There is a well known case, at least within my Branch, where someone (a civilian) took a complaint against us up through the CAF/DND system and was still not satisfied with the resolution(s) rendered. They chose, was was/is their right, to take it to an external oversight body who also dismissed it as a complaint without merit.
After that the individual chose to take it to a Federal Court and, like you, were not entitled to any sort of legal representation. That's because it is a Court matter and the rules of the Canadian civilian court system apply. It's viewed as a personal issue and like any other personal issue before the Courts (especially a civil matter which these things are since they are not criminal in nature) the complainant is required to have or obtain their own representation. Anyway, in the matter I am referring to the appeal was also denied and the Court not only denied it but assessed court fees on the person who brought the court case. Court costs are normally only assigned when the Court feels the matter was without merit. If the court felt there was even a shred of grounds, or reason for appeal, they do not normally assign court costs if the person loses. Since you had court costs assigned then one can conclude your case was without merit.
As a tax payer I have no problem at all with the DND lawyers, or even Crown Attorneys, requesting court fees. DND and the Canadian Government incurred a fee because of your failed bid and, as I noted, if there was any merit to your appeal....and common sense grounds to appeal, the Courts would not have awarded fees against you.