4.29: Costs consequences of formal offer to settle
10.29: General rule for payment of litigation costs
10.31: Court-ordered costs award
10.33: Court considerations in making costs award

Case Summary

After Trial, Bensler J., declined to award Double Costs in relation to a Settlement Offer, declined to award second counsel fees and adjusted disbursements to accord with what was reasonable and proper in the circumstances.

Both Rule 4.29, and its substantive equivalent under the former Rules, Rule 174, contain strong language entitling a party who betters a Formal Offer at Trial to Double Costs. However, Bensler J. noted that “the operation of the rule on double costs is only triggered following a threshold inquiry where a Court determines the settlement offer was, in fact, genuine…”. After reviewing relevant jurisprudence, Bensler J. found that the Defendants’ Offer was not genuine as it lacked an element of compromise reflecting the relative strength of the Parties’ positions at the time the offer was served. The terms of the Defendants’ Offer failed to acknowledge the potentially meritorious Claim and triable issues raised by the Plaintiff. The Offer was at most a little over 1% of the Plaintiff’s Claim. Bensler J. held that is was not 99% likely that the Defendants were bound to win at any point prior to Trial. The Defendants had also offered to forego their Counterclaim. However, the Counterclaim lacked substance. Accordingly, Bensler J. concluded that the Defendants’ Settlement Offer did not contain a genuine element of compromise.

The Court also specifically declined to compare the value of the Settlement Offer to the final Judgment. Bensler J. found that the final Judgment at Trial in this case was an all or nothing proposition. Consequently, the Court held that a relative assessment in this regard would be inappropriate since “the judgment in an all or nothing trial is an erroneous standard from a comparative perspective”. Bensler J. also found that, even if genuine, the Defendants’ Offer could not reasonably be expected to induce settlement and allowing Double Costs in the circumstances would “aggravate the already formidable economic barriers that impede access to justice”. Bensler J. held that the negative impact on access to justice qualified as a special circumstance favouring the exercise of the Court’s discretion to order that the Double Costs rule not apply.

Generally “courts should be reluctant to award costs for second counsel in the absence of an established need based on the complexity of the issues or law...”. Relevant factors to be considered are:

(i)         The general importance of the issue or issues to the parties or to others;

(ii)        The value of the case;

(iii)       The complexity and scope of the issues;

(iv)       The size of the trial record;

(v)        The manner in which opposing counsel conducts the case; and

(vi)       Whether second counsel addressed the court.

Bensler J. held that the issues in this case were narrow, straightforward, and determined largely based on several key findings of fact. Second counsel fees were not warranted.

Although the Plaintiffs did not dispute the disbursements in the Bill of Costs, Bensler J. chose to exercise the Court’s discretion to adjust certain disbursements to ensure a reasonable and proper Costs award. The Court disallowed disbursements for computer research, fax charges, laser printing, and photocopy charges. Bensler J. held that computer research and fax charges fall within the tariffs described in Schedule C as implied activities and necessary services. Her Ladyship held that a disbursement at 30 cents per page for laser printing and photocopying was excessive in light of the costs for such work at commercial printers, and that such disbursements should only apply to final documents. Bensler J. awarded a disbursement for laser printing and photocopying of final documents only, at 10 cents per page.

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