Little Sisters Book and Art Emporium v. Minister of National Revenue, (2007) 235 B.C.A.C. 1 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: January 19, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 235 B.C.A.C. 1 (SCC);2007 SCC 2;150 CRR (2d) 189;[2007] ACS no 2;53 Admin LR (4th) 153;JE 2007-211;[2007] SCJ No 2 (QL);[2007] 1 SCR 38;62 BCLR (4th) 40;153 ACWS (3d) 46;235 BCAC 1;275 DLR (4th) 1;356 NR 83;215 CCC (3d) 449;78 WCB (2d) 316

Little Sisters Book & Art v. MNR (2007), 235 B.C.A.C. 1 (SCC);

    388 W.A.C. 1

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2007] B.C.A.C. TBEd. JA.053

Little Sisters Book and Art Emporium (appellant) v. Commissioner of Customs and Revenue and Minister of National Revenue (respondents) and Attorney General of Ontario, Attorney General of British Columbia, Canadian Bar Association, Egale Canada Inc., Sierra Legal Defence Fund and Environmental Law Centre (intervenors)

(30894; 2007 SCC 2; 2007 CSC 2)

Indexed As: Little Sisters Book and Art Emporium v. Minister of National Revenue

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.

January 19, 2007.

Summary:

Little Sisters Book and Art Emporium (Little Sisters) appealed detention orders made against four books by Customs and Revenue on the basis that the books were obscene. Little Sisters filed a notice of constitutional question in relation to the appeal challenging the constitutional validity of s. 163(8) of the Criminal Code. Little Sisters applied for orders and directions framing the issues, establishing the parameters for discovery of documents and examination for discovery of the respondent. The Crown applied for particulars of the constitutional issue and to strike out both the notice of constitutional question and the portion of the notice of appeal that raised constitutional challenges.

The British Columbia Supreme Court, in a decision reported at [2003] B.C.T.C. 148, refused to strike the notice of constitutional question and the portion of the notice of appeal. The court held that the onus was on the Crown to prove that its decisions were correct and to prove that since January 19, 1996, it had construed the Customs Act in accordance with the Charter and had remedied the "grave systemic problems" identified in prior litigation involving Little Sisters. The court directed the Crown to set out particulars of the alleged obscenities and of the steps that it had taken since 1996 to redress the systemic problems. Little Sisters was to file a reply and state the basis upon which it alleged that the Crown had not made any or sufficient systemic changes and why it alleged that the violation of rights was continuing. After the directions were complied with, Little Sisters applied for advance payment of costs.

The British Columbia Supreme Court, in a decision reported at [2004] B.C.T.C. 823, allowed the application. The Crown appealed.

The British Columbia Court of Appeal, in a decision reported at 208 B.C.A.C. 246; 344 W.A.C. 246, allowed the appeal and set aside the order for advance costs. Little Sisters appealed.

The Supreme Court of Canada, Binnie, J., dissenting, dismissed the appeal.

Practice - Topic 6931

Costs - General principles - Discretion of court - The Supreme Court of Canada stated that "A trial judge enjoys considerable discretion in fashioning a costs award. This discretion has two corollaries. ... First, a plethora of options are available to a judge when rendering a decision on costs. While the general rule is that costs follow the cause, as we have seen, this need not always be the case. ... Second, a judge's decision on costs will generally be insulated from appellate review. In the past, this Court has established that costs awards should not be interfered with lightly ... But this does not mean that no decision on costs should ever be interfered with. For instance, in Okanagan [S.C.C.], advance costs were granted on appeal after having been denied by the trial judge. A costs award can be set aside if it is based on an error in principle or is plainly wrong ... In exercising their discretion regarding costs, trial judges must, especially in making an order as exceptional as one awarding advance costs, be careful to stay within recognized boundaries." - See paragraphs 47 to 49.

Practice - Topic 7881

Costs - Funding before judgment - General - [See Practice - Topic 6931 ].

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The decision in British Columbia (Minister of Forests) v. Okanagan Indian Band et al. (S.C.C.) set out the three requirements that a litigant had to establish to succeed on an application for advance costs in public interest cases - The Supreme Court of Canada stated that "Okanagan did not establish the access to justice rationale as the paramount consideration in awarding costs. Concerns about access to justice must be considered with and weighed against other important factors. Bringing an issue of public importance to the courts will not automatically entitle a litigant to preferential treatment with respect to costs ... By the same token, however, a losing party that raises a serious legal issue of public importance will not necessarily bear the other party's costs ... Each case must be considered on its merits, and the consequences of an award for each party must be weighed seriously ..." - See paragraph 35.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The decision in British Columbia (Minister of Forests) v. Okanagan Indian Band et al. (S.C.C.) set out the three requirements that a litigant had to establish to succeed on an application for advance costs in public interest cases - The Supreme Court of Canada stated that "Okanagan was a step forward in the jurisprudence on advance costs - restricted until then to family, corporate and trust matters - as it made it possible, in a public law case, to secure an advance costs order in special circumstances related to the public importance of the issues of the case ... In other words, though now permissible, public interest advance costs orders are to remain special and, as a result, exceptional. These orders must be granted with caution, as a last resort, in circumstances where the need for them is clearly established. The foregoing principles could not yield any other result. If litigants raising public interest issues will not always avoid adverse costs awards at the conclusion of their trials, it can only be rarer still that they could benefit from advance costs awards. An application for advance costs may be entertained only if a litigant establishes that it is impossible to proceed with the trial and await its conclusion, and if the court is in a position to allocate the financial burden of the litigation fairly between the parties." - See paragraph 36.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The decision in British Columbia (Minister of Forests) v. Okanagan Indian Band et al. (S.C.C.) set out the three requirements that a litigant had to establish to succeed on an application for advance costs in public interest cases - The Supreme Court of Canada stated that "In analysing these requirements, the court must decide, with a view to all the circumstances, whether the case is sufficiently special that it would be contrary to the interests of justice to deny the advance costs application, or whether it should consider other methods to facilitate the hearing of the case. The discretion enjoyed by the court affords it an opportunity to consider all relevant factors that arise on the facts." - See paragraph 37.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that the standard for awarding advance costs in public interest cases was high and although no right test could be applied systematically to determine whether a case was "special enough" some observations could be made: (1) The injustice that would arise if the application was not granted had to relate both to the individual applicant and to the public at large; (2) An applicant had to have explored all other possible funding options - If the applicant could not afford all the litigation costs, but was not impecunious, the applicant had to commit to making a contribution to the litigation - Different kinds of costs mechanisms, like adverse costs immunity, should also be considered; (3) Courts should consider whether other litigation was pending and might be conducted for the same purpose, without requiring an interim order of costs - Courts should be mindful to avoid using these orders in such a way that they encouraged purely artificial litigation contrary to the public interest; and (4) the granting of an advance costs order meant that the applicant had to relinquish some control over how the litigation was to proceed - The applicant could not spend the opposing party's money without scrutiny - A definite structure had to be imposed or approved by the court itself - See paragraphs 38 to 44.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that on an application for advanced costs "... different kinds of costs mechanisms, like adverse costs immunity, should also be considered. In doing so, courts must be careful not to assume that a creative costs award is merited in every case; such an award is an exceptional one, to be granted in special circumstances. Courts should remain mindful of all options when they are called upon to craft appropriate orders in such circumstances. Also, they should not assume that the litigants who qualify for these awards must benefit from them absolutely. In the United Kingdom, where costs immunity (or 'protective orders') can be ordered in specified circumstances, the order may be given with the caveat that the successful applicant cannot collect anything more than modest costs from the other party at the end of the trial ... We agree with this nuanced approach." - See paragraph 40.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that when granting an advance costs order a definite structure had to be imposed or approved by the court itself - "For example the court should set limits on the chargeable rates and hours of legal work, closely monitor the parties' adherence to its dictates, and cap the advance costs award at an appropriate global amount. It should also be sensitive to the reality that work often expands to fit the available resources and that the 'maximum' amounts contemplated by a court will almost certainly be reached. As well, the possibility of setting the advance costs award off against damages actually collected at the end of the trial should be contemplated. In determining the quantum of the award, the court should remain aware that the purpose of these orders is to restore some balance between litigants, not to create perfect equality between the parties. Legislated schemes like legal aid and other programs designed to assist various groups in taking legal action do not purport to create equality among litigants, and there is no justification for advance costs awards placing successful applicants in a more favourable position. An advance costs award is meant to provide a basic level of assistance necessary for the case to proceed." - See paragraphs 42 and 43.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that "A court awarding advance costs must be guided by the condition of necessity. For parties with unequal financial resources to face each other in court is a regular occurrence. People with limited means all too often find themselves discouraged from pursuing litigation because of the cost involved. Problems like this are troubling, but they do not normally trigger advance costs awards. We do not mean to minimize their unfairness. On the contrary, we believe they are sufficiently serious that this Court cannot purport to solve them all through the mechanism of advance costs awards. Courts should not seek on their own to bring an alternative and extensive legal aid system into being. That would amount to imprudent and inappropriate judicial overreach." - See paragraph 44.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that "We agree that corporations are not barred from receiving advance costs awards. However, the judge should ask in every case whether the applicant has made the effort that is required to satisfy a court that all other funding options have been exhausted ... In evaluating whether the impecuniosity requirement is met, a court should also consider the potential cost of the litigation. ... Such cost estimates form an integral part of the evidence; the court should subject them to scrutiny, and then use them to consider whether the litigant is impecunious to the extent that an advance costs order is the only viable option. ... A court should generally consider whether the applicant has tried to obtain a loan. In the criminal law context, financing litigation through credit is something that courts will look for before deciding that an accused's failure to obtain counsel merits a constitutional remedy: An application for advance costs should demand no less. ... The impecuniosity requirement from Okanagan [S.C.C.] means that it must be proven to be impossible to proceed otherwise before advance costs will be ordered. Advance costs should not be used as a smart litigation strategy; they are the last resort before an injustice results for a litigant, and for the public at large." - See paragraphs 68 to 71.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - The Supreme Court of Canada stated that "Once the three-part test from Okanagan [S.C.C.] has been met, the court must exercise its discretion to decide whether advance costs ought to be awarded or whether another type of order is justified. In exercising its discretion, the court must remain sensitive to any concerns that did not arise in its analysis of the test." - See paragraph 72.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - An importer appealed detention orders made against four books by Customs on the basis of obscenity (the books appeal) - The court directed the Crown to prove that the Crown's decisions were correct and that, since January 19, 1996, it had construed the Customs Act in accordance with the Charter and had remedied systemic problems identified in prior litigation before the Supreme Court of Canada involving the importer (the systemic review) - The importer successfully applied for an advance payment of costs - The British Columbia Court of Appeal set aside the order - The Supreme Court of Canada dismissed an appeal - There was insufficient prima face evidence - Even if more convincing evidence was provided, the books appeal concerned no interest beyond that of the importer itself - With respect to the systemic review, short of imputing bad faith to Customs, a finding that its practices did not meet the court's dictates did not rise to the level of general public importance simply because it concerned a public body - It was insufficient to contend that an alleged Charter breach, if proven, would have implications beyond the importer - What had to be proved was that the alleged breach begged to be resolved in the public interest - Only one of the possible results on the merits (the success of the constitutional challenge) would render the case publicly important - Generally, the public importance requirement would be satisfied only when the public importance could be established regardless of the ultimate holding on the merits - It was unnecessary to consider impecuniosity - The access to justice purpose of advance costs could not be triggered absent the requisite exceptional circumstances - See paragraphs 45 to 67.

Practice - Topic 7883

Costs - Funding before judgment - When interim or advance costs available - An importer appealed detention orders made against four books by Customs on the basis of obscenity (the books appeal) - The court directed the Crown to prove that the Crown's decisions were correct and that, since January 19, 1996, it had construed the Customs Act in accordance with the Charter and had remedied systemic problems identified in prior litigation before the Supreme Court of Canada involving the importer (the systemic review) - The importer successfully applied for an advance payment of costs - The British Columbia Court of Appeal set aside the order - The Supreme Court of Canada dismissed the appeal where the requirements for advance costs were not met - The court stated that before the issue of advance costs were raised, the presiding judge had determined that three issues could proceed: the book appeal, the systemic review and the constitutional question - In her ruling on advance costs she correctly dealt with each of these issues separately - However, after she found that the test for advance costs had been satisfied, she should have addressed whether there was any way to prevent the injustice that she had identified other than through awarding advance costs - Consideration should have been giving to hearing the books appeal (or at least hearing evidence on the appeal) before hearing the systemic review - An applicant had to be able to prove either that modifying its litigation strategy would not be more efficient and would not lead to demonstrable savings, or that retaining its original litigation strategy was necessary to ensure that justice was done - See paragraphs 72 to 77.

Practice - Topic 8296

Costs - Appeals - Appeals from order granting or denying costs - General - [See Practice - Topic 6931 ].

Practice - Topic 8425

Costs - Appeals - Grounds - Error in principle - [See Practice - Topic 6931 ].

Cases Noticed:

British Columbia (Minister of Forests) v. Okanagan Indian Band et al., [2003] 3 S.C.R. 371; 313 N.R. 84; 189 B.C.A.C. 161; 309 W.A.C. 161; 2003 SCC 71, affing. (2001), 161 B.C.A.C. 13; 263 W.A.C. 13; 95 B.C.L.R.(3d) 273; 2001 BCCA 647, consd. [paras. 1, 83, 112, 134].

Little Sisters Book and Art Emporium et al. v. Canada (Minister of Justice) et al., [2000] 2 S.C.R. 1120; 263 N.R. 203; 145 B.C.A.C. 1; 237 W.A.C. 1; 2000 SCC 69, refd to. [paras. 7, 97, 114].

R. v. Butler and McCord, [1992] 1 S.C.R. 452; 134 N.R. 81; 78 Man.R.(2d) 1; 16 W.A.C. 1, refd to. [para. 17].

R. v. Sharpe (J.R.), [2001] 1 S.C.R. 45; 264 N.R. 201; 146 B.C.A.C. 161; 239 W.A.C. 161; 2001 SCC 2, refd to. [para. 22].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201; 2003 SCC 69, refd to. [para. 35].

Office and Professional Employees' International Union, Local 378 et al. v. British Columbia Hydro and Power Authority et al., [2005] B.C.T.C. 8; 2005 BCSC 8, refd to. [para. 35].

MacDonald v. University of British Columbia, [2004] B.C.T.C. 412; 26 B.C.L.R.(4th) 190; 2004 BCSC 412, refd to. [para. 35].

Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), [2004] 1 S.C.R. 76; 315 N.R. 201; 183 O.A.C. 1; 2004 SCC 4, refd to. [para. 35].

Valhalla Wilderness Society v. British Columbia (Minister of Forests) et al., [1997] B.C.T.C. Uned. A40; 4 Admin. L.R.(3d) 120 (S.C.), refd to. [para. 35].

Sierra Club of Western Canada v. Chief Forester (B.C.) et al. (1994), 117 D.L.R.(4th) 395 (B.C.S.C.), affd. (1995), 60 B.C.A.C. 230; 99 W.A.C. 230; 126 D.L.R.(4th) 437 (C.A.), refd to. [para. 35].

R. (Corner House Research) v. Secretary of State for Trade and Industry, [2005] 1 W.L.R. 2600; [2005] EWCA Civ 192, agreed with [para. 40].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 49].

R. v. Keating (K.K.) (1997), 159 N.S.R.(2d) 357; 468 A.P.R. 357 (C.A.), refd to. [para. 70].

Jones v. Coxeter (1742), 2 Atk. 400; 26 E.R. 642 (Ch.), refd to. [para. 83].

Organ v. Barnett (1992), 11 O.R.(3d) 210 (Gen. Div.), refd to. [para. 102].

Sheena B., Re, [1995] 1 S.C.R. 315; 176 N.R. 161; 78 O.A.C. 1, affing. (1992), 58 O.A.C. 93; 10 O.R.(3d) 321 (C.A.) refd to. [paras. 102, 104].

R.B. v. Children's Aid Society of Metropolitan Toronto - see Sheena B., Re.

Little Sisters Book and Art Emporium et al. v. Canada (Minister of Justice) et al., [1996] B.C.T.C. Uned. 67; 18 B.C.L.R.(3d) 241 (S.C.), refd to. [para. 115].

R. v. Coles (C.) Co., [1965] 1 O.R. 557 (C.A.), refd to. [para. 123].

Authors and Works Noticed:

Orkin, Mark M., The Law of Costs (2nd Ed. 1987) (2005 Looseleaf Update), vol. 1, p. 2-39, § 205.2(2) [para. 34].

Counsel:

Joseph J. Arvay, Q.C., and Irene Faulkner, for the appellant;

Cheryl J. Tobias and Brian McLaughlin, for the respondents;

Janet E. Minor and Mark Crow, for the intervenor, the Attorney General of Ontario;

George H. Copley, Q.C., for the intervenor, the Attorney General of British Columbia;

J.J. Camp, Q.C., and Melina Buckley, for the intervenor, the Canadian Bar Association;

Cynthia Petersen, for the intervenor, Egale Canada Inc.;

Chris Tollefson and Robert V. Wright, for the intervenors, the Sierra Legal Defence Fund and the Environmental Law Centre.

Solicitors of Record:

Arvay Finlay, Victoria, British Columbia, for the appellant;

Deputy Attorney General of Canada, Vancouver, British Columbia, for the respondents;

Attorney General of Ontario, Toronto, Ontario, for the intervenor, the Attorney General of Ontario;

Ministry of Attorney General of British Columbia, Victoria, British Columbia, for the intervenor, the Attorney General of British Columbia;

Camp Fiorante Matthews, Vancouver, British Columbia, for the intervenor, the Canadian Bar Association;

Sack Goldblatt Mitchell, Toronto, Ontario, for the intervenor, Egale Canada Inc.;

Sierra Legal Defence Fund, Toronto, Ontario, for the intervenors, the Sierra Legal Defence Fund and the Environmental Law Centre.

This appeal was heard on April 19, 2006, by McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ., of the Supreme Court of Canada.

On January 19, 2007, the judgment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:

Bastarache and LeBel, JJ. (Deschamps, Abella and Rothstein, JJ., concurring) - see paragraphs 1 to 79;

McLachlin, C.J.C. (Charron, J., concurring) - see paragraphs 80 to 113;

Binnie, J., dissenting (Fish, J., concurring) - see paragraphs 114 to 162.