Court of Appeal Decision of the Week

Appealing Costs Awards: When is Leave Required?

Case: Mullin v. Lagace, 2015 ONCA 757 (CanLII) 

Keywords: s.133 of the Courts of Justice Act; Costs Awards; Leave to Appeal; Ontario Court of Appeal

Synopsis:

The appellant, Brenda Mullin, is injured in a car accident – she’s a passenger in a car driven by Randy Lagace. Ms. Mullin adds her own insurance company, Allstate (co-respondent on appeal) as defendant following her discovery that Mr. Lagace is uninsured.

The action settles before trial for $190,000.00 plus costs to be agreed upon or assessed.

At the assessment, Ms. Mullin seeks $528,522.25 in costs and an additional $20,000.00 for disbursements. The assessment officer issues a Certificate of Assessment of Costs in the amount of $231,137.93.

Allstate appeals to the Superior Court of Justice under s. 17(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43 and under R. 62.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194. The costs award is substantially reduced to $102,000.00 all-inclusive.

Ms. Mullins seeks to appeal this decision to the Court of Appeal.

Allstate moves to quash the appeal, arguing that, since the appeal is solely about costs, leave to appeal must be sought pursuant to s. 133(b) of the Courts of Justice Act.

The Court of Appeal is persuaded by the moving party’s argument with respect to s. 133(b) of the Courts of Justice Act. The motion to quash the appeal is therefore allowed (without prejudice to the appellant’s right to seek leave in writing under Rule 61.03.1(1) of the Rules of Civil Procedure).

Importance:

The appeal route for costs appeals is now set out expressly at s. 133(b) of the Courts of Justice Act. The Court of Appeal was unequivocal and clear at paragraph 8 in its judgment:

  • when appeals come to the Court of Appeal, if the appeal relates only to costs, leave is required.
  • when the appeal is both substantive and as to costs, leave is required for the costs component.
  • had this case proceeded to trial, then if the trial judge fixed costs, an appeal of the trial judge’s costs decision is subject to the leave requirement at s. 133 of the Courts of Justice Act.
  1. 133(b) of the Courts of Justice Act provides as follows:

“No appeal lies without leave of the court to which the appeal is to be taken…(b) where the appeal is only as to costs that are in the discretion of the court that made the order for costs”[emphasis added]

The Court of Appeal prefers “[a] simple and consistent approach…” using s. 133(b) – the Court found the old authority of Rickwood et al. v. The Town of Alymer, [1955] O.R. 470 (C.A.), 1955 CarswellOnt 60 (cited by Allstate) is superseded by s. 133 of the Courts of Justice Act.

Allstate argued the Rickwood decision stood for the proposition that any appeal in this case would be to the Divisional Court with leave under s. 19 of the Courts of Justice Act. The reason: as per the Court in Rickwood, the decision below was interlocutory – an order “…made in working out the judgment.”

In the present case, the Court of Appeal found the decision below to be a final order relating to costs. Furthermore, leave to appeal lies to the Court of Appeal, “…since the amount in issue exceeds the threshold of $50,000.00 referred to in s. 19(1.2)(a) of the Courts of Justice Act”.

A cursory review of caselaw relating to s.133 of the Courts of Justice Act suggests leave to appeal a costs order will be granted sparingly – only where strong grounds exist to show the lower court erred (see for example McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 62 C.P.C. (6th) 196, 2008 CarswellOnt 7384, 95 O.R. (3d) 365, 2008 ONCA 597, 298 D.L.R. (4th) 86, 250 O.A.C. 252, [2008] O.J. No. 5040 (C.A.); additional reasons at 2009 CarswellOnt 4443, 2009 ONCA 598, 76 C.C.L.I. (4th) 56, 75 C.P.C. (6th) 1 (C.A.)).

Counsel for the Moving Party: Todd McCarthy and Sophia Chaudri (Flaherty McCarthy, Toronto)

Counsel for the Respondent: Patrick Wymes

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Posted: Tuesday, November 10, 2015