Court File and Parties

Date: August 27, 2018

Court File No.: Toronto D90616/16

Ontario Court of Justice

Between:

Amber Sabeeh Applicant (Mother)

— And —

Sabeeh Syed Respondent (Father)

Before: Justice Robert J. Spence

Costs Submissions Received in Chambers

Reasons released on: August 27, 2018

Counsel:

• Ms. Eva Chan, counsel for the applicant Mother
• Mr. Kenneth Snider, counsel for the respondent Father

Introduction

[1] On May 31, 2018 I released my reasons for judgment following a three-day trial heard March 19, 20 and 21, 2018.

[2] In that decision I ordered the father to pay the mother child support for four children in the amount of $4,476[1] per month pursuant to the Child Support Guidelines (CSG), based on an imputed income to the father in the amount of $175,000 per year.

[3] In addition, I ordered the father to pay spousal support to the mother in the amount of $1,240 per month.

[4] The mother now seeks her costs from the father.

Parties' Respective Positions

[5] The mother is requesting costs in the amount of $36,477.29, inclusive of disbursements and applicable taxes.

[6] The father acknowledges that mother is entitled to costs but he submits that the more appropriate and reasonable amount for costs is $5,000.

The Trial Issues

[7] As I noted above, the trial lasted three days. The issues at trial were:

1. How much income ought to be imputed to the father;
2. The child support payable by the father to the mother; and
3. Mother's entitlement to spousal support and, if so entitled, the amount of spousal support that father should pay to her.

The Outcome at Trial

[8] The father argued that the court ought to impute an income to him for child support purposes in the amount of $40,000 per year.

[9] The mother argued that the court ought to impute income to the father in the amount of $175,000.

[10] The court imputed income to the father in the amount of $175,000.

[11] The father argued that the mother was not entitled to spousal support. The court ordered the father to pay spousal support to the mother.

[12] The mother was the successful party in every respect.

Costs Rules

[13] Costs in family law cases are governed by Rules 18 and 24 of the Family Law Rules. ("Rules")

[14] 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).

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).

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

SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS

(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).

BAD FAITH

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

SETTING COSTS AMOUNTS

(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.

Analysis

(a) Offer to Settle

[16] The mother served an Offer to Settle ("Offer") on March 7, 2018. This was twelve days prior to the start of trial. The Offer was open for acceptance until after the commencement of trial. That Offer was not accepted by the father.

[17] On the essential issues at trial – the imputation of income to the father, the amount of child support payable by the father, and the amount of spousal support payable by the father – the Offer was more favourable to the father than the outcome at trial. On the essential elements, that Offer provided, inter alia:

1. Father's income to be imputed at $94,088 per year;
2. At various time periods, father to pay spousal support to mother ranging from $30 per month to $350 per month; and
3. At various time periods, father to pay mother child support ranging from $2,084 per month to $2,176 per month, together with section 7 expenses, ranging from $960 per month to $1,024 per month.

[18] Accordingly, the Offer falls within the conditions set out in subrule 18(14). And because of that, there is a presumption that the mother is entitled to her costs to the date of the Offer, and full recovery of her costs from the date of her Offer. See: Lawson v. Lawson.

[19] That said, the rebuttable presumption in subrule 18(14) also confers discretion on the court to "order otherwise" even where that subrule is presumptively engaged. See, for example, Snelgrove v. Kelly, 2017 ONSC 4625.

[20] The court may consider it appropriate to order otherwise for a variety of reasons. One reason may be when, for example, the unsuccessful party has also served an offer to settle which proposes a settlement that is very close to the outcome at trial, albeit perhaps less so than the offer made by the successful party.

[21] Accordingly, I turn to the father's Offer to Settle. His Offer, dated March 15, 2018 contained a number of proposals for settlement, including, inter alia:

1. His income to be imputed at $40,000 per year;
2. No spousal support would be payable to the mother; and
3. Child support payable by him to the mother in the amount of $975 monthly.

[22] When these two Offers are compared it is clear that the mother's Offer was not only more realistic than the father's Offer but, additionally, it was far more generous than his Offer. In fact, the gap between the two Offers was so wide as to make the court wonder whether the father's Offer was intended to be taken seriously by the mother.

(b) Setting Costs Amounts

[23] As stated in subrule 24(12), the court must consider a number of factors in deciding the amount of costs. In other words, it isn't simply the case that just because a party is presumptively entitled to costs on a full recovery basis that the successful party has carte blanche to submit a Bill of Costs in whatever amount the party chooses and expect that the court will make a costs order accordingly.

[24] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, 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.

[25] The question this court must ask is what amount of costs would be fair and reasonable in the circumstances of this case.

[26] The recent amendments to Rule 24 [3] now require the court to expressly consider the:

Reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues

[27] It is not entirely clear to this court why the Ontario Rules Committee felt it necessary to amend Rule 24 by expressly importing the words "reasonableness and proportionality" as umbrella descriptors into that Rule. The concepts of reasonableness and proportionality have long been essential hallmarks of costs decisions in family law. [4] In this court's view, the addition of those words does not change the principled basis upon which courts ought to be deciding the amount of costs, as compared to the way in which costs were decided prior to the July 1, 2018 amendments.

[28] What is reasonable and what is proportional are questions that can only be answered in the context of the particular case. Importantly, the court must look at what was at stake for the parties.

[29] In his costs submissions, the father acknowledges the mother's entitlement to costs as the successful party, and pursuant to the presumption in subrule 24(1). However, he states that the entitlement should not be on a full recovery basis but rather on a partial indemnification basis. He says that the "appropriate and reasonable amount is $5,000".

[30] However, the father's costs submissions do not address the presumption of full recovery of costs provided for in subrule 18(14). More specifically, those submissions do not argue why, despite the mother having met all of the conditions provided for in subrule 18(14), the court should order "otherwise" than full recovery following the date of her Offer.

[31] Instead, the father's argument focuses on why the amount requested by the mother is unreasonable. [5]

[32] His arguments are essentially two-fold. First, he argues, while the issues were important, they were not complex or difficult. Although the words "importance, complexity or difficulty" were used in the pre-July 1, 2018 amendments to Rule 24, I am prepared to consider those words as part of the overall assessment of what costs are appropriate in this case. As I stated earlier, while some of the wording to Rule 24 has changed since July 1, 2018, the principles remain essentially the same.

[33] The trial was about imputing income to a self-employed professional accountant. Imputing income to a self-employed individual is usually far more complex than income considerations for a T4 employee.

[34] In the particular circumstances of this case, the complexity of the trial was magnified by the extensive documentary evidence which the father adduced, amounting to several volumes of material. In my trial decision I noted that the father produced [my emphasis]:

Extensive records for 2016, filed in a number of disclosure volumes [which] included a statement of revenue and expenses, backup documents for his claimed expenses and various bank statements.

[35] The gap between the income the father was stating he earned for child and spousal support purposes ($40,000), and what the mother was arguing ought to be imputed to him ($175,000) was significant. In order to succeed in her position, it was necessary for the mother's counsel to spend considerable time in advance of trial going through all of the father's documentary disclosure to find inconsistencies and areas of weakness upon which to cross-examine the father at trial.

[36] What this case was essentially about for the mother was convincing the court that the father's documents did not support the father's assertion that his income was $40,000 annually and, furthermore, that the father's testimony at trial lacked credibility. In order to succeed, the mother's counsel had to perform considerable work prior to the commencement of trial.

[37] In fact, in my reasons for judgment, I spent four pages discussing and analysing why, on all of the evidence, including both the documentation as well as father's trial testimony, his evidence lacked credibility.

[38] So that while the court is able to conclude that, conceptually, the issues may not have been difficult, factually they were both difficult and time-consuming.

[39] Next, the father argues that the mother's Bill of Costs is:

deficient in many important areas. The hearing was only two witnesses, being the parties themselves. The applicant's time for the pretrial preparation phase is vague, does not breakdown time spent in court as opposed to time spent preparing. There is no justification for almost 70 combined hours of time for this part of the bill of costs by both counsel and the legal assistant. The trial phase represents two and one-half days of evidence. Ten hours per day seems excessive as well for the carriage of the trial. . . . the bill should be limited to the legal aid tariff.

[40] I turn first to the submission regarding Legal Aid tariffs. It would appear to be settled law that in determining costs, the courts will not have regard to whether the successful party was represented by counsel pursuant to a legal aid certificate. In the case of Ramcharitar v. Ramcharitar, Wein, J. canvassed the extensive case law on this issue and came to this conclusion.

[41] I turn next to the trial time and the preparation for trial. The parties appeared before Justice Stanley Sherr at trial assignment court on January 11, 2018. The parties estimated trial would take 2-3 days.

[42] At the trial management court on February 1, 2018, I ordered that the evidence in chief of both parties was to be in the form of affidavits filed no later than February 12, 2018. I also ordered each party to file a brief in advance of trial, each brief to contain the party's opening statement as well as the draft order sought by each party.

[43] Accordingly, much of the typical trial work that would traditionally take place at the trial itself [6] – evidence in chief and opening statements – had to be performed by counsel outside of the courtroom and in advance of the commencement of trial.

[44] The trial in fact commenced on March 19, 2018 and ran into the third day, March 21, 2018.

[45] This court does not measure trial time by whether there are two witnesses called to give evidence or whether there are ten witnesses. The testimony of one witness might take a full day or more, whereas the testimony of five witnesses might take in total only a half a day. It depends on who the witnesses are and what their evidence is about. In terms of measuring court time, it is more about the court's determination whether the time required at trial, and whether the testimony elicited was relevant and useful, rather than being a waste of court time.

[46] In this particular case, the father asks the court to conclude that because only two witnesses gave evidence this somehow minimizes the work that had to be done during the course of trial or in the preparation leading up to trial. Interestingly, the father does not suggest anywhere in his submissions that the time required for the testimony of the witnesses was somehow wasted by counsel, or that the testimony elicited could have been achieved in less time spent in the course of trial.

[47] There was a considerable amount of money at stake for the parties. Had the court accepted the father's position that income to him be imputed at $40,000, he would have been required to pay child support at the rate of $975 per month.

[48] Instead, the court ordered him to pay $4,476 per month, a difference of $3,501 per month.

[49] Had the court accepted the father's position, he would not have had to pay any spousal support.

[50] Instead, the court ordered him to pay $1,240 per month in spousal support.

[51] The total difference between what the father sought and what the court ordered was $4,741 per month. Over the course of merely one year that amounts to $56,892 in favour of the mother. And this order will continue for years to come.

[52] Accordingly, in dollar terms alone, this trial was very significant and was of great importance to the parties.

[53] I turn next to the Bill of Costs and the father's submission that the time spent on the pre-trial phase, namely 67.9 hours for counsel and her legal assistant, is without justification. I refer back to my earlier comments about the work that was necessitated before the commencement of trial, more specifically:

1. The court order that all evidence in chief be prepared and filed in advance of the commencement of trial;
2. The court order that the parties file a brief in advance of trial, containing an opening statement;
3. The court order that the parties' brief was to include a draft order; and
4. The requirement for father to provide extensive documentary disclosure, five volumes of which then had to be reviewed and analyzed by mother's counsel.

[54] All of this would have required extensive pre-trial preparation by the mother's counsel.

[55] In Grimba v. Bossi, 2012 ONSC 2290, the court stated at paragraph 14 [my emphasis]:

I do not view it to be the court's function when fixing costs to second-guess successful counsel on the amount of time that should or could have been spent to achieve the same result, unless the time spent is so grossly excessive as to be obvious overkill. [7]

[56] I cannot conclude on the basis of the foregoing that the time spent by counsel was unnecessary and unreasonable.

[57] The hourly rate charged by the mother's counsel was not challenged in the father's costs submissions. That hourly rate is reasonable having regard to counsel's level of experience.

[58] However, there is a deficiency in the Bill of Costs in that it does not specify how many of the 67.9 hours were spent prior to the date of the Offer (March 7, 2018) and how many hours were spent after the date of the Offer. Instead, the Bill of Costs has a heading which states:

Pre-Trial Preparation Phase (November 15, 2017 – March 18, 2018)

followed by a description of the work performed, the total time spent by mother's counsel and the total time spent by her law clerk, all of which adds up to 67.9 hours.

[59] Counsel was clearly alive to the impact of subrule 18(14), as reflected in the body of her costs submissions and, accordingly, she ought to have broken out the time spent before March 7th and the time spent after that date. She did not do so, which places the court in the near-impossible position of having to make an arbitrary allocation for the purposes of determining what costs should be awarded on a full recovery basis, and what costs should be awarded on a less than full recovery basis.

[60] As that allocation is next to impossible for this court to make, I have decided to apply a 25% reduction to all of the 67.9 hours spent. I recognize that this across-the-board reduction may be overly harsh to the mother, but the obligation rested with her counsel to be more diligent in breaking out those hours in accordance with the provisions of subrule 18(14).

[61] Mother's counsel argued that the father engaged in bad faith behaviour. Were the court to find bad faith by the father this would automatically lead to a full recovery of costs pursuant to subrule 24(8).

[62] Father submits that there was no bad faith on his part.

[63] In my trial judgment I did make findings of credibility against the father, including a finding that he had likely falsified certain documents pertaining to his financial disclosure. Furthermore, the father failed entirely to provide documentary disclosure of his 2017 income, notwithstanding that he knew that this disclosure was an essential element of the case at trial.

[64] This kind of behaviour can lead to a finding of bad faith. See, for example, DePace v. Michienzi, and Kardaras v. Kardaras, 2008 ONCJ 616.

[65] There is little doubt that the father's conduct left much to be desired. The combination of his 2017 non-disclosure as well as this court's finding that he likely falsified documents, could have been sufficient to make a finding of bad faith by the father.

[66] That said, I am not persuaded that father's overall conduct in the trial constitutes bad faith.

[67] Finally, I turn to subrule 24(12)(b), "any other relevant matter".

[68] While the court is required to consider whether any other relevant matter exists which might impact on the amount of costs, the father has not made submissions on what those relevant considerations might be. Nor is the court aware of any such considerations which might otherwise impact on the scale of costs.

Conclusion

[69] I conclude that mother is entitled to her costs up to the date of her Offer, and full recovery of costs from the date of her Offer, as set out in her Bill of Costs.

[70] I reduce the "Pre-Trial Preparation Phase" (November 15, 2017 – March 18, 2018 - full costs of $20,210, inclusive of H.S.T.) by 25% and allow $15,158 for that portion of the costs.

[71] To those costs, I add a full recovery of costs for the balance of the work reflected in the Bill of Costs, namely, $15,526, inclusive of H.S.T, as well as disbursements in the amount of $741.04, inclusive of H.S.T., for a total of $31,425.04.

[72] I award costs in favour of the mother in the amount of $31,425.04, inclusive of all fees, disbursements and H.S.T.

[73] These costs will be payable by father to mother forthwith and shall be enforceable by the Family Responsibility Office as incidents of child support and spousal support.

Justice Robert J. Spence

August 27, 2018

Footnotes

[1] My original reasons for judgment provided for child support in the amount of $4,431. However, I amended that amount to $4,476 pursuant to a consent 14B motion form filed by the parties on June 19, 2018.

[2] This case was decided prior to the change in the wording of subrule 24(12) (previously subrule 24(11)), which did not use the umbrella words "reasonableness and proportionality" in the analysis of all the factors courts were to consider in determining the amount of costs. Nevertheless, the principles enunciated in Serra, supra, remain essentially the same in requiring the courts to decide costs on the basis of what is fair and reasonable.

[3] As at July 1, 2018.

[4] Principato v. Principato, 2013 ONSC 420, and Snelgrove, supra are merely two of many such cases. Furthermore, the Ontario Court of Appeal has reiterated the principles of reasonableness and proportionality on more than one occasion, for example, in MacKinnon v. MacKinnon, and May v. Smith, 2014 ONCA 524.

[5] The father's costs submissions frames the argument as full recovery v. partial recovery whereas what he really intends to argue is that even if full recovery is ordered by the court, the amount requested is unreasonable having regard to the considerations set out in subrule 24(12) [erroneously referred to by the father as 24(11)].

[6] Family law trials under the current Rules have evolved over the past number of years so that courts have increasingly ordered parties to do this kind of work beforehand, rather than at the actual trial itself, which had been the more traditional approach in previous years. More recently this kind of approach in family law cases has been codified through the enactment of subrule 1(7.2). What it means as a practical matter is that fewer courtroom hours are required to conduct the trial, and more of the "trial" work is performed ahead of time by the parties and by the judges in chambers.

[7] Citing Tri-Investments, [1991] O.J. No. 2292 (S.C.J.).