COURT FILE NO.: FC-08-2478
DATE: 20141002
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Pauline Elizabeth Kerr, Applicant
AND
Jan Tadeusz Erland, Respondent
BEFORE: Blishen J.
COUNSEL: Applicant, self-represented Respondent, self-represented
HEARD: by written submissions
COSTS ENDORSEMENT
Introduction
[1] Although both parties had previously retained lawyers during five and a half years of matrimonial litigation, they both chose to represent themselves on an eight day trial. Parenting and property issues were settled by agreements signed in April, 2012.
[2] The remaining issues at trial were:
(1) imputation of income to Dr. Kerr;
(2) retroactive and ongoing child support;
(3) sharing of the special and/or extraordinary expenses for the children;
(4) Mr. Erland’s claim for ongoing and retroactive spousal support;
(5) some minor parenting issues; and
(6) life insurance.
[3] In my Reasons for Judgment released after trial, I found Dr. Kerr the more successful party and therefore entitled to some costs. I further found that she did not behave unreasonably as outlined under sub-Rule 24(5)(a) of the Family Law Rules, O. Reg. 439/07, s. 1 (“FLR”), although offers to settle had to be considered.
[4] In her written submissions on costs, Dr. Kerr requested $85,000. Mr. Erland proposed a payment to her of $4,833.
Self-represented Litigants
[5] A self-represented litigant does not have an automatic right to costs. The matter remains fully within the discretion of the trial judge. See Fong v. Chan, 1999 CanLII 2052 (ON CA), 46 O.R. 3d 330, (para. 25) (“Fong v. Chan”).
[6] In Fong v. Chan, the Ontario Court of Appeal sets out the test for awarding costs to a self-represented litigant as being based on demonstrating that the litigant: devoted time and effort to do work ordinarily done by a lawyer retained to conduct the litigation; and incurred an opportunity cost by foregoing remunerative activity.
[7] In this case I find Dr. Kerr devoted time and effort to do work ordinarily done by a lawyer. In addition, prior to trial she retained a lawyer to assist in resolving the trial issues. Dr. Kerr also spent significant time away from her employment preparing for trial and conducting the trial. I find therefore, she incurred an opportunity cost.
Success
[8] Pursuant to sub-Rule 24(1) of the FLR, there is a presumption that a successful party is entitled to costs. Offers to settle are important and can be the yardstick by which to measure success. They are significant in determining both liability for costs and quantum. See Osmar v. Osmar, 2000 CanLII 20380 (ON SC), [2000] O.J. No. 2504 (Sup. Ct.).
[9] As stated by Mackinnon, J. in Neill v. Egan, 2000 CanLII 21156 (ON SC), [2000] O.J. No. 1567: “Both parties should make an offer covering in detail all aspects of the case. Even where the case appears intractable, an offer can serve to settle some issues or narrow the issues, with the saving to time and effort for all concerned.”
[10] Since the matrimonial litigation began in September, 2008, Dr. Kerr provided four offers to settle relevant to the issues at trial, on: April 20, 2011, September 2, 2011, April 11, 2013, and February 7, 2014. Dr. Kerr was as successful as her offers regarding retroactive child support (none was ordered) and spousal support (none was ordered). She was not as successful as her offers on the issue of ongoing child support. She was ordered to pay child support of $880 per month based on an imputed income of $169,148, commencing January 1, 2014, using the subtractive method. None of her offers approached that amount.
[11] Mr. Erland provided one offer to settle dated February 1, 2014. His offer was far more favourable to him on all issues. He was the unsuccessful party.
[12] Therefore, a review of the offers confirms that Dr. Kerr, although not completely successful on all issues, was the more successful party and entitled to some costs. Her offers do not meet the requirements under sub-Rule 18(14) for full recovery costs, but they are reasonable and demonstrate an ongoing attempt to resolve the matrimonial dispute.
Quantum
[13] Sub-Rule 24(11) sets out the relevant factors in determining the amount of costs as follows:
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.
(a) Nature of the Issues
[14] The issues were important and somewhat complex involving expert evidence on the determination of income and the parties’ net worth. Business income, shareholder loans, and dividend income all had to be considered. The issues at trial were made more complicated and difficult by the fact that both parties chose to represent themselves. In addition, I note Mr. Erland was seeking to change the April, 2012 Settlement Agreement on property issues up to the eve of trial, thereby complicating trial preparation.
(b) Reasonableness
[15] The factors to be considered in determining reasonableness are outlined under sub-Rule 24(5) as follows:
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.
[16] As noted above, I find Dr. Kerr behaved reasonably.
[17] I find Mr. Erland’s behavior was unreasonable as follows:
(1) He provided only one late offer to settle throughout the entire five and a half years of litigation.
(2) His offer regarding child support and spousal support was for exorbitant amounts unfounded on the evidence of both his own and Dr. Kerr’s experts on income and was completely unreasonable.
(3) Mr. Erland failed to consider withdrawing his spousal support claim despite participating in numerous conferences and a mediation after which Dr. Kerr made offers including a mutual withdrawal of any claim by either party for spousal support.
(4) Mr. Erland continued to argue for a change to the April, 2012 negotiated property settlement up to the eve of trial.
[18] In her written submissions on costs, Dr. Kerr makes numerous other arguments as to Mr. Erland’s unreasonable behavior and bad faith requiring findings of fact which have not been made and which relate more to past and ongoing substantive issues which were not argued at trial.
(c) Lawyers’ Rates, Time Spent, and Expenses
[19] As noted above, both parties represented themselves at trial. Both however had previously retained counsel.
[20] After the property and parenting issues were resolved, Dr. Kerr retained counsel Ms. Cooligan in an attempt to resolve the outstanding issues largely related to income determination, child support and spousal support. Dr. Kerr is entitled to some of those costs for legal fees and disbursements which total approximately $20,000. In addition, Dr. Kerr argues she spent 20 days preparing for trial and eight days at trial resulting in 28 days of lost income. I imputed income to her in an annual amount of $169,148. This results in an amount of $463 per day times 28 days equals $12,964.
[21] In Fong v. Chan, the Ontario Court of Appeal indicates that self-represented litigants are not entitled to costs calculated on the same basis as those of litigants who retains counsel. The court states at para. 26:
…all litigants suffer a loss of time through their involvement in the legal process. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation, and that as a result, they incurred an opportunity cost by foregoing remunerative activity. As the early Chancery rule recognized, 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. The trial judge is particularly well-placed to assess the appropriate allowance, if any, for a self-represented litigant…
[22] I find an appropriate allowance for Dr. Kerr’s time in trial preparation and attendance at trial to be $6,500.
[23] Therefore, the total amount for discussions and communication with counsel, drafting documents, correspondence, attempts to settle, preparation for trial and hearing of trial is approximately $26,500.
[24] Dr. Kerr’s disbursements include fees for the preparation of reports and testifying at trial by two expert witnesses totaling $6,412.75. I find these to be reasonable disbursements. The issues of income determination, shareholder loans, business income and net worth were very much at issue.
[25] In addition, a portion of Dr. Kerr’s cost of the mediation which to some extent dealt with trial issues is reasonable. Her total cost was $1,356. I find $675 reasonable. Therefore, total disbursements in the amount of $7,087.75 are appropriate.
Conclusion
[26] There must be flexibility in examining the factors under sub-Rule 24(11). As the Ontario Court of Appeal noted in Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), 21 CCEL. (3d) 161:
In our view the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.
[27] This approach is equally applicable in family law cases.
[28] Taking into consideration all the factors noted above, I order Mr. Erland to pay Dr. Kerr costs of $20,000 inclusive of disbursements and HST as a fair and reasonable amount under all the circumstances.
[29] I find Mr. Erland has the ability to pay these costs forthwith and I so order.
Blishen J.
Date: October 2, 2014
COURT FILE NO.: FC-08-2478
DATE: 20141002
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Pauline Elizabeth Kerr, Applicant
AND
Jan Tadeusz Erland, Respondent
BEFORE: Blishen J.
COUNSEL: Applicant, self-represented Respondent, self-represented
COSTS ENDORSEMENT
Blishen J.
Released: October 2, 2014