Today’s blog is authored by Chigozie Enwereuzo, Student-at-Law with Hull & Hull LLP. This will be her last blog, as her term with us is finished and we wish her all the best!
At the conclusion of a lawsuit, a court usually makes a “costs award.” A costs award is an order made by the court mandating the losing party to pay to the winning party a portion of the latter’s legal costs. Ontario and a number of other provinces in Canada follow this “loser pays” rule which could see the losing party paying a sizable portion that ranges between 30 % and 70% of the winner’s costs. Courts will often apply this “loser pays” rule in estates litigation: it is no longer the case that costs awards automatically become the burden of the estate..
There are circumstances, however, where it becomes a bit challenging to ascertain who amongst the losing litigants should be made to bear the legal costs of the winning litigant(s). Such a situation could arise, for instance, in a complex, multiparty litigation commenced by an individual who, being unsure of whom exactly is liable for the wrong he/she suffered, elects to use the “scattergun approach” to name several defendants in the lawsuit.
Clarity as to who bears the most liability amongst the defendants is usually obtained when the litigation has run its course. The question of costs awards for zero-fault defendants named in the lawsuit arises as it becomes apparent that they should never have been joined in the litigation; they have had to incur legal costs to defend themselves.
Such a scenario may result in an injustice against the winning party (usually the plaintiff) who pursued remedies by suing numerous defendants at once but will be required to pay the costs of those defendants not found liable. To mitigate the burden of costs award, the litigant can ask the court to award a Sanderson Order or a Bullock Order to protect a winning plaintiff from an adverse cost award.
Sanderson and Bullock Orders permit a defendant(s) deemed to have won his/her case to claim costs from the losing defendant(s) rather than the plaintiff. Although both orders lead to the same result, the mechanics of each are different.
A Bullock order, which originated from the case of Bullock v London General Omnibus Co [1907] 1 KB 264, CA, requires the unsuccessful defendant to reimburse the plaintiff for the successful defendant’s costs. Thus, a Bullock Order provides compensation to the plaintiff, provided the unsuccessful defendant has an ability to pay.
On the other hand, a Sanderson order provides more comfort for the plaintiff as it requires the unsuccessful defendant to pay the successful defendant directly. The courts will normally order a Sanderson order unless there is some reason to believe the unsuccessful defendant would not be able to pay. The order emanated from the case of Sanderson (Sanderson v Blyth Theatre Co [1903] 2 KB 533, CA).
The test for awarding a Sanderson order or a Bullock order was set out by the Ontario Court of Appeal in Moore v. Wienecke. It is a two-step process, as follows:
- first, it must be determined whether it was reasonable for the plaintiff to join the defendants in one action. If the answer to that threshold question is yes, then
- the court must exercise its discretion to determine whether a Bullock or Sanderson order would be just and fair in the circumstances.
The Court further identified four factors that are relevant to its deciding between awarding a Bullock or Sanderson order to be:
- whether the defendants tried to shift responsibility amongst themselves as opposed to focusing on meeting the plaintiff’s case;
- whether the unsuccessful defendant caused the successful defendant to be added to the action;
- whether there was a joint cause of action against all the defendants or a separate cause of action; and
- whether there is an issue with respect to the plaintiff’s ability to pay costs.
It is important to note that the above factors are not applied mechanically in every case as the overarching determination is discretionary. Further, the Bullock or Sanderson orders are just exceptions to the “loser pays” rule applicable in Ontario.
Thank you for reading.
Chigozie Enwereuzo, Student-at-Law