Cost Awards (Small Claims)

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 The offer was not withdrawn and did not expire before the trial.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 The offer was not withdrawn and did not expire before the trial.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