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A “Day in Court” Can be Costly for Persistent Family Litigants

A “Day in Court” Can be Costly for Persistent Family Litigants

In our last blog  No Need to Disclose Affair When Negotiating Separation Agreements  we talked about the decision in D’Andrade v. Schrage, where the court concluded that a spouse’s failure during negotiations to disclose the existence of an extra-marital affair did not automatically invalidate the resulting separation agreement reached with the other spouse.

The case is an interesting one, and settles an important legal point for all separating spouses in Ontario.     But whatever the legal merits may be, the fact remains that – as with all litigation – the individual spouses in the matter each expended a good deal of money getting the matter heard.  

Therefore, after rendering its decision on the merits of the case, the court also had to consider how to allocate responsibility for the court costs of the 8-day trial, specifically since the husband had insisted on proceeding to trial but was unsuccessful.  

The resulting costs decision in in D’Andrade v. Schrage is a good reminder that having a “day in court” can be very costly, especially for a persistent-but-unsuccessful party.

First of all, the court’s overriding assessment was that this was a matter that should not have proceeded to trial at all.  The husband had persistently and steadfastly refused to settle throughout, and in fact had continued to heap additional claims against the wife and had increased her exposure at trial.   In the end, after an 8-day trial which was the culmination of three years of litigation, the wife was awarded $250,000 as her support entitlement together with pre-judgment interest.    Also, as the unsuccessful party, the husband was also obliged to pay the wife’s legal costs, amounting to more than $100,000 plus disbursements and taxes that she had spent in bringing the matter to court.  

The husband resisted paying this $100,000 costs award, claiming that they were “excessive” and “unreasonable”.    However, the court reviewed the wife’s detailed bill of costs and found nothing reflected in them that suggested they were grossly excessive.  Instead, the wife had properly retained competent counsel, and the steps taken by him on her behalf were necessary in defending the wife against the husband’s numerous claims.

More importantly, the court also considered the fact that 1.5 years before trial, the wife had submitted an offer to settle for $225,000 that would amount to full satisfaction of her claim, and which remained valid until the day the trial commenced.    The wife’s offer was more favourable than the $250,000 plus interest that she ultimately received a year-and-a-half later.

This triggered a consideration of the Family Law Rules, which (among other things) are designed to encourage settlement.  Those Rules specifically set out the basic principle that if a party chooses to pursue litigation despite a reasonable offer to settle, they do so knowing that will have to pay their own lawyers, but also the lawyers of their spouses as well.   In particular, as was the case here, if one spouse makes an offer to settle that is more favourable to the losing party that the result that is obtained at trial is entitled to full recovery costs from the date of the offer.

The court found no reason to deviate from that Rule in this case.   The legal costs claimed by the wife’s lawyers were within the scope of what the husband should have expected to pay in light of his lack of success at trial.   Indeed, in awarding the full amount, the court found it was not enough for the husband to merely suggest that the costs were excessive – the court characterized that as being “no more than an attack in the air”.  

Furthermore, the court emphasized that the spouse who challenges a costs award should come to court with clean hands:  if he or she forced the other to proceed to trial and then – after an unsuccessful outcome – argues that the costs incurred by the successful spouse were excessive and unreasonable will not be accorded sympathy by the courts.   Indeed, the court observed that the husband in this case:

“had three lawyers representing him at the trial, an indicator that he was prepared to spare no expense to defeat [the wife’s] claims and to advance his own. It would be unreasonable for him to have expected [the wife] to do less.”

The wife was awarded her full legal costs of almost $120,000.

For the full-text of the costs decision, see: D’Andrade v. Schrage, 2011 ONSC 2144 (CanLII)) http://canlii.ca/s/6knav