When I was still a student, I once heard a lawyer say this about costs in the Superior Court: “To bring a motion is like buying a car: it may be a junk car or a nice car, but you are buying a car. To do a trial is like buying a house: it may be a small house or a big house, but you are buying a house.”
Now that I am in private practice, I can’t agree with the saying more. A typical (opposed) motion in the Superior Court typically costs between $10,000 to $30,000; a full-blown trial may cost a few hundred thousand dollars or even millions.
However, you can’t exclusively blame the lawyers for their high rates. In Ontario, unlike the U.S., we have what is called a “cost-shifting system,” meaning that the losing parties, besides footing their own bill, must pay the costs of the winning parties.
There are two types of “costs” that are payable by the losing parties. The usual one is called “partial indemnity,” or “party-to-party cost,” meaning the amount payable to the winning party is about 2/3 of the actual legal bill. Partial indemnity are frequently granted when no other consideration, such as improper conduct, is involved.
The second, rarer, type of costs payable is called “substantial indemnity,” or “solicitor-client cost,” where the amount payable is close to the actual amount that has been charged to the winning party. This type of costs is generally granted when there are evidence of improper conducts by the losing party.
Besides the two types of costs mentioned above, the judge may also fix the amount of the costs payable. When doing so, the judge generally considers the complexity of the proceeding, the behaviour of the parties, and whether the bills submitted are of reasonable amounts. Occasionally, the judge may order that there are no costs payable if the circumstances warrant.
The fairness of our cost-shifting system is debatable. On the one hand, cost-shifting serves as a deterrent against frivolous claims, since the losing parties are penalized by having to bear the costs of the winning parties. On the other hand, cost-shifting becomes an obstacle for individuals with modest means who wish to bring their claims forward because they fear the possible cost consequences. Which argument should prevail? Your answer, of course, may depend on whether you are the winning or the losing party.
