Cost of preparing pleadings: Disbursement vs Fees

Question

_{Source: Ontario Small Claims Court - A Practical Guide (2011). pp. 258-259.}

§14.15 "Reasonable disbursements" are to include the following, unless the court orders otherwise:

p. 258 Bottom

4. Costs of preparing pleadings (Plaintiff's or Defendant's Claim and Defence). This is a new charge. It must not exceed $100. Before January 1, 2011, successful parties could claim as much as $50 for "preparation and filing of pleadings". This cost was a fee, not a disbursement, and it was meant to cover not only time spent in preparing pleadings but also filing them. Now, the cost is supposed to be a disbursement, but it relates only to preparation of pleadings, not filing them in court. It is arguable that this disbursement now covers reasonable legal fees charged to the client for preparing the Claim or Defence. Up until now, in general, lawyers' brush with Small Claims Court has been at the pleading stage only. They would draft the pleadings and then send the clients on to the trial to fend for themselves. If the client won the action, the judge would ask the client whether he was inter- ested in costs, and he would mainly answer affirmatively, and then claim the fee that he had paid his lawyer for drawing the Claim or Defence. Generally speaking, that disbursement was not allowed. Usually,

p. 259 Top

lawyers' recoverable compensation occurred when they represented party in court. Now, since the beginning of 201 1, a successful plaintiff or defendant may request as costs the fee charged by the lawyer (or paralegal) for drafting the pleading, up to $100. The size of the fee is rather minimal, but it was based on the recognition that costs are not intended to be a full indemnity but rather a partial indemnity, as we have seen from the earlier discussion of the components of costs.

I read: Disbursements (that is, the law firm's out of pocket expenses) will be accounted for, and added to the bill. This from p. 260 states more about 'costs' vs 'fees'.

Yet I still don't understand the bolded sentence's apparent distinction of 'disbursement' vs 'fees.'

Answer 1

Disbursements are 'the funds paid out by the lawyer for expenses incurred in the lawsuit, such as the costs of typed transcripts and the fees charged by expert witnesses': Irwin Law, Canadian Online Legal Dictionary, definition of 'disbursements.' For an international perspective, see the Wikipedia article on disbursements.

The term fee does not necessarily have any special legal meaning. Disbursements can include 'fees' which are paid by a lawyer on a client's behalf – the dictionary definition includes the example of expert witness fees, but a more common example is a filing fee charged by a court to commence a lawsuit. However, when used in contrast to 'disbursements,' 'fees' often refer to lawyers' professional fees. These tend to be charged by the hour and form the majority of litigation costs. Wikipedia calls them attorney's fees.

Costs are the combination of fees and disbursements which the losing party can be ordered to pay to the winning party. The source you have quoted from explains a common feature of the law of costs in the United Kingdom, Australia and Canada: disbursements are often recoverable in full, while professional fees can only be recovered in part. This ensures that the loser is not responsible for the winner's decision to hire unusually expensive lawyers, although in many jurisdictions even an average lawyer will charge fees well in excess of the recoverable amount. Wikipedia refers to these as court costs.