Costs awards and reasonableness in disciplinary hearings

Regardless of the specific language in a profession’s governing statute or the governing body’s bylaws on costs for discipline hearings, costs need to be reasonable. This concern arises not only from the fact that any conduct by a statutory body must in law be reasonable, but also the practical outcome that costs liability for a discipline hearing may have a more significant impact for a respondent than the discipline itself.

The Court of Appeal has twice reiterated a presumption that “costs” means costs under the Supreme Court Rules, which creates a distinction between “party and party” tariff costs in the ordinary case, and “full” costs (or “special costs” under the court rules) which are appropriate only in cases of reprehensible conduct during the proceeding. Some statutes can, however, specifically authorize costs on a full-indemnity basis.

For example, in Law Society of British Columbia v. Taschuk, [1999] LSBC 4, a majority of a Bencher panel (7-3) decided that s.46(2) of the Legal Profession Act contemplated full indemnity of legal fees, provided full indemnity was reasonable in the circumstances. Notably, the minority in Taschuk found no basis to distinguish the situation from the one addressed in Roberts v. College of Dental Surgeons (British Columbia) (1999), 63 B.C.L.R. (3d) 116 (C.A.), and concluded the term “costs” when assessed by a professional association discipline tribunal, means “party and party” costs under the court rules.

Regardless of their different interpretations, both the majority and minority in Taschuk recognized that assessed costs must be reasonable: “[14] … any such assessment is subject to judicial review on the basis of whether it is reasonable. In certain cases, a full indemnity may be both appropriate and reasonable.”

Reviews for reasonableness

The Saskatchewan Court of Appeal noted in Barik that a statutory power of a college to order a physician to pay the costs of investigation and hearing “must… be exercised reasonably and any such assessment of costs is subject to judicial review on the basis of whether it is reasonable.” Barik v. College of Physicians and Surgeons (Saskatchewan) (1992), 100 Sask.R. 26 (Sask.C.A.)

Similarly, under a statute which allowed for bylaws concerning “all or part of the costs of the disciplinary proceeding,” and although regulations provided for a licensee to pay “all or part of the costs of the disciplinary hearing, including (i) per day fees for members of the Discipline Committee, (ii) counsel fees, (iii) reporter fees, (iv) facility charges, and other charges associated with the hearing”, a court found such award to be subject to the same reasonableness standard of review as is the rest of the substantive disciplinary decision. Creager v. Provincial Dental Board of Nova Scotia, 2005 NSCA 9 at ¶93.

On a related point, procedural fairness may require that a tribunal awarding substantial costs to provide written reasons: Creager at ¶¶104-107. Costs unsupported by any reasons may be unreasonable and disallowed: Hatfield v. Nova Scotia Barristers’ Society (1978), 95 D.L.R. (3d) 585 (N.S.C.A.) at ¶59.

In reviewing for reasonableness, a court may consider “[96] … whether the costs award is so exorbitant that it would effectively bar the complainant from practice, contrary to the Committee’s express dispositive sanction.” Creager at ¶96.

Indeed, if a costs system routinely involves exorbitant awards, “in absolute terms the costs might, in an individual case or as a matter of routine practice of the College, become so excessive and exorbitant that they do deny to the doctor a fair chance to dispute any suggestions of professional misconduct.” Lambert v. College of Physicians and Surgeons (Saskatchewan) (1992), 100 Sask. R. 203 (Sask. C.A.).

Accordingly, in reviewing for reasonableness, a court may consider “[95] … whether the quantum of costs would be so excessive as to deny the accused person a fair opportunity to dispute the allegations of professional misconduct.” Creager, supra. As the B.C. Court of Appeal has also noted, “it is for the prosecution to make its case and it is not in the public interest to lessen that responsibility by holding over the head of the professional whose livelihood is in jeopardy the additional threat of special costs.” Roberts v. College of Dental Surgeons (British Columbia) (1999), 63 B.C.L.R. (3d) 116 (C.A.).

The reasonableness of specific costs items

When, then, are specific kinds of costs reasonable or unreasonable?

Investigation costs: The right to recover investigation costs will depend on the wording of the enabling statute. Sometimes wording may be generous, such that a right of the body to recover “costs of and incidental to the investigation” actually means costs of an investigation by an inquiry committee, as well as costs of a hearing by a discipline committee, and costs of a council imposing a penalty: Barik v. College of Physicians and Surgeons (Saskatchewan) (1992), 100 Sask.R. 26 (Sask.C.A.).

When a regulatory body seeks to recover investigation costs, the college can recover reasonable out-of-pocket expenses (e.g., courier expenses, investigator expenses, etc.), but whether an expense is reasonable cannot always be predicted. For example, an Alberta court found the travel expenses of out-of-town council representatives to be unreasonable in James v. Real Estate Council of Alberta, 2004 ABQB 871, where the court noted that while out-of-town council members could sit on hearing panels, “[20] … In my view, however, it must be reasonable for them to do so in a particular matter before they can impose the costs of doing so on the member.” It said further that, “[21] It is unclear from the submissions whether the investigation and hearing costs included any costs for the involvement of panel members from outside of Calgary. If they did, then there is no indication as to why their involvement was necessary and whether it was reasonable in the circumstances.”

To the extent investigation costs may involve legal costs, the extent to which the body can recover them will turn most pertinently on whether the body can recover “prosecution” legal costs on a tariff basis (e.g., measured in fixed “units” under the court rules), or on a full-indemnity basis (e.g., based on actual legal costs). For example, “investigation” costs were interpreted to mean tariff costs in Roberts (at ¶44).

Regulatory bodies should be aware, however, that where legal costs are recoverable on an indemnity basis, unless they have fixed some sort of per diem rate with respect to legal fees, a respondent may be entitled to review the legal bills in order to ensure reasonableness. This clearly has implications in terms of a respondent having access to confidential information contained in legal bills.

Hearing costs – regulatory body disbursements: Under the B.C. Supreme Civil Rules, an assessment of costs provides for a “reasonable amount” for disbursements which have been “necessarily or properly incurred in the conduct of the proceeding”: Rule 14-1(5). Apart from legal fees (examined below), the most substantial of these disbursements will often be fees of “expert” witnesses. Although some respondents may question the need for a regulatory body to put “expert” witnesses in front of a panel that may itself consist of professional members with “expert” knowledge, many cases establish expert witnesses as necessary for a proper evidentiary record, even though the entire panel may possess the same knowledge, e.g., to allow expertise to be tested by cross-examination, and to permit a review or appeal body to carry out its function.

Proper expenses may include expenses associated with interviewing and preparing a witness who is not ultimately used or relied on in the course of a hearing: “The test is therefore not one of necessity viewed in the light of the resulting decision but one of reasonableness viewed from the perspective of the persons investigating and preparing the case for hearing.” Jaswal v. Newfoundland Medical Board, [1996] N.J. No. 50 at ¶52. If a charge is not made out, however, costs awarded on the basis of success on other charges may properly exclude “time spent in receiving evidence of a complainant on a charge that the Committee found not to have been made out”: Sazant v. College of Physicians and Surgeons of Ontario, [2011] O.J. No. 192, 2011 ONSC 323 at ¶284.

Hearing costs – “prosecution” legal fees: As in the investigation context, the extent to which a body can recover legal fees relating to the prosecution of a hearing will turn most pertinently on whether the body can recover such costs on a tariff basis, or on a full-indemnity basis. For example, the court in Roberts decided that recovery of legal costs on a full-indemnity basis (“a solicitor and own client basis”) was not authorized by the Dentists Act (at ¶43).

Hearing costs – panel member per diems: Any per diem rates payable to members should ideally be one fixed rate. In Roberts, the court rejected per diem panellist rates which varied with the panellist’s occupation, e.g., $628 for a dentist panellist, but $132 for a certified dental assistant, as not being authorized by the Dentists Act (at ¶¶40 and 64). In contrast, the majority of a Benchers panel of the Law Society noted in Taschuk that Roberts did not prevent the charging of a “hearing fee” as a cost item, meaning a single, flat administrative charge meant to compensate the Law Society for the use of its physical plant, staff and costs incidental to assembling the Panel.

The “reasonableness” of other some panel expenses may be open to question. For example, in an assessment of costs in Brand, an “honorarium” amount was acceptable, but any expenses incurred by members of a disciplinary committee to dine together during a hearing, on top of per diem expenses, was implied to be one that could not reasonably be assessed against a member (and, in fact, was not assessed against the member in that case) in Brand v. College of Physicians and Surgeons of Saskatchewan (1991), 101 Sask.R. 143 (Q.B.) per Matheson J.

Hearing costs – panel’s legal counsel: In Roberts, the court noted the Dentists Act did not in that case authorize the Panel to charge “the accounts of its legal advisor, rendered on a solicitor and client basis, as an item in the assessment of the party and party costs” (at ¶42). In Shpak v. Institute of Chartered Accountants of British Columbia, 2003 BCCA 149, the court noted more fundamentally that “[64] … The costs of counsel to the panel have no counterpart under Rule 57. It is not a party and party cost as contemplated by that Rule. Rather, it is a cost of the tribunal. To require the member to pay for two sets of legal counsel approaches the punitive.” Accordingly, it disapproved of such a charge “unless clearly authorized under the Act, or properly constituted Rules.”

Reasonableness of costs overall

In addition to the reasonableness factors listed above, the court in Jaswal outlined a non-exhaustive list of factors that tribunals should consider when exercising discretion to order payment or partial payment of expenses (at ¶51):

1.    the degree of success, if any, of the [registrant] in resisting any or all of the charges;

2.    the necessity for calling all of the witnesses who gave evidence or for incurring other expenses associated with the hearing;

3.    whether the persons presenting the case against the [registrant] could reasonably have anticipated the result based upon what they knew prior to the hearing;

4.    whether those presenting the case against the [registrant] could reasonably have anticipated the lack of need for certain witnesses or incurring certain expenses in light of what they knew prior to the hearing;

5.    whether the [registrant] cooperated with respect to the investigation and offered to facilitate proof by admissions, etc.; and

6.    the financial circumstances of the [registrant] and the degree to which his financial position has already been affected by other aspects of any penalty that has been imposed.

Finally, undue delay in proceedings may render an award of costs against a respondent unreasonable: Wachtler v. College of Physicians and Surgeons of Alberta, [2009] A.J. No. 347; 2009 ABCA 130 at ¶¶49-50.