Understanding court costs

Many people worry about the potential costs associated with lawyers and the Canadian justice system. It is a well-known fact that choosing to pursue and defend litigation can be costly. Questions usually arise as to lawyer fees, disbursements and costs associated with court proceedings.

When a matter is brought before the court, the presiding judge has the ability to award costs to a party. The term “court costs” refers to the amounts one party to the litigation may be ordered to pay to another party.

 In most Canadian jurisdictions, there is a loser-pay cost regime. Subject to the discretion of the court and whether or not any settlement offers have been made, the unsuccessful party must often pay a portion of the legal expenses incurred by the successful party. The judge can order a specific amount of costs to be paid, or can order the costs to be assessed in accordance with a schedule of costs known as a tariff. It is important to note, however, that a successful party will almost never achieve a complete recovery of all of the costs associated with going to trial.

It is also important to keep in mind that settlement offers made prior to trial can have an effect upon the award of costs. Courts always try to encourage settlement before having to proceed to court. The judge only learns of the terms of the offer(s) to settle after making his or her decision in the case. The judge will compare the offer to settle with the award made at trial. The judge may determine that litigation could have been avoided, had the other party accepted the offer to settle. Additional cost compensation may be awarded on this basis.

It should be noted that each province has different rules when it comes to the awarding of costs. Individuals should consult their own lawyers for advice on what a judge may or may not award.

So the question most people then want answered is: when are court costs awarded? The simple answer is whenever the parties attend court. At any time, a judge or officer of the court hearing a particular matter has the power to fix or determine the amount of costs.

A good way to avoid court costs is to try to reach a settlement or to bring your matter to small claims court. A small claim is a way to settle monetary disputes that do not exceed a certain amount of money. For example, in Manitoba the disputed amount cannot exceed $10,000, in Ontario the amount disputed cannot exceed $25,000 and in Alberta the amount disputed cannot exceed $25,000. Costs and interest may be requested and added to a judgement; however, it is probable that costs will be much lower than proceeding to court as you may represent yourself and proceedings are less formal.

In the final analysis, when considering whether to proceed with any court action, you should not only consider the amount which you feel is owing but also the amount you could potentially receive from the court in the form of a cost award.

Deryk Coward articled with D’Arcy & Deacon in 1996 and was called to the Manitoba bar in June of 1997. He is a partner with the firm, practising primarily in the area of general civil litigation, personal injury, insurance, debtor-creditor and labour and employment law. Coward is legal counsel for the Canadian Rental Association.