COURT FILE NO.: F1802/13-01

DATE: December 31, 2014

SUPERIOR COURT OF JUSTICE – ONTARIO

FAMILY COURT

RE: Stephanie Gail Smith, applicant

AND:

Gerald Paul Nicholson, respondent

BEFORE: MITROW J.

COUNSEL: Sharon Hassan for the applicant

Denis E. Burns for the respondent

HEARD: written submissions filed

ENDORSEMENT ON COSTS

INTRODUCTION

[1] The applicant had brought a motion for various interim relief that was argued before me on September 5, 2014. Pursuant to the decision on the motion released September 23, 2014, the parties have forwarded the following costs submissions which I have reviewed: the respondent’s costs submissions dated September 26, 2014; the applicant’s responding costs submissions dated October 10, 2014; and the respondent’s reply dated October 16, 2014.

[2] Paragraphs 2 and 3 of my endorsement dated September 23, 2014 set out the issues that were resolved and the issues that were to be argued as follows:

[1] At the outset of the hearing of the motion, the parties filed minutes of settlement consenting to a final order in relation to child support; that final order was made on September 5, 2014 as asked by the parties. This order was made pursuant to the Family Law Act, R.S.O. 1990, c. F.3.

[2] The remaining issues that were argued on the applicant’s motion were: (a) interim spousal support; (b) an order directing the respondent to return to full-time employment during the course of this lawsuit and directing the respondent not to retire during the course of this lawsuit.

[3] In relation to the issues that were argued, the applicant’s motion was dismissed. The applicant submits that there was divided success: that she was successful on the issue of child support and that the effect of the order, in dismissing the applicant’s claim for interim variation of a deemed final order for spousal support arising from the filing of a separation agreement, was to leave that issue to the trial judge. The applicant submits that the costs of her motion for various interim relief should be reserved to the trial judge.

[4] The respondent strenuously opposes the applicant’s position: he submits that he was successful on the applicant’s motion, that he is entitled to the benefit of r. 18(14) because he obtained an order that is as favourable, or more favourable, than an offer served by him; and as a result he seeks an order of $12,000 in costs inclusive of HST and disbursements. The calculation of the costs is set out in a summary of the respondent’s time dockets included as part of his written submissions.

[5] There were a total of five offers to settle made in relation to the applicant’s motion for the various interim relief sought by her: three offers were made by the applicant; and two offers were made by the respondent.

COSTS IN RELATION TO INTERIM CHILD SUPPORT

[6] It is common ground that on January 16, 2013 the respondent received a one-time non-recurring severance payment of just over $54,000 and that the respondent failed to disclose this income immediately as required by the terms of the separation agreement. This non-disclosure meant that the respondent’s child support was not adjusted when it should have been. In fact, the respondent was well aware of this potential payment as verified by the email he received in early October 2012 attaching the relevant documents.

[7] It was only after the applicant commenced her motion to change in December 2013 that she received this disclosure. This lack of disclosure, in part, prompted the applicant to include in her motion an immediate increase in child support retroactive to January 1, 2013.

[8] On September 5, 2014, the day that the applicant’s motion for interim relief was set to be argued, the parties signed partial minutes of settlement consenting to a final order of child support.

[9] It is clear that the applicant achieved some success after filing her motion for interim child support because the motion was resolved via a final order for child support that required the respondent, on a retroactive basis, to pay child support for all of 2013 based on his income for that year in the amount of $159,270 (said income including the severance payment received that year by the respondent). Given that the respondent had been underpaying child support for 2013, the consent order fixed child support arrears at $6,269.20 payable forthwith on the execution of the minutes of settlement.

[10] In relation to ongoing child support commencing January 1, 2014, the final consent order provided that the respondent was to pay child support based on an income of $105,220 for the one remaining dependent child, Chloe.

[11] The respondent, however, raises an interesting argument in his reply submissions. He argues that because all child support issues are now dealt with on a final basis pursuant to a final order and because the final order made no provision for costs and did not reserve costs, that the applicant cannot now seek costs in relation to her motion for interim child support. The final order was silent on costs.

[12] The reality is that it became unnecessary to deal with interim child support because the parties were able to settle all child support issues on a final basis.

[13] Considering the timing of the final minutes of settlement, I am not prepared to decide the issue as to whether the applicant is precluded from claiming costs in relation to interim child support based only on the respondent’s brief reply submissions.

[14] I find that further submissions, including reference to any relevant authorities, is necessary. The applicant really had no opportunity to respond to this point, which should likely have been raised by the respondent in his initial submissions as it was reasonable for the respondent to anticipate that the applicant would advance an argument of divided success. Also, even if it is found that the applicant cannot not claim costs in relation to interim child support, there may be a live issue as to whether the trial judge is able to deal with costs in relation to the final settlement of child support, when dealing with costs in relation to the main proceeding, being the applicant’s motion to change. The respondent will argue that the final child support order made on consent contemplates no costs for child support issues. The applicant undoubtedly will take a different position.

[15] I am not prepared to invite further submissions on this issue at this time. I find it is just, and appropriate, to reserve the issue of costs in relation to interim child support to the trial judge. The trial judge can decide if it is appropriate to make any award for costs in relation to the applicant’s claim for interim child support. If the answer is no, then the trial judge can decide if he or she should make any award for costs in relation to child support as part of any final order for costs on the motion to change.

[16] Accordingly, I now deal with costs relating to the other issues argued in relation to the applicant’s motion for interim relief.

IS THE RESPONDENT ENTITLED TO THE BENEFIT OF THE AUTOMATIC COST CONSEQUENCES OF RULE 18(14)?

[17] In order for the respondent to receive the benefit of the automatic cost consequences of r. 18(14), the burden is on the respondent to prove that the order was as favourable, or more favourable, than his offer: r. 18(15).

[18] For reasons explained below, I find that the respondent has not discharged this burden, despite his submissions to the contrary.

A. The Respondent’s First Offer to Settle Dated August 27, 2014

[19] Pursuant to this offer, the respondent offered to pay interim spousal support in the amount of $2,990 per month, commencing September 1, 2014 “without prejudice to the position either party wants to advance at the trial or other proceeding for the disposition of this Motion to Change for prospective spousal support.”

[20] The order dismissed the respondent’s claim for interim spousal support. However, the effect of the dismissal is that spousal support continued to be paid pursuant to the separation agreement in the amount of $1,900 per month, and the payment of this ongoing amount must be regarded as the “effective” order and compared to the offer; clearly the order was more favourable to the respondent than his offer.

[21] However, this does not end the analysis in relation to the applicability of r. 18(14). The offer also dealt with child support. None of the provisions of the offer were severable; the offer was a package deal; hence, the reality for the applicant is that, if she accepted the offer, she then accepted all of its terms.

[22] In relation to child support, the offer provides that the obligation of the respondent to pay child support pursuant to the separation agreement is “terminated effective August 31, 2014 so that there is no further child support payable commencing September 1, 2014.”

[23] For the purpose of comparing the offer and the “order,” it becomes necessary to consider also the final order made on consent in relation to child support. A comparison between the “order” and offer, for the purposes of r. 18(14), is in reality a comparison between the offer and the final consent order made on September 5, 2014, plus the interim order made on September 23, 2014.

[24] The final order for child support included a provision for ongoing child support for Chloe (born February 17, 1992) in the amount of $890 per month based on the respondent’s income of $105,220. This child support was to terminate on the occurrence of one or more terminating events, as set out in the final order, including Chloe attaining age 24 in February 2016.

[25] There was evidence in the motion material that Chloe had completed her undergraduate studies in the spring of 2014 and was pursuing post-graduate studies.

[26] In relation to child support, the order is less favourable to the respondent than the offer because child support can continue up to and including February 2016. Further, in precluding any further child support payments “commencing September 1, 2014,” the offer would appear to preclude the payment of child support arrears after that date in relation to child support arrears that had been accruing during 2013. However, the effect of the final order is that the respondent is required to pay child support arrears of $6,269.20, forthwith, on September 5, 2014, being the date that the minutes of settlement were signed. This was a payment specified in the order that was not included in the offer.

[27] It may be that the intent of the offer was not to preclude dealing with child support arrears that accrued in 2013; but that interpretation is not clear and, for the purpose of determining the applicability of r. 18(14) and considering the burden on the respondent pursuant to r. 18(15), the offer should be regarded as precluding any child support arrears payment, and further the offer should be interpreted as settling child support on a final basis.

[28] Also, this is not a situation where the total amounts payable pursuant to each of the offer and the orders can be quantified, and then compared.

[29] The reason is because it is not known at this interim stage how long the interim spousal support order will be in effect, nor is it known how long child support will continue to be paid. Even though the total interim spousal support ($2,990 per month) in the offer is slightly more than the combined amount of spousal support and child support payable as a result of the orders ($1,900 + $890 = $2,790 per month), if for example, the trial is held in January 2015, as the parties were expecting or soon thereafter (and it should be noted that the endorsement included an order expediting the trial), and if periodic child support continues to be paid until trial, then the small differential in the total periodic payments to the date of judgment between the offer and the orders, will be more than offset by the child support arrears payment contained in the final child support order. (Also, for simplicity, this comparison does not include any further child support that may be payable after the date of the judgment even though the possibility of such further payments should in my view be factored in, thus potentially further increasing the disparity between the offer and the orders.)

[30] Accordingly, there is an uncertainty as to the “value” of the offer when compared with the values of the orders and, with this uncertainty, it is not possible for the respondent to discharge his burden under r. 18(15).

[31] The net result of the foregoing is that it is not possible to conclude that the orders are as favourable or more favourable than the offer and accordingly the respondent is not entitled to the benefit of r. 18(14).

B. The Respondent’s Offer to Settle Dated September 4, 2014

[32] I find that the respondent cannot rely on this offer to settle in claiming the benefit of r. 18(14) because the respondent has not complied with the condition set out in paragraph 1 of that subrule, which provides as follows: “If the offer relates to a motion, it is made at least one day before the motion date.”

[33] The offer included the following provision in paragraph 7: “The Applicant’s Motion to Change shall otherwise be dismissed.”

[34] With that paragraph being included in the offer, it was not possible for the respondent to demonstrate that the orders were as favourable, or more favourable, than the offer.

[35] The offer was dated and served September 4, 2014. On the next day, September 5, 2014, in the morning, Mr. Hassan, in an email to Mr. Burns, stated that he did not understand the offer insofar as it provided for the “motion to change” to be dismissed, given that the offer in its preamble proposed to settle the outstanding claims made by the applicant for interim relief.

[36] Later that morning, Mr. Burns responded by email, advising that this was an error and that paragraph 7 was meant to read “that the Applicant’s Motion returnable September 5, 2014 is otherwise dismissed.” [my emphasis]

[37] The effect of the foregoing is that the offer, as presented on September 4, 2014, was in effect amended on the day of the motion. In my view, the typographical error was material to the offer. It was not an obvious “typo.” There was no basis upon which Mr. Hassan could have assumed that the offer presented on September 4, 2014 meant to say “motion” instead of “motion to change.” In fact, Mr. Hassan legitimately raised this issue on the following day, which then prompted Mr. Burns’ response.

[38] The most favourable finding that can be made for the respondent is that he had presented an amended offer made on the morning of September 5, 2014. However, that is the date of the hearing of the motion.

[39] Assuming, without deciding, that the orders are as favourable or more favourable than the offer, the fact remains that the respondent has failed to comply with paragraph 1 of r. 18(14) and, thus, r. 18(14) is not engaged by this offer. Although this may appear to be a very technical approach, I find that such an approach is proper: r. 18(14) confers a potential substantial benefit on a party, a benefit that can only be claimed by a party who meets all of the conditions set out in the rule.

RESPONDENT’S ENTITLEMENT TO COSTS

[40] The respondent was successful on the issue of interim spousal support and he is presumptively entitled to costs. This includes also his success in dismissing the applicant’s request for an order requiring the respondent during the course of the lawsuit to return to fulltime employment and not to retire.

[41] In awarding costs, the overriding principle is reasonableness; the court must fix an amount of costs that is fair and reasonable for the unsuccessful party to pay: Davies v. Clarington (Municipality), 2009 ONCA 722, 2009 CarswellOnt 6185 (Ont. C.A.) at para. 52.

[42] I have considered the factors in r. 24(11). In relation to time spent, Mr. Burns docketed a total of 27.2 hours. Mr. Burns’ regular hourly rate is $420 and Mr. Burns used a rate of $315 an hour for that portion of his time (8.55 hours) that he submitted was not eligible for full recovery costs. Mr. Burns, quite properly, did not include any of his time in relation to work done relative to that portion of the applicant’s motion that dealt with requests for disclosure (that portion of the motion having been dismissed earlier with costs to the respondent in the amount of $3,500).

[43] The total disbursements were modest (just under $100) exclusive of HST. No specific issues were taken by the applicant in relation to the time spent, disbursements and hourly rates.

[44] The main arguments related to the allegations of each party accusing the other of behaving unreasonably.

[45] In his submissions on the issue of the applicant’s alleged unreasonable behaviour, the respondent focussed on the positions taken by the applicant during the motion, including the contents of her offers.

[46] If a litigant takes a position on a motion, and loses, that does not per se translate to “unreasonable” behaviour. A litigant is entitled to be wrong without being branded as behaving unreasonably. In my view, there was nothing in the applicant’s conduct, or her three offers, that can be characterized as unreasonable. Having said that, the applicant’s claim to prevent the respondent from retiring and forcing him back to work was found to be without merit (see para. 31 of the endorsement on the motion), and I find that the respondent is entitled to his costs of that issue in an amount approaching full recovery.

[47] In reviewing all offers made by both parties, I find that both parties acted reasonably in attempting to settle the motion. Also, even though the respondent’s offers do not engage r. 18(14), they are relevant and should be taken into account in relation to costs (r. 18(16)).

[48] This brings me to the respondent’s conduct in relation to income disclosure. I agree with the applicant’s submission that the respondent’s failure to disclose his increase in income immediately, when it occurred in January 2013, in contravention of the separation agreement, was unreasonable conduct. The respondent knew that his child support was linked to his income and he knew he had an obligation to disclose forthwith any significant changes in his income.

[49] The issue of the respondent’s income was raised in the motion material. Even though child support was resolved on the day of the motion, this does not preclude the court, in dealing with costs of the motion, from considering the respondent’s conduct in failing to provide timely disclosure of his income. This lack of timely disclosure created a situation where the applicant was forced to wait unnecessarily to receive the child support that was properly due and owing. This is a proper case to invoke r. 24(4) to reduce the costs that the respondent is otherwise entitled to receive.

[50] The time spent in relation to child support needs to be factored out of the costs because the costs of that issue are left for the trial judge.

[51] I find that equal time should be allocated to each of the three main issues: child support; spousal support; and the applicant’s claim relating to the respondent returning to work and not retiring.

[52] I therefore allow the respondent 18 hours (rounded), representing two-thirds of the total time spent. The remaining approximate one-third is for child support.

[53] The 18 hours are allocated 50% (9 hours) to each of the two remaining issues. I fix these costs as follows:

a)

b)

for interim spousal support: 9 hours x $300 =

issue relating to the respondent returning to work and not retiring (representing approximately 90% of full recovery): 9 hours x $380 =

Total:

$2,700

$3,420

$6,120

[54] I round the costs to $6,200 inclusive of disbursements. I reduce this amount by $2,000 to reflect the respondent’s unreasonable conduct.

[55] Accordingly, the respondent is entitled to $4,200 costs, plus $546 HST (13%), for a total of $4,746.

[56] I have considered when the costs should be paid. Normally, costs in relation to a motion should be payable forthwith.

[57] However, in this case, I find that the costs should not be paid until the conclusion of this case. I make this finding for two reasons: the first reason is the unreasonable conduct of the respondent and the fact that his lack of timely disclosure forced the applicant to wait unnecessarily to receive her full entitlement of child support; the second reason is that the costs of interim child support are reserved to the trial judge and, if the applicant receives an award of costs in relation to child support, then those costs likely would be offset against the costs the applicant has been ordered to pay to the respondent.

ORDER

[58] For reasons set out above, I make the following order:

1. Subject to paragraph 2 of this order, the applicant shall pay to the respondent his costs of the balance of the applicant’s motion in the amount of $4,746 inclusive of HST and disbursements. These costs are not due and payable until the conclusion of this case.

2. The issue of costs in relation to the applicant’s claim for interim child support is reserved to the trial judge, unless settled by the parties.

“Justice Victor Mitrow”

Justice Victor Mitrow

Date: December 31, 2014