Court File and Parties
COURT FILE NO.: 693/15 (St. Catharines) DATE: 20190625 SUPERIOR COURT OF JUSTICE – FAMILY COURT – ONTARIO
RE: Shannon Dawn Rebecca Leigh Witt, Applicant AND: Andrew David Witt, Respondent
BEFORE: The Honourable Mr. Justice R. A. Lococo
COUNSEL: Shannon Witt, Applicant, acting in person Larissa (Lacey) Bazoian, for the Respondent
HEARD: By written submissions dated May 1 to 13, 2019
Endorsement – Costs
I. Introduction
[1] Shannon Witt and Andrew Witt are parties to family law proceedings that Shannon commenced in January 2017 by motion to change, seeking spousal support. Andrew responded, seeking expanded access time with the parties’ two sons as well as variation in the child support payable to Shannon based on Andrew’s current income. As set out in Reasons for Judgment dated April 11, 2019 (reported at 2019 ONSC 2180), after a 14-day trial, I made a final order that, among other things, dismissed Shannon’s claim for spousal support, expanded Andrew’s access time, and varied child support payable to Shannon.
[2] In the Reasons for Judgment, at para. 134, I also set a timetable for written costs submissions, if the parties were unable to agree on costs. Andrew had 21 days to provide brief written submissions, including a bill of costs. Shannon had 14 days to respond. I subsequently received and considered written submissions from Andrew, through his counsel, and from Shannon, acting in person (since she is no longer represented by counsel).
II. Position of the Parties
[3] As set out in his submissions, Andrew is seeking costs in the global amount of $200,000, based on his success at trial and taking into account offers to settle that he made. The amounts set out in Andrew’s bill of costs include disbursements of $73,743 (including HST). The two largest disbursements are for expert reports and testimony from (i) a chartered accountant/business valuator in the amount of $46,805, and (ii) a social worker/children’s assessor in the amount of $20,723. The preparation of both expert reports was ordered at a case conference on June 29, 2017.
[4] The business valuator’s report and testimony related to Andrew’s income for support purposes. The case conference judge ordered Andrew to arrange for the income report (by a person the parties agreed to through counsel), at Andrew’s expense. The children’s assessor conducted an assessment of the children pursuant to s. 30 of the Children’s Law Reform Act, R.S.O. 1990, c. C.12. The case conference judge ordered that Andrew was responsible for the costs of the s. 30 assessment and report “in the first instance.”
[5] In her responding costs submissions, Shannon challenges the central premise of Andrew’s submissions, that is, that Andrew was the successful party to the proceedings. Shannon submits that she should be considered the successful party, taking into account what she argues was reprehensible conduct on Andrew’s part. She therefore requests that Andrew be denied his costs, and that Shannon be awarded her costs in the amount of $64,657. That amount includes the full amount of her legal expenses from the firm that represented her at trial (in the amount of $60,908) as well as the amount she was billed by a law firm that represented her prior to the commencement of her Motion to Change. She also challenges the quantum of costs Andrew is seeking as unreasonably high, taking into account her modest financial resources. On that basis, she also seeks time to pay any costs award made against her.
[6] Shannon also submits that Andrew should bear the costs of a subsequent motion (while the trial decision was under reserve) relating to renewal of the children’s passports in order to permit the children to accompany Andrew for a previously-scheduled March break holiday. In fact, Andrew’s bill of costs does not include charges relating to that motion; the time period covered by the bill of costs ends January 31, 2019, the last day of the trial. After a brief appearance before me for the passport motion, the matter was ultimately resolved on consent, with the question of costs being reserved. In all the circumstances, I find that no costs should be awarded to either party on that motion.
[7] Another costs issue was left outstanding by the order of Scott J. dated October 4, 2017, which dismissed on consent (i) Shannon’s claim for equalization of net family property, and (ii) her request to set aside the parties’ Separation Agreement. That order also preserved Andrew’s right to claim costs thrown away. No such claim is included in Andrew’s bill of costs. In those circumstances, it is appropriate to consider any claim Andrew may have for costs thrown away to be abandoned.
III. Successful Party
[8] Subrule 24(1) of the Family Law Rules, O. Reg. 114/99, creates a presumption of costs in favour of the successful party. However, a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s costs or ordered to pay the costs of the unsuccessful party: rr. 24(4) and (5).
[9] Consistent with r. 24(1), consideration of success is the starting point in determining costs: Sims-Howarth v. Bilcliffe (2000), 2000 ONSC 22584, 6 R.F.L. (5th) 430 (Ont. Sup. Ct.), at para. 1. To determine whether a party has been successful, it is appropriate for the court to consider the position each party took at trial. The court should also take into account how the trial outcome compares to any settlement offers that were made: Lawson v. Lawson, 2008 ONSC 23496, [2008] O.J. No. 1978 (Sup. Ct.), at para. 7.
[10] In Andrew’s costs submissions, his counsel set out in chart form the major issues considered at trial, comparing the trial outcome against the position that each party took when the trial commenced. With respect to each major issue, Andrew was clearly either totally or substantially successful. His position on timesharing was adopted in preference to Shannon’s, her position being to largely maintain the status quo (described in the Reasons for Judgment, at para. 41, as a “thoroughly-discredited approach”). The decision adopted Andrew’s position on the quantum of ongoing child support, the amount being substantially less than what Shannon requested. The decision adopted his proposed date for retroactive adjustment of child support, being nearly two years later than the date that Shannon advocated. Andrew’s proposed methodology for calculating income for support purposes was adopted, except that in one year, a contested expense was added back to calculate his income. His proposed split of s. 7 expenses (80/20) was adopted over Shannon’s position (90/10). Shannon’s claim for spousal support was dismissed, as Andrew requested.
[11] Andrew’s costs submissions also include a chart comparing the outcome of the major issues considered at trial against offers to settle made by Shannon (on January 6, 2019) and Andrew (on January 7, 2019). It is beyond dispute that for each major issue (including in relation to spousal support, where Andrew offered a modest lump sum to settle that claim), the terms of the final order were as or more favourable for Andrew than the terms of his offer. Conversely, the terms of final order were less favourable for Shannon than the terms of her offer. Also included with Andrew’s costs submissions were copies of Andrew’s two previous offers to settle dated April 19, 2018 and February 6, 2018. While those earlier offers to settle were not as favourable for Shannon as Andrew’s later offer to settle (in particular in relation to spousal support), the terms of the final order were still, taken as a whole, as or more favourable for Andrew than the terms of the earlier offers to settle.
[12] Based on the foregoing, I find that for the purpose of fixing costs, Andrew should be considered the successful party, and is therefore presumptively entitled to costs. I also see no justification for denying Andrew costs or ordering him to pay Shannon’s costs on the basis of unreasonable behaviour on Andrew’s part.
[13] In reaching those conclusions, I considered the various arguments that Shannon made to the contrary, but found them to be entirely without merit. Among other things, she relied on various written exchanges between her and Andrew (or Andrew’s counsel) that occurred after the trial. For example, she attached a letter from Andrew’s counsel (clearly labelled “Without Prejudice”), containing a proposal to settle the costs issue between the parties and setting a tight deadline for Shannon’s response. When determining costs in family proceedings, r. 18 permits the court to consider any offers to settle the matters in issue, but only once the court has rendered a decision on those matters. In this case, the trial decision did not rule on the costs issue, leaving costs to be determined based on written submissions if not settled by the parties.
[14] It was clearly improper for Shannon’s costs submissions to include the letter from Andrew’s counsel proposing to settle costs, even putting aside Shannon’s spurious attempt to characterize the letter as an intimidation tactic on the part of Andrew’s counsel (because Shannon was not given 14 days to respond to it). The Reasons for Judgment, at para. 141, contemplated an interchange of this nature between the parties in an attempt to settle costs – the timetable for written costs submissions applied “if the parties cannot agree on costs”. If the parties settled costs, written costs submissions would have been unnecessary. Since the trial decision provided Andrew with a limited time to prepare and submit written submissions if costs were not settled, it was reasonable for his counsel to provide a tight deadline for Shannon to respond to their proposal to settle costs.
[15] As well, in order to support her position that Andrew should bear the full costs incurred for the s. 30 assessor, Shannon repeated what I considered to be unfounded allegations of bias in Andrew’s favour that she made against the children’s assessor during the trial. While I did not expressly address those allegations in the Reasons for Judgment, I relied on and accepted the assessor’s thoroughly-professional analysis and recommendations (virtually in their entirety) as the basis for the access and parenting terms in the final order. The fact that I did so may be taken as an indication of how much credence I gave to Shannon’s allegations. It is clear that Shannon did not agree with the thrust of the assessor’s report and testimony. She is entitled to her opinion. However, her opinion does not give her licence to baselessly impugn the professional reputation of the assessor.
[16] In a similar vein, Shannon’s costs submission attempt to re-characterize her failure on the spousal support issue as being less than complete. She suggested that in the trial decision I found that she met the criteria for spousal support but could not recover because of the terms of the parties’ Separation Agreement. That submission is not consistent with my findings in the Reasons for Judgment. In my Reasons, I indicate that in addition to the terms of the Separation Agreement, Shannon’s spousal support claim would also fail because the evidence did not establish (i) a material change in circumstances (at para. 128), or (ii) entitlement to spousal support on the merits, either on a compensatory or non-compensatory basis (at para. 129).
[17] In summary, it is not appropriate for a party to treat costs submissions as an opportunity to re-argue points on which they failed to prevail at trial or to recast the court’s findings in a manner more favourable to that party’s position. In large measure, that is what Shannon attempted to do in her costs submissions, undermining the points she was trying to make.
IV. Quantum of Costs
[18] Having concluded that Andrew as the successful party is entitled to his costs, the next issue to consider is the quantum of costs that should be awarded.
[19] In Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, the Court of Appeal indicates that as a general rule in family law proceedings, “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs”. That principle is reflected in para. 24(12)(a) of the Family Law Rules, which directs the court when fixing costs to consider the “reasonableness and proportionality” of a number of listed factors as they relate to “the importance and complexity of the issues”. Those factors include (i) each party’s behaviour, (ii) the time spent by each party, (iii) any written offers to settle, (iv) legal fees, including the number of lawyers and their rates, and (v) any proper expenses, including expert witness fees.
[20] In settling the amount of costs, the court is also directed by para. 24(12)(b) to consider “any other relevant matter.” In the appropriate case, the financial situation of the unsuccessful party may be a relevant matter, particularly where a significant costs award against a custodial parent would seriously affect the interests of the child: see M. (A.C.) v. M. (D.) (2003), 2003 ONCA 18880, 67 O.R. (3d) 181 (C.A.), at para. 42, cited in Beaver, at para. 18. However, as indicated in LeVan v. LeVan (2006), 2006 ONSC 63733, 32 R.F.L. (6th) 359 (Ont. Sup. Ct.), at para. 36, “the ability or inability to pay goes to the amount of costs and not the liability for costs.”
[21] When fixing costs, r. 18(14) provides additional direction that applies where a party who makes an offer to settle obtains an order that meets the requirements set out in that subrule. One of those requirements is that the party who makes the offer obtains an order that is “as favourable as or more favourable than the offer.” The offer to settle that Andrew made on January 7, 2019 meets the requirements of r. 18(14), as did the previous offers to settle dated April 19, 2018 and February 6, 2018 that Andrew’s later offer superseded. Therefore, under r. 18(14), unless the court orders otherwise, Andrew is “entitled to costs to the date of the offer and full recovery costs from that date,” the earliest of those dates being February 7, 2018.
[22] As the Court of Appeal notes in M. (A.C.), at para. 43, given use of the words “unless the court orders otherwise” in r. 18(14), the court has a discretion not to make an award of full recovery even where the party has met the conditions in r. 18(14). In M. (A.C.), the court also indicates that, in the appropriate case, a relevant consideration would include the financial position of the other party. However, in LeVan, at para. 39, the trial judge states that “unless a party can meet the threshold of undue hardship, that party will not have relief from costs on the basis of affordability where a reasonable offer to settle has been served”, citing the previous decision of this court in Critch v. Critch, [2005] O.J. No. 2002 (Sup. Ct.).
[23] That being said, the Court of Appeal in M. (A.C.), at para. 43, also notes that “even when making an award of full recovery the trial judge must ensure that the costs sought by the successful party are reasonable,” consistent with the “touchstone” considerations of reasonableness and proportionality referred to in r. 24(12): see Beaver, at para. 12.
[24] With that background, I will first address Andrew’s claim for disbursements. As noted above, Andrew’s bill of costs includes disbursements of $73,743 (including HST). The most significant of those disbursements were paid to two experts, being the income expert (in the amount of $46,805) and the s. 30 children’s assessor (in the amount of $20,723). Shannon argues that both of those disbursements should be Andrew’s responsibility, as discussed further below. I see no issues relating to the balance of the disbursements in the amount of $6,215. Consistent with r. 18(14), Shannon should be responsible for the latter disbursements in full.
[25] As previously noted, at the time that the order was made requiring the preparation of the two expert reports, the case conference judge addressed the issue of costs.
[26] With respect to the income expert, the order required that (i) Andrew shall arrange for the preparation of an income report, and (ii) Andrew “shall be responsible for the costs of same.” From the contents of the income report, it was clear why a report of this nature was necessary in this case. The calculation of Andrew’s income for support purposes is not a straight-forward exercise. Among other things, most of his income is from an operating company that he partly owns. He is co-CEO of that company. Some of the company’s income is retained within the corporate group. Andrew is also a beneficiary under a discretionary trust, the sole trustee of which is his father. In these circumstances, it is appropriate for the onus to be on the support payor to provide, at his expense, the necessary evidence to calculate his income for support purposes. The case conference judge considered an income report to be necessary in this case and required Andrew to pay for it. Unlike the costs order relating to the s. 30 assessment (which Andrew was directed to pay for “in the first instance”), there is no suggestion in the order that the issue of costs of the income report would be revisited at a later date. As well, in my view, subsequent conduct of the support recipient is irrelevant to the issue of who should bear the costs of the income report. It is not Shannon’s fault that Andrew’s income situation is complicated.
[27] According to the receipts attached to Andrew’s bill of costs, the income expert’s fees amounted to $30,663 up to the delivery of the final income report on February 2, 2018. Although not in itself determinative, that date was prior to Andrew’s first offer to settle. Andrew should be responsible for paying those costs.
[28] The amounts paid for the income expert’s subsequent services are a different matter. Those amounts related principally to the income expert’s trial preparation and testimony. Prior to trial, Andrew’s counsel inquired whether Shannon would be challenging the conclusions set out in the income report, but did not receive a positive response. In her trial testimony, Shannon indicated that she was not prepared to take a position on whether she agreed with the income expert’s methodology until she heard him testify. After his testimony, Shannon through her counsel accepted the basic methodology set out in the income report. Had she done so sooner, the income expert’s testimony could have been more limited in scope, if it was necessary at all. Once again, Shannon was entitled to take the position she did. In doing so, however, she cannot expect to avoid the costs consequences of her position. I ultimately accepted the income expert’s methodology in calculating income for support purposes, as did Andrew’s counsel (except in one narrow respect). In these circumstances, Shannon should be responsible for the balance of the income expert’s fees in the amount of $16,142.
[29] Turning now to the disbursements for the children’s assessor, subsection 30(12) of the Children’s Law Reform Act provides that the court shall require the parties to pay the fees and expenses of the person appointed to conduct an assessment under s. 30. It is left to the court to determine how the payment of those fees and expenses should be apportioned between the parties. When appointing the children’s assessor in this case, the case conference judge ordered that Andrew be responsible for the costs of the assessment and report “in the first instance”, leaving open the question of who should bear the ultimate responsibility for those amounts.
[30] For a number of reasons, I have concluded that Shannon should cover the full amount of the disbursements for the s. 30 assessor in the amount of $20,723. Among other things: a. Shannon opposed variation of the status quo arrangements relating to Andrew’s access time with their two sons, in part based on concerns about Andrew’s parenting. The children’s assessor found those concerns to be unfounded, and provided comprehensive recommendations for a parenting regime that included expanded access for Andrew. The trial decision adopted the assessor’s recommendations virtually in their entirety. b. Prior to trial, Andrew’s counsel wrote to Shannon’s counsel, asking if there were any parenting recommendations on which the parties could be agreed to on consent, thereby limiting trial time relating to those issues. Her counsel’s pre-trial reply was that “Ms Witt does not consent to any of [the assessor’s] recommendations.” At trial, the parties ultimately agreed to many of the assessor’s general parenting recommendations (the terms of which were included in the final order), but only after the children’s assessor had testified. Had Shannon done so sooner, the children assessor’s testimony could have been more limited in scope. c. In the s. 30 report and trial testimony, the children’s assessor (consistent with the testimony of the children’s counsellors) expressed concern about the fact that Shannon had inappropriately shared information with the children about the court process, given the potentially detrimental effect on the children of doing so. The trial decision echoed that concern.
[31] Accordingly, Shannon should be responsible for the disbursements paid to the children’s assessor in the amount of $20,723. That amount together with Shannon’s share of the income expert’s fees and the other miscellaneous disbursements totals $43,080.
[32] Turning now to Andrew’s claim for legal fees, in support of Andrew’s claim for $200,000 in costs, Andrew’s bill of costs details full recovery costs in the total amount of just under $230,000, including disbursements totalling $73,743. Legal fees (including HST) in the $230,000 global figure amount to approximately $156,000, covering the period starting after the trial scheduling conference in June 2018 until the last day of the trial on January 31, 2019.
[33] Included in that fee amount is over 100 hours of time charged by each of Andrew’s two experienced counsel appearing in court each day during the 14-day trial. By contrast, there was only one lawyer in court for Shannon on all but one day of trial. Deducting the amount charged at trial for the lawyer with the lower hourly rate (including HST) would reduce the total fees by approximately $30,000. That amount appears to correspond with the implicit $30,000 “discount” from the $230,000 full recovery calculation in the bill of costs. On that basis, the total amount attributable to legal fees would amount to over $126,000 (including HST). With that adjustment, I would not consider that amount claimed for legal fees in Andrew’s bill of costs to be unreasonable on its face (contrary to Shannon’s submissions). Together with $43,080 in disbursements (the amount that I found should be for Shannon’s account), total full recovery costs would amount to approximately $170,000.
[34] In her submissions, Shannon argues that when considering a costs award against her, I should take into account her modest financial resources. Consistent with previous case law, it is within my discretion to do so in determining the amount of costs, as opposed to whether she should be liable for costs: LeVan, at para. 36. As previously noted, Shannon also requested time to pay any costs award against her, without suggesting a specific payment schedule.
[35] In his reply submissions, Andrew challenges Shannon’s claim of financial hardship, noting that Shannon’s financial statement indicated a net worth of approximately $200,000, including her equity in the former matrimonial home. On that basis, Andrew argues that Shannon does not meet the “threshold of undue hardship” that is required to obtain “relief from costs on the basis of affordability”, given his previous reasonable offers to settle: LeVan, at para. 39. Andrew also indicates, however, that he is not opposed Shannon being allowed to pay a costs award “over time and/or in instalments.”
[36] In my view, there can be no real dispute that a costs award in the range of $170,000 would be a significant financial burden for Shannon. While a substantial costs award in Andrew’s favour is clearly warranted, it appears to me in all the circumstances that some reduction in the quantum of costs that would otherwise be awarded would be in order in this case, together with additional time to pay.
[37] In addition, while r. 18(4) contemplates full recovery costs, as indicated by the Court of Appeal in Beaver, at para. 12, I am also guided by the “touchstone considerations” of reasonableness and proportionality when fixing the amount of costs. As well, as noted by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 ONCA 14579, 71 O.R. (3d) 291 (C.A.), at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.” In doing so, the reasonable expectations of the unsuccessful party would be a relevant factor, consistent with Boucher, at paras. 37-38, and clause 57.01(1)(0.b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. While Boucher is a non-family civil case, the court’s “overall objective” in Boucher is consistent with the principles set out in the Family Law Rules, as interpreted by the Court of Appeal in Beaver.
[38] When considering what amount of costs Shannon as the unsuccessful party may reasonably expect to pay, I also have the benefit of seeing the accounts from Shannon’s trial counsel, covering her legal expenses for the proceedings from March 2017 (prior to the period covered by Andrew’s bill of costs) until the end of the trial and beyond. Although a direct comparison between the two sets of accounts is difficult, it is evident that the amount of Shannon’s legal expenses charged by her trial counsel (totalling $60,908 including disbursements and tax) was considerably less than Andrew’s.
V. Disposition
[39] Taking into account the above considerations, I would fix Andrew’s costs at $125,000 including disbursements and tax, payable by Shannon as follows: (a) $40,000 by January 31, 2020; (b) a further $40,000 by January 31, 2021; and (c) the balance by January 31, 2022.
The Honourable Mr. Justice R.A. Lococo Date: June 25, 2019