ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 32777/10
DATE: 2015-06-11
BETWEEN:
Delia Joan Berta
Applicant
– and –
Raymond Louis Berta
Respondent
Douglas Quirt, Counsel for the Applicant
Peter M. Callahan, Counsel for the Respondent
Written Submissions Received
COSTS
Harper j.
Issues
[1] The Respondent seeks cost of the proceedings on a full recovery basis.
Background
[2] The Applicant’s claims that were the subject of my reasons for judgment dated August 20, 2014 were under the provisions of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), and the Family Law Act, R.S.O. 1990, c. F.3. The following issues were the subject of the trial before me:
(i) Division of Certain Property;
(ii) Determination of Equalization Payment;
(iii) Entitlement and Quantum of Spousal Support;
(iv) Divorce; and
(v) Pre-judgment interest.
Background
[3] Delia Joan Berta (Joan) is 75 years old and Raymond Louis Berta (Ray) is 68 years old.
[4] Joan and Ray were married on December 31, 1982. This is the second marriage for both parties. They each have two adult children from their previous marriages. They also each have grandchildren. They have been married to each other for 27 years.
[5] At the time of separation, Joan was 71 and Ray was 64.
[6] The trial took place over a 9 day period. My written reasons were released on August 20, 2014.
The Law and Analysis
[7] The starting point in setting costs in family law matters is Rule 24(1) of the Family Law Rules O.Reg 114/99:
“24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.”
[8] Rule 24(8) provides that “If a party has acted in bad faith, the court shall decide costs in a full recovery basis and shall order the other party to pay them immediately.”
[9] Rule 18(14) provides that a party who makes an offer is, unless the court order otherwise, entitled to costs to the date the offer was served and full recovery costs from that date, if certain conditions are met. One of the conditions is:
- The party who made the offer obtains an order that is as favorable as or more favorable than the offer.
[10] Rule 24(10) provides that promptly after each step in the case the court should decide who, if anyone, is entitled to costs and set the amount of costs.
[11] Rule 24(11) sets out the factors which must be considered in awarding costs:
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 signatures of the order;
e) expenses properly paid or payable; and
f) any other relevant matter.
[12] An award of costs is a matter in the discretion of the court by virtue of s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C43 which provides:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in the proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.
[13] In addition to the above considerations, there is a long line of cases that establish that where a party alleges fraud and does not produce evidence to substantiate the allegation, courts may make an order of substantial or full indemnity costs.
[14] I agree with H.E. Sachs J.’s comment in relation to her considerations in awarding costs to Ms. D’Andrade’s, in D’Andrade v. Scharge, 2011 ONSC 2144, [2011] O.J. No. 2763 at paragraph 8 and 9:
[15] The family law costs rules are there to encourage settlement. In doing so they make it clear that if one party chooses to pursue litigation in the face of a reasonable offer to settle, they do so knowing that the likely costs consequence is that they will not only have to pay their own lawyers, but will also have to pay their spouse’s lawyers.
[16] The Family Law Rules r.18 which reads as follows:
Rule 18 of the FLR deals with offers to settle. The relevant part, for purposes of the present case, is Rule 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.
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.
Rule 24 Considerations
[17] The importance, complexity or difficulty of the issues in this proceeding:
[18] I find that the issues in the proceedings were both important and complex. The complexity was exacerbated by the conduct of the Applicant. Until the opening of the trial the Applicant would not even acknowledge the separation date. That remained an issue until the opening. At that time the parties agreed to the date of separation.
[19] I also found in my reason for judgment that the applicant created the climate that gave the ostensible orders to her accounting expert to proceed in such a litigious manner that efforts to settle were throated by her accountant taken the unreasonable position of not participating in meetings that would narrow or possibly settle some or all of the issues.
[20] The unending requests for disclosure were out of proportion to the task that the applicant’s expert was engaged to do and qualified at trial to do. Instead, I found, in my reason that the applicant and her experts sought to find fraud under every rock they sought to look under. This unreasonable conduct on the part of the Applicant and her accounting professionals positioned this matter in in such a way that the only path to completion was a litigious and costly path.
[21] I agree with counsel for the Respondent, that the Applicant made baseless allegations of fraud, despite fraud not being pled. She was also unsuccessful on many of the positions she took relative to the net family property statements she was advancing. An example of her taking such unreasonable positions was her attempts to have gifts from her husband to her excluded from the calculation of her net family property. That position had no chance of success in law. Yet that issue occupied trial time and clouded the real issues that had to be addressed.
Reasonable Conduct of the Respondent
[22] I find that the respondent did act in a reasonable manner throughout these proceedings. He complied with all of the disclosure requests and offered disclosure processes that would have been more efficient and effective. They were rejected. The Respondent’s expert opinions were accepted by this court. Both the Respondent and his experts were prepared to meet with the Applicant’s experts in order to narrow the issues and possibly resolve them.
The Offers to Settle and Success
[23] The Respondent was successful on all material issues in this case. He is presumptively entitled to costs. I agree with counsel for the Respondent that his offers to settle date February 9, 2011 that was never withdrawn. I agree that this offer was as good as or more favorable than the results achieved at trial. This offer was made at an early stage when the costs of both parties were low. However, I consider that a certain level of financial disclosure was reasonably still outstanding at this stage and an amount of due diligence was necessary at this stage by the Applicant’s professionals in order to be in a position to respond in an informed manner.
[24] On November 5, 2013 the Respondent delivered another offer to settle. This offer remained open until the start of the trial. I agree with counsel for the Respondent that the Respondent’s second offer provided that the Respondent pay a lump sum of $200,000 for support. That amount would not have been taxable in the Applicant’s hands and would be equivalent to approximately $300,000. At the rate of spousal support that I did order ($5,380.00 per month) the $300,000.00 equivalent would be equal to approximately 56 months of support that was ordered. Given the respective ages and health of the parties that lump sum support offer was most reasonable.
[25] As a result of the above findings that include:
a) The unreasonable conduct on the part of the Applicant in the conduct of the case;
b) The allegations of fraud that were not supported by any evidence;
c) The Respondents offers to settle that were as good as if not better than the outcome at trial; and
d) The success of the Respondent of all material issues.
[26] I order that the Applicant shall pay to the respondent full indemnity costs.
[27] I have reviewed the bill of costs submitted by the Respondent’s solicitors. Mr Callahan is a senior counsel of over 25 years of experience. I find that his hourly rate of $445.00 per hour is reasonable as well as the time spent by Mr Callahan to be necessary and reasonable. I find that the Respondent’s lawyers’ use of law clerks and junior counsel to be reasonable both in time spent and in the hourly rates charged.
[28] The Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 48 C.P.C(5th) 56, 2004 CarswellOnt 2521 at para 26:
“… the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”
[29] In the case before me the unsuccessful party testified that she had paid in excessive of $700,000.00 in legal and related costs to the point of her testimony at the trial. It is reasonable that she would have expectations that the successful Respondent would incur the costs claimed in the total amount of fees, $460,179.57 inclusive of fees and disbursements and HST. The disbursements totalling $119,880.98, include the substantial costs of Marmer Penner Inc, MacGillivray Associates, H&A Accounting and Campbell Valuations
[30] The Applicant shall pay to the respondent the total amount $460,179.57 inclusive of fees disbursements and HST.
__________
Harper J.
Released: June 11, 2015