Costs: Who Bears the Burden at the End of Litigation

By Suzanne Fleming of Kirk Montoute Dawson LLP posted in Family Law on Thursday, February 7, 2019.

When Family law goes to litigation it can be a lengthy and drawn out process. Although it can be a relief when your matter is resolved, that relief can quickly dissipate knowing you are faced not only with your own costs, but costs for the other party as well. Accordingly, it is helpful to have some knowledge about costs ahead of your next court appearance.

The Alberta Rules of Court states that when a party is successful in an action, he or she is entitled to a costs award against the unsuccessful party, and the unsuccessful party must pay the costs forthwith. However, a Judge is not bound by the Rules, and has the exclusive discretion to order (or not order) costs based on the circumstances of your case.

Parties are not required to be successful on every issue in order to obtain costs; rather, a party must only demonstrate substantial success on the majority of issues and/or the most important issue. In the event a party makes a formal offer to settle (that is not accepted by the other party) and afterward obtains an order that is equal to or more favorable than the initial offer, the successful party may be entitled to double costs.

There are two types of costs: Party/Party costs and Solicitor/Party costs. Party/Party costs are the most common of the two and represent costs payable by the unsuccessful party to the successful party at the end of litigation. Party/Party costs have predetermined limits and are not meant to indemnify the successful party for the full amount of funds he or she put into the litigation. Solicitor/Client costs go a step above Party/Party costs and allow the court discretion to fully indemnify the successful party of his or her costs. Solicitor/Client costs are extremely rare and difficult to obtain. Some examples of the factors a court will consider when determining if a departure from Party/Party costs to Solicitor/Party costs is appropriate, include but are not limited to:

  1. Circumstances constituting blameworthiness;
  2. Where an unsuccessful party forced a successful party to exhaust legal proceedings to obtain what was rightfully his/hers;
  3. An unsuccessful party’s attempts to delay or deceive the court;
  4. An unsuccessful party’s misconduct that gives rise to an action that blatantly intended to harm the other party.

As a takeaway point, it is important to remember that even if you are the successful party in a family law action, you are still likely to walk away financially behind due to relatively low Party/Party costs. Ultimately, the looming threat of costs (and the low likelihood of indemnity of costs for the successful party) can be a positive motivator to assist parties in negotiating early settlements.