ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: D18871-09
DATE: 20130212
CORRECTED DECISION RELEASED: 20130213
BETWEEN:
Marc Rene Taillefer
Applicant
– and –
Gillian Kaara Taillefer (Schultze)
Respondent
Richard Guy, for the Applicant
Rejean Parisé, for the Respondent
HEARD: November 1 and 2, 2012
CORRECTED DECISION ON COSTS
Corrected decision: Paragraph [31] of the original decision dated February 12, 2013
was deleted on February 13, 2013, and in its place
this corrected Paragraph [31] was integrated into the original decision
R.d. gordon J.:
Overview
[1] The trial of this family law case was held on November 1 and 2, 2012. My decision was released on November 30, 2012 and I invited written submissions in the event costs could not be agreed upon. I have now received written submissions from the parties. Although the length of the Respondent’s submissions significantly exceeds the maximum I had prescribed, no objection has been taken by the Applicant and so I have considered the Respondent’s submissions in their entirety.
The Positions of the Parties
[2] The Applicant’s position is that there should be no costs awarded to either party for the period of time preceding the order of Justice Gauthier made July 30, 2012 and that thereafter, the Applicant should be entitled to his costs on a partial indemnity basis as the party who met with greatest success at trial. Having reviewed counsel’s accounts, that would amount to between $10,000 and $12,000.
[3] The Respondent’s position is that she should receive substantial indemnity costs from the date of an offer made by her in September 2009. From the accounts submitted, this would amount to over $50,000.
Applicable Law
[4] Rule 24(1) of the Family Law Rules provides for the presumption that a successful party is entitled to the costs of a step in a proceeding. Under Rule 24(6), where success in a step in a case is divided the court may apportion costs as appropriate. Under Rule 24(4), a party’s presumptive entitlement to costs may be lost if the party has behaved unreasonably during the case.
[5] In the case of Islam v. Rahman (2007) ONCA 622, the Court of Appeal held that in the absence of a specific order for costs in a step in a proceeding, costs claimed in relation to such steps as part of an award for full recovery will be disallowed. In Houston v. Houston, 2012 ONSC 233 (Div. Ct.) it was held that this principle does not extend to steps which do not require any form of judicial intervention, such as preparation of pleadings and financial statements, property evaluations, document production, attendance at questioning, review of transcripts, compliance with undertakings, and preparation for trial.
[6] Once entitlement to costs has been established, Rule 24(11) sets out the factors to be considered when fixing the amount and includes the importance, complexity or difficulty of the issues, the reasonableness or unreasonableness of each party’s behaviour in the case, the lawyers’ rates, the time properly spent on the case and expenses properly paid, and any other relevant matter.
[7] In my view, other significant and relevant matters would include the reasonable expectation of the parties, and the concept of proportionality.
[8] In addition to the provisions of Rule 24, Rule 18 provides that 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 conditions set out in the rule are met. One such condition is that the party making the offer obtains an order that is as favourable or more favourable than the offer. The burden of proving that this condition is met lies with the party who claims the benefit of the rule. If an accepted offer does not deal with costs, either party is entitled to ask the court for costs.
Analysis
Rule 18 Offers
[9] The Respondent contends that several Rule 18 offers were made and that she obtained a decision at trial more favourable than those offers. As such, she has claimed considerable costs.
[10] There is no doubt the Respondent’s offers were bettered at trial on the issues involving child support. However, the offers also included terms directed to equalization of the parties’ net family properties and such offers can be difficult to compare to the results obtained at trial when the allocation of assets and debts is different than what is finally determined by the trial judge. The issue becomes how to make the comparison in such situations.
[11] In my view, the appropriate manner of comparison involves the following analysis:
- A review of the net family property statements determined at trial for each party.
- A review of the net family property statements which formed the basis of the offer.
- A reallocation of assets and debts in the net family property statements determined at trial to correspond with the allocation in the statements which formed the basis of the offer.
- A calculation of the equalization payment due if such reallocation took place.
- A comparison of that equalization payment with what was contained in the offer.
[12] The Respondent has pointed to seven offers dealing with property which she claims to have bettered at trial. I will address each of them in turn.
[13] The first offer alleged by the Respondent was in the course of emails sent between her and the Applicant in September of 2009. The Respondent opens her proposal with the words: “I am considering the following option.” In my view, what follows is not an offer to settle as contemplated by the Family Law Rules, but discussion of an option for settlement which the parties did not ultimately conclude. No Rule 18 offer was made incorporating the terms of that discussion.
[14] The second offer was made in a letter of June 29, 2010 and attached a net family property statement. That offer differed from the determination at trial in the following respects: (a) the Applicant was to retain his entire pension; (b) the Applicant was to pay the entire line of credit pertaining to the RV; (c) the Applicant was to pay basically all of the joint line of credit. The offer required an equalization payment of $4,879 by the Respondent to the Applicant. If the net family property statements determined at trial are reallocated to reflect the allocation in the offer they work out as follows:
Applicant Respondent
$241,292 Pension $320,000 Mat. Home
$105,000 Rental Prop. $105,000 Rental Prop.
$25,000 Ford Exp. $2,300 Saturn Wagon
$20,000 RV and Business $15,663 LIRA
($17,764) LOC re RV
($70,203) Jt. LOC
($997) VISA
($40,654) Home mortgage
($72,011) Rental Mortgage ($72,011) Rental mortgage
($1,021) Overdraft
($10,000) Property DOM ($30,000) Property DOM
$221,314 NFP $298,280 NFP
[15] The required equalization payment by the Respondent would have been $38,483 which is substantially more than what was provided for in the offer. Accordingly, the Respondent did not better her offer at trial.
[16] The third offer was made April 6, 2011 and the asset allocation differed from the judgment in that the Applicant was to retain his entire pension, pay the line of credit for the RV and the joint line of credit; the Respondent was to retain the house and rental property and the debt associated with those assets. The resulting equalization payment was to be $2,169 payable by the Respondent. If that asset configuration is applied to the findings made at trial, the resulting equalization payment by the Respondent would have been $37,968. The result is that the Respondent did not do better at trial on the equalization issue than was offered April 6, 2011.
[17] The fourth offer was made May 5, 2011 and the asset allocation differed from judgment in that the Applicant was to retain his entire pension, pay all of the line of credit pertaining to the RV and the joint line of credit; the Respondent was to receive both the home and the rental property and the debt related to them. The anticipated equalization payment was $11,030 from the Applicant to the Respondent. When that asset allocation is applied to the findings made at trial, the resulting equalization payment would have been $70,972 payable by the Respondent. Again, the Respondent clearly did not to better at trial than had been offered on May 5, 2011.
[18] The fifth offer was made January 27, 2012 and the asset allocation differed at trial in that the Applicant would retain his entire pension and would pay the entire line of credit pertaining to the RV; the Respondent would keep the house, rental property and associated debts. The anticipated equalization payment was $88,638 payable by the Applicant. When that asset allocation is applied to the findings made at trial, the resulting equalization payment would have been $7,613. Again, the Respondent’s offer was not bettered at trial.
[19] The sixth offer was dated May 31, 2012 and provided for the same asset allocation as in the offer of January 27, 2012 but the equalization payment payable by the Applicant was to be $85,173. Again, if that same asset allocation was used and applied to the findings made at trial, the equalization payment would have been just $7,613.
[20] The final offer made by the Respondent was dated October 26, 2012 and the asset allocation differed from trial in that the Respondent would receive the entire rental property and the debt associated with it. The required equalization payment from Respondent was calculated to be $91,956. When that asset allocation is applied to the findings made at trial, the equalization payment would have been $113,933. Clearly the offer, at least as it pertains to the equalization payment, was not bettered at trial.
[21] From this review, the offers made by the Respondent to equalize the parties’ net family properties were not bettered at trial. Given that none of the offers contained a provision allowing for severability of terms, I conclude that the Respondent made no offers which would attract the consequences of Rule 18.
Who Was Successful?
[22] The success at trial was divided. It may be fairly said that the Respondent was successful in having income attributed to the Applicant for the purposes of calculating child support, in obtaining retrospective child support, in obtaining reimbursement of some, though not all, of the extraordinary expenses she had claimed, and in limiting the Applicant’s claim of assets existing on the date of marriage.
[23] It may also fairly be said that the Applicant was successful in limiting the amount he was required to pay for extraordinary expenses, in having current fair market value attributed to the matrimonial home and mortgage, in limiting the Respondent’s claim for improvements to the home and in establishing the value of the Saturn motor vehicle.
[24] Financially, the success enjoyed by each party was roughly equivalent. Presumptively, the Applicant would be entitled to costs on those issues where he met with success and the Respondent would be entitled to costs on those issues where she met with success. In the normal course, those competing costs claims would cancel each other out with the result that each would bear their own costs. However, the presumptive entitlement to costs may be lost when a party has acted unreasonably during the proceedings.
Did Either Party Act Unreasonably?
[25] In determining whether a party has behaved reasonably or unreasonably, the court is required to examine the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle, the reasonableness of any offer the party made, and any offer the party withdrew or failed to accept [see Rule 24(5)].
[26] I have already reviewed in some detail the various offers made by the Respondent. Until the day before trial the Applicant made no offer of settlement. Although none of the offers were patently unreasonable, there was significant disparity between what was offered and what was obtained.
[27] Certainly, it would appear the Respondent made greater efforts to achieve settlement. More telling, however, is the Applicant’s behaviour in relation to certain issues. With respect to child support he failed to disclose his entire income, failed to provide increases commensurate with increases in his income, and failed to provide financial support for his children for a fairly lengthy period of time following separation. In addition, he failed to contribute meaningfully to extraordinary expenses over a period of almost four years, and completely disregarded a court order requiring him to make payment on a line of credit. In my view, this is precisely the type of conduct which ought to be discouraged and which should disentitle a party to his or her costs.
[28] Accordingly, having regard to this unreasonable behaviour of the Applicant, it is appropriate that he not receive costs relative to the success he had. The result is that there is nothing to offset the Respondent’s entitlement to costs on the matters in which she met with success and she is entitled to an order.
Amount
[29] A determination of what costs the Respondent ought to receive is made difficult by the manner in which her solicitors’ accounts were presented. In particular, those accounts included all time spent on various motions and conferences upon which costs have already been determined.
[30] When I consider the various factors set out in Rule 24(11), I find the following: Firstly, I accept that the issues in which the Respondent met with success were important to her but were not particularly complex or difficult. Secondly, I accept that the Respondent generally conducted herself reasonably during these proceedings. Thirdly, the time spent on the issues in question, including attempts to settle, preparation for and attendance at trial were not insignificant. Fourthly, I consider proportionality, that is, I must consider what amount of costs is reasonable given the result that was obtained. By my calculation, her financial gain was in excess of $40,000 as a result of the findings I made in her favour.
[31] Having considered these factors it is my view that an appropriate award of costs is $10,000, payable by the Applicant within 6 months.
Mr. Justice R.D. Gordon
Released: February 13, 2013
COURT FILE NO.: D18871-09
DATE: 20130212
CORRECTED DECISION RELEASED: 20130213
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Marc Rene Taillefer
Applicant
– and –
Gillian Kaara Taillefer (Schultze)
Respondent
DECISION ON COSTS
R.D. Gordon J.
Released: February 13, 2013