What is the test for substantial indemnity costs?
Ontario, Canada
The following excerpt is from Thibault v. The Empire Life Insurance Company, 2012 ONSC 5387 (CanLII):
Substantial indemnity costs should only be awarded in "rare and exceptional cases to mark the court's disapproval of the conduct of the party in the litigation."[20] Lax J. in Manning v. Epp, [2006] O.J. No. 4239 (S.C.J.) held at paras. 7 – 9 that: Costs on the higher scale can be awarded as a form of chastisement and as a mark of the court's disapproval of a litigant's conduct. This is intended to punish as well as to deter others from engaging in similar conduct.
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