NEWMARKET
COURT FILE NO.: FC-10-35650
DATE: 20151230
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Kyle O’Brien, Estate Trustee Estate of Philip O’Brien
Applicant
– and –
Galina O’Brien
Respondent
Kristen Woods, for the Applicant
Evan Chang, for the Respondent
HEARD: April 29, 2015
RULING ON COSTS
JARVIS J.
[1] This Ruling relates to the costs of four motions (two by each party) that have been the subject matter of Orders made on May 15 and November 13, 2015. Those motions principally dealt with partial distribution of the net sale proceeds of a matrimonial home owned by the deceased, and disclosure. The procedural history and background facts of this matter are set out in the court’s May 15, 2015 Ruling. While success on the motions was divided, it is my view that the estate was more successful on the principal issues that required the court’s direction.
[2] The estate served an Offer to Settle in accordance with the Family Law Rules. It was dated April 17, 2015. The respondent also served an Offer to Settle dated April 21, 2015.
[3] The estate seeks full indemnity costs of $45,122.13, inclusive of disbursements and HST. The respondent’s costs totalled $10,411, also inclusive of disbursements and HST, discounted by 25% to $7,996: this is the amount she seeks.
Overview of Orders
[4] When the estate brought its motion in April 2015 there was about $483,600 available representing the net sale proceeds of a former matrimonial home owned by the deceased. As a result of the Rulings made, $200,000 remains held in trust, and exceeds what, on the evidence available, would be any equalization payment due to the respondent. All of the disbursed funds were paid to the estate. It claims that no equalization payment is due, relying on a Marriage Contract signed on the day that the former spousal parties married or, alternatively, if the Contract is not valid then only $118,557.66 is payable after taking into account an earlier costs Order for $19,000.00 payable by the respondent, possibly even as low as $17,000.00.
[5] The estate offered to settle the motions heard April 29, 2015 on the terms that all but $150,000 of the sale proceeds be held in trust. The Offer was severable. No costs would be payable by either party if the Offer was accepted before April 20, 2015. The Offer did not deal with disclosure. It was not accepted by the respondent. She proposed that $290,000 be held in trust and that, among other terms, the estate provide a valuation of the deceased’s business interests.
[6] The estate claims that, as the more successful party, it should be entitled to its full indemnity costs even though success on the motions was divided. Certainly, the estate prevailed on the issue of disbursing the sale proceeds. But it resisted its clear obligation to provide a valuation of the deceased’s business interests. There is no doubt that the respondent acted unreasonably in failing to provide disclosure in a more timely and meaningful way.
Analysis
[7] 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.
[8] 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.). Since the primary objective of the Family Law Rules is to enable the court to deal with cases justly, it is incumbent on parties who, by choice or necessity, litigate to act reasonably and in a cost effective manner. This means that family law litigants are responsible, and accountable, for the positions they take in their litigation: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317, and Peers v. Poupore, 2008 ONCJ 615 (Ont. Ct.). 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.
[9] Family Law Rule 24 governs the awarding of costs. Subrules (1), (6), (10) and (11) are relevant to this matter, and they provide as follows
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(10) Promptly after each step in the case, the judge or other person who dealt with that step shall decide in a summary manner who, if anyone, is entitled to costs, and set the amount of costs.
(11) A person setting the amount of costs shall consider,
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness or unreasonableness of each party’s behaviour in the case;
(c) the lawyer’s rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter.
[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.
(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.
[11] A number of facts impact the costs in this matter, as follows:
(a) as already noted, the estate succeeded on the issue of holding back sale proceeds but it resisted its obligation to properly value the deceased’s business interests. On that issue, the respondent succeeded;
(b) on the issue of valuing the estate’s business interests, its argument that it had no funds with which to pay for any valuation was meritless. The sole beneficiary of the estate, and its trustee, was the son and he had already received life insurance proceeds and business interests well exceeding in total value the cost of any valuation;
(c) the respondent brought a motion long after the death of the deceased, and almost a year after she had obtained her chattels from the former matrimonial home, to attend the property and inventory its contents – this shortly after she learned about a completion date for the home’s sale. There was no merit to this motion, but it did not take much of the court’s time;
(d) the respondent did act unreasonably in failing to provide meaningful disclosure of her marriage and valuation date assets and debts;
(e) the estate claimed costs of its further motion brought on October 7, 2015 on minimal notice to the respondent, although otherwise in accordance with the service provisions of the Family Law Rules. Given the history of this case and the outstanding disclosure, an adjournment should have been granted. There was no need to compel the attendance of counsel that date.
[12] The estate is entitled to costs. While on the principal issues it was more successful than the respondent, that in no way entitles it to an award of full indemnity costs, especially since the estate had a clear obligation to proceed with a valuation of the deceased’s business interests notwithstanding its position that there was a valid marriage contract In my view, the respondent should pay to the estate the sum of $17,500 inclusive of disbursements and HST, structured to take into account the respondent’s financial circumstances and in a manner as least prejudicial as possible to each side’s position in these proceedings, as follows:
(a) the sum of $5,000, without interest, payable on or before February 29, 2016;
(b) the balance (which will include post-judgment interest on the balance unpaid, calculated from and after March 1, 2016) to be deferred and payable either as a credit to any equalization payment that may be found owing by the estate to the respondent or to be taken into account when the final costs of these proceedings are determined by the court, in the discretion of the presiding judge.
Justice D.A. Jarvis
Date Released: December 31, 2015