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.

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