ONTARIO SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS 70/11 DATE: 20160808
BETWEEN:
Kenneth Holtby Applicant
- and -
Cheryl Draper Knapton Farms Ltd. Respondents
HEARD: December 16, 17, 18, 2014; April 20, 21, 22, 27, 28, 29, 2015; June 8, 10, 11, 2015; November 9, 10, 12, 13 and 16, 2015
REASONS FOR DECISION ON COSTS
Conlan J.
I. Introduction
1After a 17-day trial that spanned nearly one full year (with more litigious wrangling afterwards), in Reasons for Judgment reported at 2015 ONSC 7160, the husband, Kenneth Holtby, succeeded in his effort to retain sole ownership of all of the assets of the farm corporation, Knapton Farms Ltd. (“Knapton”), and of Lot 8, a fifty-acre parcel of land.
2The claims advanced by the wife, Cheryl Draper, regarding ownership of those assets and for rent on the matrimonial home and/or the fifty acres were dismissed.
3Other issues were also adjudicated on, for instance, Ms. Draper’s claim for an equalization payment was allowed in part, and her claim for a constructive trust was allowed in part.
4Some issues were settled, either before the trial started (like spousal support in favour of Mr. Holtby, which claim was ultimately abandoned by the husband) or after the trial commenced (like the valuation date – when the parties separated).
5Not surprisingly, the parties have been unable to resolve the issue of costs. Written submissions and case law have been filed, which materials I have reviewed.
II. The Positions of the Parties
6Using round figures and ignoring tax for the moment, Mr. Holtby seeks costs in the range of about $185,000.00. He claims that he was the largely successful litigant at trial.
7Ms. Draper submits that there ought not to be any costs awarded to either side. She argues that success at trial was divided.
III. The Basic Legal Principles
8Although the law of costs covers a vast terrain, there are just five relevant legal principles that govern this decision.
9First, successful parties are presumed to be entitled to some costs, the quantum of which is largely discretionary.
10Second, where success is divided, rather than apportion costs, it is often appropriate to make no order as to costs.
11Third, along with a host of other factors, any settlement offer [including one that does not attract the extra costs consequences provided by subrule 18(14) of the Family Law Rules] may be considered in determining the issue of costs.
12Fourth, in addition to indemnifying, in part, successful litigants, costs awards are designed to encourage settlement and discourage and sanction inappropriate conduct by litigants.
13Fifth and finally, any costs order ought to be just, fair and reasonable in all of the circumstances of the case including having regard to the prudent expectations of the losing side.
IV. Analysis
Mr. Holtby’s Entitlement to Costs
14Notwithstanding the length of the written submissions on costs that were filed (actually longer than permitted, especially considering the very small font and spacing contained in the wife’s materials), it is my respectful view that counsel are making the issue of costs much more complicated than it needs to be.
15I already indicated, at paragraph 131 of the Reasons for Judgment, that Mr. Holtby is presumed to be entitled to some costs as he was undoubtedly the more successful party at trial.
16Nothing filed has rebutted that presumption.
17Success is not measured by adding up checkmarks on one side of the column or the other. It is more art than science. It requires an assessment of, at a minimum, (i) how important each issue was to the parties, (ii) how much money and time was expended on each issue, and (iii) how successful (in whole or in part) the winning side was on each issue.
18Measured in that framework, it is beyond debate that Mr. Holtby was the largely successful litigant at trial. Having reviewed the transcripts of the trial evidence, it is safe to say that the ownership of Knapton’s assets and the fifty acres took up the vast majority of the trial time and, consequently, expended more resources than all of the other issues combined. Who would walk away with what part(s) of the farm corporation also elicited the highest passion and zeal from the litigants themselves and, as evidenced by the closing submissions, their counsel. Virtually every witness on both sides was called for the predominant purpose of testifying on matters related to that question – who would walk away with what part(s) of the farm corporation. Even the structure of the Reasons for Judgment support the notion that the trial was most about whether Ms. Draper would be recognized as a lawful owner of all or some of Knapton and/or the fifty-acre parcel of land.
19Succinctly put, the trial’s raison d’etre was whether Ms. Draper was a “real” owner of Knapton and/or the fifty acres.
20On that question, by far the most important at trial, Mr. Holtby was entirely successful, and Ms. Draper was wholly unsuccessful.
21Mr. Carey is correct that “[a]ll in all, the [w]ife obtained success on a number of issues” (paragraph 6 of Ms. Draper’s written submissions on costs). But that does not convert this case into one of divided success. It simply means that the husband did not score a shutout.
22On the issues that Ms. Draper was successful on, not only did they take up relatively small fractions of trial time (in the case of spousal support, none at all), but they also led to compromised results. For example, on the equalization payment owing to the wife, the quantum decided by the Court was not everything that Ms. Draper wanted. She enjoyed partial success on that issue.
23Similarly, on her constructive trust claim, Ms. Draper obtained success only in part, as her claim was dismissed vis a vis the expenses documented in Exhibit 8 at trial.
24To illustrate how minor these matters were in comparison to the ownership issues, it is worth repeating what was noted at paragraphs 94, 102, 104 and 109 of the Reasons for Judgment – the result of the equalization issue was driven in large part by the resolution of the big issues of ownership of Knapton and the fifty acres (paragraph 94); Mr. Clayton spent virtually no time at all in closing submissions on the issue of equalization (paragraph 102; not surprising as, in the Court’s eyes, it was a foregone conclusion that Mr. Holtby would be paying some money to Ms. Draper); Mr. Carey, the wife’s own counsel, spent no time in closing submissions dealing specifically with the constructive trust claim (paragraph 104); and Mr. Holtby, in his trial testimony, essentially conceded the wife’s constructive trust claim to the extent that it was allowed by the Court (paragraph 109).
25In summary, there is no comparison between the kind of success enjoyed by Mr. Holtby and that obtained by Ms. Draper. The husband was much more successful than the wife. Like any war, there were minor raids along the way, however, the major offensive went in favour of Mr. Holtby.
26As such, Mr. Holtby is entitled to some costs.
Quantum of Costs in Favour of Mr. Holtby
27The only serious issue to be decided is how much money in costs the husband should receive. On that question, I agree with Mr. Carey that $185,000.00 is far too much. I say that for three main reasons.
28First, that quantum does not adequately recognize the goal of discouraging and sanctioning inappropriate conduct by a litigant, here Mr. Holtby. I accept the submission by Ms. Draper’s counsel that my comments in my handwritten Motion Endorsement of June 4, 2014 were not commentary on an isolated incident. Despite Mr. Clayton’s undoubted best efforts, his client was far less than diligent in complying with Court Orders. That kind of chronic non-compliance is deserving of sanction by the Court, beyond what was ordered in my June 4, 2014 Endorsement.
29Second, that quantum does not adequately recognize the goal of encouraging settlement. Having reviewed the various offers to settle made by both sides, although neither litigant did as good or better after trial than any one of his/her offers, I concur with Mr. Carey that Ms. Draper appears to have put forward a more protracted and (at times) a more reasonable effort, from the outset, to avoid litigation (see, in particular, her very early offer dated May 30, 2011, at tab 6 of Ms. Draper’s written costs submissions).
30Third and finally, that quantum must be reduced to account for some of the discrepancies/warts pointed out by Mr. Carey. Let me be clear – I am not attributing to Mr. Clayton an ounce of bad faith or unprofessionalism. On the contrary, I hold Mr. Holtby’s counsel, as I do Ms. Draper’s, in high regard. It is true, however, that a review of Mr. Holtby’s costs filings reveals that (i) the disbursements being charged appear inordinately high, (ii) the fees being charged by assistants and students are likely beyond what would have reasonably been expected by the other side, (iii) the rate being charged for travel time is likely beyond what would have reasonably been expected by the other side, and (iv) there is some inadvertent duplication in that there are docket entries underlying the $185,000.00 figure that relate to conferences and motions.
31“There is something rotten in Denmark”, says Mr. Carey at the end of clause 13 of the wife’s written costs submissions. Hyperbolic flavour aside, if what is intended is to submit that the $185,000.00 figure is simply not fair, just and reasonable in all of the circumstances, I agree.
32Those circumstances, of course, also include the fact that Ms. Draper did have some success at trial.
33On ability to pay, I have considered the wife’s argument at paragraph 17 of her written costs submissions. I am not persuaded that a substantial, albeit much reduced, award of costs in favour of the husband will financially cripple Ms. Draper. One must remember that she will be receiving a sizeable equalization payment from Mr. Holtby, along with other sums of money. Although not specifically requested in her written costs submissions, it would seem appropriate to offset Ms. Draper’s liability to pay costs against any amounts of money owing by Mr. Holtby to Ms. Draper.
34So what would be a fair, just and reasonable sum? In my view, $100,000.00, all-inclusive of fees, disbursements and tax, is an appropriate quantum.
35To go below that amount, in my view, would gut the husband’s entitlement to costs to something that simply could not be justified.
36At an all-inclusive amount of $100,000.00, even discounting the disbursements by a few thousand dollars, the actual fees being awarded to Mr. Holtby are a relatively modest $80,000.00 or so, before tax. Frankly, that is relatively cheap for a lawyer as experienced as Mr. Clayton (no complaint is made or could be made about his hourly rate) and seventeen days of trial, excluding preparation time.
37If one ignores the first few days of trial which dealt with the valuation date, an issue that was eventually resolved between the parties, a case that involved two weeks of trial time remains capable of generating a costs award that is much, much higher than $100,000.00, even on a scale of recovery that is less than substantial indemnity.
38In fact, for illustrative purposes only, taking Mr. Clayton’s hourly rate at just fifty cents on the dollar ($245.00/hour), and assuming a modest six hours per Court day over 14 days of trial, the result is that one-fifth to one-quarter of the $100,000.00 is eaten-up in fees just to have Mr. Clayton in the Courtroom during the trial. That excludes everything before the trial resumed after the settlement on the issue of the valuation date, all tax, all disbursements, all travel, all preparation for trial, all work done before and after Court each day of the trial, et cetera.
39If the $185,000.00 requested is “partway between partial and full indemnity” (as submitted by Mr. Carey at clause 12 of Ms. Draper’s written costs submissions), then what is being awarded herein amounts to a discounted partial indemnity recovery.
40No matter how one looks at it, I can see no way to avoid the conclusion that $100,000.00, all-in, is a very reasonable figure. We know, for example, that the wife herself has been billed much more (nearly fifty per cent more) than that (see paragraph 17 of the wife’s written costs submissions).
41I recognize that the said legal costs billed to Ms. Draper, presumably, include more than the trial itself, however, those costs are still a useful yardstick to support the reasonableness of the $100,000.00 figure, all-inclusive.
42In Dejong v. Dejong, 2014 ONSC 1942, the most recent case included in the wife’s own costs submissions, and a family law case involving these same two lawyers, Mr. Carey and Mr. Clayton, Henderson J. awarded to Mr. Carey’s client costs that included more before-tax fees ($85,000.00) than what is being awarded here, despite the fact that the trial before Justice Henderson was several days shorter (ten days) than here. Each case is different, however, surely the Dejong, supra decision forecloses any complaint by Ms. Draper that the quantum of costs arrived at here is in any way unfair, unjust or unreasonable.
43In short, no reasonable person could expect (i) to go to trial for two weeks, with the within costs decision being released what seems like an eternity (twenty months) after the start of the trial, (ii) be entirely unsuccessful on what was unquestionably the major and most important issue in the litigation, (iii) against a lawyer who is well-known to your own counsel and who specializes in family law, has been practising for more than forty years and whose office is a considerable distance away in London, Ontario, and be ordered to pay anything less than about $80,000.00 in fees, before tax.
V. Conclusion
44Ms. Draper shall pay to Mr. Holtby costs in the total all-inclusive amount of $100,000.00.
Conlan J.
Released: August 8, 2016
