REDDY v SAROYA

This was a costs decision arising from the ruling in 2025 ABCA 322, where the Court granted an appeal in part and directed that the parties provide further submissions on costs. The focus was on the fact that the Appellant’s counsel had filed a factum drafted by a contractor using generative artificial intelligence (“AI”) that cited non-existent authorities.

In this decision, the Court considered whether the conduct of the Appellant’s lead counsel in filing the factum containing fabricated authorities constituted serious misconduct pursuant to Rule 10.50, and whether costs should be awarded against the counsel personally. Pursuant to Rule 10.50, a Court may order costs against a lawyer personally if there is serious misconduct, but such Orders are reserved for exceptional circumstances. A mere error or mistake is insufficient; there has to be a marked departure from the standard of reasonable conduct or gross neglect that undermines the administration of justice.

The Court determined that counsel’s conduct went beyond mere inadvertence. Counsel failed to follow Rule 14.25(1)(h), requiring factums to include a table of authorities with hyperlinks to, or copies or extracts of, authorities. Had this Rule been complied with, counsel would have immediately identified the fabricated cases. Rather, the factum contained multiple fabricated cases which opposing counsel had to investigate and address. Despite the issue being raised with Appellant’s counsel, he failed to promptly and adequately respond, and later filed an amended factum which corrected the errors, but also improperly expanded on arguments. This resulted in further procedural steps and additional submissions from the Respondent.

The Court referred to the Notice to the Public and Legal Profession dated October 6, 2023, titled Ensuring the Integrity of Court Submissions When Using Large Language Models, which served to reinforce the integrity and credibility of legal proceedings in light of the increasing prevalence of the use of AI. The Court found that if Appellant’s counsel had complied with this Notice and exercised caution, none of the above actions would have been necessary. The Court concluded that Appellant’s counsel’s conduct wasted judicial and party resources, misled the Court, and constituted a marked departure from reasonable standards.

The Court awarded costs personally against Appellant’s counsel pursuant to Rule 10.50. Costs were awarded based on Column 5 of Schedule C, tailored to reflect the additional steps taken by the Respondent due to counsel’s misconduct, in the amount of $17,550, plus GST.