Family

Scorched-earth approach to family litigation backfires

By AdvocateDaily.com Staff

Two recent massive costs awards are a reminder of the risks of a “scorched-earth” approach to family litigation, says St. Catharines family lawyer and mediator Sharon Silbert.

In one case, the Ontario Court of Appeal (OCA) upheld a trial judge’s order that a man pay his former spouse $490,000 in costs as a result of his unreasonable conduct during a 13-day trial over the validity of their marriage contract.

That followed closely on the heels of a Superior Court judge’s decision to award full recovery costs of $420,000 in favour of the mother in an acrimonious two-year custody battle after a judge found the father of her child engaged in bad faith and unreasonable conduct that “permeated the entirety of the litigation.”

Silbert, principal of Sharon B. Silbert Professional Corporation, tells AdvocateDaily.com that the magnitude of the awards delivered a “bit of a jolt” to the family law bar.

“The key message is that adopting the scorched-earth approach to litigation really doesn’t pay and is, in fact, more likely to backfire,” she says. “In family law, there is a fairly high emotional component to issues, which means it’s sometimes easy to make decisions based on personal agendas rather than reason.

“But there is a huge risk to proceeding that way because, if you’re found to have acted unreasonably or in bad faith, you could be on the hook not only for your own fees but also for the other side’s legal costs. And that’s on top of any amount you’re ordered to pay based on the substantive issues,” Silbert adds.

Parties can reduce the chances of a large cost award by taking the emotion out of their decision-making and trying not to get swept up in “a war mentality,” Silbert says.

“On the flip side, if you’re involved in litigation with someone who is behaving unreasonably, the best approach is to maintain one’s integrity, and continue to make efforts to settle on a reasonable basis because that will be rewarded when costs are being evaluated,” she says.

Despite the similarity in the amounts awarded in the two recent decisions, Silbert says she was struck by the differences in the cases, both in terms of the issues at stake and the financial means of the parties.

“It drove home for me that huge costs awards are not only coming up in cases involving extremely wealthy litigants,” she says. “That is concerning, but at the same time, I think it is ultimately a good thing that the courts have jurisdiction to make these kinds of orders. If they didn’t, it would be even easier than it already is for people to behave poorly in litigation and get away with it.”

The OCA case concerned a couple in their mid-30s who moved in together in 2010 within a year of meeting online. The pair had a child together, but separated in 2014 after three years of marriage, and ended up in court fighting over the interpretation of a marriage contract governing equalization of net family property, as well as spousal and child support.

Almost half of the trial judge’s $490,000 cost award in favour of the wife was for expenses related to an accounting expert she retained to support her case, while another large chunk of her legal fees was for chasing disclosure from her former spouse.

While acknowledging that the costs were high for a 13-day hearing, the trial judge blamed the husband’s unreasonable behaviour, writing that the man’s litigation tactics and “unacceptable offers to settle” suggested his goal was to inflict financial defeat on his former partner.

A unanimous three-judge panel of the province’s top court denied the man leave to appeal the costs award, rejecting arguments that it was disproportionate.

“In this instance, the appeal to proportionality is nothing other than an attempt to have this court second-guess the quantum of the award,” the panel wrote.

“The wife was ultimately rewarded for the fact that she did not give up, and continued presenting reasonable offers to settle,” Silbert says.

In the custody and access case, the trial judge pointed to various instances of bad faith and unreasonable behaviour on the part of the father as justifying her $420,000 full-recovery costs award to the mother. She concluded that his actions were harmful to their daughter, and designed to “inflict emotional and financial harm” on the mother, as well as “to deceive both the mother and the court.”

For instance, the judge found the father started the case by making false allegations about the mother in an attempt to withhold access, defending many of them until the end of the trial. In addition, his failure to reasonably accommodate travel requests or to consult with the mother on health and care decisions about their daughter drove up legal costs, the judge concluded.

“Given the exceptional nature of this case, in which [the father’s] bad faith and unreasonable conduct permeated the entirety of the litigation, and [the mother] beat her offer to settle on the issues at trial, I award full recovery costs,” the decision reads.

Even so, the judge wrote that the one thing the parties could agree on was that the case was a “financial catastrophe,” noting that documents filed with the court suggested the father had a net worth of about $350,000, compared with negative $570,000 for the mother.

“The cost award is greater than the father’s entire net worth. It looks like he’ll have to use all his assets and borrow an additional $70,000 beyond that to cover it. But it still won’t be enough to get the mother out of the red. If the estimate of her net worth referred to in the decision is accurate, she’ll have at least $150,000 of debt left over after he’s paid. So, despite the important message sent by the decision, it’s still a very unfortunate set of circumstances,” Silbert says.

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