Executive Summary: Key Legal and Evidentiary Issues

• Appeal success determined by “who got what they sought”; defendant deemed successful and presumptively entitled to partial indemnity costs

• Rule 57.01 factors applied: results, amount claimed ($35,000), and what an unsuccessful party could reasonably be expected to pay

• Fees and hours found reasonable: 22.9 hours total; senior counsel at $247/hr, junior at $110.50/hr (partial indemnity rates)

• Two-counsel staffing acceptable; however, a second counsel’s hearing attendance fee was disallowed and effectively reallocated to preparing cost submissions

• Impecuniosity claim rejected due to insufficient evidence and deterrence/indemnification objectives; insurance status of the defendant irrelevant to costs entitlement

• Costs fixed at $5,764.38 (inclusive) payable within 30 days; no costs awarded for the motion below to set aside noting in default

Facts
The underlying dispute is a slip-and-fall claim seeking $35,000 (the top end of Small Claims Court jurisdiction), plus costs. The plaintiff (respondent) was self-represented; the defendant (appellant) was represented by counsel.

Procedural history and positions
On January 6, 2025, a Deputy Judge dismissed the defendant’s motion to set aside a noting in default and granted judgment to the plaintiff. The defendant appealed. In earlier reasons (ONSC 3689), the appeal was allowed and the noting in default was set aside, sending the case to be decided on its merits. The judge then had to fix costs for the appeal and the proceeding before the Deputy Judge.
For costs, the defendant sought $5,764.38 on a partial indemnity basis for the appeal, plus $500 for the motion below, arguing the rates, the amount in issue, the importance of the issues, and the respondent’s conduct supported the request. The plaintiff argued for no costs, or alternatively $2,000 payable only if the defendants ultimately won the case, asserting limited success on multiple appeal grounds, disproportionate time for a simple matter, impecuniosity (social assistance), and alleged evasion of service and rule breaches by the defendant.

Issues on costs
The court considered the Rule 57.01 factors: (1) the result; (2) the amount claimed; and (3) what the unsuccessful party could reasonably be expected to pay. It also addressed reasonableness of rates and hours, the propriety of using two lawyers, the impecuniosity claim, and whether costs should be payable forthwith or “in the cause”.

Decision and reasoning
Success: The court held the defendant was the successful party because he obtained what he asked for—an opportunity to defend the action—so he was presumptively entitled to partial indemnity costs.
Amount in issue and forum: With a $35,000 claim at the Small Claims Court limit, it was reasonable to incur costs to defend and to appeal a dispositive procedural order. Although the underlying action is in Small Claims Court, the appeal proceeded in the Divisional Court, and the amounts sought were within the normal range for a simple Divisional Court appeal or leave application.
Rates and hours: The total 22.9 hours claimed—covering record review, preparing the appeal book/compendium, research, factum drafting, and the hearing—were reasonable. Senior counsel (call 2003) billed $247/hr and junior counsel (called the prior year) billed $110.50/hr on partial indemnity; both rates were “entirely reasonable”. Two-counsel staffing was appropriate overall, but the judge disallowed a second counsel fee for hearing attendance and, balancing fairness, effectively added equivalent time to account for preparing the costs submissions.
Complexity: The appeal was made more complex by the interplay between the appealed decision and an earlier decision by Anderson D.J. in the same case, as well as by the number and nature of the arguments advanced by the plaintiff.
Impecuniosity: The plaintiff’s claim of impecuniosity (Ontario Works) did not carry the day. The court had discretion to consider inability to pay but found the evidence insufficient (no detail on financial circumstances or duration of benefits). It also emphasized the objectives of costs—indemnification and deterrence—and noted the plaintiff’s hard-line stance and complicating arguments (including self-help rent withholding before any court order) weighed against denying costs. The fact that the defendant was insured (TD Insurance) did not alter costs entitlement.
Timing of payment: The court declined to make costs “payable in the cause,” distinguishing BeneFACT v. Nanotek. Unlike a routine motion to set aside default, this appeal was necessary and vigorously opposed; costs should be payable in the usual course.

Disposition
The court ordered the plaintiff to pay the defendant $5,764.38 inclusive of HST and disbursements for the appeal within 30 days of August 11, 2025. No costs were awarded for the motion below to set aside the noting in default.