Federal Court Doubles Costs Awarded After Settlement Offer is Rejected
- Citation
- 2026 FCA 108
- Decided
- Court file
- A-247-23
- Full judgment
- Read the decision
Case Law Overview
1048547 Ontario Inc. v. Fromfroid S.A., 2026 FCA 108
This case involves an assessment of legal costs following a dismissed appeal. The successful party (the respondent) made a formal settlement offer before the appeal hearing, which the appellant rejected. The respondent sought to have its legal costs paid by the appellant, arguing for a higher rate and a doubling of costs due to the rejected offer.
Court Ruling
The Federal Court of Appeal's Assessment Officer awarded costs at the high end of the allowable range, recognizing the complexity of the issues. More importantly, the Officer doubled the costs incurred after the settlement offer was made, significantly increasing the total amount payable by the losing party.
Key Quote from the Court
For all of the above reasons and pursuant to paragraph 420(2)(b) of the Rules, I will allow the doubling of costs of the assessable services rendered from January 18, 2024, to August 25, 2025, the date of the Judgment.
Expert Takeaways
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Strategic Settlement Offers Have Teeth Rejecting a reasonable, formal settlement offer can have serious financial consequences. Under Rule 420, if you reject an offer and fail to achieve a better result in court, you may be ordered to pay double the successful party's legal costs from the date the offer was made.
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Complexity Justifies Higher Costs The Court will consider the complexity and importance of the legal issues when deciding the level of costs to award. In this case, the number of issues raised and the nature of the proceeding justified awarding costs at the upper end of the prescribed tariff.
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Understand What Costs are Doubled The doubling of costs applies to assessable legal services (e.g., preparing legal arguments, court appearances) but not to disbursements like taxes (GST/PST). This distinction is crucial for calculating potential financial risk.
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Costs for a Second Lawyer Require Court Direction Simply having a second lawyer present at a hearing does not automatically mean you can claim their costs. The Court must specifically direct that costs for a second counsel are warranted and payable.
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Disclaimer
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Questions people ask after reading a case like this
Does this mean my own case will succeed?
No. Every application is decided on its own record. A reported decision shows how the Federal Court has reasoned about a particular kind of error - it does not predict the result of a different file. What it can tell you is whether the problem in your refusal is the kind of problem the Court has been willing to intervene on.
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Written by
Ali Dadkhah
Ali Dadkhah is a litigator whose practice is dedicated to challenging government decisions at the Federal Court of Canada. He specializes in judicial review, providing a crucial avenue for recourse for individuals and businesses who have faced unfair or unreasonable administrative outcomes. Bilingual legal support in English and Persian (Farsi)