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A Helpful Introductory Guide to Understanding the Rules Governing Costs Awards Against Self-Represented Parties in Small Claims Court

Legal Costs Rules Applicable Within Small Claims Court ProceedingsBy: Giancarlo Mazzitelli

United Legal Services (“ULS”) is often faced with negotiating or attempting to navigate through the Rules of Small Claims Court (“Rules”) and procedure with a self-represented defendant on the other side of the table.  The following is a list of steps ULS will take to ensure a creditor is protected and can achieve maximum cost awards.

Costs Rules

Costs are governed by section 19 of the Rules which defer cost awards to section 29 the Courts of Justice Act, R.S.O.  1990, c.  C.43, which limits the amount of costs that may be awarded to a successful party.  Specifically, section 29 of the Courts of Justice Act states that:

Limit on Costs

29 An award of costs in the Small Claims Court, other than disbursements, shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding.

Double Costs Awards

Section 14.01 of the Rules govern offers to settle.  An offer to settle may be presented at any time of the claim process.  From a creditor’s point of view, an offer to settle may be used to mitigate unwanted trial risks. 

The consequences of failing to accept a reasonable offer to settle can result in double costs against the defendant.  Section 14.07 of the Rules state that:

14.07 (1) When a plaintiff makes an offer to settle that is not accepted by the defendant, the court may award the plaintiff an amount not exceeding twice the costs of the action, if the following conditions are met:

1.  The plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer.

2.  The offer was made at least seven days before the trial.

3.  The offer was not withdrawn and did not expire before the trial.

(2) When a defendant makes an offer to settle that is not accepted by the plaintiff, the court may award the defendant an amount not exceeding twice the costs awardable to a successful party, from the date the offer was served, if the following conditions are met:

1.  The plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer.

2.  The offer was made at least seven days before the trial.

3.  The offer was not withdrawn and did not expire before the trial.

In other words, if an offer to settle is served on a Defendant and remains available for acceptance seven days prior to trial, then a request may be made after a finding of liability is made to make a request for double costs.  The resulting increase in costs on a $35,000 claim can be as significant as an additional $10,500.00 as a costs award.

The practice of strategic offers to settle and self-represented litigants are well articulated in Hinschberger v. Welsh, 2012 CanLII 98283 wherein Deputy Judge J.  Sebastian Winny stated at paragraph 45:

45.  Mr.  Hinschberger is self-represented.  On the one hand the court can sympathize with him for his failure to analyze the case properly from a legal perspective for the simple reason that he is a layperson.  On the other hand if he had invested in legal representation the matter might not have come this far and cost so much for the defendants to litigate.

… I fix a representation fee at $1,250 and double that amount under rule 14.07, to $2,500 …

It is well articulated that self-represented parties cannot use their lack of representation or knowledge as a shield against costs.  This is clearly outlined in Evans v. Villages of Sally Creek2014 CanLII 13556 wherein Deputy Judge James Branoff stated:

21.  I also agree with the submission of Mr.  Truelove on behalf of the Developer, citing the Martin v. Martin, [2007] W.D.F.L.  2818 at [7]:

Mr.  Martin’s overall financial circumstances are dire.  However, that is not determinative of the costs issue.  A self-represented litigant cannot be treated any differently, with respect to costs, than one that is legally represented.  That would be unfair to the party who seeks legal representation.  It would also encourage self-represented litigants to litigate with impunity regardless of the merits or the lack of merits of their case.  Mr.  Martin could no more afford this litigation than could Ms.  Martin who continues to have the major financial responsibility for the children of the marriage.  In all of these circumstances, Mr.  Martin must be taken to have reasonably anticipated that he would be liable for Ms.  Martin’s costs in the event that he was substantially unsuccessful in this litigation.

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