“Courts have a broad discretion to award costs, and the court may determine by whom and to what extent costs shall be paid: Courts of Justice Act, RSO 1990, c. C. 43, s. 131 (1). In the family law context, there is a presumption that a successful party is entitled to the costs of a proceeding and, in fixing the quantum of costs, the court shall consider the reasonableness and proportionality of each party’s behaviour: Family Law Rules, O. Reg. 114/99, r. 24 (1) & (12).
These determinations presuppose the existence of objective benchmarks against which relative success, reasonableness and proportionality can be measured. Those objective benchmarks are present when a court makes findings of fact and law and issues an order. It is for this reason, as Middleton J. succinctly observed over a century ago, that costs are generally regarded as “incident to a determination of the rights of the parties, and ought not to be made themselves the subject matter of the litigation.”: McClellan v. Powassan Lumber Co., [1914] O.J. No. 381 (Ont. H.C.), at para. 8 (emphasis added) (“McClellan”). The same point was made more recently by Myers J. in Muskala v. Sitarksi, 2017 ONSC 2842, at para. 8.
These objective benchmarks are absent when parties resolve disputed issues on consent: Dhillon v. Dhillon, [2009] O.J. No. 4459 (S.C.J.), at para. 10; Witherspoon v. Witherspoon, 2015 ONSC 6378 (“Witherspoon”), at para. 42. There are a myriad of reasons why parties may decide to compromise or settle their claims without necessarily conceding that positions previously held were wrong. Thus, to attempt to use a negotiated compromise solution as the proper benchmark against which to assess relative success, or the reasonableness of either party’s behaviour, is questionable as a matter of principle: Witherspoon, at para. 42. See also Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304, at paras. 24-39; Talbot v. Talbot, 2016 ONSC 1351, at paras. 44-60.
It therefore follows that, where parties compromise their claims and settle litigation, the award of costs is very much the exception rather than the rule. Another way of expressing this principle is that “when parties reach a settlement as between themselves, the court should be very slow to make an award of costs against one of them.”: Mark M. Orkin & Robert G. Schipper, Orkin on The Law of Costs, 2nd ed., (Toronto: Thomson Reuters Canada Ltd., 2022), at § 2:35.
This is not to deny that there may be exceptional cases in which a costs order is appropriate even following a negotiated resolution. For example, where there has been a vast disparity in the relative costs that have been incurred by the parties, thereby precluding a negotiated settlement without an award of costs, and where the court is in a position to determine relative success based on the record before it, it may well be appropriate for the court to make an award of costs: Kearney v. Hill, 2017 ONSC 6306. But as a matter of principle, an award of costs following a negotiated resolution will generally be inappropriate.