Can You Recover Your Legal Fees If You Win a Lawsuit in Ontario?

If you are thinking about suing someone, or you are already in the middle of a lawsuit, you have probably asked yourself this question: if I win, will the other side have to pay my legal fees? It is a fair question, and the answer is not as simple as yes or no.

In Ontario, courts do have the power to order the losing party to pay a portion of the winning party's legal costs. But that does not mean you walk away with every dollar you spent on your lawyer. In most cases, you recover only part of your legal expenses, and sometimes less than you might expect. Understanding how cost awards actually work can help you set realistic expectations before you start, or continue, a lawsuit.

Why Courts Award Legal Costs

The idea behind a costs award is fairness. If you were forced to go to court to enforce a right, or to defend yourself against a claim, and you succeed, it seems reasonable that the other side should contribute something toward what that cost you. At the same time, the legal system also wants to discourage people from bringing weak claims, dragging out proceedings unnecessarily, or refusing reasonable settlement offers.

Because of this, Ontario courts have broad discretion when it comes to costs. A judge may consider a number of factors, including how the parties behaved during the case, whether either side made a reasonable settlement offer that was rejected, the complexity of the issues, and the overall outcome. This means the amount awarded can vary quite a bit from one case to another, depending on the facts.

Partial Indemnity vs Substantial Indemnity Costs

When a court awards costs, it is usually on what is called a partial indemnity basis. This generally means the winning party recovers a portion of their actual legal fees, often somewhere in the range of 50 to 70 percent, though this can vary. It is meant to contribute toward your costs, not fully reimburse them.

In some situations, a court may order costs on a substantial indemnity basis instead, which typically results in a higher percentage of recovery. This tends to happen when the court finds that a party behaved unreasonably during the litigation, for example by rejecting a formal settlement offer that turned out to be better than what they eventually received at trial, or by conducting the case in a way the court considers improper. Even substantial indemnity costs rarely cover 100 percent of what was actually spent.

Winning Does Not Mean Recovering Everything

This is the part that often surprises people. Even a clear win in court does not guarantee that all your legal fees will be covered. Depending on the facts, a judge might reduce a costs award for several reasons, such as finding that some of the legal work was unnecessary, that the case took longer than it should have, or that the successful party was only partly successful on the issues raised.

It is also worth remembering that a costs award is separate from the amount you were awarded in the underlying claim. If you sue for damages and win, the costs award is calculated on top of that, but it is its own separate assessment, and it does not automatically match your legal bill dollar for dollar.

Settlement Offers Can Affect Costs

Ontario's court rules include provisions that encourage parties to make reasonable settlement offers before trial. Generally speaking, if a party makes a formal offer to settle and the other side rejects it, but then does worse at trial than what was offered, there can be cost consequences for the party who rejected the offer. This is one of the reasons settlement offers are taken seriously in litigation, and why a lawyer may advise you to consider one carefully, even if you believe you will win at trial.

Small Claims Court Works a Bit Differently

If your matter is in Small Claims Court, the costs rules tend to be more limited than in the higher courts. Cost recovery there is often capped and calculated differently, which can mean that even a successful claim results in a fairly modest costs award relative to what you spent pursuing the matter. This is one of many reasons it is worth thinking through, before you start a claim, whether the potential recovery makes sense given the time and expense involved.

What This Means Before You Sue

None of this is meant to discourage anyone from pursuing a legitimate legal claim. It is simply a reminder that legal costs should be part of your planning from the start, not something you think about only after the case is over. In some cases, the potential costs award may make pursuing a claim worthwhile even after accounting for legal fees. In others, the numbers may not work out as favourably, especially for smaller claims.

Speaking with a lawyer early on can help you understand, based on the specific facts of your situation, what a realistic outcome might look like, both in terms of the claim itself and any potential costs award. Every case is different, and the discretion courts have in awarding costs means outcomes can be hard to predict with certainty.

Frequently Asked Questions

Q: If I win my lawsuit, will the other side automatically have to pay my legal fees?

A: Not automatically, and not in full. Ontario courts have discretion to award costs to the successful party, but this usually covers only part of the actual legal fees spent. The exact amount depends on the facts of the case, including how the parties conducted themselves during the litigation.

Q: What is the difference between partial indemnity and substantial indemnity costs?

A: Partial indemnity costs are the more common type of award and generally cover a portion, rather than all, of the winning party's legal fees. Substantial indemnity costs, which usually result in a higher recovery, are typically awarded in more limited circumstances, such as when a party rejected a reasonable settlement offer or acted unreasonably during the case. In either case, full reimbursement is unlikely.

Q: Does it matter if I turned down a settlement offer before trial?

A: It can. Depending on the facts, rejecting a formal settlement offer and then doing worse at trial than what was offered may lead to cost consequences against the party who rejected it. This is one of the reasons it is worth discussing any settlement offer carefully with a lawyer before deciding how to respond.

Q: Is it different in Small Claims Court?

A: Yes, in many cases. Cost recovery in Small Claims Court tends to be more limited and calculated differently than in the higher courts. Even a successful claim may result in a smaller costs award relative to what was spent, so it is worth thinking through the numbers before starting a claim.

Speak With DevLaws

If you are considering a lawsuit, or you are already involved in one, and you want a clearer picture of how legal costs might work out in your situation, the team at DevLaws is here to help. Contact us to discuss the specific facts of your case.

contact@devlaws.com | +1 437 290 0424 | devlaws.com

Disclaimer

This article is for general information purposes only and does not constitute legal advice. Every situation is different, and the outcome of any legal matter, including any award of costs, depends on the specific facts involved. If you have questions about your particular circumstances, you should speak with a lawyer.