The Irrelevance of Costs Rules to Litigation Rates: The Experience of Quebec and Common Law Canada

Abstract

All jurisdictions in Canada follow the “world rule” that the loser pays the costs of litigation. There are, however, great differences in implementation of the rule. Quebec has allowed the level of recoverable costs to become negligible, given the effect of inflation, and the operation of the “world rule” in Quebec therefore approximates the U.S. rule that each side pays their own costs. This is generally seen as a means of facilitating access to justice, eliminating the down-side risk of a costs award, yet the Quebec experience in recent years has been one of dramatic decline in litigation rates. Nor have devices such as contingent fees or class actions obviously compensated for the decline. The conclusion is that costs rules are irrelevant to litigation rates, at least where counsel fees have reached a certain level.