Can a buyer recover their own legal fees as part of an indemnity claim against the seller?

It depends on how the purchase agreement defines the "Losses" that are indemnifiable, since this is not something Ontario law automatically grants beyond what a court's own costs rules might separately award in litigation. Many purchase agreements expressly define indemnifiable losses to include reasonable legal and professional fees the buyer incurs in investigating, defending against, or enforcing a claim, which would let the buyer recover those costs directly through the indemnity itself rather than relying only on whatever a court awards for costs if the matter proceeds to litigation.

Where the agreement's definition of Losses is narrower, or silent on legal fees specifically, a buyer may be limited to recovering only the direct loss caused by the underlying breach, with legal fees left to ordinary litigation costs rules if the claim ends up in court or arbitration, which are typically a partial recovery at best rather than full reimbursement. Because this can make a real difference to what a buyer actually nets from pursuing a claim, checking the specific wording of the Losses definition during negotiation, rather than after a dispute arises, is worthwhile.