Court File and Parties
Date: April 4, 2017
Court File No.: D71293/14
Ontario Court of Justice
Between:
Ingrid Annmarie Watson
Applicant
- and -
Leroy Watson
Respondent
Counsel:
- James A. Hunter, for the Applicant
- Acting in Person, for the Respondent
Heard: In Chambers
Justice: S.B. Sherr
Costs Endorsement
[1] On January 30, 2017, the court released its reasons for decision arising out of a two-day trial about the respondent's (the father's) child support obligations for the parties' two children. See: Watson v. Watson, 2017 ONCJ 24.
[2] The court gave the parties the opportunity to make written costs submissions. The applicant (the mother) seeks her costs of $25,305. The father submits that the costs claim is excessive.
[3] 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.
[4] Subrule 24(1) of the Family Law Rules (all references to rules in this endorsement are the Family Law Rules) creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ- Family Court). To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ).
[5] Subrule 18(14) reads as follows:
Costs Consequences of Failure to Accept Offer
18(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- The offer does not expire and is not withdrawn before the hearing starts.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.
[6] Even if subrule 18(14) does not apply, the court may take into account any written offer to settle, the date it was made and its terms when exercising its discretion over costs (subrule 18(16)).
[7] The onus of proving that the offer is as or more favourable than the trial result is on the person making the offer. See: Neilipovitz v. Neilipovitz, [2014] O.J. No. 3842 (SCJ).
[8] The mother submitted that she made two offers to settle pursuant to rule 18.
[9] The mother's first offer to settle was contained in her settlement conference brief dated August 12, 2016. The case law is clear that an offer to settle contained in a settlement conference brief is not a valid offer pursuant to rule 18. See: Entwistle v. MacArthur; Simoneau v. Kennedy, 2015 ONCJ 792; Owen-Lytle v. Lytle, 2015 CarswellOnt 18683 (SCJ). Subrule 17(23) states that no brief, evidence or statement made at a settlement conference is to be disclosed unless in an agreement reached at a settlement conference or an order. There is no exception for the offers to settle in a settlement conference brief to be disclosed in submissions for costs.
[10] The mother's second offer to settle was dated December 15, 2016. The final order was more favourable to the mother than this offer to settle. In particular:
a) The mother was prepared to accept $1,984 each month for ongoing child support. The court ordered $2,726 each month.
b) The mother was prepared to accept $50,000 for support arrears. The court ordered the father to pay arrears of $56,227.
c) The mother was willing not to pursue spousal support at that time. The court ordered spousal support of $550 each month.
[11] The mother's offer to settle reflected a clear desire to compromise and avoid the costs of a trial.
[12] The father made an offer to settle dated January 6, 2017. He offered to pay child support of $850 each month and to pay for the travel costs for the children to see him each summer and on alternate winter school breaks. He asked that the court order no support arrears. His offer wasn't anywhere close to the final result.
[13] The father should have accepted the mother's offer to settle.
[14] The mother was the successful party and is presumptively entitled to costs.
[15] The mother also met the pre-conditions for subrule 18(14) to be applied. The father did not rebut the presumptive costs consequences set out in this subrule. The mother shall receive her partial recovery costs up until December 15, 2016 and her full recovery costs after December 15, 2016.
[16] In making this decision, the court considered the factors set out in subrule 24(11), which reads as follows:
24(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.
[17] The case was important for the parties. There was some complexity and difficulty involved as there were multiple issues dealt with at trial including:
a) Determining the father's income.
b) Determining how to treat taxable allowances paid to the father.
c) Determining if the court should exercise its discretion to reduce child support pursuant to section 4 of the Child Support Guidelines.
d) Assessing if the father had a claim for undue hardship pursuant to section 10 of the Child Support Guidelines.
e) Entitlement, quantum and duration of spousal support.
f) Determination of retroactive support.
[18] The mother acted reasonably in this case. The father did not act reasonably by not complying with the temporary child support orders, when he had the ability to do so. His position in his offer to settle and at trial was misguided and unrealistic.
[19] The rates claimed by the mother's lawyer ($300 per hour) for a 1988 Call to the Bar are very reasonable.
[20] The father included claims for time not related to the trial step – in particular, time from May, 2016 through to September, 2016, when the case was still being case-managed by Justice Carole Curtis.
[21] Subrule 24(10) sets out that costs are to be determined in a summary manner after each step in the case by the presiding judge. A "step" in the case is one of the discrete stages recognized by the rules such as a case conference, settlement conference and the like. See: Husein v. Chatoor, 2005 ONCJ 487, [2005] O.J. No. 5715 (OCJ). The trial judge should not deal with requests for costs that were addressed or should have been addressed at these prior steps in the case. See: Islam v. Rahman, 2007 ONCA 622.
[22] A party is entitled to claim time spent for meetings with the client and reviewing and preparing pleadings and financial statements as this is time not attributable to any one step in the case. See: Czirjak v. Iskandar, 2010 ONSC 3778. Costs accrued from activity not specifically related to the step (not requiring judicial intervention) should be dealt with at the end and not by the motions judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98. However, the mother did not provide specific details of time that fell into these categories.
[23] The time claimed by the mother to appear at Assignment Court is attributable to the trial step.
[24] The mother's bill of costs did not set out what portion of the trial preparation was attributable to the period after December 15, 2016 – the date the offer to settle was made.
[25] The time claimed by the mother for the trial step was not itemized. This would have been helpful.
[26] Although the application of subrule 18(14) entitles the mother to full recovery costs, the court must still carefully examine her bill of costs to determine if the time claimed by her was justified. A party should not be indemnified for time spent on trial positions that lack merit. Here, at trial, the mother sought spousal support of $3,951 each month. Only $550 each month was ordered. This likely resulted in additional preparation time for both parties. Further, much of the data on which the spousal support calculations were based, was entered into the software incorrectly, resulting in erroneous calculations that added unnecessarily to the time for submissions on the issue.
[27] On the other hand, the father caused more time to be spent by the mother, by taking unjustifiable positions about his income, the mother's entitlement to spousal support and an undue hardship claim.
[28] The court further finds that the time claimed by the mother for the trial step (41 hours) was somewhat excessive.
[29] The expenses claimed by the mother were reasonable.
[30] The court considered both Boucher et al. v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (Ont. C.A.) and Delellis v. Delellis and Delellis, [2005] O.J. No. 4345. Both these cases point out that when assessing costs it is "not simply a mechanical exercise." In Delellis, Aston J. wrote at paragraph 9:
However, recent cases under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended have begun to de-emphasize the traditional reliance upon "hours spent times hourly rates" when fixing costs....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.
[31] The court considered the father's ability to pay the costs order (see: MacDonald v. Magel, 67 O.R. (3d) 181 (Ont. C.A.)), due to his additional child support obligations. However, the father owns his home in Fort McMurray and earns a significant income. The court finds that he can afford to pay this costs order.
[32] Taking into account all of these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $15,000, inclusive of fees, disbursements and HST.
Released: April 4, 2017
Justice S.B. Sherr