Court File and Parties

CITATION: Ohanessian v. Kalisz, 2016 ONSC 1276 COURT FILE NO.: FS-11-369732-FIS DATE: 20160307

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Vahe Ohanessian, Applicant AND: Eva Kalisz, Respondent

BEFORE: Kiteley J.

COUNSEL: Aaron Franks, for the Applicant Rui Alves, for the Respondent

HEARD: in writing

ENDORSEMENT AS TO COSTS

[1] On October 22, 2015, counsel attended on the Respondent’s motion for, inter alia, contempt, and on the Applicant’s cross-motion. In the endorsement I made that day, I noted that Mr. Franks had been retained and would go on the record and that, after several hours counsel and their clients had agreed to terms of Minutes of Settlement, subject only to costs submissions if they did not agree.

[2] Mr. Alves’ submissions were filed on December 11 and included an affidavit of the Respondent sworn December 11, 2015 that contained evidence as to the Applicant’s alleged non-compliance with the October 22 order in respect of not facilitating the Respondent’s contact with the children when they were with their father. Mr. Franks asked for an opportunity to make submissions that such evidence was not admissible in the context of costs. I held a telephone case conference with counsel and heard from both as to the relevance of that evidence. I made an endorsement that I would not consider the post-hearing conduct and would disregard the December 11 affidavit. After receipt of Mr. Frank’s submissions, Mr. Alves provided reply submissions dated January 15 with Mr. Franks’ further reply dated January 15, 2016.

[3] In my view, the evidence of non-compliance with the October 22 consent order is neither relevant nor admissible to the question of costs up to and including October 22. Furthermore, if I did consider it, I would have to afford an opportunity to the Applicant to respond which would doubtless lead to yet more contradictory evidence. It is a practice that is to be discouraged so as not to prolong the length and complexity of submissions as to costs, as demonstrated in this case by the impact of the filing of the affidavit and delay and additional costs as a result.

[4] Mr. Alves’ bill of costs totals $38,884.99. For the reasons indicated in his written submissions, Mr. Alves asked for costs on a full recovery basis in the amount of $38,000 payable within 30 days.

[5] In his submissions, Mr. Franks took the position that the Respondent was not entitled to recover any costs but the Respondent should be ordered to pay his client’s costs as reflected in the bill of costs that totaled $40,516.44.

Issues in the motions

[6] The parties have 3 children born March 2001, February 2003 and November 2006. The matter was set for trial in November 2013. On the 4th day of trial, the parties entered into Minutes of Settlement that were incorporated into a 7 page detailed consent order dated November 8, 2013. The paragraphs of that order relevant to this motion are as follows:

Paragraph 3(k) The parties shall share information regarding significant matters concerning the children’s health, education, religion, and extra-curricular activities. The parties shall consult with each other before making a decision concerning a significant matter concerning the children’s health, education, religion, and extra-curricular activities. If the parties cannot reach agreement, the Respondent shall make the final determination in consultation with the appropriate healthcare/educational/other professional.

Paragraph 3(l) Each party shall facilitate telephone/email/Skype/Voxer/similar communication contact with the non-residence parent of a total of not more than one exchange per day.

Paragraph 3(q) Each party shall facilitate travel between the children and the other parent and sign the necessary travel letter upon being provided with full particulars of the intended travel well in advance of such travel. Detailed itineraries including, date and time of departure and return, the name of flight carrier and flight times, accommodations including address and telephone number of hotel/resort, and details as to how to contact the children during the trip, shall be provided at least 7 days before departure.

Paragraph 15 The Applicant shall obtain/maintain life insurance in a sufficient amount to cover his support obligations, and shall name the Respondent in trust for the children as irrevocable beneficiary of such policy. Within 21 days he shall provide a copy of the designation to the Respondent and shall execute a Direction in a form satisfactory to the Respondent’s counsel authorizing the Respondent to obtain information as to the status of the policy directly from his insurer. If an issue arises concerning the applicant’s life insurance, the parties shall mediate and if necessary arbitrate the matter with a mutually agreeable senior family law lawyer.

[7] In June 2015 the Respondent launched her motion in which she sought to compel the Applicant to comply with final orders by serving a Notice of Contempt Motion and Notice of Motion and affidavit sworn June 25, 2015 in which she asked for an order to secure delivery of a travel consent for the children to attend their imminent international dance competition in Poland; she asked for an order setting a summer parenting schedule; an order enforcing the requirement that the Applicant make the children available for contact with the Respondent; and an order securing the life insurance designation pursuant to the final order.

[8] The Respondent brought a form 14B motion for approval of the service on the Applicant based upon evidence of the Applicant having evaded service. The order was granted by Horkins J. dated June 30, 2015. Counsel for the Applicant pointed out that service had been attempted on the one year anniversary of the Applicant’s brother’s death and on the Applicant’s birthday; and the Applicant did not receive notice of the form 14B motion that stated it was likely opposed. The order was granted before the Applicant was aware of the form 14B motion.

[9] After service of the motion materials and before July 2, the Respondent received the signed travel consent. On the original return date of the motion on July 2, Stevenson J. made an order on consent that established the parenting schedule for the summer and until resumption of the regular parenting schedule in September and the Respondent’s motion was adjourned to October 22, 2015.

[10] The Applicant opposed the motion and he brought a cross-motion in which he asked that the Respondent’s communications with the children while they were with him be limited as well as a motion to appoint the Office of Children’s Lawyer and to appoint a s. 30 assessor.

[11] Until Mr. Franks attended at the hearing of the motion and cross-motion on October 22, 2015, the Applicant (who is a lawyer) did not have counsel of record.

[12] The consent order dated October 22, 2015 included the following terms:

Paragraph 3(k) of the order of Backhouse J. was clarified to provide that the parties would follow the reasonable recommendations and referrals of the children’s paediatrician.

Paragraph 3(l) of the order of Backhouse J. was clarified to provide that the non-resident parent may call and speak to the children or email or text with the children between the hours of 8:30 p.m. and 9:00 p.m.; and the children may contact the non-resident parent as they wish.

Paragraph 3(q) of the order of Backhouse J. was varied to provide that the travel particulars shall be provided 15 days before the departure; the travel consent shall be signed by the non-travelling party and provided to the travelling party 5 days after the non-travelling party received it; and that that regime would not apply in exigent circumstances.

Paragraph 15 of the order of Backhouse J. dated November 8, 2013 was amended to provide that the Respondent shall be the sole beneficiary of the Applicant’s insurance policy in trust for the children; that the amount of insurance at the time of the order shall be $400,000; that the required amount of insurance shall be subject to any appropriate reduction as the present value of the Applicant’s support obligation reduces over time; and that the insurance is only meant to be security for support.

Entitlement to costs

[13] Pursuant to rule 24(1) the successful party is entitled to the costs of a motion. Given that the motion and cross-motion were both settled, “success” is not readily ascertainable.

[14] In Benoit v. Kerr [2014 ONSC 5401] McGee J. presided at a trial that involved mobility rights. She heard evidence over 4 days and on the morning of the 5th day of the trial, the parties settled with a term of their agreement that costs would be determined by the trial judge. McGee J. noted that rule 18(14) does not specify that the order must result from adjudication. At paragraph 21, she held that

In considering the issue of costs in the specific context of a case that has settled, the most important factor in determining both entitlement and quantum of costs is the reasonableness and timeliness of the parties’ respective offer to settle. It is not appropriate to go behind the freely negotiated terms of settlement and engage in an exercise of determining which party’s position on each issue would have been accepted by the trial judge if the matter had proceeded to trial (See: O’Brien v. O’Brien 2009 CarswellOnt 7194 (Ont. S.C.J.))

[15] As indicated in her reasons, McGee J. had had the benefit of hearing evidence for 4 days and was in a position to make observations at paragraphs 28 and 33 about the difficulties in the case caused by the Respondent. She also noted at paragraph 29 as follows:

Much of each counsel’s costs submissions speak to the reasonableness of the opposing parties’ respective conduct during the five years prior to trial and during the trial. As per O’Brien, supra, a court is not able to determine which position would have succeeded at trial when a matter is settled prior to adjudication. In the absence of such findings, it is my view that rule 24(11)(b) has limited application in determining costs arising from a settlement.

[16] After applying rule 18(14) McGee J. awarded full recovery costs to the Applicant.

[17] In Witherspoon v. Witherspoon [2015 ONSC 6378], Leach J. dealt with costs submissions arising after settlement of all issues by the parties on the morning of the first day of the trial, which included the agreement of the parties that the trial judge would decide the issue of costs of the case. In that case, the Applicant had taken the position that each party should bear their own costs but he had asked in the alternative that, if costs were awarded a substantial amount would be awarded to him. The Respondent asked for an equally substantial amount of costs to be awarded to her. At paragraph 42, Leach J. concluded that the attempt to argue cost entitlement and quantification through application of normally applicable cost recovery rules after parties had reached formal settlement of substantive issues between them without trial, was fundamentally misconceived and inappropriate. At paragraphs 49 and 50, she held that both parties behaved unreasonably in committing to the inappropriate and abortive cost exercise and as a result, she made an order that each party should bear responsibility for her or his own costs of the case.

[18] In McNaught v. McNaught [2015 ONSC 5010] Shelston J. dealt with submissions as to costs of an action that had been settled. In his reasons he referred to Benoit and to other cases. I observe that the circumstances before him were unique in that the parties had agreed that the issue of costs would be determined by way of a motion for summary decision of a legal issue, pursuant to rule 16(12). He pointed out in paragraph 6 that he approached it as assessing costs. As the lengthy reasons make clear, he had an extensive evidentiary record before him on the costs issue.

[19] My colleagues have taken different approaches: Leach J. declined to award either party costs while McGee J. awarded full indemnity costs. The difference may lie in that McGee J. had had 4 days of evidence and was fully informed as to the merits of the case; and the issue before McGee J. was a relatively narrow one as a result of which comparison of the offers to settle and the consent order was both possible and fair and enabled her to make a finding as to success and therefore entitlement to costs.

[20] Similar issues arise where the parties settle a motion(s) before submissions are heard. In this case, there had been many pages of affidavits (with extensive exhibits) exchanged and filed and which I read. However, in the absence of submissions by counsel on the substantive issues in the motion and cross-motion and without the opportunity to reflect on the contradictions and challenges in that record, it is difficult to arrive at conclusions as to success on the basis of competing affidavits.

[21] I am mindful that it is essential that parties make best efforts to resolve pending motions because it creates an opportunity for them to experience collaboration that does not require judicial adjudication. I also realize that if every motion were contested, the courts would grind to a halt. I accept that sometimes counsel and the parties arrive at a consensus as to the underlying substantive issues but cannot agree as to the cost consequences. I understand that there is a role for judges to play in making orders as to costs in such circumstances. However, when acting in negotiations which leave costs to a judge who did not adjudicate, I encourage counsel to reduce clients’ expectations as to the extent to which each might be vindicated by a costs award.

[22] Unlike the situation in Witherspoon where the Applicant took the threshold position that each party should bear their own costs, in this case both parties claimed not only costs, but similar amounts of costs and for similar reasons. Since the parties agree that I should decide costs and since it is less complex in a motion rather than a trial in which costs of the action are at stake, I will undertake the analysis of entitlement to the extent possible.

[23] Each party took the position that his or her settlement position in offers to settle should contribute to the determination of entitlement. Attached to the Applicant’s costs submissions is a table that arguably demonstrates that the Applicant was the more successful party on the issue of contempt; on restricting communications between the Respondent and the children; on life insurance; on resisting the request for a blanket travel consent; on maintaining the status quo for parenting time; and on the agreement to follow the recommendations of the children’s paediatrician.

[24] Counsel for the Respondent takes the position, that, relative to her offers to settle, his client was successful in the outcome with respect to life insurance; to refining the requirements for out of country trips; to specifying the parenting schedule; to resisting the request for the appointment of the OCL or a counselor or assessor.

[25] On behalf of the Applicant it is argued that the Respondent’s offers included matters not relevant to the motions and did not reflect outcomes on the respective issues.

[26] In Benoit, McGee J. relied on offers to settle in comparison with the terms of the consent order as the most important factor. I agree with that approach where there are narrow issues that are readily compared to offers. However in a case such as this where there was a motion and a cross-motion and multiple issues, I do not consider the offers as the most important factor in determination of entitlement, although I will comment on the offers when I come to the amount of costs.

[27] Instead of comparing the request contained in a notice of motion with the order made or comparing offers to the outcome, in cases in which all issues involved in a motion were resolved without a contested hearing, one of the key factors is whether the motion and cross-motion were necessary. After the motion was served but before it was heard on July 2, the Applicant provided the notarized consent dated June 2 from which I infer that he had signed it but had withheld it until he received the motion material. In my view, the motion was necessary to obtain the travel consent to ensure that the children would be able to take the trip to Poland; and the request for a blanket travel consent flowed from those circumstances.

[28] The motion was also necessary with respect to the designation of life insurance. As indicated above, the detailed consent order dated November 8, 2013 provided for the Applicant’s obligation to maintain life insurance. Pursuant to paragraph 15, he was required to “name the Respondent in trust for the children as the irrevocable beneficiary of such policy”. He took the position that the children were the irrevocable beneficiaries and the Respondent was named in trust. That is not consistent with paragraph 15. Furthermore, he changed the designation to add Nancy Chaves as co-trustee. Had he died leaving such a designation, it would have been in breach of the consent order and, equally as importantly, would have left the Respondent as co-trustee with Ms. Chaves whose role in the case was mentioned by Justice Greer at paragraphs 15 and 16 of her endorsement dated December 13, 2012 [2012 ONSC 7123]. It may be that the Applicant achieved some success by addressing periodic reductions in coverage but the key issue was compliance with the consent order. The motion for contempt was understandable within that context.

[29] On the other hand, it was not necessary for the Applicant to bring a cross-motion in which he sought relief such as the referral to the OCL or for an assessment or counseling. Neither party had brought a motion to change and consequently there was no context in which the court could make such orders.

[30] In the context of necessity and in relation to the consent order, the Respondent was more successful and she is entitled to costs.

Amount of costs

[31] Rule 24 identifies the factors relevant to the amount of costs which includes bad faith by either party, reasonable or unreasonable behavior by either party, the importance, complexity or difficulty of the issues, the lawyers’ rates, the time properly spent on the case, expenses properly paid or payable and any other relevant matter.

[32] The issues were important but not complex or difficult.

[33] Mr. Alves was called to the bar in 1996 and his hourly rate is $540. Mr. Franks was called to the bar in 1998 and his hourly rate is $575. Neither commented on the hourly rate of the other from which I infer acceptance. Over the protracted period of the motions, with work commencing on June 24, 2015, Mr. Alves accumulated approximately 55 hours which included preparing the original motion material, delivering the form 14B motion for validation of service, preparing a factum for the return date in July and preparing a revised factum for the hearing in October to take into account the Applicant’s responding material and his cross-motion. The total for services at his firm is $33,717 before HST.

[34] Mr. Franks provided two bills of costs. The first includes services rendered by Nancy Chaves between June 26 and November 18 which totals almost 66 hours including almost 3 hours in preparation of costs submissions and bill of costs. Ms. Chaves was called to the bar in 1999 and her hourly rate is $425 for a total of $27,922 before HST. The second bill of costs includes services rendered primarily by Mr. Franks between October 1, 2015 and October 21, 2015 plus 30 minutes on December 8 reviewing and revising costs submissions. Mr. Franks accumulated 7.30 hours that totaled $4,197. Two other lawyers accumulated about 8 hours for a total of approximately $3,000. The total hours on behalf of the Respondent is approximately 73 and combining Ms. Chaves and the firm of Epstein Cole, the total on behalf of the Applicant is approximately 80. Since they are similar, I infer that the time spent on the case was considered appropriate.

[35] I observe that both bills of costs are high but, accepting the similarity, I start from the point that the Respondent’s bill of costs for fees totaling $33,717 (plus HST of $4,383) is reasonable. The disbursements totaling about $750 are not remarkable and in any event, not challenged by Mr. Franks. The question is how much of that total of $33,717 the Respondent should recover.

[36] Pursuant to rule 24(11)(b) each party criticizes the other for unreasonable behavior and pursuant to rule 24(8) Mr. Alves describes the Applicant as acting in bad faith.

[37] Mr. Alves referred to several cases on bad faith but he did not refer to the decision of the Court of Appeal in Scalia v. Scalia [2015 ONCA 492] in which the Court of Appeal said the following at paragraph 68:

. . . The legal test for bad faith in the family law context. . . is that the impugned behavior must be shown to be carried out with “intent to inflict financial or emotional harm on the other party or persons affected by the behavior, to conceal information relevant to the issues or to deceive the other party or the court”. In short, the essential components are intention to inflict harm or deceive.

[38] On this record, I do not have evidence that the Applicant demonstrated an intention to inflict harm or to deceive and accordingly I do not accept the submissions that he has acted in bad faith.

[39] Mr. Alves relies on various other grounds for alleging unreasonable behavior which I will not analyze because I agree with Leach J. and McGee J. in both Witherspoon and Benoit, that it is difficult to make findings of bad faith or unreasonableness by reviewing multiple and conflicting affidavits. Instead of attempting to make such findings I approach it on the basis of uncontradicted evidence of events that occurred that demonstrate that the Applicant acted unreasonably in respect of the following:

(a) by bringing a motion for the appointment of the OCL and for the appointment of a s. 30 assessor when the court had no jurisdiction to do either in the context of the Respondent’s motion to enforce compliance and no Motion to Change final order;

(b) by changing the designation of the consent court ordered life insurance from the Respondent as the sole irrevocable beneficiary (as he confirmed in letters dated December 4 and 5, 2013) to add his fiancee Nancy Chavez as co-trustee;

(c) by failing to provide the travel consent letter in a timely way so as not to jeopardize the trip for the children to Poland to participate in a dance event and by using vulgar language in communicating with the Respondent when she pressed him for the consent;

(d) by making only one offer dated September 22, 2015 that contained five notwithstanding clauses and acceptance of the offer would have meant acceptance of those clauses, and that attracted cost consequences unless it was accepted before 1:00 p.m. on September 23.

[40] Mr. Alves also challenges his behavior because the Applicant is a lawyer and is a member of the Law Society of Upper Canada. I decline to decide on this record whether, as a lawyer, the Applicant’s duty to the court, separate from his fiduciary duty to his former wife, is a relevant factor in deciding the amount of costs that he should pay.

[41] Rule 24(11)(f) includes consideration of “any other relevant matter” and it is the bill of costs that Mr. Franks provided that reflects services rendered by Nancy Chaves that is a relevant matter. As indicated above, Mr. Franks provided a bill of costs that reflected services rendered by Ms. Chaves between June 26, 2015 and November 18 that totals almost 66 hours. The Applicant has been in a domestic relationship with Ms. Chaves for some time. I agree with the submission by Mr. Alves that the inference is that the Applicant will not incur such costs. Indeed, I have a bill of costs but no invoices from which I infer that no invoices were ever sent, they will likely never be sent, and Ms. Chaves was likely docketing for the specific purpose of being in a position to create a bill of costs. Ms. Chaves was never the Applicant’s solicitor of record although her name does appear as counsel in the endorsement made by Stevenson J. dated July 2, 2015. The fact that the Applicant would advance a significant bill of costs under circumstances in which he was not likely to pay is a relevant consideration and an additional demonstration of unreasonable behavior. Furthermore, it means that the Applicant could litigate the motion and cross-motion without exposure to paying his own costs. The bill of costs does demonstrate, as Mr. Alves pointed out, that an account of such dimensions, similar to that provided on behalf of the Respondent, would reflect the Applicant’s reasonable expectations of the amount the Respondent would be required to pay on a motion and cross-motion such as this.

[42] Rule 24(11) and (5) engage both reasonableness and unreasonableness. The Respondent made four offers to settle: June 28; September 23; September 29 re cross-motion; September 29 re motion. Without analyzing them from the perspective of outcomes, the proliferation of offers including distinguishing between her motion and his cross-motion and addressing accumulating costs was reasonable on the part of the Respondent.

[43] As indicated at the outset, the Minutes of Settlement and the consent order dated October 22 provided that if the parties could not agree on costs, they would make submissions beginning on December 11. In the material filed on behalf of the Respondent was a letter dated November 16, 2015 in which the Respondent offered to accept $19,000 in full and final satisfaction of her costs. Counsel for the Applicant took no objection to the inclusion of that offer in the material.

[44] Rule 24(10) provides that promptly after each step in the case, the judge shall decide in a summary manner who, if anyone, is entitled to costs and set the amount of costs. In summary, the factors affecting my decision are as follows:

(a) the unreasonable behavior of the Applicant;

(b) the reasonable behavior of the Respondent;

(c) the willingness of the Respondent to compromise her costs of the motion and cross-motion at 50% of the bill of costs;

(d) a modest discount for the affidavit which I rejected;

(e) the ultimate agreement that the parties reached in their Minutes of Settlement and consent order.

I conclude that the Applicant should pay an amount that reflects 70% of the fees in the amount of $33,717 (together with HST) and 100% of the disbursements and I will direct the terms of payment.

ORDER TO GO AS FOLLOWS:

[45] The Applicant shall pay to the Respondent with respect to costs of the motion and cross-motion fees in the amount of $23,601 plus HST at 13% in the amount of $3,068 and disbursements and applicable HST in the amount of $784 for a total of $27,454.

[46] The Applicant shall pay those costs to the Respondent in two installments of $13,726 payable no later than April 7, 2016 and no later than May 9, 2016.

[47] Counsel for the Respondent may take out this order without approval by the Applicant or his counsel.

Kiteley J.

Date: March 7, 2016