NEWMARKET

COURT FILE NO.: FC-05-022841-00

DATE: 20150731

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Kathryn Rosanne Henderson, Applicant

AND:

Russell Andrew Henderson, Respondent

BEFORE: THE HON. MR. JUSTICE J.P.L. McDERMOT

COUNSEL: Daniel Dooley and Saly Botelho, for the Applicant

Gregory T. Evans and Beth Kibur, for the Respondent

HEARD: By Written Material

COSTS ENDORSEMENT

[1] This matter originally arose from a motion for rectification of a divorce judgment issued in 2006. The Applicant argued that the order did not reflect the parties’ joint intention to include certain corollary relief including a $100,000 lump sum payment to the Applicant. As well, the Respondent requested certain credits to be applied to this amount, if I found that was the intention in the order.

[2] The issue of rectification of the order was set down for trial by Kaufman J. after hearing the motion for a full day, ordered the matter set down for trial. The trial was heard over three days in November, 2014. Kaufman J. ordered that costs of the motion be reserved to the trial judge.

[3] I granted the Applicant the relief requested by her, which was correction of the Divorce Judgment under Rule 25(19) of the Family Law Rules[^1] to give effect to the joint intentions of the parties. I rejected Mr. Henderson’s evidence that he had never intended to make that payment to Ms. Henderson unless a subdivision he was involved in made at least one million dollars.

[4] I did, however, over the objections of Ms. Henderson, give credits to Mr. Henderson of some $48,607.89 towards the debt owing under the rectified order of $100,000. He enjoyed partial success respecting this issue.

[5] Neither party made an offer to settle. Each party claims costs and each claims to have been successful in this matter. Ms. Henderson says that she is entitled to costs because she succeeded in her claim for rectification or change to the 2006 Divorce Judgment. Mr. Henderson claims partial success in obtaining a set off as against the amount found owing under the order. Both of these were substantive issues placed before the court by the endorsement of Kaufman J. dated November 6, 2013.

[6] Mr. Dooley also says that the Respondent was unreasonable in his insistence that the lawyers be forced to testify at trial, when they had been questioned earlier in the proceeding.

[7] I need to firstly determine which party, if any, enjoyed substantial success in this matter. The second issue is whether requiring the lawyers’ attendance as witnesses at trial was unreasonable conduct. Finally, I must determine whether costs are payable based upon success or unreasonable conduct, taking into account the novelty of the issues placed before the court.

Success at Trial

[8] The first issue raised by Mr. Dooley was whether his client was successful at trial to the extent that she is entitled to costs. There is no issue that the Applicant was successful in her claim for rectification of the Divorce Judgment. In response, Ms. Kibur suggested that in fact her client had also achieved substantial success in obtaining a large credit to be set off against the amount owing under the order.

[9] In considering costs, under Rule 24(1) of the Family Law Rules, costs follow the event, and a successful party is presumed to be entitled to costs. As well, where there are a number of issues before the court, I can have regard to the dominant issue at trial in light of those offers to settle: see Firth v. Allerton, [2013] O.J. No. 3992 (S.C.J.).

[10] Surprisingly, neither party served an offer to settle. As such, and unlike many other cases, I cannot look to the offers to determine who was ultimately successful at trial. The lack of offers made this a zero sum game.

[11] I agree with Ms. Kibur that success was divided. However, the major issue at trial and on the motion before Kaufman J. was the issue of rectification under Rule 25(19). Both lawyers testified on that issue and the majority of Ms. Henderson’s testimony was on that issue as well. The legal arguments surrounded the issue of whether there was jurisdiction to change the order under Rule 25(19) including the questions of laches and of res judicata.

[12] The issue of the credits to be applied to the amount owing under the order were secondary to the question of changing the Divorce Judgment. In fact, had the Divorce Judgment stood without amendment, there would have been no claim for credits for payments made by Mr. Henderson as he would have owed nothing to his former wife. Indeed it would have been difficult for Ms. Henderson to agree to accept a specific amount in the face of the Respondent’s refusal to acknowledge his liability to pay the funds due under the order.

[13] Furthermore, Ms. Henderson was wholly successful in the issue of changing the order and rectification. Mr. Henderson only realized partial success insofar as there were certain payments made by him to the Applicant which I declined to credit as against the amount owing by him to Ms. Henderson under the amended order.

[14] As such, I find that the Applicant had success on the major issue at trial, which was the issue of changing the order to reflect the joint intentions of the parties to provide for a $100,000 payment to the Applicant. The Respondent only enjoyed partial success in claiming a credit against the amount owing to the Applicant. Accordingly, I find the successful party at trial for costs purposes to be the Applicant.

Unreasonable Conduct

[15] In awarding costs, I may take into account the conduct of the parties to this proceeding: see Rule 24(8) of the Family Law Rules. Under that rule, I am obliged to order full indemnity costs payable forthwith if a party has acted in “bad faith.” Moreover, I may generally take into account under Rule 24(11) “the reasonableness or unreasonableness of a client’s behaviour” in assessing the amount of costs.

[16] Bad faith is not an issue before the court. However, Mr. Dooley suggests that the Respondent was guilty of unreasonable conduct in both questioning the lawyers who were responsible for carriage of the file, and later forcing them to be called at trial. He says that the pre-trial cross examinations were sufficient in this case to place their evidence before the court and the calling of these witnesses therefore unnecessarily prolonged the trial.

[17] I do not find this to be unreasonable conduct. I found the testimony of both Mr. Epstein and Ms. Maidenburg to be helpful, if only to determine that this was clearly a case of solicitor’s negligence. I was, in fact, impressed by the orderly progression through the file that Ms. Kibur took me through, in part by way of Mr. Epstein’s testimony. It is also apparent from my endorsement that the testimony of Ms. Maidenburg was valuable if only to demonstrate the lack of involvement that she had in administering the file.

[18] Accordingly, I do not find Mr. Henderson to have engaged in unreasonable conduct in this matter within the meaning of Rule 24(11).

Novel Issue

[19] In assessing whether costs should follow this event, Ms. Kibur and Mr. Evans have urged me to consider the fact that the issues considered at this trial were novel in nature, and as such costs should not be assessed in this matter.

[20] Whether an issue is novel is defined not only by a set of unique facts; it must be a matter where the decided cases do not “provide adequate guidance to its resolution”: see Baldwin v. Daubney, 2006 33317 (ON SC), [2006] O.J. No. 3919 (S.C.J.) at para. 19. Put another way, is the case sufficiently unique, and the guidance provided by the case law sufficiently unclear so as to make it not unreasonable for a party to assert or defend a claim? See Burgess (Litigation Guardian of) v. Canadian National Railway, 2005 39687 (ON SC), [2005] O.J. No. 4650 (S.C.J.).

[21] The novelty of a legal issue before the courts has resulted in a reduction or dismissal of a costs claim on a number of occasions: see Elliott v. Canadian Broadcasting Corp., 1995 244 (ON CA), [1995] O.J. No. 1710 (C.A.), Madore-Ogilvie (Litigation Guardian of) v. Ogilvie Estate, 2008 ONCA 39 and Burgess (Litigation Guardian of) v. Canadian National Railway, supra. This is because the lack of guidance or precedents in such a case leaves a party unable to determine whether or not to make or defend the claim in question.

[22] In my view, the issue of whether a matter is novel can be considered in awarding costs in family law matters under Rule 24(1)(f) (“any other relevant matter”).

[23] At trial, Mr. Dooley suggested that Justice Kaufman had determined that there was jurisdiction to change the order, but that there were evidentiary issues that could not be addressed at a motion. In fact, that was not the case. I found that Kaufman J. had, in fact, left the issue of jurisdiction open and that was for good reason. Until this case came before the court, there had, as far as could be determined, no cases in Ontario considering the issue of whether an order could be rectified pursuant to Rule 25(19) of the Family Law Rules. It was reasonable for Mr. Henderson to defend the claim as, until now, the decided case law in Ontario limited the application of the rule to clerical errors and slips as considered by Boswell J. in Gray v. Rizzi, 2010 ONSC 2858 (S.C.J.).

[24] As such, the major issue at trial is of sufficient novelty to reduce the award of costs in this matter.

Award of Costs

[25] I have found Ms. Henderson to have succeeded on the major issue at trial, an issue, however that had sufficient novelty to reduce the claim for costs. I did not find Mr. Henderson to have been guilty of unreasonable conduct. However, I did find that Mr. Henderson’s evidence about the condition for payment of the $100,000 to be without credibility.

[26] I am tempted to award no costs of this proceeding. However, Mr. Henderson took an unreasonable position on the facts and as such, he should bear some of the costs of this proceeding. There shall be an award of costs against Mr. Henderson.

[27] Mr. Dooley claims costs of just under $60,000 for the motion, examinations and trial. The issues were complex. I do not find the costs claimed by the Applicant to be excessive under the circumstances.

[28] This matter, however, involved a claim which was funded by LPIC for the purpose of “fixing” a problem resulting from the negligence of counsel. I am troubled by the fact that the effective cause of the trial of this matter was the negligence of the solicitors who administered the file for Ms. Henderson, and indirectly for Mr. Henderson who was unrepresented. Had the solicitors done their job properly, there would have been no need for a trial or a motion. Although Mr. Henderson took a position that I found to be unsound, the mischief resulting in the trial largely resulted from the negligent conduct of Mr. Epstein and Ms. Maidenburg. I am troubled by the request by Ms. Henderson that the Respondent pay the costs of trial when the trial would not have occurred but for the negligence of the solicitors who testified at trial.

[29] As such, I am going to award costs against Mr. Henderson in what is a nominal amount considering the actual costs of trial. The costs are nominal in order to reflect the divided success noted above, Ms. Henderson’s success on the major issue at trial, the novelty of the issues before the court as well as the responsibility of the solicitors who administered the file, and who are not parties or liable for costs in any way.

[30] Accordingly, I am awarding Ms. Henderson costs in the amount of $10,000 inclusive of disbursements and HST.

McDERMOT J.

Date: July 31, 2015

[^1]: O. Reg. 114/99