By Munera Lawyers
In a recent case, Smith v Kane, the Ontario Superior Court of Justice clarifies some issues regarding offers to settle and costs in civil litigations. Generally speaking, the successful party is entitled to an award of costs. However, the courts also have a wide discretion in awarding costs. Rule 57.01 of the Rules of Civil Procedure provides a list of factors that the court may consider when exercising the discretion. In particular, Rule 57.01(1)(i) allows the court to consider “any other matter relevant to the question of costs” and this arguably suggests that costs should not be ordered against impecunious plaintiffs.[1]
In Smith v Kane, the plaintiff, who did not succeed in the trial, argues that the defendant should bear the costs since the defendant has not made any offer to settle, and the court disagrees. Justice Gans, in the judgment, states that the mere fact that the party did not make an offer to settle is not a valid legal ground to penalize the party.[2] In non-matrimonial ligations, there is no obligation on a party to make a pre-trial offer to settle.[3] However, it should be noted that modern cost rules purport to facilitate access to justice, which is to be balanced with the indemnity principle.[4] Therefore, where the plaintiff is impecunious, access to justice could suggest that the court may not order costs against the unsuccessful plaintiff.
In addition to financial hardship, Justice Gans also states that it is appropriate to take into consideration tragic circumstances when exercising discretion as to costs.[5] In Smith v Kane, the court notes that the plaintiff is indeed impecunious and relies on social assistance, and she also faces tragic circumstances of losing her foot following the defendant’s allegedly negligent diagnosis and treatment. Since the successful defendant did not demand costs in Smith v Kane, the concerns of hardship were alleviated on the part of the plaintiff, and the court orders that the ordinary rule that the successful party is entitled to an award of costs applies. Should the defendant reconsiders its position, however, the court reserves the right to revisit the matter of costs.[6]
To sum up, Smith v Kane affirms the common-law rule that a mere failure to make offers to settle does not change the ordinary rule regarding costs, yet the courts also have a wide discretion in awarding costs. Among other things, where the plaintiff is impecunious and access to justice is an issue, and where there is tragic circumstances to be taken into consideration, the court may decide not to order costs against the unsuccessful plaintiff.
[1] Smith v Kane, 2020 ONSC 4814 at para 13 [“Smith”].
[2] Ibid at para 14.
[3] Pike’s Tent & Awning Ltd. v Cormdale Genetics Inc., 1998 CarswellOnt 3282 at para 49.
[4] Smith, supra note 1 at para 19.
[5] Ibid at para 22.
[6] Ibid at para 26.
NOTE: This article has been written for general information purposes only and does NOT constitute legal advice. For further questions and/or legal advice please consult a qualified lawyer.