CITATION : Fyfe v. Jouppien, 2012 ONSC 97
COURT FILE NO.: 676/10
DATE: 2012-01-04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Heather Jane Fyfe Applicant – and – Jon-Karl Jouppien Respondent
Frederick Cameron, counsel, for the Applicant
Robert Stewart, counsel for the Respondent
cOSTS jUDGMENT
I. BACKGROUND AND POSITIONS OF THE PARTIES ON THE ISSUE OF COSTS
[ 1 ] These are my Reasons on the issue of costs in connection with a motion which I heard on July 21, 2011 (“the Motion”). I released my Judgment relating to the Motion on September 16, 2011, and invited counsel to file written submission on the issue of costs. I received written submissions from counsel for the Applicant on September 29, 2011, and from counsel for the Respondent on October 27, 2011.
[ 2 ] The Respondent brought the Motion to request temporary spousal support from the Applicant. In my Reasons for Judgment on the Motion, I found that although the Respondent had made out a prima facie case for entitlement to spousal support on non-compensatory grounds, no temporary spousal support was payable by the Applicant to the Respondent based on the Applicant’s current financial limitations and her inability to contribute to the Respondent’s support. This determination was based largely on the fact that the Applicant had assumed the major share of the responsibility for supporting the children of the marriage since the parties’ separation in the fall of 2004, resulting in her having accumulated significant debt since the separation. The evidence indicated that the Respondent had a monthly deficit of $2,146.89, was resorting to credit to pay for daily expenses, and also faced additional significant orthodontic and school expenses for one of the children.
[ 3 ] Counsel for the Applicant submitted a Bill of Costs which identifies a total of $4,193.42 in fees and disbursements which she incurred in relation to the Motion. The Bill of Costs claims fees for sixteen hours, at the rate of $225.00 per hour. The Applicant is requesting costs on a full indemnity basis, payable out of the proceeds from the sale of the matrimonial home.
[ 4 ] The Respondent’s position was that the issue of costs should be reserved to the trial judge. His counsel submitted that success on the Motion was divided, since I found that the Respondent had made out an arguable case on the issue of entitlement. He argued that based on this reasoning, the trial judge will likely quantify spousal support, and that an order for costs at the interim stage would therefore be inequitable.
II. THE LAW AND ANALYSIS
[ 5 ] The starting point in addressing the issue of costs is section 131 of the Courts of Justice Act , [1] which provides that subject to the provisions of an Act or rules of court, costs are in the discretion of the court, which may determine by whom and to what extent the costs shall be paid. Rule 24 of the Family Law Rules [2] (“the Rules”) sets out a number of principles to guide the court in the exercise of its discretion.
[ 6 ] Rule 24(10) establishes the general principle that the court should determine the issue of costs promptly after each step in the case. There is a presumption established by Rule 24(1) that a successful party to a motion, enforcement, case or appeal is entitled to costs. This presumption does not apply where the successful party has acted unreasonably, in which case that party may be deprived of all or part of their costs or may be ordered to pay the unsuccessful party’s costs. [3]
[ 7 ] Where success in a step in a case is divided, the court may exercise its discretion to apportion costs as appropriate. [4] Rule 24 also stipulates that the absence of a party at a step in the case, inadequate preparation and evidence of bad faith are additional factors which may prompt the court to order costs as against the offending party. [5]
[ 8 ] 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:
FACTORS IN COSTS
24 (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.
[ 9 ] Rule 18 must also be considered in determining the question of costs. Rule 18(14) establishes costs consequences for failing to accept an offer to settle that complies with the requirements of Rule 18. In order for these costs consequences to come into play, the offer to settle must be signed by the party making the offer and their lawyer. [6] The costs consequences, and conditions precedent to these consequences, are set out in Rule 18(14) as follows:
COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER
Rule 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. O. Reg. 114/99, r. 18 (14) .
[ 10 ] In deciding costs, the court may also take into consideration as a favourable factor any written offer to settle, the date it was made and its terms, even if the conditions set out in Rule 18(16) do not apply. [7] By contrast, a party’s failure to serve an offer to settle may be viewed as an adverse factor in determining the issue of costs. [8]
[ 11 ] Although they are not specified in Rule 24(11) as factors in determining costs, the financial means of the parties, their ability to pay a costs order and the effect of any costs ruling on the parties and the children of the family are also relevant considerations in reaching a determination on the issue of costs. [9]
[ 12 ] Although Rule 24(10) directs the court to make an order for costs at each stage of the case, there remains a discretion to reserve the issue of costs of a motion to the trial judge if the circumstances of the case are such that an order to that effect would be more just. [10]
[ 13 ] The Ontario Court of Appeal established in Serra v. Serra [11] that modern rules respecting costs have the goal of fostering three fundamental purposes:
to partially indemnify successful litigants for the cost of litigation;
to encourage settlement; and
to discourage and sanction inappropriate behaviour by litigants.
[ 14 ] The Court has also highlighted the discretionary nature of costs awards, and the importance of the court considering all relevant factors. [12] It has emphasized that although Rule 24 has circumscribed the broad discretion which section 131 of the Courts of Justice Act grants the court in regard to costs, it has not completely negated this discretion. [13] In Serra v. Serra , [14] the court noted that ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay. Costs need to be proportional to the issues and amounts in question and the outcome of the case. Amounts actually incurred by the successful litigant may therefore not be determinative. [15]
[ 15 ] Upon considering all of the factors set out in Rules 18 and 24, and the written submissions of counsel, I conclude that the Respondent should pay the Applicant costs in the amount of $3,500.00, inclusive of fees and disbursements, plus HST on that amount, payable out of the proceeds from the sale of the matrimonial home. I have considered the Respondent’s submissions that success was divided on the Motion, and I disagree with him on this point. Although I found that the Respondent had made out an arguable case on the issue of entitlement at the interim stage based on his need at that point, and the principles set out in the cases of Moge v. Moge [16] and Bracklow v. Bracklow , [17] the Respondent was not granted spousal support due to a clear inability on the part of the Applicant to pay. The evidence indicated that the Applicant’s financial limitations were attributable to her having voluntarily incurred most of the financial responsibility for the children of the marriage over a number of years post separation, and her lack of significant disposable assets which she could resort to in order to satisfy a spousal support order. The only major assets in this case are the matrimonial home, which is in the Respondent’s sole name, and the contents thereof, to which the Respondent is also claiming a sole interest.
[ 16 ] I also disagree that the issue of costs of the Motion would be best left to the trial judge. Costs of motions for temporary relief should be dealt with at the conclusion of the motion, by the judge who hears the matter, except in exceptional circumstances where the issue can only be fairly adjudicated at a later stage. There are no such exceptional circumstances in this case. The Respondent argued that based on my finding of prima facie entitlement at the interim stage, the trial judge would likely quantify and order spousal support to the Respondent. He submitted that in such circumstances, the issue of costs of the Motion should await the final determination of the spousal support issue. However, a finding of prima facie entitlement at the interim stage in this case is not determinative of the issue at the trial stage. The condition, means, needs and circumstances of the parties could be very different at the final stage of these proceedings, depending on the court’s determination of the other financial issues, including the Applicant’s retroactive child support claims and her claims to an interest in the matrimonial home and its contents. By way of example, if the Respondent succeeds in arguing that the Applicant has no claim to an interest in the matrimonial home, his net worth will be far greater than the Applicant’s, and the Applicant’s living expenses will increase significantly since she has been residing in the matrimonial home. These considerations could very well cause the court to conclude in the final analysis that there is no entitlement to spousal support on the part of the Respondent.
[ 17 ] In addition to the Applicant’s success on the Motion, I have considered her conduct in relation to the Motion. Her materials were well prepared, thorough and helpful. Although she did not serve a formal, signed Offer to Settle, her counsel did send correspondence to counsel for the Respondent on June 7, 2011, several weeks in advance of the hearing of the Motion, in which the Applicant offered to settle the Motion on the basis of an order that she pay the Respondent spousal support in the amount of $200.00 per month. This offer was fair and reasonable in the circumstances. While the offer did not trigger the cost consequences set out in Rule 18(14) , it is relevant to the issue of the Applicant’s conduct in connection with the Motion, which I am required to consider pursuant to Rule 24(11). I have also considered the fact that the Applicant sought through her counsel to resolve the issue of costs on less than a full indemnity basis.
[ 18 ] By contrast, the Respondent did not in his costs submissions make reference to having made any offers to settle the Motion. He did not contradict the Applicant’s assertion that he failed to respond to the offer to settle the costs issue on less than a full indemnity basis. The Applicant was therefore required to incur the additional expense of her counsel preparing written submissions on the issue of costs. Further, there were a number of deficiencies in the Respondent’s materials relating to his financial situation which complicated the hearing of the Motion, made it more protracted than it should have been and rendered it difficult for the Applicant and the court to obtain an accurate picture of his condition, means and circumstances. The specifics of these deficiencies are detailed in my Reasons for Judgment on the Motion.
[ 19 ] I have considered the above noted factors in setting the quantum of costs in this matter. I have taken into account the rate which the Applicant’s counsel charged, $225.00 per hour, which I find is extremely reasonable having regard for counsel’s year of call of 1990. In addition, I have considered that the case raised the challenging question of entitlement to spousal support where there is no need-based or compensatory claim at the time of separation, but need arises many years post-separation as a result of significant illness. Both counsel were required to conduct legal research and file written submissions on this point. The outcome of the case was not clear-cut, and the Respondent therefore did not act unreasonably in bringing the Motion. On the other hand, because the case raised this difficult legal issue, the Applicant’s counsel spent more time on the Motion than would typically be spent on a straightforward temporary spousal support motion.
[ 20 ] I have not granted the Applicant her costs on a full recovery basis, in part due to the very limited financial means of the Respondent. It is uncontroverted that the Respondent suffers from cancer, and while there is disagreement about his current income level, it is acknowledged that his illness has significantly impacted on his income earning potential. I have also not allowed the Applicant’s claim for costs incurred in relation to service and filing of materials, and to the court attendance on July 7, 2011 which was adjourned because of problems which the judge hearing the matter on that date identified with the Applicant’s materials.
IV. ORDER TO ISSUE
[ 21 ] Based on the foregoing analysis, an order shall issue as follows:
The Respondent shall pay costs to the Applicant in the amount of $3,500.00, inclusive of fees and disbursements, plus HST on this amount.
These costs shall be paid to the Applicant from the Respondent’s share of the proceeds from the sale of the matrimonial home, forthwith once the house has been sold. The Respondent shall execute any authorizations or directions which may be required to ensure compliance with this order.
The Honourable Madam Justice Chappel
Released: January 4, 2012
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Heather Jane Fyfe Applicant – and – Jon-Karl Jouppien Respondent REASONS FOR JUDGMENT Chappel, J.
Released: January 4, 2012
[1] Courts of Justice Act, R.S.O. 1990, c. C-43, as amended.
[2] Family Law Rules, O. Reg. 114/99, as amended.
[3] Rule 24(4).
[4] Rule 24(6).
[5] Rule 24(7) and (8).
[6] Rule 18(4).
[7] Rule 18(16).
[8] M. (J.V.) v. P. (F.D.), 2011 CarswellOnt 13510 (Ont. C.J.) .
[9] Tauber v. Tauber , 2000 5747 (ON CA) , [2000] O.J. No. 2133; additional reasons at 2000 22280 (ON CA) , [2000] O.J. No. 3355 (Ont. C.A.).; Biant v. Sagoo , 2001 28137 (ON SC) , [2001] O.J. No. 3693 (Ont. S.C.J.); Van Rassel v. Van Rassel , 2008 56939 (ON SC) , [2008] O.J. No. 4410 (Ont. S.C.J.).
[10] Giang v. Le , 2004 5036 (ON SC) , [2004] O.J. No. 569 (Ont. S.C.J.); Tout v. Bennett , 2003 1951 (ON SC) , [2003] O.J. No. 1674, 38 R.F.L. (5 th ) 223 (Ont. S.C.J.).
[11] Serra v. Serra , [2009] O.J. No. 1905, 2009 ONCA 395 , 2009 CarswellOnt 2475 (Ont. C.A.).
[12] Andrews v. Andrews , 1980 3619 (ON CA) , [1980] O.J. No. 1503 (Ont. C.A.).
[13] M. (A.C.) v. M. (D.) , 2003 18880 (ON CA) , [2003] O.J. No. 3707, 67 O.R. (3d) 181 (Ont. C.A.).
[14] Supra.
[15] 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] Moge v. Moge (1992), 1992 25 (SCC) , 43 R.F.L. (3d) 345 (S.C.C.).
[17] Bracklow v. Bracklow , 1999 715 (SCC) , [1999] 1 S.C.R. 420 (S.C.C.).