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Costs at the LAT – Revisiting One of the More Controversial Changes

By Alon Barda

Background and Legislative Basis for Costs

In January 2018, I co-authored a paper that looked at the LAT as it approached two years at that time. The paper outlined that one of the most significant differences from FSCO to the LAT is the costs that may be awarded.

At FSCO, the arbitrator could award “all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.” This included various types of expenses, such as filing fees, legal fees, and disbursements, which were specifically set out in a Schedule attached to the Regulation.

The legislative authority now to award costs is within the Common Rules of Practice & Procedure applicable to LAT proceedings and the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”).

Section 17.1(1) of the SPPA states that a Tribunal “may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding.” However, there are limitations.

Section 17.1(2) of the SPPA states that the Tribunal shall not make an order to pay costs unless the following apply: “a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and b) the tribunal has made rules under subsection (4).”

As such, while the Tribunal may order a party to pay all or part of another party’s costs in a proceeding, the cost award is statutorily limited to circumstances wherein the conduct of a party has been unreasonable, frivolous or vexatious, or a party has acted in bad faith.

The section in the LAT Rules for costs mirror that in the SPPA. Section 19.1 of the LAT Rules states that, “where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs.” 

Section 19.5 and 19.6 were added to the LAT Rules when they were updated on October 2, 2017 (the previous rules were known as the Licence Appeal Tribunal Rules of Practice and Procedure).

Section 19.5 sets out the factors that will be considered by the Tribunal in awarding costs, such as the seriousness of the misconduct, prejudice to other parties and the potential impact an order for costs would have on individuals accessing the Tribunal system.

Furthermore, while the SPPA allows an order for a party to pay “all or part of another party’s costs in a proceeding”, s.19.6 of the LAT Rules outlines that the amount of costs shall not exceed $1000 for each full day of attendance at a motion, case conference or hearing.

As such, while the LAT has jurisdiction to allow for the payment of the other party’s costs under very limited circumstances, the LAT exercised its jurisdiction pursuant to ss.17.1(4) to limit even the amount of costs recoverable.

A review of the cost awards during the first two years highlighted that costs were indeed restricted to s.19.1 of the LAT Rules and s.17.1 of the SPPA and, in the rare  circumstances where costs were awarded, it was an exceedingly low amount.

Fast forward a few years and a recent decision of the LAT has once again revisited the issue of costs and when they may be awarded.

Recent Decision on Costs

In Corpuz v Aviva General Insurance, 2021 ONLAT 19-014198/AABS, the matter proceeded to a written hearing to determine entitlement to various medical benefits.

The adjudicator found that there was no entitlement to the benefits sought. The adjudicator then turned to the issue of costs. She outlined that Rule 19 of the Common Rules of Practice and Procedure sets out that in awarding costs the Tribunal shall consider all relevant factors, including:

  1. the seriousness of the misconduct; 
  2. whether the conduct was in breach of a direction or order issued by the Tribunal;
  3. whether or not a party’s behaviour interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process;
  4. prejudice to other parties; and
  5. the potential impact an order for costs would have on individuals accessing the Tribunal system.

The insurer sought the full $1,000 allowable on the grounds that the applicant acted in bad faith and vexatiously. Specifically, the insurer argued that the claimant misled the Tribunal in misrepresenting the procedural history.

The adjudicator found that the submissions made by the applicant regarding notification of insurer examinations were inaccurate. Nevertheless, the Tribunal found that the applicant’s submissions were not made with the deliberate intent to mislead and deceive the Tribunal.

However, when the Tribunal viewed the applicant’s submissions together with evidence that was tendered, it found that the applicant’s conduct rose to the threshold of vexatious and bad faith warranting costs awarded under Rule 19. Specifically, the Tribunal found that the applicant redacted and thereby concealed details in an email that contradicted his submission and misrepresented the evidence as a result.

The Tribunal also found that aspects of a treatment plan were falsely attributed to the applicant on the grounds that it was improbable that the applicant made remarks about the accident and his injuries to the doctor that were identical to remarks attributed to a different insured person four years prior.

While the Tribunal was satisfied that a cost award was warranted, it was not prepared to award the full amount. The Tribunal held: “A costs award must balance the need to discourage unreasonable, frivolous, vexatious or bad faith conduct in litigation against the real-world impact of costs penalties on those accessing the Tribunal system. On balance, considering all factors set out in Rule 19, I find an award in the amount of $100.00 to be appropriate in the circumstances.”

The Takeaway

While the Tribunal held that “misrepresenting evidence in a Tribunal proceeding is serious and should be strongly discouraged”, it still did not award the full amount of costs allowable. The conduct in this case was certainly concerning and it does not appear a $100 cost award will act as much of a deterrent.

The LAT cannot award costs in the same manner that FSCO once did and it appears that is not changing any time soon. At the very least, it is the opinion of this writer that if the conducts so warrants, the LAT should utilize the limits available to deter such future conduct. An award at only 10% of the maximum is unlikely to do so.