NEWMARKET
COURT FILE NO.: FC-10-35101-01
DATE: 20151013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jory Bocknek
Applicant
– and –
Giuliana Sevareid-Bocknek
Respondent
Jaret N. Moldaver, Counsel for the Applicant
Karen Ballantyne, Counsel for the Respondent
HEARD: July 16, 2015
RULING ON COSTS
JARVIS J.:
[1] This Ruling deals with costs arising, and reserved, from a Motion to Change which was settled at a Settlement Conference. For convenience of reference the parties shall be identified as husband and wife, although they were divorced on December 2, 2010.
Background
[2] By final Order dated November 19, 2012, Kaufman J. ordered the husband to pay $2,885 monthly child support for two children of the parties’ marriage and special and extraordinary expenses in accordance with the Child Support Guidelines, as well as spousal support of $4,404 monthly. This Order was based on income imputed to the husband of $265,000 a year. The wife’s imputed income was $30,000 a year.
[3] Child support was ordered variable once a year in May and spousal support on a material change in circumstances.
[4] At all times material to these proceedings the husband was a practicing veterinarian owning a minority interest in an animal hospital. The wife worked as a part-time teacher.
[5] In Spring 2014 the husband’s income was reduced by $45,000 effective April 1, 2014, and, through counsel, the wife was notified of this change, and of the husband’s request that his child and spousal support obligations be reviewed. Financial disclosure was provided. In mid-June 2014 the husband provided the wife with his accountant’s letter calculating the husband’s qualifying support income and, later (in September 2014), an income analysis also prepared by that accountant. There is no dispute that the methodology adopted by the accountant mirrored that of the expert whom the wife had earlier retained in the proceedings that led to the final Order. In fact, the wife ultimately re-engaged that expert to verify the analysis made by the husband’s accountant.
[6] While negotiations were under way, and even after the husband initiated these proceedings in mid-December 2014, the husband complied with his support obligations as ordered.
[7] A Case Conference was held on March 23, 2015.
[8] The husband made an Offer to Settle dated April 23, 2015 compliant with the Family Law Rules. The wife made no such offer. Both parties did exchange correspondence before and after these proceedings were commenced, although the wife’s proposal sought a greater financial outcome than what the husband was prepared to pay, and ultimately what the parties settled.
[9] Shortly before the Settlement Conference, the wife’s expert delivered his report. In short, it confirmed (within a couple of thousand dollars) the husband’s projected income as opined by his accountant’s September 2014 income analysis.
[10] The parties settled these proceedings on July 16, 2015 at the Settlement Conference. The terms of that settlement reflected, with some timing adjustments, the husband’s Offer to Settle, the parties reserving the issue of costs to this court to determine.
Analysis
[11] Family Law Rule 15 governs Motions to Change final Orders. It envisions a summary procedure for variation for which a trial is, and should be, the default option. Far too often what should be a relatively simple, timely and inexpensive procedure is tactically transformed into a case at first instance, and the payor confronted by a Catch 22 – if the payor does not comply with the outstanding Order either the Motion will be dismissed or the payor will be obliged to chance a temporary change Motion; if the payor complies, then he or she must (so it is often argued) have the financial wherewithal to pay. Either way a summary resolution is prejudiced.
[12] Too often, as well, the confounding issue in support change cases (like elsewhere in family law) is the lack of meaningful disclosure with which a support recipient can realistically assess the merits of any change request. Good practice would suggest that as soon as a material change event occurs or where, either contractually or ordered, a review is indicated every effort should be made by the requesting party to promptly provide meaningful and proportionate disclosure to the other side. While recent amendments to the Rules are intended to obviate disclosure disputes and each case presents its own challenges, the task of parties and counsel is to identify and assess what disclosure is required and to proceed expeditiously and proportionally to the issues.
[13] The primary objective of the Family Law Rules is to enable the court to deal with cases justly, and it is incumbent on parties who, by choice or necessity, litigate to act reasonably and in a cost effective manner. Rules 24 and 18 dealing, respectively, with costs and Offers to Settle govern litigation conduct and outcomes, and provide as follows,
(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(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.
- (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.
[14] The provisions of Rule 18 (14), (15) and (16) are also relevant,
(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).
(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).
(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.
[15] It should by now be axiomatic that determining costs is not simply a mechanical exercise. 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 v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 201, [2004] O.J. No. 2634, 2004 CarswellOnt 521 (Ont.C.A.).
[16] A number of principles inform the analysis in this case:
(a) Conduct of parties prior to (and during) litigation is relevant to determining costs: Maltezos v. Maltezos, [2012] O.J. No. 5537, 2012 ONSC 6532;
(b) Family law litigants are responsible, and accountable, for the positions they take in litigation: Heuss v. Sarkos, 2014 CarswellOnt 3317, and Peers v. Poupore, 2008 ONCJ 615;
(c) A party’s limited financial resources may affect the scale or quantum of costs but are irrelevant to the other party’s entitlement to costs: Izyuk v. Bilousov, 2011 CarswellOnt 19392, 2011 ONSC 7476.
[17] It is clear that the husband has been the successful party. Months before this Motion to Change was commenced the husband provided to the wife the financial disclosure to support a level of qualifying income that the wife’s expert later verified was accurate. As already noted, his Offer to Settle was prescient in terms of the eventual outcome.
[18] In this case the husband requests full indemnity costs of $44,033.47 or, alternatively, $33,025.10 on a substantial indemnity basis, both inclusive of disbursements and HST. The wife’s all inclusive costs are $26,599.04. Unlike the husband’s Bill of Costs, the wife’s does not include anything on account of pre-litigation fees or disbursements. Included in each party’s Bill are accounting/expert expenses - $3,623 for the husband and $12,091 for the wife. The husband’s legal fees were $34,092 and the wife’s $14,022.17 (noting, again, that this does not include pre-litigation services).
[19] It is clear from a review of the Continuing Record and the parties’ Bills of Costs that, presented with the analysis made by the husband’s accountant, the wife should have pro-actively undertaken an earlier review of her own before litigation was commenced. The husband had no obligation, as the wife asserts, to retain a financial expert if by that she means someone better qualified than his accountant. While the evidence suggests, and the submissions made imply, a position taken by the husband in which he determined before litigation the parameters of the disclosure provided the record does not indicate what the wife may have been requesting as additional disclosure before then since her Bill of Costs is silent on that issue, and her submissions unhelpful.
[20] In reviewing the husband’s Bill of Costs for what he emphasized was a “simple” case, three lawyers were involved, although in fairness one’s participation was nominal. Considerably less time was spent by husband’s counsel before his Motion was commenced than afterwards. Most of the time then docketed related to drafting the husband’s pleadings, inter-office meetings (involving counsel and clerks) and revising the husband’s Financial Statement, and court appearances. While it was not unreasonable for Senior counsel for the husband and his clerk to spend over 11 and almost 16 hours, respectively, leading up to and shortly following the change Motion being commenced in December 2014, it is difficult to understand over 24 hours for Senior counsel’s time, 21 hours of Associates’ time, and over 14.4 hours of clerical time being incurred for what, in the end, were three court appearances – a Rule 39 clerk attendance, a Case Conference and the Settlement Conference. In comparison, significantly less time was recorded by the wife’s counsel and her Associate.
[21] A component of the husband’s Bill of Costs included the Case Conference in respect to which there was no Endorsement as to costs. Family Law Rule 24 (10) directs the court to decide costs at each step of the proceeding. In Islam v. Rahman, 2007 ONCA 622 the Court of Appeal disallowed an award of costs where the record was silent. Since then, and likely in an effort to address oversight by counsel, and possibly the court, there have been a number of decisions chipping away at that Ruling. In these cases the rationale often expressed is that it would be inappropriate at the Conference stage to award costs, except in situations of clear non-compliance with the Rules: Gogas v. Gogas, 2011 ONSC 5368, [2011] O.J. No. 4085. Or that Islam should not be applied to a costs determination by a motions judge, that its application should be restricted to costs determinations made by a trial judge: Kaverimanian v. Kaverimanian, 2013 ONSC 5265. I disagree. There is nothing in the Rule or Islam that permits such interpretations as these and there is no reason why the parties, or the court on its own Motion, cannot request or make amendment, for example, reserving costs. That, at least, acknowledges the Rule and may focus attention on compliance with the new disclosure requirements of the amended Rules, honoured more often, so it seems, in the breach than the observance. No costs shall be awarded for the Case Conference.
[22] In my view, the husband’s claim for fees he paid his accountant in the amount of $3,623 are proper. I am not prepared to make any allowance for the expert fees incurred by the wife. There is no evidence why, before her expert was retained, apparently well after the litigation began, the wife didn’t undertake a critique of the analysis made by the husband’s accountant, and there is some credence to the husband’s suggestion that this step was only undertaken in an effort to challenge that opinion, without success as it transpired. The husband should not be obliged in these circumstances to contribute to this expense: Kearley v. Renfro, 2012 ONSC 5391 para 19.
[23] As for the husband’s fees prior to commencing his Motion to Change, it is my view that, excluding the accountant’s costs as noted above, a fair and reasonable amount for the wife to pay is $5,000.
[24] Comparatively, after the change Motion began, the husband’s docketed fees were $23,502.50 and the wife’s were $14,022.17. A significant component of the fees for the husband’s counsel related to the Associate and clerk. Given that the issues were not complicated, the overall time spent was excessive. I disagree with the wife that the husband incurred only modest costs after his Offer was served. The inescapable fact is that she should have accepted the husband’s Offer. Payment of $8,000 for the husband’s fees and $1,669.98 for disbursements is appropriate.
[25] Accordingly, the wife shall pay to the husband his costs of these proceedings in the amount of $18,292.98 (i.e. $3,623 plus $5,000 plus $8,000 plus $1,669.98) plus HST. This award includes submission costs.
[26] The wife has asked that if an award is made she be allowed to pay it in equal monthly installments. In the circumstances, that is not an unreasonable request and so the costs shall be paid in equal monthly installments of $500 commencing December 1, 2015. Interest at the prescribed rate shall only apply to any default of payment in the monthly amount ordered.
[27] In making this award, I am not unmindful that most, if not all, of the legal fees and expenses incurred by the wife will be tax deductible to her, unlike those of the husband. Additionally, the wife’s financial circumstances are more limited than those of the husband. Absent these two considerations this award could well have been more.
Justice D.A. Jarvis
Released: October 13, 2015