Who pays legal costs in Canadian civil litigation?
Canada follows a loser-pays (costs-follow-the-event) model. The unsuccessful party typically pays a portion of the winner's legal costs, assessed on the partial indemnity scale (roughly 40-60% of actual fees). This is a major difference from the US, where each side usually bears its own fees.
What is the difference between partial and substantial indemnity costs?
Partial indemnity is the default scale and covers roughly 40-60% of the winner's actual legal fees. Substantial indemnity is an elevated scale (about 90%) awarded in specific situations: where a party beats its own formal offer to settle, or where there has been reprehensible or bad-faith conduct.
How are costs determined in Ontario?
Under Rule 57 of the Rules of Civil Procedure, the court considers the amount claimed and recovered, the complexity and importance of the issues, the conduct of the parties, and any offers to settle. Costs are often fixed by the judge using a Costs Outline or assessed by an assessment officer.
Can I be ordered to pay costs even in small claims?
Yes, but they are limited. In Ontario Small Claims Court, costs awards to a successful party are generally capped at 15% of the amount claimed, plus disbursements, except where a party has behaved unreasonably. The full partial/substantial indemnity regime applies in Superior Court.