s. 36 of the Solicitors Act, which provides that costs cannot be disallowed or reduced merely because the counsel involved are salaried employees of the party. It found that in the circumstances it could not simply reduce a cost order that otherwise would have been made.
Turning to the issue of quantum of fees, the court found that it should consider the factors enumerated in R. 57.01(1) of the Rules of Civil Procedure(“Cost of Proceedings – General Principles”) and fix an amount that was fair and reasonable to the unsuccessful litigant (rather than that merely reflects the costs of the successful party).
In this situation, the court determined that the hourly rates charged by counsel were too high given the complexity of the matter; that the time spent on some steps was excessive; and that one, rather than two, counsel from Aviva was all that was reasonably required for the hearing. Accordingly, it awarded costs at a lesser amount than claimed.
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Megan F. Connolly
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