Skip to content

Posts from the ‘Costs’ Category

Is Husband’s Payment of 230 Gold Coins Under Islamic Marriage Contract Excluded from Wife’s Property?

Image result for islamic coins

Is Husband’s Payment of 230 Gold Coins Under Islamic Marriage Contract Excluded from Wife’s Property?

Under the law governing Islamic marriage, a “Maher” (sometimes written as “Mahr”) is a written marriage contract.  In the recent Ontario Court of Appeal decision in Bakhshi v. Hosseinzadeh, the narrow legal question was whether, under the Ontario Family Law regime, the property transferred under a Maher is excluded from the definition of Net Family Property (NFP), and by extension excluded from the equalization calculation of the parties’ respective NFPs upon divorce.

When they married in Iran in 1995, the couple had entered into the Maher in keeping with their religious and cultural beliefs.  The Maher contained a clause that required the husband to pay the wife 230 gold coins promptly upon her request.  The spouses later immigrated to Canada.

When in 2013 the wife began divorce proceedings and various related court applications, the issue arose as to how the notional transfer from the husband of those 230 gold coins under the Maher was to be treated in law.  At the initial trial, the judge concluded that the Maher obligation was valid and that the value of the gold coins – about $80,000 – was to be excluded from the wife’s NFP total.

The Court of Appeal was asked to entertain the husband’s appeal.  It began by confirming the ruling of prior courts to the effect that despite being religion-based, marriage contracts such as a Maher can be enforceable, provided they satisfy the elements of a valid domestic contract under Canadian law.  Once deemed valid, they are interpreted like any other civil contract, by looking at their wording and the objective intentions of the parties at the time the agreement is made.

Next, the Court observed that definition of NFP found in the provincial Family Law Act includes all property owned by a spouse on the valuation date.   The Maher in this case contained no express agreement that the payment of 230 gold coins was to be excluded from the wife’s NFP, nor was there any basis to infer that the spouses intended at the time to exclude it.  To the contrary, it was executed in Iran and contained other terms that suggested the couple envisioned continued life in that country, and were not contemplating their potential mutual obligations under the Ontario legislation.

The Appeal Court concluded that the Maher payment was to be treated under the Family Law Act like any other payment obligation between the spouses, meaning that it was to be included in the overall calculations.  That outcome was in keeping with the rest of the legislative regime, which envisions that spouses own property separately during marriage, and does not allow for transactions between spouses to be excluded from NFP calculations.

The Court re-calculated the NFP by including the value of the Maher payment, while clarifying that the husband still needed to actually (i.e. physically) transfer the 230 gold coins to the wife’s possession.  Even though its value was to be included in the overall equalization calculation, the Maher payment itself was considered a demand obligation with a paper value, which meant the wife was entitled to pursue debt collection remedies if the husband refused to pay.

For the full text of the decision, see:

Bakhshi v. Hosseinzadeh

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

 

Court Strikes Family Law Firm’s $72,500 “Premium” as Being a Contingency Fee

Image result for contingency fee

Court Strikes Family Law Firm’s $72,500 “Premium” as Being a Contingency Fee

Most of you will be familiar with “contingency fees”, meaning the fees a client agrees to pay a lawyer only if the lawyer is successful in the litigation for which he or she is hired.   They are most often used in personal injury matters, with the lawyer’s fee being calculated as a percentage of the amount recovered for the client.

But what you may not know is that in Ontario Family Law matters, contingency fee arrangements are prohibited outright. And in a recent decision, the court “undid” an arguably creative approach by a Toronto-area Family Law firm, finding it was a prohibited contingency fee by another name.

In Jackson v. Stephen Durbin and Associates, the husband was involved in a contentious custody battle with his wife over their 6-year-old daughter.   Under the retainer he signed with the law firm chosen to represent him, the husband agreed to pay the lawyers an hourly rate for working on his case, but “with a daily counsel fee for court or tribunal appearances at ten-fold (solicitor’s) hourly rate and an increase in fees in the event of a positive result achieved (“results achieved fee”)”.

About two years into the litigation process, the husband had depleted the retainer funds and began to accrue arrears with the law firm.  After several accommodations and re-negotiations, the husband still owed the firm its fees totaling $132,500.

He challenged the law firm’s overall bill, especially the “results achieved fee” of almost $72,500, which had been rendered on a separate invoice.   He claimed this was tantamount to a contingency fee agreement in a Family Law matter, which is clearly prohibited by section 28.1(3) of the Solicitors Act.

After reviewing several prior cases on this point, the court agreed. The Act’s wording describes a contingency fee agreement as being one that provides that the remuneration paid to the lawyer for legal fees is contingent “in whole or in part” on the successful disposition or completion of the matter.  The retainer in question stipulated an increase in the event of a “positive result achieved”.  As the court put it:

The logical interpretation of that agreement is that the “results achieved fee” is only chargeable if a successful result is achieved.  I find that the language of the retainer agreement combined with the way the results achieved fee was charged (by way of a separate account), confirms the firm’s intention that the fee was contingent on the successful disposition or completion of the matter in respect of which services were provided.  As such, the results achieved fee charged by the respondent to the applicant is a contingency fee defined by the Solicitor Act and is a prohibited charge.

In short, the “results achieved fee” was merely a contingency fee arrangement in a creative wrapper.  The court accordingly ordered the law firm to refund the almost $72,5000 “premium” that the husband had been charged.

For the full text of the decision, see:

Jackson v. Stephen Durbin and Associates

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

Should Aboriginal Heritage Trump Child Protection Needs?

Image result for native american heritage

Should Aboriginal Heritage Trump Child Protection Needs?

In a recent child protection case, the court summed up nature of the proceedings with a definite air of gravitas:

This case is also about the equality rights of Métis children and their families in the child protection context in Ontario, and whether the provincial government is respecting those rights. It is an important opportunity for this province to demonstrate its commitment to act upon the Calls to Action that the Truth and Reconciliation Commission of Canada issued in 2015.

The facts involved a child who had been apprehended at birth by the Children’s Aid Society (CAS), and was in foster care ever since.  He was now almost two years old.

The father claimed the child was of Métis heritage.  This claim was an important fact, because the definition of “Native child” contained in the Child and Family Services Act (CFSA) did not include Métis.   This meant that a Métis child would not gain the same advantages as one who had been designed a “Native child” under the CFSA; including the benefit of a legislative mandate to the court to the effect that any order made in relation to the child was to bear his or her cultural, religious, and regional differences in mind.

Against that background, the CAS had applied to have the child made a Crown ward, with no access to the parents at all.  This sparked a successful Charter of Rights challenge by the child’s father, who claimed that the differing treatment of Métis children was in violation of the guarantee of “equality before and under law, and equal protection and benefit of law”.  A prior court had temporarily addressed the father’s concern by ordering the child to be treated as if he were in the more beneficial “Native child” category for the purposes of the court application by the CAS to make him a Crown ward.

The court then turned to assessing the parties’ positions on that application.  It acknowledged that there were numerous factors involved in deciding a child protection application, and the child’s Aboriginal heritage was just one of them.  Here, the father had raised the issue at the eleventh hour, and had supplied only scarce evidence to show that maintaining the native heritage and culture was important to the family.  The court said:

What I have outlined above is the totality of the evidence this court was given relative to [the father’s] background. He did not give any testimony about his Aboriginal background or any connections that he had or has in that community other than his relatively brief contact with the Métis Ontario Healthy Babies Healthy Children Program.

The court quoted from a prior ruling in which the court had to deal with similar issues, then added its own comments:

Our compassion toward and recognition of the importance of native heritage and families remains unwavering.  But special status does not equate to a blanket exemption from legislation carefully crafted to protect vulnerable and often damaged children.

 I agree with all of the considerations that are set out by [the prior judge] in the above-quoted paragraph. In addition, I do not feel that the legislative scheme put in place to recognize the importance of Native heritage and culture for children who have been designated as Native can be meaningfully applied in the abstract. There must be evidence of the nature of the involvement of the child’s family in the Native community. The mere claim that someone is Native does not allow the court to consider the relevant factors within the legislative scheme, without some evidence of what is important to this family, this child, and the Aboriginal community the child is said to be a member of.

In this case, the required proof was absent. The father had also not shown that his prior inappropriate parenting skills had improved even though he had parenting services available to him for several years.  An attempt to find the child suitable placement with extended family-members had failed.  Meanwhile, the child had begun to thrive in his current care arrangement that did not feature any involvement by the parents.

Finally, the court observed that prior to bringing its application, the CAS had invited members of various Ontario-based Métis communities to participate in the litigation or provide the placement options for the child, without success.

Ultimately, the child was made a Crown ward, with no access to the parents.  However, the court also directed that the CAS should make every effort that any foster parent or adoptive placement would be willing to educate the child on his Aboriginal heritage and culture, and to expose the child to his culture on an age-appropriate basis.

For the full text of the decision, see:

CCAS v G.H. and T.V.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

Wednesday’s Video Clip: Russell Alexander, Family Lawyers

Wednesday’s Video Clip: Russell Alexander, Family Lawyers

Our fees are based on the following elements:

(a) The time spent on your behalf, and the service which is performed;

(b) The complexities of the issues, and your potential emotional and monetary exposure;

(c) The results accomplished, and the extent to which the expertise of this firm contributed to a successful outcome;

(d) The degree and type of resistance encountered; and,

(e) The extent to which any work needs to be performed on an emergency basis.

None of these elements are capable of a precise arithmetic assessment, and no such assessment is attempted, except in a general way with respect to the time spent. A standard hourly rate, is applied to convert the time into a monetary figure. Any amount that exceeds the number of hours multiplied by the standard rates is the result of the weighing of the other elements mentioned.

We charge standard hourly rates for the work done by our law clerks and lawyers for the time spent on your case. Records are kept (in our computer time-keeping system) by us to the nearest one tenth of an hour, for all activity on your case, including conferences, telephone calls, e-mail, preparing correspondence and memoranda, drafting documents, research and travel time. Each hour billed to you is based on actual work done on your particular case.

Our absence from the office on your behalf is charged at the usual hourly rate. Travel time includes attending at court, settlement conferences, meetings, or consultations on your behalf. We will minimize travel expenses and courthouse time, if any, whenever possible. However, as you will be charged for our traveling time (in addition to the counsel fee), it may be worthwhile to consider whether a local lawyer is desirable for you if your litigation is taking place in another community.

If your appointment is for a consultation only, in order for you to receive advice on a limited number of issues, or, for example, for a second opinion, you will be billed a flat rate consultation fee, payable prior to the consultation. The consultation is not meant to deal with your whole legal problem. These rates are reduced rates, and apply only if the fee is paid at the time of the consultation. The rates are calculated on the basis of the average amount of time spent by our lawyers on consultations in the most recent year.

At Russell Alexander Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

Financial Disclosure: If One Spouse is Dishonest, Must the Other Actively Investigate?

 Financial Disclosure: If One Spouse is Dishonest, Must the Other Actively Investigate?

In a case I reported on last week, called Virc v. Blair, the husband had deliberately and materially misrepresented the value of the corporations that he brought into the marriage, which eventually came to light upon the couples’ separation.

Although the matter resulted in the court re-calculating the parties’ equalization entitlements in accord with the more accurate corporate valuation, the case raised an interesting corollary legal question:

If one party deliberately misleads the other, does it become the other’s obligation to actively investigate into that dishonesty?

In Virc v. Blair, the parties had gone before a motion judge on a procedural matter relating to what turned out to be the husband’s incomplete and misleading financial disclosure.   Once the motion judge had assumed that the husband had made certain material misrepresentations, the judge shifted the burden and placed it on the wife to inquire as to the truthfulness of the husband’s financial disclosure.

The Court of Appeal later held this was an error.  It said:

In the face of a deliberate material misrepresentation, the onus is not appropriately placed on the recipient spouse.  Rather, the burden is on the party disclosing to establish actual knowledge of the falsehood by the recipient. 

In other words, and contrary to what the husband claimed, there was no law to the effect that a spouse who receives financial disclosure in a matrimonial case is under an obligation investigate or test the veracity of the information provided by the other spouse.   Rather, the effect of the deliberate material non-disclosure remains the focal point (unless the dishonest spouse can prove that the other spouse conclusively knew of the dishonesty).

As the court said a little later in the judgment:

The law does not entitle a liar to succeed just because the recipient of the falsehoods has not ferreted them out.

For the full text of the decision, see:

Virc v. Blair

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

Busted! Court Relies on Sworn Financial Statements from First Divorce to Value Assets During Second One

Busted! Court Relies on Sworn Financial Statements from First Divorce to Value Assets During Second One

The husband was a 46-year-old, recently-separated businessman who met the 26-year-old wife when she was a junior at the law firm he used for his business matters and litigation. After they moved in together and he got a divorce from his first marriage, the wife left her job at the law firm to take care of the husband’s litigation and related corporate affairs.

They were married for 14 years before they separated, and had three children.

When they split up, the husband forwarded a newly-prepared separation agreement for the wife’s signature. She signed without obtaining independent legal representation.  She was comfortable doing so because she believed that the husband had provided full disclosure, and she trusted his assessment since he had considerable experience valuing businesses.

Using the business valuation information provided by the husband, the separation agreement would have called for the wife to pay the husband just under $1 million as an equalization payment; however, it also provided that the husband would agree to forgo her having to pay that amount.

Sounds like a good deal, right?

However, the wife slowly realized afterwards that the husband had misled her. Rather than her owe him money in equalization (which he waived), the proper calculation was entirely different because he had greatly overstated the value of the corporate assets that he brought into the relationship, most notably the value of his company at the date of marriage. This would inflate the amount she was adjudged to owe him way of an equalization.

She successfully applied to the court to set aside the separation agreement, on the basis that the husband had not given full financial disclosure.  The trial judge adjusted the calculation accordingly.

The husband appealed.  In support of his business valuation figures, he put forth the evidence of an expert, who attested to the fact that the value of the business on the marriage date was over $7 million.  However, the Appeal Court concluded that the expert was partial to the husband and lacked independence, and had given an inflated figure that could not be trusted.

Instead, the court relied on some “smoking gun” evidence:  the sworn financial statements the husband had filed in his first divorce, which showed that he had essentially brought no assets of value into this second marriage to the wife.  The trial judge had relied on this evidence as well in setting the separation agreement aside, and the Appeal Court confirmed that there was nothing improper about the trial judge having done so, even if it was to the husband’s detriment.

In the end, the husband was found to have intentionally misrepresented the value of his corporate assets, by claiming that they were worth $6 million more than their actual (court-determined) value.

The Appeal Court upheld the trial judge’s decision to set aside the separation agreement, and went on to calculate the proper equalization amounts using the true valuation of the husband’s assets.

For the full text of the decision, see:

       Virc v. Blair

At Russell Alexander Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

For Amateur Lawyers, Part 2: Equalizing a House that Cost More to Build than it’s Worth

For Amateur Lawyers, Part 2: Equalizing a House that Cost More to Build than it’s Worth

As I reported last week, the case of Strobele v. Strobele involved a couple who in the two years leading up to their final split had invested all their life savings (and more) to build their “dream home”. Unfortunately, it turned out that not only was the construction project the “death-knell” to their relationship, but the home also ended up being worth far less than it cost them to build/renovate.

At the end of the day, the home cost about $1.8 million to build, but ended up being worth $1.2 million, with title solely in the husband’s name. The wife had contributed $240,000 of her own money to the construction project over the years they were together.

So how does a Family Court split a home that’s worth less than what the spouses invested in it? The answer: With some complex calculations, and after looking at all the circumstances.

An already-tricky scenario was made somewhat more complicated by the fact that the husband wanted to buy the wife out, so that he could stay in the home. This meant that one of the many issues for the court was how much the husband should have to pay her.

The court first ruled out doing a straightforward Net Family Property calculation using the home’s current low market value. That would result in allowing the husband to stay in the home, obtain the benefit of the surroundings, and have the wife make further payments towards the home’s cost. This, the court stated, would be unfair.

Instead, the court had to look at the economic consequences of the relationship and its breakdown. The couple had moved into the home before they got married, and the wife spent $240,000 of her own money on construction projects both prior to and after marriage. They had enjoyed a relatively equal economic partnership throughout their relationship.

The fair approach was thus to calculate – and to divide equally – the overall losses that the couple sustained in building their dream home, and to give the wife a 50 percent equitable interest in the home – whatever that might turn out to be – by way of resulting trust.

Using an as-built value of $1.8 million, and a market value of $1.2 million, the court focused on “consumption value”, which would lead to a determination of what the parties’ loss on investment was. In these circumstances, the parties had each lost one-third of their overall investment in the home.

When that discount ratio was applied to the $240,000 that the woman put in over the course of their relationship, this meant she had lost one-third of that, too. In other words, rather than have the wife emerge with nothing from her $240,000 investment, the fair solution was to gross-down that figure by one-third, to represent her losses.

So after the normal equalization calculation the husband was at liberty to purchase the wife’s interest in the home for $160,000 and also personally assume all the debt associated with the house. Or, if that transaction did not take place and he chose not to buy her out, then the house could be sold and the loss that results could be divided equally between the parties through the usual equalization process.

Was this the outcome you would have predicted? What are your thoughts?
For the full text of the decision, see:

Strobele v. Strobele, [2005]

At Russell Alexander Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

SaveSave

SaveSave

SaveSave

SaveSave

Representing Yourself and Asking for Legal Costs? Read this First

Representing Yourself and Asking for Legal Costs? Read this First

Recently I wrote about a ruling on costs where a self-represented litigant was awarded significantly more in legal costs, than she had requested after trial.

That case, called McMurter v. McMurter, gave the court an opportunity to revisit some of the prior authorities on the issue, and to set out the principles that apply to awarding legal costs to self-represented family litigants.

Based on that review, if you succeed in represented yourself in your family law trial or motion and are looking to be awarded your legal costs from your unsuccessful opponent, here is what you need to know:

  • Whether you are legally trained or not, you cannot claim the same costs as a lawyer would charge. Instead, you can receive a “moderate” or “reasonable” allowance for your lost time.
  • Courts recognize that every litigant must prepare for court to some extent, whether represented by lawyer or not. So if you decide to represent yourself, you can only recover for the time and effort above and beyond what an average person would devote to getting ready for the proceeding.
  • You must also demonstrate that you spent time and effort doing work ordinarily done by a lawyer retained to conduct the litigation, and that you incurred an opportunity cost because of it.
  • Even if you did not give up remunerative activity to represent yourself in court, the court may award you costs for what would otherwise be lawyer’s work on the case. This means that you can get legal costs even if you are a homemaker, retirees, students, unemployed, unemployable, or disabled, etc.
  • The quality of your work as a self-represented person will also be a factor in the court’s assessment of what costs you might be awarded.

In terms of the actual fees, courts can vary widely on how they approach the mathematical calculation. Some will award an hourly rate varying from $20 to $150 per hour, minus the time you would have spent on the case if you had a lawyer present. Others have a “rule of thumb” that allows for a certain number of hours of preparation time, and a certain number of hours of trial time.

In any event, the amount must be reasonable, proportional and with the losing party’s expectations.

Returning to the McMurter v. McMurter case, the court applied these principles in awarding the wife her legal costs award of $30,000, even though she had asked for $18,000. It found that she had successfully represented herself in a complex case where there was a lot at stake. She had been exceptionally well-organized and presented her arguments well, and dealt with complicated legal issues and various family legislation. As the court put it, “She did the work of a lawyer in addition to the work expected of her as a litigant.”

For the full text of the decision, see:

McMurter v. McMurter, 2017 ONSC 725 (CanLII)

Main judgment:

McMurter v. McMurter 2016 ONSC 1225 (S.C.J.)

Fong v. Chan, 1999 CanLII 2052 (ON CA)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

 

For a Divorce Trial, is $430,000 in Legal Fees Too Much?

For a Divorce Trial, is $430,000 in Legal Fees Too Much?

Anyone who has gone through a divorce will know that legal costs can get out of control. But consider the recent Ontario case of McCabe v Tissot, where the court was asked to rule on whether the husband should pay the wife’s legal fees of $430,000, part of divorce litigation that “financially devastated” both former spouses, and which saw the wife alone rack up almost $1 million in legal fees overall.

The court’s first step was to determine which member of the sparring couple had been the successful party at trial, because under Ontario civil procedure this is essentially the starting-point for determining how costs should be apportioned, although additional factors come into play as well. Both parties claimed that they had been entirely successful on all significant issues.

Perhaps not surprisingly, in addition to disputing her entitlement the husband also took issue with the wife’s dollar-figure: the $430,000 she was claiming was both excessive and disproportionate, in his view. The wife had chosen to endlessly litigate to the point where both parties’ financial stability, and thus the well-being of their son, was in jeopardy.  He said that for his own part, he had been financially ruined by the whole process.

The court, after considering the various circumstances (including the reasonableness of the parties’ positions at trial, the offers to settle they had exchanged, and prior courts orders), agreed that the wife had been more successful overall. But it rejected the notion that she should receive the full costs she was claiming. The court said:

[t]he amount of legal fees spent by the parties on this litigation is astronomical and completely unreasonable. The [wife] has mortgaged her home and has very little equity left as was her evidence at trial and as set out in her sworn Financial Statements. The [husband] also spent an exorbitant amount on legal fees borrowing funds from his parents to finance the first trial. The [wife] alone has spent close to $1 million on legal fees and disbursements. The [husband] borrowed over $393,000 from his parents. The fees spent by the parties are completely disproportionate to the issues before the court.

The court continued:

The parties lost sight of what is reasonable and what is proportionate. The financial devastation suffered by this family will last a lifetime. Most importantly it will once again negatively impact their son….

And further:

…from the spring of 2013 onward conflict ensued and they attended court numerous times, obtaining approximately 41 court orders. Not only did this financially devastate the parties and affect Liam detrimentally as set out in my Reasons, but it also resulted in the use of an inordinate amount of judicial resources. My only hope is that the parties have now come to the realization that the destruction both financially and emotionally was not worth it and they will not become embroiled in further litigation in the future. Only time will tell.

After reviewing all the relevant factors, the court concluded that legal costs in the amount of $125,000 were payable by the husband to the wife in the matter.

For the full text of the decision, see:

McCabe v Tissot, 2016 ONSC 4443 (CanLII)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

Father Who Paid $400K in Legal Fees to “Cause Financial Harm to the Mother and His Son” Ordered to Pay Mother’s Costs Too


Father Who Paid $400K in Legal Fees to “Cause Financial Harm to the Mother and His Son” Ordered to Pay Mother’s Costs Too

If a father runs up almost $400,000 in legal costs – including nearly $75,000 in expert fees – in pursuit of a low-dollar-value victory in court, should this be considered in assessing legal costs later on?

In Jordan v Stewart, court was asked to allocate legal costs in connection with the parents’ dispute over whether the father’s obligation to pay child support for their now-20-something son should be terminated. The young man had been attending University in London, Ontario but when the father learned that he was switching to a college in Toronto, he applied to have child support cut off, on the basis that the young man would be independent and no longer be living with his mother in London. In fact, the father asked for the termination of his support obligation to be back-dated three years.

The father brought a motion to have the support obligation end; the mother wanted the father’s motion dismissed. Although the issues were relatively straightforward, the hearing took up several days of court time, and required expert evidence and scrutiny of the father’s income.

The father did not get the order he wanted, but the mother wasn’t fully vindicated either, since there were additional legal issues that were also addressed at the same time. Given those rather mixed results, the judge was challenged to apportion legal costs, which under Ontario civil procedure are usually (but not always) given to the winning party. So the court had to determine which of the parents had been the “successful” one in the proceeding so far.

The stakes were potentially high: The father had incurred about $373,000 in costs in preparation for certain proceedings, including almost $75,000 paid to an expert to provide an opinion on his income for child support purposes, for the years 2010 and 2011, based on various financial scenarios. But despite the staggering run-up of costs, the father was asking for only 25% of it from the mother – which was still just under $90,000.

The court rejected the father’s claim that he was the successful party, stating that his rationale “stretch[ed] the reality of the outcome.” Instead, the judge stated that “even if I found the father was somehow technically successful, I would award the mother costs.”

The judge’s stern stance against the father was explained by the following passages from the 130-paragraph ruling:

This case is another example of courts struggling to determine entitlement and quantum of costs. The costs issue is made more complex by the father’s willingness to spend approximately $400,000 in legal and expert fees. This amount is significantly disproportionate to any amount that he advances as his best possible financial outcome. The father also knew that, if successful, he probably would not recover the costs in any significant way from the mother as she has limited financial resources and appeared in court without counsel.

This case is an extreme example of a person who was prepared, as he has been in the past, to spend significant sums of money without concern for costs or outcome.

While I cannot conclude that the father in this case deceived the court in any manner, his willingness to spend money on legal and expert fees so out of proportion to any economic benefit defies logic. The reasonable conclusion is that the father was prepared to cause financial harm to the mother and his son even at incredible expense to himself. He certainly never expected to recover his costs [from her].

He does not seek to recover most of the significant fees he spent, a signal that the money was not a factor in his pursuit of the case or relevant to any resolution. He was prepared to spend more money than any financial benefit to him if he succeeded.

The judge also observed that the mother had made multiple reasonable offers: she had suggested mediation, and offered to accept reduced support.  The judge found these offers were all “worthy of the father’s consideration”, and would have been far more financially beneficial to both parties than what transpired.

In the end, using the father’s own tally of his costs as a representative “measuring stick” of the fair compensation to which the mother should be entitled, the judge awarded her the nearly $90,000 in costs to be paid by the father, plus the $34,000 he already owed her.

For the full text of the decision, see:

Jordan v Stewart, 2013 ONSC 5037 (CanLII)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com