On August 29, 2025, the Ontario Court of Appeal released its decision in Barry v. Anantharajah, 2025 ONCA 603^[1], a case that will resonate widely with personal injury litigators, insurers, and mediators. The central issue was whether a $300,000 costs award could stand when the plaintiff’s net damages after trial amounted to only $16,160.50. The Court dismissed the appeal and upheld the trial judge’s award, confirming that proportionality cannot be used as a shield by defendants who refuse to make meaningful settlement offers.

The case arose from a 2014 pedestrian accident in which Jacqueline Barry was struck by a vehicle driven by Punithavathi Anantharajah. At trial, the plaintiff advanced claims exceeding one million dollars, supported by a broad array of medical and psychiatric evidence. The defence strategy was equally robust, relying on credibility challenges, malingering tests, and expert opinion that her injuries had either resolved or were unrelated to the accident. The jury ultimately awarded modest damages of $24,166 in general damages and $26,000 in income loss, reduced for contributory negligence and the statutory deductible, leaving a net figure just over $16,000.

Despite this modest recovery, the trial judge awarded Barry $300,000 in costs and disbursements. The reason was straightforward. The defendant, through Aviva, had taken an uncompromising approach to settlement, offering nothing more than a dismissal without costs throughout the litigation and trial. In the trial judge’s view, that posture forced the case forward unnecessarily, requiring the plaintiff to incur substantial legal and expert expenses. Relying on authorities such as Wray v. Pereira, 2019 ONSC 3354^[2], Persampieri v. Hobbs, 2018 ONSC 368^[3], and Corbett v. Odorico, 2016 ONSC 2961^[4], she reasoned that significantly reducing costs in such circumstances would reward “bully tactics.” She reduced the plaintiff’s bill by $100,000 for proportionality and the duplication of using two senior lawyers, but otherwise accepted it as fair and reasonable.

On appeal, the defendant argued that the trial judge erred both in finding that the plaintiff was more successful at trial and in failing to apply proportionality correctly. The appellant emphasized that Barry had lost on threshold, was found contributorily negligent, and had recovered only a fraction of her claim. They submitted that the trial judge had wrongly measured success only against the zero-offer defence position, rather than by examining the issues as a whole. They further argued that awarding $300,000 in costs against a net judgment of $16,160.50 was wholly disproportionate and undermined access to justice.

The Court of Appeal rejected both arguments. Writing for the panel, Justice Pepall reaffirmed that costs awards are “quintessentially discretionary” and attract a high degree of deference. Unless there is an error in principle or a result that is plainly wrong, appellate courts should not interfere. That principle was drawn from Hamilton v. Open Window Bakery Ltd., 2004 SCC 9^[5], Frazer v. Haukioja, 2010 ONCA 249^[6], and Nolan v. Kerry (Canada), 2009 SCC 39^[7].

The Court accepted that the trial judge had properly applied Rule 57.01 of the Rules of Civil Procedure and found that Barry was more successful than the defendant at trial. The defence had asked the jury to award nothing, yet the jury awarded income loss. In the Court’s words, a defendant is not required to make any settlement offers, but if they choose a “hardball” strategy and it is not vindicated by a complete defence win, they must live with the consequences. In that respect, Justice Pepall distinguished earlier authorities such as Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.)^[8] and Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267^[9] , where zero offers were vindicated because the plaintiffs recovered nothing. Here, by contrast, Barry did recover damages, modest though they were.

On the issue of proportionality, the Court again deferred to the trial judge. Rule 1.04(1.1) requires orders to be proportionate to the importance and complexity of the issues and the amount involved. Justice Pepall noted that this case required extensive expert evidence and voluminous records, engaged significant issues for the plaintiff, and involved a defendant who refused to make a monetary offer. While the award was far greater than the damages, the Court accepted that it remained proportionate to the case as litigated. The Court distinguished Elbakhiet v. Palmer, 2014 ONCA 544^[10], and Cobb v. Long Estate, 2017 ONCA 717^[11], where costs were adjusted for statutory errors or where proportionality had been overlooked. It endorsed the line of trial-level authorities such as Persampieri, Corbett, and Brophy v. Harrison, 2019 ONSC 4377^[12], which caution against allowing proportionality to become a backdoor tool for insurers to minimize exposure despite unreasonable litigation strategies.

An additional feature of the case was the trial judge’s criticism of defence tactics as reflecting outdated stereotypes about mental health injuries. While the Court of Appeal acknowledged that relying on such a consideration alone might risk error, it held that there were ample independent bases for the award. The costs ruling was not plainly wrong and deserved to stand.

In the end, the Court dismissed the appeal and awarded Barry a further $15,000 in costs for the appeal.

The decision in Barry v. Anantharajah sends a clear signal to the bar. Plaintiffs with modest recoveries can still obtain substantial costs where defendants and their insurers refuse to make reasonable offers and press for trial. Defendants are entitled to stand firm, but if they adopt a zero-offer strategy and it fails, proportionality will not rescue them from steep cost consequences. For insurers, the message is unmistakable: credible offers, even modest ones, can substantially reduce exposure. For plaintiffs, the decision affirms that pursuing a claim in the face of “hardball” tactics can lead to meaningful cost recovery even if the damages are limited. And for mediators, Barry is a timely reminder that early, good-faith offers are not merely procedural niceties but critical tools in managing litigation risk.

Disclaimer: This blog is for informational purposes only and not legal advice.