Can a Settled Costs Order Be Disputed After Agreement in Ontario?

Can You Object to a Draft Costs Order After Settling in Ontario?

No — once parties have settled costs terms through a clear exchange of correspondence, objections to the resulting draft order are very unlikely to succeed. The Ontario Court of Appeal confirmed this principle in Nguyen v. Pham, 2026 ONCA 559 (CanLII), a decision that offers a practical lesson for anyone navigating Ontario civil litigation.

What Happened in This Case?

After an earlier court order was made on December 9, 2025, the parties exchanged correspondence and reached an agreement on costs. The agreed amount was an all-inclusive $7,500. When a draft order was prepared to reflect that agreement, one party objected — raising concerns about the form and content of the draft. The Registrar, following proper procedure, referred the matter to a motion judge after the parties appeared by Zoom conference. The Court of Appeal was then asked to approve the draft order and resolve the dispute.

Is a Costs Settlement Binding Once Agreed in Writing?

Yes — in Ontario, an exchange of correspondence that clearly establishes agreement on costs terms creates a binding settlement. The court found that the parties had genuinely agreed to the $7,500 all-inclusive amount, and that the objection to the draft order’s form and content was unfounded. Courts will look at what was actually communicated between the parties, not at whether one side later has second thoughts about how the agreement is worded.

This matters because litigation costs can be significant. Trying to reopen a costs settlement after the fact wastes court resources and rarely succeeds. If you have concerns about a proposed costs settlement, raise them before agreeing — not after.

What Happens When Trust Funds Are Not Enough to Cover Costs?

If trust funds are insufficient, the responsible party must pay the shortfall from other available funds. The court clarified that a prior order directing payment from trust funds does not mean trust funds are the only way to satisfy a costs obligation. Trust funds are one mechanism — not a ceiling on liability. If the trust account runs dry, the obligation to pay does not disappear.

This is an important point for anyone involved in estate litigation, real estate disputes, or any matter where funds are held in trust. Do not assume that a trust account will automatically absorb all costs — confirm the balance and plan accordingly.

What Role Does the Registrar Play in Settling Draft Orders?

When a party objects to a draft order, the Registrar can refer the matter to a motion judge for determination. In this case, the parties appeared before the Registrar by Zoom, and the matter was properly referred for judicial resolution. The Court of Appeal confirmed that this process was appropriate and that the judge had the authority to settle the order.

This procedural step — the Registrar referral — exists precisely to resolve disputes about how agreed terms are translated into a formal court order. It is not a mechanism to reopen the underlying agreement itself.

How Does This Decision Affect Employment Litigation in Ontario?

Costs disputes arise in all areas of civil litigation, including wrongful dismissal and constructive dismissal claims. Employees and employers alike should understand that once a costs agreement is reached — whether at mediation, in correspondence, or at a settlement conference — that agreement is binding. Our Ontario employment lawyers regularly advise clients on costs exposure and settlement strategy throughout the litigation process.

If you are involved in an employment dispute in the Hamilton or Burlington area, understanding your costs obligations early can make a significant difference to the outcome. Clients in those regions can also reach our team through our Burlington employment law page or our Hamilton employment law page.

Practical Takeaways for Litigants in Ontario

• Settle costs carefully. Once you agree to costs terms in writing — even through informal correspondence — that agreement is likely binding. Review any proposed settlement amount before confirming it.
• Read draft orders promptly. If you receive a draft order that does not accurately reflect what you agreed to, raise the issue immediately and in writing. Do not wait.
• Do not rely solely on trust funds. If a prior order directs payment from trust, confirm the trust balance is sufficient. If it falls short, you may be responsible for the difference from your own funds.
• Use the Registrar process properly. The referral process exists to resolve drafting disputes — not to reopen settled agreements. Use it for genuine form-and-content concerns, not to revisit the substance of what was agreed.
• Get legal advice before agreeing to costs. Costs amounts that seem modest can have significant implications, especially if they interact with trust obligations or other orders.

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This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.