Can I recover all of my legal fees?

 

It depends.  Matters that settle usually involve parties waiving their legal fees.  If, however, a matter goes to trial the court can award up to 15% of the claim amount for legal fees to the successful party.  On a $20,000 claim that would be $3,000.

 

BACKGROUND

Under Rule 19 of Ontario’s Rules of the Small Claims Court a successful party is entitled to have their disbursements paid by the unsuccessful party as well an amount for legal fees.  Any award for legal fees is generally limited to 15% of the claim amount.  As a matter of course, whenever we issue a Plaintiff’s Claim or a Defendant’s Claim we ask for a client’s court costs, legal fees and interest.

 

SETTLEMENTS

Most defended actions in the Ontario Small Claims Court either settle at a settlement conference or sometime thereafter but before a trial.  While each party may feel they are in the right, there are many good reasons to settle a claim such as ensuring payment, creating certainty with respect to the outcome, minimizing costs and expediting disposition of the matter.

A settlement is a compromise of a lawsuit that involves each party giving something up in order to resolve the matter.  For a Plaintiff, this typically means waiving the court costs and legal fees and some of the principal amount of the claim.  For a Defendant who maintains they owe nothing, it typically means paying the Plaintiff some, but not all, of the principal amount of the claim.  In both cases, the parties are generally forgoing their legal fees and costs.

 

TRIALS

If a matter does not settle, and instead goes all the way to a trial, then that is generally when Rule 19 of the Rules of the Small Claims Court would apply.  A successful Plaintiff would generally be entitled to their court costs, disbursements and amount for their legal fees.  As mentioned herein, legal fees are limited to up to 15% of the claim amount as per section 29 of the Courts of Justice Act.  The practice, however, is that the court will grant up to 15% of the judgment amount.  Consequently, if a Plaintiff sues for the maximum of $35,000 but is only awarded $10,000 the court would give 15% of the $10,00 and not the $35,000.

 

DOUBLE THE COSTS

One way that a Plaintiff can increase an award for costs is by the other side rejecting an offer to settle that is better than the judgment.  If, for example, a Plaintiff is suing for $20,000 but makes an offer to settle of $18,000 the Defendant can be penalized for rejecting such an offer if the Plaintiff is ultimately awarded the claimed $20,000. In such a situation, the court then has the power to double the costs award against the Defendant.