Costs Following a Conference are Mandatory in Certain Circumstances (and Can be Substantial)

By Maria Golarz, Senior Associate Research Lawyer, Lam Family Law*

Costs in family law proceedings were a hot topic over the last year.

Broadly, Rules 18 (Offers to Settle) and 24 (Costs) of the Family Law Rules (“FLR”) govern costs in family law proceedings. Consideration of success is “the starting point.” Rule 24(1) creates a presumption of costs in favour of the successful party: FLR, R. 24(1) & Rogers v. Porga, 2021 ONSC 5442 (CanLII), at paras 11-12 & Family Law Rules, O. Reg. 114/99 (“FLR”), rr. 18 & 24.

Rule 24(10) provides that the judge who deals with a step in a case shall (a) determine who, if anyone, is entitled to costs; or (b) expressly reserve the decision on costs for determination at a later stage in the case: FLR, at r. 24(10).

Costs following a conference – i.e., a Case Conference, Settlement Conference, or Trial Management Conference – are also governed by r. 17(18). Costs are not to be awarded following a conference unless certain circumstances arise:

(18) Costs shall not be awarded at a conference unless a party to the conference was not prepared, did not serve the required documents, did not make any required disclosure, otherwise contributed to the conference being unproductive or otherwise did not follow these rules, in which case the judge shall, despite subrule 24 (10),

(a)  order the party to pay the costs of the conference immediately;

(b)  decide the amount of the costs; and

(c)  give any directions that are needed. [underlining added]

Note the mandatory, not permissive, wording of the provision. If such circumstances arise, the court shall order costs immediately.

An enumerated circumstance arose in Mitchell v. Mitchell, 2023 ONSC 2341 (WL), where Justice Kraft was tasked with addressing costs for a Settlement Conference where one party was unprepared and “otherwise contributed to the Conference being unproductive.” The husband had “behaved unreasonably” and the wife was put to “excessive” legal fees due to his refusal to comply with his financial disclosure obligations (including court ordered disclosure): para 12.

In particular, at the time of the conference:

1. the husband was in breach of two consent disclosure orders;
2. his failure to comply with those orders caused additional expense to the wife;
3. he had not served or filed an updated financial statement, updated certificate of financial disclosure, Net Family Property Statement, expert reports, or an Offer to Settle, as required by the FLR;
4. his failure to provide basic financial disclosure deprived the wife of the opportunity to have a judge explore settlement or narrow the issues (two purposes of a Settlement Conference as per r. 17(5)), or to advance to a Trial Management Conference;
5. his previously sworn financial statements omitted relevant information and assets;
6. he blamed his delay and failure to comply on his age, lack of computer skills, and lack of representation (despite being represented for part of the litigation);
7. the wife had been forced to bring a motion to dispense with his consent to accept an offer to purchase a jointly owned property, above list price, despite his previous agreement to sell, and had recovered some but not all of her costs of that motion; and
8. the wife was forced to incur fees to obtain documentation of cash receipts which the husband had failed to disclose: para 7.

Prior to the Settlement Conference, the parties had reached a consent regarding several issues, including payment of interim spousal support, sharing net rental income, a non-dissipation order regarding the proceeds of sale of various assets, a process for selling a property, and timing for outstanding and new disclosure. Still, the wife argued that the consent order was only possible due to extensive efforts by herself and her counsel to gather evidence: paras 1 & 8.

Justice Kraft went on to make several observations about how courts are to decide the quantum of costs following a conference:

• The two traditional scales of costs (i.e., solicitor-and-client and party-and-party) are no longer appropriate to quantify costs under the FLR. Having determined one party is liable to pay costs, the court must fix an amount somewhere between a “nominal sum” and “full recovery”, having regard to the factors set out in r. 24: para 13, citing Sims-Howarth v. Bilcliffe, 2000 CanLII 22584 (ON SC) and A.M. v. D.M., 2003 CanLII 18880 (ON CA).
• The FLR do not explicitly provide for “partial” or “substantial” indemnity costs. Rule 24(8) does refer to costs on a “full recovery basis” where a party has acted in “bad faith”. However, absent bad faith, the court does not need to find “special circumstances” before ordering costs on a full recovery basis: para 14, citing Sordi v. Sordi, 2011 ONCA 665 (CanLII).
• Nevertheless, there is no general approach in family law to “close to full recovery costs”. Full recovery is only warranted in certain circumstances, such as bad faith (r. 24(8)) or beating an offer to settle (r. 18(4)): para 15, citing Beaver v Hill, 2018 ONCA 840 (CanLII).
• Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs they may face if unsuccessful. Unreasonable behaviour may result in a higher award of costs: para 16.

Here, the wife had initially sought costs of $10,000 at the Settlement Conference. She served a new Bill of Costs the day after, seeking costs of $34,558.33, representing 60% of her costs incurred since the earlier disclosure orders. The husband argued the new Bill of Costs contained billings related to other issues, including a motion to strike the husband’s pleadings, correspondence, and other matters not related to disclosure or the adjourned Settlement Conference dates: para 4.

Ultimately, Justice Kraft ordered costs to the wife in the amount of $18,000 to be paid within 10 days. This was an appropriate order in light of the husband’s lack of preparedness for the conference, his ongoing breach of disclosure orders and the FLR, particularly since the first order was made in February 2022, the reasonableness and proportionality of the wife’s counsel’s work, and the fact that the husband should have expected to pay costs given his disclosure failures: paras 2 & 19.

Tips for Effective Settlement Conferences (and Getting Your Costs After an Unproductive One)

• Review the purposes of a Settlement Conference as set out in r. 17(5) of the FLR.
• Review outstanding disclosure and other orders with your client beforehand.
• Manage client expectations – clients need to know that costs may be awarded against them at a conference for certain unreasonable behaviour.
• Reference in your Settlement Conference Brief why costs of the conference should be ordered – i.e., that the opposing party was not prepared, did not serve the required documents, did not make required disclosure, otherwise contributed to the conference being unproductive or otherwise did not follow r. 17(18), of the FLR.
• Review the docket entries on your Bill of Costs to make sure there is enough detail for a judge to understand what each time entry relates to.
• On the date of the conference, be prepared with a Bill of Costs – and don’t be afraid to amend it as necessary, and as is reasonable, before any costs determination.

*with thanks to Vanessa Lam and Rebecca Winninger for their suggestions and edits.