A Quick Guide to the Proposal on Costs in Ontario Civil Litigation

This summary explains what the proposal says about costs, why changes are needed, and how the new approach to costs would work. The intention is to make costs orders more efficient, consistent, and predictable.  

The Current Costs Regime 

The current regime is a cost‑shifting model under section 131 of the Courts of Justice Act and Rule 57.01. The successful party generally receives “partial indemnity” costs, with the court using a multi‑factor test to fix a “fair and reasonable” amount. “Substantial indemnity” and “full indemnity” may be awarded in defined circumstances, but the scales are not precisely defined in the Rules. In practice, partial indemnity often lands around 40–60% of actual fees plus 100% of disbursements and “full indemnity” is meant to reflect 100% of actual fees.  

The process frequently requires a second round of submissions and a separate decision on costs, adding time, expense, and uncertainty in the litigation process.  

The Need for Change

The Working Group identifies two core problems: 

• The current method of costs determinations often requires the court to issue a second decision, resulting in added expense and delay.  

• The highly discretionary nature of costs creates unpredictability, making it difficult to advise clients and assess risk.  

Any new framework for costs should balance six objectives: meaningful indemnification, deterrence of improper conduct, simplicity and clarity, encouragement of settlement, access to justice, and flexibility.  

Proposed Reforms 

The proposal keeps cost‑shifting but simplifies and codifies key elements, which include: 

Defined Tiers 

• Partial indemnity = 60% of actual legal fees (including pre‑litigation protocol compliance), plus 100% of disbursements and HST 

• Full indemnity = 100% of actual fees plus 100% of disbursements and HST. Notional rates would be set for salaried counsel and contingency matters to calculate “actual” costs.  

• Self‑represented parties would continue to recover disbursements and certain out‑of‑pocket losses, but not time as fees.  

Costs Presumptions 

• A Partial Indemnity Presumption for the successful party.  

• A Full Indemnity Presumption where the court’s reasons show one or more of:  

  • no serious issue to be tried on an interlocutory motion;  

  • pleading struck as frivolous, vexatious or abusive;  

  • proceeding or step found frivolous, vexatious or abusive;  

  • egregious conduct (e.g., fraud, deception, reprehensible behaviour); 

  • breach of the new Representations Rule; or  

  • where another Rule expressly applies the presumption. 

• A narrow “injustice” exception. The court may depart from the Costs Presumptions only where applying them would result in an injustice—for example, gross disproportionality in spend, divided success, good‑faith pursuit of a novel issue, or serious access to justice concerns. If the threshold is not met, the court applies the Costs Presumptions without lengthy reasons.  

Public Interest Litigation Exceptions

• The Costs Presumptions do not apply. The court retains broad discretion to craft just costs having regard to the usual factors and the public benefit of the case. 

Cost Outlines and Submissions 

• Motions and Summary Hearings - parties must confer on costs in advance. If they agree, file a short Agreed Costs Form the day before. If not, file costs outline by the day before; failure file limits what a party can claim or contest. Brief post-decision submissions remain, within strict page limits.  

• Trials - file a pre‑trial costs outline 20 days before trial capturing costs to date; update and make submissions after judgment as directed.  

• Conferences - “baseball arbitration” costs at Directions Conferences and Scheduling Conferences—each side proposes a number; the judge picks the more reasonable figure without reasons.  

• Rule 58 Assessments of Costs - the court fixes costs on motions, conferences, Summary Hearings, and trials—no separate assessment step. A focus group would consider what functions (if any) Rule 58 should retain. 

Consultation Feedback 

Feedback was mixed but generally pragmatic: 

• Defined percentages improve predictability for some; others wanted broader discretion or a reasonableness overlay to guard against rate disparities and cost‑escalation.  

• Some worried that expanding full‑indemnity triggers (e.g., for Representations Rule breaches) could chill litigation by lower‑income or self‑represented parties or constrain judicial discretion; advocates for vulnerable groups stressed access‑to‑justice safeguards.  

• Several supported stronger, quicker costs at conferences and clearer, earlier disclosure of costs to aid settlement; timing for trial outlines was adjusted to 20 days before trial in response.  

• Many urged maintaining robust discretion in public interest litigation; the proposal expressly preserves it.  

• No significant reforms to Rule 49 other than replacing the reference to “substantial indemnity costs” with “Full Indemnity Costs.” 

Recommendations

• Amend Rule 57 to define “Partial Indemnity Costs,” “Full Indemnity Costs;” “Partial Indemnity Presumption;” “Full Indemnity Presumption;” and “Costs Presumptions”.  

• In relation to Costs Presumptions:  

• Departure from Costs Presumptions is discretionary where injustice can be shown with regard to the New Cost Factors;  

• Presumption of no cost award on motions made without notice; and  

• Costs Presumptions will not apply in public interest litigation.  

• Baseball arbitration model to fix costs of disputed Directions Conference and Scheduling Conferences.  

• New requirements for the content, process, and timing of costs outlines and submissions for motions, Summary Hearings, and trials. 

• Creation of focus group to determine continued functionality of Rule 58.