Court File and Parties

COURT FILE NO.: D1057/98 DATE: 2017-01-20 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Charetina Alexandra O’Brien Applicant – and – David Alan O’Brien Respondent

Counsel: Sally Chiarelli, for the Applicant Christine G. Kim, for the Respondent

HEARD: January 16, 2017 The Honourable Mr. Justice A. Pazaratz

Endorsement

[1] This is a costs determination in relation to a January 8, 2016 motion brought by the Respondent husband to change the final order of Justice Mazza dated March 22, 2000. The motion and a resulting cross-motion were resolved by Minutes of Settlement negotiated November 15, 2016, and signed at the commencement of the costs hearing on January 16, 2017.

[2] The original order included the following provisions: a. Sole custody of two daughters to the Applicant mother. Katherine is now 21. Hayley is now 18. b. Detailed access provisions for the Respondent. c. Respondent to pay $789.00 per month child support to the Applicant, based on his income of $57,226.00 d. Proportionate sharing of section 7 expenses. e. Respondent to pay $900.00 per month spousal support to be indexed annually. Respondent entitled to have quantum and continued entitlement to spousal support reviewed after one year, or if there is a material change in circumstances. f. Applicant to provide details of employment efforts every six months, and particulars if she obtains employment. g. Mutual annual disclosure of tax returns and notices of assessment. h. A minor equalization adjustment. i. Each pays their own costs.

[3] The scope of this case was actually fairly limited: a. Both parties were represented by counsel throughout. b. They exchanged pleadings. c. They attended a Case Conference with a Dispute Resolution Officer on April 27, 2016. Costs were not addressed in the resulting endorsement. d. A Settlement Conference was scheduled for June 23, 2016, but it had to be cancelled at the last minute because the Applicant’s counsel became ill. The Respondent and his counsel attended. They submit they should be reimbursed for $500.00 costs for a wasted attendance, on the basis that they should have been notified of the adjournment request sooner. Costs were reserved. e. A Settlement Conference proceeded on September 21, 2016. f. On November 15, 2016 they returned for a “to be spoken to” attendance at which time they signed a memorandum of agreement settling all issues, and scheduling a costs hearing before me. g. On January 17, 2017 counsel and the parties attended for a one-half day costs hearing.

[4] The following were the main issues:

[5] Spousal support: a. The Respondent sought an immediate termination of spousal support. He argued that he’d already paid 16 years of spousal support stemming from an eight year relationship, and that enough was enough. b. The Applicant sought an increase based on the Respondent’s increased income. She said there were many impediments to her becoming self-sufficient, but she was trying. c. The Respondent acknowledged he hadn’t made ongoing disclosure with respect to his increased income since 2000, but he said the Applicant also failed to produce ongoing disclosure. d. The final minutes provided that the Respondent would pay $1,173.00 per month spousal support, based on his income of $97,251.00. with spousal support to terminate on November 15, 2019. e. Spousal support was by far the most contentious issue. The Applicant was successful resisting the Respondent’s efforts to terminate support immediately, and in increasing ongoing support. f. The Respondent was successful in obtaining a final cut-off date.

[6] Child Support: a. Again, the Respondent did not adjust child support following the 2000 order, even though his income went up. b. When the Respondent brought his motion, the younger daughter had gone to live with him. He initially proposed that he would pay child support for Katherine in the sum of $841.00 per month, and the Applicant would pay child support for Hayley in the sum of $200.00 per month based upon $25,000.00 income being imputed to the Applicant. c. By the time they settled the case, the Respondent acknowledged Hayley was no longer a dependent child, so he withdrew his claim for child support. d. The final minutes provided that the Respondent would pay the Applicant $858.00 per month for Katherine. e. The Applicant was successful in obtaining a higher amount of child support, although that success was tempered by the fact that during the early portion of the litigation the Respondent’s set-off claim for support for Hayley had some merit. f. As well, the Respondent is solely responsible for Katherine’s tuition, books, and course materials. g. The Respondent also has to pay $27,501.00 to the Applicant as retroactive child support and section 7 expenses, based in part on his lack of ongoing financial disclosure. h. The Applicant was entirely successful on the various aspects of the child support claim.

[7] The Respondent’s motion requested joint custody of both children. a. This was a curious claim given the ages of the children when the motion was brought. b. It was also more dubious, given the extreme history of conflict and the profound animosity and tension on this file. c. There appeared to be no logical basis for a change in the custody designation. The Applicant opposed the request. d. Ultimately, the Respondent withdrew the request. e. This wasn’t a time-consuming issue, but it certainly fuelled the conflict between the parties. f. Ultimately the Applicant was successful in resisting the Respondent’s motion.

[8] The final minutes included many other provisions in relation to health care coverage and life insurance coverage which were not really contentious (once the threshold issue of spousal entitlement was resolved).

[9] The positions at the costs hearing: a. The Applicant seeks full indemnification in an amount exceeding $61,000.00 based on a Bill of Costs which didn’t include the January 17, 2017 costs hearing. b. The Respondent does not seek costs, but proposes that the Applicant is not entitled to any costs.

[10] The relevant considerations in relation to costs include the following:

[11] Offers: a. The Applicant filed a non-severable offer to settle on October 27, 2016, which did not reflect the eventual result. Indeed, the offer included a number of terms which were extremely unhelpful and couldn’t have been included in a court order. b. The Respondent filed severable offers on May 25, 2016 and November 2, 2016. Each offer included a stand-alone section in which he offered to abandon his claim for joint custody. The Applicant should have accepted those sections. But the custody issue was never very time consuming. And the balance of those two offers included provisions which did not reflect the eventual outcome. c. Offers are to be encouraged, but all of these offers were so far off the mark that they do not attract cost consequences under either Rules 18(14) or 18(16).

[12] Success: a. The Respondent started all of this by bringing a motion seeking to reduce and terminate his obligations. b. The Applicant responded with a cross-motion. c. The Applicant was predominantly successful. This creates a presumption in favour of costs. (Rule 24(1)). d. The Respondent achieved some success in that he obtained an eventual cut-off date for spousal support. This constitutes divided success (Rule 24(6). But success was not evenly divided. By any standard, the Applicant achieved the most success.

[13] Reasonableness: a. It was unreasonable for the Respondent to fail to make ongoing disclosure following the 2000 order. The Applicant also had disclosure obligations. But there was very little change in the Applicant’s situation, so her disclosure would not likely have resulted in a significant change in the order. In contrast, the Respondent should have known that if he disclosed his continual increases in income, this would likely have exposed him to increases at least in relation to child support, and possibly spousal support. b. There were some minor inconsistencies in the income the Respondent eventually revealed. c. The Respondent claimed he paid the oldest child’s tuition from his own funds, and wanted the Applicant to contribute her proportionate share. He later acknowledged the tuition was paid from an education fund created by his parents, and he refused to disclose full details of the fund. d. The Respondent started these court proceedings with a very aggressive – and in some ways unrealistic – approach. To his credit, he backed down and accepted a reasonable resolution almost immediately after a Settlement Conference.

[14] Bad faith: a. Throughout her submissions the Applicant’s counsel repeatedly described the Respondent’s actions as constituting bad faith. She then referred to Rule 24(8) which states that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. b. Unfortunately, the Applicant’s counsel did not address or satisfy the very high onus required to establish bad faith as set out in the case law. C.S. v. M.S., (2007) 2007 ONSC 20279, O.J. 2164; Scipione v. Del Sordo, 2015 CarswellOnt 14971; Anderson v. Anderson 2016 ONSC 7774; Wilson v. Cunningham 2016 ONCJ 721; Janjic v. Janjic 2016 ONSC 3131; Wehbe v. Wehbe 2016 ONSC 3227. c. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. d. Here, the Respondent was quite open about what he was trying to do: He wanted to pay less support. He was wrong. He was unsuccessful. But his unsuccessful and even unreasonable behaviour as a litigant does not elevate his behaviour to the category of bad faith. e. As an aside, the Applicant’s counsel submitted that under this “bad faith” category the Respondent should pay full recovery costs because the stress of his unreasonable litigation caused the Applicant to suffer a stroke in December 2016 (after the terms of settlement had been agreed upon). The Applicant’s health problems are not disputed. But the Applicant submitted no evidence to link the Respondent’s behaviour and/or this litigation to any current health problems. While I am prepared to take judicial notice of the fact that family litigation is usually stressful for all parties, this does not mean that unsuccessful litigants should automatically pay elevated costs because of the emotional upset experienced by the successful party.

[15] Importance, complexity or difficulty (Rule 11(a)): a. There can be no doubt that the issues herein were extremely important, particularly to the Applicant. The Respondent was trying to reduce her child support and cut her off spousal support. This, after he had underpaid child support by failing to make proper disclosure. b. Accordingly, it was reasonable and necessary for the Applicant to vigorously – and successfully – oppose the Respondent’s requests.

[16] Reasonableness of each party’s behaviour in the case (Rule 11(b)): a. The Respondent brought a motion which had little merit; he started out aggressively; but his materials were fairly succinct; and he quickly came to his senses and settled. b. In contrast, while the Applicant was justified in resisting the motion (and bringing a cross-motion), the Applicant’s materials were excessively long, unfocussed, and at times unhelpful. She had a good case but it was presented in a needlessly complex and inefficient manner.

[17] The lawyer’s rates (Rule 11(c)): a. The $375.00 hourly rate for the Applicant’s counsel is quite reasonable given her experience, and in comparison to the $250.00 hourly rate of the more junior counsel for the Respondent.

[18] Time spent (Rule 11(d)): a. This is my big concern. b. The Applicant’s bill of costs totals $61,339.16, plus more fees for the half-day costs hearing. c. The comparative bill of costs for the Respondent’s counsel totals $13,296.07 (with some minor dissimilarities). d. The Applicant has simply submitted a computerized print-out of every single thing her lawyer’s office has ever charged her for, including various telephone calls or administrative functions which could easily (and more appropriately) have been assigned to support staff without charging $375.00 per hour.

[19] In Serra v. Serra 2009 ONCA 395 the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles: a. To partially indemnify successful litigants for the cost of litigation. b. To encourage settlement; and c. To discourage and sanction inappropriate behaviour by litigants.

[20] The assessment of costs is not a mechanical exercise. It’s not just a question of adding up lawyer’s dockets. Boucher et al v. Public Accountants Council for the Province of Ontario; 71 O.R. (3d) 291 (Ont. C.A.); Dingwall v. Wolfe 2010 ONSC 1044, 2010 ONSC 1044 (SCJ).

[21] The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant. Selznick v Selznick 2013 ONCA 35, 2013 ONCA 35 (Ont. C.A.); Delellis v. Delellis, 2005 CarswellOnt 4956 (SCJ); Serra (supra); Murray v. Murray (2005); Guertin v Guertin 2015 ONSC 5498, 2015 ONSC 5498 (SCJ).

[22] I have already identified that the Applicant is not presumptively entitled to full-indemnity costs, because she neither filed a Rule 18(14) Offer to Settle, nor has she established bad faith under Rule 24(8).

[23] But even if she met the threshold for “full recovery”, quantification of costs still requires an overall sense of reasonableness and fairness. Chomos v Hamilton 2016 ONSC 6232; Goryn v. Neisner 2015 ONCJ 318, 2015 ONCJ 318 (OCJ). The Rules do not require the court to allow the successful party to demand a blank cheque for their costs. Slongo v Slongo 2015 ONSC 3327, 2015 ONSC 3327 (SCJ). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. M.(C.A.) v. M.(D.), 2003 CarswellOnt 3606, 67 O.R.(3d) 181 (Ont C.A.); Scipione v Scipione (supra).

[24] In Sepiashvili v Sepiashvili (supra) Justice Wildman J stated at paragraph 20: “…Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term “full recovery costs”, there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner…..”

[25] The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which reimbursement is sought) and the importance or monetary value of the issues at stake. Pagnotta v. Brown [2002] O.J. No. 3033 (SCJ); Gale v. Gale (2006) CarswellOnt 6328; Jackson v Mayerle 2016 ONSC 1556.

[26] Simplistically, a common theme in the “reasonable expectations” and “proportionality” analyses is that the loser should not have to reimburse the winner for excessive or unnecessarily expensive litigation behaviour which might be regarded as “overkill”. Scipione v. Scipione (supra).

[27] This litigation resolved fairly efficiently. It basically entailed: a. Motion & cross-motion pleadings of average length, including a single substantive affidavit by each party. b. A Case Conference before a Dispute Resolution Officer c. A Settlement Conference. d. A “to be spoken to” to advise the court that a memorandum of agreement had been signed.

[28] It is difficult to understand how this could have generated more than $60,000.00 in legal fees for one party – even the successful party. The Respondent’s $13,000.00 legal bill seems more comprehensible. In any event, it is impossible to justify a costs order anywhere near $60,000.00 even if full recovery was appropriate.

[29] I have also considered the financial resources of the parties under Rule 11(f) (“any other relevant matter”). The Respondent is much better able to afford this type of litigation than the Applicant -- and he knew it.

[30] Finally, I agree with the Respondent that whatever costs the Applicant is entitled to, there should be a small reduction for the June 23, 2016 Settlement Conference when the Applicant’s counsel didn’t attend because she was ill. Her illness and professionalism are not in dispute. But I accept the Respondent’s submission that his lawyer didn’t receive sufficient notice that her trip to court would be wasted, because the matter was going to be adjourned. On this issue, the Respondent is out of pocket through no fault of his own.

[31] Having regard to all of these circumstances, I make the following order.

[32] On consent: a. Final Order per Minutes. b. Support Deduction Order to issue.

[33] Not on consent: a. The Respondent shall pay to the Applicant costs fixed in the sum of $15,000.00 inclusive of HST and disbursements. b. These costs relate entirely to securing child and spousal support, and as such they are to be enforced by the Director of the Family Responsibility Office.

Pazaratz, J. Released: January 20, 2017

COURT FILE NO.: D1057/98 DATE: 2017-01-20 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Charetina Alexandra O’Brien Applicant – and – David Alan O’Brien Respondent REASONS FOR JUDGMENT The Honourable Mr. Justice A. Pazaratz Released: January 20, 2017