February 24, 2023
In Ontario it is normal that a successful party in a lawsuit is awarded a portion of their legal expenses as court costs following a trial, motion, or other event.
You are most likely aware that most final judgments are subject to appeal to the Court of Appeal. Does that include the judges determination of costs and the amount of those costs?
Costs are only appealable with leave of the appeal court. Leave is not frequently granted when there is an appeal of the rest of the judgment. It is seldom granted on a stand-alone basis.
Even where leave is granted, it does not mean that you will win your appeal of the costs award. An award of costs by a trial judge is a discretionary matter and therefore an appeal will only be successful where the judge committed an error in law, or a palpable and overriding error of judgment.
The concept of error in law is relatively straightforward and easy to understand. Although costs are discretionary, there are rules of law that every judge must follow and they almost always do. The rare cases where an appeal of costs is successful on the basis of an error in law are usually about very unusual situations, such as when a court may order a non-party to pay the costs. The Court sorted that out a few years ago, but it keeps coming back with different facts. That does not create an error of law.
So most cost appeals rely upon convincing two out of three Court of Appeal judges hearing the case that the judge exercised their discretion so very incorrectly that the Court of Appeal has to intervene. The Court of Appeal is reluctant to ever intervene because they do not want to be flooded with cases where the only issue is a dispute about costs. Like every court, the Court of Appeal has limited resources and wants to use them efficiently by focusing on the most important cases and issues.
Whether you agree or not, costs are just not considered an important issue in most cases. This is true even when the costs are substantial compared to the amount of a judgment. This is true even when the apparent losing party is awarded costs.
Lawyers from Weilers LLP (then plain Weilers) confronted this issue in 2019 in Colistro v. Tbaytel, in which as the Court of Appeal stated, the trial judge had ruled that
given the damages sought at trial by the appellant and the result achieved after trial, it was obvious that Tbaytel and the City were the substantially successful parties to the litigation, and were therefore entitled to an award of costs.
The Court of Appeal denied leave to appeal costs.
Another example shows that not much has changed in four years. In the 2023 case of Northwinds Brewery Ltd. v. Caralyse Inc., the Court of Appeal upheld a Superior Court judge’s award of costs to a respondent commercial tenant, even though the landlord had been given judgment for a modest amount of unpaid rent. The application was about larger issues of breach of lease, with the landlord seeking to terminate the lease. The tenant remained in the premises, which was substantial success.
As a result, in both Colistro and Northwinds Brewery, the plaintiff or applicant ended up owing the opposing side money, in addition to paying their own legal fees. Not a result people expect when they start lawsuits, but one the Court of Appeal will uphold.
- Costs are an important aspect of any lawsuit.
- The importance of costs is easily overlooked.
- In some cases, the amount of costs can exceed the amount of the judgment.
- Although there is law governing the awarding of costs, the final decision is largely discretionary.
- The Court of Appeal will seldom overturn a costs decision.
- You and your lawyer should carefully consider the costs impact of your trial strategy.
- Do not assume that you will get a second chance to argue about costs on an appeal.
- In costs, as in everything else, it is best not to win the battle and lose the war.
How WEILERS LLP can help you
Colistro is merely one example where our lawyers successfully managed strategy with an eye on winning the war by winning the costs battle. Strategy is important to every case and part of the Weilers LLP proud tradition is provide our clients with experienced and effective strategic advice. Our advice is not generic, but is tailored to every case’s particular circumstances. Our progressive approach helps anticipate what may happen in your case. We do not have a crystal ball and cannot give guarantees, but we are proud of our track record.
If you want lawyers who think strategically, even about costs of litigation, why not give Weilers LLP a call and see if we are the right lawyers for you.