The Cost of Litigation: a primer on costs for FDR professionals

In the recent case of Yovcheva v. Hristov, 2019 ONSC 4252, Justice A. Doyle sets out an easy to follow set of considerations and case law in assessing a costs award.

The costs decision followed a six-day trial.  In arriving at its decision, the court considered written submissions, the Family Law Rules, O. Reg. 114/99 (the FLRs), the bill of costs and offers to settle.  The case provides a useful roadmap in assessing both entitlement and amount of costs and can serve as a useful guide to parenting coordinators and arbitrators when making costs awards.

Justice Doyle’s decision sets out the following key legal principles related to costs awards and a helpful analytical framework. 

Key Legal Principles

• The purpose of costs
  • (1) to partially indemnify successful litigants;
  • (2) to encourage settlement;
  • (3) to discourage and sanction inappropriate behaviour by litigants; and
  • (4) to ensure that cases are dealt with justly under subrule 2 (2) FLRs.

(Mattina v. Mattina 2018 ONCA 867)

• Costs follow success – subrule 24(1) of the FLRs creates a presumption of costs in favour of the successful party.  

(Sims-Howarth v. Bilcliffe [2000] O.J. No. 330 (SCJ-Family Court).)

• Divided success – divided success does not mean equal success; you must conduct a comparative analysis.

(Jackson v. Mayerle, 2016 ONSC 1556, para. 66.)

• Litigants must be responsible for the positions they take.

(Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.)

• Costs awards are discretionary – Awards must be reasonable and proportional

(Beaver v. Hill, 2018 ONCA 840.)

• The amount must be fair and reasonable for the unsuccessful party but an inability to pay is relevant to quantum but NOT to entitlement.

(Izyuk v. Bilusov 2011 ONSC 7476)

Analytical Framework

STEP 1 – Determine which party was successful

To determine if costs are payable the first step is to determine which party was more successful based on the final court order and previous offers to settle.  Where there is divided success, a contextual analysis is required that considers the importance of the issues litigated and the time and expenses spent.  

STEP 2 – Determine the amount of costs

After deciding that a cost award is appropriate, to determine the amount of the award start with the factors set out in section 24(12) of the FLRs. 

In setting the amount of costs, the court shall consider:

A. The reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

• (i) Each party’s behaviour
  • Consider the following criteria for considering the reasonableness of a party’s behaviour:
    • (a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
    • (b) the reasonableness of any offer the party made; and
    • (c) any offer the party withdrew or failed to accept. (Rule 24(5))
• (ii) The time spent by each party in preparing for the case and attendance at trial.
• (iii) Any written offers to settle, including offers that do not meet the requirements of rule 18.
• (iv) Any legal fees, including the number of lawyers and their rates.
• (v) Any expert witness fees, including the number of experts and their rates.
• (vi) Any other expenses properly paid or payable (e.g., disbursements such as courier, photocopying and parking fees).

B. Any other relevant matter.