Alberta Court of Appeal Redefines Costs in Professional Discipline

The Alberta Court of Appeal has released its long-awaited decision on the law of costs in Charkhandeh v. College of Dental Surgeons of Alberta. The case is important because it redefines the principles that discipline tribunals use to make orders for investigation and hearing costs. The Court reconsidered its prior decision on the law of costs, Jinnah v. Alberta Dental Association and College.

Facts

Dr. Charkhandeh, a dentist, was found guilty of five counts of unprofessional conduct. All five counts related to forced, non-consensual sexual encounters with a co-worker over several months. The College’s discipline tribunal ordered Dr. Charkhandeh’s registration to be cancelled, imposed the maximum possible fine of $50,000¹ and ordered that he pay costs of $350,425, amounting to 75% of the investigation and hearing costs. Dr. Charkhandeh appealed. The Appeal Panel of the Council of the College upheld the findings, the sanctions and the costs order. It ordered Dr. Charkhandeh to pay 75% of the costs of the appeal amounting to an additional $78,000.

Dr. Charkhandeh appealed again to the Alberta Court of Appeal. The Court upheld all five counts of unprofessional conduct but varied the sanctions and costs orders. The Court substituted a 3-year suspension instead of cancellation, overturned the order for fines and reduced the total costs order for the investigation, hearing and appeal to $60,000.

Costs in Professional Discipline Cases

The most significant aspect of the Court’s decision is its redefinition of the law of costs in professional discipline. The Court did not limit its analysis to cases under the Health Professions Act, so its decision will likely apply to any regulated profession with similar provisions in its governing statute. The Court reviewed a series of its own prior decisions² before departing from the approach in the Jinnah case and largely reverting to the multi-factor approach in its previous decisions. The Court set out the following principles:

• Costs orders should be considered only after the discipline tribunal has determined a fit sanction. They are not a further punishment.^{3 4 5} The statute gives the discipline tribunal discretion to make an order for costs, and that discretion must be exercised in a principled, transparent and reasonable manner.

• The starting point is the wording of the statute. Wording is important, but it generally does not dictate the manner in which the powers in the statute should be exercised. 

• There is no presumption that the regulator, or the registrant should bear any amount of the costs.⁶ The presumptive approach in the Jinnah case should not be used.⁷ In every case, the discipline tribunal must first consider whether to make an order for costs. If the tribunal decides to make a costs order, then it must consider how much of the costs to order the registrant to pay.⁸ 

• When considering an order for costs, discipline tribunals should consider a number of factors:
  • Full indemnity costs are neither a starting point, nor a default outcome.⁹
  • The number of allegations and the overall success of the parties, but it is not a mathematical calculation.¹⁰
  • The length and extent of the hearing.¹¹
  • Discipline tribunals should receive information about the types of expenses that were incurred and make an assessment of their reasonableness before making orders for costs.¹²
  • Parties who engage in unreasonable or inefficient conduct should bear the associated costs, such as costs resulting from excessive allegations, introducing unnecessary or irrelevant evidence, refusing to admit uncontested facts, bringing unnecessary applications, failing to meet reasonable deadlines and delay in the proceedings.¹³
  • The registrant’s circumstances and the overall burden that a costs order would place on them,¹⁴ but evidence of the ability to pay does not make an otherwise unreasonable costs order into a reasonable one.¹⁵
  • Whether a costs order would be disproportionate or “crushing.”¹⁶ The possibility of an excessive costs order should not discourage or deprive registrants of the opportunity to fully defend themselves. 
• Contrary to earlier decisions of the Court, the seriousness of the allegations of unprofessional conduct is no longer relevant to costs.¹⁷ Seriousness is relevant only to the determination of sanctions.
  

• The Court of Appeal also commented on some specific aspects of costs. It held that registrants should not be ordered to pay a significant portion of expenses for the “infrastructure” of a hearing, such as travel expenses or daily allowances paid to tribunal members.¹⁸
  

• Costs of expert witnesses should not be ordered, except where the circumstances make it reasonable and proportionate.¹⁹
  

• When considering legal fees for the lawyer “prosecuting” the case, the tribunal must consider the reasonableness of the lawyer’s rates and the total amount charged, the lawyers’ seniority and experience, and the duration and intensity of their work.²⁰ While some cases justify the involvement of multiple lawyers, the costs to be charged to the registrant should generally be calculated as if the work was done by one lawyer of mid-level seniority at appropriate rates.²¹

• The Court also commented that generally, fees for lawyers advising the discipline tribunal and assisting in drafting its decisions should be borne by the regulator.²²

While the Court found no indication that any of the College’s costs in this case were inappropriate, some of them were not reasonably transferable to Dr. Charkhandeh. The orders that he pay 75% of the overall costs were held to be based on an error of principle.²³

Determining a Fit Sanction

Another significant aspect of the Court’s decision is its discussion of sanctioning factors and when cancellation may be justified. The Court discussed the traditional factors, but identified several more that may be relevant in a given case:²⁴

• the prospect of rehabilitation;
• whether the registrant has continued to practice without incident since the conduct;
• the registrant’s demonstrated skill;
• proportionality of the sanctions to the gravity of the conduct.

The Court emphasized the need for restraint in sanctioning. Cancellation should generally be reserved for cases where the registrant is ungovernable, or where continuing to practice would create a “measurable risk to the public.”²⁵ Discipline tribunals should select the most lenient sanction that will serve the primary purpose of sanctions: protection of the public. Even if a sanction would protect the public while serving secondary purposes such as denunciation, deterrence and protection of the profession’s reputation, tribunals must consider whether a lesser sanction would have substantially the same effect.²⁶

In this case, the Court held that the prior decisions had overemphasized denunciation. Dr. Charkhandeh had no prior discipline history. There had been no further allegations over the ensuing 10 years. It was not obvious that he needed to be permanently deprived of his profession and his livelihood to protect the public.²⁷ The Court replaced cancellation with a three-year suspension, but without explaining how it arrived at this duration. The Court also held that the fines served no “legitimate incremental function” and were unjustifiable.²⁸

Conclusion

The Charkhandeh case redefines the law of costs in professional discipline cases. The Court is exerting control over what it sees as unreasonable increases in costs orders. Regulators should expect greater scrutiny of requests for significant costs orders. They should develop processes to account for, display and support the costs of investigations and hearings with sufficient detail to allow discipline tribunals to assess the reasonableness of those costs. Regulators should also consider which expenses to include in their requests for costs orders in light of the Court’s reasons.

Field Law will continue to monitor and report on the Charkhandeh case and its impacts. Regulators with questions about the case can contact Gregory Sim, or any member of Field Law’s Professional Regulatory Group.