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Civil Litigation Dicta - Costs - Appeals

. Barry v. Anantharajah

In Barry v. Anantharajah (Ont CA, 2025) the Ontario Court of Appeal dismissed a costs appeal, here from a trial judge award of "$300,000 consisting of $164,148.33 in fees, $21,339.29 for HST, and $114,512.38 in disbursements". This was an MVA negligence case where, "(a)fter accounting for the jury’s finding of contributory negligence and the statutory deductible for general damages, the respondent’s damages award amounted to $16,160.50."

Here the court considers the deference accorded to discretionary trial cost awards:

[25] The standard of review on an appeal of a costs award was clearly described by Arbour J. in Hamilton v. Open Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27. A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong.

[26] An appellate court takes a deferential approach when reviewing a discretionary award of costs by a trial judge. The reason for deference towards discretionary decisions was described in Cowles v. Balac (2006), 2006 CanLII 34916 (ON CA), 83 O.R. (3d) 660 (C.A.), at para. 41. Deference recognizes the expertise of the lower court, promotes the integrity and autonomy of the proceedings in the lower court, limits the number, length and costs of appeals, and recognizes the advantage that lower courts have from firsthand observation of the evidence. Deference towards discretionary decisions means that a reviewing court “must defer to the judge’s exercise of … discretion and must not interfere with it merely on the ground that the members of the appellate court would have exercised the discretion differently”: Canadian Pacific Ltd. v. Matsqui Indian Band, 1995 CanLII 145 (SCC), [1995] 1 S.C.R. 3, at para. 39, quoting Lord Diplock in Hadmor Productions Ltd. v. Hamilton, [1982] 1 All E.R. 1042, at p. 10.

[27] Sometimes it is helpful to have regard to other areas of the law that apply a high degree of deference to certain lower court orders. For instance, in R. v. Range, 2010 ONCA 488, 257 C.C.C. (3d) 261, at paras. 70-72, Doherty J.A. explained the justification for appellate deference towards the decisions of sentencing judges, stating that sentencing “is anything but an exact science”:

In the vast majority of cases, there is no single sentence that is clearly preferable to all others. Instead, there is a range of reasonable options from which the trial judge must make his or her selection. That selection is driven by the judge’s evaluation of the sentence that best reflects his or her assessment of the combined effect of the many variables inevitably at play when imposing a sentence. Absent the discipline of deference, sentence appeals would invite the appellate court to repeat the same exercise performed by the trial judge, with no realistic prospect that the appellate court would arrive at a more appropriate sentence. Appellate repetition of the exercise of judicial discretion by the trial judge, without any reason to think that the second effort will improve upon the results of the first, is a misuse of judicial resources. The exercise also delays the final resolution of the criminal process, without any countervailing benefit to the process.

[28] Although of course a sentencing decision differs significantly from a costs award, the discretionary principles at play bear many similarities. As stated by Rothstein J. in Nolan v. Kerry (Canada), 2009 SCC 39, [2009] 2 S.C.R. 678, at para. 126, costs awards “are quintessentially discretionary”. This court has recognized that “[a] trial judge has an extremely broad discretion in the awarding of costs, which is entitled to a very high degree of deference and will not be taken lightly by reviewing courts”: Frazer v. Haukioja, 2010 ONCA 249, 101 O.R. (3d) 258, at para. 75.

[29] The concept of deference relating to costs awards is reflected in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C43, which represents the basis for a costs award in Ontario:

Subject to the provisions of an Act, or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[30] It follows from this discussion that an appellate court should exercise caution when reviewing a trial judge’s costs award. Like the sentencing context, appellate repetition of the trial judge’s exercise of discretion in awarding costs, without any basis for review, amounts to an inefficient use of judicial resources. A high level of deference is necessary due to the unique position of the trial judge, who, having observed the proceedings firsthand and grasped the subtleties of the case, is best equipped to assess whether costs should be awarded, in what amount, and at what scale: McNaughton Automobiles Limited v. Co-Operators General Insurance Company, 2008 ONCA 597, 95 O.R. (3d) 365, at para. 27; see also 100 Bloor Street West Corporation v. Barry’s Bootcamp Canada Inc., 2025 ONCA 447, at para. 70.

[31] But what of a situation where the trial judge made an error in principle in the exercise of her discretion? In keeping with the high degree of deference owed, such an error is not fatal so long as there is an independent basis on which to uphold the costs order. Relying on this court’s decision in Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.), Zarnett J.A. recently explained this principle in Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267, 70 C.P.C. (8th) 219, at para. 10:

Th[e] deferential approach requires that attention be paid not only to the nature of any error affecting a costs decision, but also to its extent. It is insufficient to identify an error in principle in the course of the trial judge’s reasons without considering whether there is an independent basis to uphold the order. An appellate court should be reluctant to interfere with “the exercise of discretion by a trial judge who had a much better opportunity to acquaint himself with, and have a feeling for, all of the factors that formed the basis for the award of costs”: [Bell Canada,] at para. 41. Even 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”: Bell Canada at para. 42.

[32] In Przyk, the jury found no liability on the part of a defendant in a slip and fall case and the plaintiff’s action was dismissed. Nonetheless, the trial judge denied the defendant an award of costs. Leave to appeal was granted and on hearing the appeal, this court upheld the award even though it concluded that the trial judge’s ruling reflected certain errors in principle. The fact that the defendant was insured by Aviva, a large insurer, was not a reason to deny an award of costs. Similarly, the refusal of a party to offer a financial settlement before trial was not a reason to deny that party costs where the refusal is proven reasonable by the verdict. Nor ought the trial judge have sought to correct a general attitude of Aviva toward settlement in other cases in the absence of referring to any unreasonable conduct of the insurer in that particular case. Nonetheless, as there was an independent basis on which to uphold the trial judge’s cost award, this court declined to interfere and upheld the costs order.

. Akman v. Sonnet Insurance Company

In Akman v. Sonnet Insurance Company (Ont Div Ct, 2025) the Ontario Divisional Court considered a 'general principle' (really, a presumption) applicable for successful party cost awards, here in a challenging costs appeal situation:

[6] In the circumstances of this appeal, the general principle to be applied is that “when an appeal is allowed […] the order as to costs below is set aide [SS: sic] and the costs below and of the appeal are awarded to the successful appellant”: see St. Jean v. Cheung, 2009 ONCA 9, at para. 4, citing Hunt v. TD Securities Inc. (2003), 2003 CanLII 48369 (ON CA), 43 C.P.C. (5th) 211 (ON CA), at para. 2.

[7] Another general principle to be applied is that where the disposition on the appeal is different from the outcome on the decision under appeal, leave to appeal costs is not necessary: St. Jean, at para. 4, citing Dines v. Harvey A. Helliwell Investments Ltd., [1992] O.J. No. 2107 (C.A.).

[8] Mr. Akman’s position is that, because the costs awarded at first instance were less than $3,500, Sonnet was prohibited from appealing the costs award. In support of that position, Mr. Akman relies on s. 2 of O. Reg. 626/00 titled, “Small Claims Court Jurisdiction and Appeal Limit”. Pursuant to that regulatory provision, there can be no appeal from an award, made in the Small Claims Court, that falls below $3,500. That provision applies to costs orders: Riddell v. Carefree Moving Inc., 2018 ONSC 1972 (Div. Ct.).

[9] If Mr. Akman’s position were to prevail in the circumstances before this court, the costs awarded at first instance would effectively be set off against the costs awarded on the appeal. Mr. Akman would be required to pay Sonnet a total of $900 ($2,500 - $1,600).

[10] Such an outcome makes no practical sense and is not in the interest of justice. The fact that Sonnet was not permitted to appeal the order as to costs at first instance does not mean that the order as to costs stands regardless of the outcome on the appeal. The general principles summarized in paras. 6 and 7, above, prevail over the regulatory provision upon which Mr. Akman relies.

. Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP

In Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP (Ont CA, 2025) the Ontario Court of Appeal considered setting aside and amending trial cost awards where an appeal is allowed:

[5] As a general principle, costs follow the event. Thus, when an appeal is allowed, this court’s general practice is to set aside the costs order below and award the successful appellant costs below and of the appeal: St. Jean v. Cheung, 2009 ONCA 9, at para. 4; Hunt v. TD Securities Inc. (2003), 2003 CanLII 48369 (ON CA), 40 B.L.R. (3d) 156, 66 O.R. (3d) 481 (C.A.), at para. 2, leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 473. For this reason, s. 18(1) of the court’s practice direction instructs parties to be prepared to address all costs issues at the hearing of the appeal (emphasis added): “Practice Direction Concerning Civil Appeals in the Court of Appeal”, (March 1, 2017).