Executive Summary: Key Legal and Evidentiary Issues

• Reasonableness of commencing and continuing the action under the ordinary procedure instead of Rule 76 Simplified Procedure, given that the ultimate award was under $200,000.00.
• Interpretation and mandatory nature of Rule 76.13, and whether its costs sanctions applied or could be avoided on the facts of the plaintiff’s damages claims.
• Application of Rule 57.01(1) and section 131(1) of the Courts of Justice Act in fixing costs, including the principle of indemnity and proportionality between costs claimed and the result achieved.
• Significance of the plaintiff’s success on compensatory damages, partial success on general damages, and failure on punitive damages in assessing the appropriate scale and quantum of costs.
• Impact of the parties’ written offers to settle, and the plaintiff’s post-trial result exceeding most offers, on entitlement to costs on a partial indemnity basis.
• Assessment of counsel’s rates, time spent, and overall reasonableness of a substantial cost claim for a four-day trial with disputed liability and damages.

Background and procedural history

This proceeding arose from a civil action in which the plaintiff, Dale Robert Austin, sued the defendant, Lynn Melanie MacFarlane, for monetary damages. The claim was advanced under the ordinary procedure of the Ontario Rules of Civil Procedure rather than under Rule 76 Simplified Procedure. The plaintiff’s pleadings sought three types of damages: compensatory damages of $119,595.75, general (non-pecuniary) damages of $100,000.00, and punitive damages of $100,000.00. These amounts placed the total claimed figure well above the $200,000.00 ceiling that triggers the strict costs consequences under Rule 76.13 if a proceeding that should have been under simplified procedure is instead pursued under the ordinary stream. Trial proceeded in the Superior Court of Justice before Bellows J. Liability and damages were both in issue. The trial was set for five days but concluded in four, with each party presenting their evidence and legal position without unnecessary delay or obvious inefficiencies. Following the trial decision on January 23, 2026 (2026 ONSC 463), the court invited and received written submissions solely on the question of costs, culminating in the March 10, 2026 costs decision in Austin v. MacFarlane, 2026 ONSC 1466.

Damages claim and trial outcome

At trial, the plaintiff pursued recovery of the claimed compensatory loss of $119,595.75, general damages of $100,000.00 for non-pecuniary harm, and punitive damages of $100,000.00. In the final damages disposition, the plaintiff was entirely successful on compensatory damages and recovered the full $119,595.75. The plaintiff also achieved partial success on the general damages claim: while $100,000.00 was sought, the court ultimately awarded $10,000.00 in general damages. The punitive damages claim did not succeed. Nonetheless, the court expressly noted that neither the general damages claim nor the punitive damages claim was vexatious or unreasonable. The judge emphasized that the punitive damages claim was not dismissed summarily or as frivolous; it was considered on its merits, and the court acknowledged that it was open, on the evidence, to award a higher quantum of damages than was ultimately given. In total, the plaintiff obtained a monetary award of $129,595.75 in damages ($119,595.75 compensatory plus $10,000.00 general), together with pre- and post-judgment interest under the Courts of Justice Act, though the costs decision does not quantify the interest component.

Dispute over the appropriate procedure and the Rule 76.13 argument

The central issue raised by the defendant in the costs phase was whether the action should have been brought and maintained under the Rule 76 Simplified Procedure rather than the ordinary procedure. Because the total damages ultimately awarded were below $200,000.00, the defendant argued that Rule 76.13 barred any costs recovery by the plaintiff, regardless of the outcome on the merits. Rule 76.13 provides that, once certain monetary conditions are met, a plaintiff who obtains a judgment of $200,000.00 or less (excluding interest and costs) “shall not recover any costs” unless the court is satisfied it was reasonable to have commenced and continued the action under the ordinary procedure. The defendant submitted that this mandatory language should supersede the usual costs analysis under Rule 57.01 and that, given the final award, the plaintiff ought to receive no costs at all. In addressing this contention, Bellows J. considered the recent Court of Appeal authorities, including Sundial Homes (Sharon) Limited v. Wei and its predecessor, Garisto v. Wang. Those decisions underscore that the Rule 76.13 costs consequences are mandatory, but that there is a “safety valve”: if it was reasonable, when viewed prospectively and based on the facts before the trial judge, for the plaintiff to proceed under the ordinary procedure, the court can still award costs even where the ultimate recovery falls within the simplified procedure monetary threshold. Applying this framework, the judge focused on whether, at the time of commencement and as the case unfolded, it was reasonably foreseeable that the claim could justify a recovery above the simplified procedure ceiling, particularly given the combined compensatory, general, and punitive damages sought. The court found that the plaintiff’s claims for general and punitive damages were not exaggerated or improper and that it was certainly open to the trial court to have awarded a higher damages quantum than what was eventually ordered. On that basis, it was reasonable for the plaintiff to commence and continue under ordinary procedure. Consequently, the court declined to apply Rule 76.13 in a way that would bar the plaintiff from recovering any costs.

Costs framework under section 131 and Rule 57.01

Having rejected the defendant’s position under Rule 76.13, the court turned to the general costs framework. Section 131(1) of the Courts of Justice Act gives the court broad discretion over “costs of and incidental to a proceeding,” including the power to determine by whom and to what extent costs shall be paid. Rule 57.01(1) lists a series of non-exhaustive factors to guide that discretion. Among these are: the result in the proceeding, the amount claimed and the amount recovered, the complexity of the matter, the importance of the issues, the conduct of the parties and whether any steps unnecessarily lengthened or shortened the proceeding, the effect of settlement offers, the experience and rates of counsel, and the principle of indemnity. The court adopted the modern view of costs articulated by Perell J. in 394 Lakeshore Oakville Holdings Inc. v. Misek, which identifies multiple purposes for costs awards: partial indemnification of successful litigants, facilitation of access to justice, discouragement of frivolous claims and defences, deterrence of inappropriate litigation conduct, and encouragement of settlement. In this case, the defendant did not rely on any specific Rule 57.01 factors in submissions. The plaintiff, by contrast, filed a Bill of Costs and argued for a substantial partial indemnity award given his overall success and the course of the litigation. The judge reviewed the Bill of Costs and found that the time spent, use of a law clerk, and counsel’s hourly rates—appropriate for a lawyer with 23 years of experience—were all reasonable and commensurate with the work performed in a four-day trial with contested liability and damages.

Offers to settle and their impact on costs

The parties’ written settlement offers played a significant role in the costs analysis. Over the life of the case, the plaintiff made multiple offers to settle, while the defendant made only one. The plaintiff’s offers included: an October 20, 2021 offer of $110,000.00 inclusive of costs; an August 21, 2023 offer of $200,000.00 inclusive of costs; a May 12, 2025 offer for $119,575.75 with no costs payable by either party; and an August 20, 2025 offer for $115,000.00, again with no costs payable by either side. The defendant tendered a single offer in March 2025 for $10,000.00 inclusive of costs. All of the plaintiff’s offers remained open until five minutes after the start of trial; the defendant’s offer was open until trial commenced. The trial began on September 8, 2025. When compared with the final judgment, the plaintiff’s result—$129,595.75 plus interest—was more favourable than all of his offers except the August 2023 proposal for $200,000.00 inclusive. It was also significantly better than the defendant’s $10,000.00 offer. This pattern of offers and the ultimate result supported the plaintiff’s entitlement to costs on a partial indemnity basis. The court referred to authority such as Bell Canada v. Olympia & York Developments Ltd. and George v. Landles for the principle that a plaintiff who betters his own reasonable offers is generally entitled to costs, absent exceptional circumstances justifying a different scale. In this case, there was no misconduct or unusual feature warranting elevated costs such as substantial or full indemnity; accordingly, the court held that the ordinary partial indemnity scale was appropriate.

Complexity, importance of issues, and conduct of the parties

Although the monetary value of the claim placed it close to the simplified procedure range, the case was not trivial. Both liability and damages were disputed, and there was minimal common ground between the parties. The issues were therefore important to the determination of the matter, and the court recognized that the litigation carried real consequences for both sides. From a procedural standpoint, the court found that each party presented their case efficiently. The trial, initially scheduled for five days, was completed in four without undue delay. The judge expressly concluded that neither side unnecessarily lengthened the proceeding or took improper or vexatious steps under Rule 57.01. There was no suggestion that any party unreasonably refused to proceed by remote hearing, nor that any step was taken through negligence or excessive caution. These factors favoured a conventional partial indemnity award reflecting both the work reasonably required and the need to keep costs proportionate to the amounts at stake and recovered.

Final costs order and overall financial outcome

After weighing all relevant considerations—particularly the plaintiff’s substantial success, the reasonableness of proceeding under ordinary procedure, the pattern of settlement offers, and the principle of indemnity—the court concluded that a significant but proportionate award of costs in favour of the plaintiff was justified. The plaintiff had sought costs of $77,264.97 on a partial indemnity basis, and the judge accepted this figure as reasonable in light of counsel’s experience and the nature of the proceeding. Accordingly, Bellows J. ordered that costs be awarded to the plaintiff in the amount of $77,264.97, payable by the defendant within 60 days of the decision. When this costs award is added to the previously ordered damages of $129,595.75, the overall quantified outcome in favour of the plaintiff is $206,860.72, to which must be added pre- and post-judgment interest on the damages component. The exact dollar amount of interest is not stated in the costs decision and therefore cannot be determined from the available text. As a result, the successful party in this litigation is the plaintiff, Dale Robert Austin, who obtained a total monetary award of $206,860.72 in damages and costs (exclusive of interest), with additional interest owing under the Courts of Justice Act that is not numerically specified in the reasons.