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Who’s Paying for This…?

10 minute read

Navigating legal and financial issues that impact your life when your family dynamic changes can be challenging. Subscribe to FamilyMatters, our Lerners Family Law blog series, which provides insightful information and helps you determine your next steps. 

Navigating the family law system is stressful for everyone: personal information is being disclosed, assets are being divvied up, and decisions are being made about your children and your family. Unfortunately, all of this comes with the added stress of legal fees. Inevitably, most family law litigants end up asking themselves the same question—who’s going to pay for this?

The answer? It depends.

This blog aims to explain the rules governing costs in family law and explain what to keep in mind when thinking about the cost consequences of your matter.

Presumption of Costs for the Successful Party

Under Section 131 of the Courts of Justice Act, the court has the discretion to determine the costs in any step “incidental to a proceeding”. To put this simply, this means that the cost consequences, i.e. who pays whom and how much, is up to the judge.

Rest assured, this discretion not absolute, and there is a method to it. The starting point is determining which party was successful. Under Rule 24(1) of the Family Law Rules the starting point is  that the successful party is entitled to the costs.

For example, let’s assume you are in the midst of a divorce proceeding, and you do not have a trial date yet. If during that time, you were to bring a motion for temporary spousal support, and you were successful in obtaining that relief, then you would be the more successful party. That means that under the Rule 24(1), there is a presumption that you would be awarded costs. This means your spouse may be required to pay a portion of your legal fees. On the other hand, , let’s assume you brought a motion and you were not successful. In this situation, it is now your spouse who is considered the more successful party, and you may be required to pay a portion of their legal fees.

Apportioned Costs for Divided Success

In the above scenario, deciding which party was more successful was straightforward— but as most family law litigants know, it’s usually not that simple. So what happens when there is a tie, or success is not so easy to determine?

Say leading up to trial, you and your spouse disagree on three issues: parenting time, spousal support, and the equalization of your family assets. At the end of your trial, you have been successful in your position on spousal support, and your spouse was successful on the equalization issue. On the issue of parenting time, let’s say that you both asked the court to award you sole decision-making authority and exclusive parenting time. At trial, the judge ordered that you share parenting time 50/50 and have shared decision-making authority.

Under these circumstances, Rule 24(6) states that the “court may apportion costs as appropriate”. This means the judge can divide costs as he or she sees fit based on the particulars of the case. This could be determined in a number of different ways. For example:

  • The judge may assign a cost to each of the issues based on their relative complexity and importance, then make a final cost award based on those figures;
  • The judge could determine each party’s percentage of success, i.e. 60% versus 40%, and determine costs in accordance with that percentage; or
  • The judge may ultimately find that even if one party was successful on some issues, that the other party was more successful “on an overall global basis”, and award only that party costs, as was the case in Jackson v Mayerle, 2016 ONSC 1556.

At the end of the day, the judge has the power to award costs as he or she may see fit, and in cases where success is somewhat subjective, i.e. parenting issues, there is a lot of room for interpretation.

For this reason, it is important to have counsel that can represent your interests not just on the issues in dispute, but the cost consequences of that litigation.

Determining Quantum: Reasonableness and Proportionality

While the process for apportioning costs can vary greatly, all judges are guided by the same key objectives and principles when determining the final amount for costs, i.e. the quantum.

Typically, quantum is determined by reference to something called a Bill of Costs. This is a document that outlines the time and money spent to prepare for the court appearance, and is usually prepared by each party’s lawyer.

However, as stated at para 17 in Jackson v Mayerle, the court’s assessment of costs is not merely an exercise of adding up dockets. In Serra v Serra, 2009 ONCA 395, the Ontario Court of Appeal determined that there are three  objectives the court must consider when assessing costs, which are:

  1. To partially indemnify litigants for the cost of litigation;
  2. To encourage settlement; and
  3. To discourage and sanction inappropriate behavior by litigants.

What this decision tells us is that reimbursing litigants for the money spent in court is only one of these three objectives, meaning that reimbursing you for your costs is only part of the equation.

In order to balance these objectives and reach an appropriate quantum for costs, the court is guided by the principles of reasonableness and proportionality, per Rule 24(12).

Generally, when considering reasonableness, the court looks at whether the time and money spent preparing  for a court appearance makes sense, when compared to the complexity of the legal issue. .

Take for example a judge reviewing a case with fairly simple legal issues. If one party were to provide a Bill of Costs that showed their counsel spent 10 hours preparing, and the other party’s Bill of Costs reflected 100 hours spent preparing, then there will be a question of reasonableness. Even if the party whose counsel spent more time was successful on the issue, a judge may find the 100 hours unreasonable, and decide not to award costs on that basis.

Similarly, proportionality speaks to the overall importance and value of an issue in the greater scheme of things. As stated in Jackson, “there should be a correlation between legal fees incurred (for which reimbursement is sought) and the importance or monetary value of the issues at stake” (para 94). What this means is that if your Bill of Costs shows that you spent tens of thousands of dollars in legal fees to prepare for an issue that was not that important to the overall dispute, then your costs would likely be considered not proportional. Imagine incurring $2,000 in legal fees to prepare submissions over the division of a particular asset only valued at $1,000. While the time spent by your lawyer be reasonable in terms of the complexity of the argument, it may still be deemed disproportionate to the overall value of the asset.

In light of this, while the court will reference the Bill of Costs to gain insight into the expenses incurred by each party, the amount will be altered in accordance with these principles. It’s important to keep these principles in mind when preparing for court.

Exceptions for Unreasonable Conduct

Another consideration in the costs analysis is the conduct of the parties themselves. Even an entirely successful litigant will be denied costs, or even have costs ordered against them, if they behaved unreasonably during a case, pursuant to Rule 24(4).

Once crucial factor in assessing if a litigant has behaved reasonably is how they have handled offers to settle. Here, the court is directed to follow a basic set of rules. Under Rule 18(14), if a party makes an Offer to Settle within a prescribed timeframe before a motion or trial, and that offer is not accepted, then serious cost consequences may be triggered if the final result in the motion or trial is as favourable or more favourable than the offer.

As a final example, imagine you are 6 months away from your trial date and the only issue is how to equalize your assets. To avoid spending more money on legal fees to prepare for trial, you provide your spouse’s counsel with an Offer to Settle. In it, you offer to pay $150,000 to equalize your assets. Your spouse does not accept the offer. After months of expensive preparation and a lengthy trial, you are only ordered to pay $100,000 by way of equalization.

Under this example, you achieved an outcome which is better than your offer to settle because you were ordered to pay $50,000 less than you were willing to pay in settlement. As a result, Rule 18(14) states that in addition to the normal  costs you would get as the more successful party, you also are entitled to full recovery of costs from the date of your offer onward. This means that from the time you offered $150,000 to the date of the trial, your spouse may have to reimburse you for the entirety of your legal fees.

While this entitlement is subject to the normal discretion of the court, and the same principles of reasonableness and proportionality, it still is important to keep this in mind both when preparing and reviewing offers to settle, as the ramifications are substantial.

Putting It All Together

Taken all together, cost orders are made based on a highly fact specific analysis, and involving balancing several factors. That’s why it’s important to work with your lawyers to craft a strategy that makes sense from a cost perspective.

Generally, the following things are important to keep in mind:

  • Act in good faith, and conduct yourself appropriately throughout all stages of litigation to avoid appearing unreasonable;
  • Ensure the time and money you are putting towards an issue is proportionate to its overall importance in your dispute;
  • Keep in mind the impact of Offers to Settle, and be realistic about what outcome you may achieve in court.

At Lerners, we understand the delicate nature of domestic and family-related legal decisions and appreciate the emotional toll they can have on those involved. Our team, located in Southwestern Ontario and Toronto, will work tirelessly to protect your interests and achieve the best possible outcome to get the closure you deserve. With a successful track record that includes some of Canada's most complex family law cases, we dedicate ourselves to achieving results and helping you move forward with your life. Contact us today to see how we can help.

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Courtney Edwards

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