In family law, litigation often extends well beyond the initial dispute over division of assets or support. One frequently overlooked yet important aspect of post-trial proceedings is the question of costs. Who pays, how much, and why are decisions that can carry significant financial consequences for both parties.

The recent Alberta Court of King’s Bench decision in Banovich v Banovic, 2025 ABKB 280, is a compelling example of how procedural conduct and litigation behaviour can heavily influence cost outcomes, even when neither party walks away the clear winner.

A Long and Bitter Dispute

The case followed a lengthy and acrimonious divorce and matrimonial property action between Natalia Banovich and Vlado Banovic. Although the parties had separated in 2017 and were granted divorce in 2022, unresolved disputes over spousal support, the division of matrimonial property, and allegations of asset dissipation led to a summary trial in November 2024. That trial, previously decided in Banovich v Banovic, 2025 ABKB 121, yielded mixed results.

Mr. Banovic received some exemptions under Alberta’s Matrimonial Property Act for property acquired before marriage, though not to the extent he claimed. Ms. Banovich was awarded approximately $75,000 from the proceeds of matrimonial property sales, but was unsuccessful in claims for spousal support and allegations that Mr. Banovic dissipated assets. Neither party succeeded in proving that the other owned undisclosed foreign property.

Following the trial, both parties made written submissions on costs. The court’s subsequent ruling in Banovich v Banovic focused exclusively on determining an appropriate costs awards based on the parties’ conduct and litigation outcomes.

Costs in Alberta Family Law: The Legal Framework

The Alberta Rules of Court govern cost awards in Alberta, particularly Rules 10.29 to 10.33, and apply equally to family law and civil matters. The general rule is that the substantially successful party is entitled to recover costs, typically based on the Schedule C tariff, unless a court determines another measure is more appropriate.

However, the Court has broad discretion in making costs decisions. Factors include proportionality, litigation conduct, and the complexity of the issues. Costs awards are generally intended to partially indemnify a successful party, not provide full reimbursement. A rough rule of thumb suggests that Schedule C awards reflect about 40% to 50% of what might be incurred on a solicitor-client basis, but this is not a fixed standard.

The court may also award enhanced or punitive costs in cases of litigation misconduct. It may adjust awards where a party unreasonably rejects a Calderbank offer—a settlement offer made “without prejudice save as to costs.”

Mixed Success, Mutual Frustrations

In this case, both parties argued that they had achieved substantial success and sought full indemnity costs. Ms. Banovich claimed legal fees of over $230,000, citing procedural delays and misconduct by Mr. Banovic and his counsel. Mr. Banovic claimed approximately $157,000 in costs, arguing that Ms. Banovich had engaged in serial non-compliance with court orders and had made unsubstantiated allegations throughout the litigation.

Justice Harris rejected both parties’ assertions of substantial success. Ms. Banovich failed to prove entitlement to spousal support, to establish dissipation of matrimonial assets, or to disprove Mr. Banovic’s exemptions in full. Mr. Banovic, meanwhile, was unable to substantiate his central claim that Ms. Banovich owned $500,000 in undisclosed Russian property. This claim had formed the basis for his argument that she owed him a substantial equalization payment.

Ultimately, Justice Harris found that neither party had achieved substantial success. Both made serious but unproven allegations about undisclosed foreign assets, and both had partial wins and losses regarding the division of property. This would normally suggest that each party should bear their own costs.

The Cost of Non-Compliance

However, the court identified a compelling reason to depart from the default position: Ms. Banovich’s litigation conduct. Over the course of the proceedings, she repeatedly failed to comply with court orders, submitted disorganized and excessive written materials, and disregarded procedural guidelines. Her cost submissions alone consisted of two briefs, each exceeding the directed page limits and containing extraneous, irrelevant materials. She also made baseless accusations of misconduct against opposing counsel.

While the court noted that these issues were not isolated, but rather indicative of a pattern of behaviour, it emphasized that such conduct imposed real burdens on both the opposing party and the court. Additional case management meetings and procedural complications drove up legal expenses unnecessarily and impeded the efficient resolution of the dispute.

Justice Harris acknowledged that full indemnity costs would be inappropriate due to the lack of substantial success, but the court found it necessary to sanction Ms. Banovich’s conduct. As such, a lump sum costs award of $10,000 was ordered payable to Mr. Banovic. This amount was to be set off against the equalization payment owed to Ms. Banovich under the original trial decision.

Calderbank Offers and Proportionality

One of the arguments raised by Mr. Banovic was that he had extended a Calderbank offer, which Ms. Banovich rejected. While such offers can affect cost outcomes, the court found the offer, which sought to settle two separate actions simultaneously, did not offer a valid basis for comparison to the trial outcome. Accordingly, it was not a determinative factor in the costs award.

The court also rejected arguments that costs should be assessed under Column 4 of Schedule C (typically used for matters involving claims over $500,000). Given the final amounts in dispute and awarded, Justice Harris noted that Columns 2 or 3 would have been more appropriate. Further, costs associated with previous applications were presumed to have been dealt with at the time of those applications, unless otherwise directed.

Lessons for Litigants and Counsel

This decision offers several important lessons for family law practitioners and parties:

First, substantial success remains the threshold for a typical costs award. Winning on a few issues or recovering some funds does not equate to being the successful party unless those issues are the most significant in the case.

Second, litigation conduct matters. Courts are increasingly attentive to how parties behave during litigation, particularly in family law, where emotions often run high. Persistent non-compliance, excessive materials, or unfounded accusations can trigger adverse cost consequences, even when the underlying claims have some merit.

Third, proportionality governs costs. Courts strive to ensure that costs are reasonable in light of the amounts and issues at stake. This means that even if a party spends hundreds of thousands on legal fees, they will not necessarily be reimbursed unless those costs are proportional and justified.

Fourth, Calderbank offers must be clear, specific, and reasonably related to the outcome of the case if they are to influence cost decisions. Offers that bundle multiple matters or that are difficult to compare to the actual results carry less weight.

Conduct Carries Consequences

In Banovich v Banovic, the Court of King’s Bench demonstrated a balanced approach to costs, recognizing both the need to sanction misconduct and the importance of fairness when neither party achieves a clear victory. For legal professionals, the case is a valuable reminder that success in litigation is not measured solely by dollars won or lost, but also by the professionalism, precision, and procedural integrity with which a case is conducted.

As family law litigation continues to grow more complex, costs rulings like this one will play a critical role in shaping strategy, encouraging settlement, and promoting respect for the court process. Counsel and clients should note that conduct counts, and courts are watching.

Getz Collins and Associates: Trusted Alberta Family Law Lawyers

The Banovich v Banovic case is a powerful reminder that in family law, how you litigate matters as much as what you litigate. Missteps in procedure and non-compliance can cost you more than a favourable ruling; they can carry real financial penalties. Don’t navigate this alone. Whether you’re dealing with complex asset division, spousal support, or a high-conflict divorce, working with an experienced family lawyer can make all the difference. Reach out today to ensure your case is handled with strategy, precision, and respect for the court process. Call us at (587) 391-5600 or contact us online.