If You Lose a Lawsuit in Ontario, Do You Pay the Other Side’s Legal Fees?
This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions.
Quick Answer: If You Lose a Lawsuit in Ontario, Who Pays the Legal Fees?
- In Ontario, the party who loses a civil lawsuit is typically ordered to pay a portion of the winning party’s legal costs, on top of paying their own lawyer.
- Costs are discretionary under section 131 of the Courts of Justice Act, so the court decides who pays, how much, and on which scale — “loser pays” is the general rule, not an automatic result.
- The default scale is partial indemnity, which covers only part of the winner’s actual legal fees; substantial indemnity applies in narrower circumstances, and full indemnity is rare.
- In Small Claims Court, costs other than disbursements are capped at 15% of the amount claimed under section 29 of the Courts of Justice Act — up to $7,500 on a $50,000 claim.
- A formal offer to settle under Rule 49 of the Rules of Civil Procedure can move costs to a higher scale from the date of the offer, so an offer that is refused and then beaten at trial may change both who pays and how much.
Why the Costs Question Decides Whether People Sue at All
Someone owes you $40,000 for work you finished a year ago. A lawyer has read your file and told you the claim looks strong. You have budgeted for your own legal fees, and the arithmetic works.
There is a second number attached to the case, and it is the one most people are never quoted: what you could be ordered to pay the other side if the case goes against you.
Ontario lawyers call that number costs. It is why people with good claims sometimes decide not to sue, and why people who have been served with a Statement of Claim sometimes settle a case they could have defended. Understanding how the number is calculated often changes the decision — in both directions.
Quick Start: Are You Suing, Defending, or Deciding?
Read the costs scales and the two courts first. The court you choose may set your maximum exposure before anything is filed.
Start with offers to settle. A defendant who makes a reasonable written offer early can recover costs even while losing overall.
The date it was served is the date that matters. Costs consequences may already be attaching to the case.
Nihang Law’s civil litigation services cover all three positions.
What “Loser Pays” Actually Means in Ontario
A costs award has two parts. Fees are what a lawyer or paralegal charges for their time. Disbursements are the out-of-pocket expenses a case generates: filing fees, process servers, expert reports, transcripts and copying.
Costs are also discretionary. Section 131 of the Courts of Justice Act gives the court the power to decide who pays, how much, and on what terms. “Loser pays” describes the usual pattern rather than a rule the court must follow: a judge may order no costs at all, divide them between the parties, or in unusual cases order a successful party to pay.
The Three Costs Scales, From Smallest to Largest
Partial indemnity is what a successful party can normally expect. Legal commentary often describes awards landing between a third and two-thirds of actual fees, though no fixed formula applies — a court fixes an amount it considers fair and reasonable for the unsuccessful party to pay.
Substantial indemnity is defined in the Rules of Civil Procedure as 1.5 times what would otherwise be awarded on the partial indemnity scale. Courts typically reserve it for two situations: where a party beat its own formal offer to settle, and where the other side’s conduct was genuinely unreasonable.
Full indemnity means the losing party pays the winner’s entire account. It is uncommon in ordinary disputes, appearing most often where a contract such as a mortgage or a guarantee says one side pays the other’s full legal costs on default.
The scale a judge chooses often matters more to the final number than the hourly rate on anyone’s bill.
| Costs scale | What it means in plain terms | When a court typically uses it | How it is defined |
|---|---|---|---|
| Partial indemnity | The successful party recovers part of what their lawyer or paralegal actually charged, not the whole account. | The default scale in most contested civil cases, applied unless something moves the case to a higher scale. | Fixed by the court as a fair and reasonable amount for the unsuccessful party to pay, using the factors in rule 57.01. |
| Substantial indemnity | A higher award that still falls short of the full account, but noticeably closer to it. | Typically where a party beat its own formal offer to settle, or where the other side’s conduct was genuinely unreasonable. | Defined in the Rules of Civil Procedure as 1.5 times what would otherwise be awarded on the partial indemnity scale. |
| Full indemnity | The unsuccessful party pays the entire account the successful party was charged. | Rare in ordinary disputes; most often where a contract such as a mortgage or guarantee provides for it. | The full amount charged, subject always to the court’s discretion under section 131 of the Courts of Justice Act. |
What a Judge Weighs When Fixing the Amount
Rule 57.01 of the Rules of Civil Procedure lists what a court may consider when it fixes costs. The factors are practical rather than technical, and several of them are within a party’s own control.
A court may look at the amount claimed and the amount recovered, the complexity of the case, the importance of the issues, the hours and rates of the successful party’s lawyer, and the conduct of each party, particularly conduct that lengthened the proceeding unnecessarily. It may also consider what the unsuccessful party could reasonably have expected to pay.
That last factor carries real weight: a party who ran a modest dispute economically tends to be in a better position on costs than one who turned it into a paper war.
How Costs Differ Between Small Claims Court and Superior Court
The rest of the Small Claims structure sits under that ceiling. A successful party represented by a lawyer or paralegal may be awarded a reasonable representation fee, and one who ran the case alone may be awarded up to $500 as compensation for inconvenience and expense. Disbursements are assessed separately, on top of the cap. A court may also go above 15% where it considers that necessary to penalize unreasonable behaviour.
The Superior Court has no such ceiling, and a costs award in a hard-fought case there can approach or exceed the amount in dispute. If your dispute may fit the lower court, Ontario’s $50,000 Small Claims Court limit explains how that court works.
| Costs question | Small Claims Court | Superior Court of Justice |
|---|---|---|
| Statutory cap on costs | Costs other than disbursements are capped at 15% of the amount claimed, or the value of the property sought. | No cap. Exposure depends on the scale the court applies and the size of the case. |
| Ceiling on a maximum claim | Up to $7,500 on a $50,000 claim, before disbursements. | None. A costs award in a hard-fought case can approach or exceed the amount in dispute. |
| Disbursements | Assessed separately and sit outside the cap. | Included in the costs award and assessed with the fees. |
| If you win self-represented | Up to $500 as compensation for inconvenience and expense. | No fixed allowance; a self-represented party may recover less than a represented one. |
| If a written offer is refused and then beaten | The court may award up to double costs where the offer was served at least seven days before trial. | Costs may move from partial indemnity to substantial indemnity from the date of the offer, unless the court orders otherwise. |
| Going above the usual limit | A court may exceed the 15% cap where it considers that necessary to penalize unreasonable behaviour. | The court may raise or reduce the scale based on conduct and the rule 57.01 factors. |
| Governing provisions | Courts of Justice Act, s. 29; Rules of the Small Claims Court, O. Reg. 258/98, rr. 14.07 and 19. | Courts of Justice Act, s. 131; Rules of Civil Procedure, rr. 49.10 and 57.01. |
How an Offer to Settle Can Change Who Pays
The rule comes with conditions. The offer generally must be served at least seven days before the hearing, must not be withdrawn, and must not expire before it — and even then, the costs consequences apply unless the court orders otherwise.
Where a plaintiff makes an offer and then obtains a judgment as favourable as or more favourable than it, the plaintiff is typically entitled to partial indemnity costs up to the date of the offer and substantial indemnity costs from that date forward.
The reverse is the outcome most people do not anticipate. Where a defendant makes an offer and the plaintiff recovers no more than it, the plaintiff typically receives costs only to the date of the offer, and the defendant typically receives costs from that date forward. A plaintiff can win a case, recover less than they were offered, and still end up writing a cheque.
Small Claims Court has its own version: a party who serves a written offer at least seven days before trial and then does as well or better may be awarded up to double costs. For these reasons, resolving a dispute outside court deserves genuine consideration at every stage.
| What happened | Costs up to the date of the offer | Costs from the date of the offer |
|---|---|---|
| Plaintiff’s offer The plaintiff offered to settle, the defendant refused, and the judgment was as good as or better than the offer. | The plaintiff typically recovers partial indemnity costs. | The plaintiff typically recovers substantial indemnity costs — the higher scale. |
| Plaintiff’s offer The plaintiff offered to settle, the defendant refused, and the judgment came in below the offer. | Ordinary costs rules apply; the plaintiff’s offer does not lift the scale. | Ordinary costs rules apply; no scale shift from the offer. |
| Defendant’s offer The defendant offered to settle, the plaintiff refused, and the plaintiff recovered more than the offer. | Ordinary costs rules apply. | Ordinary costs rules apply; the defendant’s offer does not shift costs. |
| Defendant’s offer The defendant offered to settle, the plaintiff refused, and the plaintiff recovered no more than the offer. | The plaintiff typically recovers partial indemnity costs to that date. | The defendant typically recovers partial indemnity costs from that date — so a plaintiff can win and still owe money. |
From Claim to Costs Order: When the Costs Question Comes Up
Costs are not settled once at the end of a case. Six moments shape the final number.
- 1Before you fileA demand letter and an honest assessment of what the claim is worth cost far less than a proceeding, and a refusal to engage may be raised later.
- 2Choosing the courtA claim filed in the Superior Court that belonged in Small Claims may attract reduced costs, or none, even after a win.
- 3The offer windowThe earlier a reasonable written offer is served, the more of the case its costs consequences may cover.
- 4Motions along the wayCosts are often fixed on each contested motion, and may be payable before the case ends.
- 5The costs outlineAt trial each side files a short document setting out the fees, rates and hours it seeks.
- 6The costs endorsementAfter judgment the judge fixes the amount, usually in a brief written ruling.
In debt recovery and collection matters, the first of those six moments often decides the rest.
Mistakes That Can Multiply What You Owe
- ▪ Assuming a win makes you whole. A successful party typically recovers a portion of their fees, so the net cost of winning is real and should be part of the budget from the start.
- ▪ Ignoring a written offer. An offer that is left unanswered and later beaten can move costs to a higher scale for the entire remainder of the case.
- ▪ Filing in the wrong court. Bringing a claim in the Superior Court that could have been heard in Small Claims may reduce or eliminate a costs award.
- ▪ Fighting every issue. Conduct that lengthens a proceeding unnecessarily is one of the factors a court may weigh when fixing costs.
- ▪ Treating self-representation as free. A self-represented winner recovers far less than a represented one, which is worth weighing before representing yourself in Small Claims Court.
- ▪ Overlooking security for costs. In limited circumstances a defendant may ask the court to order a plaintiff to post money in advance to cover a future costs award.
Frequently Asked Questions About Legal Costs in Ontario
If I sue someone in Ontario and lose, do I have to pay their lawyer?
How much of the winner’s legal fees does the losing side usually pay?
What is the most I can be ordered to pay in Ontario Small Claims Court?
Can I be ordered to pay costs even if I win my case?
What is a Rule 49 offer to settle, and why does it matter for costs?
Do I get anything for my time if I win without a lawyer?
What is the difference between legal fees and disbursements?
Can I be asked to put up money before the case is even heard?
Talk to Nihang Law Before You Decide Whether to Sue
Costs exposure is not a footnote to a case assessment. It is part of it, and it can be estimated, bounded and managed — by choosing the right court, by making a reasonable written offer early, and by keeping the fight proportionate to what is actually in dispute.
Qasim Ali, Principal Lawyer at Nihang Law, and the firm’s litigation team act for individuals and small businesses across Toronto, Scarborough and the wider GTA, on both sides of civil disputes.
Weighing whether to start or defend a claim?
Speak with our litigation team about the strength of the case and the costs exposure that comes with it, before the first deadline arrives.
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About the author
Qasim Ali
Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario
Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.
Nihang Law is particularly recognized for its depth in immigration and real estate law — a combination that serves newcomers and growing families navigating both legal systems simultaneously.
Learn more about Qasim Ali →Sources & References
- Courts of Justice Act, R.S.O. 1990, c. C.43 — s. 29 (costs in Small Claims Court) and s. 131 (costs in the discretion of the court) — www.ontario.ca/laws/statute/90c43
- Rules of Civil Procedure, R.R.O. 1990, Reg. 194 — r. 1.03 (definitions of the costs scales), r. 49.10 (costs consequences of an offer to settle), r. 56 (security for costs), r. 57.01 (factors in fixing costs) — www.ontario.ca/laws/regulation/900194
- Rules of the Small Claims Court, O. Reg. 258/98 — r. 14.07 (offers to settle), r. 19.01 (disbursements), r. 19.04 (representation fee), r. 19.05 (compensation for a self-represented party), r. 19.06 (unreasonable behaviour) — www.ontario.ca/laws/regulation/980258
- O. Reg. 626/00, as amended by O. Reg. 42/25 — Small Claims Court monetary limit of $50,000, effective October 1, 2025 — www.ontario.ca/laws/regulation/000626
- Government of Ontario — Suing someone in Small Claims Court — www.ontario.ca/page/suing-someone-small-claims-court
- Ontario Superior Court of Justice — Small Claims Court — www.ontariocourts.ca/scj/areas-of-law/small-claims-court/
- Law Society of Ontario — Find a lawyer or paralegal — lso.ca/public-resources/finding-a-lawyer-or-paralegal
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