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Costs - Substantial Indemnity

. 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.


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