A recent Ontario Superior Court decision provides a useful reminder that success on the merits does not necessarily determine the costs result.
In Wilson v. OCDC et al., 2026 ONSC 5663, the defendants had successfully obtained the dismissal of the plaintiff’s action. Ordinarily, that result would favour an award of costs to the defendants.
Instead, the defendants sought no costs and were ultimately ordered to pay $10,000 in costs to the unsuccessful plaintiff.
The result was unusual. Justice Lemay expressly described the circumstances as “very exceptional.” The decision nevertheless offers an important practical lesson for litigants and counsel: where a potentially dispositive defence is available, raising it at an early stage may be important not only to the outcome of the case, but also to the eventual costs consequences.
Background
The plaintiff’s action arose from a slip and fall at the Ottawa-Carleton Detention Centre in June 2017.
At trial, the action was dismissed as a nullity because the notice requirements under the former Proceedings Against the Crown Act had not been satisfied. That legislation required notice of a potential claim against the Crown within 60 days of the facts giving rise to the claim.
The difficulty arose from when that defence was raised.
The defendants served their Statement of Defence in December 2022 but did not plead the statutory notice issue. Discoveries were completed in March 2023, the matter was set down for trial in March 2024, and trial dates were eventually fixed for May 2026.
It was not until October 2024 that defence counsel first sought the plaintiff’s consent to amend the pleading to rely on the statutory notice provisions. When consent was not provided, no motion to amend was brought at that time.
The issue resurfaced before trial, and the motion to amend was ultimately heard on the first day of trial.
A Defence That Could Have Been Raised Earlier
Justice Lemay was concerned that the timing of the defence had affected the course and cost of the litigation.
The Court observed that, had the statutory notice issue been raised from the outset, the plaintiff would have been in a position to make an informed decision about whether to continue the action.
The issue might also have been capable of determination by summary judgment, potentially avoiding the expense associated with preparing for and conducting a trial.
Importantly, the Court did not find that the defendants were prohibited from relying on the defence.
Justice Lemay expressly recognized that the defendants were entitled to raise the statutory defence at trial even though it had not previously been pleaded.
The concern was instead one of timing and procedure.
The Court found that the defendants had a responsibility to raise the defence in a timely manner so that the plaintiff could understand the litigation risk before incurring significant costs.
That distinction is important.
A party may have a complete and ultimately successful legal defence. But where that defence could substantially alter the course of the litigation, delay in advancing it can have consequences independent of the merits.
The Motion at Trial
The procedural history became more unusual on the first day of trial.
The defendants moved to amend their pleading to rely expressly on the statutory notice provisions.
The Court granted the amendment, but on terms. The trial would be adjourned to permit further discoveries, and the defendants would be responsible for the costs thrown away by the adjournment.
Faced with those terms, the defendants chose not to proceed with the amendment. They instead continued with the trial without amending the pleading and ultimately succeeded on the statutory defence.
Justice Lemay was particularly critical of the inefficiency associated with that motion.
The Court noted that the plaintiff had been required to prepare responding materials and a factum. Yet after obtaining the requested relief, subject to terms, the defendants declined to make use of it and proceeded with the trial.
The Court concluded that this aspect of the proceeding had unnecessarily consumed both the Court’s time and the plaintiff’s resources.
An Exceptional Costs Result
The starting point in Ontario remains that costs normally follow the event.
A successful party will ordinarily be entitled to some measure of costs, and an award requiring a successful party to pay costs to the unsuccessful party is exceptional.
Justice Lemay concluded that the circumstances in Wilson justified such a departure.
The Court found both a miscarriage in procedure and vexatious conduct associated with the manner in which the defence and the amendment motion had been pursued.
At the same time, the Court was careful not to compensate the plaintiff for all of the costs incurred.
The plaintiff had lost the action, and the statutory defence had ultimately succeeded. Some of the work associated with the motion also remained relevant to the issues determined at trial.
Balancing those considerations, the Court awarded the plaintiff $10,000 all-inclusive, substantially less than the approximately $30,000 she had requested and a fraction of her approximately $100,000 in overall trial costs.
Why This Decision Matters
The decision should not be understood as suggesting that defendants should hesitate to advance strong technical or statutory defences. Quite the opposite.
Where a defence may dispose of an action entirely, identifying and evaluating that issue early can benefit all participants in the litigation.
For a defendant, an early dispositive motion may reduce defence costs and eliminate unnecessary litigation steps.
For a plaintiff, early notice of the defence allows for a realistic assessment of risk before substantial costs are incurred.
For the Court, early determination of a threshold issue can promote the proportional, efficient use of judicial resources.
The practical difficulty arises when a potentially case-ending issue is identified but remains unresolved while the litigation continues through discoveries, trial scheduling and preparation.
Practical Takeaway
Wilson is a useful reminder that the ultimate legal result and the manner in which litigation is conducted are separate considerations.
The defendants were successful. The plaintiff’s claim was dismissed.
But the Court nevertheless concluded that the timing and handling of the statutory defence had caused unnecessary expense and justified an exceptional costs award in favour of the unsuccessful party.
For counsel on both sides of civil litigation, the broader lesson is one of early issue identification.
Where a defence has the potential to end the proceeding, it should generally be investigated, communicated and, where appropriate, determined as early as reasonably possible.
Doing so can sharpen the parties’ assessment of litigation risk, reduce unnecessary expense and help ensure that the resources of both the parties and the Court are directed toward the issues that truly require adjudication.
At Flaherty McCarthy LLP, our lawyers regularly act in complex civil and insurance litigation and advise clients on litigation strategy, procedural issues and costs exposure throughout the life of a proceeding.
