The Cost of Unsuccessful Litigation in Ontario
In Ontario, awarding costs (compensation for legal fees) is always within the discretion of the adjudicator. However, there is a presumption that the losing party will be ordered to pay a portion of the successful party’s legal costs.
Many people who are unfamiliar with the litigation process think that suing every possible party is usually a good idea. This strategy can backfire in a significant way in light of the “loser pays” system. In some instances a plaintiff may be successful at trial against one defendant, but lose against multiple other defendants who the plaintiff has named and, in the result, end up being liable for more in costs to the successful defendants than they awarded in principle and costs against the unsuccessful defendant.
Ignorance of the loser pays system is also often evident with self – represented plaintiffs. Often these parties feel that they can sue a defendant with little or no downside. However, if they are unsuccessful at trial the self-represented party may be in for an unpleasant surprise when costs are awarded against them.
A recent decision, which is otherwise unremarkable, demonstrates the impact an adverse cost award can have on an unsuccessful plaintiff. The plaintiff obtained default judgment against the one defendant. After a three day trial (which is a relatively short trial) the plaintiff was unsuccessful against the other defendant. The judge awarded the plaintiff just over $9,000 in costs from the defendant who did not defend. However, the judge also ordered the plaintiff to pay the successful defendant nearly $56,000 in costs.
Matt,
Well, yes, it’s a good example of the cost consequences of overreaching, too.
Now the “but”. It’s that that in some cases the plaintiff may not care too much about cost consequences. If we look under the cover – look at the trial reasons to which I’ve linked below – we see that this is a nice example of the theory but a better example of how theory and practice often don’t connect.
One instance is where a plaintiff doesn’t care is where the plaintiff has no assets but a defendant does and cares. I call that economic terrorism. I don’t think it’s original.
Another is where it’s an institutional plaintiff prepared to roll the dice as seems to have been the case, here.
It seems the real plaintiff was the named plaintiff’s insurance company. Read between the lines in the trial decision Schnurr v. Card, 2013 ONSC 1054. Actually, the lawsuit seems to have been between the insurer of the plaintiff and the defendant RH.
So, what effect did the costs exposure have on the real plaintiff?
SFA.
Although, it might have had some effect on the relationship between the plaintiff’s insurer and the lawyer handling the file.
Some people might wonder why that case ever got to trial on that evidence, given the problems recounted by the trial judge; however, too often the reasons only reflect the the judge’s view of part of the story.
(I now return you to your regularly scheduled programme.)