I was recently  involved in a case where the court awarded costs for “unbundled legal services” to a self-represented litigant.  The case is Jordan v. Stewart.  The decision on the issue of costs is set out in supplementary reasons.

After succeeding at trial, the court allowed the acting in person mother her costs of $90,000.00.  That sum included  accounts from lawyers who had provided ‘unbundled legal services” of about $65,000.00 at different parts of the proceeding.

In addition to allowing all of the mother’s lawyer’s fees,  the Court allowed costs for part of her preparation for trial.  Her claims for loss of income and a counsel fee for herself were not accepted by the Court.

The $90,000.00 was small compared to the father’s legal fees.  Those exceeded $400,000.00.

The  case took almost two weeks of trial followed by a full day costs hearing.  The trial was a David and Goliath battle, featuring a self-represented mother up against a team of 3 lawyers and a law clerk.

Both parties claimed to be the successful party.  After a full day of argument the Court delivered supplementary written reasons finding the mother was the successful party.  The presiding judge said he would have awarded the mother costs even if she had not been the successful party.  The Court found the father was motivated by a desire to do harm the mother and the child in spending vast sums of money well in excess of the economic benefit to him.

Justice Czutrin accepted the mother’s claim for the costs of obtaining legal services for part of the case, known as “unbundled legal services” and directed that she receive costs sufficient to pay her lawyers’ accounts.

Justice Czutrin noted my involvement as follows:

“Mr. MacLennan also prepared a Bill of Costs for work he did for the mother from September 7, 2012 to April 3, 2013 totaling $15,520.56. The description of his services includes trial preparation, discussion of issues that arose during the hearing before me, and discussions .. raised by father’s counsel.”

The decision is significant given recent changes to the Law Society’s by-laws allowing lawyers to provide legal services for part of proceedings.

Generally speaking a successful party is entitled to his or her costs.  Usually, those costs will be awarded on a partial indemnity basis.  A party can obtain higher costs on a “substantial indemnity” basis by making an offer to settle and doing as well or better than the offer.  A successful party can be awarded even higher costs, on a full indemnity basis, if it can be shown that the other party has acted in bad faith.  Bad faith has been defined to mean acting with an ulterior motive intended to harm the other party.

Regrettably, it is not uncommon in family law cases to see people acting with ulterior motives to harm the other party — usually a spouse!

An award of costs on a “substantial indemnity” is usually made when a party makes an offer to settle and the outcome of the hearing is as good or better than the party’s offer.  However, in the recent case of Murphy v. Murphy, Justice Spies of the Ontario Superior Court found that an offer to settle must also contain an “element of compromise” before the court will award a higher level of costs.

In the Murphy case, one party offered to settle on the basis that the moving party would withdraw his motion and there would be no costs.  However, in order to do so, the offer required the moving party to accept the offer within 27 hours.  The offer provided that even if the motion was withdrawn after that time, the responding party would be entitled to her costs as “fixed by the court” (whatever that meant).

Ultimately the husband withdrew his motion, but only after the start of argument.

Justice Spies denied the successful party a higher costs award because there was no element of compromise in that party’s offer.  By giving the moving party only 27 hours to consider the offer, and then taking the position that costs would be payable thereafter, the offer contained no real element of compromise according to Justice Spies.

What was the element of compromise worth?  The wife claimed that her “full  indemnity costs” were $79,000.00.  Justice Spies awarded the wife $27,000.00.

This case is interesting because the Family Law Rules make no mention of the need for an element of compromise in offers to settle.  The court relied on case law authority from  a 2000 decision of Supreme Court of Canada in finding that such an element was required.