Court File and Parties
COURT FILE NO.: 43643-10(2) DATE: 2019-05-17 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Christene Ann Weber, Applicant AND: Sean Robert Hugh Merritt, Respondent
BEFORE: The Honourable Madam Justice L. Madsen
COUNSEL: Glenda D. McLeod, Counsel, for the Applicant Self-Represented Respondent
HEARD: In Chambers
Endorsement
[1] This is the costs endorsement in relation to the contempt motion brought by the Applicant, Christene Weber [Ms. Weber] regarding the alleged breach by the Respondent, Sean Merritt [Mr. Merritt] of two non-depletion orders. Mr. Merritt brought a cross motion seeking to have Ms. Weber’s motion dismissed.
[2] Ms. Weber seeks costs in the amount of $24,615.80, being full recovery of her costs on the motion.
[3] For the reasons set out below, Mr. Merritt shall pay to Ms. Weber $23,429.30 on account of costs of the motions.
Background
[4] The contempt motion was argued over the course of two days, October 16, and December 14, 2018. Both parties filed affidavits for the motion. The court also heard oral evidence of both parties. In addition, the court heard evidence from Mr. Merritt’s former lawyer, as it became clear that Mr. Merritt was suggesting that he withdrew funds from his RRSP on the advice of his lawyer.
[5] The court found that Mr. Merritt was in contempt of two orders requiring that he not deplete his assets when he withdrew $104,941.62 from his RRSP; that the orders in question were clear and unequivocal; that Mr. Merritt had full knowledge of the orders; and that in making the withdrawals he did, he was attempting to reduce his assets in a manner that would impair or defeat Ms. Weber’s claim for arrears and lump sum prospective support.
[6] As the penalty for contempt, the court ordered Mr. Merritt to pay $104,941.62 into an RRSP or other account solely in his name and provide proof of having done so, failing which his pleadings would be struck.
[7] The decision on the contempt motion invited costs submissions on a set timeline. No submissions were received from Mr. Merritt.
Law and Analysis
[8] Modern costs rules are designed to foster four fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules). See: Mattina v. Mattina, 2018 ONCA 867.
[9] The objective of any costs determination is to determine an amount that is fair and reasonable for the unsuccessful party to pay. See: Boucher v. Public Accountants Council (Ontario), 71 O.R. (3d) 291, Selznick v. Selznick, 2013 ONCA 35, Jackson v. Mayerle, 2016 ONSC 1556.
Success
[10] Under Rule 24(1) of the Family Law Rules, the successful party is presumptively entitled to costs. This presumption of entitlement to costs is the starting point of the analysis. See Sims-Howarth v. Bilcliffe, 2000 CarswellOnt 299.
[11] Ms. Weber was wholly successful on the motion to find Mr. Merritt in contempt. Mr. Merritt was unsuccessful in his motion to have Ms. Weber’s motion dismissed.
Bad Faith
[12] Rule 24(8) provides that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and order the party to pay them immediately.
[13] As set out by Justice Pazaratz in Jackson v. Mayerle above, bad faith requires a “fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made.”
[14] In order to come within the meaning of bad faith, behaviour must be “shown to be carried out with the intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues, or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith.” See: Justice Perkins in S.(C.) v. S.(M.), 2007 CarswellOnt 3485.
[15] Bad faith implies a “conscious doing of a wrong because of dishonest purpose or moral obliquity.” It involves intentional duplicity, obstruction or obfuscation. Jackson v Mayerle, above at 58. As stated by Justice Pazaratz in Jackson, “The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another. It is done knowingly and intentionally.” See para. 59.
[16] In my view, Mr. Merritt acted in bad faith in taking the steps he did. As set out in the decision, Mr. Merritt reduced his assets to defeat Ms. Weber’s claims. He withdrew funds on three occasions with full knowledge of the existence of the orders and the assets to which they applied. None of the funds withdrawn from the RRSP were used to address child support arrears which had accumulated. A significant proportion of the funds withdrawn from the RRSP were unaccounted for at the hearing of the motion. Mr. Merritt’s actions were intended to inflict financial harm on Ms. Weber.
Application of Rule 24(12)
[17] In making this decision the court has considered the factors set out in subrule 24(12) of the rules which reads as follows:
Setting Costs Amounts
24(12) In setting the amount of costs, the court shall consider,
(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
(i) each party’s behaviour,
(ii) the time spent by each party,
(iii) any written offers to settle including offers that do not meet the requirements of rule 18,
(iv) any legal fees, including the number of lawyers and their rates,
(v) any expert witness fees, including the number of experts and their rates,
(vi) any other expenses properly paid or payable; and
(b) any other relevant matter.
[18] Subrule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24(12)(a)(i) above). It reads as follows:
Decision on Reasonableness
24 (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.
[19] The issues on this motion were not complex, legally or factually, but were rendered more difficult and time consuming due to the need to hear oral evidence from Mr. Merritt’s former counsel.
[20] The findings applicable to bad faith also apply to unreasonableness. Mr. Merritt has been unreasonable in relation to the issues.
[21] Further, while no formal offer to settle was served by Ms. Weber’s counsel, she contacted Mr. Merritt on October 25, 2019 to propose that consent to a finding that he was in contempt such that argument might proceed on the matter of penalty only. He did not accept that proposal, which had the effect of lengthening this step in the proceedings.
[22] I have no difficulty with Ms. McLeod’s rate of $350 per hour. Ms. McLeod is in her 15th year of practice.
[23] This court finds that the time spent in relation to the motion are reasonable, with the exception of the inclusion of fees for the attendance of Ms. McLeod’s associate on the motion. That entry reflects a total of $1,186.50 (fees of $1,050 plus HST of $136.50). I have no difficulty with the disbursements incurred.
Quantum
[24] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.
[25] Having said that, where the court has found bad faith, costs shall be ordered on a full recovery basis.
[26] Based on the foregoing, Mr. Merritt shall pay Ms. Weber $23,429.30 forthwith on account of the costs of the contempt motion, which is the claimed costs of $24,615.80 less the adjustment in respect of the duplication of time mentioned above.