It would seem that this attitude is fairly common sense that a parties legal fees are not subject to disclosure to the opposing party, legal fees are in respect of work undertaken by your lawyer, and therefore one would think that they should be immune from disclosure, either because of solicitor-client privilege or just a general lack of relevance to any matter being contested between parties.
While it may be the case in some areas of litigation that legal fees have no bearing on the matter and therefore should escape disclosure to the opposing party, this is not always the case when parties are seeking to divide their matrimonial property.
It is well accepted, and codified in the Alberta Rules of Court and the Law Society of Alberta Code of Conduct that litigants are entitled to retain any counsel of their choice. It follows that each litigant then has some control over the amount that they may be charged for legal services, by virtue of being able to choose either a very expensive lawyer, or a very inexpensive lawyer. As a result of this discretion to choose legal representation, one litigant may choose an incredibly expensive lawyer, while another might choose a lawyer with much lower rates. The outcome of such a scenario is that one party may be paying a significantly higher amount for legal representation than the other party. In a lot of legal matters this would have no bearing on the actual matter before the Court. However, when dealing with matrimonial property, the parties to the matter are typically paying for their legal fees with funds that may be considered joint matrimonial property or assets.
In matrimonial property matters, parties are seeking to divide their assets, but at the time they retain a lawyer they are still financially intertwined and consequently the debts of one party are usually the debts of the other party others. However, as the legal fees for each party are assumed to only assist that one party, and not both, and the extent of those legal fees is, in a large part, based on the decisions that party and the lawyer they retain, it makes little sense that a party should have to bear the legal costs of the other party – particularly if that other party has chosen an expensive lawyer, or decided to engage in excessive litigation.
In the case of of Peregrym v. Peregrym, 2015 ABQB 176 the Court of Queen’s Bench of Alberta addressed this very issue, and citing our Court of Appeal, has affirmed that legal fees incurred by each party in matrimonial property matters should not be included as matrimonial debt – that each party is responsible for their own legal fees. This reasoning is common sense. When considering that costs awards to a successful party are rarely in an amount that covers all their legal fees, to take the position that legal fees are joint matrimonial debt would effectively result in the winning party in litigation paying the legal fees for the losing party. This runs counter to the general and accepted statement of the Courts that costs go to the victor.
For this reason legal fees incurred by a party, in the context of a matrimonial property matter, are properly disclosable to the other party. However, in recognition of the closeness of legal fees to solicitor-client communications, the information that is disclosable does not include the details of work done by the lawyer, or their statement of accounts; disclosure of fees is limited to strictly to the dollar amount of the legal fees – and not a description of the work performed for those fees. This is necessary to enable parties to separate those debts from other debts jointly incurred during the marriage.
However, it must be clarified that the disclosable nature of the legal fees is as a result of the parties using joint assets for their litigation. This can be distinguished from legal fees incurred by parties when the matter does not involved matrimonial property. If the parties have no live matrimonial property matters, or matrimonial property has already been resolved, (such as standalone actions for child or spousal support, or parenting) then there is no guarantee that legal fees will be determined as disclosable.
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