ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-11-0116
DATE: 2014-07-09
B E T W E E N:
Desmond Craig Berry,
Mary Ann Currie, for the Applicant
Applicant
- and -
Melissa Jean Berry,
The Respondent representing herself.
Respondent
HEARD: June 12, 2014,
at Thunder Bay, Ontario
Mr. Justice F. B. Fitzpatrick
Decision On Costs
[1] The applicant seeks an award of costs following a three-day trial of this matrimonial matter. The litigation commenced in early 2011 and the trial was concluded on February 7, 2014.
[2] Immediately before the commencement of the trial, the parties settled two very important outstanding issues between them. First, they settled the issue of equalization. Second, they resolved what appeared to be the most significant issue between them, that of custody and access for their two daughters. This settlement was incorporated in the final order in this matter.
[3] The applicant now seeks an award of $83,193.50 which represents full indemnity for all work expended on the entirety of the litigation. The respondent resists the award and suggests no costs should be awarded as “she won the two motions” that were before the court.
[4] At the outset of the hearing on costs, I allowed the respondent’s father to make submissions on her behalf. This is because she advised the court she was too emotional to properly put forward her position. I asked if she thought she might be able to compose herself if the matter was adjourned, and she replied that she did not think that would help. The applicant wished the hearing to go forward and accordingly, given the provisions of rule 4(1)(c), I permitted the applicants father, Mr. Whiteside, to make representations on her behalf.
[5] The trial evidence concerned three very narrow issues between the parties. Those issues were:
What is the husband’s income for 2011, 2012 and 2013 for the purposes of child support and spousal support?
Is the wife entitled to spousal support for the period of separation to date?
Does the husband owe the wife any monies for expenditures she has made in respect of items she claims to be s. 7 special or extraordinary expenses under the Federal Child Support Guidelines, SOR/97-175 as amended?
[6] In my decision, I found that the applicant husband was wholly successful in resisting all the claims of the wife put forward in the trial. The husband had been paying interim child support. I denied the wife’s claim for spousal support. I indicated that absent any relevant offers to settle I was inclined to award costs to the husband of the trial proceeding.
[7] I begin by addressing the wife’s contention that no costs should be awarded as she “won the two motions” that were before the court. This argument has no merit. The matter before me was a trial. There was no mention at the time of the trial of the matter being a continuation of any motions. The issues at trial were as I have set them out. The husband was paying interim child support. The wife wanted him to pay more because she argued income should have been imputed to him. This argument was rejected. She asked for spousal support to be paid for a brief period of time. This argument was rejected. The wife made a claim for payment of extraordinary expenses. Only the claim concerning child care expenses had any merit and the amounts found to be owing were nominal: $2,422.98. In my view, the husband should have costs of the trial. The issue is the quantum of the costs and what costs can be recovered for work done leading to the trial.
[8] Reviewing the endorsements made prior to trial, I note there were no orders as to costs for any of the preliminary steps, such as the case conference or settlement conference. There were four motions filed for which costs were ultimately awarded against the respondent in the amount of $500 payable 30 days following the conclusion of the trial by the order of Shaw J. dated September 26, 2013.
[9] There were twenty separate offers exchanged between the parties. Each party made 10 separate proposals. The applicant made five formal offers to settle which were signed by him as per rule 18(4) of the Family Law Rules, O. Reg. 114/99. None of these were formally withdrawn. Also, there were no formal acceptances of any of the offers to settle. The parties did agree to settle property and custody and access as noted above.
[10] The applicant made his first offer on September 6, 2011. It was a formal offer containing a style of cause and signed by the applicant. The applicant’s argument for recovery of an amount that represents full indemnification of all his costs from the beginning of the litigation rests on the premise that the judgment obtained in this matter represents a more favourable result for him than the terms of his very first offer. In this respect, the applicant relies on rule 18(14)(5).
[11] In my view, the terms of the first offer were not sufficiently precise to permit a finding that the judgment is in fact more favourable to the applicant than his offer. This is because the offer provided that its terms were severable, that is, the wife could have accepted select portions of the offer, but it also contained an open-ended costs provision. These terms were as follows:
This Offer is severable. The Respondent may accept each section – A, B, C and D separately.
There would be no costs payable for those portions of the Offer accepted by September 16, 2011. For any issues not resolved by that date the Respondent would pay the Applicant’s costs until settlement or final order.
[12] It is important to note that four of the five of the applicant’s formal signed offers contained a similar provision regarding costs.
[13] There was no evidence on this hearing that the applicant kept the respondent apprised of the possible cost consequences of accepting certain portions of the proposal but not others. The actual term regarding costs is itself imprecise, in that it does not set out specifically if costs would be payable on a partial- or full-indemnity basis. In my view, the respondent could not know with any real certainty what she would be faced with if she accepted the offers.
[14] I appreciate that the Court of Appeal in Rooney (Litigation guardian of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685, 198 D.L.R. (4th) 1, has found that provisions in an offer to settle for ongoing solicitor-and-client costs or for ongoing prejudgment interest do not deprive the offering party of the benefits of Rule 49 and by analogy the provisions of rule 18(14) of the Family Law Rules respecting the impact of offers to settle on costs awards. Laskin J. wrote at para 44:
A provision for ongoing solicitor-and-client costs is, in some measure, uncertain. But so too is a provision for ongoing party-and-party costs. This “uncertainty” should not invalidate rule 49 offers. I recognize that some courts have taken the opposite view. It seems to me, however, that in evaluating a rule 49 offer any “uncertainty” that arises from a provision for costs should only be relevant in deciding whether the party relying on the offer has met its burden of proof under rule 49.10(3). In other words, uncertainty or lack of clarity in an offer may prevent a party from showing that the judgment it obtained was “as favourable as the terms of the offer to settle, or more or less favourable, as the case may be.”
[15] In this case, I find that the applicant has not met the burden of showing that judgment is more favourable than the terms of four of his formal offers, and most importantly the first offer, as these offers all contained the imprecise costs provision. As a result of this uncertainty, I cannot say that the offers are more or less favourable than the result obtained at trial.
[16] However, there is a presumption in favour of the applicant arising from the application of rule 24(1). As noted above, the issue is what quantum of costs is appropriate.
[17] I note there is a discrepancy between the bill of costs and the actual docketed time submitted. The dockets indicate total fees were $61,103 whereas the bill of costs sets out fees at $71,775.
[18] Rule 24(11) sets out matters I am to consider in fixing costs. The Rule states:
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.
[19] The matter before me was important as it involved how much the husband should pay in child support, whether or not spousal support was payable, and what was owed for extraordinary expenses. The issue of attempting to impute income to the applicant was not particularly complex given he is a wage employee who has not been off work during the relevant periods. The issue was not difficult to resolve in light of the evidence of the applicant and that presented by representatives of his employer.
[20] The evidence presented by the respondent regarding spousal support was not complex.
[21] The only slightly difficult matter was that of payment of extraordinary expenses.
[22] As far as the trial went, I do not believe any party acted in an unreasonable manner. The respondent took a position that was difficult to prove and failed. This, however, will not attract an award of full indemnification.
[23] I find Ms. Currie’s rate to be reasonable for a lawyer of her experience and years at the bar. After reviewing the dockets submitted and the bill of costs, I find that the majority of the fees sought to be recovered related to work performed for the custody, access and property portions of this matter. Clearly there were difficult negotiations between the parties relating to custody and access of the children. However, this issue, as well as division of property, was not considered at the trial. In Blank v. Micallef (2009), 2009 60668 (ON SC), 75 R.F.L. (6th) 308 (Ont. Sup. Ct.), Ricchetti J. adopted the proposition (ultimately from Orkin based on a ruling of Oliphant J.) that in a circumstance where parties have settled matters between themselves, the court should be very slow to make an award of costs against one of the parties. I agree with this reasoning, which in my view would militate against a consideration of all those costs that have been expended on issues that were settled and not dealt with at trial.
[24] Ms. Currie has docketed 206 hours related to this matter. The bill of costs at ss. 8 and 12 indicates some 124 hours related to trial preparation. Assuming a 40-hour work week, roughly speaking this amounted to 3 weeks of straight trial preparation for a three-day trial. This amount of time seems excessive to me given what matters actually came before me at trial. I expect this is because Ms. Currie spent the bulk of her preparation time getting ready for the custody and access issues, which were complicated and involved the calling of several expert witnesses. Certainly, I am not doubting that Ms. Currie did the work. It is simply a matter of properly compensating the applicant in respect of the matters that actually proceeded to trial. Absent express language in minutes of settlement regarding costs, I do not think it reasonable to expect the other side to pay for the preparation for trial for matters that did not go forward.
[25] I see no reason why full indemnification should be awarded in this case; hence my setting costs below those actually sought by the applicant.
[26] I am prepared to fix costs in this matter at $15,000 plus HST and $750 for disbursements. In my view, this amount represents a reasonable amount of indemnification for the applicant for the conduct of the trial that occurred before me. In this regard, I am cognizant of the decision of the Court of Appeal in Islam v. Rahman, 2007 ONCA 622, 228 O.A.C. 371, which provided that it is proper to exclude from the award of costs amounts claimed for steps taken in the case where no order was made as to costs at the particular time of each step or where there was silence on the issue. The majority of the bill of costs presented, in my view, related to matters that were not before me or that involved preliminary steps where no costs award was made.
[27] The applicant asks that this award be set off against the applicant’s ongoing child support obligations. In this regard, the applicant relies on the decision of Spence J. in Peers v. Poupore 2008 ONCJ 615, 61 R.F.L. (6th) 453. In that decision, Spence J. found that in the circumstances where the parties were both of modest means, and there was evidence the children would not suffer from the set-off order, that such an order was reasonable, fair and just in all the circumstances.
[28] These parties are middle class people for whom this litigation has had a significant, negative economic impact. The respondent is employed and earns an income that is approximately 80% of that earned by the husband. From the docketed evidence filed, I can see that there was much interaction between Ms. Currie and counsel acting on behalf of the respondent during this file. I am sure the respondent also incurred significant legal bills prior to discharging her counsel. However, the respondent has managed to improve her economic situation since separation and is gainfully employed on a full-time basis.
[29] Given the respective incomes of the parties, and the fact they both have stable employment, I find the children will not suffer if this costs award is allowed to be set off against the award of costs. The present order contemplates that the children will be moving to a week about type arrangement in January 2015. With that more equal sharing of time, any difficulty this set off could possibly cause the respondent will be lessened.
[30] Also the respondent shall be entitled to a credit of $2,422.98 against her obligation to pay costs further to my finding that the applicant owed the respondent that amount in regard to previously owed s. 7 expenses. Consequently, the amount of costs owing by the respondent to the applicant, $15,277.02 ($15,000 + $1,950 (HST) + $750 - $2,422.98), is to be set off entirely against the applicant’s ongoing Guideline child support obligation until the costs are paid in full. The outstanding order for child support is correspondingly suspended effective September 1, 2014 for such time as is necessary to give effect to the set off nature of this order. The obligation of the applicant to pay s. 7 extraordinary expenses is not covered by this set off and he shall continue to pay those as determined by the outstanding order.
The Hon. Mr. Justice F.B. Fitzpatrick
Released: July 9, 2014
COURT FILE NO.: FS-11-0116
DATE: 2014-07-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Desmond Craig Berry,
Applicant
- and -
Melissa Jean Berry,
Respondent
DECISION ON COSTS
Fitzpatrick J.
Released: July 9, 2014
/mls