Rule 24: Understanding “Costs” in Family Law Litigation in Ontario

When it comes to Family Law Litigation in Ontario, most people rightly focus on the big issues: Parenting arrangements, child support, spousal support, or property division.

But an often-overlooked aspect of litigation is the matter of “costs.”

Understanding “Costs” in Family Law Litigation: A Key Aspect of the Process

Understanding this concept – and the factors that go into how a court approaches it – will help you make informed decisions as your matter moves through the Family justice system.  Here’s a handy FAQ:

Q:  What Are “Costs”?

A:  In the legal world, “costs” are really “legal costs”, meaning an amount of money that one party is ordered by the court to pay the other, to cover some of their legal expenses incurred during the litigation. This can include lawyer’s fees, disbursements, and HST (and these have to be supported with documentary proof).

The purpose of a court-ordered costs award is twofold:

• To help whichever of you is the successful party in your case to cover some of your litigation expenses, and
• To encourage you both to act reasonably, and to settle your disputes wherever possible.

Q:  Is There a Basic Rule About Who Pays Costs?

A: Yes.  In Ontario Family Law, the starting point is Rule 24 of the Family Law Rules.  This Rule – which has 25 separate subclauses – sets out all the principles that courts must use to decide which of you pays legal costs, and how much, and why.

But the true cornerstone of Rule 24 is subrule (3) which states a legal presumption:  That the successful party is entitled to the costs of a step from the unsuccessful party.

Q: What Does “Success” in a Case Mean?

A: In this context, “success” is not always simple to define. Courts look at which of you achieved the most important goals of your case, and whether you each acted reasonably throughout. Even if you win on paper, if you behaved unreasonably — for example, by dragging out the process or refusing to provide disclosure — the court may reduce or even deny your costs.

Q: Are There Any Exceptions to the Presumption?

A:  Yes.  The Rules set out specific exceptions for some scenarios (e.g. where success is divided in  your case, among other things).   The court is also given a broad discretion to tailor a costs order in situation where either of you:

• Have behaved unreasonably,
• Fail to appear, or are unprepared for a hearing date, or
• Act in bad faith.

Q: Are There Any Other Factors the Court Considers?

A:  Yes, offers to settle are the big one.

A key feature of Rule 24 Family Law Litigation is the special treatment of formal offers to settle. Rule 18 sets out the protocol for making one, and if it meets the required formalities but is refused by your Ex, then there are potential ramifications. Read our article on Understand Rule 6 of the Family Law Rules.

Specifically, if your Ex later gets the same or worse results at trial, then the court may order your Ex to pay your costs from the date of your offer, onward.

This can have a major financial impact in your overall litigation. For example:

• If you make a fair offer early on, and your Ex insists on going to trial and achieves no better result, you may be entitled to a higher costs award.
• On the flip side, if you reject a reasonable offer that your Ex has made, and then you fail to do better at trial, you may end up paying them.

These rules are designed to encourage both of you to make realistic offers, and to think carefully before rejecting one. The earlier and more reasonable the offer, the more persuasive it will be when costs are ultimately decided by the court.

Q: How Does the Court Calculate the Dollar-Value of Costs, Exactly?

When setting the amount of costs in relation to a step in your case, the court will consider things like the importance and complexity of the issues, and the reasonableness and proportionality of several factors when viewed against the bigger picture.  These factors include:

• The behaviour of each of you,
• The time each of you have spent in preparing for and participating in your litigation,
• Any written offers to settle you may have exchanged,
• Any legal fees, expert witness fees, and other expenses you have incurred.

Q:  Do You Always Get All Your Costs?

A:  No. In most cases – even if you are the successful party – the court will usually award you “partial indemnity” costs.  This means only a portion of your actual legal bill will be covered. The amount is generally based on a legislated tariff, or based on a percentage that reflects what’s fair in the circumstances.

In contrast “full indemnity” costs — where the losing party must pay 100% of the winner’s legal bill — are rare, and usually reserved for cases involving misconduct.

Q:  Any Practical Tips?

Sure.  Here are some pointers to keep in mind about costs in Family Law Litigation, when thinking about your overall strategy:

• Act reasonably at all stages. Respond to communications promptly, provide full financial disclosure, and avoid unnecessary motions.
• Consider making a formal offer to settle promptly. Ensure you’ve gathered enough information first, and ensure it’s realistic and complies with the procedural Rules about submitting offers to settle.
• Think carefully before rejecting an offer. Ask your lawyer to assess the risks and likely outcomes.
• Keep track of your own legal costs. This allows you to make an informed decisions about settlement and litigation strategy.

Contact one of our experienced Family Lawyers, and they can guide you through the proper steps of Family Law Litigation in Ontario. If you need solid advice on whether your rights are being protected with a proposed settlement, give our offices a Call or request a Free Consultation.