Fry v. Fry, 2013 ONSC 1084

SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 77341/12
DATE: 2013-02-19

RE: Fry v. Fry

BEFORE: The Honourable Justice M. L. Lack

COUNSEL: Michael H. Tweyman, for the Applicant Larry Fry
S. Lawrence Liquornik, for the Respondent Judith Fry

COSTS ENDORSEMENT

1The applicant Larry Fry brought an application under the Arbitration Act, 1991, S.O. 1991, c.17 asking the court to set aside the decision of arbitrator Carolyn Jones dated February 9, 2012 or alternatively to declare the arbitration invalid and for an injunction against continuation of the arbitration and substantial costs of this application and the original motion. I dismissed the application. The parties, through counsel, made submission on costs in writing. This is my ruling on costs.

The Issues

2The issues are: (a) should costs be awarded to the responding party Judith Fry; and if so, (b) on what scale – partial or substantial indemnity; and (c) in what amount.

The Position of Each Party on Costs

3Judith Fry, the responding party on the application, asks me to award her costs of the application on a substantial indemnity basis in the amount of $10,450.14 inclusive of disbursements and HST.

4Larry Fry, the applicant on the application, concedes that the respondent is entitled to costs of the application and submits that costs should be awarded on a partial indemnity basis in the appropriate amount of $2,500 inclusive of disbursements and HST.

The Jurisdiction to Award Costs

5The court’s discretion to award costs arises under s. 131 of the Courts of Justice Act¹. The discretion must be exercised taking into account the provisions of rule 57.01². Any relevant consideration may be taken into account. The specific factors set out in that rule, which are applicable to the determination in this case, are the result achieved; the principle of indemnity; the complexity of the proceeding; the importance of the issues and the conduct of any party. Another factor is 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. That principle was articulated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario)³. The court wrote that the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay rather than an amount fixed for the actual costs by the successful litigant. To decide what is fair and reasonable a relevant factor is the expectations of the parties, objectively determined. This is a principle of proportionality, essentially a principle of common sense, and is fundamental to any decision of what constitutes a fair and just order of costs.

Application of Principles

6The underlying claim in the application was Larry Fry’s applicant to set aside the decision of an arbitrator relating to her jurisdiction to deal with a spousal support issue between the parties. Mr. Fry was paying spousal support to Ms Fry under a court order. The matter was returned to court and the parties consented to an order made by Gunsolus J. on April 23, 2010. That order provided that Mr. Fry could request a review of spousal support if there was a material change in circumstances, including his retirement. In that event, he was to provide Ms Fry with 6 months’ notice to the date that he was scheduled to retire. The parties were to have a 6-month window to attend mediation/arbitration for determination. If at the end of the 6 months matters were not finalized through mediation/arbitration with the signing of a new agreement or an arbitration award then Mr. Fry’s obligation to pay the spousal support in the Minutes (presumably, as incorporated into the order) terminated on the 6-month date. There was also a dispute resolution clause in the order.

7Mr. Fry did give notice and the parties attended mediation. The matter was not finalized within the 6 months, principally because of the time required to obtain actuarial evidence relating to his pension and to exchange financial material, which were required for the mediation process. Mr. Fry stopped paying spousal support. He took the position that the spousal support had terminated forever at the end of the 6 months. He refused to engage further in the mediation/arbitration procedure. He took the position that with the passage of the 6 months the jurisdiction of the mediator/arbitrator came to an end. His position was not supported by any provision in the order of Gunsolus J. that the support would end forever after the 6 months or that the mediation/arbitration process ended with the 6 months. Moreover, it flew in the face of a Mediation-Arbitration Agreement that he had signed during the process, which provided otherwise. The mediator/arbitrator found that she had jurisdiction to continue with the process. I dismissed Mr. Fry’s application for a declaration that the mediator/arbitrator lacked jurisdiction. Ms Fry therefore was totally successful on the application.

8There is no reason that costs should not follow the result and as noted the applicant acknowledges that Ms Fry is entitled to costs. The real issue is the quantum to be awarded.

9In the circumstances, the application was not complex. Each party prepared affidavit material for the hearing. The material included copies of the existing court orders, a copy of the Mediation-Arbitration Agreement and copies of two decisions made by the mediator/arbitrator. Each side filed a factum and authorities. The court attendance to argue the application was 6 hours, but as I recall, the actual argument was under 2 hours.

10The application was important because, as both sides knew, if Mr. Fry were successful on the application, it would have ended the mediation/arbitration process and made court proceedings under the Family Law Act a virtual certainty.

11In my view, it was unreasonable for Mr. Fry to have brought this application. Granted the court order did not stipulate how long the mediation/arbitration process would go on for without a resolution, but that is often the case. However, Mr. Fry had contractually bound himself to continue with it in the Mediation/Arbitration Agreement he had signed during the 6-month period. There was no evidence that the process was unduly protracted or that Ms Fry had prolonged it. The mediator had been obliged to wait for the actuarial material, which was Mr. Fry’s responsibility to obtain, and the exchange of financial documentation.

12Three days before the hearing of the application counsel for the respondent Ms Fry served an offer to settle on Mr. Fry’s lawyer, to the effect that if the applicant would return to the arbitration process (that is, abandon the application), and pay the outstanding costs awarded against him by the arbitrator, she would settle the application upon payment of her costs thrown away in the amount of $3,500. Since the offer was served less than 7 days before the hearing commenced it does not attract the cost consequences of rule 49.10. Nevertheless, under rule 49.13 in exercising my discretion respecting costs I may take into account any offer to settle made in writing, the date the offer was made and its terms.

13I do not accept, as Mr. Fry’s counsel submits, that Mr. Fry’s contractual obligation to continue with the process was in the least way controversial. Nor do I accept that the order of Gunsolus J. bars Ms Fry from receiving substantial indemnity costs because she was not a party required “to commence” the court proceeding to enforce the order. The fact that the order provided that a party who was required to commence court proceedings to enforce it could recover costs on a full recovery basis, should have informed Mr. Fry’s expectations that enhanced costs could follow court proceedings, the effect of which were to ensure that the spirit of the order was implemented. Ms Fry was put to the expense of responding to an unreasonable attempt by Mr. Fry to shut down a process that he had agreed to and been ordered to engage in and then contractually bound himself to, and she gave him the opportunity to retreat from it on modest terms. Those modest terms, costs on a partial indemnity basis, also should have informed Mr. Fry’s expectations about how much would be sought on a substantial indemnity basis, if there was full argument on the application and costs were granted on a higher scale. In my view, she is entitled to her costs of responding to the application on a substantial indemnity basis.

14I have reviewed the respondent’s bill of costs. It is in line with the rates generally charged by lawyers at the experience level noted. The time spent in meeting and discussing the matter with Ms Fry is excessive. Apart from that it is reasonable. I would reduce the fees to $7,500 to take into account the excess I noted. There is no issue that the disbursements were incurred and are reasonable.

Conclusion

15Taking all of these factors into consideration, I order the applicant Larry Fry to pay the respondent Judith Fry her costs of the application on a substantial indemnity basis fixed at $8,755.14, all inclusive.

M. L. Lack S.C.J.

Footnotes

1. 1Courts of Justice Act, R.S.O. 1990, c. C.43
2. 2Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended
3. 3Boucher v. Public Accountants Council (Ontario), [2004] O.J. 2634, 2004 14579 (ON CA)