How difficult is it to obtain leave to appeal a costs order? Two recent decisions from the Ontario Divisional Court show that it is very difficult indeed.

Taken together, the recent decisions in Men at Work General Contractors Ltd. v. Macdonald and Van v. Palombi show that a costs order need not be supported by reference to the R. 57.01 criteria, costs outlines prepared by counsel, or mathematical equations.  As long as the order is proportionate and reasonable, leave to appeal will be denied.

The decision of Lederer J., in Men at Work, highlights the difficulties inherent in any attempt to appeal a cost order.  On the one hand, cost orders are a matter of discretion [citations omitted]:

[14]           Costs are, generally, considered to be a matter of discretion. Appeals of cost orders are unusual:

Leave to appeal cost orders will be granted only in the most obvious cases and very sparingly.

[15]           For leave to be granted, the judge must be shown to have acted on a wrong principle, to have misapprehended significant facts or to have made the determination in a non-judicial manner:

In order to succeed on an application for leave to appeal, the Court must be persuaded that the Trial Judge exercised his discretion on wrong principles.  The Applicant must show that there are strong grounds upon which the appellate court could find that the judge erred in the exercise of her/his discretion.

[16]           A test of reasonableness applies:

In recent cases, the Ontario Court of Appeal has emphasized that there is an ‘overriding principle of reasonableness’ that must govern the judicial exercise of fixing costs.

On the other hand, while costs decisions are guided by R. 57.01 of the Rules of Civil Procedure, guidance is all that the rule provides. The criteria mentioned in R. 57.01, such as the amount claimed and the amount recovered in the proceeding, the apportionment of liability, and the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding, do not need to be considered by the original decision maker.

In Lederer J.’s view, the most important consideration in any award of costs is proportionality, “that is, [the award should] demonstrate some relationship to the complexity and value of the issues involved.” A proportionate costs award is not necessarily a reflection of a “mathematical exercise”, nor is it a tally of hours worked on a given file.

On the same day as  Lederer J’s decision in Men at Work, a decision by McKelvey J. in Van v. Palombi, was rendered.  Van v. Palombi involved a motion for leave to appeal a costs decision relating to a long motion argued on a family matter. As in Men at Work, leave was denied.

The case starts the same way, with a restatement of the settled law on deference to costs decisions. McKelvey J. then went on to deal with the preliminary question whether leave to appeal a costs order of a motion judge is required.  In holding that leave was required in this case, he noted that,

[11] … The issue before the motion judge was the entitlement and quantum of any cost award as well as a request by the appellant for additional time to pay this award.  In my view, the issues before the motion judge on costs did not extend beyond the usual terms associated with an award of costs.  Thus, the requirement for leave applies, and the usual criteria regarding leave to appeal a costs order applies to the facts of this case.

Relying on common law, he left the door open to cost order appeals without leave in certain circumstances.  One example is where the cost order eliminates the ability of the defendant to set off the debt against a larger judgment owed to it.

Where leave is required, it will be denied where a motion judge appears to have reviewed relevant factors:

[22] …the issue is not whether the appellate court would have exercised its discretion differently.  Unless the motion judge made an error in principle, or his decision was clearly wrong, his decision must be respected.