Principles from $2.7 Million Costs Award

In Fram Elgin Mills 90 Inc. v. Romandale Farms Limited et al, 2020 ONSC 1621, the defendant was awarded costs of $2.7 million following a 13 day trial in an action that spanned 12 years. The following principles emerge from the decision:

• The quantum of costs should reflect an amount the court considers to be fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than any exact measure of the actual costs of the successful litigant.
• Absent considerations involving formal offers to settle under rule 49, substantial indemnity costs are the exception and should only be awarded in rare and exceptional cases to mark the court’s disapproval of the conduct of the party in the litigation.
• A distinction must be made between hard-fought litigation that turns out to have been misguided and malicious counterproductive conduct.
• The lack of merit in the positions taken by a party is not, in and of itself, enough to award elevated costs.
• If an objection is going to be made to an expert being qualified, counsel must provide advance notice of the objection. Doing otherwise is “shocking” and is an ambush on opposing counsel and the court.
• The costs grid is not binding and is out of date. Amounts calculated at 55% to 60% of a reasonable actual rate might more appropriately reflect partial indemnity fees, particularly in the context of sophisticated litigants well aware of the stakes.
• Costs awarded on a substantial indemnity scale are to be determined on the basis of applying a factor of 1.5 to the amount of the partial indemnity costs as determined to be fair and reasonable.
• The court should not second-guess successful counsel on the amount of time spent on the case or the allocation of counsel to the tasks at hand.
• Requests for an opposing party’s redacted dockets should only be made where the claim for costs is substantial.
• Parties should appreciate that the cost to provide dockets, which requires time-consuming careful redaction, is going to be added to the costs awarded to the winning party. This will hopefully discourage unreasonable requests for dockets.
• Unsuccessful parties are generally jointly and severally liable for the costs of the winning party. However, this depends on each party’s role in the overall proceedings.

Justice Spies concluded with the following statement of the Supreme Court of Canada: “protracted litigation has become the sport of kings in the sense that only kings or their equivalent can afford it. Those who inflict it on others in the hope of significant personal gain and fail can generally expect adverse cost consequences”.