Law school 101 : Costs in Ontario Legal Cases

Many people who consult us are unfamiliar with the concept of “costs” as it is defined under court rules of procedure.  Further there can be confusion regarding costs for legal proceedings other than court, including administrative tribunals such as the WSIB, the License Appeals Board etc .

Court:

Generally, the successful party in a civil lawsuit will also get a court order or judgment that the losing party pay a portion of their legal costs.  Depending how far along the case has gone, these costs that the losing party must pay the winner can be enormous.  This is one of the very significant risks faced by litigants when starting or defending against a lawsuit. 

Because the normal rule is “partial” costs – even if you win your lawsuit, you will still have to pay part of your legal bill. 

Costs awarded by the court to one side or the other usually include disbursements, i.e. money the winning party or their lawyers have paid for lawsuit expenses such as court filing fees, process servers, expert reports etc.  A judge at the end of the case still has a discretion to disallow some of these disbursements.

When there are court hearings on procedural steps before the case reaches trial, the same rule applies – and the normal rule is that such costs are “payable forthwith”.  For example, you don’t think your opponent is being forthcoming with all the relevant documents, and you ask a judge for relief.  The judge disagrees with you and not only dismisses your motion but orders you to pay $5,000 in costs.  Failure to pay these costs awards promptly can lead to an outright dismissal of your case before you get close to the courtroom door.

After a trial, depending on its length and complexity, the losing party may be ordered to pay $100,000 or more to the winning party just for their legal bills, not to mention any damages they are ordered to pay.  Court cases can easily bankrupt the unwary litigant.

Careful consideration must be given regarding any decision to litigate a case in the courts.  We have seen particularly in motor vehicle accident cases this risk is amplified by laws that we have discussed elsewhere (threshold tests to meet, deductibles of $39,000 or more and offsets from other benefits received).  Innocent injured parties can and do end up losing after these rules are applied and being ordered to pay six figure cost awards to the defending insurance company.

To encourage settlement, the rules provide incentives to compromise by making reasonable offers to settle – and penalize the party that rejects an offer by ordering them to pay a higher percentage of the winner’s legal bill. 

When people think about their lawsuits, they rarely consider the question of “costs”, but it should always form a major part of your risk assessment.  You may be able to afford to win, but can you afford to lose?

Administrative Tribunals:

Most tribunals, including the WSIB, the Workplace Safety and Insurance Appeals Tribunal, the License Appeals Tribunal [that decides accident benefit claims], and the Human Rights Tribunals do not have any power to award legal costs.

You may have a legitimate grievance over an issue worth a few thousand dollars, but hiring a lawyer may well cost a lot more than what is at stake, and winning won’t feel so good when you end up owing money for legal fees at the end of your case. 

No one likes to be wronged, but the remedies are not always cost-efficient.  We sometimes hear from clients who say they “don’t care” what it costs, they want their day in court or at a Tribunal hearing.  However, the costs of any proceeding should be an important part of your initial discussions with your lawyer, and your own risk assessment. 

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