ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FC-13-339
DATE: 2015/06/10
BETWEEN:
Margaret Annette Cork
Applicant
– and –
David William Cork
Respondent
H. Hunter Phillips and Rachel Laforge, for the Applicant
Pam MacEachern and Alice Weatherston for the Respondent
HEARD: via written submissions
REASONS ON COSTS
Madam Justice B. R. Warkentin
[1] In paragraph 104 of my Reasons for Judgment released on April 28, 2014 I invited submissions from the parties regarding the issue of costs. I have now received written submissions and have considered their positions.
[2] This was a complex case regarding spousal support and equalization of the parties’ net family properties. However, at the commencement of trial counsel advised the Court that they had reached agreement on most of the issues, and where they disagreed, they had narrowed the areas requiring proof and as such the trial proceeded over a period of five days from January 31, 2014 and February 4 to 7, 2014.
[3] The trial focused on the quantum of spousal support owing, including retroactive spousal support and life insurance to secure support, child support, ownership of the family cottage and an equalization of the parties’ Net Family Properties (“NFP”) as well as the timing of the parties’ divorce.
[4] The parties’ primary disagreement regarding their property centred on the ownership of the family cottage located in Quebec and whether or not disposition costs for the sale of the matrimonial home were a reasonable deduction from the Wife’s NFP.
[5] The Wife acknowledged she owed an equalization payment to the Husband and the parties agreed to certain adjustments to that payment. The actual amount of the equalization payment was dependent on my decision regarding ownership of the family cottage. Similarly, the Husband acknowledged his obligation to provide spousal support to the Wife. It was the quantum of support that was in dispute including whether or not some income should be imputed to the Wife.
[6] The Husband takes the position that he should receive his costs of this proceeding totalling $108,730.68 which is comprised of partial indemnity costs to his Offer to Settle of January 30, 2014 (the day prior to trial), full indemnity costs to the end of trial and substantial indemnity costs for steps taken after trial. It is the Husband’s position that his January 30, 2014 offer on most points was more favourable to the Wife than my Judgment.
[7] The Wife acknowledges that the Husband’s January 30, 2014 offer was on most aspects more favourable to her than my Judgment. However, she quite correctly notes that this offer was made on the eve of trial and therefore falls outside the Rule 18(14) requirement that for cost considerations, offers be made seven or more days prior to the commencement of trial.
[8] The Wife is seeking her costs be paid by the Husband in the amount of $100,000.00, alleging that the Husband’s behaviour in the course of the proceeding was unreasonable, entitling her to her costs on a partial indemnity basis.
[9] The Husband also made three other relevant Offers to Settle on January 8, January 23 and January 28, 2014. The Wife made Offers to Settle on September 19 and November 21, 2013 and on January 29, 2014. Offers made by either of the parties prior to these dates were considerably different than my Judgment and I have not considered them.
[10] I have reviewed all of the above noted Offers of the parties. It is curious that both the Wife and the Husband proposed to the other that the Husband pay the Wife spousal support in the amount of $17,000.00 per month in their respective Offers in the weeks prior to trial and yet for some reason they were unable to reach a resolution on this issue in spite of settling many of the other issues between them prior to trial.
[11] A great deal of trial time focused on the quantum of spousal support including whether or not income should be imputed to the Wife as well as the Wife’s efforts at seeking employment post separation.
[12] At trial, the Wife sought $19,000.00 per month and the Husband proposed $15,000.00 per month for spousal support. I awarded $16,000.00 per month in spousal support. The submissions on costs did not address why spousal support was not settled prior to trial. Therefore, I find that the Husband’s Offer was more favourable than my Judgment.
[13] The issue of ownership of the Quebec cottage was a particularly complex issue; one that reasonably was left to trial because of the jurisdictional issues.
[14] In her Offers to Settle, the Wife proposed an Equalization Payment that exceeded the amount she was eventually required to pay and she was successful with respect to the manner in which the Husband’s life insurance is to be maintained. In those areas, the Wife’s Offers were more favourable or as favourable as my Judgment.
[15] I have not considered the Offers that were made less than seven days prior to trial in making my determination on costs.
General Principles of Costs
[16] 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, 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.
[17] Rule 18 (14) of the Family Court Rules is as follows:
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.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing 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.
[18] Rule 24 of the Family Law Rules provides that there is a presumption that a successful party is entitled to their costs. If success is divided, the court may apportion costs as appropriate.
[19] The factors which must be considered under Rule 24(11) are:
(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.
[20] Both parties accuse the other of unreasonable conduct before and after trial. The accusations of unreasonable conduct prior to trial by the Wife are focused on the Husband’s approach to payment of spousal support prior to the temporary order of Madam Justice Métivier on May 16, 2013. Justice Métivier awarded retroactive support and costs for that motion.
[21] The Wife also alleges that the Husband’s conduct by commencing a proceeding against the cottage in Quebec, also on the eve of trial, was unreasonable. Nonetheless, the Husband was successful at trial in having this issue dealt with in Quebec.
[22] Both parties allege the other took unreasonable positions after trial in dealing with the final issues regarding the cottage property and resolving other aspects of the equalization calculation.
[23] I have not heard evidence about this conduct outside of the settlement meeting that took place in February 2015 and their respective allegations in the submissions on costs. The February settlement meeting resulted in a resolution of the immediate issues between the parties with a strategy for moving forward put in place. It has been clear from the outset that there is much acrimony between these parties. Based upon the evidence before me, I am unable to find that one has been more unreasonable than the other in their conduct of this trial.
Disposition on Costs
[24] In the total result, the Husband was more successful at trial than the Wife, even without consideration of the Offers to Settle that were exchanged less than seven days prior to trial.
[25] I do not find, however, that this is a case in which an award of full or substantial indemnity costs is appropriate. In considering partial indemnity costs of the Husband, I am also mindful of the fact that the parties were able to resolve many of the issues between them prior to trial and that the Wife was partially successful on some issues. I have also already noted that the jurisdictional issues regarding the Quebec cottage was a unique issue.
[26] Nonetheless, the issues for which the Husband was successful were those that were the most contentious and consumed most of the trial time.
[27] Having reviewed Counsel for the Husband’s Bill of Costs and in considering the circumstances of this case, I find that costs in the amount of $45,000.00 inclusive of HST and disbursements, are payable to the Husband by the Wife.
Pre-Judgment Interest
[28] The Husband seeks payment of pre-judgment interest in the amount of 1.3% on the equalization payment owing to him by the Wife. It is unclear if Counsel for the Wife turned his mind to the Husband’s position on pre-judgment interest because there were no submissions by Counsel for the Wife on this point.
[29] Nonetheless, I do not require submissions by Counsel for the Wife because I find that this is not a case where pre-judgment interest should be awarded.
[30] Pre-judgment interest is discretionary, particularly in family law cases when the payor spouse cannot realize on an asset in order to make an equalization payment. It is true that the Wife might have been able to take more aggressive steps to sell the matrimonial home prior to trial, however until at least May 2013, the Husband was not paying an appropriate amount of spousal support, leaving the Wife with few options regarding her living arrangements.
[31] Similarly, the Wife’s evidence that I accepted at trial, was that the separation had a significant negative effect on her, causing her a difficult time adjusting to her new reality. This, combined with the difficulty she had in obtaining an appropriate quantum of spousal support, would have made it very difficult for her to contemplate selling the matrimonial home earlier than she did. I also note that the issue of the sale of the matrimonial home was resolved on consent during the trial.
[32] The trial proceeded less than 2 years after separation and the matrimonial home was sold shortly after the trial.
[33] It is for these reasons that I am not awarding pre-judgment interest.
Madam Justice B. R. Warkentin
Released: June 10, 2015
COURT FILE NO.: FC-13-339
DATE: 2015/06/10
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Margaret Annette Cork
Applicant
– and –
David William Cork
Respondent
REASONS ON COSTS
Madam Justice B. R. Warkentin
Released: June 10, 2015