Cost awards must be given on a principled basis

Toronto Star Newspapers Ltd. v. Fraleigh, 2011 ONCA 555, released today online, is a useful decision relating to when elevated costs are appropriate.  The Court held:

[32]         In determining the extent of a costs award, the ordinary rule is that the successful litigant is entitled to his or her costs.  However, while awarding costs is a discretionary exercise, attracting a high level of deference, awards must be given on a principled basis.  While I accept that the motions judge was entitled to exercise his discretion and order costs, I do not accept that he did so on a proper basis.  Accordingly, his decision is not entitled to deference and this court can intervene: Davies v. Clarington (Municipality) (2009), 100 O.R. (3d) 66 (Ont. C.A.).

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[34]         This court at para. 31 of Clarington reaffirmed the principle that elevated costs are warranted in only two circumstances.  First, where there is an offer to settle under rule 49.10 of the Rules of Civil Procedure, which has no application in this case.  Second, on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. 

[35]         There are simply no findings by the motion judge of actual misconduct let alone conduct that can be described as reprehensible.  As I noted above, the motions judge recognized the propriety of the Star in advancing its interest.  Indeed, it seems to me that the motions judge was primarily motivated by his unfavourable view of the Star’s claims and his perception of an inequality of resources. 

[36]         At para. 16 he observes: “The high minded assertions of the Star are not without commercial consequences.  The Star is not a non-profit interest group.”  And later, at para. 19 he justifies his ultimate order with these remarks:

Substantial indemnity costs are usually reserved for exceptional situations.  This situation, between a media giant and an individual trying to protect his right to privacy is exceptional.  This, like any David and Goliath situation, was, to say the least, a tough battle based on principle.

[37]         First, the view of the motions judge on the ethics of the Star seeking to publish potentially embarrassing personal information about Mr. Fraleigh does not amount to conduct worthy of sanction by the courts.  Second, the relative resources of litigants is not relevant in determining a costs award except perhaps when considering the impecuniosity of a plaintiff in making a costs award against them: see Mark M. Orkin, The Law of Costs, 2d ed., looseleaf (Aurora: Canada Law Book, 2010), at para. 205; Jeremia v. Toronto (Police Services Board), 2009 ONCA 671, leave to appeal to S.C.C. refused, [2009] S.C.C.A. No. 471.