ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: F2021/07

DATE: 2015-06-09

BETWEEN:

LINDA MARIE SCOZZARO
Applicant

– and –

THOMAS SCOZZARO
Respondent

Linda I. Sapiano, Counsel for the Applicant

Richard P. Startek, Counsel for the Respondent

THE HONOURABLE MR. JUSTICE PAZARATZ

1. If people put as much effort into making disclosure as they do preparing costs submissions – perhaps they could have avoided having to make cost submissions.

2. I have considered the written submissions of counsel, invited pursuant to my 18 page judgment dated April 22, 2015 in relation to this two day motion.

3. The only issue is the amount of costs owing by the Respondent husband.

4. He proposes paying $5,000.00.

5. The Applicant requests $26,539.21 representing 100% indemnification. In the alternative she claims $17,209.28 which amounts to 65%.

6. There can be no question the Applicant was successful.

7. The background:

a. The Applicant wife is 57.

b. The Respondent husband is 59.

c. The parties were married May 12, 1979.

d. They separated May 31, 2002 at which time their two children were ages 16 and 14. Both children are now independent.

e. They were divorced in 2009.

f. On August 20, 2002 they signed a comprehensive separation agreement which included terms in relation to spousal support.

g. On November 19, 2008 Justice McLaren made a consent order requiring the Respondent to pay spousal support to the Applicant in the increased sum of $1,200.00 per month.

h. On February 3, 2014 the Respondent’s lawyer sent the Applicant a letter notifying her that the Respondent would be retiring March 31, 2014 as a result of health issues.

i. On February 12, 2014 the Applicant’s lawyer responded requesting financial disclosure and medical reports from the Applicant.

j. On February 26, 2014 the Respondent’s lawyer wrote stating “I am not certain that there is any cause for the exchange of financial disclosure by the parties as you are requesting based on the terms of the existing final order and separation agreement.”

k. On March 14, 2014 the Respondent commenced this motion to terminate spousal support.

l. On April 30, 2014 the Respondent unilaterally stopped paying spousal support despite the fact that the existing order had not been changed.

m. On April 25, 2014 the Applicant filed her responding materials.

n. The Applicant’s lawyer continued to request both financial and medical disclosure. It was not voluntarily produced prior to a June 11, 2014 Case Conference.

o. As a result, on June 11, 2014 Justice Lafreniere made an order requiring a comprehensive list of disclosure from the Respondent, to be produced within 30 days.

p. Costs of the case conference were reserved “to the judge finally disposing of this matter.”

q. When the Respondent started producing disclosure in June 2014, it became evident that even though the $1,200.00 per month spousal support was based on the Respondent’s 2008 income of $78,000.00, from 2009 until 2013 he earned considerably more income (without advising the Applicant of this material change, or even that he had found replacement employment after permanently losing his job as a result of a plant closure). Despite ending his employment in March 2014, his total income for that year was still almost $78,000.00.

r. At the October 2, 2014 Settlement Conference the Respondent still hadn’t produced all of his disclosure. The matter was set down for hearing during the sittings commencing March 30, 2015.

8. Among the issues at the hearing of the motion on April 8 and 9, 2015:

a. The Respondent argued that he had no obligation to disclose his increased income or his improved employment status. I agreed with the Applicant that the Respondent should have made disclosure. He was quite anxious to have support lowered when his income went down, but he didn’t want anyone to know when his income went up.

b. The Respondent argued that the $29,654.28 he received annually in pension income from his former employer should be excluded from the spousal support analysis because it would amount to double dipping. I accepted the Applicant’s position that the pension income should be included. For equalization purposes, the pension had been valued based on an anticipated retirement date of 2018, but the Respondent derived significant additional value from his pension by commencing payments eight years earlier. The equalization payment received by the Applicant did not include pre-date-of-marriage or post-separation pension growth. The Respondent’s lawyer submits he was “ambushed” because he didn’t realize the Applicant was going to be asking that the pension income be considered. I find that there is no evidence that the Applicant’s counsel misled the Respondent. It should have been clear that all of the Respondent’s income was going to be the subject of discussion in the determination of this motion. In any event, it is difficult for the party who doesn’t make disclosure to complain about being “ambushed.”

c. The Respondent attempted to somewhat selectively rely on provisions of the 2002 separation agreement when it suited his purposes. I did not accept his analysis.

d. The Respondent argued the Applicant should not be allowed to benefit from his “post-separation increase in income.” I concluded that in many ways this wasn’t a traditional case of “post-separation increase.” It was more of an “income replacement” when a party loses long-standing employment as a result of a plant shutdown, and then finds a replacement job. The overlap of “old job” and “new job” income does not fall into the traditional category of “post-separation increase.” In any event, I found that there was a significant compensatory support component to the Applicant’s entitlement, warranting inclusion of all of the Respondent’s income for the support analysis.

e. When the motion was argued the Applicant appeared to accept that the Respondent had developed serious health problems. As it happens, the Applicant also developed significant health problems. Notably, however, the Respondent did not produce the balance of his medical disclosure until March 16, 2015 – just prior to the motion being argued.

f. Despite acknowledging the Respondent likely couldn’t work, the Applicant attempted to argue that the $1,200.00 spousal support order should never be reduced because there was no “unforeseeable” change in circumstances. I rejected that argument.

g. The Applicant sought retroactivity back to January 1, 2009, the point at which the Respondent was earning more than he had ever informed the Applicant. I accepted her position in relation to retroactivity.

h. The Applicant attempted to apply the Spousal Support Advisory Guidelines in a purely mathematical manner which would have led to a completely unrealistic level of retroactive support. I rejected that misapplication of the SSAG’s. Notably, the Respondent’s proposed application of the SSAG’s was equally inappropriate, but in the opposite direction.

9. The Applicant submits the order she obtained in my April 22, 2015 judgment includes terms more favourable than she had included in her formal offer to settle dated December 1, 2014 – and much more favourable than the Respondent’s offer to settle dated December 22, 2014.

10. On the issue of spousal support owing by the Respondent to the Applicant:

a. I awarded the Applicant a lump sum of $34,000.00 if satisfied by an RRSP rollover, or a netted down sum of $27,200.00 after considering tax consequences.

b. The Applicant’s offer set out two options:

i. If the Respondent provided sufficient medical disclosure by December 31, 2014 his $1,200.00 monthly support would terminate April 30, 2014. He would then pay $1,000.00 per month for two years commencing January 1, 2015. That’s $24,000.00 tax deductible to the Respondent, compared to the $27,200.00 non-tax deductible amount ordered.

ii. If he didn’t make medical disclosure, he would continue to pay $1,200.00 per month indefinitely until he either provided medical disclosure of inability to work, or until age 65.

c. The Respondent’s offer to settle basically proposed paying either a total of $6,000.00 in tax inclusive payments, or $5,000.00 as a lump sum. In no circumstance was this offer appropriate or realistic.

11. On the issue of the Applicant’s ongoing entitlement to spousal support:

a. I specifically noted that even though spousal support was being reduced to $0.00 as of January 1, 2015, there was no determination that entitlement had ended, and there was to be ongoing financial disclosure between the parties.

b. The Applicant’s offer set out that if the December 31, 2016 termination date option prevailed, the Respondent would still pay $1.00 per year spousal support to keep the issue open, with ongoing financial disclosure.

c. The Respondent’s offer simply referred to there being no spousal support payable to the Applicant after December 31, 2015. There was no provision for continuing entitlement, nominal support, or ongoing disclosure.

12. The Applicant claims full-indemnity for costs throughout the proceeding on the basis that she matched or exceeded her offer dated December 1, 2014.

13. Ordinarily, the full recovery provisions of Rule 18(14) commence from the date the offer is made. But full recovery can be ordered prior to the date of the offer, if lack of disclosure made it impossible to formulate an offer sooner. Ascento v Davies 2012 ONCJ 581; Steckley v. Steckley 2013 ONCJ 467.

14. In this case the Applicant’s delay in formulating an offer is understandable given the frustrations she was experiencing in obtaining disclosure.

15. But there are other reasons why the Applicant’s December 1, 2014 non-severable offer does not trigger the Rule 18(14) full recovery consequences:

a. For a party to submit that they matched or exceeded their offer pursuant to Rule 18(14)(5) they basically must be able to establish that they were successful in obtaining everything that they set out in their offer. Hall v. Sabri, 2011 ONSC 6342, [2011] O.J. No. 4850 (SCJ); M.P. v. W.P. 2014 ONSC 6393 (SCJ).

b. The Applicant is to be commended for creativity in offering two different results, depending on whether the Respondent produced or didn’t produce his medical disclosure by December 31, 2014.

c. But once December 31, 2014 passed and the medical disclosure had not been produced, that first option was no longer available for acceptance by the Respondent.

d. That only left the alternative set out starting at paragraph 2 of the Applicant’s offer. That was basically $1,200.00 per month retroactive to May 1, 2014, on an indefinite basis, with some additional complicating provisions relating to retirement pre age 65 if medical disclosure was available, or retirement at age 65 even if there was no medical evidence.

e. Only this second option existed after December 31, 2014. And as it happens the Applicant withdrew her offer on March 17, 2015 – so there was no offer in place when the motion was argued.

f. The offer included other minor provisions relating to terms being characterized as a domestic contract. Not much turned on these terms. But when counsel includes language in an offer that cannot be included in a court order, they jeopardize their ability to claim full recover pursuant to Rule 18(14).

16. However, having concluded that the Applicant’s December 1, 2014 offer does not trigger Rule 18(14) cost consequences, I have no hesitation in finding that this offer represented a good faith effort to settle, and is relevant to the determination of costs pursuant to Rule 18(16).

17. I have considered all of the factors set out in Rule 24 of the Family Law Rules:

a. The Applicant was successful. This is the starting point in the analysis. Sims-Howarth v. Bilcliffe 2000 22584 (ON SC), [2000] O.J. No. 330 (SCJ).

b. The Applicant behaved reasonably. From the very outset her lawyer requested relevant and necessary financial and medical disclosure.

c. As well, the Applicant’s position in this litigation was for the most part reasonable.

d. The Respondent’s behaviour in failing to disclose his improved financial circumstances for quite a number of years, and then suddenly – unilaterally – terminating all spousal support payments, was not reasonable.

e. And his failure to make timely disclosure once his motion commenced is an aggravating factor. While there may have been some minor delay waiting for doctors to produce reports, cumulatively there is no excuse for how much time it took to produce relevant financial and medical disclosure.

f. I do not accept the Respondent’s submission that the Applicant was impatient or overly zealous in pursuing disclosure. The Respondent created financial hardship for the Applicant by improperly cutting off her spousal support. He cannot complain that she was in too much of a hurry to resolve the problem.

g. A number of key legal arguments the Respondent relied upon were also not reasonable.

h. As stated, the Applicant’s offer to settle was practical and represented a good faith effort to try to resolve the case.

i. In contrast, the Respondent’s offer to settle was unrealistic and unhelpful.

j. The Respondent cites Rule 24(10) (“Costs to be decided at each step”) in resisting costs claimed in relation to the Case Conference on June 11, 2014. But those costs were specifically reserved by the Case Conference judge, so the Applicant is entitled to pursue that claim. That costs claim was kept alive specifically because of the Respondent’s lack of disclosure at the Case Conference.

k. The issues herein were very important to both parties – perhaps more important for the Applicant whose financial situation is more difficult than the Respondent’s.

l. The issues were legally complex, and both counsel vigorously and thoroughly explored the law.

m. The hourly rate charged by Applicant’s counsel is reasonable given her experience and the skill and efficiency with which she presented her case.

n. I agree with Respondent’s counsel that some of the time entries on the bill of costs are somewhat ambiguous as to how much time was required for specific services. However, the times in relation to preparation and attendance in court appear reasonable.

o. The disbursements claimed are reasonable.

18. The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395 stated that modern costs rules are designed to foster three fundamental purposes:

a. To partially indemnify successful litigants for the cost of litigation.

b. To encourage settlement.

c. And to discourage and sanction inappropriate behaviour by litigants bearing in mind that the awards should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party.

19. Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome. The overriding principle is reasonableness. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case. Boucher et al. v. Public Accountants Council for the Province of Ontario 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.).

20. In the final analysis the Applicant was reasonable and successful. While full recovery is not justified by the facts herein, nonetheless a high level of indemnification is appropriate – particularly having regard to the fact that the Applicant’s financial vulnerability, and her comparative ability to afford this litigation.

21. The Respondent shall pay to the Applicant costs fixed at $18,000.00 inclusive of HST and disbursements.

22. All of these costs were incurred with respect to the order for support. They are “legal fees or other expenses arising in relation to support or maintenance” and as such, should be enforceable by the Director of F. R. O. (see s. 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act 1996, S.O. 1996, c. 31 (as amended) and Wildman v. Wildman (2006) 82. O.R. (3d) 401 (C.A.)).

Pazaratz, J.

Released: June 9, 2015

COURT FILE NO.: F2021/07

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

LINDA MARIE SCOZZARO
Applicant

• And –

THOMAS SCOZZARO
Respondent

REASONS FOR JUDGMENT

The Honourable Mr. Justice A. Pazaratz

Released: June 9, 2015