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Recovery of Costs for the Successful Party in Family Law Litigation

August 23, 2016

 

Complex or contentious family law litigation can result in substantial legal costs. When can a successful party expect compensation from the unsuccessful party for the costs it incurred?

 

At the conclusion of a trial or a motion, the presiding judge will determine costs based on principles and rules laid out in the Family Law Rules and in previous decisions of other judges. The effect of the Family Law Rules is to circumscribe the broad discretion granted to judges with respect to imposing costs in non-family law cases. However, the discretion of the judges is not completely removed.

 

The Ontario Court of Appeal stated that modern costs rules are designed to foster three fundamental objectives: 1) to partially compensate successful litigants for the costs of litigation; 2) to encourage settlement; and, 3) to discourage and sanction inappropriate behaviours by litigants.[1] 

 

Entitlement to Costs

 

Under Rule 24(1) of the Family Law Rules, there is a presumption, except in child protection cases or where a party is a government agency, that a successful party in family law litigation is entitled to the costs of a motion, enforcement, case or appeal. This is the starting point in any costs analysis. 

 

However, where a successful party behaved unreasonable during a case, they may be deprived of some of all of their own costs and may be ordered to pay some or all of the unsuccessful party’s costs (Rule 24(4)).

 

In deciding whether a party has behaved reasonably or unreasonably, the court will look at (a) the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle; (b) the reasonableness of any offer the party made; and (c) any offer the party withdrew or failed to accept (Rule 24(5)).

 

If a party acts in bad faith, the court must decide costs on a full recovery basis and must order the party to pay them immediately (Rule 24(8).  A finding of bad faith is relatively rare.  In S.(C.) v. S.(M.), the Honourable Mr. Justice Perkins described the requirements for a finding of bad faith:[2]

 

In order to come within the meaning of bad faith in Rule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent.

 

The Effects of Offers to Settle

 

As in other civil cases, offers to settle in family law cases carry costs consequences. Rule 18(14) states that if a party makes an offer at least one day before a motion hearing date or at least seven days before a trial, and obtains an order that is “as favourable as or more favourable than the offer”, that party is entitled to “costs to the date the offer was served and full recovery of costs from that date." 

 

However, the court ultimately can exercise its discretion over costs, and may take into account any written offer to settle, the date it was made and its terms, even if the offer does not comply with Rule 18(14). The court can also exercise its discretion not to make an award of full recovery of costs even where a party has met the conditions in Rule 18(14).

 

Quantum of Costs

 

The quantum or amount of costs reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties, rather than the amount of actual costs incurred by the successful party.

 

In setting the amount of costs, the court must consider various factors listed in Rule 24(11). These include:

 

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party’s behaviour in the case;

(c) the lawyer’s rates;

(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(e) expenses properly paid or payable; and

(f) any other relevant matter.

 

Examples of Unreasonable and Bad Faith Behaviour

 

In Wright v. Wright,[3] the Court of Appeal upheld the trial judge’s award of costs on a substantial indemnity basis, or on a higher percentage of actual costs incurred than usual, even where the wife claimed success in the trial. The court held that, even if it determined that the wife was largely successful at trial, she had acted unreasonably because her settlement proposals were found by the trial judge to be “outrageous” and constituted “a completely impossible demand for spousal support.” In effect, the trial judge had concluded that the case would have settled years earlier than its eventual resolution if the wife had not sought to obtain more than what had been previously agreed by the parties.

 

In Serra v. Serra, the husband was substantially successful on the trial and the appeal.[4] The Court of Appeal found that the proceedings were unduly prolonged by the wife’s “irrational belief” that the husband was hiding assets and that his company was worth far greater than its stated value. The husband had also made numerous offers to settle which were refused by the wife, and the wife failed to make any offers to settle. The Court of Appeal found that the wife’s approach to the trial prolonged bot the preparation and trial period and that she was not entitled to shield herself from the consequences of her refusal either to make or accept offers to settle. The court awarded the husbands costs of $300,000 for the trial and the appeal out of the $412,034 claimed.

 

In S. (C.) v. S. (M.), the husband was found to have deliberately disobeyed court orders in the case, including orders he had consented to.[5]  The husband was also found to have made complaints against lawyers and other professionals not merely to report what he believed to be negligence or misconduct, but also as his form of punishment and vengeance when he had been unhappy with the way they performed their duties.  Most significantly, the father had waged a campaign against the mother through the children, to alienate the children from her and to cause her emotional distress.  The court determined that the father's behaviour amounted to bad faith under Rule 24(8) and awarded the mother full recovery of her costs for the entire litigation.

 

Appealing a Cost Award

 

If costs are awarded against one party, and that party believes that it is unreasonable, they may wish to appeal the cost award.

 

Appealing a cost award can be quite difficult. A trial judge’s costs award attracts considerable deference from the reviewing court. Absent some error in principle made by the judge, or unless the costs award is plainly wrong, intervention by the appellate courts with a trial judge’s discretionary costs ruling is precluded.[6]

 

In the family law context, the courts have found that there is arguably even a greater reason to afford deference to the quantum of costs awarded. The Supreme Court of Canada noted in Hickey v. Hickey, for example, that there is significant deference to costs awards in relation to spousal support orders.[7] This is to promote finality in family law litigation and to avoid giving parties an incentive to appeal judgments and to incur added expenses in the hope that the appeal court will have a different appreciation of the relevant factors and evidence. 

 

The Takeaway

 

The courts have attempted to impress upon family law litigants the cost consequences of engaging in prolonged and acrimonious litigation. The Honourable Mr. Justice Spence expressed this sentiment in Heuss v. Surkos:[8]

 

Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation. Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.

 

At Suliman Lehner, our goal is to reduce our clients' legal costs and keep them in proportion to their objectives. At the outset, we encourage our clients to avoid unnecessary litigation and attempt to achieve a favourable settlement on as many issues as possible. However, when early resolution proves unfeasible, we encourage our clients to adopt a reasonable approach to avoid adverse cost consequences.

 

Contact our lawyers for assistance with your family law issue.

 

Disclaimer

 

Suliman Lehner Barristers & Solicitors has prepared this document for information only; it is not intended to be legal advice. You should consult us about your unique circumstances before acting on this information. Suliman Lehner Barristers & Solicitors excludes all liability for anything contained in this document and any use you make of it.

 

Endnotes

 

[1] Serra v. Serra, 2009 ONCA 395

 

[2] S. (C.) v. S. (M.), [2007] O.J. No. 2164 (Ont. S.C.J.) 

 

[3] Wright v. Wrigth, 2010 ONCA 349

 

[4] Serra v. Serra, 2009 ONCA 395

 

[5] S. (C.) v. S. (M.), [2007] O.J. No. 2164 (Ont. S.C.J.) 

 

[6] Hamilton v. Open Window Bakery Ltd., 2004 SCC 9

 

[7] Hickey v. Hickey, [1999] 2 S.C.R. 518

 

[8] Heuss v. Surkos, [2004] O.J. No. 289 at para 31

 

 

Illustration 

 

Illustration parodying the divorce proceedings of Anna Gould (an American heiress and socialite) and Boni de Castellane (a French nobleman) in 1906 in Paris, France. Boni de Castellane then sought an annulment from the Vaticanso that he could be free to remarry in the Church. The annulment case was not finally settled until 1924, when the highest Vatican tribunal upheld the validity of the marriage and denied the annulment.

 

 

 

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