Is a court likely to award costs to one of the parties after a settlement has been reached?

Kearney v. Hill, 2017 ONSC 6306 is an example of a case where costs were awarded following a settlement. Monahan J. reiterated the court’s general reluctance to make a costs award against one of the parties where a proceeding is settled on all issues except for costs, noting expressly that “there may be many motivating factors for parties to enter into settlements, and the reasonableness or unreasonableness of any party’s position may depend on a myriad of factors.” Monahan J. also observed (as did Myers J. in Muskala) that there may be exceptional circumstances where it is appropriate to award costs despite a settlement having been reached. Ultimately, at para. 30, Monahan J. held that refusing to determine entitlement to costs would be inconsistent with the express agreement of the parties and, further, that parties may be unwilling or unable to voluntarily resolve substantive issues in dispute if they believe they will be unable to resolve costs issues through subsequent adjudication. Relying on particular conduct exhibited in that case, he awarded costs.