Which scenario allows the court to exercise discretion in awarding costs?

The scenario in which the court has discretion in awarding costs primarily relates to documentation proving misconduct by the successful party. When a party is successful in a case but has engaged in misconduct, the court may choose to exercise its discretion regarding the costs awarded. Misconduct can influence a judge's assessment of what is fair and just regarding costs, leading to adjustments based on the conduct of the parties involved during the proceedings.

In contrast, nominal damages awarded to a successful party do not automatically invoke a discretion in cost. In cases where nominal damages are granted, it indicates that while one party technically won, the victory is not substantial, and the court may be less inclined to award costs related to such a minimal outcome.

Additionally, a modification of the initial claim does not inherently provide a reason for the court to exercise discretion regarding costs. Changes to the claim can be part of the procedural flow of the case and do not directly relate to the conduct of the parties that would influence the court's decision on costs.

Thus, the correct scenario for the exercise of discretion in awarding costs is indeed linked to the successful party's misconduct, making it a key consideration for the court's decision.