Canada: Private Parties Not Liable For Public Interest Costs

Courts are becoming increasingly resistant to attempts by third parties, specifically environmental non-governmental organizations ("ENGOs",) to insert themselves in permitting processes and judicial reviews where they are not directly involved and add no relevant expertise. The recent British Columbia Supreme Court decision in Gagne v. Sharp is a further example of this trend. This case included the additional wrinkle of an attempt by the ENGOs involved to have their court costs covered by the private company on the basis that they were acting in the "public interest".

Background

In Gagne, several individuals and ENGOs applied for standing before the Environmental Appeal Board (the "EAB") to appeal a permit amendment granted to Rio Tinto Alcan Inc. The EAB denied the petitioners standing because they were not persons aggrieved within the meaning of s. 100(1) of the Environmental Management Act, S.B.C. 2003, c. 53 (the "EMA"). The petitioners sought a judicial review of that decision, which resulted in the issue being sent back to the EAB for reconsideration. The EAB again denied the petitioners standing. That decision was itself judicially reviewed.
The judicial review was dismissed and the parties were ordered to bear their own costs of that application.

The issue of costs on the first judicial review, however, remained outstanding. The petitioners sought special costs as public interest litigants. Interestingly, unlike most public interest costs application, the petitioners sought costs only against Rio Tinto, a private party, rather than against the Attorney General of British Columbia or the EAB, the other parties involved. Traditionally, public interest costs are only awarded against public bodies, not against private parties protecting private interests.

The petitioners argued that they deserved special costs because of the public interest nature of the litigation. The petitioners submitted that: (i) the judicial review involved issues of broad public importance that had not previously been resolved (i.e. the standard of proof to establish standing before the EAB, the right of ENGOs to obtain standing, and the interpretation of s. 100(1)
of the EMA); (ii) their lack of personal, proprietary, or pecuniary interest in the outcome of the litigation; and (iii)Rio Tinto's far superior ability to bear the costs of the proceeding. They also argued that an award of special costs would encourage counsel to take on meritorious causes on a pro bono basis.

Rio Tinto denied that the petitioners satisfied the Adamstest for public interest costs. Rio Tinto argued that the issues in the judicial review were neither novel nor of broad public importance, and that no new legal ground was broken as the issue had been remitted back to the EAB on procedural fairness grounds only. Rio Tinto also argued that its superior capacity to bear the costs of the proceeding was not a determinative factor. Relying on Chief Mountain v. Canada (Attorney General ), 2012 BCSC 1152, Rio Tinto submitted that as a private party defending its private interests, the burden on the petitioners was even higher than the already high burden under the Adams test.

The Decision

In reasons indexed at 2015 BCSC 154, Mr. Justice MacKenzie of the British Columbia Supreme Court rejected the petitioners application for costs against Rio Tinto.

First, and decisively, the court held that the petitioners were not even entitled to ordinary costs because while they had been partially successful on the issue of procedural fairness at the first judicial review, they had been unsuccessful on the issues concerning the statutory test for standing and the standard of review. In the words of the statutory test under Rule 14-9, the petitioners had not been "substantially successful".

Second, even if the petitioners had been substantially successful, the court held that they would not have been entitled to special costs. Notably, the court reached this conclusion despite agreeing with the petitioners that Rio Tinto had occupied a dominant role in the litigation and was "not merely caught in the crossfire", and that Rio Tinto had a far superior capacity to pay. The court reaffirmed that special costs for public interest litigants "must remain the exception rather than the norm" and emphasized the significance of the fact that the petition was prompted by the alleged errors of the EAB, not Rio Tinto. The court was also not convinced that the issues on which the petitioners were successful were sufficiently novel to warrant an exceptional order for special costs.

Implications

While the decision does not close the door on the award of public interest costs against private parties, it certainly supports the argument that any such awards should be truly exceptional and limited to the rarest of cases.

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