ONTARIO
SUPERIOR COURT OF JUSTICE
WELLAND COURT FILE NO.: 119/10
DATE: 2012/03/09
BETWEE N:
SUSAN MARIE NEUFELD
Jeffrey Richey, for the Applicant
Applicant
- and -
HENRY NEUFELD
Paul A. MacLeod, for the Respondent
Respondent
The Honourable Mr. Justice D.J. Taliano
COSTS ENDORSEMENT
[ 1 ] This is a costs ruling from an equalization Order requiring Susan Marie Neufeld (“Applicant”) to pay $89,502.95 to Henry Neufeld (“Respondent”).
[ 2 ] The matter was heard on July 26, 2011. The Order was released on November 24, 2011. Written submissions for costs were provided by the Respondent on November 29, 2011. The Applicant replied on December 31, 2011. The Respondent responded on January 11, 2012.
[ 3 ] The equalization Order resolved four issues:
a. the value of the Respondent’s pension;
b. the value of the Respondent’s retirement gratuity;
c. whether any portion of a severance package received by the Applicant in 2001 should be considered a pre-marital asset and excluded from the net family property equalization process; and
d. whether the Applicant could recover the expenses she incurred for readying the matrimonial home for sale.
[ 4 ] The majority of the issues were decided in favour of the Respondent, although the Applicant was successful regarding her severance package.
[ 5 ] An award of costs is authorized by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, as amended (“ CJA ”), which states that, subject to the provisions of an Act or rules of court, the court has a discretion in deciding by whom and to what extent costs shall be paid. The principles set out in Rule 24 of the Family Law Rules, O. Reg. 114/99, as amended (“the Rules ”) circumscribe the broad discretion conferred by s. 131.
LAW AND ANALYSIS
[ 6 ] There is a presumption established by sub-rule 24(1) that a successful party is entitled to costs. Where success is divided, sub-rule 24(6) states that the court may exercise its discretion to apportion costs as appropriate. In this case, the recovery by the respondent of a judgment for $89,502.95 presumptively entitles him to an award of partial indemnity costs. However, the respondent seeks a combination of both partial indemnity and full recovery costs by reason of having made several offers to settle prior to trial. Those offers require consideration and I will deal with this issue momentarily.
[ 7 ] Sub-rule 24(10) establishes the general principle that the court should determine the issue of costs promptly after each step in the case. Counsel for the applicant submits that sub-rule 24(10) bars the respondent from costs for preparation and attendances at the case conference, settlement conference and trial management conference as no cost order was made at the time nor was an award of costs reserved for the future. I agree. The Ontario Court of Appeal settled this issue in Islam v. Rahman, 2007 ONCA 622 , [2007] O.J. No. 3416 (C.A.) , at para. 2 . Accordingly, I have deducted from the respondent’s bill of costs 8.5 hours or $3,000, which sum represents compensation for time spent at these conferences.
[ 8 ] Sub-rule 24(8) stipulates that evidence of bad faith may prompt the court to order costs against an offending party on a greater scale. Counsel for the respondent submitted that the applicant exhibited bad faith by failing to make an offer to settle the litigation prior to trial. Be that as it may, I am not prepared to hold that the simple failure to make an offer is sufficient to warrant a finding of bad faith so as to attract cost sanctions. The applicant did not exhibit the requisite intent to harm, conceal or deceive, which are necessary elements to support a finding of bad faith: S.(C.) v. S.(M.) (2007), 2007 20279 (ON SC) , 38 R.F.L. (6 th ) 315 (Ont. S.C.), at para. 17 , affirmed by the Court of Appeal 2010 ONCA 196 . However a party’s failure to serve an offer to settle may be viewed as an adverse factor in determining the issue of costs: M.(J.V.) v . P.(F.D.), 2011 ONCJ 616 , [2011] O.J. No. 5441 (Ont. C.J) .
[ 9 ] Sub-rule 24(11) sets out the following factors which the court must consider in setting the amount of costs once liability for costs has been established:
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.
[ 10 ] As previously indicated, the offers to settle made by the respondent must also be taken into account, by virtue of Rule 18. Sub-rule 18(4) mandates that an offer to settle be signed personally by the party making it and also by the party’s lawyer, if any. Sub-rule (14) establishes costs consequences for failing to accept an offer to settle that complies with the requirements of Rule 18. However, the costs consequences are only triggered when certain conditions precedent stipulated in sub-rule 18(14) are met. The rule reads as follows:
(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.
[ 11 ] According to sub-rule 18(16), the court may also consider any written offer to settle, the date it was made and its terms, even if the conditions above are not met.
[ 12 ] The respondent made two offers to settle both of which were more favourable to the applicant than the final judgment. The first offer was dated April 18, 2011 and proposed to settle the matter for a payment to the respondent of $80,000. The second offer was made on July 25, 2011 and it proposed to settle the matter for $70,000. The last offer was open for acceptance until 9:59 am on July 26 th , 2011, which was the trial date. Accordingly, the requirement that the offer precede the trial by at least seven days has not been satisfied. In addition, neither of these two offers was signed by counsel on behalf of the respondent. Finally, the fact that the last offer expired before the start of the hearing fails to satisfy Rule 18(14) 3.
[ 13 ] For the foregoing reasons, the respondent has not met the preconditions for an award of full recovery costs.
[ 14 ] However, I find that the applicant’s failure to serve any offers to settle and her decision to ignore both of the respondent’s offers are factors which militate against the applicant.
[ 15 ] An additional factor which the court must consider is one of proportionality. Costs need to be proportional to the issues, the amounts in question and the outcome of the case. Amounts actually incurred by the successful litigant may therefore not be determinative: Delellis v. Delellis , 2005 36447 (ON SC) , [2005] O.J. No. 4345 (Ont. S.C.J.) ; Hackett v. Leung , 2005 42254 (ON SC) , [2005] O.J. No. 4888 (Ont. S.C.J.) .
[ 16 ] After considering all of the foregoing cases, the factors set out in Rules 18 and 24, and the written submissions of counsel, I fix the Respondent’s costs for which the applicant is responsible, in the sum of $17,000 plus disbursements of $836.24 , plus applicable GST/HST.
Taliano J.
Released: March 9, 2012
WELLAND COURT FILE NO.: 119/10
DATE: 2012/03/09
ONTARIO SUPERIOR COURT OF JUSTICE BETWEE N: SUSAN MARIE NEUFELD Applicant - and - HENRY NEUFELD Respondent COSTS ENDORSEMENT Taliano J.
Released: March 9, 2012