The losing party in a court case usually pays some of the winning party’s costs, but the costs that can be recovered in Small Claims Court are significantly limited by the Rules of the Small Claims Court and the Courts of Justice Act. Despite these limits, a judge recently awarded a losing party to pay the winning party $15,000 in legal costs in a Small Claims Court action.
The judge in that case remarked that it was an extraordinarily lengthy trial: over the course of 12 months, 19 witnesses gave evidence over 7 days of trial. The plaintiff was ultimately successful: he was awarded $44,320 in damages which was reduced to $25,000 because that is the maximum damages that can ordered in Small Claims Court. The judge also noted that the defendant asked for several adjournments, which obliged the plaintiff to prepare for trial for the several dispersed trial dates. Consequently, the plaintiff suffered extraordinary inconvenience, which was a factor in his costs award.
The judge noted that the court may order an unsuccessful party to pay to a successful party who is self-represented an amount not exceeding $500 dollars as compensation for inconvenience and expense. The Defendant attempted to rely on this rule to limit the plaintiff’s costs award to $500.
Typically, an award of costs in Small Claims Court cannot exceed 15% of the amount claimed, unless the court finds it necessary to penalise a party for unreasonable behaviour in the proceeding. The court concluded that in this case the defendant had acted unreasonably, both in the way it conducted its defence and by refusing to accept a reasonable offer to settle, and assessed a $5000 penalty in costs.
Another Small Claims Court rule allows the court to award the plaintiff double the normal cost order if the plaintiff makes an offer to settle that is not accepted by the defendant and obtains a judgment as favourable as or more favourable than the terms of the offer.
In this case, because the plaintiff obtained judgment for $25,000 at trial, which was higher than the offer he made that was not accepted, he was awarded $11,000 in costs; that is; $500 for inconvenience plus $5,000 for costs, doubled.
There are many rules regarding costs at all levels of court, however, costs are significantly limited by the Rules of the Small Claims Court. When deciding where to bring a lawsuit, it is important to consult a lawyer who is aware of these rules.
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