ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: F-1865/11
DATE: 2015-01-28
BETWEEN:
CHERYL ANN TILLMANNS
Applicant
– and –
FRANK JOSEPH TILLMANNS JR.
Respondent
Alisa Williams – Counsel for the Applicant
Kanata J. Cowan – Counsel for the Respondent
COSTS
THE HONOURABLE MR. JUSTICE PAZARATZ
[1] I have reviewed written submissions regarding costs relating to a two and a half day oral hearing of a motion to change.
[2] Child support for the parties’ 11 year old son was the only issue:
a. A July 19, 2006 separation agreement required the Respondent father to pay $519.00 per month as table support, and 43 per cent of childcare and section 7 expenses based upon an income of $56,000.00.
b. A September 5, 2012 order specified the Respondent was to contribute to Rep Hockey Fees and Special Rep Hockey Equipment (and related expenses).
c. The Respondent brought this motion to change his obligations under the separation agreement after he was permanently laid off as a result of a plant closure. He said he couldn’t find comparable employment based on his existing skills. So he commenced a plumbing apprenticeship which will entail a short-term reduction of income (and ability to pay), but with the benefit of long-term financial security (and eventual ability to resume child support at his former income level).
d. The Applicant admitted the Respondent involuntarily lost his job. But she wanted income imputed to the Respondent at his former level. She alleged he didn’t look hard enough to find replacement employment, and his choice of an apprenticeship was ill-advised and self-serving.
e. During the period between the Respondent’s job loss and trial, he unilaterally lowered child support payments and eventually discontinued s.7 contributions entirely. As a result, each party claimed certain retroactive adjustments.
f. But the main issue was whether the Respondent had established a material change in circumstances justifying a reduction in income, or whether his pre-layoff income should continue to be imputed to him pursuant to s.19 of the Child Support Guidelines.
[3] The result at trial:
a. I accepted the Respondent’s evidence that he had made reasonable efforts to replace his income after his layoff, and that his decision to pursue a plumbing apprenticeship was appropriate in all the circumstances.
b. I rejected the Applicant’s fundamental position: that income should be imputed to the Respondent as if he hadn’t been laid off.
c. Child support was determined based upon an income of $35,000.00, with ongoing disclosure in anticipation of continuous increases in his income as his four to five year apprenticeship unfolds.
d. The Respondent was ordered to pay $1,000.00 as retroactive s.7 and extraordinary expenses, and 25% of ongoing expenses (including school transportation expenses which the Respondent objected to until the end of the 2015-2016 school year).
[4] Costs must be determined pursuant to Rules 18 and 24 of the Family Law Rules.
[5] Consideration of success is the starting point in determining costs. Sims-Howarth v. Bilcliffe 2000 22584 (ON SC), [2000] O.J. No. 330 (SCJ).
[6] Rule 24(1) creates a presumption of costs in favour of a successful party.
[7] To determine whether a party has been successful the court should take into account how the order compares to any settlement offers that were made. Lawson v. Lawson 2008 23496 (ON SC), [2008] O.J. No. 1978 (SCJ).
[8] The costs consequences of offers to settle are set out in Rule 18(14).
[9] The Respondent filed a series of formal offers pursuant to Rule 18:
a. His offer dated April 10, 2014 proposed child support based on an income of $20,000.00 – less than the income level determined at trial. The offer is irrelevant to this costs determination.
b. Similarly the Respondent’s July 30, 2014 offer does not trigger costs consequences, because its eventual increase to an income level of $30,000.00 is still below the amount determined at trial.
[10] The Respondent’s September 5, 2014 offer is more relevant to costs:
a. On the primary issue, he proposed child support from September 1, 2014 onward based on an income of $40,000.00 – more than the $35,000.00 determined at trial.
b. He also proposed his ongoing proportion of section 7 expenses should be 29% -- more than the 25% determined at trial.
c. However there are minor ambiguities and deficiencies in relation to section 7 and extraordinary expenses, leaving open the interpretation that the Respondent was offering to pay a higher percentage of fewer expenses.
d. The offer does not clearly specify that all special or extraordinary expenses set out in Justice Brown’s September 5, 2012 order continue to be eligible for contribution. Indeed, after some confusion, at the outset of trial counsel agreed that there was no formal request to change the September 5, 2012 order.
e. As well, this offer did not match the specific determination at trial that child care expenses would be deemed to include transportation expenses (to and from school) until at least the end of the 2015-2016 school year.
f. The non-severable offer exceeds the trial result on the main issue (determination of income), but does not precisely match residual child support obligations. Accordingly it does not trigger the full recovery cost consequences of Rule 18(14). (As judges frequently comment in costs endorsements, a severable offer would have been much more effective.)
g. Nonetheless, I consider this “close” offer to be highly relevant pursuant to Rule 18(16).
[11] The Applicant filed an offer dated August 18, 2014 which included the requirement that the Respondent’s income “shall always be imputed to be at least $55,000.00 [even] if his income is lower than this.” Both the imputed amount and the predetermination of future income render this offer irrelevant and unhelpful to settlement.
[12] The Respondent seeks costs in the sum of $27,465.77 representing full recovery for the period after the September 5, 2014 offer. The Applicant claims that amount is excessive, and her real position appears to be that either no costs or modest costs should be awarded.
[13] Notably, as an alternate position, the Applicant seeks full recovery costs in the sum of $23,331.42 in relation to the relatively minor areas in which she was more successful (extended school transportation expenses, for example). The Respondent’s counsel offers two comments:
a. The Applicant improperly claims costs for past steps at which costs should have been dealt with [Rule 24(10)].
b. More to the point, if a $23,331.42 claim is reasonable for success on relatively minor issues, the Respondent’s claim for $27,465.77 for winning on the main issue looks comparatively good.
[14] I find that the Respondent was predominantly successful, although his costs entitlement should be reduced somewhat by the divided success in relation to section 7 and extraordinary expenses [Rule 24(6)].
[15] The issue of child support was important to both parties [Rule 24(11)(a)]. I agree with Applicant’s counsel that the legal analysis in relation to imputation of income was complex. But the factual analysis overwhelmingly favoured the Respondent.
[16] Both parties – particularly the Applicant – could have acted more reasonably:
a. The Respondent unilaterally reduced table support payments and completely stopped making section 7 contributions, despite specific terms in the separation agreement requiring that he maintain payments until a variation was determined. As evidenced by the retroactive award, he elected to pay less than he should have paid.
b. The Respondent should have kept the Applicant better informed as to his unfolding financial situation (and anticipated ability to pay) both before and after he received his layoff notice.
c. The Respondent took an unreasonable position in proposing that his son transfer from a school where he was well settled, for the sole purpose of reducing some childcare/transportation expenses.
d. Both parties attempted to rely on dubious (and ultimately inadmissible) internet materials to bolster their case.
e. The Applicant made a series of unsubstantiated attacks on the Respondent: that he improvidently accepted a severance package; that he didn’t really want to find regular employment after his layoff; that he strategically selected a plumbing apprenticeship so that eventually he would be able to hide “cash” income, or get write-offs through self-employment; that he was living a lavish lifestyle in disregard of his financial obligations toward their son. The Applicant’s multi-pronged attack on the Respondent’s credibility was time-consuming – and completely unsuccessful.
f. Each party complains disclosure was incomplete and the other party’s position on certain issues was unclear until the commencement of trial. I find that both parties should have made more complete disclosure. They should have better clarified their positions on all issues prior to trial.
[17] I find the hourly rates charged by both lawyers are reasonable. But in both cases the time claimed exceeds what would have been required if the parties had elected to take less of a “shotgun” approach to advancing arguments. Particularly given the fact that evidence in chief was presented by affidavits, this trial should have taken no more than a day.
[18] I agree with Applicant’s counsel that the claim for $538.00 for photocopies is somewhat excessive [Rule 24(11)(e)]. I do not take issue with the charge of 35 cents per page. But the volume of materials produced and photocopied was completely unnecessary.
[19] I have considered the financial circumstances of both parties, in assessing costs.
a. Courts must always be mindful that a costs claim against a custodial parent may have the undesirable consequence of impacting on the child’s primary household.
b. But here the Respondent also has access-related expenses (not to mention two children of his current relationship).
c. The Applicant earns $102,000.00 per year. That’s almost twice as much as the income she sought to impute to the Respondent, and almost three times as much as the income I ultimately attributed to him.
d. The Applicant’s aggressive approach to litigation was largely unsuccessful. She cannot use “ability to pay” as the basis for significantly reducing a potential costs exposure which should have been considered at the outset.
[20] Regrettably, in their written submissions, both counsel elected to refer to recommendations by either a case management judge or a dispute resolution officer. Settlement discussions at case management should never be disclosed to the trial judge. Coe v. Tope 2014 ONSC 4707 (SCJ); [Rule 17(23)].
[21] The Ontario Court of Appeal in Serra v. Serra 2009 ONCA 395, [2009] O.J. 1905 (Ont. C.A.) stated that modern costs rules are designed to foster three fundamental purposes:
a. To partially indemnify successful litigants for the cost of litigation.
b. To encourage settlement.
c. To discourage and sanction inappropriate behaviour by litigants.
[22] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome. The overriding principle is reasonableness. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case. Boucher et al. v. Public Accountants Council for the Province of Ontario 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.).
[23] In balancing all of these considerations, I order the Applicant shall pay to the Respondent costs fixed in the sum of $17,000.00 inclusive of H.S.T. and disbursements.
Pazaratz, J
Released: January 28, 2015
COURT FILE NO.: F-1865/11
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CHERYL ANN TILLMANNS
Applicant
- And –
FRANK JOSEPH TILLMANNS JR.
Respondent
REASONS FOR JUDGMENT
The Honourable Mr. Justice A. Pazaratz
Released: January 28, 2015