Something that you will want to take into consideration before starting an action is the bill that may come with it. Going to court can be extremely expensive. It is important to know that if you lose your case, you may also get stuck with the other parties’ costs. This article will help explain how legal “costs” work and suggest helpful ways to avoid getting stuck with a big legal bill.
What are “costs”?
“Costs” are the fees associated with going to court. They can include court filing fees, legal bills, and “disbursements” (ie. photocopy charges, or the cost of putting evidence together). In British Columbia (as in other Canadian jurisdictions) the general rule of costs is that absent any special circumstances or considerations, a successful litigant has a reasonable expectation or obtaining an order for his or her costs.
This means that if you win your case, the defendant may have to pick up a significant portion of the bill. According to the British Columbia Court of Appeal, the rule that costs follow the action serves a number of important public policy objectives. In Skidmore v. Blackmore the court explained that by partially indemnifying the successful litigant, frivolous actions are deterred, parties are encouraged to settle, and unnecessary steps in the litigation can be avoided. The SCC has confirmed that the cost-shifting rule promotes fairness, accessibility and efficiency in the justice system.
When are costs ordered or withheld?
It is important to note that parties have no general “right” to costs, unless they are awarded by a court. Although successful litigants have a reasonable expectation of being awarded costs, special circumstances may be established by the loser to defeat that expectation. In order to avoid costs, the applicant must prove that there is a reason connected to the proceedings that costs should not be awarded. If the reason is not connected to the proceedings it will not be considered. For example, if Billy sues his ex-girlfriend Anna because she stole his truck and smashed it into a building and he is successful, he will likely be awarded costs. Anna’s protest that she has no money to pay costs and that Billy was a liar and a cheater are not connected to the proceeding and therefore would not likely be a reason to deny Billy costs.
How are costs determined?
Once an order for costs has been made the parties’ are encouraged to settle the bill on their own. If an agreement cannot be reached they may apply to have costs assessed. It is important to note that once a court has made a decision on a particular item, that decision is final and binding. Costs may be withheld if the party entitled to payment unnecessarily slowed the process or made it more expensive or if lied.
For example a successful plaintiff was denied costs for two days of trial because he lied about how much wages he had actually lost. The registrar hearing the assessment has the jurisdiction to award costs as he or she thinks is proper, therefore it is always best to be truthful about your circumstances so that you do not risk losing your entitlement.
Can I still get costs if I didn’t have a lawyer?
Yes, an unrepresented party may be awarded costs.
What if I offered to settle?
An offer to settle is an offer made by one party to the other in order to avoid going to court. Offers to settle must
- Be made in writing
- Be served on all parties on the record
- Notify the recipient that the offer will be made known to the court if refused
If a party to litigation made an offer to settle before winning a case and the loser refused it, the loser could be liable for the winning parties’ costs since it would have been possible to avoid the litigation altogether. In determining whether costs should shift because of an offer, courts will consider various criteria including:
Whether the offer to settle would have been reasonable to accept…
For example, in Abma v. Paul the BC Supreme Court maintained that it was unreasonable for the plaintiff to have rejected the defendant’s offers since the plaintiff’s claim for a mild traumatic brain injury was “hotly disputed and the amount of the offers was substantial.”
How the terms of the settlement compared to the final judgment at court…
This factor will favour the defendant where the offer was within the range of results the plaintiff ought to have expected. For example, If Anna offered to pay Billy $12,000 and he refused he may not be entitled to costs if the court determined the amount to be paid was $12,500. Since the offer Anna made was reasonable and comparable to the final judgment, Billy could have accepted it and avoided court time.
The relative financial circumstances of the parties…
While it is possible that a court may take into consideration the position of the parties financially, case law suggests that a poor financial situation alone, or a disparity of income may not be enough to alter cost decisions.
Going to small claims court can be cheaper…
Legal fees are not recoverable in small claims court. A victorious party may be entitled to their expenses in attending court, and possibly disbursement, but they will never recover legal fees paid to counsel. While legal fees cannot be recovered, a trial judge does have the power to award a penalty against an unsuccessful party of up to 10% if the claim proceeds to trial, but has no reasonable prospect of success – but this will only be given in the clearest of circumstances. While there are also some remedies available to trial judges to encourage settlement, costs in small claims court will not be as crippling as they may be in a Superior Court.
If your claim is under $25,000 you should seriously consider taking it to Small Claims court. If you are concerned about costs, speak to you lawyer. They may be able to suggest some possible alternatives or arrangements for the cost of your legal fees.