Civil Contempt and Costs: Can Opposite Costs Awards Be Set Off?
What happens if costs for misconduct are awarded against both sides in a proceeding? Specifically, can costs against a party offset a sanction for contempt of court against the other side?
The Ontario Court of Appeal recently addressed these questions in Tridelta Fixed Income Fund v. GTA Mixed-Use Developments GP Inc. (“Tridelta”). The decision provides useful guidance for parties involved in civil litigation on how courts may approach competing misconduct and costs awards in the same proceeding.
Background
The dispute involved three limited partnerships. After a trial, the respondents obtained a court order requiring the defendant companies to turn over the partnerships’ books, records, accounts and assets[i].
The defendants did not fully comply. Approximately one month after the order was made, they had produced only 64 documents and had not produced various financial and other records. The court later provided further clarification about what the defendants were required to produce. When the defendants still did not comply, the respondents brought a motion for contempt[ii], which was granted.[iii]
There was also a separate complication. During the proceedings, the plaintiffs had failed to disclose incriminating records they had obtained before the defendants filed their evidence. The plaintiffs had subsequently used those records to their advantage against the defendants for the contempt motion.[iv] The motion judge found that withholding this evidence violated the Defendants’ procedural rights and excluded the evidence obtained as a result.[v]
Despite these violations, some findings of contempt stood.
The Original Costs
When determining the appropriate sanction for the remaining contempt, the motion judge was therefore faced with misconduct by both sides.
The Plaintiffs sought approximately $609,000 in costs as a sanction for the contempt. The motion judge granted costs, but reduced the amount by 25% due to the improperly obtained evidence.[vi]
The Defendants were separately awarded approximately $258,000 in compensation for their violated rights[vii]. However, the motion judge found that it would not be just and equitable to dilute the sanction for contempt and refused to allow the offset[viii].
The Ontario Court of Appeal dismissed the Defendants’ appeal to offset their costs.
Main Takeaways
A Costs Sanction for Contempt May Stand Independently from Other Costs Awards in the Same Litigation
Even though the defendants were separately awarded approximately $258,000 in costs as compensation for their violated rights, the court was entitled to refuse to offset those costs against the contempt sanction.
The costs imposed for contempt were not simply another costs award; they were imposed as a sanction for disregarding the court’s process. The motion judge was therefore entitled to conclude that allowing another costs award to reduce the sanction would undermine its purpose[ix].
Misconduct by the Party Prosecuting Contempt Does Not Necessarily Eliminate the Consequences of the Contempt
The Court of Appeal rejected the argument that the Plaintiffs’ violations had not been adequately addressed. Their misconduct had resulted in two contempt allegations being dismissed, and the contempt costs were already reduced by 25% to ensure they did not recover for work associated with that evidence. The Court found that these were meaningful remedies for the violations and that the motion judge was not required to further reduce the sanction imposed for the remaining contempt[x].
These remedies had a practical effect on both the scope of the contempt findings and the ultimate sanction. The defendants therefore could not treat the plaintiffs’ misconduct as cancelling out their own contempt[xi]. Instead, the court was entitled to address the misconduct of each side separately and impose consequences appropriate to each.
For parties involved in civil litigation, this means that misconduct by the opposing party will not necessarily excuse or reduce the consequences of your own conduct. A court may instead provide a separate remedy for each party’s misconduct.
Courts Have Broad Discretion When Determining an Appropriate Sanction for Contempt
The Court of Appeal confirmed that contempt sanctions are discretionary and will generally only be overturned on appeal where the sanction is clearly unfit or the judge made an error in principle. This gives courts flexibility to impose a framework for sanctions that reflects both the seriousness of the contempt and other relevant conduct during the proceeding[xii].
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[i] Tridelta Fixed Income Fund v. GTA Mixed-Use Developments GP Inc., 2026 ONCA 645 at para 5.
[ii] Ibid at paras 6-8.
[iii] Ibid at paras 11 and 14.
[iv] Ibid at para 12.
[v] Ibid at para 14.
[vi] Ibid at paras. 15-17.
[vii] Ibid at para 18.
[viii] Ibid at para 19.
[ix] Ibid at para 31.
[x] Ibid at para 28.
[xi] Ibid.
[xii] Ibid at para 23.