Ask most people who pays the lawyers in a lawsuit and you will hear one of two answers: everyone pays their own, or the loser pays everything. Ontario sits between those two ideas. The usual pattern is that the losing party pays a portion of the winner’s legal fees and expenses, and the winner absorbs the rest. The word for that payment is “costs,” and it can be large enough to change whether a lawsuit makes financial sense at all.
Costs tend to get attention only at the end, when a judgment has been released and someone has to write a cheque. By then, most of the decisions that shaped the number have already been made. An offer that was or was not served, a motion that should never have been brought, a fact that was denied for two years and then admitted on the first day of trial: each of these can show up in the final order.
This article is general information about civil costs in Ontario and is not legal advice about your lawsuit. Costs are highly dependent on the facts and on the judge’s discretion, so a lawyer who has reviewed your file can give you a far more useful estimate.
The Starting Point Is Judicial Discretion
Section 131 of the Courts of Justice Act says the costs of a proceeding, or of a step in a proceeding, are in the discretion of the court. The court decides who pays and to what extent. There is no table that converts a $90,000 judgment into a $25,000 costs award, and two cases of similar size can end very differently.
In practice, costs usually follow the event, meaning the successful party receives them. That habit has limits. Rule 57.01(2) of the Rules of Civil Procedure expressly allows a judge to order costs against a party who won. Someone who recovers a small slice of a much larger claim after refusing a sensible settlement could find that winning did not feel like winning at all.
Costs also come in stages. A contested motion is usually a small contest of its own. Rule 57.03 says that on a contested motion the court will generally fix the costs and order them paid within 30 days, unless a different order would be more just. Failing to pay can have consequences for your case, including having a claim stayed or a defence struck. Sometimes the judge instead reserves the issue or orders “costs in the cause,” leaving the outcome of the motion’s costs to follow the final result.
What the Scales Mean
Three terms come up again and again, and they are less mysterious than they sound.
- Partial indemnity costs are the ordinary scale. The Rules tie the term to Part I of Tariff A. In plain terms, you get back part of what the litigation reasonably cost, leaving a gap.
- Substantial indemnity costs are, by definition in Rule 1.03, 1.5 times what would otherwise be awarded on the partial scale. Offers to settle are the most common route to this higher scale.
- Full indemnity costs come close to complete repayment. These are unusual and are generally reserved for serious misconduct in the litigation, or for a contract that clearly provides for them.
That last point deserves attention if your dispute comes from a commercial lease, a loan, or a mortgage. Many of these documents say the borrower or tenant will pay the other side’s legal costs of enforcing the agreement, sometimes on a “full indemnity” or “solicitor and client” basis. A court will take such a clause seriously, though it keeps control over the final figure. Read the contract before assuming the ordinary scale applies to you.
The Factors a Judge Weighs
Rule 57.01(1) lists the considerations, and reading them is a good way to understand how your own conduct feeds into the result. Beyond the outcome of the case and any written offers, the court may consider:
- the principle of indemnity, including the lawyer’s experience, rates, and hours
- the amount the losing party could reasonably expect to pay for that step
- the amount claimed compared with the amount recovered
- the apportionment of liability, the complexity of the case, and the importance of the issues
- conduct that shortened or unnecessarily lengthened the proceeding
- whether a step was improper, vexatious, or unnecessary, or was taken through negligence, mistake, or excessive caution
- a refusal to admit something that should have been admitted
- any other relevant matter
The second item is worth pausing on. The reasonable expectation of the losing party acts as a check on what would otherwise be a simple exercise in adding up invoices. A court is asking for a figure that is fair and proportionate in the circumstances, which may be well below the actual bill. A party that spent $180,000 chasing a $40,000 dispute should not assume the other side will be ordered to fund that decision.
Judges normally fix the amount themselves after reviewing a costs outline or written submissions, rather than sending it to a separate process. Referral to an assessment officer under Rule 58 is meant for exceptional cases.
An Offer to Settle Can Move the Whole Calculation
If there is one costs rule worth knowing before a case is far along, it is Rule 49.10. It rewards a party who makes a reasonable formal offer, and it applies pressure to a party who turns one down.
Suppose, hypothetically, a Brampton supplier sues a customer for $120,000 and serves a formal offer to accept $80,000. The offer stays open until trial, at least seven days before the hearing starts, and the customer does not accept. If the supplier then obtains judgment for $80,000 or more, it is presumptively entitled to partial indemnity costs up to the date the offer was served and substantial indemnity costs from that date, unless the court orders otherwise.
Defendants have a parallel tool. If the same customer had offered $50,000 and the supplier recovered $50,000 or less, the general result flips after the offer date. The supplier gets partial indemnity costs only up to the date of the offer, and the customer gets partial indemnity costs from then on. That can wipe out much of what the supplier thought it had won.
The technical conditions matter: the timing, the wording, and the fact that the offer was not withdrawn. A casual email saying “we would take less” may still be considered under Rule 49.13, since courts may look at written offers generally, but it does not carry the same presumptive effect. Offers are also a judgment call about risk, and the right moment to make one often arrives earlier than people think.
Small Claims Court Runs on Different Numbers
The Small Claims Court at the Brampton courthouse, 7755 Hurontario St., handles claims up to $50,000, and its costs rules are much tighter. Section 29 of the Courts of Justice Act caps a costs award, other than disbursements, at 15 per cent of the amount claimed or the value of the property sought, unless the court considers it necessary in the interests of justice to penalize a party or representative for unreasonable behaviour.
On a hypothetical $20,000 claim, that ceiling works out to $3,000 for representation fees, plus reasonable disbursements such as filing fees and service charges. Those disbursements generally go to the successful party under Rule 19.01 of the Small Claims Court rules. A few other points are particular to that court:
- A successful self-represented party can be awarded up to $500 for inconvenience and expense under Rule 19.05.
- The costs of a settlement conference, excluding disbursements, are limited to $100 unless there are special circumstances.
- Rule 14.07 allows an award of up to twice the costs where a party’s offer is not accepted and the result is at least as good for that party as the offer. A self-represented party in that position may also receive up to $1,500 for inconvenience and expense.
- Rule 19.06 lets the court order a penalty against someone who unduly complicated or prolonged the action, as contemplated by section 29.
Because of the 15 per cent cap, hiring a lawyer for a Small Claims matter is usually something you pay for largely yourself, even if you win. That can still be sensible where the amount is close to the limit or the facts are complicated. It should simply be a clear-eyed decision.
Picking the Wrong Court Has a Price
The size of the claim influences costs in the Superior Court too. Under Rule 57.05, if a plaintiff sues in the Superior Court and recovers an amount within the Small Claims Court’s monetary jurisdiction, the court may order that the plaintiff recovers no costs at all. Starting with a higher court for a dispute that was never worth more than $50,000 can leave you paying a substantial bill with no recovery from the other side.
Simplified Procedure under Rule 76 has its own restraint. For actions under the $200,000 threshold, Rule 76.12.1 generally limits recoverable costs to $50,000 and disbursements to $25,000, exclusive of HST, subject to exceptions. A case that belongs in that track has a known ceiling, which affects how much it makes sense to spend on either side.
Before starting, it helps to have a realistic view of what the claim is worth and what a judgment would actually recover, not the largest figure that could be pleaded. Our civil litigation page describes the kinds of disputes where that early assessment matters most.
Security for Costs: Paying Before the End
Occasionally a defendant asks the court to require the plaintiff to put money aside before the case goes further. Rule 56.01 allows this order in specific situations, including where the plaintiff is ordinarily resident outside Ontario, already owes unpaid costs from another order, or is a corporation with good reason to believe it lacks the assets in Ontario to pay.
That last scenario comes up for small companies. A numbered company with no real assets that sues a Brampton business may face a motion for security, and that motion can bring the claim to a halt until money or a bond is posted. The plaintiff can respond, for example by showing that it has assets or that an order would be unjust in the circumstances. It is a discretionary remedy with a real body of case law behind it, and it requires a motion rather than a demand letter.
What to Do When an Order Arrives
If you are ordered to pay costs, read the order for its due date and any stated interest. A costs order is enforceable like other money orders, and the enforcement tools can include garnishment and writs. If you cannot pay at once, try to speak with the other side before enforcement begins. A short written payment plan is often possible where the alternative is a contested enforcement process.
If you think the order is wrong, move quickly. Costs decisions are given a lot of deference, and an appeal only about costs generally requires leave under section 133 of the Courts of Justice Act. Deadlines are short. When a money order is under appeal, Rule 63.01 generally stays enforcement of the payment provision once a notice of appeal is delivered, but there are exceptions, and you would still need a proper appeal behind it.
Planning for Costs From the First Meeting
A costs award is a piece of the lawsuit’s overall math, and it is best considered from the beginning. Some practical habits help:
Ask your lawyer for a stage-by-stage budget and for a rough sense of adverse-costs exposure at each stage. These are estimates, and they can change as a case develops, but they let you make decisions with real figures in mind.
Keep your lawyer’s time records and disbursement receipts in an organized form if you are managing a business file. A costs submission relies on them.
Revisit settlement at each major step. Pleadings, discovery, mediation, and the eve of trial each bring new information, and a formal offer can be made at any of those points.
Check your insurance. Some policies respond to certain claims by providing a defence, and that can change the financial picture a great deal.
Remember that your own lawyer’s bill and a costs order are separate things. The retainer sets what you owe your lawyer, regardless of what a court later orders the other side to pay you. If you would like help working out what this means for a dispute in Peel Region, you can contact our office with your court documents and any offers exchanged so far.
Costs are one of the few parts of litigation where your own decisions can steadily improve your position. A well-timed offer, an honest admission, and a refusal to fight about things that do not matter will not decide who is right, yet they may substantially affect what the outcome finally costs you.