Carey v. Carey, 2013 ONSC 3157

CITATION: Carey v. Carey, 2013 ONSC 3157

COURT FILE NO.: 04751/12

DATE: 2013-05-29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

DOUGLAS JAMES CAREY

Applicant

• and -

ALISON MAE CAREY

Respondent

Randy S. Brant, for the Applicant

Alison Pengelley, for the Respondent

HEARD: November 28, 2012, at Walkerton, Ontario

Price J.

Reasons For Order

NATURE OF MOTION

1Following the reasons for the Order in the parties’ motions for bifurcation and disclosure, released on December 14, 2012, the parties were unable to agree on the disposition of costs. After the Respondent Applicant delivered costs submissions, the Respondent requested an extension of time to deliver her submissions. This extension was granted and I have now reviewed the submissions of both parties.

BACKGROUND FACTS

2As the facts were set out at length in my reasons of December 12, 2012, I will not repeat them here. Briefly, after Mr. Carey brought an application to set aside the parties’ Separation Agreement dated July 31, 2008, and for a fresh determination as to equalization of their net family property and as to his support obligation, he moved for an Order granting him access to the matrimonial home for purposes of obtaining a valuation of it. Ms. Carey opposed this motion and moved for an Order bi-furcating the trial. She argued that the valuation of the home would be rendered unnecessary, and the proceeding would be shortened, if at the first stage of a trial the Agreement were found to be valid. She further sought an Order requiring Mr. Carey to produce a better Affidavit of Documents, to include documents that Justice Daley, in an Order dated August 8, 2012, had required him to disclose, and statements from joint bank accounts and credit cards that he operates with his common law spouse, Ms. White.

3In the result, I allowed Ms. Carey’s motion for an Order bi-furcating the trial, so that an initial determination could be made as to the validity of the Separation Agreement and, if it is found to be valid, the amount of spousal support payable by Mr. Carey pursuant to the Agreement. I ordered, further, that Mr. Carey produce a more complete affidavit of documents, to include monthly statements from bank accounts and credit cards that he had operated with Ms. White since January 1, 2007, and his T4 Slips for 2007. I directed that he be given access to the matrimonial home for the purpose of obtaining, at his expense, a valuation of it.

POSITIONS OF THE PARTIES

4Ms. Carey seeks her costs on a substantial indemnity scale in the amount of $12,290.00. Mr. Carey submits that Ms. Carey should be awarded costs in the amount of $3,000.00 plus HST.

ANALYSIS AND LAW

1. General Principles

a) Principles to be balanced

5In awarding costs, I must balance two conflicting principles, namely, to indemnify the successful litigant for the cost of enforcing her rights and to avoid making potential litigants feel unduly hesitant to defend their rights by requiring them, as unsuccessful litigants, to bear all the costs of the successful party as well as their own.¹ The ultimate objective in balancing these principles is to ensure that the justice system works fairly and efficiently.²

b) Discretion to be exercised

6The entitlement to costs and the appropriate amount to be paid is “within the court’s discretion”.³ The Family Law Rules direct the court as to how its discretion as to costs is to be exercised. Rule 24(1) presumptively entitles a successful party to costs. Although it circumscribes the broad discretion on costs which s. 131(1) of the Courts of Justice Act confers on the court, it does not completely remove a judge’s discretion.⁴ Rules 24(4) and 24(5), for example, state that a successful party may be deprived of costs if he or she has behaved unreasonably.

c) Objectives to be Served

7Indemnification of the successful party is the paramount objective, but not the only one, to be served by a costs order. Other objectives that the court has recognized include encouraging settlement, discouraging frivolous proceedings and unnecessary steps in litigation,⁵ and preserving access to justice.⁶

8Ms. Carey was substantially successful in the motions. She obtained the Order she sought bi-furcating the trial and requiring Mr. Carey to disclose the records of the bank accounts and credit cards he operates with Ms. White. While Mr. Carey was given access to the matrimonial home for the purpose of obtaining a valuation, that valuation was determined to be at his expense.

d) Reserving costs to the trial judge

9Rule 24(10) requires that the costs be decided at each step in the case. I have decided that the trial judge will not be in a better position than I am to rule on the parties’ claims for costs in relation to the portions of the motion that were argued before me. It is therefore incumbent on me to fix these costs rather than reserving them to the trial judge.

e) Factors to be considered

10Rule 24(11) lists the factors that the court should consider in quantifying 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.

11I will consider each of these factors as they pertain to these motions.

Importance of the motion

12The motions were important to the parties, having regard to Ms. Carey’s limited ability to pay the costs that a full airing of the issues would entail. The Order she obtained will narrow the scope of questioning, the focus of future court appearances, and the evidence required, she hopes, to put an end to the proceeding. If Ms. Carey had not been successful, her legal fees may have exceeded what she could afford, which could have given Mr. Carey a strategic, perhaps decisive, advantage. An unfavourable outcome of the motions could have affected the ultimate outcome of the proceeding.

Complexity

13The motions were of moderate complexity. They required Ms. Carey to prepare responding material to Mr. Carey’s motion, as well as material in support of her own motion, including a factum and a Reply affidavit. The motions involved the intersection of the law governing bifurcation of a trial, and the law governing the setting aside of domestic contracts. Counsel’s submissions required review of numerous court decisions on those issues.

Hourly Rates

14Ms. Pengelley was called to the Ontario Bar in 2011. She says she charges an hourly rate of $300.00 for herself and $140.00 for her Law Clerk. The “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (“the Costs Bulletin”)⁷ suggests maximum hourly rates, on a partial indemnity scale, of $225.00 for lawyers of less than 10 years’ experience, and $80.00 for Law Clerks. I am mindful that her opposing counsel was called to the Bar in 1991 and charged an hourly rate of $370.00 in 2012. On this basis, I find that an hourly rate of $250.00 for Ms. Pengelley, on a substantial liability scale, is appropriate.

Time Spent

15Ms. Pengelley states that she spent 38 hours on the motion, including 2 hours in travel between her office, in Barrie, and the court, in Walkerton. She states that her Law Clark spent 7.5 hours. Of the total time, Ms. Pengelley spent 4.5 hours on the day of the hearing, including time meeting with her client to obtain her signature on a Reply affidavit, serving the affidavit, completing her affidavit of service, and asking the court clerk to give the affidavit to the judge.

16While Mr. Carey’s lawyer argues that the time spent by Ms. Pengelley is excessive, he has not filed a Costs Outline of his own, setting out the time he spent on the motions. Ms. Pengelley correctly notes that this Court has held, on more than one occasion, that when one party attacks another’s costs as excessive, but declines to put its own dockets before the court, the attack “is no more than an attack in the air.”⁸

17In Risorto v. State Farm Mutual Automobile Insurance Co., in 2003, Winkler, J., as motion judge, stated:

The attack on the quantum of costs, insofar as the allegations of excess are concerned, in the present circumstances is no more than an attack in the air. I note that State Farm has not put the dockets of its counsel before the court in support of its submission. Although such information is not required under Rule 57 in its present form, and the rule enumerates certain factors which would have to be considered in exercising the discretion with respect to the fixing of costs in any event, it might still provide some useful context for the process if the court had before it the bills of all counsel when allegations of excess and “unwarranted over-lawyering” are made. In that regard, the court is also entitled to consider “any other matter relevant to the question of costs”. (See Rule 57.01(1)(i). In my view, the relative expenditures, at least in terms of time, by adversaries on opposite sides of a motion, while not conclusive as to the appropriate award of costs, is still, nonetheless, a relevant consideration where there is an allegation of excess in respect of a particular matter.⁹

18In the absence of a Costs Outline from Mr. Carey, I find that the 4.5 hours that Ms. Carey claims for her counsel’s work on November 28, 2012, is reasonable, even though it exceeds the time spent arguing the case that day.

Reasonable expectation of the unsuccessful party

19It is not the role of the Court, in fixing costs, to engage in a purely mathematical exercise, or to second guess counsel with respect to particular dockets and particular tasks. It should take a global view to determine whether the costs as claimed are within the reasonable range and fall within the reasonable expectation of the parties.¹⁰

20A costs award must be within the reasonable expectation of the unsuccessful parties in order to preserve access to justice. Armstrong J.A. explained the rationale for the principle in Boucher:¹¹

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….

In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor.¹²

21Polowin J. summarized the principles that inform the present approach to costs in Sommerard and Spies J. restated them in Diefenthal:

In assessing costs, the principles that I must apply have been settled by our Court of Appeal. The fixing of costs is not a mechanical exercise of calculating hours times hourly rates. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. In doing so I must stand back from the fee produced by the raw calculation of hours spent times hourly rate and assess the reasonableness of the counsel fee from the perspective of the reasonable expectations of the losing party. Although the Costs Grid has been abolished since these decisions from the Court of Appeal, I see my function in this regard as unchanged.¹³ [Emphasis added]

22The question remains as to what criteria should be applied when deciding what the “reasonable expectations” of the losing party are. The Court must approach any proposed formula for assessing costs with due consideration to the context of the case. The context includes the particular lawyer’s seniority, style of preparation, and resources, including support staff, the nature and complexity of the proceeding, and the issues that were addressed.

23In the present case, I have considered the fact that Ms. Pengelley was called to the Bar recently and approached the motions with greater caution than a more seasoned lawyer would have done, spending more time in preparation. Mr. Carey benefits from the fact that the court allows her a lower hourly rate than it would allow more senior counsel, and it is reasonable that she be given some latitude in her preparation time.

24Ms. Pengelley made appropriate use of a Law Clerk. While Mr. Carey notes that some of the time claimed for the Law Clerk was spent in administrative tasks that should be subsumed, as part of Ms. Pengelley’s overhead, within her own fees, this cannot be said of all of the Law Clerk’s time. For example, the time that the Clerk spent in correspondence and telephone communications with opposing counsel, the client, and the court, and in preparing Ms. Carey’s book of authorities, confirmation sheet, and Bill of Costs, was non-administrative work properly delegated to the Law Clerk. I allow 6 hours for the work performed by Ms. Pengelley’s Law Clerk.

25Ms. Pengelley presented her case at the hearing of the motions in a capable and economical way, which reflected thorough preparation by her and by the Law Clerk who assisted her in her preparation. That said, the 31 ½ hours (aside from travel) that Ms. Pengelley claims for preparation is high, even for a lawyer of limited experience. It represents over 7 hours for each hour spent on the day of the hearing. While the time required to prepare for the hearing of a motion, argued on a single day, is often higher than the time required to prepare for the same amount of hearing time at one of many days of a trial, the preparation time here was still excessive.

26I am mindful of the fact that I should not second guess the amount claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances and award costs in a global fashion, after taking all of the relevant factors into account.¹⁴ On this basis, I allow 20 hours for Ms. Pengelley’s own preparation time.

Proportionality

27I must have regard to the principle of proportionality. It has been incorporated into the Rules of Civil Procedure by the express provisions of Rule 2, and should be applied by analogy when applying the Family Law Rules pertaining to costs:

Proportionality

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding. O. Reg. 438/08, s. 2.

28In Gale v. Gale,¹⁵ (2006), G.B. Smith J., in reducing the partial indemnity costs of a motion for leave to appeal in a family law action, stated:

Proportionality must be kept in mind when considering the issue of costs. This principle was considered in the case of Buchanan v. Goetel Communications Corp.¹⁶ where Ferguson J. had this to say at paragraphs 10 and 11 of that judgment:

…the bottom line is that the proposed costs are excessive. They are excessive from two perspectives: costs of this magnitude will make litigation inaccessible as a method of dispute resolution; costs of this magnitude are also disproportionate to the value of the legal work necessary to represent a client in this dispute. If counsel do not use more restraint in deciding how much to invest in litigation, they will put both the bar and the Courts out of business which will profoundly harm the public whom we both serve.¹⁷ [Emphasis added]

29I find that costs of $7,500.00 are proportionate to the importance of the motions to the parties and the complexity of the issues they involved.

Improper or Unnecessary: The Scale of Costs

30I must consider whether there was fault on the part of Mr. Carey or some other factor that justifies imposing costs against him on a substantial indemnity scale. As noted above, Rule 24(1) provides that a successful party is presumed to be entitled to the costs of the proceeding. In the normal course, such costs are awarded on a partial indemnity scale; however, the court has the discretion to order costs payable on a substantial indemnity scale in exceptional cases.¹⁸

31Rule 24(4) of the Family Law Rules gives explicit recognition of the principle that costs may be used to express the court’s disapproval of a litigant’s unreasonable conduct. It provides:

24.(4) Despite sub-rule (1) [which provides that a successful party is presumed to be entitled to the costs of a motion], “a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.

32Mr. Carey brought the present proceeding seeking to address issues of equalization and support that Ms. Carey reasonably believed the parties had dealt with on a final basis in the Separation Agreement they signed in 2008. While the validity of that Agreement has yet to be determined, and I have directed a bifurcated trial so that its validity can be determined early in the proceeding, before substantial costs are incurred, the nature of the proceeding must be kept in mind as the context for the present motions.

33Family proceedings can too easily be transformed into a war of attrition waged by a more economically powerful spouse against an economically weaker one. The court must be vigilant to avoid its process being abused in this way, especially where the economic inequality of the parties is the outcome of a previous settlement or adjudication of the issues. A re-opening of issues, either by challenging a Separation Agreement that, on its face, appears to have been negotiated fairly, or by applying to change an existing Order based on an alleged material change of circumstances which, on its face, is tenuous, is unfair to the litigant who looks to the negotiation or litigation process as a means for achieving closure of the dispute, and this practice, which has become too common, tends to bring the administration of justice into disrepute.

34In the present case, Mr. Carey has applied to challenge the parties’ Separation Agreement on the basis that he regarded Ms. Carey’s lawyer, who drafted the Agreement, as a “quasi-mediator”, who was assisting both parties to resolve their dispute. Even though he consulted two lawyers on his own before signing the Agreement, he characterizes his meeting with one of them as “a mistake,” because it occurred before an agreement had been finalized, and characterizes both meetings as a “mere formality” associated with the Agreement that Ms. Carey’s lawyer was drafting. He denies having obtained independent legal advice.

35After Mr. Carey initiated the present proceeding, Daley J. made an Order dated August 7, 2012, requiring him to produce documents in the nature of financial disclosure. He unreasonably failed to produce the documents and resisted the disclosure of records of the bank accounts and credit cards he has operated jointly with his common law spouse since signing his Agreement with Ms. Carey. By challenging that Agreement, while seeking to conceal his current financial circumstances with Ms. White, the disclosure of which is necessary for the court to assess the fairness of the 2008 Agreement in the light of its consequences, and Ms. Carey’s need for support and Mr. Carey’s ability to pay, Mr. Carey has sought to conceal the extent of his economic superiority, while leveraging it to secure a better deal than the one the parties negotiated in 2008.

36It would be unfair, in these circumstances, to require Ms. Carey to continue bearing the same proportion of costs that a litigant is normally expected to incur when first negotiating or litigating the issues. A different approach to costs is required in these circumstances than in a case where the evidence, on its face, disclosed that the initial Agreement was negotiated unfairly, or that there had clearly been a material change in circumstances that rendered an earlier Order unfair or no longer tenable.

37In the present case, Mr. Carey must pay the full cost of his effort to re-open the issues that both parties had reasonably thought they had resolved. To do otherwise would tend to undermine the integrity of the resolution process undertaken in 2008, and would encourage other litigants to enter carelessly into agreements, in the expectation that there will be no greater cost to re-open them than are associated with negotiating or litigating them in the first place.

Offers to Settle

38Ms. Carey delivered an Offer dated November 26, 2012, which she has submitted with her costs submissions, for the court’s consideration. The Offer was to settle the parties’ motions on the following terms:

1. The issue of the validity of the Separation Agreement would be severed from the other issues in the proceeding, and would be heard first.

2. The issue as to disclosure not related to the validity of the Separation Agreement would be adjourned until after that issue had been determined.

3. Mr. Carey would produce the financial disclosure ordered by Daley J. on August 8, 2012.

4. The issue of Mr. Carey’s valuation of the matrimonial home, as well as the issue of Mr. Carey’s production of statements from his joint accounts with Ms. Smith, would be adjourned until after the validity of the Separation Agreement was determined.

5. The offer was open for acceptance “until one minute after the opening of Court on the return of the motions on November 28, 2012.”

39Mr. Carey did not accept the Offer.

40The Family Law Rules provide, in part:

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:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. The offer does not expire and is not withdrawn before the hearing starts.

3. The offer is not accepted.

4. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (15)

(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made, and its terms, even if subrule (14) does not apply.¹⁹

41Ms. Carey’s Offer did not comply fully with Rule 18 in that it provided for the adjournment of Mr. Carey’s motion for access to the matrimonial home for the purpose of having it valued and, in the outcome of the motion, Mr. Carey was given access to the home for this purpose. Additionally, the Offer expired after court opened on the date of the hearing, but before the hearing started. I take the Offer into account, as it was made at least one day before the motion was heard, did not expire until the day of the hearing, and was substantially more favourable to Mr. Carey than the outcome. Had I not granted Ms. Carey the costs of the motions on substantial indemnity scale, I would, based on her Offer, have granted her the costs from the date of the Offer onward, on that scale.

CONCLUSION AND ORDER

42In the result, Mr. Carey will pay Ms. Carey’s costs of the present motions on a substantial indemnity scale, at $250.00 per hour for her lawyer’s time and $140.00 for her Law Clerk, as follows:

a) 4.5 hours spent by Ms. Pengelley at the hearing of the motions on November 28, 2012, at the rate of $300.00 per hour = $1,350.00.

b) 2.0 hours spent by Ms. Pengelley for travel at the rate of $125.00 per hour = $250.00.

c) 20 hours spent by Ms. Pengelley in preparation, at the rate of $250.00 per hour = $5,000.00.

d) 6 hours spent by Ms. Pengelley’s Law Clerk, at the rate of $140.00 per hour = $840.00.

Total Fees: $7,440.00 plus HST (13%) = $8,407.20

43Based on the foregoing, it is ordered that:

1. Mr. Carey shall pay Ms. Carey’s costs of the motions in the amount of $8,407.20 within 30 days.

Price J.

Footnotes

1. 1Mark Orkin, The Law of Costs (2nd edition) (2001 Canada Law Book), p. 23
2. 2British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 at paras. 25 and 26
3. 3Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131
4. 4M. (A.C.) v. M.(D.), [2003] O.J. No. 3707, 67 O.R. (3d) 181 (ON C.A.)
5. 5Fellowes, McNeil v. Kansa General International Insurance Co. 37 O.R. (3d) 464 (ON S.C.), para. 10
6. 61465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 82 O.R. (3d) 757 (ON C.A.), per Feldman J.A., at para. 45
7. 7“Information for the Profession” bulletin (“the Costs Bulletin”) from the Costs Sub-Committee of the Rules Committee (that the Costs Sub-Committee of the Rules Committee issued to replace the Costs Grid, which it repealed in 2005. The Costs Bulletin has advisory status only and not statutory authority, as it was not included in the Regulation that repealed the Costs Grid.
8. 8Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 64 O.R. (3d) 135 (ON S.C.), per Winkler J., cited in Springer v. Aird & Berlins LLP (2009), 74 C.C.E.L.(3d) 243 (ON. S.C.), at para. 12-17
9. 9Risorto v. State Farm Mutual Automobile Insurance Co. (2003,) 64 O.R. (3d) 135, 32 C.P.C. (5th) 304 (ON S.C.), at para. 10
10. 10Banihashem-Bakhtiari v. Axes Investments Inc. [2003] O.J. No. 3071, at para. 40.
11. 11Boucher v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579 See also: Moon v. Sher 246 D.L.R. (4th) 440 (ON C.A.), per Borins J.A., at para. 28.
12. 12Boucher v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579 See also: Moon v. Sher 246 D.L.R. (4th) 440 (ON C.A.), per Borins J.A., at para. 37 and 38.
13. 13Sommerard, [2005] O.J. No. 4633, per Polowin, J., at paras. 53 to 59; and Diefenthal v. Bilbija, [2006] O.J. No. 2346 (S.C.J.), per Spies, J., at para. 24.
14. 14Fazio v. Cusumano 2005 CarswellOnt 4518 (S.C.J.), at para. 8.
15. 15Gale v. Gale, 2006 ONSC 34428 (Div. Ct.).
16. 16Buchanan v. Goetel Communications Corp [2002] O.J. No. 3063 (ON S.C.).
17. 17Gale v. Gale, 2006 ONSC 34428 (Div. Ct.), per G.B. Smith J., at para. 12.
18. 18131843 Canada Inc. v. Double “R” Toronto Ltd. (1992) 7 C.P.C. (3d) 15 (Ont. Gen. Div., per Blair J., as he then was) at p. 17, approved in Murano v. Bank of Montreal (1998) 41 O.R. (3d) 222 (C.A.) at p. 244
19. 19Family Law Rules, O. Reg. 439/07, s. 1, Rule 18