As a family law lawyer in Victoria and Calgary, I am often asked by my clients if it is possible to recover any or all of the costs that they incur in legal fees. The short answer is that it may be possible to recover one’s legal fees. An award of costs is within the Court’s discretion. Typically, a person does not recover 100% of their legal fees. However, there is one exception to that rule. Both British Columbia and Alberta have rules dealing with Formal Offers to Settle (Rule 9-1 of the Supreme Court Civil Rules and Rule 4.24 of the Alberta Rules of Court). Under the Rules for a Formal Offer to Settle, there will be additional costs payable by the party who does not accept the Formal Offer if the final award is more beneficial than the Formal Offer. This is the best chance of recovering your legal fees.
The main difference between a Formal Offer and a regular offer, is a Formal Offer is made with the intention of bringing the Formal Offer to the attention of the Court if the offer is not accepted and the party who made the offer obtains a better result in Court. A regular “Without Prejudice” offer is often made in an attempt to feel the other side out and to commence settlement discussions. These offers cannot be presented to the Court.
Formal Offers are useful tools in Family Law matters as it forces parties to take a serious look at what a reasonable settlement might look like. There is no point in making a Formal Offer if the offer is not realistic or is unlikely to be accepted. The purpose of the Formal Offer rule is to encourage settlement by forcing parties to seriously consider Formal Offers when they are presented. If the receiving party does not accept the Formal Offer, and they do not exceed the Formal Offer in Court, there are serious cost consequences. Formal Offers are brought to the attention of the Court when all issues, other than costs, have been determined; they are a major factor in determining the amount that the successful party will recover.
In British Columbia, the Rule states that a Formal Offer may be considered by the Court in exercising discretion in relation to an award of costs. When a Formal Offer has been made, the Court may deprive one party of all costs to which they would otherwise be entitled or award double costs for all or some steps taken in proceedings after delivery of the Formal Offer.
In Alberta, the costs consequences of a Formal Offer are more severe. The successful Plaintiff or Claimant is entitled to double costs to which they would otherwise be entitled to receive for all steps taken in relation to the action (excluding disbursements) after the service of the Formal Offer. The word entitled is very important – this is not a discretionary remedy.
If you want to end your family law dispute, consider putting forward a Formal Offer to Settle. Be realistic in your offer, as there is no advantage to be gained from making a Formal Offer that is unlikely to be accepted. On the other hand, if you make a realistic Formal Offer, and exceed the offer at trial, this is your best chance to recover the funds spent on legal fees.