DATE: April 19, 2022 COURT FILE NO.: D41467/21
ONTARIO COURT OF JUSTICE
B E T W E E N:
DIANA MALGORZATA MULIK Applicant
- and -
MICHAEL WESLEY MCFARLANE Respondent
COUNSEL: Monika Curyk, for the Applicant Paul Cooper, for the Respondent
HEARD: In Chambers
JUSTICE S.B. SHERR
Costs Endorsement
Part One – Introduction
[1] On February 23, 2022, the court released its endorsement regarding the applicant’s motion for temporary spousal support. See: Mulik v. McFarlane, 2022 ONCJ 67. The court ordered the respondent to pay temporary spousal support to the applicant in the amount of $2,400 each month, starting on March 1, 2022.
[2] The court provided the parties with the opportunity to make written costs submissions. The applicant seeks her costs of $6,138, which she says are 80% of her full recovery costs. The respondent asks that no costs be payable.
Part Two – Legal Considerations
2.1 General Principles
[3] The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 set out that 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 Family Law Rules (all references to the rules in this decision are to the Family Law Rules).
[4] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.
[5] An award of costs is subject to the factors listed in subrule 24 (12), subrule 24 (4) pertaining to unreasonable conduct of a successful party, subrule 24 (8) pertaining to bad faith, subrule 18 (14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party. See: Berta v. Berta, 2015 ONCA 918, at paragraph 94.
2.2 Success
[6] Subrule 24(1) 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).
[7] To determine whether a party has been successful, the court should examine who was the successful party, based on the positions taken in the litigation. See: Lazare v. Heitner, 2018 ONSC 4861. This assessment includes the positions taken in the pleadings, and the specific relief sought at the hearing, if different. See: Kyriacou v. Zikos, 2022 ONSC 401. The court may also take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ); Todor v. Todor, 2021 ONSC 3463; Kyriacou v. Zikos, supra.
2.3 Subrule 18 (14)
[8] Subrule 18 (4) sets out that an offer shall be signed personally by the party making it and also by the party’s lawyer, if any.
[9] Subrule 18 (14) sets out the consequences of a party’s failure to accept an offer to settle that is as good as or better than the trial result of the person making the offer. It 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.
[10] 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)) or, in assessing the reasonableness of a party under sub-clause (iii) of subrule 24 (12) (a).
[11] 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 ONSC 4409.
[12] Close is not good enough to attract the costs consequences of 18 (14). The offer must be as good as or more favourable than the trial result. See: Gurley v. Gurley, 2013 ONCJ 482.
[13] The technical requirements of subrules 18 (4) and 18 (14) must be met to attract the costs consequences in subrule 18 (14). See: Sader v. Kekki, 2014 ONCJ 41; Jakubowski v. Kopacz-Jakubowski; Weber v. Weber, 2020 ONSC 6855; Clancy v. Hansman, 2013 ONCJ 702; Ajiboye v. Ajiboye, 2019 ONCJ 894.
2.4 Other Factors Affecting Costs Orders
[14] Subrule 24 (12) reads as follows:
24 (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.
[15] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.).
[16] The rules do not require the court to allow the successful party to demand a blank cheque for their costs. See: Slongo v. Slongo, 2015 ONSC 3327. The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. See: Jackson v. Mayerle, 2016 ONSC 1556.
[17] In determining the appropriate quantum, the court should consider the amount that the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation. See: Arthur v. Arthur, 2019 ONSC 938.
[18] A useful benchmark for determining whether costs claimed are fair, reasonable and proportionate is to consider the amount that the unsuccessful party paid for their own legal fees and disbursements in the same matter. See: Smith Estate v. Rotstein, 2011 ONCA 491; Durbin v. Medina, 2012 ONSC 640; Scipione v. Del Sordo, 2015 ONSC 5982; Zhang v. Guo, 2019 ONSC 5767; Laidman v. Pasalic and Laidman, 2020 ONSC 7068.
Part Three – Success
[19] The applicant made two offers to settle. Her first offer, dated January 7, 2022, was made in an email sent by her counsel to the respondent’s counsel. It was not signed by the applicant. The applicant acknowledges that the offer was not in compliance with subrule 18 (4). The second offer, dated January 22, 2022, was sent in compliance with subrule 18 (4).
[20] Neither of the applicant’s offers were more favourable to the respondent than the motion result, although they came close. In both offers, the applicant proposed that the respondent pay her temporary spousal support of $2,600 each month, starting on March 1, 2022. The court ordered $2,400 each month.
[21] The costs consequences set out in subrule 18 (14) do not apply to the applicant’s offers.
[22] The respondent made one offer to settle. The offer, dated February 3, 2022, was in compliance with subrule 18 (4). The respondent proposed to pay temporary spousal support of $1,350 each month, starting on March 24, 2022. This was well below the amount ordered.
[23] At the hearing of the motion, the applicant sought temporary spousal support in the amount of $2,763 each month. The respondent asked that spousal support be ordered in-between the low and mid ranges of the Spousal Support Advisory Guidelines (approximately $1,500 each month), based on assessing his annual income at $118,176. The court assessed the respondent’s annual income at $129,996 for the purpose of the support calculation – the same income that had previously been used, on consent, for the child support calculation (as the respondent had not provided updated financial disclosure). The $2,400 each month ordered by the court was set in-between the mid and high ranges of the Spousal Support Advisory Guidelines.
[24] The applicant was the more successful party on the motion.
[25] The presumption that the applicant is entitled to her costs has not been rebutted by the respondent.
Part Four – Amount of Costs
[26] The issue on the motion was important to the parties. It was not complex. The motion was made more difficult because the respondent contested that the applicant was a spouse, as defined in the Family Law Act, and took the position that she was not entitled to spousal support. He withdrew that position during his submissions. The applicant had to incur additional costs to provide the necessary evidence to establish that she was a spouse and entitled to spousal support.
[27] The respondent added to the difficulty of the motion by making unsupported allegations about the applicant’s lifestyle. The applicant had to spend additional time obtaining and presenting evidence to refute those allegations.
[28] The applicant acted reasonably on the motion. She made a reasonable offer to settle. The respondent acted reasonably by making an offer to settle. However, in its decision, the court found that the respondent had acted unreasonably by failing to support the applicant and the parties’ child, writing at subparagraph 41 (c):
The respondent has not met his financial responsibilities to the applicant and the child. It appears that he did not disclose his income to the applicant during their relationship and let her assume most of the financial responsibility for their family – even though he had the ability to pay support. He paid no child support until the applicant brought the case to court. Even after agreeing to pay child support in October 2021, he has gone into significant arrears, without explanation. His first support payment was made in December 2021. He has failed to provide the required financial disclosure. It is has become evident that he is resistant to paying fair support.
[29] The rates claimed by the applicant’s counsel are reasonable given her experience. She was called to the Bar in 2009 and her rate is $350 each hour.
[30] The respondent did not contest the reasonableness of the time spent on the motion by the applicant’s counsel. Subrule 24 (12.2) provides that a party who opposes a claim for costs respecting fees or expenses shall provide documentation showing the party’s own fees and expenses to the court and to the other party. The respondent did not do this. An adverse inference is drawn against him as a result. See: S.W.-S. v. R.S., 2022 ONCJ 11.
[31] After reviewing the applicant’s bill of costs the court finds that the amount of time claimed by her is slightly excessive. In particular, the applicant claimed time for redrafting her Reply affidavit because her original Reply affidavit had not been accepted by the court – it being in excess of the page limits set out in the Notice to the Profession. The applicant should not be indemnified for this.
[32] The court finds that the respondent should have reasonably expected to pay the costs that will be ordered if the applicant was successful on her motion. The court further finds that the respondent has the ability to pay these costs.
[33] The respondent asks for costs to be reduced because, in addition to his child and spousal support obligations in this case, he supports another child living with him and he supports his elderly mother. The court will take this into consideration by giving the respondent the opportunity to pay the costs over the remainder of 2022. However, given his poor payment history, he will be required to keep all support payments accrued after May 1, 2022, and his costs payments in good standing. Otherwise, the full amount of costs then owing shall become immediately due and payable.
Part Five – The Order
[34] Balancing all of these factors an order will go as follows:
a) The respondent shall pay the applicant’s costs of her motion in the amount of $5,085. This consists of $4,500 for fees and $585 for HST.
b) The respondent may pay these costs to the applicant in the amount of $565 each month starting on May 1, 2022. However, if he is more than 30 days late in making any costs payment, or any child or spousal payments accrued after May 1, 2022, the entire amount of the costs order then owing shall immediately become due and payable.
Released: April 19, 2022 _____________________ Justice S.B. Sherr