Is it an error in principle to award substantial indemnity costs when a defendant has a meritorious defence?
Ontario, Canada
The following excerpt is from Walker v. Ritchie, 2005 CanLII 13776 (ON CA):
We will deal first with the appellants’ contention that it is an error in principle to award a premium when a defendant has a meritorious defence. Substantial indemnity costs are awarded in two different types of circumstances. The first is where the losing party has engaged in reprehensible, scandalous or outrageous behaviour: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3. The second is triggered by operation of rule 49.10. In the second situation, it is not misconduct that leads to a substantial indemnity costs award but, rather, the operation of an offer to settle under rule 49.10.
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