Costs Consequences of Unreasonable and Unnecessary Litigation

The costs decision in Calver v. Calver, 2019 ONSC 7317 exemplifies the severe costs consequences that can accrue for parties that unreasonably litigate by needlessly complicating or prolonging court proceedings. Justice Pedlar of the Ontario Superior Court of Justice heard this matter.

Background

In this case, the parties went through a 9-day trial at the Ontario Superior Court of Justice on issues related to property division. The wife made several claims and requested some extraordinary remedies; among other things, she claimed:

  • unequal division of net family property;
  • unjust enrichment;
  • proprietary estoppel;
  • loss of future income; and
  • compensation for physical and emotional damages.

The wife claimed the husband owed her a payment of $450,000, but she offered to settle the matter before the trial for $300,000. At the trial, she received $83,851.40, which is less than 20% of what she claimed. This is because all her claims failed, except for an unequal division of net family property. The husband also made an offer to settle before trial to the amount of $9,000. The wife is seeking costs of $84,750 and the husband is seeking costs of $112,883.90. Given the trial outcome, Justice Pedlar found that neither parties’ offers were reasonable and, as such, the offers did not help mitigate the costs consequences to the parties.

Analysis

Under section 131 of the Courts of Justice Act, the court has the discretion to award costs to each party. In exercising discretion, the court will typically consider, among other things, the following factors (per Rule 57.01 of the Rules of Civil Procedure):

  1. The principle of indemnity, which includes the experience of the lawyer for the party entitled to costs as well as the rates charged, and hours spent working on behalf of the party.
  2. The amount of costs an unsuccessful party could reasonably expect to pay.
  3. The amount claimed and the amount recovered.
  4. The apportionment of liability.
  5. The complexity of the proceedings.
  6. The importance of the issues.
  7. The conduct of any party who intended to unnecessarily shorten or lengthen the duration of the proceeding.
  8. Whether any step in the proceeding was improper, vexatious, or unnecessary.

Based on the factors mentioned above, Justice Pedlar found what the wife claimed and what she recovered were far apart. Moreover, most of her claims failed, and the proceedings were unreasonably complex by the number of unsuccessful claims. This led to the husband reviewing and filing numerous documents to defend himself. The principle of proportionality is crucial and, in the context of this case, the litigation was disproportionate to what one could reasonably expect as an outcome of the trial. Justice Pedlar found that if the wife were to have advanced only 1 claim for unequal division of net family property, the trial would have only taken 1 or 1 ½ days rather than 9 days.

Given the wife’s success with her claim for an uneven share of net family property, she received costs for that portion of the trial, or approximately 16% of her costs claim. Thus, the wife received $13,560 in costs out of the $84,750 claimed. However, the husband was successful in defending all other claims and warranted 84% of his costs, which amounted to $94,822.47. Once the 2 costs awards were set off, the wife owed the husband $81,262.47 in costs. The costs order against the wife was ultimately paid from the amount awarded to her at trial. Once the costs order of $81,262.47 was compensated from her award of $83,861.40, the husband only owed a final amount of $2,588.93 to the wife.

Summary

While the circumstances of this case are rare and extreme, the costs decision of Justice Pedlar provides a serious reminder to litigants that unreasonable conduct may ultimately undermine any real gain they might receive at trial.

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