SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FS-47230-12
DATE: 2014-03-05

RE: Taren Marie Annett, Applicant

AND:

Christopher Campbell Annett, Respondent

BEFORE: The Honourable Mr. Justice G. A Campbell

COUNSEL:
Gary S. Joseph, for the Applicant

Pamela L. Hebner, for the Respondent

COSTS ENDORSEMENT

[1] The parties and counsel appeared before me on December 19, 2013 to argue several long motions. The issues were complex, important and interconnected. Some issues were conceded at the motion and terms were granted on consent. Other complex financial issues were argued and unfortunately, due to time constraints some issues had to be adjourned.

[2] I have now received, read and considered counsel’s written submissions. The applicant seeks a costs order of $45,000 plus $1,500 to prepare her costs submission. The respondent concedes that an “appropriate costs award” to the applicant would be $10,000, inclusive. He also concedes that any costs award should be enforced by the Director of the Family Responsibility Office as having been incurred to obtain a support order. I agree.

[3] Neither litigant served an Offer to Settle. This fact is relevant to this exercise since Rule 18 allows for a larger award (full indemnity) if the offer was less than the order obtained. Indeed, some judges have found that failure to serve an Offer to Settle constitutes “unreasonable behaviour” by a litigant. See McKenzie v. Newby (2013), ONSJ 610 Zisman J.

[4] The Applicant submits that she was entirely successful on those parts of her motions that were conceded or argued and as a result seeks full indemnity costs. She argues that the Respondent acted unreasonably by terminating spousal and child support. On the other hand, the Respondent points out that Broad J.’s consent order of February 21, 2013 which set child and spousal support based upon his Line 150 2011 income of $550,000 per annum, inter alia, also required the Applicant to pay the monthly mortgage and expenses on the matrimonial home (to which he consented to her having exclusive possession). He justifies withholding support and paying the mortgage payments directly when the Applicant refused or neglected to comply with that order and do so herself.

[5] The Respondent also challenges that the Applicant was entirely or “totally” successful as she claims, since, he asserts, he was able to persuade me to reduce his ongoing child and spousal support from being based on his 2011 income to being based on his 2012 income. Accordingly, child support dropped from $6,572/month to $3,038/month and spousal support went from $12,280/month to $5,396/month. I agree with the Respondent that those reductions are both substantial and significant and that he was successful in that respect. Granted, the support change was only to occur if and when the Respondent complied with certain terms imposed upon him to bring all outstanding support into good standing and to comply with his undertakings given at his questioning under oath, within certain time lines.

[6] In any event, despite the Respondent’s (conditional) success to which he refers, I find that the Applicant was mostly successful and that her motions were necessary (to respond to his withholding-money-strategy to force issues to a head) and complex, given the intricacies of the Respondent’s financial structure from which he has been so richly rewarded in the past.

[7] I am also persuaded that there had been certain hard-ball tactics employed by the Respondent and his former counsel. Despite his current plea of innocence, I am not entirely convinced that the Respondent played such a passive role in Canada Revenue Agency discovering, then seizing, certain money held in trust by his former counsel.

[8] Regardless of any culpability in how that payment to Canada Revenue Agency came about, I agree with the Respondent’s present counsel’s submission that the money paid to Canada Revenue Agency by the Respondent was properly owing for taxes on his income earned in 2012 … “the majority of which was enjoyed by both of the parties prior to their separation on November 15, 2012. It was simply a debt that had to be paid somehow.”

[9] I accept that the financial issues argued were important to the Applicant. Similar to custody of one’s children, the Applicant and her children’s continued financial wellbeing is of equal or similar importance. As I observed in Czegledy-Nagy v. Seirli (2011), ONSC 119:

Of course, the issue of custody and content of/with his children was of the “utmost importance”. In light of the strategic importance of establishing a custody status quo at the earliest stage of any family law litigation, every family law motion for custody is of the highest importance. There is no more important issue for a parent whose family has just disintegrated. (See Fappiano v. Campbell, 2002 46717 (ON SC), [2002] O.J. No. 608)

[10] I therefore find that the issues that were argued were important, necessary and complex and that the Applicant was mostly successful and therefore entitled to an order for costs. However, the quantum sought by the Applicant is nothing short of staggering.

[11] Having read the Applicant’s counsel’s accounts, it is clear that the $54,263.61 legal bill to January 7, 2014 for which she is responsible includes the services of her legal team from December 4, 2012, which team includes two lawyers and three law clerks. She can be thankful that most of the legwork has been performed by M. Younie at $260/hour and the law clerks at about $150/hour rather than by Mr. Joseph at almost $600/hour. However, I agree with Ms. Hebner that on the day of the motion, the Applicant did not require the attendance in Kitchener of two competent counsel, one of which did nothing but take notes (as far as I could observe).

[12] As observed in Czegledy-Nagy v. Seirli (supra):

a) If a litigant commences an action in his/her own community, it ill behooves him/her to retain counsel in the largest metropolitan center in the Province (where fees are subsequently higher per hour), than where the litigation is situate, then to ask that the court impose those higher costs and travel expenses upon the opposite party should he/she lose the motion.

b) While I recognize that modern legal practice has available to a client a team of legal staff, each contributing something to a motion, a losing litigant should not be expected to pay senior counsel supervising a junior counsel’s work or for the duplication of various lawyers “reviewing & revising” work already prepared (and billed to the client) by other lawyers or senior law clerks, or for the time counsel take to brief each other or their law clerks to prepare simple court documents or arrange for service of same.

Professor Czegledy-Nagy may hire as many lawyers as he wishes to have on his team, from whichever city he wants them to come from. That is his prerogative. (See Grant v. Grant, 2006 CarswellOnt 17 (Ont. SCJ).

However, no litigant should expect to drive up the cost of litigation in that manner for his/her own satisfaction or his/her need for attention and then to have the court saddle the other litigant with that bill.

There are many very competent local counsel (some are even LSUC family law “specialists”) in this Region. The need to import another from afar is unnecessarily and indulgent.

In any event, the Court need only consider as one factor the amount that a successful litigant has expended to achieve success. Some litigants need more “hand-holding” than others and some counsel bill heavily for the slightest effort where others do not.

Therefore, despite Prof. Czegledy-Nagy spending almost $65,500.00 to get to a temporary order (which required two attendances on motions), the principle of reasonableness that directs my determination is whether a reasonable party, opposing Prof. Czegledy-Nagy’s motions could possibly anticipate an order for costs against her even approaching such a breathtaking quantum, were she to lose those motions.

Despite my colleague, Wood J.’s view, expressed in Grant (supra) that losing litigants in centres outside of Toronto should be ready to face “Toronto rates” if their opponent hired a Toronto “Carriage Trade” Counsel, my view is that Dr. Seirli could not possibly anticipate being held responsible for the gargantuan costs order as sought.

[13] I am therefore disinclined to include the “duplication” of time consumed by the Applicant acceding to the use of two separate counsel in the preparation for and attendance at the December 19, 2013 motion.

[14] The Applicant’s counsel make clear their view that she is claiming and feels entitled to all expenses from the outset of the case to the December 19, 2013 attendance since her Application and all of her various motions and attendances leading up to that date are intertwined and inter-dependant one upon the other. Hence she argues that all preparations for the consent order of Broad J. of July 11, 2013 and for the December 19, 2013 motion should be included in any costs order I make. Indeed counsel, when referring to the Broad J. order of 11 July 2013 asserts that costs on that date “were specifically reserved to the long motion” as set out in (his) endorsement.

[15] However, neither counsel for the Respondent nor I can find any such endorsement. When that misstatement is drawn to the Applicant’s counsel’s attention in his written Reply, he “disputes her interpretation” of Broad J.’s order. He argues that “it is clear” that all issues that were before Broad J. which were not dealt with on that date “remain open”, which issues include “both parties claims for costs”. Hence, he argues that even though Broad J. does not endorse anything regarding costs, everything that was prepared for that motion (including affidavits now older than a year) and everything prepared specifically for the December 19, 2012 motion, all remain available to be included in this costs order. I disagree. The motion before Broad J. was certainly a “step” in this case. As I observed in Czegledy-Nagy v. Seirli (supra):

Rule 24 (10) mandates setting costs for and “after each step in the case”.

I can readily assess the preparation, effort, presentation and success of counsel’s arguments at the October attendance. But, except for reading the Sloan J. Order (on consent) and the submission where Ms. David identifies for that day in her Costs Outline 9.9 hours for her and 9.4 hours for lawyer Virtue (less three hours travel for each) it would appear that that attendance consumed six hours of effort negotiating, followed by some “face-time” with presiding Justice Sloan for him to decide the use-of-the-van issue. Apparently, some compromise was achieved on August 31st, one issue was argued and the balance adjourned to be argued in October. Based upon the scant information available to me, that is the assumption upon which I will decide the costs for that attendance or “step”.

There is good reason that a presiding justice should decide entitlement and quantum of costs “at each step”. (S)he was present and can appropriately decide which party achieved more success and how much effort and time was expended on which issues. I cannot perform that task effectively with the information at hand.

I oppose and object to the increasingly common practice of NOT addressing at least the quantum of costs at each step of a motion or an event in an action. The Rule was enacted for a very valid reason and unless counsel begin to follow its mandate, they risk a trial judge (or motions judge) later refusing to grant ANY costs for such a step in a proceeding. (see Moore v. Riley (2005), CarswellOnt 3074 (OSCJ).

[16] I am not persuaded that I should include costs for the preparation for nor the attendance at the July11, 2013 Broad J. “step” in this proceeding and decline to do so.

[17] Counsel for the Respondent also identifies charges to the Applicant for time spent on December 4, 5 and 6 of 2012 preparing motion materials that relate to an ex parte motion decided by Flynn J. Those efforts also relate to another, different step in the proceedings. No costs were ordered. That portion of the fees, disbursements and taxes relating to that abortive effort is also disallowed.

[18] Counsel for the Applicant correctly takes exception to the Respondent disclosing information (in paragraph 10) regarding actions and events that occurred after the December 19, 2013 attendance. I agree. However, his complaint would have more impact if he had not then himself indulged in that same error (see last sentence in paragraphs 1 and 11 of his Reply).

[19] There now exists ample authority that I am to view the issue of costs of this motion in a flexible and balanced way, recognizing the wide discretion afforded by r. 24 of the Family Law Rules, O. Reg. 114/99; Ostapchuk v. Ostapchuk, 2003 57399 (ON CA), 2003 CarswellOnt 1661, [2003] O.J. No. 1733 (C.A.) Ms. Scholz’s client is entitled to her costs, but the quantum to be paid must reflect the factors in r. 24(11), view flexibly: C.A.M. v. D.M. (2003), 2003 18880 (ON CA), 67 O.R. (3d) 181 (C.A.). The costs award, as well, must represent a fair and reasonable amount that should be paid, rather than any exact measure of the actual costs: Zestra Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. NO. 4495 (C.A.).

[20] I am also required to make an assessment of a sensible and fair result consistent with what the unsuccessful party might reasonably have expected to have to pay: Moon v. Sher (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440, [2004] O.J. No. 4651 (C.A.). The costs assessment, as well, must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created: Pagnotta v. Brown, [2002] O.J. No. 3033, 2002 CarswellOnt 2666 (Sup. Ct.). See also Gale v. Gale (2006), CarswellOnt 6328.

[21] After examining the factors set out in Rule 24(11) and applying them to the circumstances, positions, offers and tactics of this proceeding and using the “flexible v.s. rigid adherence to hours billed times the hourly rate charged” approach set out by the case of Hackett v. Leung 2005 42254 (ONSC) Blishen J. and the “fair and reasonable amount” approach encouraged by Boucher v. Public Accountants Council, 2004 14579 (ON CA), [2004] O.J. NO. 2634, OCA, I find that a reasonable, balanced and fair costs order to recognize the Applicant’s mixed success is $15,000.00, inclusive of recoverable disbursements and HST, payable by the Respondent to the Applicant.

[22] All of these costs were incurred with respect to the order for support. They are “legal fees or other expenses arising in relation to support or maintenance” and as such, should be enforceable by the Director of F.R.O. (see s.1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act 1996, S.O. 1996, c.31 (as amended) and Wildman v. Wildman (2006), 2006 33540 (ON CA), 82 O.R. (3d) 401 (C.A.)) I so order.

“G.A. Campbell”

G. A. Campbell J.

Date: March 5, 2014