ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-11-7636
DATE: 20150819
BETWEEN:
W.G.
David Reid, for the Applicant
Applicant
- and -
K.G.
Mary Anne Cummings, for the Respondent
Respondent
HEARD: June 15, 16, 17 and 18, 2015
REASONS FOR DECISION ON COSTS
Conlan J.
I. INTRODUCTION
[1] After a four-day family law trial, in Reasons for Judgment reported at 2015 ONSC 4010, I ruled in favour of the Respondent mother, K.G. The main issues at trial were spousal support for K.G., child support to be paid by the Applicant father, W.G., medical benefits coverage for K.G., and whether W.G. had complied with an earlier Order made by Justice Price. On those contentious issues, K.G. was clearly successful.
[2] I invited written submissions on costs in the event that the parties could not resolve that issue. I have received and reviewed those written submissions. Unfortunately, neither counsel complied with the two-page limit to those submissions, excluding supporting documents. So as not to punish the parties, however, I have considered what was filed on both sides.
II. THE POSITIONS OF THE PARTIES
The Mother, K.G.
[3] K.G. seeks costs to be paid to her in the total amount of $72,330.86, on a full recovery basis - $23,051.00 for fees, disbursements and taxes from the start of the proceeding to when Ms. Cummings became counsel for the mother, plus $26,400.00 for Ms. Cummings’ fees up to the start of the trial, plus $13,575.00 for Ms. Cummings’ fees for the trial, plus $1762.50 for fees to prepare the costs submissions, plus taxes on fees ($5425.88), plus disbursements since the change to the current counsel ($2116.48 including tax).
[4] In the alternative, the mother seeks costs to be paid to her in the total amount of $64,647.86, on a partial indemnity scale up to the change in counsel for K.G. and on a full recovery basis afterwards.
[5] K.G. makes the following main arguments. First, she was successful at trial. I agree. Second, W.G. was unreasonable. I agree, to some extent. Third, the mother met or exceeded her Offer to Settle dated September 11, 2014. I disagree, although the said Offer was a reasonable one and will surely play a part in the decision on costs. Fourth, even if the said Offer was not met or exceeded at trial, full recovery of costs is appropriate. I disagree, although a substantial award is called for.
The Father, W.G.
[6] W.G. concedes that the mother was successful at trial and deserves some costs. I agree.
[7] W.G. argues that K.G. should not be entitled to any costs prior to Ms. Cummings becoming her counsel. I disagree. An amount representing partial indemnity will be awarded for that time period.
[8] The father submits that the issues at trial were relatively straight forward. I agree.
[9] W.G. does not object to the time spent by Ms. Cummings or her hourly rate. Those are fair positions for the father to take.
[10] In the end, W.G. suggests that a fair amount for costs in favour of the mother would be $25,000.00, all-inclusive, on a partial indemnity scale. I think that the said amount is too low.
III. ANALYSIS and CONCLUSION
The Law
[11] I have considered subrules 18(14), (15) and (16) of the Family Law Rules. Those provisions are as follows.
Costs Consequences of Failure to Accept Offer
(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. O. Reg. 114/99, r. 18 (14).
Costs Consequences – Burden of Proof
(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14). O. Reg. 114/99, r. 18 (15).
Costs – Discretion of Court
(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply. O. Reg. 114/99, r. 18 (16).
[12] I have considered subrules 24(1), (5) and (11) of the Family Law Rules. Those provisions are as follows.
Rule 24: Costs
Successful Party Presumed Entitled to Costs
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. O. Reg. 114/99, r. 24 (1).
Decision on Reasonableness
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept. O. Reg. 114/99, r. 24 (5).
Factors in Costs
(11) A person setting the amount of costs shall consider,
(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 signature of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter. O. Reg. 114/99, r. 24 (11).
[13] Generally, the other items in Rule 24 are not applicable here. For example, this is not a case of divided success. This is not a case where the successful party, K.G., behaved unreasonably. This is not a case where a party acted in bad faith or where costs were caused by the fault of one of the parties or counsel (subject to my comments below about the reasonableness of K.G.’s Offer to Settle).
[14] There are three fundamental purposes of a costs award: (i) to partially indemnify the successful litigant, (ii) to encourage settlement, and (iii) to discourage and sanction inappropriate behaviour by a litigant. Quantum of costs is discretionary. The Court must consider what is a fair, reasonable and just amount taking into consideration all of the circumstances including the reasonable expectations of the losing side. Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905 (C.A.).
[15] Subrule 18(16) is an important provision which is meant to signal to litigants and their counsel that substantial costs awards may be ordered, even full recovery of costs, where the successful litigant after trial made an offer to settle that was reasonable and ought to have been accepted by the other side, albeit an offer that was somewhat better for the party who made the offer compared to what s/he obtained in the judgment after trial.
The Time Period Prior to K.G.’s Change in Counsel
[16] I reject the father’s argument that K.G. is not entitled to any costs for the time period before her current counsel was retained. That is contrary to the plain wording of subrule 24(1) – as the successful party, the mother is presumed to be entitled to costs of the case.
[17] No good argument is advanced by K.G., however, as to why she deserves to be awarded costs for that time period on a full recovery basis. Partial indemnity recovery is appropriate.
[18] The partial indemnity figure for the time period prior to Ms. Cummings’ retainer is $15,368.00, all-inclusive. I will round that number down to an even $15,300.00.
K.G.’s Offer to Settle
[19] I disagree with K.G.’s submission that she met or exceeded her Offer to Settle made in September 2014. She did not. The said Offer would have required the father to pay more money than what was ordered in the Judgment with regard to what was owing under the prior Order made by Price J.
[20] It is true that K.G., when she made the said Offer, was simply mistaken as to what amounts had already been paid by the father. And it is true that the father made very late disclosure of the proof of having paid another sum towards what he owed. But the subrule says what it says. The burden is on K.G. to prove on balance that the Judgment is as favourable as or more favourable than the said Offer. That has not been proven.
[21] In all respects, however, the said Offer was a reasonable one. It largely mirrors what was ordered in the Judgment. It ought to have been accepted, at least in part. Even an offer to settle that is not expressly severable in its terms can often form the basis of a substantial narrowing of the issues for trial. It is clear that W.G. did not take advantage of that opportunity.
[22] Thus, I place some significance on the said Offer in terms of arriving at the ultimate quantum of costs ordered herein.
The Appropriate Scale of Recovery
[23] Full recovery is not the scale that I think is appropriate in all of the circumstances of this case. I agree with K.G. that the father was, especially on the issue of entitlement to spousal support, unreasonable. The mother’s entitlement to spousal support ought to have been conceded before or at the outset of the trial, at least on a need basis. But, even considering that unreasonableness and having regard to K.G.’s Offer to Settle, made in September 2014, I am of the view that to award to the mother her costs since the change in counsel on a full recovery basis would not be reasonable and just. It would simply be too much money for the father to pay in light of his sizeable obligations arising from the Judgment.
[24] At the same time, however, $25,000.00 is too low. That quantum would gut the importance of the said Offer to Settle.
[25] Substantial recovery is the appropriate scale to use for the time period since Ms. Cummings’ retainer. That basis of recovery is usually about eighty per cent. The total amount claimed by the mother for that time period is $49,279.86. Eighty per cent of that is about $39,423.00. I will round that number down to an even $39,400.00.
The Bottom Line
[26] That brings the total costs award in favour of K.G. to $54,700.00 ($15,300.00 plus $39,400.00). In my opinion, that is a fair, just and reasonable amount. That sum shall be paid by W.G. within thirty days of the release of these Reasons. Order to go accordingly.
Conlan J.
Released: August 19, 2015
COURT FILE NO.: FS-11-7636
DATE: 20150819
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
W.G.
Applicant
- and -
K.G.
Respondent
REASONS FOR DECISION ON COSTS
Conlan J.
Released: August 19, 2015