Fridays with Rogers Partners

At our weekly meeting, Chris MacDonald discussed a decision by the Court of Appeal in Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267.

The Court considered an appeal from the costs ruling of the trial judge brought by the defendant, Hamilton Retirement Group Ltd. (referred to as “Rushdale”), in which the trial judge denied Rushdale an award of partial indemnity costs against the plaintiff after it was successful in the action.

Background

The respondent slipped and fell on a sidewalk located between the entrance and exit of a retirement home in which she was a resident. The appellant owned the home. The respondent sued the appellant for negligence and breach of the Occupiers Liability Act in relation to this incident.

The quantum of damages was agreed to and a trial proceeded before a judge and jury on liability alone in 2019. The jury found no liability on the part of Rushdale and the action was dismissed.

Decision of the Trial Judge

Rushdale asked for an award of partial indemnity costs against the respondent. The trial judge denied Rushdale’s request for an award for three main reasons:

1. The action, which required expert evidence, illustrated the need for the law of negligence to adapt to the growing area of elder care.
2. The judge noted that Rushdale was insured and defended by a large insurer, which holds a large share of the Ontario insurance market, and therefore the case created a “David and Goliath situation”, which raised access to justice issues.
3. The insurer never offered a settlement to the respondent other than a no costs dismissal of her claim. The judge held that this was an example of the insurer’s purportedly arrogant, “hardball” approach to defending claims, which was unfair to litigants of modest means and inconsistent with the insurer’s social responsibility at large.

Rushdale obtained leave from a panel of the Court of Appeal to appeal the costs ruling.

Decision on Appeal

The Court of Appeal dismissed the appeal and concluded that notwithstanding certain errors in principle, the trial judge’s costs award had an independent basis to support it that was free of error.

The Law on Denying a Successful Party Costs

Costs are in the discretion of the Court pursuant to section 131 of the Courts of Justice Act.

The Court may consider the result of a proceeding when awarding costs, but the result is not the exclusive consideration. A successful party does not have an entitlement to costs, but only a reasonable expectation that they will be awarded, absent special circumstances.

A judge may deprive a successful party of costs, or even order the successful party to pay costs, as long as the exercise of discretion to do so is not tainted by errors of law or principle, or does not result in a decision that is plainly wrong because it is based on irrelevant factors and overlooks relevant ones

No Access to Justice to Justice Issues

The Court held that it was wrong to punish a successful party by using the existence of insurance as a reason to deny an award of costs on the theory that insurance could threaten access to justice, without considering whether there actually was improper litigation conduct that interfered with access to justice for the unsuccessful claimant.

Further, the Court stated that the fact that Rushdale was insured and defended by an insurer was not a reason to deny an award of costs. Justice Zarnett noted:

“Neither the existence of insurance in favour of a successful party at trial, nor the fact that the successful party was better resourced than their opponent, is a justification for denying costs where the resource advantage has not been used to engage in abusive tactics or other misconduct during the litigation.”

Insurer’s ‘Hardball’ Approach to Defending Civil Actions Not a Reason to Deny Costs

The Court found that although the trial judge referred to an insurer using its size to “oppress deserving litigants”, the judge did not refer to any conduct of the insurer in this case which could be so characterized, other than its failure to offer a financial settlement to the respondent. The Court held it is an error in principle to rely on the failure of a successful defendant to have offered a payment to an unsuccessful plaintiff as a ground to deny costs.

Costs Award Stands Where Independent Ground Exists to Justify it

A costs award will only be set aside if the trial judge has made an error in principle or if the costs award is plainly wrong. Where a trial judge has relied on a factor that is unsupported by proper legal principles or considerations to deny costs to a successful party, an appellate court should not intervene unless it can find nothing in the factual circumstances or argument to support the order.

The Court did not interfere with the costs award and found that the trial judge viewed the respondent’s case as addressing an underdeveloped area of the law and thus raised important and novel issues, which is a proper consideration in deciding whether costs should be awarded pursuant to rule 57.01 of the Rules of Civil Procedure.

Rule 57.01 contemplates the Court considering the nature, importance, and complexity of issues in exercising its costs discretion. Novel issues arise where there is uncertainty in the law or where the facts make the guidance provided by prior cases inadequate. A novel issue that involves the public interest can support a no costs order as an exception to the general approach that a successful party will receive their costs.

The trial judge identified that this case, which required expert evidence, illustrated the need for the law of negligence to adapt to the growing area of elder care. This finding was not tainted by any errors in the costs decision and was entitled to deference. It was sufficient on its own to justify the result reached by the trial judge.