10.31: Court-ordered costs award

Case Summary

This was a Costs Decision arising from competing Applications for Summary Judgment. The underlying Action was a contract dispute with a lengthy procedural history including a series of Court Applications and two Arbitrations.

Justice Neufeld observed that Rule 10.31 provides the Court with significant discretion in the implementation of a Costs Award, the exercise of which is guided by considerations such as the relative success of the parties, the complexity of the litigation, offers of settlement, and any litigation misconduct. The Court further noted that where a contract provides for full indemnity Costs, such Costs are available despite the usual rule that full indemnification should be exceptional.

The Defendant sought to rely on provisions in his Agreement with the Plaintiff to claim full indemnity Costs for all the proceedings (Court Applications and Arbitrations). In dismissing this argument, the Court noted that under the Agreement, disputes were to be resolved by referring them to a specific lawyer who would make a final and binding adjudication. Therefore, the Costs contemplated in the Agreement were far from full indemnification of Costs for almost five years of litigation before two Arbitrators and the Courts.

In terms of the quantum of Costs, the Court found that the Costs claimed by the Defendant were incurred in two distinct phases of litigation. The first phase was a very lengthy Arbitration, for which the parties should bear their own Costs as neither party was at fault for the highly flawed result. However, in the ensuing phase of the litigation, commencing from the granting of the Application to review and set aside the first Arbitration decision, the Plaintiff should indemnify the Defendant on a solicitor-client basis. Besides the Defendant’s relative success, the Court noted the following reasons: (1) the Plaintiff refused to accept an early and reasonable settlement offer from the Defendant; and (2) the Plaintiff’s repeated reprehensible behavior during the proceedings against the opposing party and counsel, the expert witness, and the Court. The Plaintiff was also ordered to pay for the expert fees.    

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