Reilly v. Wachowich,1999 ABQB 639
Action No. 9801-08707
IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF CALGARY
THE HONOURABLE JOHN D. REILLY, JUDGE OF THE PROVINCIAL COURT OF ALBERTA
- and -
THE HONOURABLE EDWARD R. WACHOWICH, CHIEF JUDGE OF THE PROVINCIAL COURT OF ALBERTA
MEMORANDUM OF DECISION ON COSTS
of The Honourable Mr. Justice D.B. Mason
 The Applicant, Judge Reilly (“the Applicant”), was the appointed, resident Provincial Court Judge in Canmore, Alberta. On or about April 3, 1998 the Respondent Chief Judge of the Provincial Court, as he then was, (“the Respondent”) issued a directive that the Applicant be reassigned from Canmore to Calgary and that he change his residence accordingly. The reason for this directive was that the Respondent disagreed with several of the Applicant’s judgments and was of the opinion that the Applicant had lost his impartiality when dealing with aboriginal offenders in criminal matters. The Respondent did not refer the matter to the Judicial Council, as he might well have done, but instead chose to issue the aforementioned directive. In doing so, the Respondent purported to implement “corrective measures” pursuant to his statutory and constitutional authority. Once the Respondent instituted the directive and presented the Applicant with a fait accompli, the only avenue available to the Applicant to challenge the statutory and constitutional powers of the Respondent was to bring an application for Judicial Review pursuant to Part 56.1 of the Alberta Rules of Court.
 The Applicant instituted Judicial Review proceedings seeking a declaration that the directive of the Respondent was a nullity with certiorari and an order to quash in aid. By Judgment dated April 26, 1999, I found that the Respondent took these corrective measures wrongfully and without statutory or constitutional authority. I found further that, in taking this action, the Respondent wrongfully disciplined the Applicant, threatened his adjudicative independence and, in the process, denied him procedural fairness.
 The present application concerns the issue of costs. The Applicant contends that he is entitled to an order for costs on an indemnification basis. The Respondent argues that an award of costs against him, particularly on an indemnification basis, is wholly inappropriate.
1. Is the Applicant entitled to his costs on the application for Judicial Review?
2. If costs are appropriate should those costs be on an indemnity basis or on a party and party basis, in accordance with Schedule C of the Alberta Rules of Court?
III. THE APPLICANT’S POSITION
 The Applicant argues that judicial independence was central to the determination of the Judicial Review Application. He contends that, as a member of the Judiciary, it is his responsibility to enforce and protect the constitutional right to a fair and impartial hearing. As such, he was duty bound to challenge the Respondent’s directive by way of Judicial Review.
 The Applicant argues that it would be contrary to the public interest to decline his application for indemnification in several respects. Firstly, he argues that it would necessarily infringe his right to financial security, one of the three core characteristics of judicial independence. Secondly, the Applicant states that it would lead to a chill effect and would discourage other members of the Judiciary from fulfilling their duty to protect and enforce the constitutional right to an impartial hearing. Thirdly, it may dissuade judges from acting in accordance with the Ethical Principles for Judges as set out by the Canadian Judicial Council. Finally, the Applicant submits that, if the Court declines to grant full indemnification in this instance, the ability of Chief Judges to act in a constitutionally impermissible manner in the future will be enhanced.
 The Applicant suggests that an award for costs on an indemnification basis would be appropriate as it satisfies the criteria enumerated by the courts in previous decisions. These criteria will be discussed more fully below. Alternatively, the Applicant requests an order for party and party costs with the application of a multiplier, such that the amount ordered would effectively compensate him for all of his legal expenses. For the purposes of this calculation, the Applicant suggests that column 5 should be used and the Judicial Review hearing should be treated as though it were a trial.
 The Applicant states further that he is not seeking costs against the Respondent in his personal capacity, but in his capacity as the incumbent of the Office of the Chief Judge. The Applicant suggests that the Respondent would be indemnified by the Provincial Government in any event and would not suffer any personal liability even if costs were awarded against him.
However, the Applicant argues that, even if the Government refused to reimburse the Respondent for the Applicant’s costs, this Court should not be dissuaded from making the requested order because there are no special rules exempting Chief Judges from the personal payment of costs.
IV. THE RESPONDENT’S POSITION
 Although costs may be awarded against a true respondent on Judicial Review, the Respondent takes the position that no costs should be awarded against an administrative tribunal where it limits its submissions to jurisdictional issues. The Respondent argues that the general rule is that costs should only be awarded where the tribunal has lost jurisdiction through capricious or arbitrary conduct or where it has acted in bad faith. Even on the rare occasion where such conduct is found, the Respondent contends that party and party costs, as opposed to costs on an indemnity basis, are appropriate.
 The Respondent states that he legitimately believed that he had the requisite authority to make the impugned decision by virtue of sections 2(5) and 9 of The Provincial Judges Court Act, R.S.A. 1998 c. P-20.1. As such, he states that he was entitled to defend his jurisdiction and present his case on statutory authority and that he should not be penalized for having done so.
The Respondent suggests further that, if the general rule regarding costs were relaxed such that they were awarded more readily, it would discourage litigants from pursuing or defending their position in Court. Consequently, he suggests that awarding costs in this case would set a dangerous precedent.
 In the event that costs are warranted, the Respondent submits that they should be party and party costs only. He contends that indemnity costs are only appropriate where the unsuccessful litigant has demonstrated blameworthy conduct. The Respondent suggests that he has not demonstrated any misconduct during these proceedings and as a result he should not be visited with such costs.
 The Respondent advised there is no guarantee that the Government will reimburse him for any of his costs, particularly any costs awarded on an indemnity basis. He suggests that an indemnity award would tend to indicate that he had acted outside the scope of his duty in which case the Government may take the position that it is not responsible for his legal costs.
 The Respondent submits that an award of costs against him personally would infringe his judicial independence, specifically his administrative independence. He submits that all of the arguments the Applicant makes regarding the potential threat to his financial security if this application is not granted, apply with equal force to the Respondent’s administrative independence if the application is granted. The Respondent states further that it is the Government’s responsibility to ensure that the Applicant enjoys financial independence, not the Respondent’s.
V. JURISPRUDENCE ON THE SUBJECT OF COSTS
 The parties have referred me to a number of decisions which discuss the general principles in relation to awards for costs. I find that those decisions can be separated into three distinct categories based on the nature of the litigation within which they arise.
 It is well settled, and indeed codified by Rule 601(1) of the Alberta Rules of Court, that costs are within the Court’s discretion. Nonetheless, some general principles have been established in awarding costs in the context of standard litigation between private parties. In Jackson and Parkview Holdings v. Trimac Industries (1993), 138 A.R. 162, (Q.B.), Hutchinson, J. addressed the issue of where an award of costs on an indemnity basis would be appropriate. The Court stated that generally costs will follow the event and, where awarded, they will be on a party and party basis. At page 166-167 the Court quoted, with approval, from Reese v. Alberta (Minister of Forestry, Lands and Wildlife) (1993), 133 A.R. 127 (Q.B.), where McDonald, J. discussed the Canadian philosophy in relation to awards for costs. In Reese, the Court found that awards of costs are made with a view to striking a balance between two competing interests: 1) a successful party that has not demonstrated any blameworthy conduct should not be required to pay for his/her legal costs; and 2) prospective litigants should not be discouraged from asserting or defending their rights by having to bear all of the legal costs incurred by the successful litigant.
 In Jackson the Court stated that awards for costs should deviate from the general principle of party and party costs only where the case is rare, exceptional or unusual. Following a careful and scholarly review of a number of authorities from various courts, Hutchinson, J. summarized nine examples of what has been judicially considered to constitute rare and exceptional circumstances warranting a departure from the general principle of awarding party and party costs. Based on his findings of law, Hutchinson, J. found that costs on an indemnity basis were appropriate in that case. The Court of Appeal declined to interfere with these findings and affirmed the decision as it relates to costs (see: Jackson and Parkview Holdings v. Trimac Industries (1994), 155 A.R. 42).
 In Sidorski et al v. C.F.C.N. Com. Ltd. (1997), 206 A.R. 382 the Court of Appeal restated the principles set out in Jackson and adopted the list of examples cited by Hutchinson, J., of rare and exceptional circumstances in litigation between private parties where the courts have departed from the general rule of awarding party and party costs. The examples tend to indicate that it is the conduct of the litigation which is determinative of what scale of costs is appropriate in any given circumstance. That principle was expressly recognized by the Court of Appeal in Colborne Capital Corp. v. 542775 Alberta Ltd.,  A.J. No. 33. In Lawson v. British Columbia (Solicitor General) (1992), 88 D.L.R. (4th) 533 the British Columbia Court of Appeal similarly found, at page 588, that solicitor and client costs should only be awarded where there has been “reprehensible, scandalous or outrageous conduct deserving of chastisement”. That statement was later explicitly adopted by the Supreme Court in Young v. Young (1993), 108 D.L.R. (4th) 193 at page 283. As was noted by Eric T. Spinks in his essay Party and Party Costs (Alberta Law Reform Institute, October 1995), decisions of this nature demonstrate the courts recognition of the trend towards the use of costs to control litigants’ behaviour and provide an incentive to efficient litigation.
2. Administrative Tribunals
As above the Respondent suggests, an order of costs does not lie against an administrative tribunal which limits its submissions to the issue of jurisdiction. In that regard, I was referred to R v. Ontario Labour Relations Board (1969), 4 D.L.R. (3d) 485 (Ont. H. Crt.).
 In St. Peter’s Estates Ltd. v. Prince Edward Island (Land use Commission) (1991), 2 Admin. L.R. (2d) 300 (P.E.I. S.C.), the Court found that costs awards should only be made against an administrative tribunal in unusual and exceptional circumstances such as where the tribunal acted in a capricious, bad faith or arbitrary manner, or otherwise contrary to the rules of natural justice. At paragraph 15, the Court stated that:
. . . it might be said that where the tribunal has acted in good faith and conscientiously throughout, albeit resulting in error, the reviewing tribunal will not ordinarily impose costs. On the other hand, where these characteristics have not been clearly evident, the Court will cast a caustic eye upon it, which will normally result in costs being awarded against it.
 In Construction and General Labourers Union, Local 1097A v. M.F. Schurman Construction Limited (1985), 56 Nfld. & P.E.I.R. 353 (P.E.I. S.C.) the Court stated that, although an administrative tribunal has the right to be wrong, it does not have the right to act in a cavalier manner regarding its own jurisdictional right to proceed in the first instance.
 The Nova Scotia Supreme Court declined to award costs in the case of Logan v. Nova Scotia (Denturist Licencing Board) (1994), 25 Admin L.R. 285, where the administrative tribunal had not misconducted itself and its decision was not perverse. This is consistent with the much earlier decision in Regina v. Liverpool Justices ,  1 W.L.R. 585, where the English Court of Queen’s Bench found that costs would only be awarded against a justice or a tribunal for acting perversely or without regard to the fundamental principles to which every court ought to adhere. Even in those instances, the Court found that costs should only be awarded in flagrant cases.
 The Applicant cited the decisions in Tolko Industries Ltd. v. Big Lakes (M.D.) et al.
(1998), 217 A,R, 369 (Q.B.) and Grochowski v. Alberta Association of Architects (1996), 184
A.R. 233 (C.A.) for the proposition that an administrative tribunal may incur costs where it has exceeded or lost its jurisdiction or where it has committed a breach of natural justice. In Grochowski, the Court of Appeal awarded solicitor and client costs against a tribunal that exceeded its jurisdiction and failed to afford procedural fairness to the applicant.
3. Constitutional Litigation Concerning the Independence of the Judiciary
 The present matter is one of several recent cases calling into question the internal workings of the Court and its management. Decisions of this nature are demonstrative of the growing difficulty in Canada of Chief Judges having to administer large and complex courts. I was referred by the parties to a number of cases which involved applications for costs in circumstances which involved the third arm of the government and the constitutional issue of judicial independence.
 I was referred by the Respondent to Mackin v. New Brunswick (Minister of Finance) (1998), 21 C.P.C. (4th) 29 (N.B. Q.B.). In that case, the Plaintiff judge had elected to become supernumerary in lieu of retiring. The legislation that provided for supernumerary status was then repealed and replaced with a system where retired judges were engaged to hear cases on a per diem basis. The plaintiff brought an action challenging the constitutional validity of the legislation and refused to hear any cases pending the determination of the action. The Chief Judge obtained an order requiring the plaintiff judge to carry out his duties. In response to that order, the plaintiff returned to court but either adjourned the cases before him or ordered stays of proceedings. The Minister of Justice then brought a complaint against the plaintiff alleging neglect of duty and misconduct. The complaint was dismissed and the plaintiff judge brought an application for costs against the Minister. Although the Court refused to grant solicitor and client costs, on the basis that the requisite misconduct did not exist, the Minister was ordered to pay all reasonable legal expenses. The Court determined that a refusal by the government to provide legal representation for the plaintiff was incompatible with the concept of judicial independence.
 The Applicant referred me to Ruffo c. Quebec (Ministre de la justice),  R.J.Q. 254 (C.S. Qué). In that case, the appellant judge applied for a declaration that she was entitled to costs against the Minister of Justice for legal expenses incurred in her defence against two complaints brought before the Judicial Council. The Minister opposed the application on the basis that the complaints did not relate to acts arising from the exercise of the plaintiff’s judicial function. The Court referred to Reference re the Remuneration of Judges of the Provincial Court of Prince Edward Island (1998), 150 D.L.R. (4th) 577, where the Supreme Court of Canada refused the right to recover legal fees on the basis that the litigation did not directly and immediately impact the exercise of the judicial function. In Ruffo, however, the Court found that the substance of the allegations did concern the plaintiff’s conduct in her judicial capacity and, as such, there was no reason for the Minister’s refusal to pay the costs requested. The Court stated that, if the decision to pay the plaintiff’s legal costs was left to the discretion of the executive, it would permit the executive to punish judges who did not render judgments favourable to the government and reward those who did. The Court concluded that such a result would impair the independence of the judiciary.
 In Reference re: Territorial Court Act (N.W.T.), s.6(2), (1997), 152 D.L.R. (4th) 132 (N.W.T. S.C.), the Court addressed the constitutionality of legislation which provided for the appointment of deputy territorial judges for periods of two years or less. The legislation allowed for the revocation of those judicial appointments upon the written recommendation of the Chief Judge. The Chief Judge in that case challenged the constitutional validity of the legislation and the Court ultimately determined that it was largely unconstitutional. The Chief Judge sought full reimbursement for his legal costs. The Minister took the position that only party and party costs would be appropriate. There Vertes, J. found, at paragraph 143, that : The Minister’s position would in effect apply a general litigation practise to this reference. I do not consider this case to be litigation in the normal sense of that word. And later in the same paragraph: The issues on this reference touch directly on fundamentally important considerations of the independence and impartiality of the Territorial Court. As submitted by the Chief Judge he has an obligation to intervene in the interests of the judiciary and in the public interest for the orderly administration of justice. No one else did so. In that case, the Chief Judge was awarded full and reasonable solicitor and client costs.
 In Ell et al. v. Alberta,  A.R. TBEd. MR. 101 (Q.B.), the applicants challenged the constitutional validity of proposed amendments to the Justice of the Peace Act, R.S.A. 1980 c.
J-3. The proposed legislation effectively prohibited the three individual applicants from being appointed as sitting or presiding Justices of the Peace because they did not have law degrees and, as such, they could not satisfy the necessary qualifications for presiding judges as provided for by the amendments. My brother McMahon, J. concluded that the legislation offended the constitutional principle of judicial independence. The Court declined to award solicitor and client costs and instead awarded costs taxed on column 5, multiplied by 1.5 of Schedule C, together with all reasonable disbursements. For the purposes of that calculation the Court treated the Special Chambers application as a trial including second council fee. The Court distinguished Ruffo on the basis that the complaint in Ell was not one to the Judicial Council which required the applicants to defend themselves. It should be noted that Ell is currently under appeal, both with respect to the merits and the order as to costs.
 Finally, in Hamann c. Québec (Ministre de la justice) (17 février1999), no C.S. Québec 200-05-010247-984 (C.S. Qué.) the plaintiff, a Municipal Court Judge, sought a declaration that he was entitled to have his legal expenses, which were incurred defending two complaints before the Judicial Council, paid by the Minister. The Minister conceded that if the acts complained of fell within the plaintiff’s judicial function then the fees incurred by the plaintiff in defending the matter before the Council must be defrayed by the State. The Court found that the plaintiff benefited from the presumption of innocence and, as such, it was not up to the Minister to determine whether the plaintiff’s actions were within or outside the judicial function. In other words, so long as criminal condemnation was not pronounced against the plaintiff, the Minister was obligated to pay the plaintiff’s legal costs.
 With respect to the first issue, I find that the Applicant is entitled to costs against the Respondent as Chief Judge.
 As above, the Applicant was successful in his quest for a declaration that the Respondent exceeded his jurisdiction and authority. In the context of general litigation, costs generally follow the event and are granted to the successful party on a party and party basis. However, as previously stated, the Respondent takes the position that this proposition does not apply to administrative tribunals on Judicial Review. He relies on the aforementioned authorities for the proposition that costs should not be awarded against an administrative tribunal where it has limited its submissions to the issue of jurisdiction and has not lost its jurisdiction through capricious or arbitrary conduct. I accept those propositions in standard cases of Judicial Review, however, I adopt the reasoning of Vertes, J. in re: Territorial Court Act, in that matters such as the one presently before the Court cannot be considered “litigation in the normal sense of that word”. This is also consistent with the statement made by McMahon, J. in Ell where he found that the importance of the constitutional challenge in that case greatly exceeded that of usual private interest litigation.
 Notwithstanding the personality conflicts between these two protagonists, their personal differences and their divergent jurisprudential perspectives respecting the proper administration of criminal justice with respect to aboriginal peoples, this dispute related directly to the developing tension between the administrative independence of the Court, embodied in the office of the Chief Judge, and the judicial independence of the members of the Court. Specifically, the issue in the present case concerns the constitutional and statutory jurisdiction of the Chief Judge to discipline a member of the Court vis a vis that member’s individual right to judicial independence. As such, I find that different considerations come to bear on the issue of whether an award of costs is appropriate.
 In Ruffo, the Court found that, because provincially appointed judges are guaranteed judicial independence and the litigation in that case directly and immediately impacted on the judicial function, an award of costs was appropriate. In the present circumstances, I find that the litigation similarly impacted the judicial function and that costs are also warranted in this instance. In Ruffo, the Court found that if the payment of costs were left to the discretion of the executive it would weaken public confidence in the independence of the judiciary. In Hamann, the Solicitor General of Quebec conceded that the legal fees incurred by a judge required to defend himself before the Judicial Council must be defrayed by the State where the conduct in question related to the judicial function. I appreciate that an award of costs in the present case would not be against the Government per se, however the same principle applies - a failure to award costs in this case would effectively undermine the independence of the Judiciary. Obviously that result must be avoided.
 The Respondent attempts to distinguish the decision in Ruffo from the subject case on the basis that the plaintiff in that case had no choice but to defend herself against allegations made to the Judicial Council. In this case, the Applicant voluntarily brought the matter before the Court via Judicial Review. The Respondent points out that my brother McMahon, J. distinguished Ruffo from Ell on that basis and that I should be persuaded to do the same in this instance. Ell involved a constitutional challenge to the validity of the Justice of the Peace Act, whereas Ruffo involved two complaints made to the Judicial Council regarding the Plaintiff’s conduct. I agree with my brother McMahon, J. that those two situations are significantly different, however I do not think that the present circumstances are so easily distinguishable from Ruffo. In this case, I have found that the Applicant had no choice but to bring an application for Judicial Review in order to challenge the jurisdiction of the Respondent because the Respondent failed to take the complaint to the Judicial Council in the first instance. Ruffo and the within case are similar on the basis that they both concern disciplinary action taken against the litigant judges. The Respondent cannot now avoid an order of costs by having wrongfully assumed the role of the Judicial Council in meting out discipline. Although Ell and the present case are not indistinguishable in many respects, I decline to distinguish them on the basis and for the purpose suggested by the Respondent.
 As above, I find that the issues raised on the application for Judicial Review directly and immediately impacted the judicial function and, as such, the Applicant must have his costs. In coming to this determination, I am mindful of the difference between awarding costs against the Government and, as here, against a Chief Judge. However, I find that costs must be awarded in this instance in order to maintain judicial independence and impartiality. Who will ultimately be responsible for the payment of those costs is necessarily secondary to the constitutional concerns. The Respondent argues that an order for costs against him may interfere with his right to administrative independence in the event that he is responsible for his legal expenses. As I have not been asked to determine who is properly responsible for the Respondent’s legal costs, including the within order for costs, I am unable to effect that outcome. However, the Applicant has expressly stated that his request for costs is against the Respondent in his capacity as the holder of the Office of the Chief Judge, the statutory delegate as provided for in the Provincial Court Judges Act. As such I specifically make the within order on that basis.
 In answer to the second issue raised in this application, I find that costs on an indemnity basis are appropriate in the present circumstances, that is to say an award of all reasonable solicitor/client legal fees and disbursements.
 The Respondent takes the position that where costs are awarded against a tribunal they should only be awarded on a party and party basis. I agree that this general proposition should be adhered to in matters of standard litigation between private parties or where an administrative tribunal is involved. However, as stated above, I do not consider this to be a matter of standard litigation.
 In awarding costs, the courts generally attempt to strike a balance between the competing interests of the unfairness of having the successful party pay its costs while, at the same time, not dissuading potential litigants from asserting or defending their rights by visiting the unsuccessful party with enormous costs. In the present matter, any balancing of interests must be secondary to protecting the constitutional right to judicial independence and impartiality. It is not difficult to conceive of the erosion of those rights where parties in the same position as the Applicant are required, even in part, to suffer the payment of their legal expenses personally. I accept the argument made by the Applicant that, if members of the Judiciary were expected to pay legal expenses incurred in upholding their constitutional duty to protect these fundamental rights, it would necessarily attack their financial security and have a chill effect on other members of the Court.
 In the event that I had found that the same considerations apply in this case as apply in standard, private party litigation, I would have had no difficulty awarding costs on the same basis. In this case, the unilateral action of the Chief Judge, beyond his statutory jurisdiction and outside of the constitutional framework, with respect to a discipline issue, does amount to rare and exceptional circumstances. Additionally, I have little difficulty concluding that the Respondent’s conduct attracts costs on an indemnification basis. As was stated in St. Peter’s Estate Ltd., an administrative tribunal will be visited with costs where good faith and conscientious conduct have not been evident throughout the proceedings. I find that the fact that the Respondent elected to take the course of action that he did, that he instituted it without procedural fairness and, in so doing, struck at the very core of judicial independence indicates conduct well outside of those parameters. Although there may have been statutory grounds for believing that the Respondent had the requisite jurisdiction to make disciplinary decisions of this nature, I find that the Respondent stepped well outside the boundaries of his jurisdiction in this instance.
 For the above reasons I order that the Applicant is entitled to his costs on an indemnification basis.
DATED at Calgary, Alberta, this 16th day of August, 1999.
COUNSEL: Alan D. Hunter, Q.C. & M.L. McMahon for Applicant - E.David D.Tavender, Q.C. for Respondent