Court Information

Date: January 30, 2017

File No.: D57349/12

Ontario Court of Justice 47 Sheppard Avenue East Toronto, Ontario M2N 5N1

Parties

Between: Paul Fettes, Applicant (father)

- and - Alejandra Wojcik, Respondent (mother)

Before: Justice Robert J. Spence

Costs submissions received in Chambers

Reasons released on: 30 January 2017

Counsel

Ms. Marlo K. Shaw — for the applicant, father

Ms. Pamila Bhardwaj — for the respondent, mother

Endorsement

Background

[1] On November 17, 2016, I released my judgment following a three-day trial. The mother was substantially successful on all issues. She now seeks her costs of that trial.

Parties' Respective Positions

[2] The mother is requesting costs on a full recovery basis, totaling $36,103.

[3] The father acknowledges that the mother was the successful party. However, he submits that costs in the range of $10,000 to $12,000 would be more appropriate, arguing that he cannot afford to pay a large costs award.

The Trial Issues

[4] The trial, which lasted for three days in November 2016, centered on the issues of custody, parenting time, and incidents of custody/access, including such things as the right to obtain information, restrictions and permissions on parents' rights to attend certain functions and school activities, and so on.

Costs Rules

[5] Costs in family law cases are governed by Rules 18 and 24 of the Family Law Rules.

[6] The relevant portions of Rule 18 provide [my emphasis]:

APPLICATION

(2) This rule applies to an offer made at any time, even before the case is started. O. Reg. 114/99, r. 18 (2).

WITHDRAWING AN OFFER

(5) A party who made an offer may withdraw it by serving a notice of withdrawal, at any time before the offer is accepted. O. Reg. 114/99, r. 18 (5).

TIME-LIMITED OFFER

(6) An offer that is not accepted within the time set out in the offer is considered to have been withdrawn. O. Reg. 114/99, r. 18 (6).

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 The offer does not expire and is not withdrawn before the hearing starts.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. O. Reg. 114/99, r. 18 (14).

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). O. Reg. 114/99, r. 18 (15).

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. O. Reg. 114/99, r. 18 (16).

[7] The relevant portions of Rule 24 provide [my emphasis]:

SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. O. Reg. 114/99, r. 24 (1).

SUCCESSFUL PARTY WHO HAS BEHAVED UNREASONABLY

(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party's own costs or ordered to pay all or part of the unsuccessful party's costs. O. Reg. 114/99, r. 24 (4).

DECISION ON REASONABLENESS

(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. O. Reg. 114/99, r. 24 (5).

FACTORS IN COSTS

(11) A person setting the amount of costs shall consider,

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party's behaviour in the case;

(c) the lawyer's rates;

(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(e) expenses properly paid or payable; and

(f) any other relevant matter. O. Reg. 114/99, r. 24 (11).

Legal Framework

[8] The starting point in this decision must take into account two undisputed facts. First, the mother was the successful party. And, accordingly, subrule 24(1) presumptively entitles her to her costs of the trial. See: Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ- Family Court).

[9] Second, the mother did serve an Offer to Settle well in advance of the trial. That Offer remained open for acceptance until the start of trial.

[10] The court must take into account how the order made at trial compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ).

[11] The mother achieved a better result at trial than the Offer which she served on the father. The father neither accepted the Offer, nor any part of the Offer.

[12] Accordingly, pursuant to subrule 18(14), the mother is presumptively entitled to full recovery costs, "unless the court orders otherwise".

[13] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, [2009] O.J. 1905 (Ont. C.A.) stated that modern costs rules are designed to foster three fundamental purposes, namely: to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants bearing in mind that the awards should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party. See also Fong v. Chan.

Father Submits Full Recovery is Inappropriate

[14] The essence of the father's argument is that it was not unreasonable for him to take this case to trial in light of the importance of the custody and access decision, and his honestly held belief that the Mother was not acting in the best interests of the child.

[15] This submission, if accepted by the court, would effectively negate the very principles upon which the costs Rules are founded. One of the fundamental principles of the costs Rules is to actively discourage parties from litigating family law cases. As I previously stated in Peers v. Poupore, 2008 ONCJ 615, at paragraph 34:

In family law litigation, and particularly for parties of modest financial means, it behooves those parties to act reasonably to avoid trial, if at all possible.

[16] If a party were able to escape the costs consequences of trials simply by arguing that custody cases are "important" and that the party had an "honestly held belief" that the other side was not acting in the child's best interests, then full recovery costs would never be awarded in family law cases.

[17] In such a case, Rule 18 would be without teeth; it would effectively become irrelevant.

[18] Because of this, the court cannot accept father's position that his concern for the child's best interests ought to impact on the award of costs in the circumstances of this case.

How to Decide the Amount of Costs When Rule 18 Has Been Engaged

[19] As I noted earlier, mother's Offer to Settle does effectively engage Rule 18. However, Rule 18 does not automatically mean that the successful party has carte blanche to charge the losing side whatever costs she decides.

[20] Even if the successful party's lawyer actually charges her own client the fees and disbursements which are set out in the Bill of Costs, it does not necessarily mean that the losing party should be required to pay those costs.

[21] In M. (A.C.) v. M. (D.), [2003] O.J. No. 3707 (Ont. C.A.), the court stated the following at paragraph 43 [my emphasis]:

I am also of the view that the court has a discretion not to make an award of full recovery even where the party has met the conditions in Rule 18(14). The rule makes that clear since it provides that "unless the court orders otherwise" the party is entitled to full recovery. Again, a relevant consideration would be the financial condition of the parties, especially an unsuccessful custodial parent. See Church v. Church, [2003] O.J. No. 2811 (S.C.J.) at paras. 14 - 18. Finally, I am of the view that even when making an award of full recovery the trial judge must ensure that the costs sought by the successful party are reasonable.

What Costs Are Appropriate Here?

a. Lawyer's Fees

[22] As I noted earlier, the court must look at the factors in subrule 24(11) (a) – (f).

[23] The issues of custody and access were very important to both parties.

[24] Notwithstanding this, the issues were not conceptually complex.

[25] Despite certain negative findings which I made at trial about the father – findings which were an important consideration leading to an order of sole custody to the mother – I do not conclude that either of the parties acted unreasonably overall.

[26] The lawyer's rates are reasonable, as acknowledged by the father himself.

[27] This was a three-day trial, which involved the testimony of a number of witnesses, including a number of professional witnesses. The lawyer's total time of 44 hours for preparation, and an additional 16 hours of court attendance, although perhaps a bit high, was not unreasonable.

[28] The father does not dispute the expenses in the lawyer's Bill of Costs.

[29] As to the factor, "any other relevant matter", the court in M. (A.C.), supra made it clear that the financial circumstances of the paying party is a consideration in the overall award of costs.

[30] I have specifically referred to subrule 24(11)(f), and M. (A.C.), supra, because of the father's submission that costs should be fixed at a low amount due to his own financial constraints.

[31] In that regard, I note that the father is paying support to the mother based on his annual income of about $72,500.

[32] Mother's counsel submitted that, additionally, father owns property and has "substantial savings". Neither of these submissions was disputed by father in his responding submissions.

[33] I appreciate that an annual income of $72,500 is not extravagant for a person living in the City of Toronto. Nevertheless, that father's income does not place him in the category of someone who is struggling to make ends meet.

[34] Furthermore, the evidence at trial was that the father is living with a new partner. There was no evidence – either at trial or in the father's costs submissions - to suggest that his new partner is not contributing to the overall household expenses in the father's residence.

[35] I conclude that the lawyer's full fees are not unreasonable based on her hourly rate and 60 total hours spent.

b. Paralegal/Law Clerk Fees

[36] According to the Bill of Costs, the paralegal spent 22 hours on this case. Her time is charged out at $225 per hour.

[37] I have three difficulties with the paralegal's fees.

[38] First, the Bill of Costs simply sets out a block fee for "Preparation and attended at Trial" followed by 10 lines of narrative. Nowhere in the Bill of Costs are any of the different tasks broken down individually and by time spent. Instead, these 10 lines of narrative simply state: [lawyer's name], 44 hours, $19,800; [law clerk's name], 22 hours, $4,950.

[39] It is impossible to tell from the Bill of Costs what tasks were performed by the lawyer and what tasks were performed by the paralegal.

[40] For certain kinds of law firm tasks, it is more cost-effective for the client to have those tasks performed by a paralegal rather than a lawyer.

[41] By way of just one example, a properly trained paralegal can obtain financial information which goes into the preparation of a financial statement, and to actually prepare that financial statement. However, there was no such financial information required for this trial.

[42] As I examine the 10 lines of narrative I cannot identify any items which obviously stand out as necessarily having been performed by a paralegal, as opposed to a lawyer.

[43] In my view, when a lawyer seeks costs in respect of her law clerk/paralegal's time, there should be at least some detail, including time spent by the clerk for the individual law-related tasks. And the more detail that is provided, the greater likelihood the court will understand the duties which the law clerk performed which, in turn, will increase the probability that costs will be awarded for those duties.

[44] Second, my recollection is that in this case, the paralegal attended at the trial each day. She sat beside the lawyer and made notes and/or assisted the lawyer to locate certain documents or other evidence as the trial unfolded.

[45] I recognize that the 22 hours of time spent by the law clerk was not entirely in respect of her court attendance during those three days of trial. Nevertheless, to the extent that any of the 22 hours spent by the law clerk were to assist the lawyer at trial, in my view it is unreasonable to expect the other side to pay for this time.

[46] In my view, the lawyer seeking costs has a significant hurdle to overcome if she expects the court to require the other side to pay for what would effectively be $675 per hour of trial time, in the circumstances of this particular case.

[47] Had this been a trial where complex evidence needed to be examined "on the fly", such that the lawyer could not have been reasonably capable of doing this on her own, then a court could possibly consider the appropriateness of a law clerk's assistance at trial.

[48] However, the kind of work performed by the law clerk at this particular trial could easily have been performed by a law student at closer to $20 per hour, as opposed to a law clerk at $225 per hour.

[49] That is not to say that the lawyer isn't free to charge her own client for those services, but those considerations are different than what this court is required to take into account in the current circumstances where a lawyer seeks to recover those costs from the other side.

[50] And third, even if the paralegal was performing work which did not suffer from the previously-stated deficiencies, I consider the hourly rate to be simply too high.

[51] I would refer to a recent, unreported decision of Justice Stanley B. Sherr in Duntin v. Beckles, (O.C.J.), released January 24, 2017, where Justice Sherr had the following to say in respect of a costs decision involving the same lawyer and the same paralegal:

The hourly rate claimed for the work done by a paralegal employed by the mother's lawyer ($225 per hour), was also too high.

[52] In C.R. v. L.A., 2015 ONCJ 152, which was also a family law case, Justice Sherr observed (at paragraph 13) that the fee charged for a law clerk in the amount of $165 per hour, "seemed very high".

[53] Beyond those comments, I refer to another family law case, Chan v. Town, 2014 ONSC 2217, a decision of Justice David Price. In that case, the court observed, at paragraph 39, that a more realistic hourly rate for a law clerk was $100 per hour.

[54] The cumulative impact of all the foregoing considerations is such that I consider it inappropriate to allow any of the $4,950 claimed for the law clerk, as set out in the Bill of Costs. I disallow those fees in their entirety.

Conclusion

[55] I award costs payable by the father to the mother as follows:

• Lawyer's fees – 60 hours at $450 per hour – total $27,000
• Disbursements - $1,030
• H.S.T. on the above amounts (totalling $28,030) - $3,644

Total of the above amounts, allowed and payable by father to the mother - $31,674

[56] These costs are payable forthwith.

[57] The father has requested that any costs ordered against him be payable "forthwith through counsel in trust, rather than registered with the Family Responsibility Office, so as to avoid any adverse impact on his credit rating."

[58] Mother's lawyer did not take any position on that request, so I conclude she has no objection to such an order. I make that order.

[59] In the event I have made any errors in my arithmetical calculations, I may be spoken to by Form 14B within 10 days.

Justice Robert J. Spence

January 30, 2017