Today's decision in Schwark v Cutting, 2010 ONCA 299 addresses the gap to some degree. The Court holds:
[3] The appellants seek partial indemnity costs to the date of their offer to settle and substantial indemnity costs thereafter.
[4] I begin with the well-settled proposition that a successful party is entitled to its costs. Here the appellants, who were defendants at trial, have been entirely successful and are therefore entitled, at a minimum, to their partial indemnity costs throughout.
[5] However, the appellants, served a Rule 49 offer and their ultimate success in having the respondents' action entirely dismissed is a result that is much better than their offer.
[6] Rule 49.10 does not address a situation where an offer is served by a defendant and the plaintiff recovers nothing. This court has held that the rule has no application in cases where the plaintiff fails to recover judgment. See Scapillati v. A. Potuin Construction Ltd. (1999), 175 D.L.R. (4th) 169 (C.A.); S. & A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.).
[7] However, rule 49.13 provides, inter alia, that despite rule 49.10 the court in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.
[8] Of course the overall discretion of the court toward costs in civil proceedings is set out in s. 131 of the Courts of Justice Act and in rule 57.01.
[9] This court has recently considered the interplay of s. 131 of The Courts of Justice Act, rule 49.10 and rule 49.13. In Davies v. Clarington (Municipality) (2009), 312 D.L.R. (4th) 278 at para. 40, Epstein J.A. writing for this court stated:
In summary while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework – as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.
1 comment:
What then constitutes "reprehensible" conduct warranting elevated costs? Can the rejected Offer to Settle in combination,say, with the bringing of an essentially frivolous lawsuit ("lawfare") not tip the balance?
I commonly used interrogatories, an offer to settle, demand for discovery of documents plus a notice to admit in the early stages of a proceeding. It certainly got the opposing party's and opposing counsel's attention; it facilitated reasonable settlement; it greatly narrowed the issues; it often laid the groundwork for summary disposition of the case and, of course, was invaluable when it came to arguing costs. This sort of thing created significant "front end" expense for both parties but, far more often than not, saved the client a lot overall and increased the prospects of success.
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