Worked Estimates and Hiring Checklists
Does the loser pay legal fees in Canada? How costs awards work, with examples
How Canadian courts order the losing side to pay legal costs: partial and substantial indemnity, offers to settle, BC and Alberta tariffs, Quebec's different rule and worked examples.
In most of Canada the loser of a civil lawsuit is usually ordered to pay part of the winner's legal costs, but rarely all of them. Outside Quebec, courts follow the general rule that "costs follow the event", and the amount depends on the scale (in Ontario, partial indemnity in most cases, and substantial indemnity, defined as 1.5 times partial indemnity, in special situations), the court's discretion, offers to settle, and the conduct of each party. In BC and Alberta, tariffs of units or schedules guide the amount. Quebec is different: legal costs awarded to the winner normally cover court fees and certain expenses, not the winner's own lawyer's fees. Whatever province you are in, plan on paying most of your own legal bill even if you win.
This guide is part of the hiring a lawyer cost checklist. Figures are illustrative examples.
The scales and tariffs at a glance
| Jurisdiction | How costs are usually fixed | Key terms |
|---|---|---|
| Ontario | Judge's discretion under the Courts of Justice Act and Rule 57, usually on a partial indemnity scale; substantial indemnity is 1.5 times partial indemnity (Rule 1.03); full indemnity is rare | Rule 49 offers to settle, proportionality, reasonable expectations of the losing party |
| British Columbia | Tariff of units for each step (Supreme Court Civil Rules, Appendix B), multiplied by a value per unit; special costs for reprehensible conduct | Party and party costs, special costs, offers to settle |
| Alberta | Schedule C of the Alberta Rules of Court, a tariff of fees by step; enhanced or solicitor-client costs in some cases | Formal offers, Schedule C columns based on amount in issue |
| Quebec | Legal costs (frais de justice) under the Code of Civil Procedure, mainly court fees and certain expenses; lawyers' extrajudicial fees not normally included | Abuse of procedure and significant breaches can lead to reimbursement of professional fees |
| Small claims (all provinces) | Low or capped awards; in Ontario, representation costs capped at 15% of the amount claimed, subject to a penalty for unreasonable behaviour | Designed for self-represented parties |
Worked example 1: Ontario partial indemnity (illustrative)
The plaintiff wins a $120,000 judgment. Their lawyer's actual bill is $70,000 including HST and disbursements. The judge fixes costs on a partial indemnity scale at $35,000, plus disbursements of $6,000.
- Recovered: $35,000 + $6,000 = $41,000.
- Actual bill: $70,000.
- Out of pocket despite winning: $70,000 - $41,000 = $29,000.
- Net from the case: $120,000 - $29,000 = $91,000, if the defendant pays.
Try your own figures in the costs recovery estimator.
Worked example 2: an offer to settle changes the scale
Under Ontario's Rule 49, a plaintiff who makes a formal written offer to settle that the defendant does not accept, and who then does at least as well at trial, is generally entitled to partial indemnity costs up to the date of the offer and substantial indemnity costs after it, unless the court orders otherwise.
Suppose the plaintiff offered to settle for $100,000 and then won $120,000. Partial indemnity costs are $15,000 for the period before the offer and $20,000 for the period after.
- Before the offer: $15,000 on partial indemnity.
- After the offer: $20,000 x 1.5 = $30,000 on substantial indemnity.
- Total costs: $45,000 instead of $35,000. That $10,000 difference came from one well-timed offer.
The rule cuts both ways: a defendant's offer that the plaintiff refuses and then fails to beat can leave the plaintiff paying the defendant's costs after the offer date. Always ask your lawyer to explain in writing the costs consequences before you reject an offer.
Worked example 3: the cost of losing
The plaintiff loses. Their own bill is $55,000. The court orders them to pay the defendant partial indemnity costs of $30,000.
- Total cost of losing: $55,000 + $30,000 = $85,000.
That figure, not your own bill alone, is the true downside of litigating. If you are on a contingency fee, your own lawyer's fee may be nil, but adverse costs can still apply; see contingency fee rules by province.
Quebec: why the loser-pays effect is weaker
In Quebec, the Code of Civil Procedure provides that legal costs, which include court fees, certain expert costs and other listed expenses, are generally awarded to the successful party. Lawyers' fees agreed between a client and their own lawyer (extrajudicial fees) are not normally part of that award. Courts can order reimbursement of professional fees in exceptional cases, such as abuse of procedure or a significant breach in the conduct of the proceeding. In practice, each side usually pays its own lawyer, which makes the cost of litigating more predictable but also means a win does not refund your lawyer's bill.
What judges consider when fixing costs
- The result and the amount at stake.
- The complexity and importance of the issues.
- Offers to settle and their timing.
- Conduct that shortened or lengthened the proceeding.
- Whether any step was improper, vexatious or unnecessary.
- What the losing party could reasonably expect to pay.
- Proportionality between the costs and what was at stake.
Keeping your own conduct reasonable, for example agreeing to sensible timetables and not refusing obvious admissions, protects your costs position.
Security for costs
In some cases, a defendant can ask the court to order a plaintiff to post security for costs, money paid into court in advance, for example when the plaintiff lives outside the province or is a company that may not be able to pay a costs order. If you sue from another province or country, ask whether this could apply.
Frequently asked questions
Can I recover the cost of my time if I represent myself?
Self-represented parties can sometimes be awarded costs for time spent, in the court's discretion, but usually modest amounts. Disbursements are more readily recoverable. See the real cost of representing yourself.
Are costs awarded at tribunals?
Many administrative tribunals do not award costs, or award them only for unreasonable conduct. Check the tribunal's rules.
When are costs decided?
Usually at the end of a motion or trial, sometimes after written submissions. Costs on motions can be ordered during the case.
If the other side must pay costs, can I collect them?
A costs order is enforceable like a judgment, but collecting depends on the other side's ability to pay.
Sources
- Ontario e-Laws — Rules of Civil Procedure (Rules 1.03, 49 and 57) and Courts of Justice Act
- Ontario Courts — Superior Court of Justice and Court of Appeal decisions on costs
- Courts of British Columbia — Supreme Court Civil Rules and tariff of costs
- Alberta Courts — Alberta Rules of Court, Schedule C
- Éducaloi — legal costs and lawyers' fees in Quebec
- CanLII — reported costs decisions
