Costs In Small Claims Court: Here’s How It Works

Until the Condominium Authority Tribunal expands its jurisdiction, many Ontario condominium corporations continue to find themselves in the Small Claims Court to resolve disputes (either as a plaintiff bringing the claim, or to defend against a claim brought against them).

The first question that often comes up is: How much is this going to cost in legal fees? Depending on the nature of the dispute, our office can often offer a flat rate charge to handle a Small Claims Court matter on behalf of the condominium. This can be a cost effective and efficient way for your condominium to manage a claim.

The next question that comes up is: how much of our costs can we recover? Here’s what you need to know about recovering your costs in the Small Claims Court:

1. The successful party is typically entitled to have all reasonable disbursement costs (i.e. hard costs incurred for serving documents, filing fees, photocopying, travel, expert reports etc.) covered by the unsuccessful party (regardless of which party started the claim).
2. In addition, if the successful party was represented by a lawyer, paralegal, or articling student, the court can order that the unsuccessful party pay a representation fee of up to 15% of the amount claimed to the successful party. For example, on a claim for $25,000 (which is the maximum amount claimable in Small Claims Court), the representation fee (or “legal fees”) would be $3,750.
3. With that said, the two basic cost principles noted above can be varied if an offer to settle has been served at least seven days prior to trial.
   
   If a plaintiff made the offer to settle (that was not accepted by the defendant), the court can award the plaintiff up to two times the costs of the action (i.e. up to $3,750 x 2), if the plaintiff obtains a judgement that is the same as, or exceeds, the terms of their offer.
   
   If a defendant made the offer to settle (that was not accepted by the plaintiff), the court can award the defendant up to two times the costs of the action (i.e. up to $3,750 x 2), if the defendant obtains a judgement that is the same as, or exceeds, the terms of their offer.
   
   So, serving an offer to settle can be a very effective way to attempt to recover your costs. Rule 14.07 of the Small Claims Court Rules explains the cost consequences of a failure to accept an offer to settle in more detail.
4. In addition to the points above, the Small Claims Court can also vary a costs award beyond the 15% limit, if it is necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behavior in the proceeding. Rule 29 of the Courts of Justice Act governs on this point.
5. Lastly, a court order respecting costs is at the discretion of the deputy judge hearing the matter. For various reasons, the deputy judge may ultimately decide not to award any costs to the successful party. So, there is no guarantee that a successful outcome of the claim will equate to cost recovery, unfortunately.

In summary, the points above are the general standard that applies to Small Claims Court costs. In some cases, we may be able to ask the court for more than these standard amounts. But our ability to do so will depend on the facts of each particular case.

Costs can be a tricky area to navigate in the Small Claims Court, so stay tuned to Condo Law News for the latest updates!