SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: 61-2011
DATE: April 1, 2014
RE: Jane Margaret DeJong, applicant
AND:
William G. DeJong, respondent
BEFORE: HENDERSON J.
COUNSEL: Glen R. Carey for the applicant
William R. Clayton for the respondent
HEARD: written submissions filed
ENDORSEMENT ON COSTS
[1] The respondent concedes that the applicant is entitled to costs. The only substantive issue is the determination of the quantum. The applicant seeks costs in the amount of $99,474.79 being based on partial indemnity costs (75%) until the date of her first offer to settle and full indemnity thereafter. The respondent submits $65,000 plus disbursements and HST to be more appropriate.
Background
[2] Leading up to trial, the applicant made three offers to settle dated September 11, 2012, December 19, 2012 and February 27, 2013. The respondent made two offers dated December 28, 2012 and April 11, 2013.
[3] The applicant relies on r. 18(14) and (16) and R. 24 to support her claim for costs. Specifically, she argues that:
a) she was successful on all issues;
b) she was reasonable throughout as indicated by her offers to settle;
c) the respondent, in contrast, was unreasonable;
d) the judgment was more favourable than her offers to settle and less favourable than the respondent’s offers to settle and, consequently, she is entitled to her costs calculated on the basis of her first offer to settle and full recovery thereafter.
Discussion
[4] The following rules govern the determination of costs in this case:
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:
If the offer relates to a motion, it is made at least one day before the motion date.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
18(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.
24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), 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.
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
(8) If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.
(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.
[5] The determination of costs is discretionary. Both parties in the present case use terms such as “partial” and “full indemnity.” These terms are not found in the Family Law Rules, O. Reg. 114/99 as currently drafted. As Aston J. noted in Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), 6 R.F.L. (5th) 430:
- … There is no provision in the Family Law Rules for an assessment of costs by some other court official, and no tariff of costs. Having determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery. The Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs.
[6] This interpretation is supported by the language used specifically in r. 18(14) and R. 24. There is only a reference to “costs” and “full recovery of costs” (r. 18(14)) or “costs on a full recovery basis” (r. 24(5)).
[7] The assessment of those costs is assisted by a consideration of the factors in r. 24(11) and the other considerations of R. 24: unreasonableness (r. 24(4) and (5)); absent or unprepared party (r. 24(7)); bad faith (r. 24(8)); or costs caused by fault of lawyer or agent (r. 24(9)). In addition, the court is guided by the interplay of r. 18(14) and (16) in the exercise of its discretion.
[8] At the outset, I find the applicant’s bill of costs to be reasonable. The respondent challenged it arguing, in particular, that the applicant’s counsel was billing lawyer rates for essentially clerk work.
[9] I accept the applicant’s response that the practice of a sole practitioner in a small town like Goderich is qualitatively different than that in a big firm, in a big centre, like London. The applicant’s counsel’s hourly billing rate of $300 is more than reasonable given his 32 year’s experience. He does not bill out his assistant’s time, whose work may include clerk type work otherwise billed out in a bigger firm. The limited market of a small town imposes its own constraints on legal accounts. Viewed overall, I find nothing unreasonable about the applicant’s bill of costs.
[10] For the following reasons, I award the applicant costs in the amount of $85,000 plus the disbursements set out in the applicant’s bill of costs and HST:
[11] 1. The applicant starts her argument with her offers to settle. She says that the trial judgment was more favourable than her offers and is therefore entitled to the benefits of r. 18(14). First, I agree with the respondent that in order to benefit from r. 18(14) all terms must be met. It is clear that the first two offers were withdrawn as each subsequent offer was made. Therefore, the only offer in play for the purposes of r. 18(14) is the last offer dated February 27, 2013. There were two major issues tried: spousal support, including retroactive spousal support; and property. A significant sub-issue to the spousal support issue was the determination of the respondent’s income.
[12] It is clear the trial judgment was more favourable than the applicant’s last offer in respect of spousal support, including retroactive. It is not so clear in respect of the property proposal. I calculated the equalization payment without reference to the jointly owned farm. I ordered the farm to be sold with the net proceeds to be divided equally between the parties. The respondent’s share was adjusted, deducting the equalization payment and the retroactive spousal support award.
[13] In her offer of February 27, 2013, the applicant proposed a lump sum payment of $606,000 to include the equalization payment and her share of the farm. The offer was predicated on a value of $1.7 million. As noted in my judgment, that was an appraised value and the true value had to be tested by the market. Whether the farm sells for that is speculative. The applicant asks me to take into account that in fact the farm is now listed for that amount. I cannot say I am surprised that it is. Even if the respondent disagreed with the appraised value, it would be in the interest of both parties to get as much for the farm as they could. However, whether they still get that value is another thing. And, for that reason, I cannot say on that point the applicant’s offer was more favourable than my judgment. Therefore, I find the applicant cannot benefit from r. 18(14).
[14] Nevertheless, the applicant can rely on r. 18(16). I do not agree with the respondent that the strict wording of subrule (14) must be applied to offers in subrule (16). The wording is of more general application and in fact specifically to offers that do not comply with subrule (14). It is consistent with the general thrust of the Family Law Rules to encourage offers to settle and early resolution. In this respect, I weigh heavily the three offers made by the applicant. I acknowledge the two offers made by the respondent but the terms were such that settlement or even discussion was unlikely. While they were not token offers, they do appear more as a defence to a cost argument than serious efforts towards resolution. For example, spousal support was time limited to the end of this year with no recognition of retroactive spousal support. Given the length of the marriage and the roles assumed by the parties in the marriage, this was a non-starter.
[15] 2. The applicant’s serious efforts also underscore her efforts to be reasonable as contemplated in r. 24(11). It was apparent at trial and in her offers to settle that the applicant did not want the farm to be sold. She only wanted her share out.
[16] The respondent, in contrast, acted at times in an unreasonable manner. I do accept he is entitled to litigate a reasonable position. The issues surrounding income and value of the farm were real issues. He is not to be chastised for that. However, the respondent was dilatory in his financial disclosure. It was apparent that the respondent left financial matters to his bookkeeper and accountant. Nevertheless, he cannot fall back on their delays as an excuse. It is not a question of wilfulness.
[17] There is one document the applicant referred to as an example of the respondent’s delay and that concerns his 2012 income tax return. It was produced during trial but this was because it did not have to be filed sooner. It takes time to put these returns together and I see no unreasonableness in this respect.
[18] Further, the respondent took a very unreasonable position with respect to spousal support. It was clear at trial that he did not want to pay any support to his wife. He delayed months in paying, even after the interim order was issued requiring him to do so.
[19] As I indicated, with respect to his offer to settle, his position regarding spousal support was not reasonable and created a hurdle that only made trial a likelihood. To be clear, I find no bad faith and the applicant has suggested none.
[20] 3. Finally, I find the case to be of moderately high complexity. The issues of income determination and property values required expert testimony beyond what may be termed the run of the mill case.
[21] Therefore, I order that the respondent shall pay to the applicant costs in the amount of $85,000 plus disbursements and HST. This shall be paid from the respondent’s share of the net proceeds of sale of the farm, unless paid sooner.
“Justice Paul J. Henderson”
Justice Paul J. Henderson
Date: April 1, 2014