In Mahood v. Walsh, 2019 ONSC 4312, Justice Heeney declined to order any costs despite finding that the plaintiff “clearly won” the trial.
The plaintiff was awarded $72,500 in damages and interest, which was less than the defendants’ offer to settle of $90,000.
However, Justice Heeney held that the defendants’ offer did not meet the requirements of a formal offer to settle. The offer was inclusive of a subrogated claim by OHIP, and the value of the OHIP claim depended on a factual determination at trial regarding causation.
Justice Heeney stated that the defendants could have made an offer that provided certainty to the plaintiff by indicating in the offer that the defendants would assume liability for the OHIP claim. The defendants could then negotiate with OHIP.
By not doing so, the defendants could not prove that their offer was more favourable than the outcome at trial.
As a result, Justice Heeney stated that the plaintiff was presumptively entitled to costs and that depriving a successful party of costs is exceptional.
However, he also noted that, in exercising its discretion as to costs, a court must produce a result that is fair and reasonable in all the circumstances.
In ordering each party to bear its own costs, Justice Heeney indicated that the defendants were successful on an important causation issue. Moreover, the defendants were reasonable in their efforts to settle the case.
On the other hand, the plaintiff’s expectations were unreasonable. There was a great disparity between the amount claimed by the plaintiff and the amount recovered. In addition, the plaintiff was only seeking a modest costs award in any event.
Overall, although costs are normally awarded to the successful party, a court has discretion to order otherwise, taking into account a wide range of factors, including settlement offers that do not comply with the requirements of a formal offer to settle.