Canadian Rental Service

Legalese: Three considerations

By Deryk Coward   

Features Business Intelligence

When it comes to the costs of pursuing legal action, there are at least three elements to consider when deciding whether to pursue someone in court. The first is your actual out-of-pocket costs. You must determine how much it is going to cost you to hire a lawyer.

Lawyers normally charge for their time, and you will want to get an estimate from your lawyer up front as to how much time (and cost) will likely be involved. Alternatively, in some jurisdictions, lawyers can charge a percentage of the amount recovered. These are called contingency agreements and they should always be in writing. A lawyer may also agree to charge you a fixed amount. For example, if you wanted to file a lien against a property, your lawyer may be prepared to commit to a figure of $1,500 regardless of the amount of time spent or whether the lien actually achieves a recovery of monies. Regardless of which of the above arrangements you have with your lawyer, one thing is certain: you should always have your agreements reduced to writing so that both parties are clear on the terms.

The chances of recovery
The second thing you should consider is whether the opposing party will be ordered to pay some costs to you and what the likely amount of that award will be. There is a misconception amongst many people that a successful party will automatically receive its legal costs from the losing party. This is most often untrue. Courts in each province enjoy jurisdiction over the awarding of costs and are empowered to make any decision which is fair, just and reasonable. Since the facts of each case are different, there is no way to ever predict the outcome of costs with absolute certainty. In general, though, the winning party will be awarded some amount that partially reimburses them for their costs in hiring a lawyer. My experience in Manitoba is that the costs awarded to a successful party usually approximate between 20 and 30 per cent of the actual legal costs paid by a party to a lawsuit. Other provincial jurisdictions may be significantly less, or more. You should consult with a lawyer in your own province in that regard.

Can you actually collect?
The third thing you need to consider is whether you’ll be able to collect on any cost award. Courts only have the power to order that costs be paid. If the person (or company/partnership or other legal entity) does not have any assets or income to pay the cost award, then really all you have is a piece of paper. This third and final aspect of costs is very important and often overlooked. If the entity you plan on suing won’t be able to pay, then you must consider that fact if you are trying to make a prudent assessment of whether it is worthwhile to proceed. Too many times, people succeed in a lawsuit and are awarded costs only to find out that they can’t collect from the deadbeat judgment debtor. These “successful” parties are often disappointed that they didn’t consider the issue of collection years earlier, before they paid their lawyer and went through lengthy court proceedings. The assessment of the likelihood of collection should be done at the outset, and should be constantly re-evaluated during
any lawsuit.

However, just because someone may not have the money to pay you now does not necessarily mean that you should forego pursuing them. In most provinces, judgments which would include a cost award are valid for several years. If you were to obtain a judgment against someone who presently had no money and no income, you could conceivably wait until that person finally got a job, and then begin garnishing their employment income.  


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