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Divisional Court provides guidance on leave costs

‘Normal expectation’ for costs will be $5,000
|Written By Alex Robinson
Divisional Court provides guidance on leave costs
Robert Centa says a recent Divisional Court decision is helpful to lawyers as it will enable them to provide good advice to clients on what likely recovery would be.

The Divisional Court has shed some light on how costs will be awarded on motions for leave to appeal under its new process.

The court implemented a number of changes at the beginning of July, including that it no longer requires judges to provide reasons whenever leave to appeal is granted. This has led to some discussion among lawyers as to how the court was going to deal with costs on motions for leave to appeal. 

In a costs endorsement concerning a leave motion in 2265535 Ontario Inc. v. Vijayant Sood, the Divisional Court provided some timely guidance to lawyers as to how costs will be granted under the new process. The court found going forward the “normal expectation” is that costs arising from motions for leave to appeal will be around $5,000. 

“By providing that guidance, we do not mean to suggest that there will never be instances where the costs of motion for leave to appeal will be larger or smaller than that amount,” said the endorsement on behalf of justices Edward Then, Harriet Sachs and Ian Nordheimer.

“The particular circumstances of each motion will always be considered in arriving at the appropriate amount for costs.” 

In the case, the moving parties sought leave to appeal from a decision in May that awarded $76,000 in substantial indemnity costs against them.

The moving parties had sought $13,474 in costs if they were successful and the responding parties sought costs of $14,664.

The Divisional Court dismissed the motion for leave to appeal, but it took the opportunity to provide guidance to the profession on the issue. 

The court found that there may be particularly complicated issues in some motions that would warrant a higher amount be awarded but that the “normal costs award” will be $5,000.

Lawyers say the decision provides a helpful and welcome guidance around what the starting point will be for normal awards in such motions. 

“I think that’s helpful for lawyers to be able to give good advice to their clients about what the likely recovery will be in cases that they do decide to seek a motion for leave to appeal,” says Robert Centa, the managing partner with Paliare Roland Rosenberg Rothstein LLP, who was not involved in the matter.

“Certainty around costs is helpful in letting clients making rational decisions about how to proceed with a motion for leave to appeal and I think that is in clients’ interests.”

Centa says there was not a clear standard for costs on such motions beforehand, but this would have been “in the ball park” for what was expected. 

Lawyers Douglas Best and Lisa Filgiano of Miller Thomson LLP, who represented the moving parties, said the endorsement provides a clear direction to the profession as to what the expectation of costs will be on such motions. 

“It will only be in exceptional circumstances, perhaps in particularly novel or complex cases, that the Court will deviate from the normal award of costs,” they said in an email. 

The court also took the opportunity to say that motions for leave to appeal that are made lengthier than they need to be for such a motion will not qualify for a larger amount.

Lawyers say this part of the decision serves as a reminder that lawyers need to focus on the issues on the motion rather than the merits of the appeal itself. There is always a great temptation for lawyers to dive right into the merits of the appeal hoping that if you can persuade the court there is an appealable issue if it grants leave, says Centa. 

“The court strongly re­emphasized its direction to counsel that on a motion for leave to appeal, you really need to focus on the test for leave and not simply argue the merits of the appeal as if leave had already been granted,” he says. 

“It’s a very important point to be remembered.”

In the motion for leave, the moving parties had submitted six volumes of a motion record even though the issue on the motion was a “narrow one.” The issue was whether the judge had erred in awarding costs on the substantial indemnity scale, but the court found that more time was spent on the merits of the appeal and the motion judge’s findings of fact than the test for leave. 

“None of that considerable effort was necessary for the leave motion to be heard and determined and none of it justifies an award of costs at the levels suggested by the parties,” the endorsement said.

Jonathan Kulathungam, the lawyer who represented the responding parties on the motion for leave, said in an emailed statement that the endorsement promotes focused and cost-effective advocacy in furtherance of an efficient legal system.

“It also sends a clear message to the bar at large: The court will not reward counsel for complicating matters merely for the sake of complicating matters,” said Kulathungam, a partner at Teplitsky Colson LLP. 

Lawyers say the Divisional Court’s change not to require reasons on such motions will mean there will be fewer explanations of how a particular case met the test for leave to appeal under the rules. 

This could result in fewer cases that lawyers can look to help determine how to frame an argument on such motions and fewer examples of what is going to meet the test for leave to appeal, lawyers say. 

“Not having any reasons that provide you with some guidance and assistance may hinder in the development of the law,” says Christopher Wirth, a partner with Keel Cottrelle LLP, who was not involved in the case.

On the other hand, Wirth says that while it is interesting to know why courts decide as they do, if a party is declined leave to appeal, it is difficult to go anywhere from that decision. So whether you receive reasons or not, it likely will have little impact on how you proceed, he says.  

And while the court will not be required to provide reasons, it will still be able to do so when it feels it necessary to provide direction to the profession or to address an unusual issue.

“I’d be hopeful that despite the court’s ability to decide these without reasons, whether it’s an issue [or] a practice point that would be helpful to the profession, which forms part of the reason that the court granted or refused leave, that the court would still write some reasons addressing that,” says Wirth. 

The Court of Appeal and Supreme Court of Canada do not provide reasons for decisions on motions for leave to appeal either. Another change that came into effect in July is that three-member panels now hear such motions in Divisional Court rather than just a single judge. Wirth says it is too early to know how the changes will play out, but this will likely be generally helpful. 

“If you have three judges rather than one considering the issue, that might bring a broader perspective as to whether or not it’s a matter the Divisional Court should hear an appeal on,” he says.

This story has been corrected to reflect that Douglas Best and Lisa Filgiano of Miller Thomson LLP represented the moving parties, and Jonathan Kulathungam represented the responding parties on the motion for leave. The story was updated at 11:30 a.m. on August 23.

 

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