Climbing the Scale of Costs
In Ontario, pursuant to their powers under s. 131 of the Courts of Justice Act, the courts tend to follow the ‘loser pays’ principle, such that costs of a proceeding are normally borne by the losing party. These costs are usually awarded on a partial indemnity scale, being approximately 60% of the reasonable fees charged to the client. However, this is not always the case.
In certain instances, the courts have awarded costs on a substantial indemnity scale, being approximately 90% of the reasonable fees charged to the client, or on a full indemnity scale, being complete reimbursement. Today’s blog will discuss instances where the courts have awarded elevated costs.
Read together with the factors mentioned in Rule 57.01(1) of the Rules of Civil Procedure (the “Rules”), there tend to be two instances that warrant increased costs.
Firstly, the courts will consider any offers to settle made pursuant to Rule 49.10 of the Rules, which was introduced in part to create a framework allowing offers and counter-offers in order to encourage litigants to settle their disputes.
Secondly, in the case of Clarington (Municipality) v. Blue Circle Canada Inc., the Court of Appeal for Ontario provides that elevated costs are warranted:
“… on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.”
In understanding what exactly amounts to conduct being “reprehensible”, reference can be made to the case of Leung v. Leung, which defines the term as follows:
“… ‘reprehensible’ is a word of wide meaning. It can include conduct which is scandalous, outrageous or constitutes misbehaviour; but it also includes milder forms of misconduct. It means simply ‘deserving of reproof or rebuke’”.
In the case of Bricies Wigle v. Vanderkruk, the plaintiff made three attempts at settlement, in addition to two Rule 49 offers. All of these attempts were ignored by the defendant, who refused to make any attempt to settle. Harris J., stated:
“The plaintiff is an innocent party in this litigation who, at 85 years of age, had no stomach for litigation and particularly so against her neighbour. She was the one wronged yet made several attempts for a rapprochement with the defendant. The circumstances, from the first day in 2001 right up to trial, were ripe for settlement and one that would likely have favoured the defendant had he become involved”.
As a result of this behaviour, and further acknowledging that the defendant substantially and unnecessarily lengthened the trial, Harris J. awarded the plaintiff with complete indemnification.
Thank you for reading … Have a great day!