
Legal Blog
Non-Party Pays
1318847 Ontario Ltd. v. Laval Tool & Mould Ltd. 2017 Ont CA
A non-party to litigation is normally not subject to an adverse costs award. However, under the “straw man rule”, a non-party may be held liable for costs if the non-party had status to bring the action, was not the true litigant, and the actual litigant was a person of straw put forward to protect the true litigant from liability for costs. The Laval case decided that there was another circumstance in which a non-party could be held liable: the inherent jurisdiction in the court to award costs on a discretionary basis in situations in which the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process. The non-party could include directors or shareholders of a corporation, but only if there was fraud or gross misconduct in the instigation or conduct of the litigation and not simply because they directed the operations of the corporation.
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Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices. |