NEWMARKET COURT FILE NO.: FC-14-46174-00
DATE: 20151020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Francois Kern
Applicant
– and –
Sarah Kern
Respondent
Applicant – Self-represented
Ryan Duval and Devin Maguire, for the Respondent
HEARD: June 22, 23, 24, 25, 26, 2015
RULING ON COSTS
JARVIS J.:
[1] On July 28, 2015, the trial decision in this matter was released, and directions given for costs submissions.
[2] The wife has presented a Bill of Costs for $84,999.81, inclusive of disbursements and HST. The husband, who was represented at trial but now represents himself has not produced a Bill of Costs because he says that his former counsel has not provided him with a breakdown of her costs: even so he claims $45,000 costs – it is unclear whether this is an all-inclusive amount. That amount is not detailed.
[3] The husband delivered an Offer to Settle dated April 22, 2015. Despite being represented by counsel, who served it on wife’s counsel, the Offer did not comply with Family Law Rule 18 (4) in that it was not signed by counsel, only the husband. In all respects though the Offer addressed the outstanding issues between the parties on which the trial proceeded.
[4] The wife delivered an Offer to Settle dated May 2, 2015 in accordance with the Rules.
[5] Both parties’ Offers contained severable components.
Law
[6] As observed by the Court of Appeal in Serra v. Serra, 2009 ONCA 395, modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants.
[7] The overall objective in determining costs is fixing an amount that the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”; 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.).
[8] 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.
[9] Rule 24 (1), (5) and (11) are relevant, 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.
[10] 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.
Analysis
[11] As a general observation, there is no doubt that the wife succeeded on the principal issue of custody, which occupied most of the trial. On the issue of child support (and spousal support, which claim the husband did not pursue at trial), the wife also succeeded. Where the husband prevailed was the determination of the modest equalization payment in his favour ($3,317) although, in fairness, the overall difference in the parties’ positions was about $5,800.
[12] The severable options contained in the wife’s Offer separately dealt with custody, access, support, support combined with property issues and, lastly, all issues combined. The Offer was capable of acceptance in parts or in its entirety. The husband’s Offer comprised two separate parts, those dealing with custody in respect to which he was unsuccessful, and the balance dealing (mostly) with other financial issues on which he was also unsuccessful. Both parties agreed that the wife’s teacher’s pension would be divided in accordance with Provincial legislation.
[13] Each party blamed the other for unreasonable behaviour. The wife did not wish the trial to proceed because she thought that the parties’ outstanding issues could be settled, and because there was outstanding disclosure needed. The husband, whose contact with the children was limited by the wife, wanted an early resolution. It was clear to me that each party acted unreasonably. There was no evidence why, and little reason for, the wife pursuing what she claimed was disclosure she needed from the husband, and to prepare for the financial aspects of her case, so shortly before trial. Her Request for Information served on the husband in late March 2015 after there had been a Case Conference (September 22, 2014), Settlement Conference (February 17, 2015), and shortly before the Trial Management Conference (April 21, 2015) could have been delivered much sooner in the case. Trial preparation should not begin when the likelihood of a trial proceeding is imminent: it should begin, and proceed incrementally according to the circumstances of each case. This, after all, is what the Family Law Rules dealing with Requests for Information and Requests to Admit are intended to accomplish. It is incumbent on parties and counsel in my view to consider these Rules early in a case in order to make the most productive use of Conferences, and Family Law Rule 16 dealing with summary judgment.
[14] The wife has claimed full recovery costs of $28,352.32 ($17,011.38 partial recovery) for the period before her Offer to Settle and full recovery costs of $54,647.49 ($32,788.53 partial recovery) afterwards, both all inclusive. These total a full recovery costs claim of $84,999.81 ($49,799.91 partial recovery). Two counsel appeared for her, the explanation being that a second chair was needed to meet the demands of trial preparation after the Trial Management Conference. Both counsel were called in 2014.
[15] In my view, the issues in this case were not complex and did not require the involvement and attendance of two counsel[^1]: moreover, and while determining costs is not a mechanical exercise as simply counting hours, over 250 hours of, mostly counsel, very little clerical, time is excessive.
[16] In addition, as no Order respecting costs was made in any of the Conferences or at the Motions heard, no costs can be awarded for those steps[^2].
[17] Roughly one third of the wife’s costs were incurred before her Offer to Settle. That Offer did demonstrate a reasonable assessment of the issues and, in light of its severable components, one or more of them ought to have been accepted by the husband. Reviewing the wife’s Bill of Costs and taking into account the wife’s post-offer success, a reasonable amount to be awarded is $32,000 inclusive of disbursements and HST. This amount comprises fees and related services before ($7,500) and after ($20,000) the date of her Offer, disbursements ($1,068.35) and HST on the foregoing, rounded to $32,000. In my view 20% of these costs related to the child support issue.
[18] Even though no solicitor’s affidavit verifying the disbursements claimed accompanied the wife’s submissions, that amount is not unreasonable and is allowed.
[19] In making this award I am also mindful that a portion of the wife’s fees may be tax deductible to her as those relate to the support issue in this case[^3].
[20] Therefore, and for the reasons given, an Order shall issue as follows:
(1) The husband shall pay to the wife costs in the amount of $32,000 inclusive of disbursements and HST;
(2) The husband’s equal share of the net proceeds of sale of the matrimonial home, after taking into account payment from his presumptive share of those proceeds of $4,446.60 as set out in paragraph [79] of the Reasons for Decision, shall be released by the solicitor holding those funds in trust and paid to the wife. The amount paid shall be credited pro tanto against the costs awarded in (1) above[^4];
(3) The costs referable to the support issues in this case in the amount of $6,400 shall be deemed to be a support Order enforceable pursuant to section (1) of the Family Responsibility and Support Arrears Enforcement Act, S.O. 1996, c. 31, as am.
[21] One last point.
[22] In making her costs submissions the wife referenced her efforts to settle the issue of costs based on a further Offer to Settle delivered after release of the trial decision. While costs incurred for preparing submissions after trial on the issue of costs may be considered by the court, there is no rule which contemplates Offers to Settle submissions on costs after trial, and its efficacy is questionable at best. No consideration was given to these submissions.
Released: October 20, 2015 Justice D.A. Jarvis
[^1]: Sepiashvili v. Sepiashvili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (SCJ).
[^2]: Islam v. Rahman, 2007 ONCA 622.
[^3]: Peraud v. Peraud, 2011 CarswellNS 136 (N.S.S.C.).
[^4]: In light of the seeming inconsistency between paragraph [79] (c) and [87] (d) dealing with the disposition of the husband’s share of the net proceeds of the sale of the matrimonial home and his payment of child support arrears, paragraphs [79] (c) is amended pursuant to Family Law Rule 25 (19) (b) to read as follows: “The balance of the husband’s share of the net proceeds then remaining shall be retained in trust pending the determination of the costs of these proceedings.”