Court File and Parties
COURT FILE NO.: 506/16 DATE: 2020-06-03
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Daniel Parry, Applicant – and – Eda Parry, Respondent
Counsel: Bruce A. Macdonald, for the Applicant Paul A. MacLeod, for the Respondent
HEARD: Written Submissions
COSTS DECISION
JUSTICE L. SHEARD
Overview
[1] Following a trial that spanned 13 days, I released Reasons for Judgment on April 29, 2020 that determined the three main issues in dispute:
(1) Did the applicant, Daniel Parry, have an ownership interest in the matrimonial home (the “Home”) such that he was entitled to an equal share in its post-separation increase in value;
(2) What values should be given to the parties’ assets and debts for the purposes of equalization; and
(3) Child support.
[2] The Home was sold approximately two years after separation and the post-separation increase was estimated at $240,000. Ms. Parry’s position at trial was that the post-separation increase should be excluded from her net family property (“NFP”). Mr. Parry’s position was that he and Ms. Parry were equal co-owners of the Home and entitled to share equally in its net sale proceeds of $294,615.75 (the “Net Sale Proceeds”).
[3] In the Reasons, Mr. Parry was awarded:
(1) 50% of the Net Sale Proceeds;
(2) an equalization payment from Ms. Parry based on the assets and debt values determined by the court; and
(3) an amount in retroactive child support and s.7 expenses.
[4] This decision addresses the two outstanding issues:
(1) final calculation of the equalization amount, based on the findings set out in the Reasons; and
(2) costs.
Submissions on Costs
[5] In the Reasons, the parties were asked to submit their costs submissions, if any, by May 20, 2020. Mr. Parry’s costs submissions were received on May 20, 2020. On May 21, 2020, Ms. Parry’s counsel, Paul A. MacLeod, emailed the court and advised that because he had received Mr. Parry’s costs submissions late in the afternoon of May 20, he would not be able to deliver his client’s costs submissions until noon on May 22, 2020. Ms. Parry’s costs submissions were filed at 12:26 p.m. on May 22 with a further explanation from Mr. MacLeod for the delay: Ms. Parry’s mother died four weeks earlier, and the administration of the estate prevented Ms. Parry from meeting with Mr. MacLeod.
[6] On May 22, 2020, Mr. Parry filed a Response to Respondent’s Costs Submissions. On May 25, 2020, Mr. Parry submitted a Secondary Response to the Respondent’s Costs Submissions.
[7] The Reasons contemplated that both parties would file their submissions on May 20, 2020, and not the sequenced delivery assumed by Mr. MacLeod. The Reasons also did not contemplate the delivery of reply submissions, as filed by Mr. Macdonald.
[8] Notwithstanding any non-compliance with the Reasons, in making this decision, I have read and considered all costs submissions received.
Issue #1: Calculation of Equalization Payment based on findings in the Reasons
[9] In their costs submissions, each party included an NFP statement based on the findings in the Reasons. The parties differed on two values, leading to a discrepancy of $430 between their NFP statements.
[10] The parties’ NFP statements differed on the date of separation (“VDay”) values to be given to Mr. Parry’s household goods and furniture, and to his Memorabilia.
(i) Mr. Parry’s household goods and furniture
In his NFP statement, Mr. Parry uses a VDay value of $350 for household goods and furniture. The $350 was not in issue at trial but was omitted from Ms. Parry’s post-judgment NFP statement. The omission operates to increase Ms. Parry’s equalization payment to Mr. Parry.
Decision: The $350 appearing under Part 4(b) of Mr. Parry’s post-judgment NFP statement shall be included in determining the value of his assets as at VDay.
(ii) Mr. Parry’s Memorabilia
In her NFP statement, Ms. Parry used a VDay value of $3,000 for the Memorabilia owned by Mr. Parry. In his, Mr. Parry used a value of $2,200.
Decision: The correct value to use is $2,200, as per paragraph 117 of the Reasons.
Final Disposition: Equalization, Child Support, and S. 7 Expenses
[11] Based on the above, the value of the property owned by Mr. Parry on VDay is $193,092.27 and, before any adjustments for amounts owing by Ms. Parry in child support and s. 7 expenses, the equalization payment owing by Ms. Parry is $55,831.53.
[12] In his NFP statement, Mr. Parry accurately calculates the amount owing by Ms. Parry for equalization, retroactive child support, and s. 7 expenses [^1], to be $74,079.91.
[13] As per paragraph 235 of the Reasons, the $74,079.91 owing by Ms. Parry shall be paid to Mr. Parry from Ms. Parry’s share of the Net Sale Proceeds, held in trust by Ms. Parry’s lawyer, Paul A. MacLeod.
Issue #2: Costs
Positions of the Parties
[14] Mr. Parry submits that he should be awarded his costs on a full indemnity basis. Mr. Parry’s costs total $192,715.88 comprised of legal fees and HST totaling $177,242.93 ($156,861.00 + $20,381.93) and disbursements and HST totaling $15,472.95.
[15] Mr. Parry asserts that he was the successful party and under r. 24(1) of Family Law Rules [^2] (the “FLR”) is presumptively entitled to his costs. Mr. Parry also states that under r. 18 of the FLR he is presumptively entitled to full indemnity costs, as his award at trial was at least as favourable as his October 12, 2018 Offer as amended on December 10, 2018.
[16] Ms. Parry submits that she was successful on the majority of the issues in dispute, most of which, she submits, were not complex, aside from the issue of property division, particularly with respect to the Home. Ms. Parry also submits that the equalization payment set out in her offers to settle were very close to the equalization amount awarded at trial. For those reasons, Ms. Parry asserts that she should be awarded her costs on a substantial indemnity basis.
[17] In Ms. Parry’s Bill of Costs, she lists $103,889.94 for legal fees and HST ($91,938 + $11,951.94) and $2,902.18 for disbursements and HST ($2,568.30 + $333.88) for a combined total of $106,792.12. Mr. MacLeod is the only timekeeper listed in the Bill of Costs. His time is calculated at 262.68 hours (to October 16, 2019, and three hours on May 20, 2020), charged at $350.00 per hour.
[18] Ms. Parry’s costs submissions included a chart that purported to compare the offers made by Ms. Parry and Mr. Parry with the amounts awarded at trial (the “Comparison Chart”). Based on the Comparison Chart, Ms. Parry’s offers exceeded the amount awarded to Mr. Parry at trial.
[19] Mr. Parry challenges the accuracy of the Comparison Chart, which shows that Ms. Parry’s offers included a payment to Mr. Parry of 50% of the Net Sale Proceeds. Mr. Parry asserts no such offer was made.
[20] Mr. Parry also asks the court to consider docket entries in Ms. Parry’s Bill of Costs that imply bad faith on her part. Specifically, Mr. Parry asked the court to note that on two occasions, while under cross-examination at trial, Ms. Parry met with Mr. MacLeod to prepare for trial. [^3]
[21] Mr. Parry submits that in meeting with Ms. Parry while she was under cross-examination, Mr. MacLeod breached Rule 5.4-2(b) of the Rules of Professional Conduct that reads:
(b) during cross-examination by an opposing legal practitioner, the witness's own lawyer ought not to have any conversation with the witness about the witness's evidence or any issue in the proceeding.
Mr. Parry submits that Ms. Parry’s with Mr. MacLeod in contravention of the Rules, should be taken into account when determining costs.
[22] Separately, Mr. Parry submits that the Bill of Costs shows that Mr. MacLeod met with Ms. Parry on May 21, 2019 to prepare for trial and that Mr. MacLeod misled the trial coordinator when he previously advised her that the trial could not begin on May 21, 2019 because his client was ill. The trial began on May 22, 2019.
[23] The events described above, if accepted, would relate to Mr. MacLeod’s behaviour, more than that of his client. As such, I do not take these events into account in determining if Ms. Parry has acted unreasonably or in bad faith.
The Law
[24] 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 FLR).
See: Mattina v. Mattina, 2018 ONCA 867.
[25] Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634, 71 O.R. (3d) 291 (C.A.) at paras. 26, 38.
[26] The determination of costs is governed by rr. 18 and 24 of the FLR. R. 24(1) of the FLR creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs.
Identifying the Successful Party
[27] To determine whether a party has been successful, the court should take into account how the trial outcome compares to any settlement offers that were made. Lawson v. Lawson.
[28] Subrule 18 (14) of the FLR reads as follows:
(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:
If the offer relates to a motion, it is made at least one day before the motion date.
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.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
Offers to Settle
[29] Mr. Parry asks the court to consider his offers to settle, outlined below:
(1) Offer to Settle dated October 12, 2018:
The parties would divide equally the net proceeds of the sale of the Home and Ms. Parry would pay the further sum of $100,000.00 in full settlement of all claims including equalization, child support and s. 7 expenses.
(2) December 10, 2018 amendment to October 12, 2018 Offer to Settle:
Mr. Parry reduced the amount claimed in his October 12, 2018 offer by $50,000.
[30] Mr. Parry submits that had Ms. Parry accepted his October 12, 2018 Offer, she would have been left with approximately $28,000 from the Net Sale Proceeds: ($276,208.75 [^4] - ($147,307.87 + $100,000) = $28,900.88). Mr. Parry further submits that had his October 12, 2018 Offer as amended on December 10, 2018 been accepted Mr. Parry would have received $197,307.87 and Ms. Parry would have been left with approximately $78,000 from the Net Sale Proceeds.
[31] Mr. Parry’s trial award leaves Ms. Parry with $54,820.97 from the Net Sale Proceeds: ($276,208.75 - $221,387.78), thereby engaging the provisions of rr. 18(14), 18(16), and 24(1) of the FLR.
[32] Ms. Parry submits that her offers to settle were more favourable to Mr. Parry than the trial outcome. Ms. Parry asks the court to consider her offers to settle, outlined below:
(1) Offer to Settle dated October 15, 2018:
Commencing September 1, 2018, Ms. Parry will pay child support based on her 2017 income of $60,558 using the summer formula; 50% of the s. 7 expenses; and, while required to pay child support, Ms. Parry will keep the children as beneficiaries on the extended health and dental benefits and life insurance, available through her employer.
Ms. Parry will make an equalization payment to Mr. Parry of $70,000 from the Net Sale Proceeds and she shall retain the balance.
(2) Offer to Settle dated May 3, 2019:
Commencing May 1, 2019, Ms. Parry will pay child support for Aaron Parry, from May to August each year, based on Ms. Parry’s 2018 income of $62,032. [Same terms as the October 15, 2018 Offer that support was payable for Aaron only].
Ms. Parry will make an equalization payment to Mr. Parry of $75,000 from the Net Sale Proceeds and she shall retain the balance.
[33] Ms. Parry submits that the difference between her October 12, 2018 offer in which she agreed to an equalization payment of $70,000, and the equalization payment of $55,831, ordered at trial is $14,169 and if that amount is applied against the $18,248.38 ordered for retroactive child support and s. 7 expenses, Ms. Parry’s “Offer to Settle “missed the mark” by only $4,079.38”.
[34] In the Comparison Chart, Ms. Parry uses Mr. Parry’s October 12, 2018 Offer, without reference to the amendment, and calculates her Offers at $217,307.50 and $222,307.50, respectively.
[35] Having looked at each of Ms. Parry’s Offers, I agree with Mr. Parry’s submissions that the Comparison Chart is wrong: neither of Ms. Parry’s offers included payment to Mr. Parry of 50% of the Net Sale Proceeds.
[36] At trial, Mr. Parry was successful in establishing that he was an equal co-owner of the Home. As a result, Mr. Parry was entitled to 50% of the Net Sale Proceeds: $147,307.87. When added to the other amounts awarded at trial, Mr. Parry’s total award was $221,387.78.
[37] By my calculation, when the Net Sale Proceeds of $147,307.50 are deducted from Ms. Parry’s offers as summarized in the Comparison Chart, it is apparent that her offers “missed the mark” by closer to $151,000 and $146,000.
[38] Mr. Parry has also referred to r.18(16) which reads:
(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.
[39] The offer letter of December 10, 2018 was signed by Mr. Parry’s lawyer but not by Mr. Parry, as required by r. 18(4). Notwithstanding that omission, I find that the December 10, 2018 offer letter intended to amend the October 12, 2018 offer, which complied with r. 18(4). On that basis, I find that the December 10, 2018 amendment did not need to be signed by Mr. Parry and that r.18(14) does apply: See. Waters v. Waters, 2012 ONSC 6395. In any event, as permitted by r. 18(16), I also find that the offer as set out in the letter of December 10, 2018 should be taken into account when I exercise my discretion over costs.
Application of Rule 24
[40] Having considered the parties’ offers and his outcome at trial, I conclude that Mr. Parry was the successful party and that pursuant to r. 24(1), he is presumptively entitled to his costs.
[41] Mr. Parry also submits that Ms. Parry acted unreasonably and in bad faith throughout the litigation. Were I to make those findings, they would attract their own costs consequences.
Unreasonableness
[42] R. 24(5) states:
(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.
[43] As made clear in the Reasons, Ms. Parry’s conduct in the litigation was often unreasonable. The Reasons set out many examples of Ms. Parry’s unreasonable behaviour relevant to costs, including that Ms. Parry:
(i) breached court orders;
(ii) failed to make full financial and documentary disclosure;
(iii) asserted the existence and/or value of assets that she failed to support by records and/or were exposed to be inaccurate on cross-examination [^5];
(iv) breached the deemed undertaking rule by sharing portions of Mr. Parry’s financial disclosure with a former business associate;
(v) made slanderous and untrue allegations about Mr. Parry to family members, business associates and to the police;
(vi) gave away or disposed of Mr. Parry’s property without his knowledge or consent;
(vii) refused to admit facts self-evident from the evidence;
(viii) failed to disclose relevant documents, in a timely way or at all. Mr. Parry asserts that Ms. Parry’s late disclosure of relevant documents was the cause of the October 2018 mistrial;
(ix) took unsupportable positions on key issues, such as, it was her money alone that was used to buy the Home;
(x) for at least part of the trial, took unreasonable positions on child support issues such as asserting that the scholarships offered through her employer, which her two children applied for and were granted, should be included in calculating her child support;
(xi) was not truthful to the court on important issues, such as, whether she had listed the Home for sale, without disclosing that it was a matrimonial home or seeking Mr. Parry’s consent;
(xii) put forth in evidence an altered document; and
(xiii) required Mr. Parry to obtain a professional valuation of his business and then, with no opinion of her own, disputed the valuation.
[44] In addition, despite what she set out in the Comparison Chart, I have no evidence that Ms. Parry ever offered to share any portion of the post-separation increase in the value of the Home. That was the single largest financial issue in dispute, and I find that Ms. Parry acted unreasonably in failing to offer to share any portion of the post-separation increase.
Bad Faith
[45] R.24(8) provides 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.
[46] Pazaratz J., reviewed the law of bad faith in Jackson v. Mayerle, 2016 ONSC 1556 [^6]. He observed that r. 24(8) requires a high level of egregious behaviour and is not synonymous with bad judgment or negligence; to establish bad faith the court must find an element of malice or intent to harm. At para. 57, Pazaratz J. repeated the definition of bad faith given by Perkins J.:
- In S.(C) v. S.(C) (supra) Perkins, J. defined bad faith as follows:
In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with 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. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.
[47] Applying that definition to the facts in this case, I find numerous instances of bad faith on the part of Ms. Parry. Paragraphs 8 to 14 of the Reasons contain an overview of my findings of Ms. Parry’s unreasonable and dishonest behaviour. Without intending to overly repeat the unreasonable conduct referenced earlier in this decision, below is a non-exhaustive list of instances of bad faith that included that Ms. Parry:
(i) failed to make full, accurate and timely financial disclosure;
(ii) altered documents produced; gave inaccurate evidence at trial - documentary and oral - concerning her assets and debts;
(iii) misled the court on such issues as her intentions and actions respecting the sale of the matrimonial home [^7], and her contact and ability to contact a potential witness, and continued to be untruthful about this witness on an examination under oath;
(iv) failed to abide by court orders that she provide financial disclosure and obfuscated the truth respecting her tenants, and rental income she received;
(v) interfered with potential witnesses;
(vi) breached the deemed undertaking rule; breached the trial order excluding witnesses by communicating with potential witnesses after the trial began;
(vii) failed or refused to admit the existence of, and to produce in a timely way (or at all), her sworn evidence and other financial documentation in her possession from her previous divorce, that were relevant to the issues at trial;
(viii) after separation and after the legal proceedings began, slandered Mr. Parry to his children and others;
(ix) accused Mr. Parry of criminal conduct and involved the police, when she knew her accusations to be unfounded and untrue;
(x) made baseless assertions that emails exchanged with Mr. Parry, and produced in evidence at trial, had somehow been manipulated, requiring Mr. Parry to give reply evidence on that issue; and
(xi) asserted at trial that she could not check her own phone for disputed emails, because it had broken shortly before trial, only to produce, later in her cross-examination, copies of messages taken from the “broken” phone.
[48] As stated by Quinn J., in Trudel v. Trudel, 2010 ONSC 5177 [^8] a party who adopts “a catch-me-if-you-can approach to financial disclosure” demonstrates bad faith and breaches r. 13 of the FLR. He also stated at para. 18:
The financial non-disclosure of the husband amounts to dishonesty. This equates with bad faith. Thus, the wife is entitled to full-recovery costs on this basis alone, as subrule 24(8) provides: “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.” [footnote omitted]
[49] I find that Ms. Parry has adopted a “catch-me-if-you-can” approach to financial disclosure and that Mr. Parry is entitled to his costs on a full recovery basis.
Setting the Amount of Costs: Applying Rule 24(12)
[50] R. 24(12) states:
(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. O. Reg. 298/18, s. 14.
Each party’s behaviour
[51] Ms. Parry asserts that the ownership of the Home was a difficult and complex issue. I do not agree. The law on resulting trust is not new and, at the request of Mr. MacLeod, Mr. Macdonald provided the facts and the law on which Mr. Parry was relying for his claim to an ownership interest in the Home. [^9] On and after receipt of that information, I find that Ms. Parry was unreasonable in continuing to assert that Mr. Parry had no ownership claim to the Home.
[52] As revealed by the evidence at trial, which was not complex [^10], the position taken by Ms. Parry concerning ownership of the Home was unreasonable and contradicted by Mr. Parry, the banking records, solicitor’s reports, the affidavit of the parties’ mortgage broker, and by Ms. Parry herself in an email to Mr. Parry in which she acknowledged that Mr. Parry had an equitable interest in the Home.
[53] As set out in the Reasons [^11], I found Mr. Parry to be honest and forthright. While I may not have accepted Mr. Parry’s position on the value of certain assets, in most instances that was due to a lack of expert opinion evidence, which may be explained by his limited financial circumstances.
Hourly rates and Time Spent
[54] Ms. Parry submits that Mr. Parry’s costs are excessive when compared to her Bill of Costs. The gap between the fees claimed is not small: Mr. Parry claims legal fees of $156,861 and Ms. Parry $91,938, a difference of $64,923.
[55] However, a review of Ms. Parry’s Bill of Costs reveals some inaccuracies and omissions. For example, there was no time docket entered for July 19, 2019, a trial day; no time was docketed for the written closing submissions, although Ms. Parry’s closing submissions were 16 pages in length, together with the two annotated spreadsheets referenced above and two draft NFP statements dated December 13, 2019 all of which was accompanied by a two-volume Book of Authorities; the Bill of Costs has a docket entry for October 15, 2019 identified as “continuation for trial” when the correct date is October 12, 2019. While the incorrect date might not affect the docketed time, that error and the omissions in the Bill of Costs put its completeness and reliability into question.
[56] Aside from unrecorded time, a second explanation for the difference between the parties’ legal fees may be the different hourly rates charged by counsel: Mr. Macdonald charges $425 per hour and Mr. MacLeod $350, although, unlike Mr. MacLeod, Mr. Macdonald was assisted by a junior lawyer, law clerks, students-at-law and summer students, whose hourly rates ranged from $90 to $215.
[57] Both lawyers are senior practitioners and I find that the hourly rates charged by each of them to be reasonable and within the usual and expected rate charged by lawyers with the seniority of Mr. MacLeod, called to Bar in 1983, and Mr. Macdonald, called in 1986.
[58] The difference in fees charged may also be explained, in part, by the following: Mr. Parry was the applicant and, as such, carried the heavier burden. Furthermore, Ms. Parry’s failure to make financial disclosure generated additional expense to Mr. Parry. For example, Mr. Parry was compelled to cross-examine Ms. Parry on financial issues in September 2018. Mr. Parry’s Costs Outline shows 11.5 hours to prepare for and conduct this examination. Ms. Parry’s counsel recorded a total of four hours on that task.
[59] There is also a significant disparity in the time spent by counsel to prepare for trial. For example, in respect of the October 2018 trial, Ms. Parry’s counsel appears to have spent just under 18 hours to prepare as compared to Mr. Parry’s lawyer, who spent more than double that time to prepare.
[60] In Mr. Parry’s submissions, he asserts that the October 2018 mistrial was caused by Ms. Parry’s late production of documents. Ms. Parry makes no response to that assertion. The trial judge, Edwards J., ordered the costs thrown away of the mistrial, to be reserved to the trial judge. [^12] In the circumstances and as the successful party, Mr. Parry is entitled to have his costs thrown away included in his cost award.
[61] I cannot and do not conclude that because the Ms. Parry’s legal fees were lower than those of Mr. Parry, that his counsel spent too much time and charged too much [^13]. Rather, I accept that the time spent by Mr. Parry’s counsel was necessary given the case his client had to make and the challenges posed by Ms. Parry, who failed to comply with her disclosure obligations and, as witnessed during the course of the proceedings and in the course of the trial, often failed to be truthful or forthright.
[62] As stated in paragraph14 of the Reasons, to a large degree, Ms. Parry’s refusal to admit facts unduly lengthened the hearing, causing unnecessary financial hardship to both parties. I would state further that Ms. Parry’s refusal to give a direct or, at times, an honest, answer to a simple question, prolonged her cross-examination.
Any written offers to settle
[63] I have addressed that issue earlier in this decision.
Expert witness fees, including the number of experts and their rates
[64] Ms. Parry has taken no issue with the disbursements charged and I find them to be reasonable. I specifically approve the expert fee paid to DJB to prepare a valuation report and to give evidence at trial. The DJB Report was obtained at the behest of Ms. Parry and I accepted the DJB opinion.
The Principle of Proportionality
[65] Mr. Parry concedes that the quantum of fees sought raises concerns about the proportionality component of r. 24(12). Although, the awarding of costs awards is discretionary, the principles of proportionality and reasonableness must still be applied: Beaver v. Hill, 2018 ONCA 840.
[66] At trial, there were a instances where Mr. Parry spent a significant amount of time on issues which, did not, in a pure monetary sense, warrant the effort.
[67] One such example would be Mr. Parry’s pursuit of the rental income issue: Mr. Parry gave evidence on that issue, he cross-examined Ms. Parry at some length on it, and called a tenant to give Reply evidence. While Mr. Parry did succeed in establishing that Ms. Parry had received undisclosed rental income of $8,000 over a two-year period, that undisclosed income would have resulted in only a modest increase in the child support payable by Ms. Parry.
[68] I accept and appreciate that the evidence concerning Ms. Parry’s non-disclosure of rental income was relevant to assess Ms. Parry’s overall credibility. However, when applying the principle of proportionality to the time spent at trial on the rental income issue, I conclude that some reduction in the trial fees claimed is warranted.
[69] To a lesser extent, I make a similar observation respecting the trial time spent in relation to the items given by Ms. Parry to her nephew, Mr. Perteet, and his attempts to sell the items on eBay. Despite the small amount in issue $1,560 [^14], Mr. Perteet was called to testify at trial on two occasions, Mr. Parry testified about what had been taken and his investigations of the eBay listings, Ms. Parry was cross-examined at length, and Mr. Parry gave evidence in reply.
[70] Again, I appreciate that the evidence relating to Mr. Perteet was also relevant to the issues of Ms. Parry’s credibility, unreasonable behaviour, and bad faith determination. However, in fixing costs, those considerations must be balanced with the objectives of fairness and proportionality.
[71] Mr. Parry asks the court to consider D’Andrade v. Schrage, 2011 ONSC 2144, 2011 O.J. No. 2763 90, in which the court held that where a long and expensive trial flows from the conduct of the unsuccessful party, proportionality should not result in the reduction of the successful party’s recovery. That same principle is included in Pazaratz J.’s most helpful review of the applicable legal principles found in Jackson, excerpted below:
Despite the presumptive provisions of Rule 18(14) the court still retains the discretion to award less than full recovery costs. MacDonald v. Magel, 67 O.R. (3d) 181 (Ont. C.A.); Guertin v. Guertin, 2015 ONSC 5498 (SCJ).
Even where the “full recovery” provisions of the Rules are triggered – either by an offer which meets Rule 18(14) requirements, or by a finding of bad faith – quantification of costs still requires an overall sense of reasonableness and fairness. Goryn v. Neisner, 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 (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.) (supra); Scipione v Scipione (supra).
In Biant v. Sagoo, [2001] O.J. No. 3693 (SCJ) Justice Perkins stated:
“The preferable approach in family law cases is to have cost recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result.”
- 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…..”
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; Gale v. Gale.
By the same token, proportionality should not result in reduced costs where the unsuccessful party has forced a long and expensive trial. Murphy v. Murphy, 2010 ONSC 6204 (SCJ); Philippe v. Bertrand, 2015 ONSC 2449 (SCJ).
[72] Determining a fair and proportionate costs award is challenging in a case such as this in which the conduct of one party, Ms. Parry, drove up legal fees and, yet, to some extent, the time spent at trial by the other party was not always proportionate to the amounts in issue. In this case, while I find that Ms. Parry’s bad faith and Mr. Parry’s success weigh in favour of an award of costs to Mr. Parry that approaches full recovery, the principle of proportionality requires me reduce the fees claimed.
Disposition
[73] I have determined that a fair and reasonable costs award to Mr. Parry be $130,000 in fees, plus HST on the fees of $16,900, together with disbursements and HST of $15,472.95 for a total cost award of $162,372.95.
[74] As per paragraph 235 of the Reasons, the costs awarded to Mr. Parry shall be satisfied firstly from Ms. Parry’s share of the Net Sale Proceeds.
[75] Mr. Parry asks that an order also be made that 25% of the costs awarded be attributed to the support component of the proceeding.
[76] In consideration of the significant time spent on child support, including the s. 7 expenses, and the amount ultimately awarded on those claims, I order that 20% of the costs awarded shall be attributed to the support component of the proceeding.
Sheard J. Released: June 3, 2020
