The Parties sought direction from the Court in respect of an Application by the Defendant claiming privilege over certain records and requesting that the Court remove the Plaintiff’s lawyers from acting for the Plaintiff. The Court held that only one of three records were privileged. The Court also declined to remove the Plaintiff’s lawyers as counsel in the Action. The issue was whether the Court should award Costs to the Plaintiff, or direct that both Parties bear their own Costs.

Eamon J. noted that the primary purpose of a Costs Award is to indemnify the successful Party for the costs of the litigation, but may include encouraging settlement, prevent frivolous, vexatious or harassing litigation, and encourage economy and efficiency during litigation. A successful Party to an Application is entitled to Costs subject to a variety of considerations, including the Court’s general discretion under Rule 10.31 and 10.29. A Party does not need to be successful on each argument to qualify for Costs, but is entitled to Costs where a Party is substantially successful. Where no Party was substantially successful, each Party will bear their own Costs, but apportionment may be appropriate where success is divided on multiple issues. A Court can award Costs by issue, partial Costs to one Party, or require each Party to bear their own Costs.

The Court awarded the Plaintiff Costs. Eamon J. held that having regard to Rule 10.33, substantial success should be assessed by taking into account all issues in dispute, the outcome and degree of success of each Party, the relative importance and complexity of the issues, relevant conduct of the Parties, and necessary length of the hearing and nature and significance of the evidence presented. Neither Party was substantially successful, but the Court found that the Plaintiff succeeded on most of the principal issues. The Plaintiff did not succeed on one of the important issues, but the finding on that issue would not likely have much practical impact on the Action. The Court found that absent other considerations, the Parties would bear their own Costs. However, the Court found that the Defendant was responsible for necessitating a second hearing, filing written Briefs late and very shortly before the hearing, as well as an adjournment for three months, with revised Briefs that included revised arguments and significantly more authorities.

The Court held that in the circumstances, Costs should be awarded for one of the hearings, including the Brief, in favour of the Plaintiff. The Court found that civil Special Applications are premised on an orderly presentation of arguments in advance of the hearing, so that the real issues can be identified and addressed during the oral hearing. The Defendant added evidence or arguments shortly before the hearing, which undermines timely and cost-effective litigation, as required by Rule 1.2. Moreover, the Court can account for litigation misconduct when assessing Costs, but the Court found that there was no such misconduct.