In a civil case the losing party is usually ordered to pay a portion of the winning party’s legal expenses. That order is a costs award, set by the court under each province’s rules, and it covers only part of the other side’s costs. It is separate from your own lawyer’s fee and separate from the disbursements on your own file.
Most claims settle, and a settlement normally deals with costs at the same time, so the exposure rarely materialises. It is still the question to ask before an action is started.
Costs Awards Shift Part of the Winner’s Expense Onto the Loser
Canadian courts follow the general principle that costs follow the event. The successful party is presumptively entitled to costs, and the court has a discretion to order otherwise where the conduct of the case or the outcome justifies it.
The purpose is partly to indemnify the winner and partly to discourage claims and defences that should never have been run. A court can reduce or refuse costs to a winner who wasted time, and can award costs against a party who forced an unnecessary hearing.
The Amount Comes From a Tariff, Not From the Actual Bill
Each Atlantic province sets costs by a scale or tariff in its rules of court, keyed to the amount involved and the length of the proceeding. The figure produced is a contribution toward legal fees, and it is ordinarily well below what the winner actually paid their own lawyer.
That is deliberate. Full indemnity is reserved for cases where a party has behaved badly enough that the court wants to say so, and the language used for that is solicitor and client costs, or costs on a full indemnity basis. It is exceptional. The rules and the decisions applying them for New Brunswick are published on CanLII.
Disbursements Are Usually Recovered Separately and More Fully
The tariff deals with fees. The reasonable out-of-pocket costs of running the case, such as expert reports and filing fees, are generally recoverable as a separate item and at a level closer to what was spent.
So a costs award has two parts: a tariff contribution to fees, plus assessed disbursements. On a case that needed several experts the second part can exceed the first. Who advances those costs while a claim is running is dealt with in the note on who pays disbursements.
A Formal Offer to Settle Changes the Arithmetic
Every province’s rules give special costs consequences to a formal written offer. If a party makes one and the other side refuses it, and the judgment turns out to be no better for the refusing party than the offer was, the costs consequences from the date of the offer shift sharply.
This is the most powerful costs tool in litigation and it works in both directions. A defendant’s offer made early in a file has to be assessed carefully instead of dismissed outright, and a plaintiff has good reason to make one too. Refusing a reasonable offer and then doing worse at trial is how a winning party ends up paying.
Who Is Actually Exposed on an Injury File
A plaintiff who loses at trial can be ordered to pay the defendant’s costs. In practice this is the exposure that matters, because the defendant is normally an insurer with the resources to enforce an order.
The decision to start an action is made with the client, based on advice about the strength of the case. It isn’t automatic. Where a claim is strong, the risk is low. Where liability is truly in doubt, the costs exposure belongs in the conversation before the Statement of Claim is filed. The note on why a lawyer declines a case sets out how a firm weighs that.
Read What Your Retainer Agreement Says About an Adverse Award
A costs award is made against the party, not against the lawyer. Retainer agreements deal with the possibility differently, and this is one of the clauses to read before signing rather than after losing.
Ask the question directly at the first meeting. What happens if this case is lost and costs are ordered against me. The answer should be a sentence you can repeat back. The fee arrangement itself is set out in the note on how a contingency fee works.
Small Claims and Tribunals Limit the Exposure
Costs in small claims court are restricted by statute or rule in each province, usually to filing fees and modest amounts, which is a large part of why self-representation there is rational.
Tribunals go further. Residential tenancy boards, employment standards branches and human rights commissions generally do not award legal costs at all. A person who is worried about an adverse award and has a matter that fits one of those forums has a real answer available, set out in the note on free legal help.
Criminal Cases Work the Other Way
An accused who is acquitted ordinarily bears their own legal fees. Costs against the Crown are exceptional and require a marked departure from proper conduct, so winning a criminal case does not produce a payment.
That difference is one of the reasons criminal work is priced as it is, which is set out in the note on criminal defence lawyer fees.
What to Ask Before an Action Is Started
What is the realistic assessment of liability. Has a formal offer been made or received, and what are its consequences. What would an adverse costs order look like on a case of this size. Who bears it under my agreement.
Those four questions belong in the same meeting as the decision to file. The stages that follow filing, including the day the other side questions you under oath, are set out in the note on the discovery process.
Where to Start
A claim that never reaches trial never produces an adverse costs award, and most do not. Understanding the risk before filing lets the client make that decision. The Halifax office takes those calls, and what we can do for you sets out the matters the firm runs.