Cost Awards (Small Claims)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-23
CLNP Page ID:	383
Page Categories:	[Ontario Small Claims Court], [Cost Awards]
Citation:	Cost Awards (Small Claims), CLNP 383, <https://rvt.link/70>, retrieved on 2024-11-23
Editor:	Sharvey
Last Updated:	2023/07/26

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O. Reg. 258/98: RULES OF THE SMALL CLAIMS COURT

19.01 (1) A successful party is entitled to have the party’s reasonable disbursements, including any costs of effecting service or preparing a plaintiff’s or defendant’s claim or a defence and expenses for travel, accommodation, photocopying and experts’ reports, paid by the unsuccessful party, unless the court orders otherwise. O. Reg. 78/06, s. 38 (1); O. Reg. 440/10, s. 3 (1).

(1.1) For greater certainty, subrule (1) includes costs associated with the electronic filing or issuance of documents under these rules. O. Reg. 44/14, s. 13.

(2) The clerk shall assess the disbursements in accordance with the regulations made under the Administration of Justice Act and in accordance with subrules (3) and (4); the assessment is subject to review by the court. O. Reg. 258/98, r. 19.01 (2); O. Reg. 440/10, s. 3 (2).

(3) The amount of disbursements assessed for effecting service shall not exceed $60 for each person served unless the court is of the opinion that there are special circumstances that justify assessing a greater amount. O. Reg. 258/98, r. 19.01 (3); O. Reg. 78/06, s. 38 (2); O. Reg. 440/10, s. 3 (3).

(4) The amount of disbursements assessed for preparing a plaintiff’s or defendant’s claim or a defence shall not exceed $100. O. Reg. 440/10, s. 3 (4).

Limit
19.02 Any power under this rule to award costs is subject to section 29 of the Courts of Justice Act, which limits the amount of costs that may be awarded. O. Reg. 78/06, s. 39.

19.03 Revoked: O. Reg. 440/10, s. 4.

Representation Fee
19.04 If a successful party is represented by a lawyer, student-at-law or paralegal, the court may award the party a reasonable representation fee at trial or at an assessment hearing. O. Reg. 440/10, s. 5; O. Reg. 230/13, s. 15.

Compensation for Inconvenience and Expense
19.05 The court may order an unsuccessful party to pay to a successful party who is self-represented an amount not exceeding $500 as compensation for inconvenience and expense. O. Reg. 440/10, s. 5.

Penalty
19.06 If the court is satisfied that a party has unduly complicated or prolonged an action or has otherwise acted unreasonably, the court may order the party to pay an amount as compensation to another party. O. Reg. 78/06, s. 39.

Courts of Justice Act, R.S.O. 1990, c. C.43

29 An award of costs in the Small Claims Court, other than disbursements, shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding. R.S.O. 1990, c. C.43, s. 29; 2006, c. 21, Sched. C, s. 105 (2).

30 (1) The Small Claims Court may, in accordance with the rules of court, order a debtor or other person who is required to and fails to attend an examination respecting a default by the debtor under an order of the court for the payment or recovery of money, to attend before the court for a contempt hearing. 2009, c. 33, Sched. 2, s. 20 (8).

(2) The Small Claims Court may find a person to be in contempt of court at a hearing referred to in subsection (1), if the court is satisfied that,

(a) the person was required to attend the examination;

(b) the person was served, in accordance with the rules of court, with a notice to attend the examination;

(c) the person failed to attend the examination; and

(d) the failure to attend was wilful. 2009, c. 33, Sched. 2, s. 20 (8).

(3) For greater certainty, the power of the Small Claims Court to order, hear and determine a contempt hearing under this section is conferred on and may be exercised by the persons referred to in clauses 24 (2) (a) and (b). 2009, c. 33, Sched. 2, s. 20 (8).

(4) If a contempt hearing under subsection (1) is heard and determined by a person referred to in clause 24 (2) (a) or (b), the court may make such orders respecting the person in contempt as are specified by the rules of court, but the court shall not make an order that the person be imprisoned for a period of more than five days. 2009, c. 33, Sched. 2, s. 20 (8).

(5) Nothing in this section affects the authority of the Small Claims Court to order, hear and determine contempt hearings where it is otherwise authorized by law. 2009, c. 33, Sched. 2, s. 20 (8).

Ashton Hot Tubs And Fitness Inc. v RoMar Inc., 2007 CanLII 89314 (ON SCSM)

6. There is some controversy still about the interplay of s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and Rule 14.07 of the Small Claims Court Rules. A number of reported cases from this court consider failure to accept a settlement offer which is then exceeded at trial to be an example of “unreasonable behaviour in the proceeding” permitting the costs to exceed 15% under s. 29.[1] The effect of such reasoning is almost always the doubling of the costs otherwise determined. In my view, this line of reasoning does not fully account for the interaction between the statutory provision and the Rules.

7. Section 29 of the Courts of Justice Act:

29 An award of costs in the Small Claims Court, other than disbursements, shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding.

8. Rule 14.07 of the Small Claims Court Rules:

14.07 (1) When a plaintiff makes an offer to settle that is not accepted by the defendant, the court may award the plaintiff an amount not exceeding twice the costs of the action, if the following conditions are met:

1. The plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer.

2. The offer was made at least seven days before the trial.

3. The offer was not withdrawn and did not expire before the trial.

(2) When a defendant makes an offer to settle that is not accepted by the plaintiff, the court may award the defendant an amount not exceeding twice the costs awardable to a successful party, from the date the offer was served, if the following conditions are met:

1. The plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer.

2. The offer was made at least seven days before the trial.

3. The offer was not withdrawn and did not expire before the trial.

23. That exceeds the 15% limit imposed by s. 29 of the Courts of Justice Act if only the amount claimed in the main acton is considered. But there is also a Defendant’s Claim for $25,000 involved here. While the plaintiffs had very little interest in the outcome of that Defendant’s Claim, they were involved in it: the plaintiff George Coicici was cross-examined by counsel for Romar, and the witness called by Ronar further implicated Ashton Pools in a breach of contract. As well, as in every such case, the plaintiffs had to sit through the evidence relevant to the Defendant’s Claim. I find that the amount of the claim is the total of the two Claims, $50,000.00. This cost award does not exceed 15% of that amount.

26. Counsel for Romar is a lawyer with two years experience who only became involved in the action near to the trial date, but who then had to prepare for the trial of both Claims. I assess a reasonable representation fee in the circumstances of this case of $1000.00 per day. Applying Rule 14.07(2), the conditions of which are once again met, I double that to $2000.00 per day, or $4000.00 for the two days. Under Rule 19.06 I also order compensation of an additional $1000.00. This amount does not exceed the 15% limit in s. 29 considering the total amount claimed in the two Claims but if it did I would have found that, as in the main Claim, it is necessary in the interests of justice to penalize Ashton Pools for unreasonable behaviour in the proceeding and I would have allowed the entire $5000.00. No disbursements are claimed by Romar, but the court file shows $40.00 paid to file the Defence to Defendant’s Claim and I’ll allow that.

Parkway Place Holdings Ltd v 965846 Ontario Limited (Copy Connection), 2014 CanLII 72878 (ON SCSM)

My jurisdiction under the Rules to order costs and disbursements of this proceeding outside of a contractual damage or debt claim is specifically set out in Rule 19 of the Rules. In this regard, I would refer to Oxford v. 1231766 Ontario Inc. [2011] O.J. No. 2008 (Small Claims Court) wherein the Court stated: “The Rules of the Small Claims Court fully provide for the determination of costs, subject to the exception stipulated by section 29 of the Courts of Justice Act regarding unreasonable behaviour in a proceeding.” Insofar as costs are concerned, under Rule 19.04 I may order that a successful party who is represented by counsel be awarded a “reasonable representation fee” at trial. Under Rule 19.01, I also have discretion to award a successful party its reasonable disbursements, subject to the limitations of that Rule.

Under the Rules, any power I have to award costs is subject to section 29 of the Courts of Justice Act, which limits the amount of costs that may be awarded (other than disbursements) to 15% of the amount claimed unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding. In the circumstances of this case, I find that there was no unreasonable behaviour that would allow me to exceed this 15% limit. While the defendant did not admit the portion of the claim for the 2012 year end shortfall and the $120.58 rent shortfall until trial, I find that of itself does not constitute unreasonable behaviour in this proceeding sufficient for me to exercise my discretion to penalize the defendant under section 29 of the Courts of Justice Act.

Barrie Trim v. Heath et al, 2010 ONSC 2598 (CanLII)

[2] The primary costs sources in the Small Claims Court Rules and Courts of Justice Act are R.19 and s.29. The powers to award costs are specifically limited by s.29 of the Courts of Justice Act, which limits the amount of costs that can be awarded (excluding disbursements) to 15% of the amount claimed or the value of property sought to be recovered, adding that the limit applies “unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding”.

[3] The latter clause does not apply; the appellants concede that there is no suggestion that there was unreasonable behaviour in this proceeding by the respondent Barrie Trim & Mouldings Inc. (“BTM”).

[4] The amount claimed in the action by BTM was $10,000 and accordingly on a narrow interpretation of s.29 the maximum amount of recoverable costs is $1,500. However, in November 2007 the appellants made an offer to settle the action against BTM in terms of a dismissal of the action without costs. This offer met the requirements of Rule 14.02(2) and 14.07(2), having been made well in advance of seven days prior to the commencement of trial, and so potentially triggered the cost consequences set out in Rule 14.07. Rule 14.07(2) permits the court to award an amount not exceeding twice the costs awardable to a successful party from the date the offer was served. As submitted by counsel for the appellants, the issue in fixing costs in the face of such an offer is whether the “double costs” rule applies to increase the maximum to double the s.29 limit or whether the “double costs” total must remain less than the s.29 limit.

[5] BTM relies on the case of Bird v. Ireland 2005 CarswellOnt 6945 (Div.Ct.) as well as Transport Training Centres of Canada v. Wilson 2010 CarswellOnt 2155 (Div. Ct.) to argue that, absent a finding of unreasonable behaviour, costs should not exceed 15% despite the offer. Bird v. Ireland was an appeal from a Small Claims Court trial which included an appeal of the costs award. The trial judge had taken 15% of the sum recovered, which amounted to $994.28, had doubled the amount to $1,988.56 after finding that Rule 14 applied, and finally rounded the cost award up to $2,000.00. On appeal to this court Justice Clark stated that if the circumstances entitling the party to have their costs doubled under Rule 14 applied, then the deputy judge was permitted to award a maximum of $600 (two times the maximum daily representation costs award that applied under the Rules then in effect). He went on to say that the power to award costs conferred by Rule 19 is limited by s.29, as in his view s.29 was intended by the legislature to limit the power of the Small Claims Court to award costs, not to increase it. Justice Clark indicated that the purpose of s.29, it seemed to him, was to keep costs awards in proportion to the amounts recovered. Justice Clark went on to say that while the trial judge was correct to double the initial costs amount, he erred by applying R. 14.07 to the sum of $994.28 and should have applied it to the sum of $300. It is important to note that the decision revolved considerably around the wording of Rule 19.04, which at that time provided that the maximum costs award to counsel was $300.00 per day. R.19 has since changed such that the $300 limit referred to in Bird has now been replaced with “a reasonable representation fee”. As such, Bird can be distinguished as the question remains open as to whether the removal of the maximum costs award per day would alter Justice Clark’s reasoning.

[6] As such, although Transport Training Centres of Canada v. Wilson adopts the reasoning in Bird, it fails to grapple with the fact that Bird was decided before the amendment. Further, there was no offer to settle made by the successful party in Transport and so no discussion of the apparent contradiction between s.29 and Rule 14.

[7] It is more helpful to look to post-amendment cases in which the courts address the interplay between r.14.07(1) and s.29: Beatty v. Reitzel Insulation Co., [2008] O.J. No. 953; Royal Green Landscaping & Plowing v. Lonero, [2007] O.J. No. 5037. Although these are both decisions of the Small Claims Court and not binding, their logic is persuasive. In Beatty v. Reitzel Winny J. began by expressing concern that if the 15% “cap” could not be doubled under Rule 14.07 without offending s.29, then the effectiveness of the cost consequences aspect of Rule 14 is undermined and in many cases would be drained of any real meaning. Judge Winny stated that in his view, the costs consequences of a party’s failure to accept a reasonable offer should be real consequences if they are to encourage settlements in a meaningful way. Further, to interpret s.29 as if it were to freeze the operation of R. 14.07 is undesirable and unwarranted based on the legislative context and the need for a reasonable and just rule dealing with the cost consequences of offers to settle in the Small Claims Court. It would tend to undermine the court’s discretion to impose cost consequences where parties inflate or exaggerate their claims and would encourage parties to claim unreasonable amounts by allowing them to do so without fear of any real cost consequences.

[8] I agree with this reasoning and so conclude that s.29 was not intended to cap the costs at 15% in the circumstances of an offer that gives rise to the cost consequences outlined in R.14.07. This seems to give meaning to the need to encourage the acceptance of reasonable settlement offers, while maintaining proportionality with the amounts in dispute and allowing the judge to consider what is fair and reasonable in all of the circumstances.

[9] The appellants seek their costs in the sum of $3,000 plus disbursements of $411.30 for the two day trial. Were it not for their offer, the maximum that I could award for a reasonable counsel fee would be $1,500. The appellants’ offer was more favourable than the outcome; BTM’s action against the appellants was dismissed on appeal but BTM would have been saved from paying costs had the offer been accepted. The appellants’ lawyer has 30 years experience and an award of $750 for each trial day is not at all unreasonable. I am mindful that if the representation fee is too low, successful parties at trial could ultimately be unsuccessful monetarily by the time that they pay their lawyers or agents. Accordingly, I award the appellants a counsel fee of $1,500, which I will double due to the appellants’ offer to settle. The appellants will therefore have their costs of the Small Claims Court action fixed in the sum of $3,411.30 inclusive of disbursements and GST. Order to go accordingly.