On March 27, 2014, I blogged on the issue of settling litigation, but leaving the issue of costs to the court. I noted the decision of Dhillon v. Dhillon Estate, 2009 CanLII 58607 (ON SC), where the matter was settled on the eve of trial, but the parties left the issue of costs to the court. The court declined to make any award of costs, as the factors to be considered in awarding costs had not been determined by the court.
In the decision of Koster v. Koster, 2018 ONSC 6896 (CanLII) released November 19, 2018, the issue arose again. A motion was brought for summary judgment, but as the court determined that it could not decide the question without a trial, the motion was dismissed. The parties then went to mediation, where the matter was settled, except for the issue of costs. Pursuant to the settlement, the entitlement and quantum of costs was to be determined by the court.
There, the court declined to make any costs award. The court referred to the Dhillon decision.
In refusing to award costs, the court stated:
By definition, a settlement is a compromise between the litigants’ positions. Also by definition, it is agreeable to all the parties. It is impossible to say with accuracy why any particular settlement was acceptable to one or other of the parties. Put another way, an award of costs is typically grounded in findings by the court as to the parties’ respective success and the impact of their actions during litigation, which are findings not made in the event of a settlement.
The court also cited from the decision in Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304 (CanLII). There too, the court declined to determine liability for costs following a settlement. There, the court stated:
Moreover to embark upon a full examination and adjudication of the merits of the parties’ respective substantive claims and defences for the sole purpose of determining the question of costs, when those substantive issues have been settled by the parties, would run counter to the principle in McLellan that costs are incident to a determination of the rights of the parties and are not to be made themselves the subject matter of the litigation.
As I concluded in my March 2014 blog, settling but leaving the issue of costs to the court should be avoided. Courts will be reluctant to relitigate the entire matter in order to make a determination as to who was right and who was wrong and therefore entitled to or liable for costs.
Have a great weekend.