Court File and Parties

Ontario Court of Justice

Date: July 26, 2017

Court File No.: Halton 497/15

Between:

James Todd Shute Applicant

— And —

Wendy Lynn Shute Respondent

Before: Justice Victoria Starr

Written Submissions Received

Decision and Reasons with Respect to Costs, released on July 26, 2017

Counsel:

• W. Douglas R. Beamish, for the Applicant
• Anne McGrath, for the Respondent

Decision

VICTORIA STARR J.:

Introduction

[1] On June 14, 2016, the applicant brought a motion to change to this court seeking to change the child and spousal support provisions contained in the parties' separation agreement, dated July 3, 2015. The parties settled all issues except for costs, by way of minutes of settlement dated April 13, 2017.

[2] The applicant seeks costs of this proceeding on a partial indemnity scale in the amount of $22,096.13. The respondent seeks costs of this proceeding on a substantial indemnity basis in the amount of $12,091. Both parties claim costs primarily on the basis that the other party was unreasonable. This is the court's decision and reasons with respect to these competing cost claims.

Background

[3] The child support provisions in the parties' separation agreement provided, among other things, for base support for the two children of the marriage in the amount of $3,301 per month on an off-set basis as the parties shared the time with the children equally, commencing June 1, 2014. In their agreement the parties also agreed that the special or extraordinary expenses would be shared 69.6% to the applicant and 30.4% to the respondent. The agreement further directed the new child support regime that is to apply in the event that the eldest child began living away from home to attend a post-secondary education program.

[4] The child support provided in the separation agreement was based on the applicant's income of $387,056 for 2013 and the respondent's income for 2013 of $99,749.74. At the time, the applicant is alleged to have asserted that his 2015 income would be similar to his 2014 and 2013 income. That is, that it was likely to be around $387,056. Ultimately, the applicant's 2015 income was $408,656.02 - $20,000 more than he projected it would be around the time the agreement was entered into.

[5] The separation agreement further provided for spousal support in the amount of $4,000 per month, commencing October 1, 2016. The reason for the delay in the commencement of the spousal support was because the respondent was to pay the applicant an equalization payment. It was agreed that, instead of the applicant paying the respondent the sum of $4,000 per month for the period of July 1, 2013 to September 30, 2016, the after-tax amount of $4,000 [$2,235], would be credited against the equalization payment which would be fully consumed by September 30, 2016.

[6] Additionally, the separation agreement:

a. Provided that after October 1, 2016, and prior to December 1, 2017, either party may request a review of spousal support in the event of a material change in circumstances. It then went on to specify a number of changes that, together with any other material change in circumstances, could trigger such a review. One of those specifically enumerated "material changes in circumstances" applicable in the instance of spousal support is if the applicant's employment income declines by more than 10%.

b. Contained a dispute resolution clause under which the parties were to resolve all issues arising from the agreement first through negotiation and, failing agreement reached through negotiation, the party could choose from one of three options: mediation, arbitration or court application.

[7] On March 1, 2016, the applicant requested an immediate change in his child and spousal support obligation. He had received notice from his employer that new regulatory rules as set by the Prudential Regulatory Authority (PRA) would now apply to him. The effect of this, he claimed, was that a significant portion of his sizeable variable pay would be deferred and subject to claw-back provisions. While some portion of it would be paid in 2016, the balance, he asserted, would be paid in instalments over the next three years in March of each year (provided that it was not clawed back).

[8] At that time (March 2016) he estimated that his 2016 income would be about $278,226, representing a decline of either 26.9% or 15.5% depending on what year his income was compared to. As both figures were greater than 10%, he asserted the material change threshold to vary spousal and child support was met.

[9] The respondent saw things quite differently. She took the position that the introduction of the new regulation was merely a slight restructuring and/or deferral of certain portions of the applicant's bonus (variable) income. With respect to child support, she argued, any minor adjustment could be addressed in the annual July 1st mandatory year-over-year review and adjustment of child support based on previous year's income, mandated in the separation agreement.

[10] She also estimated based on the preliminary disclosure provided, that even with the new regulatory scheme and deferred payments, the applicant would receive approximately $300,000, or even more, depending on the market and exchange rates.

The respondent's overall position was essentially that it was premature to adjust the level for child support.

[11] The respondent asserted that, if the applicant's income had been materially reduced, on receipt of the applicant's 2016 T4 and all other income information at the end of 2016, his child support would be appropriately adjusted in July 2017. She suggested that the parties wait until December 31st and in the meantime exchange various disclosure required.

[12] Quite simply, she was not prepared to set a new level of child support based on the applicant's projected earnings for 2016, given the need for further disclosure and speculative nature of the projected effect of the changed regulation on the applicant's income.

[13] With respect to spousal support, the respondent took the position that spousal support was not variable, regardless of any change in circumstance, prior to October 1, 2016. The applicant's request to review spousal support was, therefore, premature both procedurally and with respect to whether or not a material change in his income had occurred. She suggested that if, at the end of 2016, the applicant's income had changed by any more than 10%, he would be entitled to request a review of spousal support payable only from October 1, 2016, onwards, in accordance with the separation agreement.

[14] The applicant wished to resolve the dispute in accordance with the dispute resolution provisions of the parties' separation agreement. Prior to starting these proceedings he requested that the parties attend at mediation and/or arbitration.

[15] The respondent was not prepared to negotiate changes in child support or spousal support at that time. She asserted that the question of whether a "material change" in the applicant's income had occurred could only be determined at the end of 2016 when the applicant's total income for 2016 could be accurately determined. She clearly indicated that she was only prepared to enter into the mediation/arbitration process if same was warranted, on review of the applicant's total income in 2016, based on income information to December 31, 2016. The respondent suggested that the parties use the intervening period to exchange further disclosure and made various disclosure requests.

[16] In his representations during negotiations in March and April 2016, and in his originating documents filed in June 2016 when the applicant started these proceedings, he represented that his income for 2016 would be $278,226.

[17] At the case conference held on November 25, 2016, the respondent revised his income projection; projecting instead that his income for 2016 would be about $329,731, about $51,505 more than he had projected it would be in March and June of 2016.

[18] A case conference was held in November 2016. No agreement was reached. The respondent requested additional disclosure, which the applicant agreed to provide.

[19] Additional disclosure was provided after the November 2016 case conference. One of the documents subsequently provided was the applicant's T4 slip for 2016. It reflected his income for 2016 as $325,332 - $4,000 less than the applicant had estimated at the time of the November case conference.

[20] On February 22, 2017, after the applicant's T4 was made available along with other more definitive income information, the respondent served his first and only formal offer to settle. The respondent served no formal offer to settle the substantive issues, but it is not disputed that she made informal offers through correspondence to settle the issues.

[21] As already noted, the parties resolved all issues, except for costs, by way of minutes of settlement dated April 13, 2017.

[22] It is not at all clear to the court what the applicant's ultimate income for 2016 is. The respondent asserts that ultimately she was right, the applicant's income for 2016 was actually $325,332. The applicant states in his submissions that for 2016, the application of the PRA rules meant that the applicant's income fell to $323,129.07, being 16.6% less than it was at the time when the parties entered into their separation agreement.

[23] It is also clear that the applicant's income for 2015 was $408,656.02 - $20,000 more than his represented projection at the time of the agreement and, thus, of the level of income upon which his ongoing payment of child support was based - $387,056.

[24] Thus, we now know that child support payable for 2015 increased and decreased in 2016. We also know that the applicant's projection and representation that his income for 2016 would be $278,226 was wrong. Thus, had child or spousal support been reduced based on his early projections and position, child support would have been significantly underpaid in both 2015 and 2016, and it would have been up to the respondent to pursue the applicant to have support adjusted.

The Legal Framework and Applicable Principles

[25] This court's authority to make orders with respect to costs is found in section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. That section makes clear that cost decisions are discretionary. The exercise of that discretion is circumscribed by Rules 2, 18 and 24 of the Family Law Rules, O. Reg. 114/99 ("the Rules").

[26] The provisions of Rule 24, most relevant to this case, are as follows:

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

24. (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.

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.

24. (6) If success in a step in a case is divided, the court may apportion costs as appropriate.

[27] Rule 24(11) provides a further list of factors that a court must consider when setting the amount of costs:

(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.

[28] In the case of Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, a case relied upon by the respondent, the Ontario Court of Appeal confirmed, at paragraph 8, that costs rules are designed to foster three important principles:

a) to partially indemnify successful litigants for the cost of litigation;

b) to encourage settlement; and

c) to discourage and sanction inappropriate behaviour by litigants.

[29] Subrule 2(2) of the Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the Rules is met – that cases are dealt with justly. This provision needs to be read in conjunction with Rule 24 of the Rules. Subrule 2(4) of the Rules states that parties have a positive obligation to help the court to promote the primary objective under the Rules. Clauses 2(3) (a) and (b) of the Rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. [See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711].

[30] The respondent referred the court to the decision of Zisman J. in Gzechowski v. Percy, 2011 ONCJ 644 and to the decision of George J. in the case of Krueger v. Krueger, 2017 CarswellOnt 3169. These decisions offer guidance to the court in terms of the approach to take when determining costs in cases where the issues are resolved by negotiated agreement rather than adjudication.

[31] Zisman J. at paragraph 22 of her decision in Gzechowski v. Percy, states:

It is not appropriate to go behind the freely negotiated terms of settlement and engage in an exercise of determining which party's position on each issue would have been accepted by the trial judge if the matter had proceeded to trial and that the reasonableness of the conduct of the parties is a consideration but not the most important one.

[32] George J. at paragraph 12 of his decision in Krueger v. Krueger, states:

In this case, is there a successful party? This is distinct from whether either or both parties achieved some success. Determining a winner is difficult if not impossible when a matter resolves for various reasons. Unlike a trial which necessarily generates a decision favouring one party or the other, the terms have been agreed upon. This means, instead of identifying a reason not to award costs, which I am to do when there is a successful party, I must identify a compelling reason to make an award.

[33] The guidance this court has taken from these two decisions and applied in this case is this: Where a matter settles, the success and/or reasonableness of the conduct of the parties is a consideration but not the most important one. In such cases, the emphasis should be on discouraging inappropriate conduct and promoting settlement. Thus, instead of identifying a reason not to award costs, the court must identify a compelling reason to make an award.

Positions of the Parties

[34] The applicant submits that he is entitled to costs on the basis that he acted reasonably throughout the matter and the respondent did not. These are the main examples of conduct relied upon:

a. Once he learned of his material change in circumstance, the applicant sought to resolve the matter by use of the Dispute Resolution clause in the separation agreement. However, the respondent refused to recognize that a material change had occurred and refused to engage in the review process before December 31, 2016. Her actions resulted in the necessity of the applicant having to bring court proceedings;

b. Once the court proceedings were commenced, the applicant was completely forthcoming with respect to his income, but the respondent failed to accept his figures and instead sought copious amounts of documentation, all of which showed that the applicant's estimate of his 2016 income was actually more than what he, in fact, earned for that year;

c. The applicant made an offer to settle which proposed both a fair and reasonable resolution of the matter.

d. The respondent acted unreasonably in that she failed to make any offer to settle;

e. The respondent acted unreasonably in her interactions (or lack thereof) and use of the FRO. He asserts that the respondent's actions (and lack thereof) resulted in the appearance that the applicant was in arrears, when in fact, he was not. This also caused the applicant considerable difficulty including with respect to his real estate transaction and resulted in substantial overpayment being made to FRO;

f. The respondent acted unreasonably in that she did not make the payment due to the applicant to compensate him for his overpayment of support in time. Her payment was due on May 13, 2017. The applicant did not receive payment, however, until May 31, 2017.

[35] The respondent submits that she ought to be compensated for the cost she incurred from June 2016 to December 2016 and those incurred in May 2017 in relation to cost submissions. She claims she is entitled to these costs because the applicant unreasonably increased both parties' legal expenses. The main behaviour she complains of are:

a. Refusing to wait until December 31, 2016 when he could provide full disclosure of his full and final 2016 income prior to commencing his motion to change.

b. Refusing to follow the mechanisms set out in the separation agreement to adjust child support on an annual basis,

c. Refusing throughout much of the negotiations and proceedings to acknowledge his obligation to provide an adjustment for the underpayment of child support in 2015;

d. Insisting that any change to the spousal support provisions of the separation agreement be indefinite thereby ensuring that the respondent would have to incur further legal fees to vary the support once the applicant's income increased;

e. Refusing to accept her fair and reasonable offer to settle costs such that each party bear their own legal costs. His failure to do so necessitated further extensive fees to draft cost submissions.

Analysis

Entitlement

[36] I do not accept the applicant's submission that he is entitled to costs on the basis that he acted reasonably throughout the matter and the respondent has not. I find that he acted unreasonably and that, while there are instances where the respondent also behaved unreasonably, the applicant was the more unreasonable party. The applicant's unreasonable behaviour drove up the respondent's legal fees and, as such, she is entitled to some compensation in furtherance of the objective of discouraging inappropriate conduct.

[37] The following are some examples of the applicant's unreasonableness. First, the applicant's decision not to meaningfully address the respondent's requests to adjust child support payable for 2015 early on and throughout most of these proceedings was unreasonable. This is particularly so given that the applicant's actual income for 2015, was $408,656.02; significantly more than the $387,056 upon which he was paying child support.

[38] The respondent repeatedly asked the applicant, early on in 2016 and throughout these proceedings as part of the negotiations, to address the adjustment of child support payable for 2015. These requests were ignored for much of the litigation. There is no good reason offered as to why.

[39] The ultimate result is that the applicant underpaid support for 2015 and this shortfall was taken into account in the ultimate settlement. Thus, on this issue the respondent was successful.

[40] It was also unreasonable of the applicant not to make the adjustment early on in these proceedings and certainly by July 1, 2016. The separation agreement mandated an annual adjustment of child support based on the previous year's income by July 1st of each year. Neither the formula to be applied nor the applicant's income for 2015 were in dispute. Despite all of this, the adjustment was not made until the overall settlement was reached in 2017.

[41] Second, the applicant's insistence in March, April and June of 2016, that his support obligation for 2016 be immediately reduced was unreasonable. Conversely, the respondent's "wait and see" approach to the applicant's request to reduce child support was the more reasonable position and approach.

[42] What was unreasonable with respect to the applicant's position was his expectation that his child support obligation should be set at a time when there was limited documentary disclosure and his representation about the effect of the change on his income, highly uncertain and speculative.

[43] The high degree of uncertainty and speculative nature of his projections is evident from the fact that his income projections changed at least three times between March 2016 and December 31, 2016.

[44] More importantly, in the face of such uncertainty, it is highly unlikely that any arbitrator or court would have been able or willing to vary the level of child support prior to December 31, 2016. Furthermore, had he waited, it is highly likely that the issue could have been resolved without any type of legal proceeding.

[45] Given all of these circumstances, I agree completely with the respondent that the applicant ought to have waited until his actual income could be determined. At the very least, he should have held off on insisting on a new level of child support until the fall of 2016 when there was less uncertainty and more documentary disclosure available. His insistence and decision to start these proceedings when he did caused the respondent to incur unnecessary legal costs – cost of such steps as reviewing and responding to his pleadings, et cetera.

[46] The applicant's unreasonable conduct is mitigated somewhat by a number of factors, including the fact that he conducted himself quite reasonably at other times. The following examples illustrate this. First, once the court proceedings were commenced, the applicant was forthcoming with respect to his income and the production of disclosure requested by the respondent. While the respondent may have requested copious disclosure, this court is not in a position to determine whether the respondent's requests for disclosure were excessive and, thus, that she conducted herself unreasonably in relation to her disclosure request.

[47] Second, the applicant made a formal offer to settle the substantive issues on February 22, 2017, just prior to the February 27, 2017 conference. The timing of this offer was very reasonable in that it coincided with the availability of more definitive evidence of his actual 2016 income and it was made at the first opportunity after this information became available. Further, any offer made by him prior to his T4 being made available would likely have been ignored by the respondent as the additional disclosure was what she was waiting on all along.

[48] While it is true that the respondent made no formal offer to settle the substantive issues and that ordinarily this would serve as evidence of unreasonableness on her part, in this instance I do not find it so and place no weight on this consideration. This is because I accept that informal offers were made by her in correspondence and as part of the negotiations that took place after she received the applicant's T4 for 2016.

[49] Third, the applicant's offer to settle was close to the final settlement and close to the position he took in the late fall of 2016. It was a reasonable offer to settle.

[50] For example, in his offer the applicant offered to pay $1,675 per month for the support of the younger child commencing January 1, 2016 and $2,586 per month for the support of both children during the period of May 1, 2016 to August 1, 2016 when the elder child returned from school.

[51] In the minutes of settlement entered into at the trial management conference held on April 13, 2017, it was agreed that the applicant would pay the respondent $1,673 per month for the support of Nathan from January 1, 2016 onward and $2,583 for the support of both children when the elder returned from school during the summer months.

[52] Further, with respect to spousal support, in the offer to settle the applicant proposed to pay the respondent the sum of $2,500 per month between the periods of October 1, 2016 to December 31, 2016. From and after January 1, 2017, the applicant proposed to pay the respondent the amount of $3,500 per month.

[53] In the minutes of settlement the parties agreed that for the period of January 1, 2017 to June 30, 2018, spousal support would be reduced to $3,500 per month and would return to $4,000 per month as of July 1, 2018. Therefore, the amount of spousal support to be paid during the period of January 1, 2017 to June 20, 2018 was exactly the same as the applicant's offer to settle.

[54] While I agree with the applicant that he made a reasonable offer to settle, this does not mean that the respondent acted unreasonably in failing to accept the offer. The offer was not severable and the terms proposed for spousal support were limited and less than ideal. In addition and in the result, the final negotiated settlement was more advantageous to the respondent than the applicant's offer.

[55] For example, the offer proposed a reduction in child support for 2016 but without adjusting child support for 2015. In the result, such adjustment was agreed upon. Further, the offer proposed that spousal support be reduced to $3,500 from January 1, 2017, indefinitely. Ultimately, the minutes of settlement provided that spousal support be reduced to $3,500 per month for a fixed 18-month period and then return to $4,000 a month as per the separation agreement. The minutes also provided that there would be no further change to spousal support except in the event of a catastrophic change in circumstances.

[56] In addition to those examples already discussed, the applicant submits that the respondent acted unreasonably. For example, he submitted that the respondent acted unreasonably in that she failed to make the payment due to him on account of overpayment of support by the May 13, 2017 deadline stipulated in the minutes.

[57] As a lag was anticipated in FRO updating its records once the notice of withdrawal from enforcement was filed with their office, the parties agreed that the net overpayment of child support of $2,945 was to be repaid by the respondent to the applicant within 30 days of the date of the minutes.

[58] The respondent did not reimburse the applicant for the overpayment of child support within the prescribed time - by May 13, 2017. To be clear, she did make the payment. In fact, all payments due by her were made by May 31, 2017.

[59] The explanation for the delay offered by the respondent is that although it is not in the minutes of settlement, all understood that the finalization of arrears was conditional on her receipt of the applicant's 2016 income tax return and notice of assessment. She did not make the payment by May 13, 2017 because she had yet to receive these documents. She did not receive this disclosure until May 27, 2016, after her counsel wrote to the applicant's counsel to remind him. All payments, she says, were mailed by May 28, 2017.

[60] The applicant's explanation is not refuted by the applicant. As such, I accept the explanation as reasonable and consistent with the intention of the parties.

[61] Second, the applicant submits that the respondent behaved unreasonably with respect to dealings with the FRO. I do not accept the applicant's submission that the respondent misused the FRO and in so doing acted unreasonably and to the applicant's detriment.

[62] In his submissions, the applicant points to various examples of the respondent's alleged misuse of FRO. First, he takes issue with the fact that she filed the agreement with the FRO for enforcement.

[63] Previously, payments were being made directly to the respondent by the applicant. The applicant made unilateral deductions from the monthly support payments. It was not reasonable of him to make unilateral adjustments to his monthly support. I find that the respondent, who did not like this practice, quite rightly filed the agreement with the FRO for enforcement.

[64] Third, the applicant asserts the respondent was unreasonable in that she failed to advise the FRO that the monthly support for the elder child was no longer payable from September 1, 2016 for the balance of that year as he had gone to university. The result, he claims, was that the FRO collected $3,301 for the month of October, November and December 2016. He asserted that it should only have collected $1,673 each month, resulting in a $1,628 per month overpayment. The applicant asserts that by December 31, 2016, as a result of this, he had made an overpayment of $4,269 to the FRO.

[65] Further, on May 1, 2017, after the final agreement had been reached, the FRO took from the applicant's pay the sum of $7,301. This amount corresponds with the amounts of support for two children [$3,301] and the spousal support for the respondent [$4,000] as set out in the separation agreement. This amount is incorrect for two reasons: since September 2016, child support is only payable for one child, not two; and under the newly signed minutes of settlement, spousal support is now in the amount of $3,500 per month commencing January 1, 2017.

[66] The applicant argues that the unreasonableness of the respondent's conduct lies in the fact that she refused to correct the situation with the FRO even though she was requested repeatedly to do so. The applicant claims that because the respondent did not confirm the applicant's position regarding the revised support payments due, the FRO continued to show the applicant in arrears of his support obligation and they filed a lien against the applicant's home. The filing of the lien in turn, delayed the completion of a real estate transaction. The FRO also garnished any income tax refunds due to the applicant.

[67] Based on the material filed, the applicant's representations are not entirely correct. The respondent produced two letters written to the FRO by her in March and May 2016, outlining that child support should be adjusted because of Jared's enrolment at university. Further, when the applicant and respondent disagreed on the amount of the payment, the FRO took the position that they only had jurisdiction to enforce the amount outlined in the separation agreement of $3,301 per month, unless they were sent a new agreement or court order. Further, it is also clear that after signing the minutes the respondent filed the proper paperwork with FRO to discontinue enforcing payments.

[68] Given the lack of clarity and clear evidence that some of what the applicant has submitted appears inaccurate, the court is not in a position to make any finding that the respondent misused the FRO process or that it is her actions alone that caused the excessive collections by the FRO or the registration of the lien that affected the applicant's real estate transaction.

Other Considerations

[69] Applying the principles referred to earlier as set out in the decision of Zisman J. in Gzechowski v. Percy, and that of George J. in the case of Krueger v. Krueger, I find that there are, as identified above, some compelling reasons to award costs to the respondent to compensate her for fees and disbursements incurred between June 2016 and December 2016 and in May 2017 on account of cost submissions. As I have found, the applicant acted unreasonably and this type of behaviour must be discouraged.

[70] For all these reasons, I find she is entitled to recover some costs for the period of June 2016 to December 31, 2016 and for May 2017, in relation to the issue of costs. I turn next to my decision as to the amount of costs to be awarded to her.

Quantum

[71] Quantum, save and except for the period of any entitlement, was not a contested issue. For example, neither party took issue with the other's bill of costs, including the time spent, hourly rates charged or amounts charged on account of disbursements. Further, neither party submitted that the costs sought were disproportionate to the complexity and importance of the issues.

[72] With respect to the rates to be applied to indemnity, the parties both adopted the formula set out in the decision relied on by the applicant – the decision of Justice Price in the case of Doherty v. Crawford, 2016 ONSC 2140, at paragraphs 36 – 43. Following this formula, Ms. McGrath's hourly rate of $400 and Ms. Attwood's hourly rate of $300 are both less than the substantial indemnity rate for lawyers of their experience (29 years in the case of Ms. McGrath and 16 years in Ms. Attwood's case).

[73] In these circumstances, I reviewed each party's bill of costs and considered the various factors in subrule 24(11) of the Rules.

[74] In reaching my decision as to the amount to award, I have considered several other factors. First, some portion of that amount includes costs that would have been incurred in aid of settlement, even if the matter was not before the court, such as requesting and reviewing disclosure and some communications. Thus, I have decided to discount the total costs to be awarded.

[75] Second, it is imperative that this court take into account the offer to settle made by the respondent with respect to cost submissions. Given the principles set out in the Rules and jurisprudence referred to in this decision, and the applicant's conduct, the applicant ought to have accepted this offer. It was a fair and reasonable offer. Further, had the applicant accepted the respondent's offer, he would have saved the parties the time and expense of preparing cost submissions, and the court would have been able to devote the time spent on dealing with the cost issue to other cases.

[76] There is insufficient information before me to determine if the respondent's offer qualifies for the cost consequences set out in subrule 18(14). Further, the respondent did not refer to rule 18 in her submissions. I have, thus, not treated her offer as one attracting the cost consequences set out in subrule 18(14). Nonetheless, it is very clear now that I have found that the respondent is entitled to costs and that she will be awarded costs, the result she has now obtained is more favourable for her than the terms of her offer. This is further evidence of the reasonableness of her offer. Her recovery of costs in relation to that issue should be fixed at full recovery. Based on the respondent's bill of costs, she incurred $3,260 in legal fees on account of cost submissions. The costs award I make below includes this full amount, plus HST.

[77] Third, some reduction in the total costs to be awarded is warranted on account of the respondent's refusal to participate in one of the alternate dispute resolution avenues available under the parties' agreement. While participation in such processes was optional, the respondent's failure to agree to same to at least attend to address the dispute in March and April 2016 about the interpretation of the agreement (i.e. whether spousal support could be varied prior to October 1, 2016 and whether the threshold test had been met), left the applicant with no choice but to choose court as the forum for resolution.

[78] Had she at least attended mediation to deal with the interpretation and threshold issues, litigation and the cost of preparing pleadings and attending at the November 2016 case conference might have been avoided altogether. As such, she bears some responsibility for the early timing of the application and costs incurred between June 2016 and December 31, 2016.

[79] Fourth, the court is also mindful of the need to promote and encourage settlement and to encourage parties to try and settle at the first real opportunity so as to further the objective of encouraging parties to behave in ways that save time and expense. In this case, as discussed above, the applicant made a very timely formal offer to settle the substantive issues.

[80] Finally, I point out that counsel for the respondent did not include all of her time in her bill of costs and the hourly rate she claimed is less than her substantial indemnity rate. As a result, one could say that her bill of costs is really based on a partial indemnity scale. In my view, however, it does not go far enough and further reduction is warranted.

[81] After stepping back and considering all of the circumstances I find that it is fair and appropriate to award the respondent $9,000 in costs, inclusive of HST and disbursements. Accordingly I make the final order below.

Order

[82] Final order to go as follows:

(1) The applicant shall pay to the respondent, costs of these proceedings fixed in the amount of $9,000, inclusive of disbursements and HST. These costs are to be paid within 30 days of the date of this order.

(2) The teleconference attendance scheduled for today at 4:30 p.m. is vacated.

[83] Matter concluded.

Released: July 26, 2017

Signed: Justice Victoria Starr