The matter of the payment of a party’s legal fees at the end of a hard fought court battle can hold up or impact upon settlement. Indeed, oftentimes, the issue of the costs of litigation becomes a subject in and of itself to be argued over in court. Generally, the courts prefer not to adjudicate on costs, particularly when the fight about who should bear the legal fees and in what amount is disproportionate to the amount of costs at issue. The court will exercise its inherent jurisdiction regarding how such disputes will proceed. However, it is important to be aware of the nuances of costs proceedings and the applicable Ontario Rules of Civil Procedure which govern these cases.
Rule 57.04 provides that where a proceeding is settled on the basis that a party shall pay or recover costs and the amount of costs is not included in or determined by the settlement, the costs may be assessed under Rule 58 on the filing of a copy of the minutes of settlement in the office of the assessment officer. It is important for parties to recognize that in order for their facts to apply to this rule, there must be executed minutes of settlement and a clear agreement that there is an entitlement to costs. It follows that what remains in issue to be determined in such cases is the quantification of those costs. How much should be awarded lies at the heart of this kind of dispute. Note that whether the matter will be referred to an assessment officer is ultimately permissive, given the use of the word “may” in Rule 57.04.
In comparison, Rule 57.01 states that in exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, a variety of factors. These factors include, but are not limited to, the hourly rates applied, the complexity of a proceeding, the importance of the issues, and the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding. Accordingly, this rule more broadly applies to the question of the entitlement of costs (and if a party is so entitled, what scale should be used and what quantum should be awarded). Rule 57.01(3) goes on to say that when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs (O. Reg. 284/01, s. 15 (1)). Notably, Rule 57.04(3.1) then states that despite the aforementioned subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58.
Rule 58 is the rule which governs cost assessments. It states that where a rule or order provides that a party is entitled to the costs of all or part of a proceeding and the costs have not been fixed by the court, they shall be assessed in accordance with rules 58.02 to 58.12.
Practically, and generally speaking, it will likely take the parties longer to appear before an assessment officer to have a matter heard. An earlier court may be preferable and more efficient (at least this seems to be the current trend in Toronto; it may vary depending on jurisdiction). However, parties must ensure that the relief requested aligns with what is provided for in the Ontario.
In any case, parties should carefully consider the time and expense associated with arguing over costs (be it before the court or an assessment officer) before proceeding down that road.