ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 09-43568
DATE: 2012-04-13
BETWEEN: Martin Richard Grimba – and – Elaine Ethel Bossi
Pamela L. Hebner, for the Applicant
Michael B. Wannop, for the Respondent
HEARD: September 27, 28, 30, 2011; October 4, 2011 and February 6, 2012.
THE HONOURABLE MR. JUSTICE P. B. HAMBLY
RULING ON COSTS
[ 1 ] The facts are set out in my judgment dated February 29, 2012. I will not review them here other than what is necessary for this ruling on costs.
The Positions of the Parties and the Offers
[ 2 ] The wife claims costs including taxes and disbursements in the amount of $30,541.65 on a partial indemnity scale to September 19, 2001 and $33,648.69 on a substantial indemnity scale after September 19, 2001 for a total of $64,390.34
[ 3 ] The judgment required that the husband pay lump sum support of $75,000 within three months and that the wife pay child support in the amount of $533 per month from March 1, 2012 to April 1, 2013 and in the amount of $266 per month from May 1, 2013 until one year after Curtis has finished his course at George Brown College.
[ 4 ] The husband's offer to settle dated May 24, 2011 required that he pay lump sum spousal support of $15,000, that he pay guideline child support to the wife for the four months of May, June, July and August, 2011 for two children and then for one child in these months to August 31, 2013. The wife's offer to settle dated September 29, 2011 provided that the husband pay lump sum spousal support of $30,000 or $875 per month for five years and that the husband pay all the post secondary school expenses of the children. These are the offers on which the parties went to trial.
[ 5 ] The husband's position is that 80% of the time at the trial dealt with spousal support and 20% dealt with child support. The judgment was less favorable to the wife on child support than was the husband's offer. It was more favourable to the wife on spousal support than was the husband's offer. Therefore, the husband should pay to the wife the set off amount of 60% of her reasonable costs. The wife's claim for costs is unreasonable. Her lawyer has not produced the accounts that he has rendered to her. Counsel for the husband has produced the accounts that she rendered to him. The wife is entitled to 60% of the account to the husband by the husband's lawyer for fees calculated on a partial indemnity scale prior to September 19, 2011. This amount is two thirds of the amount that he was actually billed. This figure is $6,037.30 plus HST in the amount of $784.49 for a total of $6,822.49. The wife is entitled to 60% of the amount billed to the husband by the husband's lawyer for fees after September 19, 2011 calculated on a substantial indemnity basis. This figure is $10,623.60. The husband concedes assessable disbursements in the amount of $675.05. 60% of this amount is $405.03. In summary he states the following in his written submissions:
- As a result of all of the foregoing, I submit the appropriate award of costs in Ms. Bossi's favour is calculated as follows:
Fees prior to September 19, 2011
$ 6,037.60
Plus HST
$ 784.89
Fees subsequent to September 19, 2011
$10,623.60
Plus HST
$ 1,381.07
Disbursements
$ 405.03
Total
$19,232.19
[ 6 ] He requests that he be given three years to pay. He points out that he does not have the savings to pay the lump sum award of spousal support. He will need to borrow the money. A costs award would increase the burden on him.
Discussion
[ 7 ] Attached hereto is Schedule A in which are set out the relevant section of the Courts of Justice Act and the relevant rules from the Family Law Rules and the Rules of Civil Procedure.
[ 8 ] The prevailing principle in fixing costs must always be "reasonableness" in all the circumstances. The Court of Appeal in Boucher v. Public Accountant , 2004 14579 (ON CA) , [2004] O.J. No. 2634 in the judgment of Justice Armstrong stated the following:
37 The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.
[ 9 ] The ultimate source of authority for a judge in fixing costs is section 131 (1) of the Courts of Justice Act . Family Law Rules 18 and 24(11) provide useful guidance in the exercise of the judge's discretion but they are not binding on the court. The Court of Appeal in M .(C.A.) v. M. (D.) (2003), 2003 18880 (ON CA) , 43 R.F.L. (5 th ) 149 in the judgment of Justice Rosenberg stated the following:
40 Reference should also be made to s. 131(1) of the Courts of Justice Act, which provides that subject to the provisions of an Act "or rules of court, the costs of and incidental to a proceeding ... are in the discretion of the court". It is apparent that the Family Law Rules have circumscribed the broad discretion granted by s. 131(1). See Biant v. Sagoo at para. 15. They have not, however, completely removed the trial judge's discretion. Thus, the general provision, Rule 24(1), enacts a "presumption" that the successful party is entitled to costs of the case but does not require that the successful party is always entitled to costs.
[ 10 ] Counsel for the husband has included in her written submissions offers which were exchanged by the parties while they were in the collaborative law process. She also makes reference to the opinion of the judge who conducted the settlement conference. I doubt if any of this material should have been placed before me. (See the exhaustive discussion of Justice Pazaratz in Entwistle v. MacArthur , 2007 17375 (ON SC) , [2007] O.J. No. 1958 at paras. 13-44 ; see also the decisions Savoie v. Richard , 2004 47793 (ON SC) , [2004] O.J. No. 5140 of Perkins, J., Sloss v. Forget , 2005 4843 (ON SC) , [2005] O.J. No. 747 of Linares de Sousa, J. and Guy v. Tulloch , [2004] O.J. No. 2198 of Mackinnon, J.)
[ 11 ] The judgment is based on the following principles for which case law and statute law are cited:
A marriage of 19 years is a long term marriage.
Where a woman in a long-term marriage is out of the workforce for a substantial period of time for the purpose of raising the children of the marriage and while she is out of the workforce the husband is advancing his career – in this case 13 years, five years completely out of the workforce and eight years working part-time for the purpose of raising two boys – she is entitled to compensatory support.
A woman who has custody of the children of the marriage after its breakdown in a long-term marriage – albeit in this case shared custody – is entitled to substantial support without a time limit.
Where a separation agreement provides for a review of spousal support a judge conducting the review is required to treat the review as an initial application.
In determining quantum and duration of support the court should consider the Spousal Support Advisory Guidelines (SSAG).
A court should consider the advantages and disadvantages of making a lump sum award for support.
[ 12 ] The husband's offer dated May 24, 2011, which is the offer on which he went to trial, does not reflect the wife's entitlement to compensatory support, the SSAG or that the provision for a review of support in a separation agreement is the equivalent of an initial application. In my judgment in para. 35, I stated "Put simply, they (the parties) do not like each other." This was probably a substantial understatement. Mr. Grimba did not acknowledge in the separation agreement and he did not acknowledge at trial that Ms. Bossi is entitled to compensatory support. This is the law. There is high authority for this proposition which I referred to in my judgment. Although he is a competent business person he was not capable of making an intelligent business decision in dealing with his wife's claim for spousal support based on the statute law and case law. He could have settled spousal support for a lump sum of $30,000 or $875 per month for five years. This equates to total payments of $52,500. I expect that Mr. Grimba is at a 50% marginal tax rate. If he had accepted the second alternative. He would likely only have paid $26,000 and that over five years. He must now pay $75,000 in lump sum support within three months for which he will receive no tax relief. He must also pay his own lawyer. He chose to roll the dice on a losing proposition and he now must suffer the consequences. I have seldom seen a case where the folly of a husband's failure to take a reasonable position on spousal support based on the law is better illustrated.
[ 13 ] The factors which the court should take into account in fixing costs are set out in Family Law Rule 24(11). Family Law Rule 1(7) states that where the Family Law Rules do not cover a matter the court may refer to the Rules of Civil Procedure . Rule 57.01 of the Rules of Civil Procedure sets out the factors which should govern the court’s discretion in exercising its discretion under section 131 of the Courts of Justice Act . They parallel the factors set out in Family Law Rule 24(11) except for the following:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
[ 14 ] I essentially agree with the position of the husband’s lawyer as to the proper approach to determine the costs that the husband should pay subject to quantum and date of payment. I am not necessarily of the opinion that her accounts would wholly survive an assessment. I agree that generally the wife’s bill of costs is excessive. The charges for legal research, the work of administrative assistants who are employees and for the items listed in the husband's written submissions on costs in paragraph 16 (b) are properly regarded as overhead that are covered by the lawyer’s fees. Most of the photocopying which is claimed relates to the voluminous documentation that the wife’s lawyer sought to file in the event that I held that the parole evidence rule did not apply. I held that it did apply. Agency accounts and other accounts where the accounts are not produced should not be allowed. I agree with the husband’s position on what disbursements should be allowed. The wife’s bill of costs smacks of the “obvious overkill” referred to by Justice Feldman (as she then was) in Tri-Investments , [1991] O.J. No.2292 where she stated the following:
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.
See also the comments of Justice P. J. Flynn in Southworks Outlet Mall Inc. v. Bradley (2009), 2009 55323 (ON SC) , 97 O.R. (3d) 796 generally and particularly at para. 26.
[ 15 ] The parties have some distance to go in satisfying their obligation to support their children in their pursuit of post secondary school education. Mr. Grimba has not satisfied his legal obligations to his wife. There is no question that he has done so and that he will continue to do so with respect to his children. I am sensitive to what the Court of Appeal said in the judgment of Justice Rosenberg in M. (C.A.) v. M. (D.) as follows:
42 I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18. Thus, while subrule 24(11) enumerates a number of factors that must be taken into account, the person setting the amount of the costs is directed to take into account "any other relevant matter". I agree with Aston J. in Sims-Howarth at para. 4, that the "Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs". In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. See Biant at para. 17 and Brennan v. Brennan, [2002] O.J. No. 4743 (S.C.J.) at para. 11 . In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child. That, however, was not a consideration in this case. The mother is not the custodial parent.
How much should the husband be relieved in fixing costs from his own folly by his continuing responsibility for the support of Evan and Curtis?
[ 16 ] In this case the losing party has produced the accounts which his lawyer has sent to him. The winning party has not. In Risorto v. State Farm Mutual Automobile Insurance Co ., 2003 43566 (ON SC) , [2003], 64 O.R. (3d) 135 at para. 10 , Justice Winkler (as he then was) held that in the absence of a statement of costs of the party against whom costs were to be assessed setting out the time spent and the hourly rate to be applied, "the attack on the quantum of costs, insofar as the allegations of excess are concerned ... is no more than an attack in the air.". By analogy, Justice Winkler's reasoning applies to the successful party who chooses not to disclose what her lawyer has charged her or plans to charge her. Perhaps her lawyer is working on a contingency or is delaying sending an account to his client depending on the results. In either case the proposed actual cost to the client should be disclosed.
[ 17 ] I said that I agreed with the husband’s position on costs subject to quantum and date of payment. I will make an order that the husband pay costs to the wife by the same day that I have ordered that he pay the lump sum support. I expect that he will be able to get a loan at the bank. If he cannot, Ms. Bossi may levy against his assets. Ms. Bossi is entitled to her costs. What she will ultimately pay to her lawyer is between her and her lawyer. I will reduce the amount suggested by the husband’s lawyer based on what she has charged her client and I will set the time that he is required to pay as the same date that he is required to pay the lump sum. As I said in my judgment at paragraph 35 “It is desirable that contact between them (the parties) be terminated so far as possible.”
Result
[ 18 ] I gave Mr. Grimba three months in which to raise the sum of $75,000 which I ordered that he pay to Ms. Bossi by way of lump sum support. The deadline is May 29, 2012. I order that Mr. Grimba pay costs to Ms. Bossi in the amount of $15,000 by that date. This makes his total obligation to pay Ms. Bossi $90,000 by May 29, 2012.
P.B. Hambly J.
Released: April 13, 2012
Schedule A
Courts of Justice Act
131.--(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
Family Law Rules
1 (7) If these rules do not cover a matter adequately, the court may give directions, and the practice shall be decided by analogy to these rules, by reference to the Courts of Justice Act and the Act governing the case and, if the court considers it appropriate, by reference to the Rules of Civil Procedure.
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.
24.(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
FACTORS IN COSTS
(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.
PAYMENT OF EXPENSES
(12) The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer's fees.
Rules of Civil Procedure
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party's denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
Authority of Court
(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;
(c) to award all or part of the costs on a substantial indemnity basis;
(d) to award costs in an amount that represents full indemnity; or
(e) to award costs to a party acting in person.
COURT FILE NO.: 09-43568
DATE: 2012-04-13
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N: Martin Richard Grimba Applicant
and – Elaine Ethel Bossi Respondent
RULING ON COSTS
P.B. Hambly J.
Released: April 13, 2012
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