Court File and Parties

Court File No.: 81042/15 Date: November 3, 2016

Ontario Court of Justice

Re: Linda Theodora Aprile (also known as Linda Tsigoulis) – Applicant

And: Giuseppe Corrado Aprile (also known as Joe Aprile) – Respondent

Before: Justice Roselyn Zisman

Counsel:

• Julie Zimmerman – for the Applicant
• Taragh Bracken – for the Respondent

Heard On: Written submissions

Costs Endorsement

Introduction

[1] The issue of costs arises out of a Motion to Change heard before me on July 29, 2016. The Applicant ("mother") sought an order for financial disclosure from the father, a retroactive adjustment from January 1, 2012 with respect to the amount of child support payable by the Respondent ("father") and an order fixing the arrears of child support and special and extraordinary expenses since 2009. The father disputed these claims and sought a retroactive re-adjustment as he claimed he overpaid child support and he claimed that he should not be responsible for the special expenses as he was not consulted and he paid for special expenses that the mother refused to contribute to.

[2] My decision was released on August 19, 2016. Despite the fact that the Motion to Change by the Applicant ("mother") was dismissed, [1] I endorsed that the mother was entitled to costs. Counsel were required to provide brief written submissions as to costs. I have now received those cost submissions and the mother's counsel was also given leave to file reply submissions.

[3] The mother was forced to commence a Motion to Change as the father had not provided annual financial disclosure as required by the terms of their separation agreement. In order to determine the issue of costs in this matter the context of the proceedings are relevant. In my decision at paragraph 57, I noted that:

Despite the mother's Motion to Change being dismissed, I wish to be abundantly clear that the mother will be entitled to her costs. The mother was unnecessarily forced to commence and continue this litigation as a direct result of the father's failure to abide by his obligation to annually provide proof of his income pursuant to the separation agreement that both parties consented to and then he continued to fail to fulfill his obligation to provide the financial disclosure ordered by the court. It was only in the course of submissions that the father agreed to pay his share of the retroactive special expenses. It was only less than one week before this motion was argued that the father provided his affidavit that he revealed that he had received income that he had previously not disclosed and he still has not complied with the outstanding orders for disclosure. Parties have a fundamental obligation to provide full and frank financial disclosure and the father's failure to meet this obligation needs to be sanctioned.

[4] The mother obtained the following relief:

a) Obtaining an order enforcing the money owed to her pursuant to the separation agreement;

b) Having the court draw an adverse inference against the father as a result of his failure to provide full and complete financial disclosure;

c) Obtaining an order imputing income of $120,000 to the father;

d) Obtaining an order that the father pay $12,303.16 being his share of the retroactive section 7 expenses. The father consented to pay this amount only during the motion.

[5] The father's claim for a retroactive reduction of his child support obligation was found to have no merit.

Position of the Parties

[6] Counsel for the mother seeks full recovery of costs in the amount of $22,434.68 on the basis that the father engaged in blameworthy conduct in failing to make financial disclosure, unilaterally reducing his child support payments, refusing to contribute to the children's special and extraordinary expenses and refusing to engage in mediation in accordance with the terms of the separation agreement. The mother also made an offer to settle and was substantially successful in obtaining all of the relief she requested. Counsel for the mother seeks a further $1,898.42 with respect to seeking leave to file reply submissions and the preparation of those of submissions.

[7] Counsel for the Respondent ("father") concedes that the mother is entitled to her costs. But it is the position of the father that the costs sought are excessive and unreasonable.

Applicable Legal Principles

[8] Rule 24(1) of the Family Law Rules provides guidance on costs on a family law context. Rule 24 (1) sets out the basic assumption that a successful party is entitled to costs. This provision still permits a court broad discretion in determining if costs should be paid, by whom and in what amount.

[9] Rule 24 (11) provides a further list of factors a court should consider in dealing with costs:

A person setting the amount of costs shall consider,

a. the importance, complexity or difficulty of the issues;

b. the reasonableness or unreasonableness of each party's behavior in the case;

c. the lawyer's rates

d. the time properly spent on the case, including conversations between the lawyer and the party, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

e. expenses properly paid or payable; and

f. any other relevant matter.

[10] In Serra v. Serra 2009 ONCA 395, [2009] O.J. No. 1905 at para. 8, the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:

1. to partially indemnify successful litigants for the cost of litigation;

2. to encourage settlement; and

3. to discourage and sanction inappropriate behaviour by litigants.

[11] In Biant v. Sagoo [2] Justice Perkins considered the costs award scheme under the Rules and commented, at para. 20:

[T]he preferable approach in family law cases is to have costs recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result. There remains, I believe, a discretion under r. 24(1) to award the amount of costs that appears just in all the circumstances, while giving effect to the rules' preeminent presumption, and subject always to the rules that require full recovery or that require or suggest a reduction or an apportionment

[12] The Ontario Court of Appeal in the recent case of Forrester and Dennis [3] confirmed this approach and the court further reaffirmed its decision in Sordi v. Sordi [4] at para. 21, "In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial indemnity."

[13] I am also mindful that the court's role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As was pointed out in Boucher v. Public Council, [5] the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings rather than an exact measure of actual costs to the successful litigant.

[14] Subsection (b) of Family Law Rule 24(11) relates to the reasonableness of each party's behavior in a case.

[15] In considering if a party acted reasonably, Family Law Rule 24 (5) directs the court to consider if a party served made an offer to settle and the reasonableness of any offer to settle.

[16] Rule 24 (5) provides that:

(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(a) the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;

(b) the reasonableness of any offer the party made; and

(c) any offer the party withdrew or failed to accept.

[17] Offers to settle are an essential part of family litigation. The parties and counsel have a positive obligation to conduct their cases to ensure that the primary objective of the Family Law Rule 2 (2) is met that is, to deal with cases justly. This includes taking appropriate steps to save time and expenses, per Rule 2 (3). Offers to settle play an integral role in saving time and expenses by promoting settlements, focusing parties and often narrowing the issues in dispute. Offers to settle are therefore important in any consideration of the issue of costs. In my view it is unreasonable behavior for a party not to make an offer to settle. [6]

[18] The consequences of an offer to settle are set out in Family Law Rules 18(14) as follows:

(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.

3. The offer does not expire and is not withdrawn before the hearing starts.

4. The offer is not accepted.

5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

Application of Legal Principles to the Facts

[19] In this case the mother served an offer to settle dated April 13, 2016 and despite her Motion to Change being dismissed she obtained all of the relief that she had requested that is, that the father continue to pay child support based on an income of $120,000, that he pay his share of special expenses being $12,147.16 [7] and that the terms of the separation agreement continue. With respect to costs the mother offered that there would be no costs if he accepted the offer before the case conference scheduled for April 21, 2016 or thereafter that he pay $5,000. The offer to settle was never withdrawn. The father did not serve an offer to settle the Motion to Change and did not respond to the mother's offer to settle.

[20] The mother's offer to settle also contained a term that the father sign a direction for his name to be removed from a RESP fund. This issue was resolved prior to the Motion to Change being argued.

[21] The mother obtained an order as favourable as she sought and she is therefore entitled to her costs to the date the offer was served and on a full recovery basis from that date.

[22] Subsequent to the decision being released, father's counsel served two offers to settle the issue of costs. Counsel for the mother sought to have the father's offers to settle struck on the basis that they are not proper Rule 18 offers to settle, that they contain privileged settlement discussions between counsel and the first offer to settle was served on the afternoon of the day the mother served her cost submission. Accordingly the mother was not able to consider the offer before incurring the cost of her counsel preparing the cost submissions.

[23] I permitted mother's counsel to file reply submissions and in those submissions she includes her responses and further offers to settle the cost issue.

[24] I see no basis for the court to strike the father's settlement proposals regarding costs. The decision stated that if counsel were unable to settle the issue of costs then written submissions could be made. I therefore expected that counsel would negotiate the issue of costs. The father offered to pay $5,000 and when that offer was not accepted he offered to pay $10,000. The mother offered to accept $14,250.44.

[25] Based on my decision regarding costs, the amount offered by the father was lower than the amount I have awarded to the mother and higher than the mother's offer.

[26] In determining the amount of costs, I have considered the legal principles and the following factors as set out in Rule 24 (11) as follows:

a) The Importance, Complexity or Difficulty of the Issues

[27] The motion was of moderate complexity but was very important to the mother as she was struggling financially to support the children. The motion was made more difficult because of the father's lack of providing complete disclosure and his lack of serving his disclosure in a timely manner and in contravention of the timelines set by the court. Counsel for the mother was required to analyze incomplete disclosure and make submissions with respect to the issues pertaining to self-employed income, imputing income and drawing negative inferences against the father.

b) The Reasonableness or Unreasonableness of Each Party's Behavior in the Case

[28] The mother acted reasonably throughout these proceedings.

[29] The father did not act reasonably. Although I do not find it necessary to categorize the father's behaviour as reaching the level of bad faith, there is no question that the father acted unreasonably by acting in the following manner:

a) The father failed to provide annual financial disclosure in accordance with the terms of the separation agreement;

b) The father failed to provide ongoing the financial disclosure despite being requested by the mother to do so. The father never explained why he had not responded to the mother's ongoing requests for financial disclosure;

c) The father did not pay child support in accordance with the separation agreement;

d) The mother was therefore forced to commence this Motion to Change to obtain the financial disclosure she was entitled to. If the father had complied with this fundamental requirement, the mother would not have been forced to incur such substantial legal expenses;

e) The father withheld important financial information and only provided disclosure at the last minute. Most significantly the father only revealed that he obtained $70,426.70 in 2013 and $42,500 in 2014 in his affidavit of June 13, 2016. Before that time the father maintained that he only earned $20,000 in 2013 and $58,679 in 2014. As a result I found that his adjusted income to be $125,000 for 2013 and $129,799 for 2014;

f) The father breached 2 disclosure orders. His submission that he "was not aware of what else to provide" is disingenuous. He agreed to these orders, he is a sophisticated litigant and I case managed this file and find that the father was well aware of the disclosure he was required to provide;

g) The father was ordered to pay costs of $1,000 pursuant to the order of April 21, 2016 due to his failure to comply with the disclosure order of February 29, 2016 but that order did not have any effect on him changing his behaviour as he never fully complied with the disclosure order;

h) The father did not comply with the court order with respect to filing deadlines and attempted to file further disclosure just 4 days before the motion to change was argued;

i) The father alleged that he was unable to pay child support because he was living close to the poverty which was found to be untrue;

j) The father increased the mother's legal expenses and caused unnecessary delay in the proceedings. Further his delay in providing timely disclosure deprived the mother of the opportunity to question the father on the disclosure or the facts he relied upon in submissions;

k) The disclosure the father did produce was disorganized, incomplete and raised more questions than it answered; and

l) As a result of the lack of complete and timely disclosure the mother was prevented from attempting to resolve the motion and was forced to proceed to argue the motion.

c) The Lawyer's Rates

[30] Ms Zimmerman was called to the bar in 2009 and her hourly rate of $295 is reasonable. Ms Zimmerman delegated some work to a more junior counsel at an hourly rate of $275 and a law clerk at the hourly rate of $115. These rates are also reasonable.

d) The Time Properly Spent

[31] It is submitted by father's counsel that the time spent by mother's counsel was excessive. It is submitted that with respect to the attendance on June 21st mother's counsel was aware that she was seeking an adjournment and insisted on proceeding. That issue was adjudicated and I found that it was not clear that father's counsel was actually requesting an adjournment and the father was ordered to pay legal costs of $2,658.45 and costs to the mother of $275 for her lost wages. This attendance is not relevant and mother's counsel did not ask for costs of this attendance as it was already dealt with.

[32] Father's counsel provided a copy of her bill of costs. Ms Bracken was called to the bar in 1999 and her hourly rate is $400 and her junior counsel was called to the bar in 2016 and her hourly rate is $225. These rates based on experience are reasonable.

[33] Father's counsel's bill of costs is $11,907.37 inclusive of HST. However, father's counsel was only retained as of May 30, 2016 whereas mother's counsel was retained almost a year earlier. Father's counsel drafted only one affidavit and seems to have only had one meeting with the father and did not research the issues. Although father's counsel did prepare a chart outlining the father's income she did not prepare a statement of fact and law or provide a book of authorities as the mother's counsel did.

[34] The time mother's counsel needed to spend to decipher the father's disclosure would have necessitated more time especially as some of the disclosure was only provided at the last minute and the disclosure provided changed the understanding of the father's income and thereby caused more time to be spent.

[35] Mother's counsel submits that the time spent by each counsel preparing, drafting and reviewing affidavits is not substantially different that is, 15.80 hours by mother's counsel and 13.50 hours by father's counsel. It is further submitted that as father's counsel is more senior to mother's counsel it is reasonable that she would be spending more time on the same task but she also submits that her hourly rate is much less than father's counsel. It is also submitted that mother's counsel spent time researching the issues and mother should not be penalized for her counsel thoroughly preparing for the motion.

[36] A further bill of costs was submitted with respect to the reply submissions. In view of the misstatements in the father's cost submissions it was reasonable that counsel sought permission to respond.

[37] However, overall I find the time spent on the cost submissions and the total legal expenses of $5,131.34 to be excessive and I would reduce these costs by $2,000.

[38] Although the time spent by mother's counsel may appear excessive to the father, given the importance of the issues to the mother, I am not prepared to second guess the time mother's counsel felt was necessary to properly represent the interests of the mother. The time spent must also be viewed in the context of the father's behaviour in this matter. If he had provided the disclosure he was required to provide and then attended mediation, as set out in the separation agreement, most of these legal fees would not have been incurred.

[39] There is a small claim of the mother's lost wages of $275 which is not a proper expense. The mother was only awarded lost wages for the attendance on June 21st as it was a wasted attendance as the Motion to Change did not proceed due the fault of the father. The Motion to Change did proceed on July 29th and therefore the mother is not entitled to be reimbursed for her attendance on that day. Also the bill of costs does not set out clearly what each counsel did so it is impossible to determine if there is any duplication. For example, there is a notation for review and preparation of motion materials for which junior counsel's time is 5.30 and Ms Zimmerman's time is 10.50 hours. There are no dockets attached so it is unclear when or what each counsel did. The better practice would have been to attach the actual dockets or prepare a more detailed bill of costs with the actual dates services were rendered on. However, overall I do not find the total time spent to be excessive.

e) The Expenses Properly Paid and Payable

[40] The usual disbursements are claimed for a total expense of $817.18.

f) Any Other Relevant Matter

[41] It is submitted by father's counsel that the mother's Motion to Change was dismissed and the father has already been "penalized" by the two previous cost orders. The previous costs orders were made to sanction the father's inappropriate behaviour and to encourage more reasonable behaviour. Those costs orders did not have the desired effect. The father chose to ignore the terms of the separation agreement, he chose to ignore the mother's requests of disclosure of his income, he chose not to comply with his child support obligation, he chose to ignore the court orders for disclosure and he chose to ignore the mother's reasonable offer to settle this motion to change. There is a consequence to the choices he made.

[42] In considering all of these factors, I find that the mother is entitled to close to full recovery of all of her costs as she served a comprehensive offer to settle, she was the successful party, she acted reasonably and to sanction the unreasonable behaviour of the father.

[43] I find that a fair and reasonable cost order and one that is proportionate to the issues involved in all of the circumstances is $22,000.00 inclusive of HST.

Order as Follows

1. The Respondent shall pay to the Applicant costs fixed at $22,000.00 inclusive of disbursements and applicable taxes.

2. The Family Responsibility Office shall enforce this order as a support order.

3. Support Deduction order to issue.

4. Counsel for the Applicant shall prepare this order and the approval of the Respondent as to form and content is hereby dispensed with.

Justice Roselyn Zisman

Date: November 3, 2016

Footnotes

[1] Once a recalculation was done of the father's income, the overall retroactive adjustment would have only resulted in the father paying the mother $543 and his income was found not to have changed from $120,000 which was his income in the separation agreement.

[2] , [2001] O.J. No. 3693 (S.C.J.)

[3] 2016 ONCA 214

[4] 2011 ONCA 665

[5] , 2004 CarswellOnt 2521, [2004] O.J. No. 2634 (Ont. C.A.)

[6] J.V.M. v. F.D.P. 2011 ONCJ 616; Menchella v. Manchella 2013 ONSC 367; Clarke and Collymore [2013] O.J. No. 4138 (OCJ)

[7] The amount that the father agreed to pay was slightly higher.