Court File and Parties

CITATION: Spies v. McLean, 2015 ONSC 2492

COURT FILE NO.: 46440-12

DATE: 2015-04-16

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Janet Muriel Spies, Applicant

AND:

Keith Dale McLean, Respondent

AND BETWEEN:

Marj’s Village Kitchen Inc., Plaintiff

AND:

Muriel Spies, Defendant

BEFORE: The Honourable Mr. Justice C. S. Glithero

COUNSEL: Heather Caron and Tracey Miller Counsel, for the Applicant

Mr. McLean, Respondent, in person

TRIAL HEARD: December 2, 3, 4, 5, 2014 and January 15 and 23, 2015

Costs Endorsement

[1] I released written reasons for judgment on February 11, 2015. At the end of those reasons I indicated that if the parties were unable to resolve the issues of costs, written submissions from the applicant were to be received within 21 days and those from the respondent within 21 days thereafter.

[2] The written submissions of the applicant were received within a week. As the respondent was representing himself, I have allowed additional time to go by before proceeding to deal with the issues of costs in the absence of any material from the respondent. I have received no application for an extension, and no submissions.

[3] In terms of the matrimonial action, I remind myself that Rule 24 of the Family Law Rules presumes the successful party to be entitled to costs. Subsection (5) required that consideration be given to whether a party has behaved reasonably or unreasonably both in respect to behaviour, but also in respect of offers to settle or the response to offers to settle. Subsection (7) provides that lack of proper preparation can lead to an appropriate award of costs. Amongst other factors, subsection (11) requires consideration of the importance, complexity or difficulty of the issues, the reasonableness or otherwise of each parties behaviour, the rates charged, the time spent and any other relevant matter.

[4] In terms of the civil action, Rule 57 provides that a court may consider written offers to settle, the results of the proceeding, the experience of the lawyer, the time spent and the rates changed, the amount of costs that an unsuccessful party could reasonably expect to pay in the circumstances, the amount claimed and the amount recovered in the proceeding, its complexity, the importance of the issues to the party, conduct of a party that tended to lengthen the proceeding, and other relevant matters. The two actions were tried together. Some of the issues were relevant to both actions.

[5] In the matrimonial action, the applicant succeeded on the issues of arrears of child support, ongoing child support, arrears of spousal support and in respect of the claim for repayment of a $211,000.00 loan by her to the respondent. She was also successful in having the civil action dismissed as against her. The respondent succeeded in respect of a fairly minor amount for household goods jointly acquired by kept by the applicant on separation, and succeeded on a reduced basis in respect of an award of set-off for the renovation work done by him on the matrimonial home.

[6] In dollar figures, the awards in favour of the applicant totalled approximately $305,000.00, while the set-offs in favour of the respondent amounted to $80,375.00.

[7] Rule 24(5) brings into play the concept of reasonableness, both as to behaviour, and as to any offer made by the party. I will comment on such offers later in these reasons.

[8] Subsection (11) requires that I take into account the importance, complexity or difficulty of the issues. In that respect I think this case to be reasonably complex involving as it did issues relating to not only the fairly common disputes over child and spousal support, but also issues relating to the respondent’s business, how that and other assets were held, and complexities relating to the applicant’s entitlement to repayment of what I found to be a loan by her. The issues were of significant importance to both parties. To the applicant, the loan of $211,000.00 based on the equity in her home represented her only meaningful asset. If she had lost on that and in respect of the arrears of spousal support and retroactive child support, her financial outlook would be indeed bleak. The issues were also important to the respondent, but for other reasons. In this action he sought to avoid repaying the $211,000.00, which at earlier stages in the proceedings he agreed to be owing. He then sought to repay it out of the proceeds of sale of a failed business that he owned, realistically leading to the result that he suggested a sharing of the losses of that business, which was owned entirely for his benefit.

[9] The applicant made an offer to settle in writing dated November 27, 2014. She offered to accept retroactive child support in the amount less than I ordered at trial. At trial she met her offer with respect to repayment of the $211,000.00 loan and met her offer with respect to the division of the motorcycles. She offered to forgo spousal support arrears other than as claimed if a shortfall occurred with respect to the repayment of the $211,000.00 loan, but in fact succeeded at trial in an award of spousal support arrears. In terms of child support arrears, at trial she recovered essentially what she offered to accept, as adjusted for some financial information changes.

[10] In an offer to settle in writing dated December 22, 2014 the applicant offered to settle on a different basis. She offered to credit the respondent with $70,000.00 for his labour and materials, the exact amount I ordered at trial. She offered to settle the $211,000.00 loan claim for $140,000.00, an amount significantly below what she achieved at trial. She offered to settle arrears of child and spousal support at less than what she recovered at trial.

[11] In my opinion the applicant achieved a result at trial which on the whole is better than the basis upon which she offered to settle in both her offers.

[12] The only offer to settle by the respondent, brought to my attention, is one dated December 22, 2014. In that offer the key points are that there would be no arrears of child and spousal support in return for his abandonment of a claim of almost $15,000.00 by way of alleged misappropriation from the business by the applicant, a claim dismissed at trial. He also offered to forgo occupation rent, a claim not advanced at trial and unsupported by any evidence. He did offer to allow the applicant to keep some of the assets retained by her upon separation without payment by her. He offered that he or his restaurant would make the monthly payments on the $211,000.00 mortgage loan until either the restaurant was sold, or the matrimonial home was sold. His offered continued however that out of the sale of the restaurant, the proceeds would be applied first to repay him the $450,000.00 he invested in the restaurant and that if those sale proceeds were not sufficient to also repay the $211,000.00, then the proceeds would be applied in proportion to his $450,000.00 investment and her $211,000.00 alleged investment. He offered to pay ongoing child support commencing November 1, 2014 on the same basis as I found to be appropriate at trial. Alternatively, he offered to transfer the restaurant to the applicant for the sum of $1.00 in exchange for a waiver of all claims with respect to child support, spousal support, section 7 expenses, that there be no equalization payment and that the applicant be responsible for the significant amounts owing to CRA for unpaid employee remittances and unpaid HST.

[13] In my opinion the outcome at trial was much less favourable to the respondent than his settlement proposals.

[14] In my assessment, Mr. McLean is responsible for much of the time spent in this case. While self-represented at trial, I take into account that he was represented by counsel until a month before trial, and in my estimation was therefore in a better position to make an informed decision with respect to the issues and merits in this case than would be the case in someone representing themselves from the outset. While polite and well-spoken in court, and in my estimation intelligent and well-versed in financial matters, the decisions made by him were responsible for a dispute that took much longer and became much more complicated than ought to have been the case. The same can be said in respect of the trial. I agree with the submission on behalf of the applicant that this trial ought to have taken about half the time it did, as only the evidence of two witnesses took any appreciable amount of time.

[15] Much of the respondent’s position at trial was based upon his claim for large amounts of money by way of credit for time and materials expended by him in respect of improvements to the matrimonial home. He kept no time records, and his estimates of the hours spent was only formulated by him shortly before trial and much after any reasonable account based on memory could be accurately compiled. The trial had to be adjourned with respect to the portion of his claim based upon materials provided in the house renovations. He had not prepared any of the necessary documentation to support such a claim by the time the matter came on for trial. After the conclusion of the fourth day in December the trial was adjourned to permit him an opportunity to provide in an organized fashion the materials he claimed to have, and claimed to need to support his claim. After an adjournment for that purpose, all that was presented at trial was a raft of documents consisting of receipts from various kinds of stores for items which could not be proven to have been supplied to the matrimonial home.

[16] Rule 24(11) (d) instructs me to consider the time “properly” spent on the case including its various components. Within this same subsection, the other factors of the importance, complexity and difficulty of the issues and the reasonableness of each parties behaviour and position are also factors.

[17] Borrowing from the civil rule concepts, in my estimation it is appropriate to allow a higher amount for costs in respect of time spent after the applicant’s unaccepted offer to settle.

[18] The applicant was represented by “Heather R. Caron, Miller Caron, Lawyers Practicing in Association”. Included in the bill of costs submitted on behalf of the applicant are the hours spent, the dates on which they were spent and a description of the services included in respect of Ms. Caron, a more junior lawyer and a law clerk. The substantial indemnity rates claimed for each, respectively, are $325.00 per hour, $150.00 per hour and $125.00 per hour. I find those hourly rates to be reasonable.

[19] A separate account for Ms. Miller is submitted in the total amount of $20,783.75 plus HST on those fees in the amount of $2701.89. It is based upon an hourly rate of $375.00. There are no dates given in the account in respect of Ms. Miller, nor any breakdown of the time spent, but rather just a list of services provided. It would appear from the description of those services that most were provided as the trial approached and accordingly after the applicant’s first offer to settle.

[20] The effect of hourly rate claimed in respect of Ms. Caron and Ms. Miller, together, is $700 per hour. It seems to me there must be some duplication in the work performed by each when one considers the description of the services provided. Certainly there is duplication in terms of the time spent at trial.

[21] In terms of disbursements, I have no trouble accepting the amount claimed of $11,705.15.

[22] In terms of the time spent by Ms. Caron, her junior counsel, and the law student, the amount claimed in respect of the time spent prior to the applicant’s first offer of settlement is $42,576.00.

[23] In terms of the time spent prior to the applicant’s first offer to settle, by Ms. Caron her junior lawyer and student, it seems to me that costs in the amount of $30,000.00 would be fair as it represents an amount more in keeping with an award on a party and party basis.

[24] In terms of fees subsequent to the Applicant’s first offer to settle, the amount claimed by Ms. Caron and the rest of her team is $20,253.25. The amount claimed by Ms. Miller, which I find to be time spent subsequent to the first offer to settle is $20,783.75. Accordingly, the total is $41,037.00.

[25] Bearing in mind my assessment that there must be some duplication in time as between Ms. Caron and her team and Ms. Miller, and bearing in mind that collectively the two are claiming a combined hourly rate of $700/hour, although I appreciate there is no exact duplication of time spent for the same services that can be discerned from the account as submitted, in my estimation an appropriate amount to award for costs post the Applicant’s offer would be $30,250.00.

[26] For these reasons, I fix costs in the amount of $60,250.00 for fees plus applicable HST, and $11,705.15 for disbursements plus applicable HST, all of which is payable by the respondent - defendant to the applicant-defendant.

C. S. Glithero, J.

Released: April 16, 2015