Family law disputes can take a toll on the participants for many reasons, including the time and energy required to participate in ongoing litigation or arbitration with a former spouse. However, these disputes can also have a significant financial impact on the respective parties. When the matter covers a wide range of issues, or the situation is particularly complex or high-conflict, litigation or arbitration can cause each party to incur a lot of expenses, including lawyer fees and third-party expenses, such as experts.
For example, a party may be required to hire a financial expert, such as a forensic accountant, if they suspect their former spouse is hiding or transferring assets to reduce their obligations with respect to property equalization or spousal support. Parents who are unable to reach a workable parenting arrangement may be required to undergo parenting assessments by a Parenting Expert to provide the court with information necessary to make an informed decision on the child’s best interests regarding parenting time or decision-making authority. In addition, delays by one party may result in additional costs to the other, as the legal proceeding is dragged on for longer than planned.
Each of these expenses can add up, and while, in many cases, the parties are expected to pay their own costs, courts also have discretion to award costs to a party when appropriate. Below, we will review some of the basics about family litigation costs, such as the different cost award structures, when they may be awarded by a court and factors that can influence a judge’s decision to impose costs on one party in favour of the other.
While any person participating in litigation should plan to pay for the costs they incur throughout the proceedings, judges do have discretion to award costs at any point in the proceeding when they feel such an award is warranted. Costs may be awarded for several reasons, including:
Costs are usually classified in one of two ways, as follows:
Party and party costs, otherwise called partial indemnity costs, allow a litigant to recover a portion of their legal expenses. This is the most common cost award, and the percentage will vary depending on the circumstances. Costs are calculated using a tariff schedule in Schedule C of the Alberta Rules of Court. However, the schedule has not been updated in a number of years. Given the outdated tariffs listed, costs calculated using Schedule C will only generally cover 10-20% of a party’s actual costs. As a result, courts will generally increase the costs calculated under Schedule C as needed.
Solicitor-client costs, otherwise known as full indemnity costs, are meant to allow a party to recover all of the legal costs they incurred in a proceeding. Solicitor-client costs are rarely awarded and are generally reserved for extreme situations involving what the Supreme Court of Canada deemed to be “reprehensible, scandalous, or outrageous conduct” in the 2004 decision called Hamilton v. Open Window Bakery Ltd.. Such conduct in family litigation would generally include deception of the court, such as extreme cases of hidden assets or non-disclosure.
While costs are often awarded at the end of a proceeding as part of or shortly after the final determination of the matter, courts may also award advance or interim costs at the start of, or during a proceeding, under Rule 12.36 of the Alberta Rules of Court, which says:
The Court may…make any order that it thinks fit for the advance payment of the costs of either party.
In some family law cases, there may be a dramatic financial imbalance between the parties, leading the more secure party to feel they have an advantage in court. However, this is precisely the situation Rule 12.36 is designed to address. Suppose one party is financially unable to hire effective legal counsel to properly advance their position in court or defend the other party’s claims. In that case, they can bring an application for advance or interim costs. The court will consider whether the applicant’s position has merit if they are likely to experience genuine financial difficulty paying their legal costs and any other relevant facts specific to the parties in question. If granted, the court may order the other party to pay a portion of the applicant’s legal expenses upfront or mid-litigation, to put both parties on relatively equal footing.
At Mincher Koeman, our lawyers work smart, and we work hard. When a matter proceeds to litigation, we are prepared to appear in court at any time and skillfully advocate on behalf of our client’s interests. We prepare each file with a view to litigation from the beginning so that we are never caught off guard and can act immediately on time-sensitive issues. Please contact our office to make an appointment to discuss your matter with one of our lawyers today by calling us at 403-910-3000 or by contacting us online.
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