Beaver v. Hill

Ontario Reports Court of Appeal for Ontario Lauwers, van Rensburg and Nordheimer JJ.A. October 22, 2018

143 O.R. (3d) 519 | 2018 ONCA 840

Case Summary

Family law — Costs — Respondent awarded costs of motions in family law proceedings of over $300,000 — Appellant's appeal allowed — Case law not establishing that costs in family law proceedings should generally approach full recovery — Motion judge erring in giving undue weight to respondent's offer to settle and appellant's failure to make offer to settle in circumstances where there was no practical possibility of settlement — Motion judge inappropriately increasing costs award on basis of appellant's ability to pay and respondent's perceived need — Motion judge failing to consider proportionality principle — Costs award reduced to $200,000.

The appellant brought a motion to stay family law proceedings until a constitutional issue was heard and determined. The respondent moved successfully to strike the appellant's answer on the basis that the constitutional issue was not properly pleaded. She was awarded costs of over $300,000. The appellant's appeal from the order striking his answer was allowed. He appealed the costs order.

Held, the appeal should be allowed.

The respondent was still entitled to the costs of the original motion. She was successful on that motion and that success remained. The court's decision on the merits appeal simply provided the appellant with the opportunity to seek to amend his answer to properly plead his constitutional argument. His failure to do so in the first instance led to the motion to strike, and the respondent should not bear the consequences of that failure.

The case law does not establish that costs in family law proceedings should generally approach full recovery. The motion judge correctly concluded that this was not a case for a full recovery of costs. However, she erred in principle in adopting a "close to full recovery" approach. The motion judge also gave undue weight to the respondent's offer to settle and the appellant's failure to make an offer to settle in circumstances where there was no practical possibility of a settlement. The motion judge erred in increasing the amount of costs on the basis of the appellant's ability to pay and the respondent's perceived need of a large award in order to be able to pay her legal bills. Finally, the motion judge erred in failing to consider whether a costs award of over $300,000 was proportionate to the issues raised by the motions that were before her. Costs of the motions should be reduced to $200,000.

Authorities Considered

Berta v. Berta (2015), 128 O.R. (3d) 730, [2015] O.J. No. 6844, 2015 ONCA 918, 343 O.A.C. 237, 75 R.F.L. (7th) 299, 262 A.C.W.S. (3d) 699; Biant v. Sagoo, [2001] O.J. No. 3693, [2001] O.T.C. 695, 20 R.F.L. (5th) 284, 108 A.C.W.S. (3d) 106 (S.C.J.) — considered

Other Cases Referred To

Frick v. Frick (2016), 132 O.R. (3d) 321, [2016] O.J. No. 5625, 2016 ONCA 799, 408 D.L.R. (4th) 622, 91 R.F.L. (7th) 129, 271 A.C.W.S. (3d) 737; M. (C.A.) v. M. (D.) (2003), 67 O.R. (3d) 181, [2003] O.J. No. 3707, 231 D.L.R. (4th) 479, 176 O.A.C. 201, 43 R.F.L. (5th) 149, 125 A.C.W.S. (3d) 650 (C.A.)

Rules and Regulations Referred To

Family Law Rules, O. Reg. 114/99, rules 18(14), 24 [as am.], (5)(a), (6), (8), (12) [as am.]

Rules of Civil Procedure, R.R.O. 1990, Reg. 194

Procedural History

APPEAL from the order of Chappel J., [2017] O.J. No. 6409, 2017 ONSC 7245, 4 R.F.L. (8th) 53 (S.C.J.) and reasons on costs, [2018] O.J. No. 2845, 2018 ONSC 3352, 8 R.F.L. (8th) 288 (S.C.J.).

Counsel

Chris G. Paliare, Bryan R.G. Smith and Andrew K. Lokan, for appellant.

Harold Niman, Martha McCarthy, Sarah Strathopolous, Joanna Radbord and Scott Byers, for respondent.

Manizeh Fancy and Estee L. Garfin, for Attorney General of Ontario, intervenor.

Judgment

The judgment of the court was delivered by NORDHEIMER J.A.:

[1] In addition to appealing the decision of the motion judge, the appellant also brought a motion for leave to appeal the costs award made by the motion judge. The parties agreed that this aspect of the appeal could be dealt with by way of submissions in writing.

[2] This court has since allowed the appellant's appeal. Thus, the appellant no longer requires leave to appeal the costs disposition which inevitably requires reconsideration as a result of the successful appeal on the merits.

[3] Nevertheless, in my view, the respondent is still entitled to the costs of the original motion to strike the amended answer. She was successful on that motion and that success remains. This court's decision, on the merits appeal, simply provides the appellant with the opportunity to seek to amend his answer to properly plead his constitutional argument. His failure to do so in the first instance is what led to the motion to strike. The respondent should not bear the consequences of that failure.

[4] I begin with the basic premise that costs awards are discretionary and entitled to deference. However, in my view, the motion judge erred in her costs decision as a result of her failure to apply two important principles. One is proportionality and the other is the "reasonableness" evaluation of the ultimate award. That error led to a costs award that was excessive.

[5] This matter began as a motion, by the appellant, to stay the family law proceedings until the constitutional issue was heard and determined. In response, the respondent brought a motion seeking 14 different orders or declarations, including an order to strike the appellant's pleading, a declaration that the Superior Court of Justice had jurisdiction to deal with the family law issues, and an order staying the appellant's constitutional case. It is not clear why the respondent launched such a broad and sweeping response, but, having done so, she bears a significant share of the responsibility for the unwarranted eight days of court time it took to address the issues, even with the serious constitutional issue that was raised.

[6] On that latter point, it must be remembered that the motion judge was not being called on to determine the constitutional issue. Her task was, in essence, to determine whether the answer adequately pleaded the constitutional issue and, if so, whether that issue ought to proceed before, after or concurrently with the family law claims. Unfortunately, the motions traversed into other issues, the answers to which were either obvious or unnecessary to the narrow issues that were before the motion judge.

[7] In terms of her costs award, the motion judge correctly concluded that a risk premium could not be awarded. She also correctly concluded that this was not a case for a full recovery award of costs.

[8] Yet, that is not how the costs in this case were determined. Rather, the resulting award approached a full recovery amount. In defence of that result, the respondent relies on what is contended to be the principle from Biant v. Sagoo, [2001] O.J. No. 3693, 20 R.F.L. (5th) 284 (S.C.J.) that costs in family proceedings should [at para. 20] "generally approach full recovery". I would make a couple of points in response to that contention.

[9] First, while the judge in Biant does make that statement, it is based on two decisions of other Superior Court judges, a close reading of which do not support the thrust of that statement. What those other cases do establish is that under the Family Law Rules, O. Reg. 114/99, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, since no scales of costs are mentioned in the Family Law Rules. Also, the Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded.

[10] Second, the respondent's assertion that this court's decision in Berta v. Berta (2015), 128 O.R. (3d) 730, [2015] O.J. No. 6844, 2015 ONCA 918 supports the "full recovery" approach to costs in family matters also reflects a failure to read the decision closely. What this court endorsed in that case was the principle that "a successful party in a family law case is presumptively entitled to costs" (at para. 94) subject, though, to the factors set out in Rule 24. This caveat is an important one since, as this court pointed out in Frick v. Frick (2016), 132 O.R. (3d) 321, [2016] O.J. No. 5625, 2016 ONCA 799, the Family Law Rules "embody a philosophy peculiar to a lawsuit that involves a family" (at para. 11).

[11] There is no provision in the Family Law Rules that provides for a general approach of "close to full recovery" costs. Rather, rule 24(12) sets out the appropriate considerations in fixing the quantum of costs. It reads:

24(12) In setting the amount of costs, the court shall consider,

(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

(i) each party's behaviour,

(ii) the time spent by each party,

(iii) any written offers to settle, including offers that do not meet the requirements of rule 18,

(iv) any legal fees, including the number of lawyers and their rates,

(v) any expert witness fees, including the number of experts and their rates,

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter.

[12] As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.

[13] Further, a "close to full recovery" approach is inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances, e.g., bad faith under rule 24(8), or besting an offer to settle under rule 18(14). Consequently, the motion judge erred in principle in adopting a "close to full recovery" approach in fixing the costs of these motions. I would note that such a result also appears inconsistent with her determination that full recovery costs were not appropriate in this case.

[14] This error underlies the problem with the motion judge's ultimate costs assessment. The motion judge did undertake a review of the hours spent and made a number of reductions to them. I would note, in passing, however, that she left untouched some problematic inclusions such as time and expenses associated with travelling to court. Having reviewed the hours charged, though, the motion judge did not evaluate the hourly rates charged with the proportionality and reasonableness principles in mind.

[15] The motion judge also gave undue weight to the respondent's offer to settle, along with the appellant's failure to make an offer to settle. Although I accept that the presence or absence of offers to settle can properly be taken into account in fixing costs, it remains the fact that the appellant was not under any obligation to proffer an offer to settle. Further, before the absence of an offer to settle can properly be used against a party, the situation has to be one where it is realistic to expect offers to settle to be made. The case here was not a situation where the issues could have been settled in any practical way. Either the appellant was going to be able to proceed with his constitutional claim or he was not. There was no way of compromising on that central issue. Consequently, this was not a case where the presence or absence of offers to settle should have played any material role in determining the appropriate quantum of costs.

[16] That salient point also impacts on the respondent's offer to settle. Her offer to settle does not reflect a compromise, given that it included a requirement that the appellant completely abandon his constitutional argument. It is recognized that the failure of an offer to settle to contain a true element of compromise is a factor to be considered in deciding whether the offer properly impacts on the appropriate award of costs. In addition, judges should be very cautious about relying too heavily on this factor to increase or decrease the quantum of costs, when the specific Rules regarding such offers are not directly engaged. Even under rule 24(5)(a) of the Family Law Rules, it is but one factor that is to be considered.

[17] The motion judge also determined that it was appropriate to award the respondent 85 per cent of her full recovery costs. The motion judge did not explain where she drew this percentage from or why it was appropriate to apply it in this case. On that point, I would note that employing 85 per cent seems to simply be another way of utilizing a "close to full recovery" approach.

[18] Another concerning aspect of the motion judge's costs award is the fact that she appears to have increased the amount of costs as a consequence of the appellant's ability to pay, along with her perception that the respondent was in need of a larger award in order for her to have the "ability to pay her legal bills". Neither of these considerations are appropriate ones when fixing the quantum of costs. There is no principle relating to costs that requires wealthier individuals to pay more for costs for the same step in a proceeding than less wealthy ones. While it may be appropriate, in the exercise of a judge's overriding discretion, to reduce the quantum of costs that a party will have to pay because of their financial condition, this principle does not apply in the reverse.¹

[19] What is most important, however, is that the motion judge did not consider the principle of proportionality. Proportionality is a core principle that not only governs the conduct of proceedings generally but is specifically applicable to fixing costs in family law matters, as I have set out above.

[20] The motion judge never considered whether a costs award of over $300,000 was proportionate to the issues raised by the motions that were before her. It was an error in principle for her not to do so.

[21] There is a final factor to which the motion judge appears to have given only passing consideration: the respondent's motion that sought a wide variety of relief, almost all of which she was unsuccessful in obtaining and which greatly extended the hearing time. The motion judge did not make any adjustment to the costs award arising from this element of divided success.²

[22] In terms of quantum, the appellant suggested, before the motion judge, that the upper limit for a costs award in this case should be $100,000. On appeal, the appellant has adjusted that upper limit to $200,000. In my view, both of those amounts are exceptional for what was actually involved in these motions. That said, I am conscious of the fact that a court should avoid overly penalizing the parties for errors made by their counsel in terms of the overall conduct of the matter. In the end, I adopt the appellant's revised upper limit and fix the costs of the original motions at $200,000 payable by the appellant to the respondent, inclusive of disbursements and HST.

[23] I would not interfere with the motion judge's conclusion that the costs should be designated as relating to support and thus enforceable by the Family Responsibility Office, although I do note that the appellant has since paid the costs so this issue would appear to be moot.

[24] This leaves the costs of the appeal itself. If the parties have not resolved those costs, they may make brief written submissions (no more than five pages and no case authorities need be filed). The appellant shall file his submissions within ten days and the respondent shall file her submissions within ten days thereafter. No reply submissions are to be filed.

Result

Appeal allowed.

Notes

¹ That this approach applies in the family law context seems implicit in this court's decision in M. (C.A.) v. M. (D.) (2003), 67 O.R. (3d) 181, [2003] O.J. No. 3707 (C.A.), at para. 42.

² Divided success is an appropriate consideration in fixing costs in family law matters - see rule 24(6).

End of Document