Court Costs in a Nutshell
Many people contemplating a lawsuit should not overlook the issue of court costs which are usually based on eight or more factors, the most important of which are:
a) The result of the lawsuit (that is, whether you have won or lost).
b) Whether the party litigant made an offer to settle which was reasonable or unreasonable.
c) The apportionment of liability between the parties of the lawsuit.
d) The amount claimed, and the amount recovered.
e) Whether a step in the proceeding was improper or unnecessary.
If you win your case, you should always seek costs. But there is no guarantee that the courts will order your opponent to pay your costs. In many jurisdictions, courts have an unfettered discretionary in awarding costs. The court may deny you the costs, (which include part or all your lawyer's fees and disbursements) if you mishandled your case, or you were negligent, used wrong or defective procedures or your conduct throughout was oppressive or vexatious.
If there is divided success, the court may apportion costs.
If an action against you is discontinued, you may be entitled to costs if you have taken steps to defend the action, such as entering an appearance, filing a statement of defence etc. In many cases, if you act for yourself, without a lawyer, you would not be awarded court costs even if you win your case. However, you may still be entitled to legal disbursements which include transcripts, expert witness fees, and photocopying.
A court may award punitive costs to penalize a party for improper behaviour. Conduct that justifies punitive costs includes false allegations of criminality, fraud, or impropriety, if made maliciously; scandalous charges; malicious abuse of position; deceit, conspiracy, and breach of fiduciary duties; and the use of obstructionist tactics.
If you have a lawyer who started an action without your authority, your lawyer may be personally liable for costs. In some cases, your lawyer or the lawyer of your opponent may be ordered to pay costs, if the lawyer is engaged in conduct which in the opinion of the court is highly objectionable or suggest serious dereliction of the lawyer's duty. Examples of such conduct include failing to appear at the hearing, misleading a client, swearing a false and misleading affidavit or intentionally engaging in intolerable delay.
Assuming you won your case and costs are awarded in your favour, in many cases such costs may not fully compensate you for all the fees you paid your lawyer. So be prepared to pay some or most of your lawyer's fees out of your own pocket, unless the court decides to award a higher level of indemnification, usually referred to as costs on a "solicitor and client scale" or on a "substantial indemnity" basis.
Many people think that their lawyer will be paid from the costs or award they expect to recover if they win the case. Although this may be correct in some cases, this is not the usual procedure. Your lawyer may ask you to give him some or all the monies "up front" or pay his periodic accounts. Be prepared to face a double edge sword: having to pay your lawyer his fees and having to pay your opponent's lawyer if you lose your case. How then do you minimize your downside risk? Make sure you do not start a lawsuit unless the chances of winning it are in your favour.
If someone is suing you and you are concerned that his action is frivolous and vexatious and he has insufficient assets in your Province to satisfy your costs (if he loses the action), your lawyer may ask the court to order the plaintiff to put his money where his mouth is by posting sufficient security for your anticipated costs before being allowed to proceed with his case against you. In some jurisdictions such orders are routinely granted if the plaintiff is a corporation which has insufficient assets in the place (e.g., Province) where the action is filed.
To ensure that the court will order the plaintiff to post security for costs, you must come to court (i.e., bring what is commonly called a "motion") as soon as the action is brought against you. If there is unreasonable delay which is unexplained, the court will refuse to order security for costs. In many cases, however, delay will be insufficient to turn down your request, as the court may ask the plaintiff to prove some prejudice; for example, a large some of legal expenses that have already been incurred to pursue the action.
In a family law case, pursuant to the Family Rules on Ontario, a party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
1. If the offer relates to a motion, it is made at least one day before the motion date.
2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
The topic of court costs can be extremely esoteric and difficult once you start dealing with issues such as what constitutes "residence", whether assets are of sufficient value and reciprocal legislation that provides for enforcement of judgments, topics that are beyond the scope of this article.
© Andreas Solomos, Barrister & Solicitor. All rights reserved.