In a recent matter involving a construction lien, the contractor received a judgment against the homeowners in the amount of $19,113.80. The contractor had initially claimed $57,686.11. The court dismissed the homeowners’ set-off and counterclaim for $325,777.37. 

On the issue of costs, the court awarded the contractor costs of $175,000: almost 10 times the amount of the judgment received. The contractor had claimed substantial indemnity costs of $225,504.45.

In awarding costs, the court first noted that it had broad discretion under the Construction Act to award costs. Further, in the construction lien proceeding, while the mandatory aspects of the Rules of Civil Procedure concerning costs were not binding, these provisions provided guidance to the court.

The court referred to the following factors:

• Offers to Settle

The contractor had made 3 offers to settle, each of which was more favourable to the homeowners than the trial result. The first offer, made just after the defence and counterclaim were delivered, called for a payment to the contractor of $25,360.17. The second offer proposed that the parties “walkaway” without costs. The third offer proposed a payment to the homeowners of $25,000.

The homeowners did not make an offer to settle. The court felt that this supported a conclusion that the homeowners had a “vendetta” against the contractor and “were only interested in exacting vengeance on [the contractor].”

• Conduct of the Homeowners

The court was critical of the conduct of the homeowners during the litigation.

• They withheld evidence;
• They “gave evidence that was downright duplicitous”; and
• They took unreasonable positions.
• Conduct of the Contractor

The contractor’s conduct also drew some censure, which was factored into the costs award. 

• He was a poor record-keeper;
• He changed his damages calculations several times;
• He changed his position on the evidence during the hearing;
• A motion to amend the claim lead to a delay of the trial for several months; and
• He was not “forthright” about certain evidence.
• Reasonable Expectation of the Unsuccessful Part

The court considered the legal costs incurred by the homeowners. These costs were similar to the costs claimed by the contractor. The court noted that the homeowners did make efforts to economize on the issue of costs, and that “some recognition” should be given to this.

The issue of costs is a serious one that must be kept front-of-mind throughout any litigation. Parties must be cognizant of how their strategy, decisions and conduct will impact on the issue of costs. 

Thank you for reading.

Paul Trudelle