ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 93-FC-000956

DATE: 20140707

BETWEEN:

MARIE JOSEPHINE BRIDGETTE SAGL

Applicant

– and –

RUDOLF JOSEF CLEMENS SAGL AND JOAN MARIE SAGL

Respondent

Representing herself

Michael Freeman, for the Respondent Rudolf Josef Clemens Sagl

Isaac Birenbaum for the Respondent Joan Marie Louise Sagl

Himel J.:

reasons on costs

[1] Following a nine day trial, I released Reasons for Judgment on March 27, 2014 in this long-running and bitterly contested family law matter. Rudolf Josef Clemens Sagl (“Rudi”) was denied most of the relief he sought in his 2007 motion to vary a 1997 support and equalization payment order (“the 1997 order”). Marie Josephine Bridgette Sagl (“Bridgette”)’s cross-motion to enforce that order was also dismissed. Joan Marie Sagl (“Joan”) was unsuccessful in her support of Rudi’s motion but did receive a ruling that she was entitled to have the 1997 order and a prior court order removed from title to her residence at 623 Breckenridge Road, Mississauga, Ontario. I also ordered that if the parties were seeking costs, they should file written submissions in accordance with a timetable. I have now received and considered those submissions and provide my reasons on costs.

Positions of the Parties

[2] Bridgette Sagl seeks an order of costs to reflect the costs of the trial and the costs of enforcement proceedings up until 2007 when she filed the support order with the Family Responsibility Office for enforcement. She asks that an order be made against both Joan and Rudi on a substantial indemnity basis in the amount of $151,700, plus an unspecified amount for her time, against both Rudi and Joan on the grounds that she was the successful party in the application before me. Bridgette did not provide any records to substantiate her expenses but reports that, of the requested amount, $100,000 was for two lawyers who represented her in pre-2007 proceedings that she initiated to collect on the 1997 order; $29,000 was spent on paralegals, typists, and “temps”; and $4,700 was for unbundled legal services at unspecified times. She also requests compensation for $8,700 for transcripts of court proceedings, and $1,800 for process servers.

[3] Bridgette argues that she was wholly successful on the main issue at trial which was responding to the application of the two respondents to vary the 1997 support order of Macdonald J. and to rescind arrears. She says that any of the issues resolved in favour of Joan or Rudi Sagl were insignificant while major issues such as set-off were determined in her favour. In addition, Ms. Sagl points out that she incurred extensive costs in attempting to collect on her judgment, was successful in adding Joan Marie Sagl as a party, and obtained ex parte orders. Further, she argues that her conduct during the trial should not disentitle her to costs.

[4] Mr. Freeman represented Joan and Rudi jointly from 2001 to February 2010, after which time, he only represented Rudi. Mr. Freeman submitted his costs information late because of serious medical issues. I will consider those submissions given the good cause for the delay. Mr. Freeman argues that costs against Bridgette on a full indemnity basis are appropriate in the amount of $140,000 from 2001 to February 2010 because, in his view, Bridgette proceeded in bad faith in trying to collect on and enforce the 1997 order. At least $108,000 of this amount was incurred before 2007, when Rudi’s motion to vary was filed. Since February 2010, when Joan retained separate counsel, Mr. Freeman reports that Rudi incurred an additional $84,200 in costs, which he also seeks to recover on a full indemnity basis. This amount is almost double the income that Rudi reported on his financial statement for this period.

[5] Mr. Birenbaum, who has represented Joan since 2010, seeks costs in Joan’s favour and against Bridgette in the amount of $154,350 in fees and disbursements, plus another $20,000 in taxes, on a full indemnity basis. Mr. Birenbaum submits that full indemnity is required because of a reasonable offer to settle Joan made on April 7, 2010 and because Bridgette needlessly delayed and extended the length of the proceedings in various ways. He asks that the court consider the success of the application by Joan and the offer to settle as well as the other factors provided in Rule 24 of the Family Law Rules. Counsel for the respondent takes the position that the court should consider the factors listed in Rule 24(11) and Rule 57.01 of the Rules of Civil Procedure. In particular, he points to Rule 57.01(e) “the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding”, Rule 57.01(f) “whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution;” and Rule 57.01(g) “a party’s denial or refusal to admit anything that should have been admitted”.

Law and Analysis

[6] “[M]odern cost rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour”: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.), at para. 22.

[7] The court has broad discretion in deciding whether to award costs: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131; Jordan v. Stewart, 2013 ONSC 5037, at para. 111. Any award must be fair and reasonable, and regard should be given to the goal of preserving access to justice: Jordan, at para. 83. The fixing of costs is not a mechanical exercise based solely upon a calculation of hours and rates. The objective in awarding costs is to fix costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particular proceeding”: see Boucher v. Public Accountants Council for the Province of Ontario (2004) 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); Zesta Engineering v. Cloutier (2002), 2002 45084 (ON CA), 164 O.A.C. 234 (C.A.); Moon v. Sher, (2004), 2004 39005 (ON CA), 246 D.L.R.(4th) 440 (Ont. C.A.) and Coldmatic Refrigeration of Canada Ltd. v. Leveltrek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.).

[8] The successful party in a family law case is presumed to be entitled to costs: Rule 24(1), Family Law Rules, O. Reg. 114/99. “The presumption can be rebutted if the successful party has behaved unreasonably during the case or if success is divided”: Wylie v. Leclair (2003), 2003 49737 (ON CA), 64 O.R. (3d) 782 (C.A.), at para. 24. In these situations, the court may apportion costs between the parties, or even make no order as to costs: see Rule 24(4); Rule 24(6); Murphy v. Murphy, 2014 ONSC 2624, at para. 26.

[9] Under Rule 24(11), the court must consider the following factors when setting the amount of costs for the successful party:

(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.

[10] Successful self-represented litigants may recover costs; however, they are “not entitled to costs calculated on the same basis as those of the litigant who retains counsel”: Fong, at para. 26. “The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case,” such as time attending court, and “a self-represented lay litigant should receive only a ‘moderate’ or ‘reasonable’ allowance for the loss of time devoted to preparing and presenting the case”: Fong, at para. 26. In addition, it is appropriate to consider a self-represented litigant’s provable expenses from paralegals and lawyers who have provided assistance, even if only on a limited retainer basis: see Jordan, at paras. 126-27.

[11] Generally, in family proceedings the same approach to the issue of costs applies as in other areas of litigation and costs will usually follow the event. Rule 24(1) provides a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. Where a successful party has behaved unreasonably during a case, it 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. In deciding whether a party has behaved reasonably or unreasonably, the court is 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. Where success in a case is divided, the court may apportion costs as appropriate.

Decision

Rudi and Bridgette’s Requests for Costs

[12] Having considered the above principles and the circumstances of this case, I exercise my discretion and determine that no costs will be awarded to either Bridgette or Rudi.

[13] First, I decline to award costs for amounts incurred before 2007, when Rudi’s motion to vary the 1997 order was filed. The pre-2007 proceedings are not directly relevant to the matters that were pending before me, and it is evident from the record that costs for at least some of those proceedings were dealt with at the time as required under Rule 24(10). That the parties did not seek to enforce costs awards made at the time with reference to specific proceedings, does not entitle them to costs at this stage.

[14] Bridgette was the successful party on the core issue presented in Rudi’s 2007 motion to vary the 1997 order and Bridgette’s cross-motion to enforce, that is, whether the court should nullify Rudi’s obligations to pay Bridgette an equalization payment and spousal support as of the date of the 1997 order and to drastically reduce his child support obligation on a retroactive basis. This is apparent from the rulings made in my judgment:

a. Rudi’s request to retroactively vary his spousal support obligation was denied. I concluded that the court lacked jurisdiction to vary the award. If there had been jurisdiction, Rudi’s spousal support obligations would have terminated only as of 2014.

b. Rudi’s request to reduce his child support payments was denied as to the monthly amount. The monthly obligation was deemed to have ended on November 9, 2007, which was after the date that Bridgette asked for support to be terminated (June 30, 2007).

c. Rudi’s arrears were reduced by the value of the equalization claim because Rudi’s 2002 bankruptcy released him from the obligation to pay that debt.

d. Rudi’s request to rescind his arrears on equitable grounds was denied.

e. Rudi’s request to set-off his arrears by the value of personal property seized by the Sheriff and sold in 2001 was denied in part. Bridgette conceded that the funds raised from the sale of the goods should be used to offset the arrears. Rudi argued that the true value of the goods was over 60 times their sale price and that he should be given credit for this higher amount. This claim was unsuccessful.

f. Rudi’s request to have his passport and driver’s licence reinstated was denied for lack of jurisdiction.

g. Rudi’s request to rescind the non-depletion order was denied.

h. While Bridgette’s cross-motion to enforce the 1997 order was unsuccessful, it was only because the Family Responsibility Office, rather than this court, has jurisdiction over the matter.

[15] Notwithstanding Bridgette’s success, Mr. Freeman suggests that the court should award costs against her because she sought an order of contempt in 2001 after Rudi failed to make any voluntary payment of the amounts imposed in the 1997 order. This is preposterous. A costs award must in all cases be fair and reasonable and accord with the fundamental principle of access to justice. To penalize a successful litigant in the case at bar because she tried to enforce a valid court order years earlier would be the antithesis of respecting these values.

[16] That said, the Family Law Rules provide that the court may deprive a successful party of costs or order that party to pay costs to the opponent if the successful party behaved “unreasonably”: Rule 24(4). Rule 24(5) states:

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.

[17] I find that both Bridgette and Rudi behaved unreasonably in this case.

[18] Neither Bridgette nor Rudi made an offer to settle that qualifies under Rule 18 in all the years that this litigation was pending.

[19] Mr. Freeman described in his submissions three instances in which settlement was allegedly discussed. The first was in March 2007, when Bridgette apparently suggested verbally that the parties walk away from the litigation, but no offer was exchanged. The second instance allegedly occurred when the parties communicated their tentative positions to a mediator in 2008, with Bridgette seeking $6 million and Rudi offering $30,000. The third instance allegedly took place in April 2013, when Joan verbally suggested paying $50,000 and Bridgette sought $3 million. No evidence was produced to substantiate these discussions, and there is no indication that any written offers were exchanged by these parties. Without further proof as to their terms, I decline to give them any consideration.

[20] Bridgette and Rudi also protracted the litigation needlessly, failed to provide complete financial disclosures even when ordered to do so, and were less than admirable in their conduct before the court. I have already quoted, in the judgment, Macdonald J.’s observations in the 1997 order about Bridgette and Rudi’s inappropriate behaviour, which applied with equal force in the trial before me. In their costs submissions, the parties – and especially Mr. Freeman, on Rudi’s behalf – continued to attempt to relitigate their various legal disputes and disparage each other.

[21] In these circumstances, a costs award in favour of Bridgette (or Rudi, if I were to adopt Mr. Freeman’s position) would not be reasonable or fair.

Joan’s Requests for Costs

[22] Joan was successful on her application to remove the 1993 order of Walsh J. and the 1997 order of Macdonald J. from the title to 623 Breckenridge Road, Mississauga, Ontario. This was the principal issue for Joan, although she also supported Rudi’s unsuccessful motion to vary. I will take that matter into account below.

[23] Joan seeks costs on a full indemnity scale under Rule 18(14) because of a settlement offer Joan made in on April 7, 2010 and under Rule 24(8) on the grounds that Bridgette acted in bad faith. In the alternative, she requests costs on a partial indemnity scale.

[24] Rule 18(14) of the Family Law Rules provides:

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. 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.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

[25] On April 7, 2010, Joan’s counsel mailed a settlement offer to Bridgette that provided for Joan to make a $100 payment to Bridgette and Bridgette to remove the court orders from the title to 623 Breckenridge and dismiss all claims against Joan. Each party was to bear her own costs if the offer was accepted before April 30, 2010. If the offer was accepted after that date, Bridgette would pay Joan’s costs arising between April 30 and the offer’s acceptance on a substantial indemnity basis. The offer remained open until trial and was never accepted. The result obtained at trial was more favourable than the offer made by Joan.

[26] This offer satisfies Rule 18(14), but Bridgette objects to its consideration on two grounds. First, Bridgette states that she never received it, but counsel for Joan provided an affidavit of service indicating that it was mailed to Bridgette “c/o Susan Cupido” at an address in Mississauga, Ontario. Apparently Joan’s counsel obtained that contact information from the last document Bridgette had filed with the court at the time the offer was made. I accept that it was mailed to an appropriate address.

[27] Second, as Bridgette points out, the offer was not “signed personally by the party making it” as required under Rule 18(4). This is a mandatory provision. By failing to comply with Rule 18(4), a party cannot take advantage of the presumption under Rule 18(14) that it is entitled to full recovery of costs: R.P.S. v. K.J.S., 2014 ONSC 2535, at para. 11; Feng v. Phillips (2006), 2006 13769 (ON SC), 26 R.F.L. (6th) 151 (Ont. S.C.), at para. 24. Therefore, Joan is not eligible for full recovery under Rule 18(14).

[28] As a second route to full indemnity, counsel for Joan submits that Bridgette acted in bad faith during the litigation. Rule 24(8) states, “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.”

[29] In S. (C.) v. S. (M.) (2007), 2007 20279 (ON SC), 38 R.F.L. (6th) 315 (Ont. S.C.), at para. 17, aff’d 2010 ONCA 196, 76 R.F.L. (6th) 14, Perkins J. observed the following about the meaning of “bad faith” within Rule 24:

In order to come within the meaning of bad faith in subrule 24 (8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person’s sole or primary intent, but rather only a significant part of the person’s intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

[30] Counsel for Joan submits that Bridgette wrongfully delayed certain proceedings, failed to comply with the rules of evidence and disclosure, made unfounded allegations of misconduct against Joan, and refused to acknowledge the validity of the quit claim deed concerning 623 Breckenridge that, I subsequently found, Bridgette signed in 1994.

[31] I decline to find that it was done in bad faith because there is inadequate evidence that Bridgette’s motivations meet the definition which was outlined by Perkins J. in S. (C.) and approved by the Ontario Court of Appeal. I am troubled by the fact that Bridgette refused to authenticate her signature on the quit claim deed and disputed the legal significance of the document. However, I would note that Bridgette executed the quit claim deed before Joan acquired title to 623 Breckenridge (with some financial assistance from Rudi) and that between the execution of the quit claim deed and Joan’s purchase of the property, a variety of highly questionable transactions took place with respect to the title. I cannot say that Bridgette’s persistence in pursuing the possibility that Rudi held an equitable interest in the residence once Joan acquired it went beyond “[a] misguided but genuine intent” to recover some of the funds Rudi owed her under the 1997 order. Therefore, I decline to order costs on a full recovery basis under Rule 24(8).

[32] I turn now to consideration of the general factors listed in Rule 24(11) to determine the quantum of costs to award in Joan’s favour. This includes an evaluation of the complexity and importance of the issues, the reasonableness of the parties’ behaviour, the legal fees and expenses claimed by Joan, and any other relevant factor.

Complexity and importance of the issues

[33] With respect to this factor, I note that the 623 Breckenridge issue was important to Joan, as it concerned the title of her residence, and it was of moderate complexity. On the other hand, Joan had no direct legal interest in Rudi’s motion to vary the 1997 order (which she joined in support), even though it was likely important to her on a practical level as his spouse.

Reasonableness of the parties’ conduct, including settlement offers

[34] I have already commented on Bridgette’s overall conduct in the proceeding. I will note, with respect to the 623 Breckenridge issue, that her refusal to admit that it was her signature on the quit claim deed forced Joan to call as witnesses Bridgette’s lawyers from the mid-1990s (who had witnessed the signing of the quit claim deed) and to litigate a motion over whether solicitor-client privilege applied to their testimony. This increased the length and cost of the proceedings without good and substantial reason.

[35] There were no settlement offers by Bridgette that can be considered. It appears, from Mr. Birenbaum’s invoices to Joan, that Bridgette made an offer to settle in May 2011. However, neither party provided any details about it. The settlement discussions referenced by Mr. Freeman, above, lack adequate proof of particulars as well.

[36] Although Joan’s April 2010 settlement offer failed to qualify under Rule 18(14), I will take it into consideration under Rule 18(16). Under the offer’s terms, all claims against Joan would have been resolved; Joan and Bridgette would have borne their own costs (if Bridgette accepted the offer within four weeks); and the matter would have resolved four years before trial. This reflects Joan’s reasonable conduct in this case.

Time and costs from Joan’s counsel

[37] Mr. Birenbaum, on behalf of Joan, does not seek to recover costs Joan incurred before February 2010, when his retainer began. Counsel further suggests that Joan’s costs are derived, appropriately, almost entirely from litigating the 623 Breckenridge issue and not from her support of Rudi’s motion. Mr. Birenbaum points out that Joan called no independent witnesses on Rudi’s motion and, for the most part, conducted only brief examination of Rudi’s witnesses.

[38] Joan’s legal costs on the 623 Breckenridge issue demonstrate the value of early settlement. Joan’s counsel spent little time on the case in the first three years of his retainer: 16 hours in 2010; 11 hours plus two half-days and one full day of court attendance in 2011; and 4 hours plus one half-day of court attendance in 2012. In 2013, however, counsel billed over 90 hours – excluding court attendance time – in connection with the trial and trial management conferences. Given Mr. Birenbaum’s rates of $600 per hour, $2500 per half-day of court attendance, and $4,000 per full day, Joan’s legal fees quickly added up. Whereas her total legal costs (excluding disbursements and taxes) from February 2010 until early 2013 were approximately $35,000, the cost of trial and the trial management conferences exceeded $103,000.

[39] Mr. Birenbaum is an experienced lawyer, having been called to the bar over 50 years ago, and that may explain his rate of $600 per hour. However, it is double what Mr. Freeman reports having charged Joan while he represented her, and no use was made of less-expensive junior counsel even on matters that did not require Mr. Birenbaum’s level of expertise. I note this because I must take into account Bridgette’s reasonable expectations as to costs if she were unsuccessful, not simply the actual amount invoiced to the successful party: see e.g. Jahn-Cartwright v. Cartwright, 2010 ONSC 2263, 91 R.F.L. (6th) 301, at para. 65.

[40] On the reasonableness of time allocated to the case, I also note that Joan’s counsel billed 23 hours for “182 letters sent and received” at the full $600 per hour. When this correspondence was exchanged, and for what purpose, is not apparent even though the line item amounts to $13,800 in fees. Most of this figure should not be included in the costs award.

Other relevant factors

[41] The unsuccessful party’s ability to pay may be taken into consideration in determining the quantum of costs: see e.g. Murray v. Murray (2005), 2005 46626 (ON CA), 79 O.R. (3d) 147 (C.A.). As noted in the judgment, Bridgette failed to provide complete financial disclosure to the court but, from what information was provided, it appeared that she had several hundred thousand dollars in savings. I would not reduce the amount of costs in this case based on ability to pay.

[42] As a final consideration, I note that the underlying cause of the present litigation was Rudi’s complete and total disregard for the 1997 order that he pay child and spousal support to Bridgette. The arrears he accrued resulted in Bridgette’s enforcement actions, including adding Joan as a party in 2001, Joan’s subsequent application to clear title to 623 Breckenridge, and Rudi’s unsuccessful motion to vary the 1997 order. Given that Joan is Rudi’s wife and caretaker, a large costs award in her favour will accrue to Rudi’s benefit even though he was unsuccessful. On the other hand, fairness requires that Joan receive a reasonable costs award.

Conclusion on Joan’s requests for costs

[43] On the whole, it is fair and reasonable to award Joan costs on a partial indemnity basis in the amount of $40,000 (inclusive of HST and disbursements). Joan was successful on the 623 Breckenridge issue, despite the difficulties and delay that Bridgette created by refusing to authenticate her signature on the quit claim deed. The goals of encouraging settlements, indemnifying successful litigants, and discouraging inappropriate behaviour all warrant a significant costs award in Joan’s favour. At the same time, Joan joined in Rudi’s unsuccessful motion to vary the support award, for which she should not receive costs, and her counsel’s fees and time spent on trial and correspondence – given the modest complexity of the 623 Breckenridge issue – were at or above what a reasonable litigant would expect to pay.

Conclusion

For the reasons outlined, I exercise my discretion and award no costs to Bridgette and no costs to Rudi. I make an order that Bridgette pay costs to Joan in the amount of $40,000 within thirty days.

Himel J.

Released: July 07, 2014

COURT FILE NO.: 93-FC-000956

DATE: 20140707

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MARIE JOSEPHINE BRIDGETTE SAGL

Applicant

– and –

RUDOLF JOSEF CLEMENS SAGL AND JOAN MARIE SAGL

Respondent

REASONS ON COSTS

Himel J.

Released: July 07, 2014