“[Legal Aid Ontario] is an independent and publicly accountable non-profit corporation: Legal Aid Services Act, 1998, S.O. 1998, c. 26, s. 3(4) (“LASA”). The Government of Ontario created LAO “to establish and administer a cost-effective and efficient system for providing high quality legal aid services to low-income individuals in Ontario”: LASA, s. 4. As stated in s. 14(2) of the LASA, LAO “shall provide legal aid services in the areas of criminal and family law having regard to the fact that the private bar is the foundation for the provision of legal aid services in those areas.” LAO does not represent the client nor does it direct the litigation. Rather, it provides the funding to the client to retain counsel from the private bar. The legal aid system in Ontario permits LAO to rely on the opinions of the private bar lawyers who have carriage of their clients’ files subject to a legal aid certificate. The system is not established on the basis that LAO is required to engage in a detailed factual and legal analysis independent of and disconnected from counsel’s legal opinion. The costs award against LAO based on its failure to adequately monitor the litigation is inconsistent with and would frustrate that statutory scheme.
An award of costs against LAO based on abuse of process must be viewed within this context.
As Strathy C.J.O. explained in Laval Tool & Mould Ltd., the court’s inherent jurisdiction to order non-party costs is grounded in the court’s inherent jurisdiction to deter abuse of process and when exercising inherent jurisdiction to award costs against a non-party, courts must do so “sparingly and with caution”: at paras. 68 and 72.
Abuse of process is a flexible doctrine: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 (S.C.C.), at para. 37; Behn v. Moulton Contracting Ltd., 2013 SCC 26, [2013] 2 S.C.R. 227 (S.C.C.), at paras. 40-41. The concept has been described as involving proceedings that are “unfair to the point that they are contrary to the interest of justice”, oppressive or vexatious, and “violate the fundamental principles of justice underlying the community’s sense of fair play and decency”: C.U.P.E., Local 79, at para 35.
In examining costs against LAO for an alleged abuse of process, a distinction must be made between LAO as a party to litigation and LAO as a non-party statutory funder of litigation. When LAO is a party to litigation, as with any other party, it may be exposed to a costs award. By way of example, in an employment or civil action in which LAO is an unsuccessful party, it would be open to a judge to grant an adverse costs award: see e.g. Legal Aid Ontario v. Gertler, 2010 ONSC 6556 (Ont. S.C.J.).
In contrast, as a non-party, LAO’s conduct must be viewed in the context of its statutory mandate and the regime of legal aid services in Ontario as it is set up by the LASA. Without evidence of something more, such as bad faith or a collateral or improper purpose in granting funding to a litigant, LAO’s conduct in funding litigation pursuant to its statutory purpose, and any conduct incidental thereto, including its monitoring of the litigation it funds, cannot support a finding of abuse of process and a resulting adverse costs award.”