Can I recover my legal fees if I win a contract lawsuit in Ontario?

Ontario follows the principle that "costs follow the event" — the winning party in civil litigation is generally entitled to a costs award against the loser. However, costs awards typically cover only a portion of what you actually paid your lawyer, not the full amount.

Costs awards are discretionary, but two general scales exist. Partial indemnity (the most common) covers only a portion of the winning party's actual legal fees. Substantial indemnity — awarded in cases of improper conduct, unaccepted offers to settle, or other special circumstances — covers a higher portion of actual fees. There is no fixed percentage for either scale; the amount is always set by the court based on the circumstances.

If your contract contains a clause specifically entitling the prevailing party to full legal fees, Ontario courts may enforce it, though they retain some discretion to adjust the amount. Fee indemnity clauses are worth including in commercial contracts precisely for this reason.

In Small Claims Court, cost awards are more modest and capped by the rules. The costs regime there is simpler, and self-represented parties may recover some out-of-pocket expenses even without counsel.

Before litigating a contract dispute, have a realistic conversation with your lawyer about the likely costs versus the damages you can recover — the economics matter as much as the legal merits.