Alberta Court of Appeal Clarifies When Enhanced Costs May Be Awarded in Family Law Appeals

Kantor v Kantor, 2023 ABCA 329 — Costs Decision

In a recent costs decision, the Alberta Court of Appeal provided useful guidance on when a successful party may be entitled to enhanced costs following an appeal. The decision is particularly relevant in family law matters where one party seeks to recover a significant portion of their actual legal fees from the opposing party.

The Court emphasized that simply being successful on an appeal, or demonstrating that the opposing party's position was unsuccessful, does not automatically justify enhanced costs.

Background

Under a January 2018 order, Mr. Kantor was required to pay Ms. Kantor $2,400 per month in spousal support. An October 2018 consent order suspended his support obligations while he was unemployed, but required him to resume payments within two months of obtaining new employment and to disclose his employment.

Mr. Kantor returned to work in June 2019 but did not disclose his employment or resume his spousal support payments.

Ms. Kantor subsequently applied for an order requiring Mr. Kantor to pay the missed support. Mr. Kantor brought a cross-application seeking a reduction of his support obligations, both prospectively and retroactively.

The chambers judge granted Ms. Kantor's application and dismissed Mr. Kantor's cross-application.

Mr. Kantor appealed. The Alberta Court of Appeal dismissed his appeal, finding that his arguments did not justify changing the amount of spousal support.

Following the dismissal of the appeal, Ms. Kantor sought enhanced costs.

Ms. Kantor's Request for Enhanced Costs

As the successful party, Ms. Kantor was presumptively entitled to her costs of the appeal. However, she sought enhanced costs equal to 75% of the legal fees and disbursements she had actually incurred, amounting to approximately $12,768.

Alternatively, she requested 50% of her actual legal fees and disbursements, or approximately $8,512.

Ms. Kantor argued that enhanced costs were justified because of what she characterized as Mr. Kantor's litigation misconduct and unreasonable conduct. Among other things, she argued that he:

• failed to provide timely and complete financial disclosure;
• failed to resume paying spousal support as required by the consent order;
• failed to pay the outstanding support ordered by the chambers judge;
• brought an unmeritorious appeal;
• refused offers to settle the appeal costs; and
• generally approached the litigation as a "war of attrition."

The Court, however, rejected these arguments.

Misconduct Must Relate to the Appeal

One of the most important points from the decision is that, when determining costs of an appeal, alleged misconduct must relate specifically to the appeal.

The Court relied on Rule 10.33(2) of the Alberta Rules of Court, which permits enhanced costs where there has been misconduct or conduct that unnecessarily lengthened the proceedings.

However, the Court noted that misconduct occurring at the lower court level is not necessarily relevant when determining the appropriate costs of an appeal.

In this case, several of the allegations raised by Ms. Kantor concerned Mr. Kantor's conduct before the chambers judge, including his failure to comply with the earlier support order and alleged deficiencies in financial disclosure.

Those matters had already been considered by the chambers judge when she awarded costs.

The Court of Appeal therefore declined to revisit those matters when determining the costs of the appeal.

An Important Distinction

The decision demonstrates the importance of distinguishing between:

Conduct in the underlying proceeding and conduct in the appeal itself.

A party seeking enhanced appeal costs should be prepared to identify conduct occurring during the appeal that independently justifies an elevated costs award.

An Unsuccessful Appeal Does Not Automatically Mean Enhanced Costs

Ms. Kantor also argued that Mr. Kantor's appeal was unmeritorious and therefore justified enhanced costs.

The Court rejected this argument.

An unsuccessful or even unmeritorious appeal does not, by itself, justify elevated costs. There must be evidence that the appeal was brought in bad faith or was frivolous.

In this case, although the Court found the appeal to be unmeritorious, there was no evidence of bad faith, and the appeal could not properly be characterized as frivolous.

This is an important distinction. Parties should not assume that simply because an appeal is unsuccessful, the successful party will automatically receive enhanced costs.

Refusing to Settle Costs Does Not Necessarily Constitute Misconduct

The Court also considered Ms. Kantor's allegation that Mr. Kantor had refused offers to settle the costs of the appeal.

The Court found that this did not amount to misconduct warranting enhanced costs.

Among other things, there had been no formal offer to settle the appeal costs, and the parties had a genuine disagreement regarding the appropriate costs award, including whether enhanced costs were justified and which Schedule C column should apply.

The decision therefore reinforces that a disagreement over costs, without more, will not necessarily justify an elevated costs award.

Actual Legal Fees Are Not Automatically Recoverable

Another significant aspect of the decision concerns the relationship between a party's actual legal fees and the amount of costs recoverable from the opposing party.

Ms. Kantor argued that a "normal" costs award should be approximately 50% of the fees and disbursements actually billed by her lawyer.

The Court rejected this proposition.

The fact that a successful party actually paid a particular amount to their lawyer does not mean that the losing party should be required to reimburse a corresponding percentage of that amount.

The Court explained that a more detailed analysis is required when a party seeks costs based on the fees actually charged by their lawyer.

Two separate questions must be considered:

1. Were the lawyer's fees reasonable as between the lawyer and the client?
2. Is it reasonable to require the unsuccessful party to pay a portion of those fees?

The Court emphasized that proportionality is an overriding consideration.

In other words, the amount of costs sought must be reasonable in relation to the issues and amounts involved in the litigation.

Schedule C Remains the Default

Because Ms. Kantor had not provided sufficient information for the Court to properly assess the reasonableness of the legal fees she had incurred, the Court turned to Schedule C of the Alberta Rules of Court.

The Court considered whether column 1 or column 2 was appropriate.

The chambers judge had previously awarded costs of $5,000, which was slightly above column 1 but below column 2. The Court of Appeal noted that the usual practice is to award appeal costs on the same scale as the trial court unless there is a reason to depart from that approach.

The Court found no reason to vary the scale.

Ultimately, the Court awarded Ms. Kantor $6,000 in costs, inclusive of the costs of the costs application.

This was below the approximately $7,700 that would have been available under column 2 and above the approximately $4,350 available under column 1.

Key Takeaways for Family Law Litigants

The decision provides several practical lessons for parties involved in family law litigation and appeals.

1. Success does not automatically result in enhanced costs

A successful party is presumptively entitled to costs, but enhanced costs require additional justification.

1. Misconduct must be connected to the proceeding for which costs are being assessed

For appeal costs, conduct occurring in the lower court will generally not justify enhanced appeal costs, particularly where that conduct was already considered by the lower court.

1. An unsuccessful appeal is not necessarily a frivolous appeal

A party should not be penalized with enhanced costs merely because their appeal was unsuccessful. Evidence of bad faith or frivolous conduct may be required.

1. Actual legal fees are not the starting point for ordinary costs

A party cannot simply point to their lawyer's account and claim a percentage of those fees. The Court must consider whether the fees were reasonable and whether it is reasonable for the opposing party to bear a portion of them.

1. Proportionality matters

The costs award must be proportionate to the issues, complexity, and amounts involved in the litigation.

1. Schedule C remains an important fallback

Where the evidence does not allow the Court to properly assess a claim based on actual legal fees, Schedule C provides the default framework for determining costs.

Conclusion

Kantor v Kantor illustrates the Court of Appeal's cautious approach to enhanced costs. While courts have discretion to award costs above the ordinary Schedule C amounts, that discretion is not exercised simply because one party was successful or incurred substantial legal fees.

For enhanced costs to be justified, the successful party must provide a proper evidentiary and legal basis demonstrating why an elevated award is appropriate. In an appeal, particular attention must be paid to the conduct of the appeal itself.

The decision also serves as a reminder that costs are not intended to provide automatic indemnification for a party's legal fees. Instead, the Court must balance reasonableness, proportionality, the conduct of the parties, and the circumstances of the litigation when determining what amount the unsuccessful party should be required to pay.

Link for case law: 2023 ABCA 329 (CanLII) | Kantor v Kantor | CanLII