Executive Summary: Key Legal and Evidentiary Issues

• Appellant's lead counsel filed a factum containing seven non-existent case authorities drafted by a contractor using a large language model without verifying the citations

• Rule 10.50 of the Alberta Rules of Court permits costs awards against lawyers who engage in serious misconduct

• Strict adherence to the October 2023 Notice titled "Ensuring the Integrity of Court Submissions When Using Large Language Models" is critical to prevent inaccurate or misleading information in court filings

• Failure to comply with rule 14.25(1)(h) requiring hyperlinks or copies of cited authorities meant the non-existent cases were not immediately identified

• Amended factum went beyond correcting the non-existent citations by augmenting substantive arguments, exacerbating the seriousness of the misconduct

• Lead counsel did not display any sense of urgency when initially contacted about the missing cases and suggested typographical errors as an explanation

Background of the dispute

This case arises from an earlier appeal decision in Reddy v Saroya, 2025 ABCA 322, where the Court of Appeal of Alberta allowed an appeal in part. The present memorandum addresses the issue of costs following the discovery that the appellant's lead counsel had filed a factum drafted by a contractor using a large language model (or generative artificial intelligence), which contained references to non-existent authorities.

The AI-generated factum and its discovery

The appellant filed his initial factum on December 16, 2024. It became apparent to counsel for the respondent that the initial factum contained references to fabricated case authorities. Prior to filing his factum, counsel for the respondent contacted the appellant's lead counsel because he was unable to locate several of the cases identified and they were not hyperlinked or appended. At one point, appellant's lead counsel suggested that cases could not be located because of typographical errors, and he did not display any sense of urgency although the respondent's factum was due in a few days. Ultimately, the respondent was required to dedicate space in his factum to addressing the issue of the seven non-existent cases relied upon in the appellant's initial factum.

Procedural developments following the discovery

Over a week after the respondent's factum was filed, the appellant's lead counsel filed a letter requesting permission to file an amended factum. The Case Management Officer issued an administrative direction allowing an amended factum to be filed and permitting the respondent to file supplemental submissions. After the amended factum was filed, the respondent filed a letter submitting the arguments in the amended factum had been changed in a way that went beyond what was necessary to correct the non-existent citations. The Case Management Officer issued another administrative direction allowing the respondent further time to file supplemental submissions but leaving other issues on this point to be decided by panel. The respondent then filed a supplemental factum.

The legal standard for costs against counsel

Under Rule 10.50 of the Alberta Rules of Court, a court may order a lawyer to pay a costs award if that lawyer engages in serious misconduct. Such an award is appropriate only in exceptional circumstances, where the lawyer's actions seriously undermined the authority of the courts or interfered with the administration of justice. An error or mistake in judgment is not enough; there must at least be a marked departure from the standard of reasonable conduct or gross neglect.

The Court's analysis of counsel's conduct

The Court emphasized the importance of 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 is applicable to lawyers and self-represented litigants alike. The October 2023 Notice serves to reinforce the integrity and credibility of legal proceedings, and strict adherence is critical to ensure that litigants do not provide inaccurate or misleading information to courts and do not waste the time and resources of the judiciary and other litigants. The unchecked use of AI undeniably resulted in a misleading factum being filed with the Court and led to a waste of time and resources. The Court rejected the argument that this was "mere inadvertence," noting that factums must include a table of authorities with a hyperlink to each authority cited, or copies or extracts of any authorities for which a hyperlink is not available under rule 14.25(1)(h). If the appellant had complied with this rule, the non-existent cases would have been immediately identified. That did not occur, and as a result nearly half of the cases listed in the table of authorities were non-existent.

The ruling and costs award

The Court concluded that in the specific circumstances of this case, there is sufficiently serious misconduct to warrant a costs award under rule 10.50 of the Rules payable by appellant's lead counsel, personally. The failure to strictly comply with the October 2023 Notice and counsel's conduct in the events that followed constitutes a marked departure from reasonable conduct that seriously interfered with the administration of justice in the circumstances. The respondent's counsel filed a draft bill of costs with his written costs submissions, with the total amount claimed calculated on a double Column 5 basis, inclusive of disbursements and GST, being $68,266.39. However, the Court determined that the appropriate way to quantify costs is based on Column 5 of Schedule C without a multiplier, for the preparation of a factum and two appearances on a contested application before the Court including a brief. The total amount of $17,550.00 plus GST was ordered payable by appellant's lead counsel personally.