Legal Blog

Costs (2)

Speaking of costs, in Prasher Steel Ltd. v. BWK, a 2023 decision of the Ontario Superior Court of Justice, the defendants were wholly successful in a decades-long contract dispute. The trial judge was tasked with determining the appropriate scale, and award, of costs.

The defendants asked for substantial indemnity costs. The judge noted that the normal scale of costs is only partial indemnity and that a higher scale of costs is reserved for exceptional circumstances, such as reprehensible or outrageous conduct on the part of one of the parties. Here, the judge agreed that substantial indemnity costs were appropriate for several reasons:

• Offers to Settle. The defendants had made settlement offers and were “exemplary in their efforts to resolve the dispute;” conversely, the plaintiff had made no settlement offer and had instead elected to play hardball. The judge found that a failure to make any settlement offer was “unreasonable litigation conduct.”
• Requests to Admit. The defendants had tried to narrow the issues for trial. The plaintiff had refused to admit any of the facts and forced the defendants to prove them.
• Excessive Lien. At trial, the plaintiff’s claim to lien was found to be excessive. Section 86 of the old Construction Lien Act provided that one of the consequences of an excessive lien was a higher scale of costs. The judge also highlighted the defendants’ argument that the plaintiff purposefully exaggerated its lien to leverage a settlement.

The judge also assessed the quantum of costs. She articulated that costs are not meant to be an arithmetical exercise, but instead reflect what is fair and reasonable in the circumstances. The defendants’ full indemnity costs were approximately $142,000 and were less than the plaintiff’s costs. The judge awarded the defendants $135,000 in costs, approximately 95% of their full indemnity costs.

Image courtesy of jackmac34.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.