COURT FILE NO.: FC-04-020043-01

DATE: 20140219

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Grace Mondino, Applicant

AND:

John Mondino, Respondent

BEFORE: The Hon. Mr. Justice J.P.L. McDermot

COUNSEL:
John M. Freeman, for the Applicant

Judith Holzman, for the Respondent

HEARD: By written submissions

COSTS ENDORSEMENT

Introduction

[1] On November 13, 2013, after a four day trial, I issued my endorsement in Mr. Mondino’s motion to change. The motion arose out of an order made on August 30, 2004 wherein Mr. Mondino was ordered by Sachs J. to pay child and spousal support; he sought a retroactive termination of the spousal support obligation as of May 1, 2005 as well as termination of his obligation to pay child support for his two children, Stefanie and Jonathon as of May, 2007 and May, 2009, respectively. The Applicant, Grace Mondino, had sought in her Response to Motion to Change a dismissal of the Respondent’s motion and ongoing spousal support in an increased amount from that previously ordered.

[2] In my endorsement, I terminated spousal support but only as of October, 2011, which I found to be the date of effective notice of the Respondent’s claim for termination of support. I did not disturb an earlier order of McGee J. terminating child support for the two children, which meant that the child support was terminated for Stefanie in June, 2008 and for Jonathon in July, 2010. The net effect of the order was that Mr. Mondino was left with arrears of some $63,176.74 in child and spousal support, which I ordered repayable by installments of $700 per month.

[3] Ms. Mondino now requests substantial indemnity costs to April 18, 2013 (the date she submitted one of her offers to settle) and full indemnity costs of trial thereafter. Mr. Mondino’s counsel, Judith Holzman, acknowledges that her client is not entitled to costs. However, she suggests that, based upon the result, which she says is divided, and based upon the conduct of the parties, there should be no order as to costs.

Analysis

(a) Result at Trial

[4] Mr. Freeman says that his client is entitled to costs on several fronts. He suggests firstly that Ms. Mondino was substantially successful at trial and as such is entitled to costs. This issue must be considered in light of the offers to settle submitted by each party, which are an indication of the parties’ relative success at trial. Mr. Freeman also states that a further ground for costs was Mr. Mondino’s unreasonable conduct. Finally, I must determine the quantum of costs, if any, considering the factors set out in Rule 24 and 18 as well as the offers to settle made by the parties.

[5] The first issue raised by Mr. Freeman was whether his client was successful at trial to the extent that she is entitled to costs.

[6] In considering costs, under Rule 24(1) of the Family Law Rules,[^1] costs follow the event, and a successful party is presumed to be entitled to costs. In determining success, I may take into account the offers to settle submitted by each of the parties: see Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.) at paragraph 9 and Lawson v. Lawson, 2008 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.) at paragraph 7. Finally, where there are a number of issues before the court, I can have regard to the dominant issue at trial in light of those offers to settle: see Firth v. Allerton, [2013] O.J. No. 3992 (S.C.J.).

[7] Ms. Holzman on behalf of the Respondent submits that the offers to settle do not indicate success on the part of either party. She submits that when the offers to settle are reviewed, “the offers by the Applicant former wife in no way are close to your ruling at trial while the Respondent former husband’s offer is low.”

[8] The latter part of that submission is, perhaps, an understatement. The Respondent made two offers. The first was attached to a Settlement Conference brief dated September 28, 2012 wherein he essentially offered to pay nothing on account of the arrears. Shortly after that, Mr. Mondino made a second offer on November 13, 2012 after having retained Ms. Holzman; that offer was for a payment on account of arrears of $10,000 payable by instalments of $350 per month. No other offers were made by the Respondent up to the date of trial.

[9] On the other hand, Ms. Mondino made a number of offers. The offers became less ambitious and more reasonable as trial approached. The offers were as follows:

a. The first offer was made on October 17, 2012 and provided for payment of support arrears of $75,000, lump sum support of $100,000 and costs of $10,000, all payable within 30 days of the date of the offer.

b. The second offer was made on November 14, 2012. The arrears under this offer totalled $63,700, with the spousal support component of $49,700 payable at the rate of $700 per month. The child support arrears of $14,000 were presumably payable in a lump sum although the offer does not specify when. The offer further provided for payment of $20,000 in costs and ongoing spousal support of $700 per month.

c. The third offer was made on April 18, 2013, shortly before trial. In it, the Applicant offers to fix arrears at $73,397, being made up of $14,397 in child support arrears and $59,000 in spousal support. The increase from the last offer amount may be explained partially, but certainly not wholly, by the passage of time. The arrears were to be payable within 30 days; the offer further provided for ongoing spousal support in the amount of $625 per month.

d. A final offer was made seven days prior to trial on May 7, 2013. Ms. Mondino reduced her claim for arrears to $67,997, made up of $14,397 in child support and $53,600 in spousal support. The arrears were payable within 60 days of acceptance of the offer. Significantly, Ms. Mondino now offered a cessation of spousal support by Mr. Mondino.

[10] None of the parties’ offers comply with Rule 18(14) of the Family Law Rules which provides that in the event that a party is more successful than his or her offer, I am bound to order costs on a full indemnity basis. Although the formal requirements of the rule appear to have been met in this case by all of the parties’ offers, neither party received a result at trial better than or equal to their offers. The Respondent’s offer was nowhere near the mark, as his offer was only to pay $10,000 in arrears as opposed to the amount of $63,176.74 which all agree to be the arrears based upon my order. The Applicant’s offers were also not bettered at trial; three of the four offers provided for ongoing support which was not ordered and the final and most generous offer provided for just under $5,000 more than the arrears which I ordered. None of the Applicant’s offers save the second offer provided for repayment of the arrears other than by way of lump sum.

[11] The result may have been different were the offers severable: see Sepiashvili v. Sepiashvili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (S.C.J.). However, they were not, and as such, Rule 18(14) is not applicable.

[12] That being said, I may also take into account offers to settle even where they do not comply with Rule 18(14): see Rule 18(16). And it is apparent that the final offer made by the Applicant was much closer to the result at trial than were either of the Respondent’s offers. Although it provided for nearly $5,000 more in arrears than as ordered, that must be contrasted to the Respondent’s last offer which called for payment of more than $50,000 less than that as ordered. As well, the Applicant apparently was more anxious to settle as well, having made two further offers after November, 2012; the Respondent made no further offers after that date. And the final offer made by the Applicant on May 7, 2013 provided for a waiver of ongoing spousal support as was ordered by me at trial.

[13] The fact that the Applicant was more successful at trial is also evidenced by the fact that the major issue at trial was the retroactive rescission of arrears sought by the Respondent. The majority of the testimony of the parties, especially Mr. Mondino, was in respect of the changes in circumstances that took place a good number of years ago, many of which I did not find to be changes in circumstances warranting a change in support. At the beginning of the trial, I pointed out that it appeared to me that the issue of the retroactivity of the rescission of arrears was the major contentious issue at trial and that, in my view, never changed. Taking that into account, all four of the offers made by the Applicant proposed arrears figures that would have obviated the necessity for a trial considering the costs incurred by each party as set out in their respective bills of costs. Although Ms. Holzman is correct in her submissions that the claims by the Applicant for ongoing support appear to be unreasonable, and would have required a trial, the final offer made by the Applicant could have been a basis for settlement as it provided that no further support was payable by the Applicant. And it is apparent to me that, even absent the offers to settle, Mr. Mondino was entirely unsuccessful in obtaining a retroactive rescission of arrears prior to the date of effective notice of his claim.

[14] Accordingly, considering the fact that the major issue addressed at trial were the rescission of arrears, and considering the offers made by the parties, it is my determination that the Applicant was successful at trial. As costs generally follow the event, this would, prima facie, entitle the Applicant to her costs of the trial.

(b) Conduct of Parties

[15] In awarding costs, I may take into account the conduct of the parties to this proceeding: see Rule 24(8) of the Family Law Rules. Under that rule, I am obliged to order full indemnity costs payable forthwith if a party has acted in “bad faith.” Moreover, I may generally take into account under Rule 24(11) “the reasonableness or unreasonableness of a client’s behaviour” in assessing the amount of costs. Importantly, in determining the reasonableness of a party’s behaviour, I can assess the reasonableness of the offers made by the parties as well as an offer that a party failed to accept: see Rule 24(5)(b) and (c).

[16] Neither party alleges bad faith. However, each party states that the other is guilty of unreasonable conduct within the meaning of Rule 24(11)(b). The Applicant says that Mr. Mondino’s unreasonable conduct entitles her to costs; on the other hand, the Respondent says that the Applicant’s unreasonable conduct should deprive her of her costs.

[17] The Respondent states that Ms. Mondino took an unreasonable position from the beginning in insisting on continuing child and spousal support. Ms. Holzman says that unreasonable position is the major reason why this litigation had to be commenced and she points to the three offers made by Ms. Mondino which provide for ongoing support, either lump sum or periodic. However, there is one fatal flaw in this argument and that is that the Respondent did bring proceedings in 2006 and these proceedings were abandoned because he failed to provide disclosure. Had Mr. Mondino made the disclosure as ordered, and had a justice found Mr. Mondino’s income to be as he stated, the child support and spousal support would have been then dealt with when it should have been. Instead we had a trial which was lengthened by the fact that disclosure was still missing and because we were dealing with extremely dated income issues. Furthermore, in light of the lack of clarity as to Mr. Mondino’s income, which was wholly his responsibility, it might be understandable why Ms. Mondino had requested ongoing spousal support as was demonstrated by her analysis of certain “business” expenditures of Mr. Mondino. In any event, in my view, Mr. Mondino’s delay is as responsible for the commencement of these proceedings as was the position respecting ongoing support taken by the Applicant.

[18] And this brings us to the issue of Mr. Mondino’s unreasonable conduct. There are several fronts where he can be seen to have acted unreasonably within the meaning of Rule 24(11)(b). Those incidents of unreasonable conduct can be summarized as follows:

a. Mr. Mondino commenced proceedings in 2005 and effectively abandoned those proceedings. The failure to prosecute those proceedings resulted in crucial disclosure being unavailable to the parties at this trial and, in part, resulted in the difficulties in determining Mr. Mondino’s actual income during the years between 2005 and trial.

b. Mr. Mondino failed to provide that disclosure, and instead said it was too expensive to produce, and that Ms. Mondino should be satisfied with a direction and should have borne the costs of that disclosure. That struck me as unreasonable considering it was Mr. Mondino’s case to make for rescission of arrears.

c. Mr. Mondino acted unreasonably in respect of his daughter, and his attempts to recover the automobile from her. I also commented in my endorsement on Mr. Mondino’s veracity respecting his allegation that he had lost his license as a result of unpaid parking tickets.

d. The Respondent not only delayed bringing proceedings to deal with the arrears; he also failed to pay any of the support owing voluntarily unless otherwise forced. He only engaged in this process when the Director of the Family Responsibility Office began proceedings to remove his driver’s license. The evidence determined that there was little, if any, voluntary compliance with the Sachs J. order by Mr. Mondino.

e. Mr. Mondino made an offer to pay arrears which was unreasonably low, and failed to make any further offers to settle after November, 2012.

f. Mr. Mondino was quite unreasonable in his conduct respecting the children’s trust, although that had a minimal effect on this litigation.

[19] All of these factors lead me to make a finding that Mr. Mondino is, indeed, guilty of unreasonable conduct within the meaning of Rule 24(11)(b). As such, both based upon conduct, and based upon Ms. Mondino’s success at trial, the Applicant his entitled to her costs of this proceeding.

(c) Quantum of Costs

[20] Mr. Freeman submits that his client is entitled to substantial indemnity costs up to April 18, 2013 after which she is entitled to full indemnity costs based upon her offer to settle made on that date. Unfortunately, the costs outline provided by Mr. Freeman does not break down what costs were incurred prior to or after April 18, 2013, or for that matter, May 7, 2013 when the final offer was made by the Applicant prior to trial.

[21] Ms. Holzman submits that the costs requested by Applicant’s counsel are unreasonable and excessive. She points out that her own Bill of Costs supports fees in the amount of $68,075.62 on a full indemnity basis. She states that this is more reflective of the costs of trial, considering that she was retained in November, 2012 and also considering that she had to prepare for trial much as had Mr. Freeman.

[22] I have made a finding of unreasonable conduct as noted above. I have also determined that these proceedings had to be brought largely because Mr. Mondino failed to prosecute his earlier proceedings on a reasonable basis. That being said, I also have some sympathy for the Respondent’s position that he had to bring this motion to change because his wife would never have otherwise agreed to the cessation of either child or spousal support. That fact was reflected in all of the offers made by Ms. Mondino which were initially unreasonable, but became increasingly reasonable as trial approached.

[23] I have also determined that Rule 18(14) is inapplicable to any of the offers made by Ms. Mondino in this proceeding. However, Ms. Mondino did make one offer which was close to the result, being the offer made on May 7, 2013, seven days prior to trial. Based upon Rule 18(16), it is that one offer which I find should be taken into account in quantifying costs. And that offer, although close to the result, does not give rise to a right to full indemnity costs as requested by the Applicant.

[24] Therefore, taking into account all of the factors before, including the terms of the offer noted above, the conduct of the Respondent and the Applicant’s success at trial, the Applicant shall have her substantial indemnity costs subsequent to May 7, 2013 and that would appear to be the counsel fee at trial, trial preparation costs, the preparation of written submissions (presumably after May 7 as written submissions were prepared after trial) and preparation of costs submissions as set out in the Applicant’s costs outline. There are no other amounts that I can fairly take into account as the costs outline does not break down when the other costs, including trial preparation costs, were incurred. Therefore, the Applicant shall have those costs which total $24,037.50.[^2] Taking into account HST, the amount for the costs of trial and preparing the written and costs submissions totals $27,162.38. Rounding the amount out, the Applicant shall have substantial indemnity costs of trial in the amount of $27,000 inclusive of HST.

[25] What is the scale of costs prior to the date of the offer? Mr. Freeman claims costs prior to that date, based upon a substantial indemnity scale as above in the amount of $72,825 in his costs memorandum. This represents 192.5 hours of lawyer’s time. The issue is the scale of costs and whether those costs are excessive under the circumstances.

[26] In my view, only partial indemnity costs should be awarded prior to the offer being made on May 7, 2013. I say this for a number of reasons. Firstly, and as noted above, although the lack of disclosure logically enough raised suspicions in Ms. Mondino which resulted in her position that she wished ongoing support, it was apparent to me based upon the respective lifestyles of the parties that ongoing spousal support was not a reasonable possibility. As well, Ms. Mondino apparently did refuse to agree to any cessation of child support until well into the settlement conferencing process. Finally, the offers to settle made by the Applicant, especially the first one made, did not reflect reality; neither did the request that the Respondent pay the entire amount of arrears within 30 or 60 days. Had Ms. Mondino contemplated a repayment scheme, this matter may have settled prior to trial.

[27] As well, the costs claimed by Mr. Freeman appear to be excessive. Although Mr. Freeman says that he is billing his law clerk’s time at a specific rate, he does not do so anywhere in the costs memorandum. He claims costs for preparation of documents, including the affidavit of documents which may very well be a delegated amount. More importantly, he claims more than 90 hours for trial preparation. Although preparation for trial may very well be important and time consuming, 90 hours appears to be excessive for a trial that went for less than 4 days. That particular heading in the costs memorandum resulted in a charge to the client in excess of $34,000 (partial indemnity). As stated by Wildman J. in Murphy v. Murphy, 2010 ONSC 6204, 2010 CarswellOnt 8616 (S.C.J.) at para. 20 of the report:

I am assuming that the decision to spend so much money preparing for this motion was Mr. Sapir's rather than his counsel's. Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term "full recovery costs", there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner.

[28] Therefore, I find that the pre-offer costs should be limited to $25,000 inclusive of HST and disbursements. That is approximately a third of what was requested by the Applicant prior to the May 7 offer being made.

[29] Therefore, the Applicant shall have her costs in the amount of $54,500.[^3] As support was in issue, those costs are collectable as support. As with the support arrears, costs are repayable in the amount at the rate of $500 per month commencing March 1, 2014; these

payments are in addition to the payments ordered by me on account of support arrears, provided if there is a default the entire amount of costs then becomes payable and enforceable by the Director.

McDERMOT, J.

Date: February 19, 2014

[^1]: O. Reg. 114/99

[^2]: I note that the amount that I am using to calculate costs is the “partial indemnity” rate as set out in the costs outline. However, the “substantial indemnity” rate appears to be based upon Mr. Freeman’s full hourly rate which would therefore be full indemnity costs. I am therefore assuming that costs memorandum partial indemnity rate is actually a substantial indemnity scale.

[^3]: Pre-offer costs of $25,000 + post-offer costs of $27,000 + disbursements of $2,467.12 = $54,467.12, rounded up to $54,500.