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Civil Litigation - Costs - Proportionality. Barry v. Anantharajah
In Barry v. Anantharajah (Ont CA, 2025) the Ontario Court of Appeal considered the costs award in 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.". It 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".
Here the court considers the issue of proportionality in cost awards::[43] Turning to the issue of proportionality, the appellant submits that the costs award was wholly disproportionate to the judgment.
[44] Rule 1.04(1.1) of the Rules of Civil Procedure provides that, “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.” The proportionality principle is concerned with both the importance and complexity of the issues and the amount involved. Here there was some recovery by the plaintiff and the trial judge found that the respondent’s unreasonable refusal to make a monetary offer required that this complex and important matter go to trial, resulting in voluminous medical and employment records and extensive mental and health-related evidence. Although the costs order substantially exceeded the recovery, the costs order was proportionate to the importance and complexity of the issues, and to the amount involved in the litigation. I would not interfere with that determination.
[45] From time to time, this court has interfered with the exercise of a trial judge’s discretion on the grounds of proportionality. In this regard, the appellant relies particularly on the decisions of Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616, leave to appeal refused, [2015] S.C.C.A. No. 427 and Cobb v. Long Estate, 2017 ONCA 717, 416 D.L.R. (4th) 222. The former did not involve a trial judge who had given express or implied consideration to the principle of proportionality and the decision in Cobb is distinguishable. There, the trial judge had made an error in principle in failing to comply with a statutory requirement that invalidated his costs award. However, he had also stated that if he were wrong in his interpretation of the statute, he would order both parties to bear their own costs: see Cobb v. Long Estate, 2015 ONSC 8167, at para. 72, rev’d 2017 ONCA 717, 416 D.L.R. (4th) 222. Having found the identified error, the ratio of the case is that this court adopted the trial judge’s alternative costs award.
[46] So long as trial judges have turned their minds to the issue of proportionality either expressly or impliedly, deference is owed to the costs award absent an error in principle or a decision that is plainly wrong.[2] In this sense, proportionality is akin to reasonableness and fairness, the overarching principles to be applied in a costs award. It is rare that an appellate court interferes with a trial judge’s assessment of what is fair and reasonable. So too with the principle of proportionality.
[47] I would also add that proportionality should be considered but it should not necessarily trump all other considerations in a costs assessment. This court has recognized that “an overemphasis on proportionality to the detriment of the other equally relevant factors ‘ignores the principles of indemnity and access to justice’, especially in proceedings where legitimate claims of clearly wronged plaintiffs are being pursued”: Bondy-Rafael v. Potrebic, 2019 ONCA 1026, 441 D.L.R. (4th) 658, at para. 64, quoting Gardiner v. MacDonald, 2016 ONSC 2770, at para. 65, aff’d 2016 ONCA 968, 63 C.C.L.I. (5th) 212.
[48] This observation is also reflected in much of the commentary on costs made by many experienced trial judges who of course have a heavy diet of costs decisions with which to grapple. In Aacurate v. Tarasco, 2015 ONSC 5980, 51 C.L.R. (4th) 314, at paras. 15-16, McCarthy J. observed that proportionality should not be invoked to undercompensate a plaintiff for costs legitimately incurred. A pattern of such outcomes would result in a denial of access to justice and it would tend to “encourage those resisting legitimate but modest claims to take unreasonable positions, the logic being that any exposure to costs will be limited because of the size of the claim regardless of the time and expense necessary to extract a judgment”: Aacurate, at para. 16.
[49] In Persampieri, Sanderson J. endorsed that proposition. She addressed the issue of proportionality in considerable detail and ultimately awarded costs and disbursements of $237,017.50 in a personal injury case where the plaintiff’s net recovery was $20,414.83. Part of the costs award was on a substantial indemnity scale as the plaintiff had fared better at trial than her offer. Aviva, the defendant’s insurer, had made an offer of a dismissal of the action without costs. Aviva argued that the cost award should be reduced on the basis of proportionality, but Sanderson J. reasoned that this would unduly minimize the quantum of otherwise usual amounts of costs.
[50] Similarly in Corbett, Hackland J. endorsed the observations in Aacurate and similar cases stating, at para. 25: “It would be an injustice to the plaintiffs to deprive them of otherwise appropriate and reasonable costs because of a modest recovery at trial in the face of a $7.00 settlement offer from the defendant.” Similarly, in Brophy, which involved a 10-day jury trial, a net judgment of $17,688.64, and a costs award of $275,456.60 in a case where the defendant made no offer and the plaintiff’s offers did not engage r. 49, the trial judge endorsed the principles articulated in Aacurate, Persampieri, and Corbett.
[51] One must also be mindful of the changing face of the cost of legal services in general and legal fees in particular. These have risen significantly in the last 20 years: Clinedale Property Group Ltd. v. BeyRose Acquisitions Ltd., 2024 ONSC 7264, at para. 21, and see generally: “The state of the Canadian legal fee landscape: an in-depth report”, Canadian Lawyer Magazine (October 2024); and Noel Semple, “The Cost of Seeking Civil Justice in Canada” (2016) 93 Can. Bar Rev. 639. At the same time, personal injury motor vehicle awards have been circumscribed by legislation: see e.g., Insurance Act, s. 267.5(8.3); Court Proceedings for Automobile Accidents that Occur on or After November 1, 1996, O. Reg. 461/96, s. 5.1(1). When juxtaposed, the damages awards may seem modest in comparison with the legal fees. Proportionality does play an important role in preventing excessive costs awards. Trial judges are well placed to appreciate both the economics at play in an action and what is fair and reasonable and indeed proportionate in a costs award. Hence deference.
[52] In the case under appeal, the trial judge expressly considered the principle of proportionality. She considered, among other things, the complexity of the case, the need for extensive expert evidence, the net amount recovered by the respondent, the reasonable expectations of the appellant, and the offers made by the parties. Although she detailed the offer made by the appellant to dismiss the action without costs, she did not mention the appellant’s alternative offer of admitting liability in exchange for the respondent limiting her claim to the appellant’s policy limits of $1 million. That said, for the purposes of costs, I do not view this alternative as materially different from the other defence offers. She reduced the quantum of costs by $100,000 on the basis of proportionality and the higher legal fees necessitated by the respondent’s decision to retain two senior lawyers. The latter accounted for a $40,000 reduction. The disbursements alone in this case amounted to $114,512.38. Having considered and applied the principle of proportionality, I am not persuaded that the trial judge’s discretionary award should be replaced by that of this court. As stated previously in these reasons, costs awards are “quintessentially discretionary”: Nolan, at para. 126. While I accept that there may be the occasional case where the quantum awarded is so disproportionate as to merit replacing a trial judge’s discretionary award of costs on the basis that the decision is plainly wrong, I am not satisfied that the decision in this case so qualifies.
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