COURT FILE NO.: 07-FL-2834

DATE: 20121024

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: FRANK KEVIN SHAW, Applicant

AND

SUZANNE SHAW (now known as Suzanne Brunelle), Respondent

BEFORE: Blishen J.

COUNSEL:
Ross Stewart, for the Applicant

Michele Labrosse and H. Richard Shanbaum, for the Respondent

HEARD: By Written Submissions

amended ENDORSEMENT regarding costs

This is an amendment to the Endorsement on Costs released October 22, 2012. The amendment occurs at paragraph 37.

Introduction

[ 1 ] This case involved a number of family law claims as well as Ms. Brunelle’s claim for damages resulting from an alleged assault by Mr. Shaw. It was agreed that the trial be divided into two parts, the first to deal with the parties’ family law claims, and the second, Ms. Brunelle’s claim for damages.

[ 2 ] Prior to trial, the parties resolved the majority of the family law issues by partial Minutes of Settlement dated February 23, 2011. It was agreed that the division of net family property be by way of an equalization payment from Suzanne Brunelle to Kevin Shaw in the amount of $40,000.00, subject to a determination of the location, possession and value of certain items Mr. Shaw alleged belonged to him but were retained by Ms. Brunelle after separation. That part of the trial lasted three days.

[ 3 ] The second part of the trial on the damages claim was adjourned for approximately two and a half months and lasted seven days.

[ 4 ] Ms. Brunelle argued that overall, she was the more successful party with respect to both issues, particularly considering her counsel’s last minute email offer to settle for $50,000.00 on all claims.

[ 5 ] Mr. Shaw acknowledges that overall, Ms. Brunelle was the more successful party but argues that the costs requested by counsel for Ms. Brunelle in the total amount of $144,335.46 are excessive when considering: the factors listed under Rule 24(11) of the Family Law Rules , O. Reg. 114/99 (the “ Rules ”), his success on part one of the trial and the fact that part two of the trial was adjourned for Ms. Brunelle to amend deficient pleadings.

Success

[ 6 ] Pursuant to Rule 24(1) of the Rules , there is a presumption that a successful party is entitled to costs. Offers to settle are important and can be the yardstick by which to measure success. They are significant in determining both liability for costs and quantum.: see Osmar and Osmar , 2000 20380 (ON SC) , [2000] O.J. No. 2504 (Sup. Ct.).

[ 7 ] As stated by Mackinnon J. in Neill v. Egan , 2000 21156 (ON SC) , [2000] O.J. No. 1567, 2000 CarswellOnt 1516, at para. 6 :

Both parties should make an offer covering in detail all aspects of the case. Even where the case appears intractable, an offer can serve to settle some issues or narrow the issues, with a saving to time and effort for all concerned.

[ 8 ] Under the Rules , offers to settle are quasi obligatory. Service of at least one offer to settle should be a basic step in every family law proceeding.

[ 9 ] Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the Rules to deal with cases justly ( Rule 2(2) ). This includes taking appropriate steps to save time and expense (Rule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focussing parties and often narrowing issues in dispute.: see Klinkhammer v. Dolan , 2009 ONCJ 774 (Ont. C.J.) and Rondelet v. Neff , 2011 ONCJ 407 (Ont. C.J.).

[ 10 ] Although he provided an offer to settle on the issues of equalization, spousal support and the disbursement of the balance of net proceeds of sale of the matrimonial home, which was ultimately incorporated into partial Minutes of Settlement, Mr. Shaw made no offer to settle on either of the two issues which proceeded to trial: accounting for chattels and damages for assault. Only Ms. Brunelle provided an offer to settle on those two issues. In fact, she provided two offers:

1. On April 20, 2010, in her Settlement Conference Brief, she offered to settle for a lump sum payment by Mr. Shaw of $135,000.00 to settle “all outstanding issues in this litigation” and to “fully satisfy all financial claims that the parties may have against each other”. This offer was a formal Offer to Settle signed by Ms. Brunelle and her lawyer and met the requirements of Rule 18(14) of the Rules ;

2. On February 20, 2011, just prior to trial, counsel for Ms. Brunelle sent Mr. Shaw’s counsel an email offer to resolve all issues based on the recommendations of the judge who conducted a final settlement conference just prior to trial, for $50,000.00 with a confidentiality, non-communication clause and without any admission of liability or fault. Mr. Shaw did not respond to this last minute offer and the trial proceeded on the two issues previously outlined. This offer does not meet the criteria under Rule 18(14) but, under Rule 18(16), may still be considered in exercising discretion over costs.

[ 11 ] Considering her offers to settle, in particular her final email offer, I find that overall, Ms. Brunelle was the successful party on the issues at trial. The net result to her is significantly more than her last offer of $50,000.00. Although this was not a formal offer as contemplated under Rule 18(14) , it was clear Ms. Brunelle was prepared to resolve all outstanding issues and had instructed her counsel in this regard. As previously noted, there was no response to that offer.

Prejudgment Interest

[ 12 ] In determining the net amount payable to Ms. Brunelle, it is necessary to accurately calculate prejudgment interest. In reviewing the costs submissions of counsel, there is a dispute as to the appropriate method of calculation. The method utilized by counsel for Ms. Brunelle is the correct one, although the rate, given the definition under section 127(1) of the Courts of Justice Act , R.S.O. 1990, Chapter C. 43, should be 4.5% as opposed to 4.8%. Therefore, the prejudgment interest on the damages award of $90,000.00 from the date of the cause of action, August 22, 2007, to the date of the judgment, January 26, 2012, is to be calculated as follows: $90,000.00 x 4.5% ÷ 365 days per year x 1,617 days = $17,942.05. The total amount therefore owing to Ms. Brunelle on the damages claim is $90,000.00 + $31,221.00 for future care costs + $17,942.05 prejudgment interest for a total of $139,163.05.

[ 13 ] Mr. Shaw was successful in obtaining an order for an additional $10,000.00 on his equalization payment, for the value of the chattels retained by Ms. Brunelle. Therefore, $10,000.00 is to be added to the equalization payment as per the partial Minutes of Settlement for a total of $43,980.88. Using the same method of calculation results in prejudgment interest on the total equalization payment of $8,767.86 for a total of $52,748.74.

[ 14 ] Therefore, the net payment to Ms. Brunelle should be $86,414.00, which as previously stated, is significantly more than the $50,000.00 she offered by way of email on February 20, 2011.

[ 15 ] Overall, Ms. Brunelle was the more successful party.

Chattels Claim

[ 16 ] Mr. Shaw was partly successful on his claim for a payment for chattels retained by Ms. Brunelle. It is difficult to value the total claim made by Mr. Shaw at trial. He valued his late wife’s jewellery at $17,500.00, added $3,500.00 for paints and paintbrushes, and an unspecified amount for china, silver and other items. In addition, he estimated a value of $18,000.00 for silverware from the Estate of his mother. Therefore, the claim was for a minimum of $40,000.00 plus the unspecified value of other chattels. The order was for $10,000.00 to be added to the equalization payment.

[ 17 ] Ms. Brunelle argues that despite the presumption under Rule 24(1) of the FLA that the successful party is entitled to costs, Mr. Shaw’s partial success was not proportionate to the amounts in issue, the outcome and the costs incurred in trying this issue. She argues Mr. Shaw behaved unreasonably and therefore should be deprived of any costs with respect to the chattels claim and, in fact, Ms. Brunelle should be awarded costs.

[ 18 ] Rule 24(5) indicates that:

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. O. Reg. 114/99, r. 24 (5) .

[ 19 ] As noted above, Mr. Shaw made no offer to settle pursuant to Rule 18 or otherwise with respect to the chattels claim. On the other hand, Ms. Brunelle made two offers. The final offer of February 20, 2011 was a reasonable one and should have been carefully considered with respect to a global resolution of all issues.

[ 20 ] Rule 24(4) indicates that a successful party who behaves unreasonably can be deprived of all or part of his or her costs or can be ordered to pay the unsuccessful party’s costs. Mr. Shaw is claiming $3,500.00 as partial indemnity costs for preparation and attendance at the trial with respect to the chattels claim. His unreasonable behaviour should be considered with respect to quantum along with the other factors listed under Rule 24(11) as follows:

(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. O. Reg. 114/99, r. 24 (11) .

[ 21 ] The issues for the first part were not particularly complex or difficult. As noted above, Mr. Shaw behaved unreasonably in not providing any offer to settle on this part of the trial and in not considering the reasonable offer made by Ms. Brunelle for a global resolution. Counsel for Mr. Shaw’s hourly rate and time spent in preparation and attendance at trial, I find to be reasonable as are the expenses incurred. Given the unreasonable behaviour with respect to this claim, I find a partial indemnity cost award of $1,750.00 reasonable. This amount will be considered in determining the appropriate final order for costs.

Claim for Costs of Trial Adjournment

[ 22 ] On February 25, 2011, the trial was adjourned and Ms. Brunelle was given leave to amend her Answer to provide more detail as to the allegations being made, the specifics of the injuries and amounts claimed for those injuries. The original Answer in which Ms. Brunelle made a claim for damages stated only “a claim for damages for the intentional infliction of physical and emotional harm, the amount of which is to be specified”.

[ 23 ] The amended Answer served and filed by Ms. Brunelle contained substantial new claims and new factual allegations. Four pages were added as Schedule A to the amended Answer. Pursuant to Rule 11(2), Ms. Brunelle could have amended her Answer without the court’s permission in a timely fashion by serving and filing an amended Answer and the consent of Mr. Shaw. That action was not taken. Instead, on February 25, 2011, the portion of the trial dealing with the claim for damages was adjourned for Ms. Brunelle to amend her pleadings. Costs of the adjournment were reserved to be dealt with at the end of the trial.

[ 24 ] Rule 11(3) states:

On motion, the court shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate. O. Reg. 114/99, r. 11 (3) .

[ 25 ] Mr. Shaw now claims his costs thrown away as a result of the adjournment, in the amount of $4,725.53. Ms. Brunelle argues that the details of the amended Answer were no surprise to Mr. Shaw, as full disclosure had been provided as to the allegations and the specifics regarding the injuries. She argues the amended Answer was simply a repetition of allegations set out in a trial management conference brief and a repeat of the claim disclosed at the settlement conference in August 2010. All medical reports had been disclosed and questioning had taken place.

[ 26 ] Despite the disclosure provided, the importance of accurate and detailed pleadings cannot be underestimated. Although a primary purpose of pleadings is to provide full and complete disclosure of all claims and allegations to other parties, pleadings are also crucial for the court. To commence a trial on a claim for damages with no specifics whatsoever in the Answer is unacceptable. Therefore, I find Mr. Shaw entitled to costs for the adjournment and for additional disbursements incurred in the amount of $3,000.00.

Damages Claim

[ 27 ] As previously stated, overall Ms. Brunelle was the successful party. In particular, she was successful with respect to her claim for damages and is entitled to costs.

[ 28 ] Ms. Brunelle’s counsel claims full indemnity costs in the amount of $139,335.46 relying on Rule 18(14), which indicates full recovery costs may be awarded from the date of the offer when a party obtains an order that is as favourable or more favourable than the offer. It is agreed that the offers to settle of $135,000.00, reduced to $50,000.00 prior to trial, dictate that a full recovery costs order should be made. I disagree.

[ 29 ] As noted above, the net payment to Ms. Brunelle, taking into consideration the equalization payment and the additional $10,000.00 payable to Mr. Shaw, along with Ms. Brunelle’s damages, future care costs, and prejudgment interest on both amounts, results in a net payment to her of $86,414.00. Therefore, she obtained a result that is less favourable than her first formal offer made under Rule 18. It is correct that the result is more favourable than the last offer made of $50,000.00; however, that offer was made very late in the day and does not meet the criteria outlined under Rule 18(14) . I do not find it reasonable to order full recovery costs in this case.

[ 30 ] In considering the appropriate quantum of costs, as previously stated, the court must consider the factors outlined under Rule 24(11) as follows:

1. importance, complexity or difficulty of the issues;

[ 31 ] The damages claim was extremely important to Ms. Brunelle. Her injuries were severe and she had suffered significantly. In addition, her credibility and reliability were challenged and disputed. Ultimately, she was found to be the more credible witness and damages were awarded for the assault perpetrated upon her by Ms. Shaw. The admissibility of similar fact evidence was a difficult issue and added time to the trial. In addition, the evidence of future care costs was complicated and hotly contested, as were all aspects of Ms. Brunelle’s claim.

2. the reasonableness or unreasonableness of each party’s behaviour in the case;

[ 32 ] As previously stated, Mr. Shaw acted unreasonably in providing no offer to settle the claim for damages and in not responding or actively considering the offers made by Ms. Brunelle. Her last offer was significantly less than the net payment ordered and, if accepted, would have avoided 10 days of trial.

3. the lawyer’s rates;

[ 33 ] Counsel for Ms. Brunelle was called to the Bar in 1972 and his hourly rate is $400.00 per hour which I find to be high but commensurate with his experience.

4. the time properly spent in preparing the case.

[ 34 ] Counsel for Ms. Brunelle docketed a total of 264.9 hours in preparing the case and attending at trial. Although the case was difficult and complicated, I find the amount of time spent somewhat excessive.

[ 35 ] In particular, I note the following:

i. Rule 24(10) makes it clear that promptly after each step in the proceeding, the court is to decide in a summary manner who, if anyone, is entitled to costs and set the amount of costs. Nevertheless, counsel for Ms. Brunelle’s Bill of Costs outlines time for preparation and attendance at a case conference;

ii. The time allotted for drafting a motion to adjourn should not be allowed. On the first day of trial, the adjournment motion was denied. In addition, the second part of the trial was adjourned due to the Respondent’s failure to amend her Answer in a timely manner;

iii. Ms. Brunelle had two counsel; one to conduct the part of the trial dealing with the chattels claim and another to deal with the damages claim. Mr. Shanbaum, who represented Ms. Brunelle for the damages portion of the trial, claims time to attend at the first part of the trial, assist and audit witnesses’ evidence. I find this unnecessary. Ms. Brunelle’s counsel on the chattels claim was highly experienced and perfectly capable of conducting the trial and providing Mr. Shanbaum with a summary of the witnesses’ evidence and their demeanour, prior to the commencement of the second part of the trial.

[ 36 ] Fixing an order of costs is not a science and is no longer a mathematical exercise. As stated by Justice Aston in Delellis v. Delellis , 2005 36447 (ON SC) , [2005] W.D.F.L. 4562, 2005 CarswellOnt 4956, at para. 9 :

...recent cases under the Rules of Civil Procedure , R.R.O. 1990, Reg. 194, as amended, have begun to de-emphasize the traditional reliance upon "hours spent times hourly rates" when fixing costs. In Boucher v. Public Accountants Counsel for the Province of Ontario (2004), 71 O.R. (3d) 291, 188 O.A.C. 201, 48 C.P.C. (5th) 56, 2004 14579 , [2004] O.J. No. 2634 (Ont. C.A.), the Court of Appeal stated that "fixing costs does not begin or end with the calculation of hours times rate". Costs must be proportional to the amount in issue and the outcome. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant. In that vein, the reasonable expectation of the losing party concerning the quantum of costs is a relevant factor to consider. ...

Conclusion

[ 37 ] Based on all the considerations and factors outlined above, I find a fair and reasonable award of costs payable by Mr. Shaw to Ms. Brunelle to be $75,000.00 for the damages claim less the costs by Ms. Brunelle to Mr. Shaw for the chattels claim and trial adjournment of $4,750.00 for a net payment of costs inclusive of disbursements, HST and GST to Ms. Brunelle of $70,250.00., payable forthwith .

Blishen J.

Date: October 24, 2012

COURT FILE NO.: 07-FL-2834

ONTARIO SUPERIOR COURT OF JUSTICE RE: FRANK KEVIN SHAW, Applicant AND SUZANNE SHAW (now known as Suzanne Brunelle), Respondent BEFORE: Blishen, J. COUNSEL: Ross Stewart, for the Applicant Michele Labrosse and H. Richard Shanbaum, for the Respondent amended ENDORSEMENT regarding costs Blishen, J.

Released: October 24, 2012