Scipione v. Scipione, 2015 ONSC 5982

CITATION: Scipione v. Scipione, 2015 ONSC 5982

COURT FILE NO.: 2172/08

DATE: 2015-10-02

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Benedetto Angelo Scipione

Applicant

– and –

Teresa Marina Del Sordo (Scipione)

Respondent

Mr. M. Clarke, Counsel for the Applicant

Ms. Nardi-Bell, Counsel for the Respondent

REASONS FOR COSTS

the honourable mr. justice pazaratz

1. Why do written costs submissions frequently try to lead us into some sort of parallel universe where losers are actually winners?

2. If you lost, don’t re-write the facts to argue that you won. It only makes the judge go back – repeatedly – to see if we’re talking about the same case.

3. And if the best you got was a mixed result on one of the issues, don’t claim you were right to relentlessly pursue all of the issues. Especially when you ignored repeated opportunities to pursue only the claims which might have had some merit.

4. Rules 18 and 24 of the Family Law Rules set out many important and complex considerations in dealing with costs. In making submissions, counsel would be remiss if they didn’t vigorously advance every potential argument on behalf of their client. Because in determining costs, fairness to both the winner and the loser is paramount.

5. But the starting point – determination of success – shouldn’t be so muddy.

6. Who got what they asked for?

7. That question shouldn’t be so complicated.

BACKGROUND

8. This was a motion to change.

9. The family profile:

a. The Applicant husband is 44.

b. The Respondent wife is 46.

c. They started living together in September 1988.

d. They were married May 13, 1989.

e. They have two children Marco, now 25, and Rosalina, now 22.

APRIL 28, 2011 ORDER

10. On April 28, 2011 Justice Grant Campbell made an order following a lengthy trial in which the Applicant was predominantly unsuccessful. Among the detailed provisions:

1. Applicant to pay Respondent lump sum child support for both children for the period September 1, 2008 to April 30, 2011 in the sum of $29,080.00.

2. Applicant to pay Respondent retroactive extraordinary expenses for both children for the period September 1, 2008 to April 30, 2011 in the sum of $20,230.65.

3. Commencing May 1, 2011 Applicant to pay Respondent periodic child support of $1,287.66 per month, calculated:

a. Applicant’s 2010 income $72,500.00

b. Respondent’s imputed income $35,000.00.

c. Full table support for Rosalina $663.00 per month for May to August of each year when child not away at school.

d. 64% of Rosalina’s extraordinary expenses of approximately $20,000.00 per year.

e. Extraordinary expenses include

i. Tuition

ii. Residence or accommodations

iii. Meal plans and or food

iv. Reasonable transportation including automobile insurance

v. Books

vi. Miscellaneous registration fees.

4. Respondent to provide copies of all invoices and receipts relating to above extra-ordinary expenses twice each year, by June 30 and December 31.

5. Applicant to pay to Respondent retroactive spousal support for period Sept 1, 2008 to April 30, 2011 in the sum of $6,636.00.

6. Commencing May 1, 2011 Applicant to pay periodic spousal support to Respondent in sum of $375.00 per month.

7. Applicant to maintain children and Respondent as beneficiaries of his medical benefits coverage through employment so long as they remain eligible beneficiaries. Amounts not covered under his plan to be considered extra-ordinary and shared 64% by the Applicant and 36% by the Respondent.

8. Applicant to maintain children as beneficiaries of his group policy of life insurance through employment.

9. Applicant to transfer a Canada Life Assurance Company policy to Respondent.

9a) Applicant to transfer ownership of joint cemetery plots to Applicant.

10. Applicant to pay $52,166.13 equalization payment plus pre-judgment interest.

11. Parties to exchange annual disclosure.

12. Order secured as charge on two properties in Applicant’s name.

13. Divorce severed from corollary issues.

14. Order bears interest at rate of 10%.

15. Applicant to pay Respondent’s costs fixed at $52,000.00.

MOTION TO CHANGE

11. Less than a year later – on March 21, 2012 -- the Applicant brought this motion to change. He sought to reopen most support issues. Among his requests:

a. Reduction of child support including retroactive reduction almost back to the date of the April 28, 2011 order.

b. Alternatively suspension of all child support arrears.

c. Stay of any enforcement, including any garnishment proceedings and/or judgment, including any Refraining order.

d. Suspension of any Support Deduction Order.

e. Enforcement of Respondent’s obligation to provide disclosure regarding the adult child Rosalina’s expenses.

f. Direct payment of child support to Rosalina rather than to the Respondent.

12. On April 29, 2012 the Respondent’s initial response was to request:

a. Applicant’s motion to be dismissed.

b. Costs on a full indemnity basis.

c. A prohibition against the Applicant bringing any further proceedings until he complied with all outstanding financial obligations.

13. On June 27, 2014 the Respondent amended her claim to seek alternative relief:

a. A retroactive increase in child and spousal support.

b. Applicant’s income to be imputed at $80,000.00 (higher than in the April 28, 2011 order).

c. Respondent’s income to be $23,000.00 (lower than in the order).

14. The Respondent submits that any counter-claims she made were purely reactions to the Applicant’s motion, and that her primary and continuing position was that the Applicant’s motion should simply be dismissed in its entirety.

SETTLEMENT

15. On August 6, 2015 -- on the third consecutive day of the hearing of this long motion -- the parties resolved all issues (except costs, which I am now dealing with) by way of a signed consent which included the following provisions:

a. Child support for Rosalina to terminate May 31, 2015.

b. No variation of child support or spousal support for the period May 1, 2011 to May 31, 2015.

c. Commencing June 1, 2015 and terminating December 31, 2020, Applicant to pay spousal support of $1,247.00 per month based upon imputed incomes: Applicant 80,000.00; Respondent $35,000.00.

d. Although not included in the court order, the parties contractually agreed this time-limited spousal support would be “non-variable.”

e. Respondent to reimburse Applicant $4,800.00 as an overpayment in relation to a previous settlement.

f. Costs of this motion to be reserved, with written submissions to be filled.

16. For the most part the Applicant did not obtain the relief he sought in his motion.

a. In March 2012 he tried to change child and spousal support retroactive to May 2011.

b. Nothing changed until June 2015.

c. The change in child support three years after he brought his motion was basically a function of time. Rosalina had continued her studies. She was almost finished. By 2015 ongoing support for the adult child would soon be ending.

d. Discontinuing child support would inevitably reopen quantum of spousal support.

e. The 2015 change in spousal support – almost four and a half years after the 2011 order – was essentially a restructuring from an open ended to a time limited non-variable spousal obligation.

f. And while the Applicant sought to reduce spousal support, quantum actually went up significantly, coinciding with the May 31, 2015 termination of child support.

COSTS CLAIMS

17. The Respondent now seeks full indemnification for costs totalling $83,034.46 -- plus HST – calculated:

a. $41,554.94 for the period up to July 17, 2014.

b. $41,479.52 for the period after July 17, 2014.

c. This includes a block fee in relation to exchanging costs submissions.

d. This does not include costs previously ordered against the Applicant in relation to other specific steps since he commenced his motion.

18. Her basic position:

a. The Applicant was entirely unsuccessful.

b. She had to incur significant legal fees successfully defending the Applicant’s effort to essentially re-litigate almost everything resolved at the 2011 trial.

c. A high level of indemnification for fees is appropriate because, among other things, the Applicant acted in bad faith.

19. The Applicant argues there was divided success.

a. He says his corresponding legal fees are approximately $55,375.00 (with HST raising it to $62,573.75).

b. He seeks $20,000.00 in costs.

20. So who got what they asked for? How did they conduct themselves in this litigation? And what are the costs consequences?

LEGAL OVERVIEW

21. In Serra v. Serra 2009 ONCA 395 the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:

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

b. To encourage settlement; and

c. To discourage and sanction inappropriate behaviour by litigants.

22. The assessment of costs is not a mechanical exercise. It’s not just a question of adding up lawyer’s dockets. Boucher et al v. Public Accountants Council for the Province of Ontario (2004) 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.); Dingwall v. Wolfe 2010 ONSC 1044 (SCJ).

23. 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, rather than an amount fixed by the actual costs incurred by the successful litigant. Delellis v. Delellis 2005 36447 (ON SC), 2005 CarswellOnt 4956 (SCJ); Serra (supra)

24. The overriding principle is that costs are to be fixed in a way that is fair to the parties and reasonable in the circumstances. Murray v. Murray (2005) 2005 46626 (ON CA), 79 O.R. (3d) 147 (Ont. C.A.); Guertin v Guertin 2015 ONSC 5498 (SCJ).

25. Rules 18 and 24, and most of the case law focus on two words:

a. “Success”

b. “Reasonableness”

i. Reasonableness of behaviour by each party.

ii. Reasonableness of the amount of costs to be awarded.

SUCCESS

26. The starting point in any costs analysis is the presumption that a successful party is entitled to costs. Rule 24(1). Sims-Howarth v. Bilcliffe 2000 22584 (ON SC), [2000] O.J. No. 330 (SCJ).

27. In his March 2012 motion the Applicant sought to rescind all arrears of support pursuant to the April 2011 order.

a. The Respondent notes that the Applicant had paid a total of $8,142.00 in spousal and child support (for two children) in the four years from the date of separation to March 2012.

b. The Respondent successfully defended this claim for rescission of arrears.

c. The Applicant was not successful.

28. The Applicant sought to decrease child support even though his income had increased by $7,500.00 in the years after the trial.

a. The Respondent successfully defended this claim.

b. The Applicant was not successful.

29. The Applicant’s motion sought to terminate spousal support which was open-ended pursuant to the 2011 order.

a. The Applicant proposed termination effective January 2014.

b. Pursuant to the negotiated settlement spousal support was actually increased from $375.00 per month to $1,247.00 per month.

c. A termination date was included, but not until December 31, 2020.

d. The Respondent says she agreed to change from open-ended spousal support to time-limited non-variable spousal support because it would finally end perpetual litigation.

e. Each party claims they benefitted from this final redetermination of spousal support.

OFFERS

30. To determine whether a party has been successful, the court should take into account how the order or eventual result compares to any settlement offers that were made. Lawson v. Lawson 2008 23496 (ON SC), [2008] O.J. No. 1978 (SCJ).

31. Rule 18 deals with the formalities and consequences of offers.

32. Rule 18(14) provides that a party who makes a written offer at least seven days before the trial, and obtains an order as favorable as or more favorable than the offer, is entitled, unless the Court orders otherwise, to costs to the date that the offer was served and full recovery costs from that date.

33. Both parties refer to their respective Offers to Settle in support of their costs claims.

34. The Applicant submitted formal offers on the following dates:

a. June 4, 2012

b. March 10, 2014

c. May 9, 2014

d. July 25, 2014

e. May 8, 2015

f. August 5, 2015

35. None of the Applicant’s offers were severable. None of the offers came close to matching the final result. Each of the offers included at least one provision which would have been clearly unpalatable from the Respondent’s perspective.

a. The June 4, 2012 offer included termination of spousal support on June 1, 2012; rescission of arrears; restrictions on child support for Rosalina; and other monetary provisions which did not prevail.

b. The March 10, 2014 offer included a $125,000.00 single payment for all past and future obligations, with staggered payments; and spousal and child support releases.

c. The May 9, 2014 offer included provision that child support would be based on the Applicant’s income being assessed at $26,728.00 rather than $72,500.00; and spousal support would be suspended.

d. The July 25, 2014 offer included $375.00 per month spousal support for five more years, and $5,000.00 toward all past and future child support obligations.

e. The May 8, 2015 offer included provision that spousal support would terminate June 30, 2015 with no arrears payable.

f. The August 5, 2015 offer included non-variable spousal support fixed at $375.00 per month until July 31, 2020.

36. None of these offers trigger any cost consequences in favour of the Applicant. They do little more than confirm that he persisted in trying to unrealistically rid himself of support obligations.

37. In addition to a number of informal settlement proposals, the Respondent filed two formal – and severable -- offers dated May 8, 2014 and August 4, 2015. She submits that had the Applicant accepted any portion of these offers, the matter may not have proceeded to a hearing or the hearing would have been shortened.

38. The Respondent submits the following paragraphs from her May 8, 2014 offer are relevant:

a. In Paragraph 2 the Respondent offered to accept $116,290.38 for the amount owing under Justice Campbell’s order as of March 31, 2014. However, as a result of an error, she gave him a credit of $4,800.00 making a net payment of $115,200.00.

b. The Respondent says the Applicant continued to litigate from May 8, 2014 to June 6, 2014 to save $1,090.00.

c. In paragraph 3 the Respondent was willing to forego child support from January to June 2014 and she was then willing to accept $241.00 per month from July 1, 2014 to April 30, 2015 for child support plus $10,000.00 as an all-inclusive amount for section 7 expenses. The total amount would have been $12,410.00.

d. As a result of the hearing, the Applicant paid $1,288.00 from January 2, 2014 to May 31, 2015 which totals $19,320.00 for child support and section 7 expenses.

e. Had he accepted this part of the offer the Applicant would have saved $6,910.00.

f. Overall, the Respondent submits that had the Applicant accepted these two paragraphs, there would have been no further litigation other than in relation to spousal support. Instead, he initially took the position that all support from and after May 2011 should be varied.

g. He changed his position at the hearing in August 2015 – he wanted to review only the section 7 expenses. His position was unreasonable given the length of the litigation, and his increased income from 2011 to 2013 at least.

39. The Respondent submits her August 4, 2015 offer reaffirmed her good faith efforts to settle:

a. She offered to dismiss the Applicant’s claims as of May 31, 2015 so that Justice Campbell’s order remained intact.

b. As a severable paragraph, she offered to accept spousal support at $654.00 monthly based on incomes of $57,000.00 and $23,000.00 for an indefinite period.

c. She argues that had the Applicant accepted this, the parties would have saved two days of the hearing.

40. The Applicant disputes the relevance of the Respondent’s offers.

a. He says they were “excessive and unreasonable” in comparison to the result achieved.

b. He says they were “so unreasonable as to be tantamount to no offers at all”.

c. He says he got a better result by continuing with the litigation.

d. Although the Applicant’s motion was commenced in March 2012, the Respondent did not file any formal offer to settle until May 8, 2014, so in any event her claim for full indemnity costs should not be considered prior to that date.

e. He says the Respondent advanced other informal offers which advanced unreasonable and intransigent positions.

41. The Applicant submits he actually tried to accept part of the May 8, 2014 severable offer but the Respondent’s counsel wouldn’t let him:

a. The May 8, 2014 offer included provision that terms were open for acceptance until five minutes after the commencement of the hearing.

b. The hearing actually commenced on June 6, 2014.

c. After some discussion and submissions at the outset of the hearing, this court was not prepared to allow the Applicant to proceed until he complied with his very substantial outstanding obligations pursuant to Justice Campbell’s April 28, 2011 order.

d. Partial Minutes of Settlement were filed, requiring the Applicant to pay $120,000.00 owing to the Respondent.

e. Ten months later, on April 1, 2015 the Applicant’s counsel wrote to the Respondent’s counsel attempting to accept paragraph three of the May 8, 2014 offer, relating to child support.

f. The Respondent’s solicitor took the position that the offer could no longer be accepted given the fact that the motion had “commenced” on June 6, 2014.

g. The hearing of the motion did not resume until August 4, 2015. It proceeded over three consecutive days, with a final consent being filed on the third day August 6.

42. Although Ms. Nardi-Bell was technically correct, this issue is a bit of a double-edged sword for the Respondent.

a. In her current submissions, the Respondent seeks to rely on her May 8, 2014 severable offer.

b. But she correctly advised the Applicant that the May 8, 2014 offer lapsed five minutes after the hearing of the motion commenced on June 6, 2014.

c. That means the Respondent had no formal offer before the court until her next offer dated August 4, 2015.

d. And the August 4, 2015 offer does not comply with Rule 18(14)(1) which requires that an offer relating to a motion must be made at least one day before the motion date (the motion resumed on August 4, 2015).

43. Apart from the aforementioned complications, there are other reasons why the Respondent’s severable offers do not trigger a presumption of full indemnity costs pursuant to Rule 18(14):

a. As stated, the May 8, 2014 offer was only open for acceptance for about a month out of this three and a half year saga.

b. Monetarily the Respondent’s offers do not precisely match the eventual result.

c. To trigger full recovery costs a party must do as well or better than all the terms of any offer (Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (SCJ); Rebiere v Rebiere 2015 ONSC 2129 (SCJ).

44. However, even if Rule 18(14) doesn’t apply, Rule 18(16) allows the court to consider any written offer, the date it was made, and its terms.

45. In this respect there can be no doubt that the Respondent consistently gave the Applicant opportunities to bail out of an ill-advised motion. Her offers, both formal and informal, reflected a more realistic approach to settling this case, and significantly reducing legal fees.

SCALE OF COSTS

46. The Respondent seeks full indemnity costs based on the manner in which the Applicant conducted himself in this litigation.

47. She submits when the Applicant commenced his motion he was in default of virtually every obligation pursuant to the April 28, 2011 order.

a. He hadn’t made the equalization payment.

b. He hadn’t paid ongoing child and spousal support.

c. He hadn’t paid costs.

48. She argues that by bringing a motion less than a year after the April 28, 2011 order – and by asking that all relief and adjustments of support be retroactive to the date of the order – this was simply “an appeal in disguise.”

49. The Respondent submits that in his first affidavit dated March 21, 2012 the Applicant lied to the court claiming he had complied with all aspects of Justice Campbell’s order, other than payment of money.

a. In fact, he failed to obey other aspects of the order.

b. For example, he failed to transfer the cemetery plot until 2015, despite repeated requests by the Respondent.

50. She notes that even after commencing his motion, the Applicant continued to ignore his significant financial obligations until he was forced by the court to pay.

a. From 2011 to 2012 the Applicant paid nothing.

b. From 2012 to 2014 he paid only when forced to do so by the Family Responsibility Office or the court.

c. On April 25, 2013 the Applicant had consented to an order requiring him to pay all costs, as agreed or adjudicated, for a motion to vacate a charging order registered against title to 287 Queenston Road, Hamilton.

d. But those costs were never agreed upon because the Applicant decided he wanted to pay no costs at all.

e. His affidavits from and after June 2013 avoided the issue.

f. The Applicant finally paid $120,000.00 owing pursuant to the April 28, 2011 order on July 17, 2014 – after he was told by the court that otherwise he wouldn’t be able to proceed with his motion.

DISCLOSURE

51. Each party accuses the other of causing legal fees to mount by failing to make proper disclosure.

52. As part of his motion the Applicant claimed the Respondent failed to provide ongoing information about Rosalina’s post-secondary education, in violation of the provisions of the April 28, 2011 order. As part of his costs submissions, he repeated this allegation, claiming it was necessary for him to commence a motion in order to compel disclosure from the Respondent.

53. However, the motion record supports the Respondent’s denial of this allegation:

a. In his March 21, 2012 affidavit the Applicant stated he believed Rosalina was enrolled in university, “the particulars of which are unknown to me.”

b. In his June 4, 2012 affidavit he stated he did not know that his daughter studied in Quebec and Italy.

c. These statements were false.

d. Considerable time had been spent during the 2011 trial reviewing Rosalina’s university programme and the costs of the 2011-2012 academic year, including the costs of studying in Quebec and Sienna.

e. After the April 28, 2011 order the Respondent had mailed all disclosure directly to the Applicant on a monthly basis from July 2011 until 2012.

f. Thereafter, all disclosure was produced through counsel.

g. Nonetheless, the Applicant continued his bald allegation until August 5, 2015, forcing the Respondent’s counsel to provide proof that all disclosure had been sent.

h. At the hearing of the motion the Applicant’s lawyer even claimed the Respondent had engaged in blameworthy conduct by failing to make disclosure.

i. The Applicant only withdrew the allegation when Ms. Nardi-Bell produced a chart which clearly set out that all disclosure had been made, and in a timely way.

54. The Applicant also alleged the Respondent failed to provide clear and cogent financial information and that she made a number of inconsistent statements regarding her income. Again, I find there is little merit to this complaint:

a. The Respondent’s disclosure and financial calculations were comprehensive and informative.

b. Any “inconsistencies” were minor, particularly viewed in the context of (needlessly) voluminous litigation spanning three years.

55. Curiously, the Applicant also argued the Respondent produced too much documentation in relation to section 7 expenses, creating needless confusion. Again, I do not accept this submission:

a. While the Applicant attempted to score dramatic points at the motion by chiding the Respondent for seeking section 7 contributions for things like a “splash bong”, the summaries provided by the Respondent clearly identified that certain invoices described expenditures for which no contribution was being sought.

b. Given the Applicant’s well documented and enduring resistance to complying with his own obligations, it is ironic that he would simultaneously argue that the Respondent provided both insufficient and excessive disclosure.

APPLICANT’S JOB LOSS

56. I further accept the Respondent’s submission that the Applicant lied about the cornerstone of his motion to reduce support payments:

a. He misled the court when he stated his employment with Safety First was unavoidably terminated due to a work-shortage.

b. He claimed an involuntary job loss and reduction in income, which he characterized as a material change in circumstances justifying reduced support and rescission of arrears.

c. He failed to advise the court that the real reason he lost his job was because he refused to reimburse his employer for a $16,496.00 overpayment in wages. The employer had sent $16,496.00 to the Family Responsibility Office on behalf of the Applicant – but mistakenly the employer failed to deduct that money from the Applicant’s wages.

d. The employer asked the Applicant for reimbursement of wages they shouldn’t have released to him. The Applicant refused. The employer was forced to sue (successfully) for the money. All of this led to a breakdown in the employment relationship.

e. This deception was fundamental to the determination of this case. He sought to suppress evidence which – once detected – inevitably led to imputation of income at his former level.

f. Ms. Nardi-Bell notes that the Applicant did not tell his lawyer the truth about his job loss. She described Mr. Clarke as being taken by surprise at the hearing when she produced the court ruling obtained by the Applicant’s former employer.

EXPANDED ISSUES

57. The Respondent submits the Applicant recklessly expanded the scope of the litigation, and then abandoned some of the issues he had needlessly raised. For example:

a. In an attempt to prove that the Respondent was so well off financially that she didn’t need support, the Applicant served a “letter of opinion” from Heather Reid stating the Respondent’s property was worth $801,215.00.

b. This opinion came as a surprise to the Respondent as Reid had never set foot on the Respondent’s property. At best Reid performed a “drive-by”.

c. The Respondent was forced to marshal evidence that this opinion was wrong. Her realtor attended at the premises and performed a proper comparison, concluding that the Respondent’s home was worth “$450,000.00 to $475,000.00 at the highest.”

d. After causing the Respondent to incur these costs, the Applicant didn’t even rely on Reid’s opinion, and completely abandoned this argument before the hearing.

RESPONDENT’S UNSUCCESSFUL COUNTERCLAIMS

58. The Applicant correctly notes that the Respondent also made claims which did not succeed.

a. The April 2011 order was based on the Respondent having an imputed income of $35,000.00.

b. In her response to the Applicant’s motion, the Respondent requested that support should be calculated based on her actual T4 income of $23,000.00.

c. The Respondent did not succeed.

d. The Respondent submits that this claim was made in the alternative, and when the final consent was signed she conceded that the $35,000.00 imputed income figure should continue.

59. Similarly, in her response to the Applicant’s motion to decrease child support, the Respondent requested a retroactive increase of child support.

a. She said this was only an alternate claim.

b. Her rationale: If the Applicant was asking to reduce support based on his purported decrease in income in 2014, she felt fairness dictated that his support should increase for 2011, 2012 and 2013 when it turned out his income had increased.

60. The Respondent’s logic is understandable: He started it. Since we were going to court anyway, I made some claims too.

a. But counterclaims don’t narrow the issues – they expand them.

b. The expectation of “reasonableness” and the implications of success or failure apply equally to claims and counterclaims.

c. Being a Respondent in a case that never should have started, does not give you a free pass to advance equally inappropriate claims.

61. The Applicant submits that as part of this claim for increased child support, the Respondent took an unreasonable position in relation to OSAP loans. This submission also has some merit.

a. Justice Campbell’s original order dated April 28, 2011 calculated child support after taking into account Rosalina’s OSAP loans.

b. On this motion, the Respondent argued she had no choice but to concede that OSAP loans were relevant in 2011.

c. However she submitted OSAP loans should not be factored into child support calculation for subsequent years.

d. That approach would have increased the amount of child support payable by the Applicant.

e. The Respondent did not succeed on this relatively narrow issue – again raised as a defence to the Applicant’s motion.

f. This added modestly to the overall time and legal expenses incurred.

SETTLEMENT BY MINUTES

62. The Applicant submits that because the case was settled by Minutes of Settlement, the court should be reluctant to order costs. (Actually, the settlement document was entitled “Final Consent” but that distinction is irrelevant to this discussion.)

a. He submits that Davis v. Davis 2004 CarswellOnt 2186 (SCJ) stands for the proposition that “where minutes of settlement are arrived at after negotiation and compromise, the ‘divided’ success approach of Rule 24(6) may be more appropriate than the winner/loser approach of Rule 24(1).”

b. He submits it is difficult if not impossible for the court to determine reasonableness or lack of reasonableness in relation to the conduct of litigants without having made the factual findings in relation to any of the issues.

c. He suggests that where parties make a settlement among themselves, the Court should be very slow to make an award of costs against one of the parties unless there are compelling reasons to do so.

d. He submits that Dhillon v. Dhillon Estate 2009 CarswellOnt 6570 stands for the proposition that “the reasonableness or unreasonableness of any party’s position in either asserting a claim, abandoning a claim or abandoning a defence or answer to a claim can depend on a myriad of factors. In the absence of judicial fact finding, unknown motivating factors cannot be relied upon by the court for purposes of applying the cost factors set out in the Rules.”

e. And he submits Wuncsh v. Stoller-Wunsch 2013 ONSC 5208 (SCJ) stands for the proposition that “entitlement to costs after a settlement is based on how close each party came in his or her offers to what the parties themselves agreed to.”

f. He submits that in this case, the parties acted reasonably in settling their case on global terms which gave each party some benefit, and that no costs should be ordered because there was divided success.

63. Davis (supra) dealt with costs after the parties filed a Consent on most of the issues.

a. Perkins J. referred to Rule 24(6) which states that if there is “divided success” the court “may apportion costs as appropriate.”

b. The court stated: “…in order for there to be a “successful” party, there must be a declared winner or loser on the issues. That declaration will ordinarily come from a judge, after argument.”

c. Notably, even though the court in Davis made a determination of divided success, and despite resolution by a Consent, the court still ordered $15,000.00 costs based on other factors relating to unreasonable behaviour.

64. While the court in Davis identified that it may sometimes be difficult to determine success (or relative success) when the parties sign a settlement document, the mere fact that settlement was by way of Minutes does not pre-empt a full costs analysis.

a. Rule 24(1) states that there is a presumption that a successful party is entitled to costs.

b. The August 6, 2015 Consent filed by the parties specifically set out that even though all other issues were resolved, costs were still to be determined by this court.

c. Parties are always encouraged to try to settle. Even up to the last moments of a motion or trial.

d. It is not uncommon for the court to receive last minute settlements which resolve all issues other than costs.

e. A party’s behaviour in settling a case and signing Minutes may be a relevant factor in deciding costs.

f. But if a party eventually makes a good litigation choice by signing Minutes, that epiphany doesn’t automatically wipe out any history of bad litigation choices which would otherwise justify costs. Settling in the face of the inevitable may be little more than damage control.

g. A party who has behaved reasonably throughout – and who may quite accurately perceive imminent success in an ongoing hearing – should not be discouraged from signing Minutes which reflect that success, out of fear that they will jeopardize a potentially sizable costs claim.

h. If we make execution of Minutes the determining factor precluding costs, it will create a disincentive for settlement at trial.

i. And in some cases – particularly motions to change where the onus of proof is quite clear – determination of success may be relatively straightforward.

j. If a party brings a motion asking to change almost everything, and at the last minute signs a Consent which changes almost nothing, how can they possibly argue that a judge will have a hard time figuring out who was successful?

65. And while Dhillon (supra) urges caution in assessing litigation behaviour where there may be “unknown motivating factors”, in this case the Applicant’s motivating factors were hardly a mystery:

a. He didn’t want to pay any money.

b. He tried everything he could to avoid paying money.

c. He finally gave up on the third day of argument of his motion, when it became pretty clear that he was going to end up having to pay money.

66. The Respondent’s motive for conceding on a single issue – restructured future spousal support – is also quite understandable:

a. The case was dragging on and legal fees were mounting by the tens of thousands of dollars.

b. I accept the Respondent’s description that exigency made it attractive for her to agree to a change in the spousal support regime.

c. Consenting to a lengthy fixed term non-variable spousal support order – something the court would never have imposed – speaks volumes about the lengths to which the Respondent was prepared to go, simply to avoid defending further relentless and financially ruinous litigation.

d. It also offered an eventual clean break: Something which benefits both parties.

SUCCESS/DIVIDED SUCCESS

67. The Respondent submits she is entitled to costs because she was successful. The Applicant counters that they were each successful in relation to different aspects of the case.

68. “Divided success” does not necessarily mean “equal success”. And “some success” may not be enough to impact on costs.

a. Rule 24(6) requires a contextual analysis.

b. Most family court cases involve multiple issues.

c. Not all issues are equally important, equally time-consuming or equally expensive to determine.

d. Comparative success can be assessed in relation to specific issues:

i. Did a mid-point number prevail on a financial issue?

ii. Did a compromise result on a parenting issue?

e. Comparative success can also be assessed globally in relation to the whole of the case:

i. How many issues were there?

ii. How did the issues compare in terms of importance, complexity and time expended?

iii. Was either party predominantly successful on more of the issues?

iv. Was either party more responsible for unnecessary legal costs being incurred?

69. I would summarize “success” in this case as follows:

a. The Applicant raised major, time consuming issues and he was unsuccessful on virtually all of them.

b. The Respondent raised a couple of minor, relatively straightforward cross-claims – which also did not prevail.

c. There was divided success in relation to one aspect of one issue: future spousal support.

i. The Applicant wanted to terminate spousal support and rescind arrears.

ii. The Respondent wanted to continue her open ended spousal support order, with increased quantum.

iii. The Applicant didn’t get any of the retroactive or current change that he was asking for.

iv. But ultimately the parties agreed to an entirely new regime for future spousal support: time-limited and non-variable.

v. The Respondent was successful slightly increasing the Applicant’s imputed income from $72,500.00 to $80,000.00.

vi. Arguably, each party achieved something on this one issue.

70. The fact that this unnecessary motion was cut short by a last minute consent does not affect the determination of success. It merely mitigates the Applicant’s costs exposure by stopping the meter.

DEDUCTIBILITY OF LEGAL FEES

71. In addressing quantum, the Applicant asks the court to consider that the Respondent will be able to deduct most if not all of her legal fees from her taxable income, because they are incurred in relation to obtaining an order for child or spousal support.

72. He refers to Boland v Boland 2012 ONCJ 239 (OCJ) as standing for the proposition that a costs award should be reduced by projected tax savings to the costs recipient, because legal fees relating to support are tax deductible.

73. Boland was one of a handful of reported decisions in 2011 and 2012 which acknowledged the possibility that tax deductibility could impact on costs awards. The issue attracted a flurry of judicial attention – briefly.

74. But as Harper J. noted in Stevens v Stevens 2012 ONSC 6881 (SCJ) the issue has now been resolved, and tax deductibility is no longer a factor to be considered in quantifying costs.

75. In a Reports of Family Law article entitled “The Impact of Tax Deductibility on Costs Awards” 22 RFL-ART 377 Phil Epstein summarized the analysis:

(Boland and six other cases cited) “…cannot be relied upon as a guide to awarding costs when the professional expenses have been deducted for income tax purposes. The income tax issue is a neutral one. Under the surrogatum principle,[FN1] the tax treatment of the recovered amount is determined by the tax treatment of the expenditures which it was intended to replace. Therefore, notwithstanding that a party is able to deduct certain professional fees, any amount awarded as partial, or substantial indemnification of those fees will be included in income and taxed accordingly.

In light of the above, when claiming costs or asking for an award, no argument should be made before a court or arbitrator that factors in the effect of the tax consequences of deducting professional fees. The after tax cost of professional fees are irrelevant to the determination of costs awarded by a judge or arbitrator.

FN1. A judge-made rule, sometimes called the "surrogatum principle", by which the tax treatment of a payment of damages or a settlement payment is considered to be the same as the tax treatment of whatever the payment is intended to replace. Thus, an amount paid as a settlement or as damages is income if it is paid as compensation for lost future rent. It is a capital receipt if it is compensation for a diminution of capital of the recipient: Westfair Foods Ltd. v. R. (1990), 1990 13453 (FC), 91 D.T.C. 5073, [1991] 1 C.T.C. 146, 1990 CarswellNat 517 (Fed. T.D.), affirmed 1991 CarswellNat 530, [1991] 2 C.T.C. 343, 91 D.T.C. 5625 (Fed. C.A.).”

SUFFICIENCY OF RESPONDENT’S BILLS OF COSTS

76. The Applicant submits the bills of costs submitted by the Respondent’s counsel lack sufficient detail for proper analysis.

77. Unlike Mr. Clarke’s bill of costs, which generally itemizes work by date and time required for each task, Ms. Nardi-Bell’s two bills of costs use a “block description” format.

a. Block paragraphs of varying lengths summarize a variety of services by category without dates or times.

b. Each paragraph concludes with a summary of hours expended by a senior lawyer, a junior lawyer, and a law clerk.

78. For example, in Ms. Nardi-Bell’s first bill of costs entitled: “Main Action – To July 17, 2014”:

“Step 1 – To Close of Pleadings”: 4 line description totals $2,472.75. (plus HST in all instances)

“Step 2 – Case Conference” 5 line description totals $3,299.00

“Step 3 – Interim Motion re Garnishment” 7 line description totals $1,140.00

“Step 4 – Trial July 17, 2014” 33 line description totals $33,006.25.

79. In her second bill of costs entitled: “Main Action - July 18, 2014 to August 11, 2015”

“Step 4 – Continuation Trial July 18-Aug 11” 75 line description totals $32,918.00

“Step 5 – Costs Submissions” 8 line description totals $7,975.00.

80. The Applicant referred to Blank v. Micallef 2009 60668 (ON SC), 2009 CarswellOnt 6790 (SCJ) in which a costs claim reduced because the lawyer’s bill of costs provided insufficient detail, and simply provided a general breakdown with a total of 49.2 hours. Ricchetti J. stated at paragraph 18: “It is impossible for me to determine whether the hours were reasonably necessary without a breakdown of the time spent on each task.”

81. There is no absolute requirement that a bill of costs must follow the “itemized by date and task” format.

a. A detailed description of services with a lump sum fee is sufficient as between a solicitor and their client pursuant to section 2(3) of the Solicitors Act.

b. A block fee description and summary may also be sufficient for determining costs as between parties, particularly where the case is straightforward and the amounts claimed are relatively modest.

c. But Rule 24(11)(f) specifically requires a court dealing with a costs determination to consider the time properly spent on the case.

d. The onus is on the party seeking costs to establish that the quantum requested is appropriate, having regard to all of the Rule 18 and 24 considerations.

e. Counsel requesting costs take their chances. The more details they provide in a bill of costs, the less likely they are to face the “insufficient particulars” argument.

82. At the best of times, the determination of costs is not an exact science.

a. In straightforward matters, if forced to do so, judges usually have little difficulty “ballparking” how many hours or how much in fees a particular case or issue might require.

b. But judges don’t like “ballparking” any more than lawyers or clients. It adds another layer of uncertainty to an already discretionary calculation.

c. And particularly if “divided success” needs to be considered, the inability to attribute hours or fees to individual issues diminishes “ballparking” to something closer to guesswork.

83. Reviewing the two bills of costs presented by Ms. Nardi-Bell:

a. I have little difficulty with the smaller block paragraphs which refer to services entailing 10 to 15 hours.

b. I have no difficulty accepting a counsel fee of $3,500.00 per day of hearing.

c. However, it would have been helpful if the Respondent’s counsel had set out more particulars in relation to step 4 on the first bill (88.5 hours senior lawyer; 2.2 hours junior lawyer; 36.75 hours law clerk); step 4 on the second bill (senior lawyer 14.30 hours; senior lawyer 50.40 hours; in addition to daily counsel fee); and step 5 (counsel fee $3,500.00 per day for two days preparing costs submissions).

84. This is not to say that the large undifferentiated sections of the Respondent’s bills of costs should automatically be disregarded or even discounted.

85. I note that the hourly rate for services is reasonable, particularly given Ms. Nardi-Bell’s experience, and her skill and efficiency in presenting this complex case in which the issues were extremely important to the parties.

86. But any lack of particulars on a claimant’s bill of costs must lead to heightened vigilance to ensure that the overall costs determination is fair.

REASONABLE & UNREASONABLE BEHAVIOUR

87. This leads to consideration of the reasonableness of each party’s behaviour (Rules 24(4); (5); (8); and (11b).

88. Contrary to the Applicant’s submissions, I find that the Respondent behaved reasonably throughout the proceedings:

a. She obtained a favourable order on April 28, 2011. It was reasonable to expect compliance and finality.

b. When the Applicant sought to effectively undo that order -- less than a year later, and retroactive to the date of the order – it was reasonable for her to take the position that his motion should be dismissed in its entirety.

c. Given that the Applicant disclosed that his income turned out to be higher than the amount Justice Campbell based his support order on, it was reasonable for the Respondent to request – as an alternate claim – that if the Applicant was going to ask for compliance with the guidelines when his income was down, support should similarly be based on compliance during periods when his income was up.

d. The Respondent’s cross-motion included individual components which lacked merit (eg: asking to lower her income determination for support purposes; excluding student loans from the adult child support analysis). However, as stated, the Respondent consistently made it clear she was prepared to settle the case without any of those changes being factored in.

e. It was not unreasonable for the Respondent to successfully argue at the first day of the motion on June 4, 2014 that the Applicant should not be entitled to advance his claims until he satisfied his outstanding obligations totalling approximately $120,000.00.

f. The Respondent made proper and thorough disclosure.

g. The Respondent made reasonable disclosure requests.

h. The Respondent’s materials were well prepared, focussed, and of assistance to the court.

i. The Respondent didn’t initiate any change in relation to the April 28, 2011 order.

89. The Respondent submits the Applicant’s behaviour and approach to this litigation was unreasonable – so unreasonable that she seeks a determination that he acted in bad faith. She argues:

a. The Applicant made no effort to comply with Justice Campbell’s April 28, 2011 order.

b. He had no intention of complying, despite having the ability to do so.

c. He simply ignored the order, waited less than a year, and then brought a sweeping motion to undo everything he didn’t like in the order.

d. He repeatedly tried to reopen issues which he knew had already been dealt with at trial. This required the Respondent to spend significant time combing through trial transcripts to answer needless and repetitive points raised by the Applicant.

e. He failed to make his own disclosure.

f. He knowingly misled the court by claiming the Respondent hadn’t made disclosure.

g. He claimed he had involuntarily lost his job, and suppressed information which revealed he lost his employment through his own wrongdoing.

90. The Applicant denies that he acted unreasonably, let alone in bad faith. However, I have little difficulty concluding that his actions in bringing and pursuing this litigation were unreasonable.

91. Where unfounded allegations significantly complicate a case or lengthen the trial process, this constitutes unreasonable behaviour relevant to the costs determination. Family law litigants are responsible and accountable for the positions they take during litigation. Hackett v. Leung (2005) 2005 42254 (ON SC), 22 R.F.L. (6th) 314 (SCJ); Katarzynski v. Katarzynski, 2012 ONCJ 393 (SCJ); Toscano v Toscano 2015 ONSC 5499 (SCJ).

92. I have little difficulty concluding that:

a. For the most part the Respondent acted reasonably.

b. Overwhelmingly, the Applicant acted unreasonably.

BAD FAITH

93. But the Respondent submits the Applicant was worse than that. She argues that the Applicant’s entire approach to this litigation was so mean spirited, deceitful, and contemptuous of the process that it falls into a special category of unreasonable behaviour: bad faith.

94. Rule 24(8) states: “If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.”

95. In S.(C) v. S.(C), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.) Perkins, J. defined bad faith as follows:

In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

96. Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children’s Aid Society of the Region of Peel v. F.(K.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (OCJ); Biddle v. Biddle, 2005 7660, [2005] O.J. No. 1056 (SCJ); Leonardo v. Meloche, 2003 74500 (ON SC), [2003] O.J. No. 1969 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ).

97. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W. 2015 ONCJ 94 (OCJ).

98. To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison 2015 ONSC 2002.

99. Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. S.(C.) v. S.(C.) (supra); Piskor v. Piskor, 2004 5023 (ON SC), [2004] O.J. No. 796 (SCJ); Cozzi v. Smith 2015 ONSC 3626 (SCJ).

100. Bad faith can be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive or, an intentional breach of court order with a view to achieving another purpose: Piskor v. Piskor, (supra); Erikson v. Erikson 2001 39078 (ON SC), [2000] O.J. No. 5789, 2000 CarswellOnt 5809 (SCJ); Hunt v. Hunt [2001] O.J. No. 5111 (SCJ).

101. In Fard v. Fard 2002 61493 (ON SC), 30 R.F.L.(5th) 316 (SCJ) Campbell J. held that bad faith “trumped” a somewhat “divided success” since, without bad faith, the parties would have avoided the huge emotional and financial costs of the litigation and could have both “succeeded” by saving tens of thousands of dollars that they could have used for their own and their children’s benefits.

102. Even in the absence of bad faith, costs may be ordered on a full recovery basis and payable forthwith. Sims-Howarth v. Bilcliffe (2000), 2000 22584 (ON SC), 6 R.F.L. (5th) 430

LAW SOCIETY COMPLAINT

103. During the course of the proceeding the Applicant filed a complaint against the Respondent’s counsel to the Law Society of Upper Canada. The complaint was not sustained, and the file was closed.

a. Ms. Nardi-Bell acknowledges that generally such complaints are not reported to the Court.

b. But I agree with her submission that such complaints against an opposing party’s lawyer may be relevant as arguably constituting a further element or indication of bad faith.

104. Lodging complaints against opposing lawyers may constitute bad faith behaviour if the complaint is advanced not to report a legitimate allegation of misconduct – but rather, to inflict harm; or as a form of punishment, vengeance or interference with the solicitor-client relationship. S.(C.) v. S.(C.) (supra)

105. There are important policy considerations here.

a. The Law Society of Upper Canada is a regulatory body intended to govern lawyers and protect members of the community in their dealings with the legal profession.

b. The Law Society has a complaints process available to the public. Anyone who feels they have a legitimate complaint of misconduct by a lawyer should have confidence that they can file a complaint without fear of repercussion; and that their complaint will be dealt with fairly.

c. Complaints to the Law Society alleging solicitor misconduct in a family court case are – or should be – completely independent of the dynamics and resolution of the court case itself.

d. But scrutiny and caution is required where a family court litigant complains to the Law Society – not about their own lawyer, but about their spouse’s lawyer.

106. Family law can be a nasty business – more often than not because of the parties, even though the lawyers usually get the blame.

a. Lawyers practising family law face a particularly difficult, hostile and accusatory environment.

b. As officers of the court they have an obligation to judges.

c. And as judges we have a corresponding obligation to the legal profession.

107. We already have increasing concern about the number of self-represented litigants in family court.

a. That’s not just because of unaffordable legal fees.

b. It’s also because of a growing shortage of experienced lawyers willing to do this kind of work.

c. The reasons are well-known: Too many rules. Too much professional exposure. Too much paperwork. Too much emotion. Too many hassles.

d. Most of that comes with the territory.

e. But while the focus should always be on litigants – and not lawyers – at a certain point our judicial system has an obligation to step in when lawyers take hits they don’t deserve.

108. Malicious or reckless personal attacks against a spouse’s lawyer must be discouraged.

a. They are not just mean-spirited.

b. They often constitute transparent attempts to punish the lawyer for doing their job. Or discourage the lawyer from continuing to do their job.

c. They create distractions.

d. They waste time and money, and sap energy.

e. They are a form of intimidation and affect access to justice.

f. Such complaints cost virtually nothing to file. And yet they can create enormous financial and emotional headaches for lawyers who have to spend significant time responding to attacks on their reputation and potentially their livelihood.

g. Sometimes they force the accused lawyer to transfer the file.

h. That sort of interference with the solicitor-client relationship strikes at the core of our justice system.

109. Even without the Law Society complaint, I accept the Respondent’s core submissions that the Applicant acted in bad faith:

a. He ignored his very significant financial obligations under the April 28, 2011 order.

b. His motion to change a year later really did amount to an “appeal in disguise”.

c. He founded his motion on a lie: That he had involuntarily lost his employment and couldn’t afford to pay.

d. From the outset his materials lied about compliance with other aspects of the April 28, 2011 order.

e. He was similarly dishonest with allegations of non-compliance and inadequate disclosure by the Respondent. He perpetuated some of those false allegations – even alleging “blameworthy conduct” -- until the hearing of the motion, when he was faced with overwhelming documentary evidence confirming his allegations of non-disclosure had never been true.

f. He raised issues and then abandoned them, after putting the Respondent to great inconvenience and expense.

110. Undoubtedly, some of his poor choices and unsuccessful arguments fall into less egregious categories like “mistake” or merely “unreasonable behaviour”.

a. But cumulatively, the Applicant’s behaviour demonstrates that he never intended to comply with Justice Campbell’s April 28, 2011 order.

b. He regarded that trial as just another battle in a war of attrition he intended to continue.

c. Ostensibly, his materials on this motion were aimed at convincing a judge.

d. But his real message was for the Respondent: I’ll never pay you anything. You’re wasting your money coming after me. Just give up.

111. The Applicant’s unfounded Law Society complaint may not have been within this proceeding, but it was contemporaneous – and certainly neither coincidental nor unrelated.

a. It constituted one more effort to interfere with the Respondent’s ability to defend a meritless claim.

b. It provides added proof – not that any was required – that the Applicant’s overall approach to this motion was deceitful, malicious, and directed to inflict financial or emotional harm. To bully until he got his way.

112. I find that the Applicant’s behaviour within and related to this motion constitutes bad faith.

PROPORTIONALITY

113. But even where the “full recovery” provisions of the Rules are triggered – either by an offer which meets Rule 18(14) requirements, or by a finding of bad faith – quantification of costs still requires an overall sense of reasonableness and fairness. Goryn v. Neisner 2015 ONCJ 318 (OCJ). The Rules do not require the court to allow the successful party to demand a blank cheque for their costs. Slongo v Slongo 2015 ONSC 3327 (SCJ). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. M.(C.A.) v. M.(D.) (2003) 2003 18880 (ON CA), 67 O.R. (3d) 181 (ONT. C.A.)).

114. In Biant v. Sagoo 2001 28137 (ON SC), [2001] O.J. No. 3693 (S.C.J.) Justice Perkins stated:

“The preferable approach in family law cases is to have cost recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result.”

115. The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which reimbursement is sought) and the importance or monetary value of the issues at stake. Pagnotta v. Brown [2002] O.J. No. 3033 (SCJ); Gale v. Gale (2006) CarswellOnt 6328.

116. By the same token, proportionality should not result in reduced costs where the unsuccessful party has forced a long and expensive trial: Murphy v. Murphy 2010 ONSC 6204 (SCJ); Philippe v Bertrand 2015 ONSC 2449 (SCJ).

117. The Supreme Court of Canada has recognized, in Hyrniak v. Mauldin 2014 SCC 7 that timeliness, affordability and proportionality are essential components of any legal system that seeks to provide true access to justice. Affordability and proportionality require that lawyers budget their time. The expenditure of a disproportionate amount of docketed time will not be sanctioned by the court. Karkulowski v Karkulowski 2015 ONSC 3171 (SCJ).

118. The Applicant submits the costs claimed by the Respondent are “so excessive as to constitute in itself, unreasonable behavior. He refers to the following passage from page 37 of a 2014 Canadian Family Law Quarterly Article entitled “Re-Thinking Costs in Ontario Family Cases: Encouraging Parties to ‘Move Forward’ (33 CFLQ 173):

“Reasonableness or unreasonableness, however, is not the end of the inquiry. Ontario judges will always maintain the power to reduce a costs award by reviewing the overall proportion of the bill to the outcome. In other words, litigants can’t be encouraged to run up their legal bills as yet another form of punishment for the other side.

119. The Applicant referred to the decision of Wildman J. in Sepiashvili v Sepiashvili 2001 25708 (ON SC), [2001] O.J. No. 3843, where she stated at paragraph 20:

“…Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term “full recovery costs”, there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner…..”

120. The Applicant calculates that costs claimed by the Respondent in the sum of $83,034.46 plus HST would total $93,828.93. He submits it is difficult to understand how a party could be entitled to costs of $93,828.00 in relation to a claim which he characterizes as “periodic payments equivalent to a lump sum of $57,651.00”.

121. I agree with the Respondent however that if you consider previously ordered funds the Applicant was unsuccessful rescinding, and future money he had to pay, the amount at stake for the Respondent was significantly more than $57,561.00.

122. Nonetheless, almost $94,000.00 is a lot of money for a motion whose focus was one aborted day of argument in June 2014, and three days in August 2015.

123. A more itemized bill of costs from the Respondent might have addressed the valid concerns about proportionality.

LOSER’S REASONABLE EXPECTATIONS

124. The issue of proportionality often becomes intertwined with another priority in fixing costs: Consideration of the reasonable expectation of the unsuccessful party, concerning the size of any costs claim they might face if they lost the case. These expectations are relevant, but not determinative of costs. Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (ONT. C.A.); Moon v. Sher 2004 39005 (ON CA), [2004] O.J. 4651 (ONT. C.A.); Van Wieren v Bush 2015 ONSC 5615 (SCJ).

125. The unsuccessful party’s “expectations” must usually be addressed inferentially.

a. The losing party rarely gives specific evidence that they predetermined (or even thought about) the amount of costs the successful party might end up requesting.

b. Invariably, as soon as a bill of costs is produced, the loser’s primary argument is a generic: That’s too much!

c. Or if they’ve read the case law, they will refine their response to say: I didn’t reasonably expect it would be that high!

d. Clearly, the onus remains on the successful party to convince the court as to what is “fair and reasonable in all the circumstances.”

e. But successful parties are not mind-readers. And judges less so.

f. Inherently, it’s hard for the winner to adduce evidence about what the loser’s expectations might have been.

g. Often the best evidence is comparative. How much did the unsuccessful party pay their own lawyer, in relation to the same case?

126. In Smith Estate v. Rotstein 2011 ONCA 491, the Ontario Court of Appeal stated: “There is no requirement for the losing party, who is not seeking costs, to file a bill of costs although it is preferable that he or she does so. However, if the losing party chooses not to file a bill of costs, this is a factor that the judge, who is assessing costs, may take into account when considering the reasonable expectations of the losing party.”

127. Many recent family law decisions have repeated that message: If you’re complaining that the other side spent too much on their lawyer, show us how much you decided to spend on your lawyer. Goryn v. Neisner (supra); Livingston v. Livingston 2014 ONSC 3987 (SCJ); Kaverimanian v. Kaverimanian 2013 ONSC 5265 (SCJ); VanSickle (Elms) v VanSickle 2013 ONSC 437 (SCJ)

128. In this case – perhaps because he is also claiming costs – the Applicant produced an approximate summary of his own equivalent legal bill: $62,573.75 inclusive of HST. About two-thirds the amount Ms. Nardi-Bell charged the Respondent.

129. The size of an unsuccessful party’s legal bill does not in any way dictate that the successful party’s legal bill is limited to the same amount.

130. Sometimes the winner was successful precisely because their lawyer put more work into the file.

131. At the very least the unsuccessful party’s legal bill will set a benchmark for proportionality.

132. Here, the Applicant can’t argue that the Respondent should have spent less than $62,573.75 on this case – because obviously he thought it was worth paying at least that much to his own lawyer.

133. As well, reasonable expectations and proportionality may be affected by whether the successful costs claimant was advancing a claim, or merely defending a claim.

134. Simplistically, a common theme in the “reasonable expectations” and “proportionality” analyses is that the loser should not have to reimburse the winner for excessive or unnecessarily expensive litigation behaviour which might be regarded as “overkill”.

135. But where child and spousal support are at stake, the court must consider not only the reasonable expectations of the unsuccessful party, but also the reasonable fears of the dependant spouse facing a claim which would leave them in serious financial hardship.

136. The Respondent didn’t start this motion. She thought/hoped the April 28, 2011 final order ended matters. Is it really fair for the Applicant to now argue: “You shouldn’t have fought so hard resisting my inappropriate attempt to take all your support away?”

ABILITY TO PAY

134. I have considered the Applicant’s submission that his financial circumstances since Justice Campbell’s order have deteriorated while the Respondent’s have improved. He says she is “in a far better position to absorb the costs of these proceedings.”

135. A court must consider a party’s ability to pay costs. MacDonald v. Magel (2003) 2003 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.).

136. But while a party’s limited financial circumstances is a factor for the court to consider, it should not be used as a shield against any liability for costs and should only be taken into account regarding the quantum of costs. Snih v. Snih, 2007 20774 (SCJ).

137. I am not persuaded that ability to pay is a consideration which works in the Applicant’s favour.

a. The April 28, 2011 order was based on the Applicant’s income of $72,500.00 and the Respondent’s income of $35,000.00.

b. The August 6, 2015 consent is based on the Applicant’s income of $80,000.00 and the Respondent’s income of $35,000.00

c. The Applicant claims his financial circumstances have deteriorated and that the Respondent’s have improved. But his income has always been at least twice that of the Respondent’s, and it’s actually gone up since 2011.

d. The Applicant portrays the Respondent as having a greater net worth. But the April 28, 2011 included a determination of equalization of net family property.

e. The Applicant appears to be arguing that he’s worse off because he’s been forced to pay the amounts Justice Campbell ordered in 2011; and he’s also had to pay lawyers to unsuccessfully try to avoid those obligations.

138. An unsuccessful party’s ability to pay must be assessed in conjunction with the successful party’s ability to absorb legal fees which shouldn’t have arisen in the first place.

RECENT CASELAW

139. The Applicant argues that the ultimate settlement of the file was influenced by the Ontario Court of Appeal decision in Holman v Holman 2015 ONCA 552 – a decision which was only released about a week before the August 2015 hearing of the motion. He suggests both parties responded appropriately to the Court of Appeal’s clarification of the law in Holman, and that neither party should have to pay costs if appellate courts change or refine the law just prior to a hearing.

140. Again, I do not accept this submission. While Holman was one of a number of cases counsel considered at the hearing, it was not determinative of the issues. It would be a distortion to suggest the Applicant had a good case until Holman came along.

SUMMARY

141. I have carefully considered counsel’s written submissions, and reviewed the voluminous file.

a. The Applicant brought this far reaching motion. For the most part he was unsuccessful.

b. The Respondent raised a few relatively minor cross-claims. For the most part they were also unsuccessful.

c. While arguably there was divided success on a single issue – a redetermination of ongoing spousal support – in every other respect the Respondent was by far the more successful party.

d. The Applicant filed offers to settle which do not assist his position in relation to costs.

e. The Respondent filed offers which do not trigger Rule 18(14) consequences, but they are relevant under Rule 18(16) and form part of my overall conclusion that the Respondent acted reasonably and made sincere efforts to resolve this case and minimize legal fees.

f. In contrast, the Applicant did not act reasonably. To the contrary, I find that he acted in bad faith.

g. Despite the full recovery which presumptively flows from a bad faith finding, I have attempted to determine costs in an amount that is fair and reasonable to both parties, and which reflects the reasonable expectations of the unsuccessful party.

h. I have considered the respective bills of costs, and I have noted the lack of particularity with respect to some amounts claimed by the Respondent.

i. By the same token, I find that counsel presented her case with the highest level of expertise, skill and efficiency.

j. I have considered the financial circumstances of each party, and the impact that legal costs will have had on each of their households.

k. In all the circumstances, I find that payment of costs by the Applicant in the sum of $70,000.00 inclusive of HST and disbursements is fair and reasonable.

142. The Applicant opposes the Respondent’s request that 80 per cent of the costs award be enforceable by the Family Responsibility Office. However, I agree with the Respondent’s position.

a. At least 80 per cent of this case related to collecting or defending child and spousal support entitlements.

b. At least 80 per cent of my costs award constitutes “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.)).

c. The Applicant has a long history of refusing to pay monies until he is forced to do so.

d. The Respondent should not have to incur further legal expense chasing after the Applicant for money he owes.

THE ORDER:

143. The Applicant shall pay to the Respondent costs of the motion (separate and apart from any previous costs order which may still be outstanding) in the sum of $70,000.00 inclusive of H.S.T. and disbursements.

144. Of this $70,000.00, the sum of $56,000.00 shall be enforceable by the Director of the Family Responsibility Office, as 80 per cent of the costs awarded arose in relation to child and spousal support.

Pazaratz, J.

Released: October 2, 2015

CITATION: Scipione v. Scipione, 2015 ONSC 5982

COURT FILE NO.: 2839/14

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

BENEDETTO ANGELO SCIPIONE

Applicant

-and-

TERESA MARINA DEL SORDO (SCIPIONE)

Respondent

REASONS FOR COSTS

The Honourable Mr. Justice A. Pazaratz

Released: October 2, 2015