As a plaintiff, losing your court case is bad. Having to pay thousands of dollars for the defendant’s legal fees is much worse.
Part of the strategy in any litigation proceeding is weighing what your case is worth versus how much you might spend to prove that case. From a financial perspective, there is not much point proceeding to trial over a $1,000 loss if it will cost you $5,000 in legal fees by the end of trial. Many people believe that the loser in any court case automatically has to pay for the winner’s legal fees. This is partially true, but also misleading. In a typical court case, it is exceptionally rare to get 80-90% of your legal fees paid for, let alone 100%. The amount of the winner’s legal fees that must be paid for by the losing party is called a “costs award”. Considering how much you will incur in legal fees plus the cost of the other side’s legal fees is something about which any prudent lawyer would advise his client.
In Small Claims Court, costs awards work differently. The Courts of Justice Act places a cap of 15% of the amount claimed (up to $25,000 which is the limit of the Small Claims Court), plus disbursements, such as travel expenses. In rare circumstances, the judge can award additional costs to penalize a party for unreasonable behaviour. For a more detailed breakdown on how Small Claims Court works, there is helpful information available from the Ministry of the Attorney General.
Barton v Bowerman is one those rare circumstances where the judge awarded more than the 15% limit. The plaintiff was hired by the defendant to be an administrative assistant at their accounting firm, subject to a six month probation period. Within weeks of starting her new position, the plaintiff was fired. She sued the defendant for $25,000 claiming she was owed pay for the full six months of her probation. The court noted that the issue was not whether the plaintiff was wrongfully dismissed, but whether she was entitled to more pay in lieu of notice than the two weeks’ pay the defendant gave her. Given her six month probation period, she was not.
In the costs decision, the judge awarded the defendant-employer $7,500.00 in costs plus $500.00 in disbursements. This is double the traditional 15% limit. In his written reasons, Deputy Judge Lyon Gilbert wrote the plaintiff wasted a full day of the court’s time exploring evidence regarding just cause for her dismissal even though the defendant stated she was fired without cause. The plaintiff also amended her claim to include claims under the Human Rights Code, but never gave any evidence to support these claims. The defendants also made an offer to settle one year before the trial which would have given the plaintiff a better result than was obtained at the trial. The plaintiff did not accept this offer. The plaintiff was also a sophisticated litigant: she had practiced as a paralegal and was represented by a retired litigation lawyer. All of these factors point to the conclusion that there was no reason for the plaintiff to have dragged out her issue as much as she did. You can read about the full costs award here.
This decision highlights the importance of presenting a clear case for the court to consider. While you may want to advance every possible cause of action in your claim, without the proper evidence to back up your claim, this could create a very costly detriment. While there are several self-represented litigants who are able to successfully argue their claim in court, a lawyer may be able to argue a small claims file in less time and for less money than one might expect. If you would like to discuss your small claims file, a member of the Devry Smith Frank LLP team would be pleased to assist you.