Matt Maurer's blog appears on Slaw - Canada's online legal magazine.

In Ontario, awarding costs (compensation for legal fees) is always within the discretion of the adjudicator. However, there is a presumption that the losing party will be ordered to pay a portion of the successful party's legal costs.

Many people who are unfamiliar with the litigation process think that suing every possible party is usually a good idea. This strategy can backfire in a significant way in light of the "loser pays" system. In some instances a plaintiff may be successful at trial against one defendant, but lose against multiple other defendants who the plaintiff has named and, in the result, end up being liable for more in costs to the successful defendants than they awarded in principle and costs against the unsuccessful defendant.

Ignorance of the loser pays system is also often evident with self – represented plaintiffs. Often these parties feel that they can sue a defendant with little or no downside. However, if they are unsuccessful at trial the self-represented party may be in for an unpleasant surprise when costs are awarded against them.

A recent decision, which is otherwise unremarkable, demonstrates the impact an adverse cost award can have on an unsuccessful plaintiff. The plaintiff obtained default judgment against the one defendant. After a three day trial (which is a relatively short trial) the plaintiff was unsuccessful against the other defendant. The judge awarded the plaintiff just over $9,000 in costs from the defendant who did not defend. However, the judge also ordered the plaintiff to pay the successful defendant nearly $56,000 in costs.