Simon's Megalomaniacal Legal Resources

Civil Litigation - Costs - Substantial and Full Indemnity

. Everest Finance Corporation v. Jonker

In Everest Finance Corporation v. Jonker (Ont CA, 2023) the Court of Appeal holds that 'full indemnity' contractual litigation costs, here in a mortgage context, will be ordered:

[3] We do not see any basis to deny the appellant its full indemnity costs. That is the relief that the respondents agreed to when they signed the mortgage. Contractual provisions stipulating entitlement of a mortgagee to costs of enforcement on the basis of costs actually expended will generally be enforced, absent misconduct or unfairness on the part of the party claiming costs: MCAP Financial Corp. v. George Fernicola in Trust and Carrington Homes Ltd., 2010 ONSC 148, at para. 18.

. Covenoho v. HomeLife Response Realty Inc.

In Covenoho v. HomeLife Response Realty Inc. (Div Court, 2023) the Divisional Court commented on the unusual circumstances in which substantial indemnity costs are awarded:

[14] While Right at Home has set out its costs both on a partial and a substantial indemnity basis, no real argument was made that substantial indemnity costs were appropriate in this case. Rule 49 does not apply in this case. Therefore, substantial indemnity costs should not be awarded except in rare and exceptional circumstances. Jassal v. Kaith, 2020 ONSC 3257. Generally, substantial indemnity costs are only awarded where a party has behaved in an abusive, egregious or otherwise reprehensible manner. Skourtis v. City of Toronto, 2021 ONSC 4492 at para. 7.

. Hutton v. Sayat

In Hutton v. Sayat (Fed CA, 2022) the Federal Court of Appeal cited a prior court definition of solicitor-client costs:

[5] For this particular file though, pursuant to the Court’s Order dated April 27, 2021, the Respondent’s costs should be assessed at the solicitor and client level. In Ontario Federation of Anglers and Hunters v. Ontario (Minister of Natural Resources and Forestry), [2017] S.C.C.A. No. 369, at paragraphs 7 and 8, the Registrar at the Supreme Court of Canada, provided clarification on the meaning of solicitor and client costs:

7. I note that the WTFN have based their claim on full indemnity. They state that "in taxing the award to them of costs on a solicitor-client basis on each file, the result should be that they be fully indemnified for their proper fees and disbursements". With respect, that is incorrect. Solicitor and client costs are not equivalent to full indemnification. As the Deputy Registrar noted in Richard:

The awarding of costs on a solicitor and client basis is something less than "solicitor and his own client costs" or full indemnity (see Orkin, at pp. 1-7 to 1-8). It is clear from the appellant's Bill of Costs, as supported by the time dockets attached as Annex 2, that the appellant's claim is for full indemnity. This is improper. [Emphasis added.]

8. The case law is settled that costs awarded on a solicitor and client scale shall be assessed on the basis of quantum meruit: see Mark Orkin, The Law of Costs, loose leaf, Vol. 1, at pp.1-13 to 1-14. See also, Richard, Best, Metzner v. Metzner, (reasons of the Registrar on Taxation dated June 15, 2001; S.C.C. Bulletin, 2001, p. 1159) and Alberta (Human Rights and Citizenship Commission) v. Brewer (reasons of the Registrar on Taxation dated August 25, 2009; S.C.C. Bulletin, 2010, p. 224). A non-exhaustive list of criteria set out in Cohen v. Kealy & Blaney (1985), 26 C.P.C. (2d) 211 (Ont. C.A.), cited with approval by this Court in Bhatnager v. Canada (Minister of Employment and Immigration), 1991 CanLII 41 (SCC), [1991] 3 S.C.R. 317, constitutes the framework within which quantum meruit should be gauged: see also, Orkin, Vol. 1, at pp. 3-54.1 to 3-54.2, as well as Brewer, Richard and Best.

[Emphasis was added in the original decision.]

. Bayford v. Boese

In Bayford v. Boese (Ont CA, 2021) the Court of Appeal considered when full indemnity costs, and opposed to substantial indemnity costs, should be awarded:

[4] We accept that a finding of fraud, or attempted fraud, may justify an award of costs on an elevated scale. Such a finding would be subsumed in the principle that costs on a substantial indemnity basis may be awarded "where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties": Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134; Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, 140 O.R. (3d) 81, at para. 43.

[5] On that point, however, we would reiterate the note of caution expressed in Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, 140 O.R. (3d) 77, at para. 8, that there is a significant and important distinction between full indemnity costs and substantial indemnity costs. This court added:

Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.

[6] This principle, though, will normally apply to the trial proceedings, not to the appeal proceedings. There was no conduct by either party on the appeal that would fall within the above principle. Any finding regarding the conduct of the respondent, and its proper effect on costs, is thus a matter for the trial judge to consider when she assesses the costs of the proceedings below.

. Fuhgeh v. Stewart

In Fuhgeh v. Stewart (Div Ct, 2021) the Divisional Court set out the standard for full indemnity costs:

[12] The Intervenors request full indemnity costs. In Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, the Court of Appeal for Ontario, at para. 8, cautioned:

There is a significant and important distinction between full indemnity costs and substantial indemnity costs. An award of costs on an elevated scale is justified in only very narrow circumstances – where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction: Davies v. Clarington (Municipality) [citations omitted] at para. 28. Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.

. T.A.W. v. J.C.L.

In T.A.W. v. J.C.L. (Ont CA, 2021) the Court of Appeal set out the standard for a substantial indemnity costs award:

[4] Costs on a substantial indemnity basis “are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134; Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26. Notably, the motion judge awarded costs on a substantial indemnity basis, because the appellant’s statement of claim was “offensive” and constituted a “misogynistic attack” on the respondent. We agree with that observation.

[5] The appellant argues that his appeal to this court did not include any discriminatory reasoning. He also submits that the mere fact of bringing an appeal does not constitute a continuation of the conduct below. We do not accept this position.

[6] Among other things, the appellant’s continuing conduct on appeal includes his reference to the respondent as engaging in a “repeated pattern of deceitful, manipulative and predatory behaviour in her relationships with three other men”. Moreover, as the Supreme Court of Canada indicated in Hamilton, at para. 26, “allegations of fraud and dishonesty are serious and potentially very damaging to those accused of deception.” Here, the appellant attempted to revitalize his claim of fraudulent misrepresentation against the respondent, one that constitutes a continuing unacceptable attack on her integrity and dignity.