Major costs award under simplified rules

The Ontario Superior Court has delivered a rare decision that places a limit on when and how the simplified rules of civil procedure may apply in defamation cases where it awards full indemnity costs.

Writing in Moberg v. Patafie, Justice Toscano Roccamo found a full indemnity cost award in a defamation case where a claimant isn’t seeking a monetary award could be made under an exception in the simplified rules where there’s evidence that a party in the case behaved unreasonably or prolonged the matter to increase the costs of the action.

In Moberg, Patafie’s Moving Supplies Inc. owner Peter Patafie appealed an assessment decision by a regional assessment officer that awarded $72,500 in costs under the simplified rules and $20,400 in costs for the assessment itself against him.

According to the decision, Patafie had allegedly defamed Kevin Moberg by making several negative remarks about him.

Patafie argued the assessment officer’s cost award against him violated the principal of proportionality under the simplified rules and exceeded what the losing party should reasonably expect to pay.

But Roccamo found the assessment officer didn’t err in her decision, writing instead that the simplified rules allowed the principle of proportionality to be flexible in cases where there was considerable future damage to a plaintiff’s earning potential.

Roccamo also found a “rigid application” of what the losing party should reasonably expect to pay in costs under the simplified rules “must be avoided” and noted the assessment officer didn’t err in basing her costs award on a less stringent approach.

“In my opinion, Ms. Bender’s decision does not reflect any breach of principle as related to the application of the factors listed in Rule 58.06 (1),” wrote Roccamo in Moberg.

“In both of her decisions, she considered the conduct of the defendant which lengthened the proceedings, including the lack of co-operation received from the defendant’s insurer and its counsel in response to the plaintiff’s attempts to simplify the action and contain costs.”

The decision is welcome news and marks the largest cost award in Ontario under the simplified rules in the province’s history, one labour and employment lawyer suggests.

Alan Riddell of Soloway Wright LLP, who represented Moberg in the case, says the court’s decision highlights the importance that exceptions in the case law play under the rule in defamation cases where the court awards full indemnity costs. It also marks an unusual move by the court in awarding those costs.

“The case is significant in showing that it is possible to get very significant costs awarded under the rules in certain conditions,” says Riddell. “In particular, it shows that you can get costs that exceed the monetary jurisdiction of simplified rules, particularly under certain exceptions.

This can be particularly true where there is a finding that the principle purpose was non-monetary. This is also true in situations where there is evidence that the defence behaved in a way that unreasonably prolonged the case or increased the costs of the simplified rules action.”

Riddell adds that those exceptions play an important role in protecting both the plaintiff and the defendant in such actions under the simplified rules.

“The exceptions prevent a less wealthy client from being abused under the Trafalgar rule when they are up against a wealthier client in court,” says Riddell. “It also prevents the wealthier client from stopping the less wealthy client from gaining justice under the simplified rules.”

Riddell notes that although the court rarely awards full indemnity costs under such exceptions, doing so can be important in defamation cases.

“Exceptions of this nature are relatively rare. In most cases, the principal objective is to have a monetary award, so this decision was particularly unique.”

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