Court File and Parties

CITATION: Brock v. Sorger, 2016 ONSC 1498 COURT FILE NO.: FC-11-064-1 DATE: 20160301

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Daniel Lawrence Brock, Applicant AND Carmen Maxine Sorger, Respondent

BEFORE: Madam Justice A. Doyle

COUNSEL: Caspar Van Baal, Counsel, for the Applicant Sean Jones, Counsel, for the Respondent

HEARD: November 12, 2015 in Ottawa

Costs ENDORSEMENT

Overview

[1] After the hearing of the motions of the parties, I rendered my decision which included determining the amount of child support payable by the husband to the wife, setting the amounts to be paid for section 7 expenses and determining which s. 7 expenses were to be paid to the wife.

[2] Upon reviewing the parties’ submissions on costs, considering the factors set out in the Family Law Rules, the offers to settle, the behaviour the parties and the divided success, the Court orders no costs. My reasons are set out below.

[3] In addition, my response to the parties’ correspondence requesting clarification of some aspects of my decision is set out below.

Wife’s position

[4] The wife submits that she has been the successful party as she obtained a court order more favourable than her offers.

[5] She submits that the total child support order was $8,362 per month to be paid while her offer suggested an amount of $8,300 per month (i.e. $5,000 per month as table amount and $3,300 for s. 7 expenses). The husband’s best offer was for a total of $8,142.93 per month, which included the stipulation that a number of s. 7 expenses would be paid to third parties. His motion served just before the motion date requesting that s. 7 payments be payable directly to third parties was dismissed.

[6] She states that the husband’s “bottom line” offer in his offer to settle dated July 3, 2015 was less than the court award. In contrast, her “bottom line” offer was less than the court award.

[7] The husband also failed to obtain an order as per the terms of his offer that required the wife to submit to income averaging and that Adriana’s enrolment at St. Laurent Academy would be for one year and subject to review. In addition, his July 19, 2015 offer had a bottom line of $7,800 per month, non-variable child support, a term that Adriana’s enrolment at St. Laurent Academy be for one year, and asked for further disclosure items never previously requested nor sought.

[8] The husband’s October 8, 2015 offer insists that s. 7 expenses be paid to third parties and the bottom line child support offer is $7,691.73 per month ($476 table and $2,925.73 for s. 7 expenses. Finally, the October 30, 2015 offer insists on third party payments, insists on a $3,600 contribution from the children for post-secondary education and the bottom line offer is $8,142.93 ($5,095 for table and $3,047.93 for s. 7 expenses).

[9] The wife denies that she failed to provide production and that, despite the fact that she had not produced an updated financial statement, the husband was aware of the value of the property as information had been previously provided.

[10] Her bill of costs totals $49,473.66

Husband’s position

[11] The husband submits that he was the successful party on the key financial issues as he offered to pay the table amount on an annual income of $382,500 while the court ordered child support on a reduced income of $372,500 ($382,500 minus $10,000 for business expenses). He offered to pay $5,095 per month and was ordered to pay $4,970 per month.

[12] In addition the court accepts a number of s. 7 expenses as stated in his offers to settle.

[13] The wife had offered to accept $62,252 in s.7 expenses, the husband had offered to pay $48,766 and ultimately the court ordered $52,562 per year.

[14] The husband could not accept the wife’s offers as it would mean he would have agreed to all 33 claimed s. 7 expenses and agreed that her financial statement was accurate. In addition, as he had not accepted the offer in the time stipulated in the offer, he would have to pay costs to her.

[15] The husband submits that the wife’s behavior was unreasonable by reason of her failure to provide an updated financial statement reflecting her current assets and values and her not promptly complying with Master Roger’s (as he then was) Order for financial disclosure made at a case conference.

[16] The wife also showed bad faith by:

• bringing a motion to change before the date stipulated in the final order dated April 29, 2013;
• failing to pay her cost costs on a timely basis;
• failing to comply with Master Roger’s disclosure order; and
• failing to agree to an adjournment of the motion to permit her to file a proper and accurate financial statement.

[17] The husband’s bill of costs amounts to $37,156.

Legal principles

[18] Modern costs as are designed to foster three fundamental purposes:

• to partially indemnify successful litigants of the cost of litigation
• to encourage settlement
• to discourage and sanction inappropriate behaviour by litigants

See Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22; and Serra v. Serra, 2009 ONCA 395, 66 R.F.L (6th) 40, at para. 8.

[19] It has been observed that costs awards, at the end of the day, should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties”. See Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 at para. 24.

[20] As Justice Aston stated in Delellis v. Delellis, 2005 36447 (Ont. S.C.), 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, rather than an amount fixed by the actual costs incurred by the successful litigant” (at para. 9).

[21] In Brennan v. Brennan, 2002 2742, at para. 3 (Ont. S.C.), Justice Campbell stated:

Both counsel argue that their client was "substantially successful" on the issues argued. In order to decide who was successful or substantially successful, the court does not merely add up the number of issues and run a total mathematically of who won more of them. Clearly, there are "key" issues that are essential and must, first, be determined, then other of the issues fall into place. [emphasis in original]

[22] In Paranavitana v. Nanayakkara, 2010 ONSC 2257, at para. 10, Justice Wildman stated:

If a party does as well as or better than an offer he or she has made, that party is entitled to full recovery costs from the date of the offer forward: Rule 18(14.5). In order for an offer to qualify under Rule 18, it has to be signed by the party and the lawyer: Rule 18(4); it needs to be made at least seven days before the trial: Rule 18(14.2); it needs to not expire or be withdrawn before the trial begins: Rule 18(14.3); and it needs to have not been accepted: Rule 18(14.4).

[23] Rule 24 of the Family Law Rules creates a presumption of costs in favour the successful party. Rule 24(11) sets out the factors that a court shall consider in determining costs.

FACTORS IN 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.

[24] Rule 18 deals with the cost consequences of failure to accept an offer, and allows the court discretion to take into account any written offer to settle, the date it was made and its terms. Rules 18(15) sets out the burden of proof:

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 sub rule (14).

Decision

Offers to settle

[25] Firstly, I commend the parties for their efforts to resolve their matter by exchanging Rule 18 offers to settle. The offers to settle dealt with a number of issues including a myriad of s. 7 expenses, details of the special and extraordinary costs and s. 7(3) credits including insurance benefits and tax credits.

[26] It should be noted that failure to make an offer to settle by either party could be considered unreasonable behavior. Rule 2 of the Family Law Rules imposes a duty on parties and their lawyers to promote the primary objective of the rules which is to deal with cases justly and includes taking appropriate steps to save time and expense. Offers to settle play an important role in saving time and expenses. Parties will save needless expense if they can settle some or all of the issues or narrow the issues in dispute.

[27] Family law matters typically involve a number of issues. It is particularly challenging to determine a true winner when dealing with offers to settle which attach long lists of s. 7 expenses and the parties’ respective positions. Essentially, a court will need to examine the success on a global sense including “bottom line” figures.

[28] Neither party believed they could accept the offer to settle as presented. Neither party presented an offer to the other side which would be tenable.

[29] On the bottom line figures, the wife achieved success as her offer was less than the ordered amount.

[30] However, I accept the husband’s reservations towards accepting an offer without agreement on some of the s. 7 expenses and without an up to date financial statement.

[31] The wife was reasonable in not accepting an offer that permitted the husband to pay s.7 expenses directly to third parties.

[32] The husband’s figures were below what was ordered and more importantly he was not successful in obtaining an order for payments to third parties. However he was successful in the awarding of certain of the s.7 expenses.

Rule 24(11) Factors

[33] The court has a general discretion when awarding costs.

[34] I note the following:

• both parties allege that they were successful;
• both parties submit the court order was more favourable than their respective offers;
• neither party (perhaps due to space) expanded on whether they were seeking costs on a partial or substantial basis.

[35] In considering the factors set out in 24(11), I have considered the following:

i) the importance, complexity and difficulty of the issues:

• This matter involved some complexities, as dealing with four children required consideration of expenses dealing with medical/dental needs, educational costs and numerous activities.
• The numerous s. 7 expenses involved significant dollar amounts.
• Whether certain of the s.7 expenses should be paid to a third party was a further issue that complicated the matter.

ii) the reasonableness or unreasonableness of each party’s behaviour in the case:

• Both parties showed some unreasonable behaviour. The wife had an obligation under the Family Law Rules to file an updated financial statement. There was a delay in providing some of the disclosure pursuant to Master Roger’s order which may have impeded the husband’s ability to assess the s. 7 expenses and formulate a settlement offer.
• On the other hand, the husband redacted his wife’s income of $100,000 requiring a court order to produce this information.

(iii) the lawyer’s rates:

• I find the lawyers’ rates reasonable given their extensive experience in family law.
• Mr. Jones was called to the bar in 1980 and charges $400 per hour. His associate Ms. Kennedy called in 2009 charges $200 per hour. Mr. Van Baal was called in 1990 and his hourly rate is $325.

(iv) 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:

• The husband’s lawyer spent 114 hours on the file and the wife’s lawyers spent 131.23 hours on the file.
• The cost of a motion to change involving a myriad of issues can be expensive for clients.
• A review of the time spent does not strike the court as excessive.
• The lawyers’ rates and the time spent on the motion, in light of the various issues and case law were reasonable.

(v) expenses properly paid or payable:

• The disbursements appear appropriate.

Bad Faith

[36] The husband alleges that the wife has demonstrated bad faith as per Rule 24(8).

[37] The wife denies that her original motion was brought early as their daughter was suffering academically at her school and a change of school was an urgent issue. Delay in paying court costs is not “bad faith”. See Montrichard v. Mangoni, 2010 ONCJ 408 where Justice Jones stated that a failure to disclose information in a timely fashion does not necessarily constitute bad faith within the meaning of Rule 24(8) of the Family Law Rules. At paragraph 11 she states that “the non-disclosure must relate to a fact material to the litigation with the intention of deceiving a party or the court on this material issue.”

[38] The court is guided by Justice Blishen’s observations in Piskor v. Piskor, 2004 5023, at paragraph 8 (Ont. S.C.):

Rule 24(8) indicates that if a party has acted in bad faith, the Court shall decide costs on a full recovery basis, payable immediately. Costs may be awarded on a full recovery basis, payable forthwith, even in the absence of bad faith. See Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.). As noted in Leonardo et al v. Meloche et al, 2003 74500 (ON SC), [2003] O.J. No. 1969 (S.C.J.), conduct that is intended to deceive or mislead can establish bad faith. In Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.), Justice Campbell relies on Black’s Law Dictionary, in stating:

Bad faith is not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity … it contemplates a state of mind affirmatively operating with furtive design or ill will.

[39] In addition, Justice Perkins in C.S. v. M.S. (2007), 2007 20279 (ON SC), 38 R.F.L. (6th) 315, at para. 17 (Ont. S.C.), defined bad faith as behavior that is carried out with the intent to inflict financial or emotional harm to the other party, to conceal relevant information, or to deceive the other party.

[40] The facts in this case do no support a finding of bad faith by either party. The parties’ behavior does not reach the level as set out in the above cases.

Conclusion

[41] None of the offers presented by either party entitle either of them to full recovery costs under Rule 18, as the offers were not as favourable or more favourable than the final award.

[42] Having reviewed the final results, I find that both parties achieved some degree of success in their respective positions. In a case dealing with s. 7 payments, one cannot just look at the bottom line and determine success on that basis. That would mean the husband who is the payer would have had to agree holus-bolus to all the s. 7 expenses attached to the wife’s offer.

[43] The wife was not prepared to average her income, accept that a child would contribute $3,600 per annum towards his post-secondary education when he was unable to find work one summer, or agree that the pattern would have to be changed and allow the husband to pay s. 7 expenses to third parties.

Clarifications

[44] I have reviewed the correspondence of the parties. I note that paragraph 123 of my decision states “net section 7 expenses”. In any event, I will provide the following clarifications:

• Sasha’s orthodontics are to be net of insurance, if any is available;
• The cost of the psych-educational assessment for Adriana is $1,480, net of any insurance available to either party;
• Sasha’s Lycee Claudel expenses will take into account available tax credits pursuant to s. 7(3) of the Federal Child Support Guidelines; and
• All educational costs are to be shared in proportion to the parties’ incomes, net of any available tax credits.

[45] If the parties can agree on a draft Order, it can be submitted to me for my review and execution.

Madam Justice A. Doyle

Date: March 1, 2016

CITATION: Brock v. Sorger, 2016 ONSC 1498 COURT FILE NO.: FC-11-064-1 DATE: 20160301

ONTARIO SUPERIOR COURT OF JUSTICE

RE: Daniel Lawrence Brock, Applicant AND Carmen Maxine Sorger, Respondent

BEFORE: Madam Justice A. Doyle

COUNSEL: Caspar Van Baal, Counsel, for the Applicant Sean Jones, Counsel, for the Respondent

HEARD: November 12, 2015 in Ottawa

ENDORSEMENT

Madam Justice A. Doyle

Released: March 1, 2016