Citation: Van v. Palombi, 2015 ONSC 170

DIVISIONAL COURT FILE NO.: DC-14-00709-ML NEWMARKET COURT FILE NO.: FC-10-37022-02 DATE: 20150108

ONTARIO SUPERIOR COURT OF JUSTICE (DIVISIONAL COURT)

BETWEEN:

Angela Elizabeth Van Respondent/Applicant

– and –

David Micheal Palombi Appellant/Respondent

Rachel Radley, for the Respondent/Applicant

Patrick Di Monte, for the Appellant/Respondent

HEARD: January 7 and 8, 2015

RULING

MCKELVEY J:

Overview

[1] This is a motion for leave to appeal the costs order of Justice Nicholson in relation to a decision released in this matter on July 17, 2014. The costs decision related to a long motion argued on a family matter. In the costs decision the motion judge ordered the appellant father to pay costs in the sum of $12,500 plus HST, which amount was ordered to be paid within six months. The decision on costs was by way of a handwritten endorsement dated August 15, 2014.

Applicable Principles Relating to the Granting of Leave

[2] Pursuant to section 133(b) of the Courts of Justice Act leave is required where an appeal relates only to costs that are in the discretion of the court.

[3] Rule 62.02(4) of the Rules of Civil Procedure provides as follows:

Leave to appeal shall not be granted unless, (a) there is a conflicting decision by another judge or court in Ontario or elsewhere on a matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or (b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[4] In the present case the appellant has advised that he relies on subsection (b) of rule 62.02(4) as the basis for his position that leave should be granted. This provision requires the appellant to establish that there is not only good reason to doubt the correctness of the decision but, in addition, the matter is of such importance that leave to appeal should be granted.

[5] The case law is clear that considerable deference is owed by an appellate court to cost orders. This is reflected in the divisional court decision in 316697 Ontario Inc. v. Sharma, 2012 ONSC 4193 where the court notes that generally cost awards are discretionary and entitled to deference by an appellate court. Leave to appeal a costs order is granted only sparingly and there must be some indication of a complete failure to exercise discretion or an exercise of discretion based on an erroneous principle. With respect to the requirement that the matters involved must be of such importance that leave should be granted, reference in that case is made to the decision in Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2nd) 110 (Div. Ct.) where the court states,

Those words refer to matters of general importance, not matters of particular importance relevant only to the litigants. General importance relates to matters of public importance and matters relevant to the development of the law and the administration of justice.

[6] It is clear that a considerable degree of deference is owed to the motion judge in his exercise of discretion on the issue of costs. This is also supported by comments made by the Court of Appeal for Ontario in the leading case of Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3rd) 291 where the court states,

The motion judge’s decision is entitled to a high degree of deference. The standard of review for interfering with the exercise of the discretion by a judge of first instance was articulated by Lamer CJC in Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3, [1995] SCJ 1, at p. 32 S.C.R.:

This discretionary determination should not be taken lightly be reviewing courts. It was Joyal J.’s discretion to exercise, and unless he considered irrelevant factors, failed to consider relevant factors, or reached an unreasonable conclusion, then his decision should be respected.

[7] The test, therefore, is not whether an appellate court would have made an order for costs similar to one made by the motion judge, but whether the motion judge in this case exercised his discretion based on an error in principle or whether he was clearly wrong.

Position of the Appellant

[8] The appellant takes issue with the motion judge’s ruling on costs on the following basis:

(a) The appellant asserts that leave is not required because the appellant was seeking a set off against amounts owed by the respondent under a separation agreement.

(b) The appellant asserts that the motion judge incorrectly proceeded on the basis that the respondent was 80% successful on the motion.

(c) The appellant asserts that the motion judge failed to properly consider that the appellant was not capable of paying the amount awarded.

(d) The appellant asserts that the motion judge did not provide a calculation or detail as to how he arrived at the figure of $12,500 + HST for costs.

Is Leave Required to Appeal the Costs Order of the Motion Judge

[9] In this case the appellant relies on the recent Court of Appeal decision in Korea Data Systems (USA), Inc. v. Aamazing Technologies Inc., 2014 ONCA 652. In that case the court found that the trial judge’s decision not to allow a set off had a substantive effect on the legal rights of the defendant. The decision effectively eliminated the ability of the defendant to set off the debt against a larger judgment owed to it. The court held that because the order determined rights that extended beyond the entitlement to and quantum to costs the appeal was not “only as to costs” and therefore leave was not required under section 133(b) of the Courts of Justice Act.

[10] In the present case the appellant argued that he was denied a set off by the motion judge with respect to costs. He referred to the written submissions which were made on costs. At paragraph 112 of his original submission for costs the appellant stated:

Further, whatever cost order may be awarded against the respondent, it is submitted that such cost order be paid in the same manner as the cost order indicated to be paid in the separation agreement, at the conclusion of 15 years from the date of the order.

[11] It is apparent from the wording of paragraph 112 of the cost submissions that the appellant was not seeking a set off. A separation agreement was entered into between the parties in April 2012. In that agreement the respondent agreed to pay certain sums over a period of 15 years. In its submissions the appellant was asking the motion judge to give a similar timeframe for the appellant to make any payments owed to the respondent on account of costs. But there was, in fact, no request for a set off. The issue before the motion judge was the entitlement and quantum of any cost award as well as a request by the appellant for additional time to pay this award. In my view, the issues before the motion judge on costs did not extend beyond the usual terms associated with an award of costs. Thus, the requirement for leave applies, and the usual criteria regarding leave to appeal a costs order applies to the facts of this case.

Did the Motion Judge Err in Concluding that the Respondent was 80% Successful on the Motion

[12] In his endorsement the motion judge stated,

Rule 24(1) requires presumption that successful party will have her costs. In assessing success, I find applicant/mother was approximately 80% successful.

[13] On the motion for leave to appeal the appellant referred to a chart contained in its original cost submissions where the success and failure on various issues was addressed. In argument, it became apparent that this chart does not accurately set out the respective degrees of success on the motion.

[14] On the motion there were a number of matters that were the subject of a consent order. There were also a number of issues that were argued fully before the motion judge. In looking at the decision of the motion judge regarding his rulings on the matters argued, it is apparent that the respondent was overwhelmingly successful on virtually all of the issues argued before the motion judge. I am not persuaded that the motion judge erred in his assessment of the respective degrees of success on the motion.

Did the Motion Judge Fail to Take into Account that the Appellant was not Capable of Paying the Amount Awarded

[15] The appellant maintains that he is impecunious and he is not able to pay any amount on account of costs. There was considerable debate on the motion before me as to whether the appellant could be considered impecunious when he was employed at the relevant time in a job which paid $60,000 per year.

[16] Whether one considers the appellant impecunious or not, it is apparent that at the time of the motion he faced serious financial challenges. He had filed a consumer proposal which had been accepted and which reduced his outstanding debts from $50,000 to $10,000. His expenses, which included child support, appeared to exceed his disposable income.

[17] The case law makes it clear that the ability of a party to pay is a factor to take into account in assessing costs on a family matter. See for example Murray v. Murray (2005), 79 O.R. (3rd) 147.

[18] However, while financial ability is a factor which the motion judge was required to consider, there were other factors as well which required consideration. These are set out under Rule 24 of the Family Law Rules.

[19] It is apparent from his endorsement that the motion judge did take a number of factors appropriately into account in accordance with Rule 24 of the Family Law Rules. These factors included:

• The respective degrees of success of the parties • The complexity and importance of the issues • The fact that some material filed by the appellant was not prepared correctly or was late filed • That an excessive amount of time was spent by the respondent’s counsel on the motion

[20] It is also apparent that the motion judge did give consideration to the appellant’s financial circumstances. This is reflected in the fact that the amount awarded was reduced from that sought by the respondent which was over $30,000 to $12,500 and the fact that the appellant was given six months to pay.

Did the Motion Judge Err in Failing to Provide a Calculation for the Amount he Awarded

[21] The appellant argues that by failing to set out the basis as to how he arrived at his award of $12,500 the motion judge failed in his duty to provide adequate reasons. The appellant argues he is left to speculate as to how the amount arrived at was calculated and that this constitutes an error in law. The law is clear, however, that the assessment of costs is not a mathematical exercise. This is reflected in the Court of Appeal decision in Boucher where the court states,

The fixing of costs is not simply a mechanical exercise. In particular the Rule makes clear that the fixing of costs does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigation.

[22] This appears to be the approach taken by the motion judge. His conclusion was not based on a mathematical calculation but based on a review of the relevant factors which he considered. As noted above, the issue is not whether the appellate court would have exercised its discretion differently. Unless the motion judge made an error in principle, or his decision was clearly wrong, his decision must be respected.

[23] For the above reasons the motion for leave to appeal the costs order is dismissed. Further, I am not satisfied that the matters raised in this appeal deal with an issue of importance which justifies the granting of leave and which is a requirement under rule 62.04(b). While the issues involved in this case are clearly of considerable importance to the parties, they do not raise issues which in my view involve matters of public importance or relate to the development of the law and the administration of justice.

[24] For all of the above reasons the within motion is dismissed. Costs will be spoken to separately.

Justice M.K. McKelvey

Released: January 8, 2015