10.29: General rule for payment of litigation costs
10.31: Court-ordered costs award
10.33: Court considerations in making costs award
14.5: Appeals only with permission

Case Summary

This case involved an Appeal of a Decision made regarding Costs. The Appellant, Perth Construction Ltd., successfully obtained permission to appeal the sole issue of Costs as required by Rule 14.5(1)(e). The issue on Appeal was whether Costs should be awarded to the “net successful party” even if liability has been apportioned on a 50/50 basis.

The Appellant held a contract to construct a water and sewer pipeline and hired the Respondent, Mears Canada Corp., to bore and install a portion of the pipeline. There were deficiencies in the work done by the Respondent and the Appellant sued the Respondent for breach of contract, claiming the costs of rectifying the deficiencies. The Appellant also did not pay the Respondent. Therefore, the Respondent counterclaimed for payment of the amount owed under its contract with the Appellant.

At Trial, the Trial Judge ruled that the Appellant and the Respondent were jointly liable for the faulty pipeline. The Trial Judge ruled that the problems arose from both the Appellant’s negligence in designing the pipeline and the Respondent’s negligence in constructing it. As a result, the Appellant was awarded 50% of the costs to fix the pipeline plus interest, while the Respondent was awarded the amount due under its contract with the Appellant, plus interest. In the end, the Appellant received an award of $107,284 over and above what the Trial Judge awarded to the Respondent. Nevertheless, the Trial Judge ruled that no Costs would be awarded given that liability had been apportioned equally and given that the Respondent’s counterclaim was awarded in full (and was not really contested to begin with). The Appellant took issue with this ruling on Appeal.

The Court of Appeal noted that a Trial Judge has broad discretion when awarding Costs but it must exercise this discretion judiciously. The general rule, as described in Rule 10.29, is that a successful party is entitled to its Costs and that these Costs may be awarded against the unsuccessful party subject to the Court’s discretion as described in Rule 10.31. The factors that may guide the exercise of the Court’s discretion are listed in Rule 10.33 and include: the result of the action and the degree of success of each party; the amount claimed and the amount recovered; and the apportionment of liability.

The Court of Appeal ruled that these factors favoured upholding the Trial Judge’s Decision not to award Costs to either party. The Appellant’s claim was only partially successful as it was only awarded 50% of the damages it claimed, while the Respondent’s counterclaim was granted in full. Further, the apportionment of liability was equal as between the parties. The Appeal was dismissed.

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