What Does “Divided Success” Mean in an Ontario Lawsuit?
Divided success means that neither side in a lawsuit fully wins or fully loses — both parties achieve some of what they asked for, but neither comes out ahead in any meaningful way. When a court finds divided success, it has wide discretion to decline awarding legal costs to either party, leaving each side to pay their own lawyer.
That is exactly what happened in Queen Mamma Ltd. et al v. 2755060 Ontario Inc. et al, 2026 ONSC 3040 (CanLII) — a recent Ontario Superior Court of Justice decision that offers a clear illustration of how courts handle costs when the outcome is genuinely mixed.
What Happened in This Case?
The dispute involved a franchise-related relationship, claims under the Arthur Wishart Act (Ontario’s franchise legislation), allegations of trespass, and claims for economic loss. The plaintiffs proved that they had received insufficient notice of something material to the relationship, but they failed to establish their economic loss claims or their Arthur Wishart Act arguments. On the other side, the defendants succeeded on a trespass claim — but only to the extent of nominal damages — and obtained reimbursement of certain royalties. Neither side walked away with a clear victory.
The defendants also brought a counterclaim raising nuisance, defamation, intentional interference with economic relations, trespass, and breach of the Arthur Wishart Act. They succeeded on only a small slice of that counterclaim. The court found that the unsuccessful counterclaim claims had added length, complexity, and expense to the entire proceeding.
How Do Ontario Courts Decide Who Pays Legal Costs?
Ontario courts use Rule 57.01 of the Rules of Civil Procedure as the framework for costs decisions, and the overriding principle is reasonableness — specifically, what a reasonable person in the losing party’s position would expect to pay. Costs are not automatic. Judges have broad discretion and weigh factors like the degree of success each side achieved, the conduct of the parties, and whether the litigation was proportionate to what was actually at stake.
The general rule is that costs follow the event — meaning the winner gets a costs award. But “the event” is harder to identify when both sides win some things and lose others. In those situations, courts often reduce costs, split them, or decline to award them at all. Our Ontario litigation lawyers regularly advise clients on this risk before they decide to pursue or defend a claim.
What Is the Small Claims Court Threshold Rule, and Did It Apply Here?
Under Rule 57.05(1) of the Rules of Civil Procedure, when a plaintiff sues in the Superior Court but ultimately recovers an amount that falls within the jurisdiction of the Small Claims Court (currently $35,000 in Ontario), the defendant may be entitled to their costs. The idea is that plaintiffs should not drag defendants into expensive Superior Court litigation when a simpler, cheaper forum was available.
In this case, the court acknowledged that the plaintiffs’ recovery was modest — potentially within Small Claims Court range. However, the court declined to use that rule as a reason to award costs to the defendants. The divided nature of the outcome, combined with the defendants’ own largely unsuccessful counterclaim, meant that applying Rule 57.05(1) in the defendants’ favour would not have been reasonable or proportionate.
Does an Unsuccessful Counterclaim Affect the Costs Analysis?
Yes — an unsuccessful counterclaim that inflates the length and complexity of a proceeding is a factor courts weigh against awarding costs to the party who brought it. When a defendant raises multiple claims in a counterclaim and succeeds on only one in a nominal way, the court takes note. Those extra claims cost everyone time and money, and a party who drove up the litigation’s complexity cannot easily turn around and ask to be compensated for the full cost of the proceeding.
Here, the defendants’ counterclaim included serious allegations — defamation and intentional interference with economic relations among them — yet the defendants succeeded on essentially none of those. That reality weighed heavily against any costs award in the defendants’ favour.
What Is a “Nominal” Damages Award and Why Does It Matter?
Nominal damages are a token amount — sometimes as little as one dollar — awarded when a court finds that a legal right was technically violated but no real financial harm resulted. Winning on a claim but receiving only nominal damages is a signal that the court did not view the violation as serious or the loss as meaningful.
In this case, the defendants’ trespass success resulted in nominal damages. That kind of hollow victory does not carry the same weight as a genuine win when a court is deciding who should pay costs. It reinforces the court’s conclusion that neither party was meaningfully more successful than the other.
Practical Takeaways for Civil Litigants in Ontario
- Assess your whole case before suing in Superior Court. If your likely recovery is modest, consider whether Small Claims Court is the right venue — filing in the wrong court can cost you a costs award even if you win.
- Counterclaims are not free. Raising multiple counterclaim allegations that you cannot prove adds expense and complexity, and courts will hold that against you at the costs stage.
- Nominal damages are not a real win. If your strongest claim is likely to yield only token compensation, factor that into your litigation strategy from the start.
- Divided success means no guarantee of costs recovery. Even if you prove part of your case, you may walk away paying your own legal fees — a real financial risk in complex commercial disputes.
- Get a costs risk assessment early. Before committing to Superior Court litigation, ask your lawyer to walk you through realistic best- and worst-case costs scenarios, not just liability outcomes.
If you are involved in a commercial dispute in the Hamilton or Burlington area, our Burlington litigation lawyers and Hamilton litigation lawyers can help you understand the full financial picture before you commit to a course of action.
UL Lawyers offers a free initial consultation from our Burlington office and serves clients across Ontario. If you are facing a complex commercial dispute or want to understand your exposure before litigation escalates, reach out to our civil litigation team to discuss your options.
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.
FAQ
Frequently asked questions
When both sides achieve only modest or divided success, an Ontario court can order each party to bear their own costs rather than awarding costs to either side. The court uses its discretion under Rule 57.01 to reach a result that is proportionate and reasonable.
Yes. Under Rule 57.05(1), if you recover an amount within the Small Claims Court limit, the defendant may be entitled to their costs from you. However, courts consider all the circumstances, including whether the defendant also had limited success, before applying this rule.
Only if the counterclaim success is meaningful. Winning a counterclaim on a nominal basis — while losing the majority of the counterclaim allegations — is unlikely to support a costs award in your favour, especially if your unsuccessful claims added significantly to the length and cost of the proceeding.