C.A. Reduces Damages to $1,000 but Upholds Trial Costs of $115,000

An odd decision from the Court of Appeal today in Aristorenas v. Comcare Health Services. At trial, the plaintiff was awarded damages of $55,000 and costs were agreed upon at $115,000. The parties also agreed that the costs did not have to be paid if the defendants were successful in their appeal.

On appeal, the damages were reduced to $1,000. The defendants asked the Court of Appeal to rule that they were not bound by their costs agreement with the plaintiff, having achieved substantial success on appeal. They asked that the Court order that there be no costs of the trial.

But the Court of Appeal refused to interfere with the parties’ agreement on costs. It explained its decision in these words:

The respondent was successful at trial and, in our view, it was reasonable for her to have brought the claim under the ordinary procedure. I would not, therefore, apply the costs consequences set out in rules 57.05(1) and 76.13(3). The appeal did not reverse the finding of negligence and an award of damages, although modest, has been upheld in this court. We consider it just and reasonable in the circumstances to award the respondent costs of the trial and see no basis for varying the amount that the parties had considered fair. While it is true that the appellants had substantial success on appeal, that success did not absolve the appellants of liability. The appellants were awarded costs of the appeal but should nonetheless be liable to the respondent for costs of the trial.

This is the second recent case that has come to our attention, in which a court has refused to enforce the costs consequences of Rule 76.13 (costs denied where judgment is less than $50,000). The other case was Dinsmore v. Southwood Lakes, but there, at least, the damages award was $29,700. The damages in Aristorenas are not only below the simplified procedure threshold of $50,000, but well within the $10,000 jurisdiction of Small Claims Court.

(These are just the most recent cases that we’ve seen. There are numerous other rulings in which courts have refused to enforce the costs sanctions of Rule 76: Li v. Rizvi, Roy v. Regent Autobody, 1379691 Ontario Ltd. v. Appugliesi, Bravo v. Etobicoke Ironworks Limited, Epifano v. Hamilton, Barrick Gold v. Lopehandia, IT/NET Ottawa Inc. v. Berthiaume and Wicken v. Harssar.)

Rule 76.13(3) does give the court a discretion not to enforce the costs consequences of a judgment of less than $50,000, where it “is satisfied that it was reasonable for the plaintiff to have commenced the action under the ordinary procedure or under Rule 77 [case management], as the case may be”.

It is hard to divine just what guiding principles the courts are applying in determining that it was “reasonable”, in a particular case, for a plaintiff to sue in ordinary procedure. In both today’s decision and in Dinsmore, no explanation for the ruling was given. At a time when consideration is being given to increasing the simplified rule jurisdiction in Toronto from $50,000 to $100,000, it seems that the Rule is being rendered somewhat toothless. 

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