April 14, 2026
We have already explained that failing to accept an offer to settle a lawsuit can have serious cost consequences in Ontario.
THE ISSUE
What happens when the Plaintiff recovers damages, but less than their offer to settle, and the Defendant made no monetary offer?
AN OVERVIEW
Although costs are always discretionary, the judge must exercise that discretion reasonably, considering guidelines in the Courts of Justice Act, the Rules of Civil Procedure and prior cases.
The trial judge’s decision is almost always upheld if there is a costs appeal, because the assumption is that the trial judge is best positioned to assess whether costs ought to be awarded, and if so, on what scale and in what amount.
THE CASE
Barry v. Anantharajah is a recent example where the Court of Appeal upheld a trial judge’s costs award.
What is noteworthy about this case is that the Plaintiff in this personal injury case recovered only $16,160.50 in damages following a three-week trial.
The Plaintiff had offered to settle for $500,000.00 in damages plus costs and disbursements. They clearly recovered much less than their offer.
However, the Defendant (or their insurer) never made a monetary offer to settle. The best they were prepared to do was consent to a dismissal without costs of the action. So, they did somewhat worse than their offer, but just looking at the numbers, they were a lot closer than the Plaintiff.
The Plaintiff sought over $400,000.00 in costs (including disbursements which exceeded $100,000.00 and taxes). The Defendant argued that there ought to be no costs awarded, because, they said, success was divided. Often, when success is divided, no costs will be ordered.
The trial judge disagreed with the Defendant.
The trial judge awarded the Plaintiff costs totaling $300,000.00. Though this is much higher than the damages award, it is not out of line with what costs often are for a three-week trial.
She commented that the Defendant’s insurer had decided to pay “hardball” and ought to pay a price for that tactic. The judge felt that the decision to make no offer made no sense in light of the evidence at trial. The Defendant ought not to be rewarded for what the judge described as “bully tactics”.
The reduction from the costs sought to the award reflected the concept of “proportionality”.
The Court of Appeal upheld this decision.
Who Was Successful at Trial?
The appeal panel agreed with the trial judge that the Plaintiff was more successful than the Defendant at trial.
They did say that the failure to make an offer was not a good reason to deny a successful defendant costs. But they agreed with the trial judge that in this case, the Plaintiff was successful. The trial judge had considered the factors required under the Rules of Civil Procedure and had determined as a fact that the Plaintiff was the more successful party.
What about the criticism of the “hardball” approach?
The Court of Appeal looks at prior decisions and states that: “a defendant is not required to make any settlement offers, but if that is the posture adopted, it must live with the consequences of that posture if its decision does not prove to have been a reasonable one.”
They also shared the trial judge’s concern that the Defendant had raised issues based on outdated stereotypes relating to mental health issues. This comment is obviously intended to send a message for future cases.
What About Proportionality?
Proportionality is an important concept under the Rules of Civil Procedure. You can tell because the concept is dealt with in the very first rule, which reads (in part): “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”
But proportionality is not just about the amount of money recovered. As the Court of Appeal points out, proportionality also should reflect the importance and complexity of the issues. They agreed that this was a complex and important case.
Proportionality “is akin to reasonableness and fairness” in that it is rare for an appeal court to overturn a judge’s determination as to what is fair and reasonable.
Finally, the Court points out that proportionality is only one factor in a costs decision, and “should not necessarily trump all other considerations”. Denying Plaintiffs costs too frequently would reward Defendants who take unreasonable positions.
TAKEAWAYS
- Costs may significantly exceed the amount awarded as damages.
- Trial costs are a matter of discretion for the trial judge (a similar principle applies to costs of a motion or application).
- Appeal courts will seldom overturn a trial judge’s decision on costs.
- Where a Defendant does not make a monetary offer to settle, they run an increased risk of costs being awarded to the Plaintiff.
- Success is not just about how much money the Plaintiff recovers.
- Though proportionality is one factor to be considered in assessing the amount of costs, it is not the only factor.
- Relying on outdated stereotypes further increases the risk of an adverse costs ruling.
- The importance and complexity of the case are even more important.
WHAT WEILERS LLP CAN DO TO HELP YOU
If you’re involved in a lawsuit, you want lawyers like the litigation team at Weilers LLP, who will give you sound advice about the risk of court costs, and how to best manage that risk.
Give us a call. We may be the right lawyers for you.