Court File and Parties

Court File No.: 36442/14 Date: 2018-11-14 Ontario Superior Court of Justice

Between:

KATHERINE MARY CAMERON Applicant – and – CHRISTOPHER ROBERT ANGUS CAMERON Respondent

Counsel: Sean W. Plat, for the Applicant William C. Kort, for the Respondent

Heard: November 27, 28, 29, 30, December 1, 4, 2017, January 15, 2018

Costs Decision

Kurz J.

[1] Following a seven day trial, I issued two decisions in this proceeding, dated April 16, 2018 and August 14, 2018. They dealt first with entitlement to spousal support and then second with the quantum of that support. I found that the Applicant, Katherine Cameron (“Katherine”), was entitled to retroactive and prospective spousal support from the Respondent, Christopher Cameron (“Chris”), for the years 2014 onward. I later fixed the support amounts that Chris shall pay to Katherine, based on the income figures that I had determined or imputed. I am now called upon to determine the costs of this case.

Positions of the Parties Regarding Costs

[2] Katherine seeks her full indemnity costs of this proceeding, which she asks that I fix at $232,108.22. This figure is derived from $153,807.69 in fees ($99,975.04 partial indemnity) and $78,300.53 in disbursements, all inclusive of HST. The majority of her disbursements are professional fees for a business valuator, Eveline Reid of Vine Valuations Inc.

[3] Katherine argues that she was the successful party, that she made two separate offers to settle that were less favourable to her than the result that she would have obtained at the time, and that Chris behaved “poorly”. The latter comment refers to his tardy disclosure and failure to obey a temporary support order. At the start of trial, I felt obliged to order him to immediately pay all $11,250 in support arrears. He complied.

[4] Chris argues that Katherine should receive no costs at all, or in the alternative, that she should receive just a fraction of even her partial indemnity costs. Chris concedes that Katherine was the successful party in that she established her claims to both retroactive and prospective spousal support. However he points out that the support I ordered was not based on the figures that Katherine sought and did not go as far back as she claimed.

[5] Chris disputes the severity of what Katherine characterizes as his “poor behaviour”, arguing that it had no effect in delaying or complicating the trial. With regard to offers, Chris points out that the issue is not whether the offer was at the time more favourable than a speculative result at the time of the offer. Rather, he asserts that the offer must be compared to the ultimate result in order to meet the requirements of R. 18(14). Chris points out that many of the issues between him and Katherine were settled prior to trial. In fact, he asserts, some of the settlements arose from case conferences in which Katherine now seeks costs. She was neither awarded the costs of those conferences nor were those costs reserved to trial. As a result, Chris disputes my jurisdiction to award the costs of those conferences after the fact. He argues that the recent rule change which expressly allows me to set the costs of prior steps should not be applied retroactively. Finally, Chris argues that in any event, Katherine’s claims for costs are excessive in the circumstances.

Jurisdiction to Award Costs

[6] The jurisdiction of this court to award costs arises from s. 131 of the Courts of Justice Act. That provision gives the court broad discretion to determine costs. I will have more to say about it below.

Rule 24 Factors

[7] Rule 24 of the Family Law Rules (“FLR”) sets out the factors that the court must consider in the exercise of its discretion regarding costs. The starting point in R. 24(1) is that the successful party is presumptively entitled to the costs of a motion, enforcement, case or appeal (see also Beaver v. Hill, 2018 ONCA 840 and Berta v. Berta, 2015 ONCA 918). However, under R. 24(6), if success in a step in a case is divided, the court may apportion costs as appropriate.

[8] R. 24(12) sets out the appropriate considerations in fixing the quantum of costs. It reads:

(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.

[9] Under R. 24(5), when the court looks to the reasonableness or unreasonableness of each party during the course of the dispute, the following considerations apply:

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.

General Costs Principles

[10] As the Ontario Court of Appeal noted in Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432 (O.C.A.), at para. 8:

Modern costs rules are designed to foster three fundamental purposes: (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: Fong v. Chan (1999), 46 O.R. (3d) 330, at para. 22.

[11] In the Shute v. Shute, [2017] O.J. No. 4110, Justice Victoria Starr of the Ontario Court of Justice supplements Serra’s three costs purposes by offering a fourth: ensuring that the primary objective of the FLR, dealing with cases justly, is met. Starr J. wrote:

29 Subrule 2(2) of the Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the Rules is met -- that cases are dealt with justly. This provision needs to be read in conjunction with Rule 24 of the Rules. Subrule 2(4) of the Rules states that parties have a positive obligation to help the court to promote the primary objective under the Rules. Clauses 2(3)(a) and (b) of the Rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. [See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711].

[12] In Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (O.C.A.) (“Boucher”), at para. 24 the Ontario Court of Appeal stated that costs awards should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties."

[13] Recently, in Beaver v. Hill at para. 10, the Ontario Court of Appeal clarified that proportionality and reasonableness, the two key factors set out in R. 24(12)(a), are the touchstone considerations to be applied in fixing the amount of costs in family law matters.

How is Success Measured?

[14] While the successful party is presumptively entitled to costs, under R. 24(6) the court has the discretion to determine the allocation of costs when there is divided success. In Jackson v. Mayerle, 2016 ONSC 1556 (SCJ-FC), Pazaratz J. of this court’s Family Court stated that the determination of divided success requires a comparative analysis as most family cases have multiple issues. However those issues are not equally important, time-consuming or expensive to determine. Comparative success can also be assessed globally in relation to the whole of the case, asking:

i. How many issues were there? ii. How did the issues compare in terms of importance, complexity and time expended? iii. Was either party predominantly successful on more of the issues? iv. Was either party more responsible for unnecessary legal costs being incurred?

[15] As Chappel J., also of this court’s Family Court, pointed out in Thompson v. Drummond, 2018 ONSC 4762, citing a number of authorities, the determination of success is not a simple mathematical exercise. “Rather, it requires a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues which required adjudication…” The court can then award costs to the party who is more successful on an overall global basis or the primary issue, subject to any necessary adjustments in regard to lack of success on other issues and other costs factors.

[16] In Lawson v. Lawson, [2008] O.J. No. 1978 (S.C.J.), Justice J. Wilma Scott of this court wrote that any determination of success "...must take into account how that order compares to any settlement offers made." In Osmar v Osmar, [2000] O.J. No. 2504 (S.C.J.), Aston J. was even more direct, in stating that:

Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.

Offers to Settle

[17] Rule 18 deals with offers to settle. Sub-rules 18(14) - (16) deal with the cost consequences of offers to settle. They state:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

(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.

COSTS CONSEQUENCES -- BURDEN OF PROOF

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14).

COSTS -- DISCRETION OF COURT

(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.

[18] In Jackson v. Mayerle, Pazaratz J. considered the requirements for an order under R. 18(14). In order to determine whether a party has obtained a result “as favourable as or more favourable than the offer”, the court need not compare the offer and the result with microscopic precision. Rather, as Pazaratz J. stated at para. 47:

To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer)… The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order… [Citations omitted]

[19] All of that said, as Lemon J. pointed out in Slongo v Slongo, 2015 ONSC 3327 (S.C.J.), Rule 18(14) does not require the presiding justice to allow the successful party to demand a blank cheque for his costs.

Offers to Settle as a Factor in Determining Reasonable Behaviour

[20] In Serra, cited above, the Ontario Court of Appeal emphasized the obligation to attempt to settle that arises from the very beginning of a family law case. In doing so, the appellate court adopted the following statement by Spence J. of the Ontario Court of Justice in Husein v. Chatoor, 2005 ONCJ 487, [2005] O.J. No.5715 (O.C.J.), at para. 30:

[P]arties have an obligation to begin to assess their respective cases at the outset of the litigation -- even before the litigation commences -- and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it behoves neither party simply to sit back and to roll the dice while those fees continue to mount. [Emphasis added by Ontario Court of Appeal]

[21] In J.V.M. v. F.D.P., 2011 ONCJ 616, [2011] O.J. No. 5441 (O.C.J.), Sherr J. of the Ontario Court of Justice equated the failure to make an offer to settle to unreasonable behaviour under Rule 24. He stated at para. 5:

The failure to make an offer to settle much earlier [than trial] by either party is unreasonable behaviour. Subrule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (subrule 2(2)). This includes taking appropriate steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute. See Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134, 2011 CarswellOnt 12972 (Ont. Fam. Ct.). The failure to serve an offer to settle will be an adverse factor when assessing costs.

[22] However in Beaver v. Hill, the Ontario Court of Appeal recently offered a note of caution about excessive reliance on offers to settle in determining costs when the provisions of R. 18(14) are not engaged. The service of an offer to settle may not, in itself, be sufficient to claim reasonable behaviour. The offer must contain what Nordheimer J.A., writing for the court, described at para. 16 as “… a true element of compromise.” Even so:

… 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 r. 24(5)(a) of the Family Law Rules, it is but one factor that is to be considered.

The Scale of Costs in Family Law Cases does not Presumptively Approach Full or Substantial Indemnity

[23] In Beaver v. Hill, the Ontario Court of Appeal offered a clarification that changed many judge’s interpretation of that court’s previous family law costs jurisprudence. While previous decisions of the Ontario Court of Appeal such as Sordi v. Sordi, 2011 ONCA 665, [2011] O.J. No. 4681 (O.C.A.), Berta v. Berta, 2015 ONCA 918, [2015] O.J. No. 6844 (O.C.A.) and Forrester v. Dennis, 2016 ONCA 209, [2016] O.J. No. 1387 (O.C.A.) led to the understanding that there is a presumption that the successful party in a family law proceeding is entitled to an amount approaching substantial or even full indemnity costs, that is not the case. There is no such presumption under the FLR or in Ontario law (see paras. 11 and 13).

De-Emphasis on Counsel’s Hourly Rates and Time Spent

[24] In Delellis v. Delellis and Delellis, [2005] O.J. No. 4345 (S.C.J.), Justice David Aston of this court noted the new emphasis on setting a “fair and reasonable” amount of costs that emerges from Boucher and the cases following it. Aston J. found that this new approach has led to a de-emphasis on hourly rates and time spent by counsel as the key factor in fixing costs. He continued at para. 9:

...Costs must be proportional to the amount in issue and the outcome. 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. [Citations omitted]

Party Status does not Grant a License to Litigate Oblivious to the Consequences

[25] The right to bring or respond to a case does not grant either party a license to litigate in a manner that ignores the consequence of that litigation. Justice Carole Curtis of the Ontario Court of Justice emphasized this point in Sabo v. Sabo, 2013 ONCJ 540, [2013] O.J. No. 4628 (O.C.J.), as follows at para. 38:

Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation...

Analysis of Costs Factors Within the Context of this case: Success

[26] While success at this trial was somewhat divided, Katherine was far more successful than Chris. I say this both in regard to the ultimate result and a comparison of the offers exchanged by the parties.

[27] Looking to the ultimate result, Chris took the trial position that Katherine was not entitled to any further spousal support. He also claimed that she was not entitled to retroactive or ongoing support, whether on a compensatory or non-compensatory basis. He strongly argued that I should impute income to Katherine.

[28] While I did impute income to Katherine, I did not do so at the level that Chris proposed. That imputation actually had little effect on the ultimate result. Katherine obtained a substantial award of both retroactive and prospective spousal support. Those awards had both a compensatory and non-compensatory basis. Chris opposed both bases, particularly the compensatory one.

[29] In total, although she was not completely successful, Katherine was far more successful at trial than Chris. Her relative success came in regard to many of the key issues at trial, such as her right to retroactive support, prospective support and to have Chris’ obligations based on a far higher income figure than he was willing to acknowledge. I generally accepted far more of the findings of her business valuator, Eveline Reid (who was originally retained by both parties as a joint valuator), than those of his valuator, David Webb. Chris individually retained Mr. Webb after unilaterally withdrawing from the joint retainer of Ms. Reid. Katherine’s comparative success related to most of the key issues at trial and most of the time during trial was taken up litigating those issues.

Non-Severable Offers to Settle

[30] As set out above, another appropriate way to consider the relative success of each party is to look to the formal offers that they exchanged in accord with R. 18.

[31] Katherine relies on two such offers. Her first was made on September 17, 2015. That offer was very wide ranging, dealing with all of the issues that had yet to be resolved at the time. Beyond spousal support, Katherine’s first offer included child custody, child support and equalization. However, all issues other than spousal support were ultimately resolved before trial. I have not been made aware of the actual settlement terms or exactly how that settlement was reached.

[32] In addition, Katherine’s offer was not severable. In other words, strictly speaking, the offer required an all-or-nothing acceptance. In order to rely on her offer under R. 18(14), Katherine would have to do as well as or better than all of the terms of her non-severable offer (see: Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (S.C.J.-F.C.). Here I am not in a position to compare Katherine’s unknown ultimate success as delineated in the party’s partial pre-trial settlement(s), along with her trial success, with the offer.

[33] Those circumstances point to the value and reasonableness of severable or separate offers for discrete issues. Such offers increase the likelihood that parties who are unable to settle all issues at any given time can at least settle some of them. Such a “half-loaf” result still offers great value to the parties, who can then focus their resources on resolving the remaining issues. In addition, partial settlements arising out of severable or discrete issue offers, allow the court to meet its duty under the primary objective of the FLR (R. 2(4)). They do so principally by saving time and expenses (R. 2(3)(b)), and helping the parties to settle all of part of a case (R. 2(5)(c)).

[34] Despite the fact that Katherine’s offer is non-severable, I can still consider it under any combination of the following sources of authority:

a. if the minutes of settlement and consequent consent order call for me to do so. Here I add that neither party has brought such an agreement or order to my attention. b. under R. 24(5), where the court may consider the reasonableness of any offer to settle; c. under the general discretion granted by R. 18(16) to consider any written offer to settle. That provision allows me to consider any good faith offers (see Chomos v. Hamilton, 2016 ONSC 6232). d. under the recently amended R. 24(11), as set out below.

Consideration of the Parties’ Offers to Settle

[35] Katherine’s first offer called for Chris to pay her a total of $400,000 in retroactive spousal and child support, of which Katherine would claim $85,536 as periodic support received the previous year. Katherine offered to base Chris’ support obligations on imputed annual incomes of $350,000 for Chris and $55,800 for her. On consent, I found that Chris’ income for 2015, the year of that offer, was $379,540. I also imputed an annual income to Katherine for that year of $85,251.

[36] Mr. Plat points out that the income figure that I arrived at to calculate Chris’ spousal support obligations was higher than the one in Katherine’s offer. However Mr. Plat conceded that Katherine’s first offer sought more retroactive support than I granted to her. Further, the income figure that I imputed to Katherine was higher than the one that she proposed in her first offer. Even with prospective support, and even if I could sever that issue from the remainder of her first offer, I cannot say that Katherine was more successful at trial than she proposed to be in her first offer.

[37] Katherine’s second offer was dated March 7, 2017. It dealt only with child and spousal support. Child support was settled before trial. With regard to ongoing spousal support, Katherine’s second offer called for the payment of $4,000 per month, based on annual incomes of $379,000 for Chris and $140,000 (imputed) for Katherine. My decision was more favourable to Katherine for 2017 than the terms of her offer. However, at the time that Katherine made that offer, neither party knew that Chris would lose the OMAFRA contract, leading me to lower his support payments for 2018 onward to $2,815 per month. Thus the prospective support order was lower than the figure that Katherine offered to accept.

[38] Katherine’s second offer also called for Chris to make a retroactive lump sum support payment to her of $175,000. I ordered Chris to pay her retroactive spousal support of $138,201. I then set that figure off against Katherine’s retroactive obligation under s. 7 of the Child Support Guidelines to pay him $20,089. That amount is her contribution to the children’s special and extraordinary expenses. These overlapping figures resulted in Chris’ obligation to pay Katherine the net amount of $118,112. Obviously the trial result was not as favourable to Katherine as the terms of her second offer.

[39] The only offer to settle by Chris was dated November 10, 2017. That offer called for all of the funds held in trust from the sale of the parties’ jointly owned Gristmill Drive, Georgetown property to be released to him. It also called for Katherine to make an unspecified payment to him of $70,000. Thereafter all claims against him, which implicitly included spousal support, were to be withdrawn. Like Katherine’s two offers, Chris’ offer was not severable.

[40] While I cannot comment on the distribution of the proceeds of sale of the matrimonial home, Chris was clearly not as successful at trial as the remaining terms of his offer called for him to be. I am also unable to discern any element of compromise in that offer.

Conclusion re Offers

[41] In sum, neither party can take advantage of R. 18(14). In considering success and my broad discretion under R. 18(16), Chris was clearly unsuccessful and his offers did not come close to reflecting the end result of this case. The lack of compromise in his offer does not assist him in any claim to reasonable behaviour in his offer. On the other hand, some aspects of Katherine’s offers may have been helpful to her request for costs under R. 18(14) had they been severable. But they do point to some reasonable behaviour and an element of compromise that I may consider under both R. 18(16) and 24(5)(b).

[42] Further, the loss of the OMAFRA contract after both of Katherine’s offers had been delivered changed circumstances in regard to prospective support. However, neither party’s offer(s) reflected that change.

Reasonable Behaviour and Bad Faith

[43] In terms of reasonable behaviour, Chris acted far less reasonably than Katherine throughout the post-separation process of determining the parties’ rights and obligations. He unilaterally chose to withdraw from the joint retainer of the business valuator, Evelyn Reid. As a result, Katherine had to continue that retainer on her own and to pay Ms. Reid to respond to Chris’ own business valuator, Mr. Webb. Much trial time was devoted to their difference of opinion. I generally sided with Ms. Reid. Chris also failed to provide timely disclosure, both to Ms. Reid, when she was jointly retained, and to Katherine during the course of this litigation. Each of: the withdrawal from the joint retainer, the retainer of Mr. Webb, and the tardy disclosure delayed the trial of this case. The timing of Chris’ disclosure also forced Katherine to bring interlocutory motions to obtain the delayed disclosure. As set out above, Katherine’s two offers were more reasonable than Chris’ one offer.

[44] One further and key factor cannot be forgotten. Chris deliberately disobeyed a court order by unilaterally terminating his spousal support payments (which were not amenable to support deduction by FRO because he is self-employed). He stopped the payments during a year, 2017, in which he earned, as I found, $308,691. In the nine months between the date that Coats J. granted her temporary spousal support order and the start of trial, he fell $11,250 in arrears of his payments. When the trial began, I had to order him to immediately bring those payments into good standing. He then complied.

[45] Deliberate disobedience of a court order can be bad faith if that disobedience is intended to achieve an ulterior motive (Fatahi-Ghandehari v. Wilson, 2018 ONSC 460 at par. 39) or inflict financial harm (S.(C) v. S.(C), [2007] O.J. No. 2164 (S.C.J.)).

[46] As Pazaratz J. of this court’s Family Court wrote in Jackson v. Mayerle, 2016 ONSC 1556: "... Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made." Pazaratz J. was careful to distinguish bad faith from bad judgment, negligence, or unreasonable behaviour. Bad faith requires some element of conscious wrongdoing. As Pazaratz J. put it at paras. 58-59:

58 Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation...

59 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. It is done knowingly and intentionally. The court can determine costs at a far higher level than those that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated.

[47] Here I am not in a position to comment on Chris’ motivation in refusing to pay spousal support. He appears to have felt that he could not afford the payment (despite his income and the fact that he was able to pay all arrears almost immediately after I ordered him to do so). I cannot say that he intended to inflict economic harm on Katherine. He did immediately obey my order at the start of trial. He also voluntarily made many payments on behalf of Katherine and the parties’ children for a number of years before the interim order became effective. Thus I do not attribute Chris’ non-payment of support to bad faith. But it is another example of unreasonable behaviour during the course of this litigation.

[48] With all of the factors set out above, I find that costs should be fixed at a level that is extensive enough to reflect the unreasonable approach that Chris took to many aspects of this litigation and the more reasonable approach that Katherine took. However that amount must also be based on proportionality, reasonableness, and the reasonable expectations of the party called upon to pay costs.

Bill of Costs

[49] Katherine’s bill of costs is quite considerable. It claims a total of $153,807.69 in fees on a full indemnity basis. Mr. Plat, Katherine’s main counsel, has been practicing law for over 20 years. He bills at $375.00 per hour. His firm bills out his junior counsel at between $190 and $210 per hour. His firm also bills out law clerks at between $140 and $185 per hour. Mr. Kort raises no issue with the amounts claimed for Mr. Plat, his juniors and the others.

[50] Mr. Kort does complain that Mr. Plat failed to include his dockets with his submissions. He points out that in calling for costs submissions, I also referred to “…any bill of costs/costs outline, dockets and authorities…” However my request for costs did not make the inclusion of dockets mandatory. I used the word “may”. While Mr. Plat was free to include his dockets with his submissions, I did not make their submission mandatory. As I note below, Mr. Kort did not file his dockets either.

[51] Mr. Kort also comments that Mr. Plat’s bill of costs referred to ten other persons: two junior lawyers, five law clerks and three students at law. Yet Mr. Platt did not explain why so large a coterie of legal workers was necessary to prepare this case for trial. I agree, particularly as I do not know the degree to which there is overlap between these legal workers or the extent to which Chris is being asked to pay for each to learn their part of this case.

[52] While taking issue with the overall amount of Mr. Plat’s bill of costs, Mr. Kort does not proffer his own bill of costs (or dockets) in order to allow the court to compare the fees claimed by each counsel. This absence is relevant to my analyses of proportionality and reasonable expectations.

Is this Court Entitled to Determine the Costs of Prior Steps in this Proceeding?

[53] One other way that Chris opposes Katherine’s bill of costs is in regard to his claim for the costs of conferences prior to trial. Mr. Kort points out that no order for costs was made at those conferences nor were those costs reserved to the trial judge.

[54] At the time of those conferences, the applicable rule, R. 24(10), called for costs to be determined promptly after dealing with each step in a case or expressly reserved for determination at a later stage in the case. R. 24(10) reads as follows:

DECIDING COSTS

(10) Promptly after dealing with a step in a case, the court shall, in a summary manner,

(a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or (b) expressly reserve the decision on costs for determination at a later stage in the case.

[55] In Islam v Rahman, 2007 ONCA 622, the Ontario Court of Appeal found that this provision required parties to raise any costs issues for a particular step in a proceeding during the course of that step. Where no costs order is made during that step or the court is silent on the issue, the trial judge should not later award costs for that step. The appeal court provided no rationale for that determination other than the wording of the subrule itself. The parties arguing the case do not appear to have brought R. 25(19)(c) to the attention of the court. It allows the court to change an order that “… needs to be changed to deal with a matter that was before the court but that it did not decide”.

[56] While many decisions have strictly applied Islam v. Rahman’s absolute prohibition against determining the unreserved costs of previous steps in the litigation, some have not. In Bortnikov v. Rakitova, 2016 ONCA 427, the Ontario Court of Appeal reaffirmed the principle set out in Islam v. Rahman but did not follow it. The court chose not to set aside the trial judge’s granting of costs of a prior conference, even though the conference judge had neither determined nor reserved the costs of that step to trial. The court’s rationale for allowing those costs to stand was simply that they were “… reasonable, fair and proportionate in the circumstances of this case.” That rationale implies an underlying jurisdiction in the court, as set out in Boucher, above, to grant costs based on "... what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties."

[57] In Cassidy v. McNeil, 2010 ONCA 218, the Ontario Court of Appeal upheld a trial judge’s decision to grant the costs of previous steps in the proceeding despite the prohibition in Islam v. Rahman. The court stated that the appellant had failed to offer the appeal court an amount attributable to those steps and that the respondent had already reduced her claim to costs.

[58] In Gogas v. Gogas, 2011 ONSC 5368, Healey J. of this court referred to her understanding of the practical application of the FLR costs rules, stating at para. 2 that “ … it is not typical for costs to be determined at each procedural step, nor is it practical to determine costs at, for example, a case conference where the merits of the case are not being fully assessed.”

[59] She added, without reference to Islam v. Rahman, which had been decided four years earlier, that:

[t]he fact that an earlier endorsement is silent as to costs, or the fact that an endorsement does not include a clause to the effect of "costs of this proceeding to date including today's appearance are reserved to the judge in the final determination", does not then disentitle a litigant from recovering costs for any time period up to that particular court appearance. I am unable to find caselaw which suggests the contrary principle and counsel for the respondent, who takes the position that costs should only be considered from December 9, 2010 onward, has not cited any law to support his position.

[60] Healey J.’s approach was approved by McGee J. of this court’s Family Court in Mandryk v. Brown, 2011 ONSC 7498. However in that case, McGee J. balanced the requirements of R. 24(10) against other relevant factors under what is now, in a modified form, R. 24(12).

Sub-Rule 24(11) does not Remove any Vested Substantive Rights

[61] The R. 24(10) restriction was overtly eased on April 23, 2018 by the introduction of R. 24(11), which states that:

(11) The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case.

[62] Chris argues that R. 24(11) should not be interpreted to apply retroactively. He points out that nothing in the FLR states that R. 24(11) has retrospective application. Nor does the FLR provide a transitional provision for the implementation of the new subrule.

[63] Chris continues by asserting that it would be unfair to impose the less rigorous R. 24(11) regime on him retroactively since this litigation was conducted under the previous R. 24(10) costs regime. The prior conference judges were presumably aware of the Ontario Court of Appeal’s interpretation of R. 24(10) in Islam v. Rahman. Since those judges neither awarded nor reserved the costs of those steps, Chris argues that it should be inferred that they felt that no costs were warranted. It would be unfair to reverse that decision now. Chris adds that the conferences resulted in two sets of partial minutes, so it can also be inferred that the conferences led to those agreements.

[64] Some cases decided after R. 24(11) came into effect earlier this year have considered its effect, albeit not within the parameters of Chris’ retroactivity argument. In N.N.S. v. J.A.O.V., 2018 ONSC 4531, Charney J., sitting in this court’s Family Court pointed out that R. 24(11) modified the impact of Islam v. Rahman decision by allowing the court to consider the undecided costs of previous steps in a proceeding. However, Charney J. warned at para. 23 that the rule change

… should not be seen as an open invitation to counsel to ask a judge to review the conduct of the opposing party at previous conferences or hearings before a different judge. There is a risk that cases will no longer be about the issues that brought the parties to court in the first place, but turn into conflicts about what happened in previous court appearances and conferences.

[65] Because the judge of each step is generally best able to determine the costs of a step, Charney J. found that a party relying on R. 24(11) must explain why the trial judge is in a better position to assess the significance or unreasonableness of a step.

[66] In Thompson v. Drummond, 2018 ONSC 4762, Chappel J. of this court’s Family Court pointed out that the FLR have a preference for addressing costs at each stage of the litigation. Nonetheless R. 24(11) “… clarifies that the court ultimately retains the discretion to go back in time and award costs in regard to previous steps if it is satisfied that it is fair and just to do so having regard for particular dynamics of the case, the purposes of costs awards and the objectives of the Family Law Rules.”

[67] Chappel J. ruled that if a party wishes to seek costs of previous steps following a trial, he or she must provide the court with a detailed summary of each step, the positions taken at that step, and offer a “fulsome submission” regarding the considerations the party feels should guide the court in determining the costs of that step.

[68] It should be pointed out that the issue of the retroactivity of R. 24(11) in regard to the alleged substantive rights of the party being asked to pay costs was not addressed in either N.N.S. v. J.A.O.V. or Thompson v. Drummond.

[69] The issue of the retroactive effect of legislation has been the subject of considerable judicial consideration. In R. v. Dineley, 2012 SCC 58, the Supreme Court of Canada set out six principles intended to help determine whether legislation can be interpreted retroactively. Those principles were summarized by Quinlan J. of this court in Davis (Litigation guardian of) v. Wawanesa Mutual Insurance Co., 2015 ONSC 6624 at para. 24 as follows:

i. Cases in which legislation has retrospective effect must be exceptional; ii. Where legislative provisions affect either vested or substantive rights, retrospectively has been found to be undesirable; iii. New legislation that affects substantive rights will be presumed to have only prospective effect unless it is possible to discern a clear legislative intent that it is to apply retrospectively; iv. New procedural legislation designed to govern only the manner in which rights are asserted or enforced does not affect the substance of those rights and is presumed to apply immediately to both pending and future cases; v. The key task in determining the issue lies not in labelling the provisions "procedural" or "substantive", but in discerning whether they affect substantive rights; and vi. The fact that new legislation has an effect on the content or existence of a right is an indication that substantive rights are affected.

[70] In R. v. Dineley, Deschamps J., speaking for the majority of the Supreme Court of Canada, adopted the following definition of procedural rules found in an earlier decision of that court. Such rules “ … do not affect the content or existence of an action or defence (or right, obligation, or whatever else is the subject of the legislation), but only the manner of its enforcement or use. ... Alteration of a "mode" of procedure in the conduct of a defence is a very different thing from the removal of the defence entirely. [Emphasis in original.]

[71] In Davis, Quinlan J. adopted these three additional rules from Sullivan on the Construction of Statutes:

1. Procedural law may be defined as law that governs the methods by which facts are proven and legal consequences are established in any type of proceedings;
2. To be considered procedural in the circumstances of a case, a provision must be exclusively procedural; that is, its application to the facts in question must not interfere with any substantive rights or liabilities of the parties or produce any unjust results; and
3. It is presumed that the legislature does not intend to confer a power on subordinate authorities to make regulations or orders that are retroactive, retrospective or interfere with vested rights (R. Sullivan, Sullivan on the Construction of Statutes (Toronto: LexisNexis, 2014), at pp.804-805 and 698).

[72] In Cobb v. Long Estate, 2017 ONCA 717, the Ontario Court of Appeal considered an amendment to the Insurance Act which lowered the prejudgment interest rate on certain damages from that set out in the Courts of Justice Act. The court found that it did not amount to a retroactive removal of a vested right. That is because interest rates set out in both statutes are subject to judicial discretion. There is no vested “right” to a particular rate of prejudgment interest in the face of that discretion. Looked at another way, a party has no vested right to a particular rate of interest until the court exercises its discretion to determine the appropriate interest rate.

[73] The FLR, by their very nature, are procedural rules. They are a regulation enacted under the authority conferred by s. 68(1) of the Courts of Justice Act, which makes clear that they are enacted “… in relation to the practice and procedure…” of the courts that apply them. The full text of the provision reads as follows:

68 (1) Subject to the approval of the Attorney General, the Family Rules Committee may make rules for the Court of Appeal, the Superior Court of Justice and the Ontario Court of Justice in relation to the practice and procedure of those courts in the proceedings referred to in the Schedule to section 21.8.

[74] As set out above, the actual right of the court to grant costs and of a party to seek them arises from s. 131(1) of the Courts of Justice Act, which states:

131. (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[75] This statutory provision both grants the right to determine costs and clarifies the discretionary nature of the process. The entitlement to and determination of costs is “quintessentially discretionary” (see Fielding v Fielding, 2015 ONCA 901 at para. 67 and 71). That is the case even though there is, for example, a presumption under R. 24(1) that the successful party is “… entitled to costs of a motion, enforcement, case or appeal” [Emphasis added]. The court has the discretion, for example, to deprive even a successful party of all or part of that party’s costs claim if he or she is found to have behaved unreasonably.

[76] Following that reasoning, R. 24(11) does not grant or deprive any party of a vested substantive right regarding costs. By extending the time that costs can be requested to a later date and step, the new subrule deals only with what Deschamps J. described as the manner of “enforcement or use” of a substantive right. Paraphrasing Sullivan on the Construction of Statutes, above, it deals with methods by which legal consequences are established in a proceeding. But R. 24(11) does not grant or remove entitlement to that right.

[77] In sum, R. 24(11)’s amendment to the FLR costs rules is not substantive. It is a procedural change to a procedural regulation, the FLR. Thus the presumption against retroactivity does not apply to it.

The Application of R. 24(11)

[78] I acknowledge that there is logic to a strict R. 24(10) approach, requiring the court to determine costs only at the time that the step is taken (or to overtly reserve the issue for trial). The conference judge is usually in the best position to determine the conduct of a conference and whether it merits a costs award. Further, the FLR’s description of the manner in which cases are to be dealt with justly includes elements of judicial time saving and proportionality (see R. 2(3)(b)-(d)).

[79] On the other hand, there is also logic to the more relaxed approach of R. 24(11). It is often only after trial that the court can say whether each party’s approach to that case as a whole is reasonable or successful. A judge presiding over a particular pre-trial step in a proceeding is not always in a position to know whether costs should be awarded for that step.

[80] That is particularly the case for conferences aimed at settling or narrowing issues in the litigation. The judge may know whether a party has acted appropriately in regard to that particular conference. But he or she may not be in a position to consider the costs of that conference within the larger picture of the litigation. He or she is likely unable to consider the reasonableness of each party’s behaviour in the conference within the context of the case as a whole until it is completed. Nor can that judge compare the offers to settle that had been exchanged to date to the final result. The consideration of entitlement to costs under those rubrics often is not possible until the trial decision crystalizes the merits of a case, the reasonableness of each party and their relative success in the proceeding.

[81] That point was concisely made some time ago by McGee J. in Mandryk v. Brown, above. She stated at para. 17 that “it is not typical for costs to be determined at each procedural step, nor is it practical to do so at any event such as [a] case conference where the merits of [a] case are not being fully assessed.”

[82] The latter approach can also be justified in light of the court’s duty under R. 2(4) to deal with cases justly. That includes considering whether the likely benefits of taking a step justify the cost (R. 2(5)(e)), which only may be determined at a later date, and dealing with as many aspects of the case as possible on the same occasion (R. 2(5)(f)).

How Should Courts Deal with Requests for the Costs of Previous Steps in a Proceeding?

[83] In sum, a trial judge has the jurisdiction under R. 24(11) to determine the costs of earlier steps in the proceeding. However, in light of the continued application of R. 24(10), it should be presumed that a judge who does not determine or reserve the costs of a step before her or him does not find that the conduct of the parties during the course of that step merits an award of costs.

[84] That presumed finding should be entitled to deference by subsequent judges. It should be accorded even greater deference when, as here, the previous step was conducted before R. 24(11) was formally amended on April 23, 2018.

[85] If the judge of a step prior to trial does not wish the presumption to apply, I suggest that he or she should say so. The judge can then expressly reserve the costs of the step to a later date, such as the trial. If that occurs, brief reasons would be helpful. I know that many judges are reluctant to award costs of a conference or even reserve them for fear that such a decision may adversely affect the potential for settlement. However, with the increasingly onerous costs of family litigation, it is always salutary for the parties to be reminded at every stage of the proceeding of the potential costs consequences of their litigation.

[86] In light of the presumption, a judge hearing a trial should only grant the costs of a previous step in one of the following circumstances:

a. when they have been reserved to the trial judge; or b. when, in light of subsequent events, the trial judge is better situated to determine the costs of the prior step than the judge presiding over that step. In that case, the process of determining costs will involve a broad consideration of the prior step within the context of the case as a whole; or c. in exceptional circumstances.

[87] If a party seeks the previously undetermined and unreserved costs of a previous step, the onus rests on him or her to set out why those costs should now be awarded in their favour. To meet that onus, the party should offer a detailed summary of each prior step for which he or she is seeking costs. The party should add an explanation of why he or she should now be granted the costs of that step. That summary should include:

a. the positions that each party took at that step; b. the manner in which the party’s participation in that step advanced the case or contributed towards the ultimate result; c. an explanation of why the later judge is in a better position than the judge who actually dealt with the particular step to assess the significance or reasonableness of the conduct of the parties during that step; d. a comparison of any relevant offers to settle, particularly as they may impact on the prior step; and e. any other consideration that the party relies upon to claim the costs of that step.

[88] The principles set out above also apply, with any necessary adjustments (considering their more summary nature), to motions and any other proceedings in which a judge is asked to award the undetermined costs of prior steps. Those principles can apply, for example when a motions judge is asked to determine the costs of a previous case conference or when the balance of a partially completed conference is adjourned to another date, without costs being reserved.

Application of the Principles set out above to this case

[89] Here, Katherine asks me to award her the costs of previous conferences in this case. Yet she does not offer the information set out above about those steps. To be fair to her, Mr. Kort raised his objection only in response to Mr. Plat’s costs submissions. I did not grant Mr. Plat a right of reply. Further, the change to R. 24(11) only occurred following the completion of the trial. The same is true of the cases cited above that were released after R. 24(11) came into force.

[90] Because of those unusual circumstances and the amounts involved, it is only fair to allow Mr. Plat to deal with the issue of costs of the conferences that he claims in light of R. 24(11) and the case law set out above. He may serve and file a further submission in regard to that issue only (subject to the comment in the paragraph below) of up to three pages (same format limitations as the previous costs submissions) within 14 days. Mr. Kort may respond in kind with regard to that issue within a further 14 days. If there is a problem with those deadlines, I would expect that the parties will agree to more convenient ones and advise me of the terms of their agreement. I will accept any reasonable extension for either or both parties.

[91] Mr. Kort also raised the issue of whether there is a claim for double billing of Ms. Reid’s time; i.e. whether Katherine is asking Chris to pay portions of Ms. Reid’s bill that he already paid. While Katherine’s previous submissions seem to demonstrate that she is seeking costs of only half of the joint retainer of Ms. Reid, I will allow Mr. Plat to reply to that additional issue as well within his page allotment, if he so chooses.

Kurz J.

Released: November 14, 2018