If You Win in Ontario Small Claims Court, Will the Other Side Pay Your Legal Costs?

Key Points

• In Ontario Small Claims Court, the successful party may ask the court for costs.

• Costs do not usually mean full reimbursement of all lawyer or paralegal fees.

• The court usually separates legal representation fees from disbursements.

• Disbursements include expenses such as filing fees, service fees, printing costs, and expert report fees.

• Legal costs in Small Claims Court are usually limited and modest.

• In most cases, representation fees are subject to a 15% limit.

• A reasonable offer to settle can affect costs at the end of the case.

• If a party refuses a reasonable offer and does worse at trial, the court may order more serious costs consequences.

• A party who delays the case or acts unreasonably may also face higher costs.

• Before starting or defending a claim, parties should consider both the amount in dispute and the possible costs risk.

  
  

A Common Misunderstanding About Costs

Many people believe that if they win in court, the losing party must pay all of their lawyer or paralegal fees.

In Ontario Small Claims Court, this is usually not correct. The court can award costs, but that does not mean the losing party must fully reimburse everything the successful party spent.

For example, you may spend $5,000 on legal representation and win the case. The court will not automatically order the other side to pay the full $5,000. The court may consider the claim amount, the result, the parties’ conduct, the actual expenses, and whether there were reasonable settlement opportunities.

Small Claims Court is designed to be a faster and more cost-effective process. For that reason, costs awards are usually more limited than in higher court litigation.

What Do “Costs” Include?

Costs in Small Claims Court usually include two main categories.

The first category is representation fees. These are fees paid to a lawyer, paralegal, or other permitted representative.

The second category is disbursements. These are out-of-pocket expenses needed to move the case forward. Common examples include filing fees, service fees, printing costs, postage, travel costs, and expert report fees.

These two categories are not the same. Many people call everything “legal fees,” but the court usually treats representation fees and disbursements differently.

If I Win, How Much Can I Expect to Recover?

If you win, the court may order the losing party to pay reasonable disbursements. This may include filing fees, service fees, and other necessary expenses.

Representation fees are more limited. In many cases, the amount awarded for representation fees cannot exceed 15% of the amount claimed or the value of the property claimed.

For example, if the claim is for $20,000, 15% is $3,000. Even if you spent more than $3,000 on representation, the court may not award the full amount.

If the claim is for $50,000, 15% is $7,500. However, this does not mean the successful party will automatically receive $7,500. The court will still consider whether the amount is reasonable, whether the work was necessary, and whether the party was successful on the main issues.

The practical point is simple. If you win, you may recover some legal costs and reasonable expenses, but you should not assume that all legal fees will be paid by the other side.

What If I Lose?

If you lose, the court may order you to pay part of the other side’s costs. This may include their reasonable disbursements and part of their representation fees.

For example, if you sue someone for $30,000 and lose completely, the defendant may ask the court to order you to pay some of their costs. If the defendant hired a lawyer or paralegal, the court may award a limited amount for representation fees, plus reasonable disbursements.

This is why it is important to assess the evidence before starting a claim. If your evidence is weak or your amount is exaggerated, losing the case may create additional cost consequences.

That said, losing does not always mean paying a large costs award. Costs in Small Claims Court are usually limited. However, the risk increases if a party acts unreasonably during the litigation.

Misunderstanding #1: Winning Means Full Reimbursement

This is the most common misunderstanding. Small Claims Court is not usually a full indemnity system. The court does not simply ask how much the successful party spent and order the losing party to pay that exact amount.

Costs are better understood as partial compensation, not full reimbursement.

This matters for both plaintiffs and defendants. A plaintiff should not assume that all legal costs will be recovered after winning. A defendant should not assume that losing only means paying the judgment amount.

Misunderstanding #2: Self-Represented Parties Cannot Get Any Costs

A self-represented party may not have lawyer or paralegal fees. However, this does not mean they can never ask for costs.

A self-represented party may still ask for reasonable disbursements. These may include filing fees, service fees, printing costs, and other actual expenses.

In some situations, the court may also award a limited amount for inconvenience and expense. However, self-represented parties should not expect the court to compensate their time at a high hourly rate.

Misunderstanding #3: Offers to Settle Do Not Matter

This is a risky misunderstanding.

In Small Claims Court, an offer to settle can affect costs. If one party makes a reasonable offer and the other side refuses it, the court may look at that offer after trial.

For example, a plaintiff sues for $20,000. Before trial, the defendant offers to settle for $15,000. The plaintiff refuses. At trial, the court awards the plaintiff only $12,000.

In that situation, the plaintiff still won something, but the trial result was worse than the defendant’s earlier offer. The defendant may ask the court to consider that when deciding costs.

The reverse can also happen. If the plaintiff makes a reasonable offer and then obtains a better result at trial, the plaintiff may seek stronger costs consequences.

An offer to settle is not just a negotiation tool. It can also be an important litigation strategy.

Why Offers Matter

Small Claims Court encourages parties to resolve disputes reasonably. If a party had a realistic opportunity to settle but insisted on going to trial, the court may consider whether that decision caused unnecessary time and expense.

This is why offers can matter at the costs stage. A well-drafted offer may help protect a party’s position after trial. A vague or unrealistic offer may not be very useful.

A good offer should be clear, specific, and capable of acceptance. It should address the amount, payment deadline, whether costs and interest are included, and whether a full and final release is required.

What Is Unreasonable Litigation Conduct?

Apart from offers, the court can also consider how the parties behaved during the case.

Unreasonable conduct may include delay, failure to attend court, refusal to disclose important documents, making claims with no evidence, raising irrelevant issues, or making the case unnecessarily complicated.

If the court finds that a party acted unreasonably, it may order higher costs. In that situation, the costs award is not just about reimbursing expenses. It may also reflect the consequences of wasting time and resources.

Small Claims Court may be more accessible than higher courts, but it is still a court process. Parties are expected to act reasonably and follow the rules.

Can Disbursements Be Recovered in Full?

Disbursements are often easier to explain than representation fees because they are actual expenses. Filing fees, service fees, and necessary document costs are common examples.

However, not every expense will automatically be awarded. The court will still consider whether the expense was reasonable, necessary, and connected to the case.

For example, a simple unpaid invoice claim may not require an expensive expert report. If a party chooses to spend money on an unnecessary report, the court may not require the other side to pay for it.

On the other hand, in cases involving renovation defects, vehicle damage, or technical issues, an expert report may be more likely to be treated as a reasonable disbursement.

How Should You Assess Costs Risk Before Court?

First, consider whether the amount claimed is reasonable. Exaggerated claims may affect credibility and may also affect costs.

Second, consider whether the evidence is strong enough. Believing you are right is not enough. The court decides cases based on evidence.

Third, take settlement offers seriously. If the other side makes an offer that is close to the likely trial result, refusing it may increase costs risk.

Fourth, keep records of all expenses. This includes filing fees, service fees, receipts, invoices, and legal fee records.

Fifth, act reasonably throughout the case. File documents on time, attend required appearances, disclose evidence properly, and avoid unnecessary disputes.

A Note for Plaintiffs

If you are the plaintiff, do not only ask, “How much can I win?” You should also ask, “How much can I realistically recover after costs and expenses?”

If the claim amount is modest but legal fees are high, the economics of the case may not make sense. Even if you win, the recoverable costs may be limited.

A Note for Defendants

If you are the defendant, do not ignore a claim just because the amount seems small. If you lose, you may have to pay the judgment amount, interest, disbursements, and some costs.

If you have a defence, prepare it properly. If you believe the plaintiff also owes you money, consider whether a Defendant’s Claim or set-off should be raised. If settlement is reasonable, consider making an offer to settle to reduce costs risk.

Conclusion

Small Claims Court costs are not designed to reimburse every dollar spent by the successful party. They provide limited compensation and encourage parties to litigate reasonably.

Winning the case does not always mean recovering all legal fees. Losing the case does not always mean paying all of the other side’s legal fees. However, refusing a reasonable offer, delaying the case, or acting unreasonably can lead to more serious costs consequences.

In Small Claims Court, litigation strategy is not only about preparing a claim or defence. It is also about managing costs, making reasonable offers, and controlling expenses.

Contact Clarity Legal Services

If you are involved in an Ontario Small Claims Court matter involving unpaid invoices, contract disputes, renovation disputes, business disputes, or other civil claims, contact Clarity Legal Services for an inquiry.

We can help you assess the claim, the evidence, costs risk, settlement strategy, and whether an offer to settle should be made.

Disclaimer: This article is for general information only and does not constitute legal advice. Costs and disbursements in Small Claims Court depend on the facts, the parties’ conduct, the evidence, any offer to settle, and the court’s discretion.