CASE COMMENT:
THE REVIVAL OF SUIT COSTS IN NOVA SCOTIA
L.K.S. v. D.M.C.T., 2007 NSCA 87
By PAUL THOMAS, Moore & Associates
Since July 17, 1948, when the Rules of the Court for Divorce and Matrimonial Causes were promulgated,
there has been provision for a litigant to apply for ‘suit money’ or ‘suit costs.’ The present rule in
family matters, Rule 70.24, states as follows:
Suit Money
70.24 (1) A petitioner or a respondent in a divorce proceeding may apply to a
judge for suit money, upon seven clear days’ notice to the other party to the
proceeding.
(2) Upon an application for suit money, the judge may order the other party
to pay to the applicant such sums of money sufficient to cover the applicant’s costs
up to any stage in the proceeding and may from time to time thereafter order the
other party to pay such further sums as the judge deems necessary to enable the
applicant to continue the proceeding.
In Whalen v. Whalen, [1973] 5 N.S.R. (2d) 265, Cowan C.J.T.D. stated the objective of suit costs as
follows at Page 630:
The purpose of such an order is to place the wife in funds to enable her to carry on
the litigation. It has been the practice to order suit money in the amount of $350.00
or some similar amount, but, in my view, this is not intended to be the final determination of
the amount of costs which could be recovered by the wife in a proper case, as party-andparty costs of the entire proceeding. (emphasis added)
Since Whalen, of course, there have been amendments to render the Application for suit costs a
gender-neutral one. Additionally, with the advent of the Matrimonial Property Act, R.S.N.S. 1989, c.275
(“MPA”), judges have taken a very much narrower view of suit costs.
In O’Brien v. O’Brien (1997), 28 RFL (4th) 384 (NSSC), the court laid out the following
considerations in an application for suit costs: a) the provision of an adequate level of financial
disclosure as a pre-requisite; b) an examination of the asset position of the applicant, especially
matrimonial assets of a liquid nature (and the matrimonial home if the sale is relatively imminent or
bridge financing is available) but excepting RRSPs and assets that have been set aside for the future
security of the parties that if deregistered, cannot be replaced; c) the financial capacities of the
applicant and the other spouse.
The court, in O’Brien, appears to agree with Cowan C.J.T.D. that the purpose of suit costs is to
ensure that a party is not denied the opportunity to advance his or her cause, but says that suit costs
were not intended as an advance of full party-and-party costs.
More interestingly, in O’Brien, the court postulates that suit costs have never been awarded to the
extent of covering the sum of a retainer. The court states, at Page 390, that today, an abiding theme
of family practice is that the payment of legal fees is a future prospect:
Family law practitioners perhaps more so than any others have exhibited a high
degree of professionalism in the continued representation of their clients, often
without any or inadequate retainers and invariably have to contend with severe
limitations on any timely payment of their accounts.
If, says the court, the purpose of suit costs is to allow the litigant to ‘continue the presentation of
his/her cause’ and with the introduction of the MPA, then the proper approach is to provide suit
costs only for necessary disbursements in the course of litigation e.g. the fees of accountants and
appraisers, so as not to leave a party at a disadvantage.
Finally, the court in O’Brien states, at Page 391, that costs are best left to the discretion of the trial
judge after trial since:
Most often a suit costs award is overlooked in the final determination of costs and
rarely, if ever, is the recipient of suit costs called upon to give an accounting of how
such funds were utilized. In short, the desirability of encouraging settlement and
where a party has been unreasonable, the cost discretion of the trial judge has
generally been diminished by the award of suit costs unconditionally.
Lastly, the availability of legal aid for the applicant has crept into the jurisprudence of suit costs. In
Whalen (supra) the Applicant deposed she was not eligible for legal aid since she owned real property.
However, in Gossen v. Gossen, 2003 NSSF 7, 213 NSR (2d) 217, the court found that the applicant
was eligible for legal aid despite having an interest in a matrimonial home and other matrimonial
assets.
In Gossen, the court found that the wife was totally dependent on her husband but in denying her
application for suit costs purported to follow O’Brien (supra) in that there was “no evidence of the
need for immediate disbursement costs necessary to move this matter along.”
O’Brien has been followed, without analysis, in Luke v. Luke, 2003 NSSF 12 and in MacArthur v.
MacArthur, 2004 NSSF 57.
This line of analysis, however, now appears to have been swept away by the Nova Scotia Court of
Appeal in L.K.S. v. D.M.C.T., 2007 NSCA. 87, albeit in a case where matrimonial assets were not in
issue.
This case involved an application to vary child support under the Maintenance and Custody Act,
R.S.N.S. 1989, c.160 (“MCA”). The level of disclosure of the Respondent’s resources became a
significant issue leading to prolonged litigation. This in turn led to an application for suit costs by
the mother.
The particular issue in L.K.S. was whether the Nova Scotia Family Court had jurisdiction to order
suit costs in an MCA application or whether the remedy was confined to divorce matters in the
Nova Scotia Supreme Court. There was also resistance to suit costs on the merits by the
Respondent, who argued that the Applicant could finance her own litigation.
On the jurisdiction question, the Court of Appeal held that the Family Court did, indeed, have the
requisite jurisdiction as follows:
(i) Section 6 of the Family Court Act states
6. The Family Court has jurisdiction over matters conferred on it pursuant to this Act or
any enactment R.S. 159 s. 6 [emphasis added]
(ii) Section 22 of the MCA, by default, incorporates the provisions of the Supreme Court Rules as
follows:
Practice and Procedure
22. Where any matter of practice or procedure is not provided by the Rules of the
Family Court or Summary Proceedings Act, the Rules of the Supreme Court relating
to matrimonial causes shall apply with any necessary modification R.S., c. 160, s. 22.
The Court of Appeal held that Section 22 of the MCA applies so that, as a matter of practice, the
Family Court may award suit costs in appropriate MCA applications. The court noted the broad
statute based discretion of Family Court judges under section 13 of the Family Court Act (and the
corresponding Family Court Rules). This broad discretion could be exercised to include the award of
suit costs.
Importantly, on the merits of granting suit costs on the facts, the Court of Appeal chose not to
engage in a discussion of the previous Nova Scotia case law outlined above. Instead, it applied the
traditional two-stage test suggested by Orkin in “Costs in Family Matters – Selected Issues” (2002 –
2003), 20 CFLQ 1-516 at p. 391 as follows:
1. Is there likelihood of success in the claim?
2. But for the award of interim costs, would the claimant be able to prosecute her
(his) claim?
In L.K.S., the Respondent had assets in excess of $ 10-million and a surplus income of over $35,000
per month. However, he argued that the Applicant did not require assistance in that she had a
taxable income of nearly $100,000 per annum. This came from child support, rental income and
government benefits. The Respondent , however, contended that her liabilities – mortgage, credit
card debts and legal fees - equaled her assets and that she had substantial monthly payments making
it impossible for her to carry on the litigation.
The Applicant argued additionally that the Respondent chose not to work after the child entered
school and that the application to vary and her financial situation was generated by placing the child
in private school and making bad financial decisions.
At trial, Judge Levy awarded the Applicant $6,000 in suit costs. He applied Orkin’s two-step analysis.
The Court of Appeal held that Judge Levy did not apply a wrong principle in law or that the result
was unjust. Indeed the Court of Appeal felt that the award, in the circumstances, was modest.
In coming to its decision, the Court of Appeal cited the following reasoning of Judge Levy at
Paragraph 34:
[34]
Then applying the appropriate two-step test, the judge concluded:
39
There is, as is obvious, a huge gap in the financial positions of the
parties and a huge gap in their respective capacities to finance litigation, The
Applicant financing her considerable monthly shortfall on credit cards and already owing
over twenty thousand dollars in legal fees, is seriously compromised in her ability to
prosecute this litigation. She has no liquid assets. It may be true that her
difficulties may be of her own making, the result of decisions she has made.
That said, the issue of “appropriate” child support is a legitimate issue for her to pursue on
behalf of the child and she will need at least some help to enable her to do so. [Emphasis
added.]
[35]
The judge then set what he felt to be an appropriate amount:
40
Counsel for the Applicant projects all manner of things that may
happen in the course of this litigation and seeks suit costs in the
multiple tens of thousands of dollars to cover these various
possibilities. To this Mr. Ryan responds, correctly, that the usual
manner of these things is that more than one approach can be made
to the court if and when new expenses are incurred. Rule 57 and Rule
70 both refer to applications of this nature being made “from time to
time.” It is imprudent, unfair and unnecessary to pre-suppose the
worst and to order a transfer of funds to cover every possible
scenario.
41
I recognize expenses to date (including two appearances and a
daylong discovery) and anticipate further and imminent expenses in
the matter of financial disclosure or analysis of material provided.
Without in any way seeking to fully cover fees or intending to state or
imply what is reasonable, or to preclude or prejudice a proper award
of costs down the road, (at which point adjustments can be made one
way or another if necessary), I will order the payment to the
Applicant of $6,000 in suit money. The sum is payable forthwith.
Conclusion
Despite the extreme facts of the case, it is submitted that the Court of Appeal in L.K.S. has favoured
a broad discretion to award suit costs. The Court of Appeal did not differentiate between a case
where matrimonial assets were to be divided and one where the issue was child support alone.
This decision is to be applauded in light of the burgeoning contingent of self-respresented litigants
that constantly appear on the dockets of our courts. The confining of the award of suit costs to
granting necessary disbursements only was never envisaged by the framers of the Rule. As Cowan
C.J.T.D. rightly said in Whalen (supra), the Rule is clearly there to enable a litigant to “carry on” the
litigation in the true sense. Indeed, as noted by Judge Levy, Rule 70 allows applications for suit costs
to be made “from time to time” in the course of the litigation. Additionally, while recognizing that
an award of suit costs could affect the award of costs “down the road,” Judge Levy properly
recognized that at that point “adjustments can be made one way or another if necessary.” This
expansive analysis is to be favoured in the current climate of expensive family litigation.
Nevertheless, it is suggested that in applying the Orkin test, the considerations set out in O’Brien
regarding disclosure and evaluating the asset bases of the parties will be extremely useful in framing
an application for suit costs.