Marrello v. Marrello, 2016 ONSC 1813
CITATION: Marrello v. Marrello, 2016 ONSC 1813
COURT FILE NO.: FS-14-394815
DATE: 20160315
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: AXANNA MARRELLO, Applicant
AND: DAKK MARRELLO, Respondent
BEFORE: Justice Matheson
COUNSEL: Alexandra Abramian and Brigetta Tseitlin, for the Applicant
Jason Gottlieb, for the Respondent
HEARD: In writing.
COSTS ENDORSEMENT
[1] This endorsement arises from the disposition of this divorce application, for which Reasons for Decision were released on February 3, 2016. This endorsement also addresses costs in certain pretrial motions that were left to be determined now, and an unpaid costs order against the respondent arising from a court order made October 21, 2014.
[2] The issues at the twelve-day trial included custody of and access to the parties’ child, equalization of net family property, spousal and child support, and whether or not there was a need to continue a restraining order going forward. At trial, there was divided success.
Costs of the application
[3] Under Rule 24 of the Family Law Rules there is a presumption that the successful party is entitled to costs, although successful parties may be deprived of costs if they have behaved unreasonably.
[4] The overall objective in determining costs is to fix an amount that the "court views as a fair and reasonable amount that should be paid by the unsuccessful [party]"; Yacoub v. Yacoub 2016 ONSC 340, at para. 9, citing Boucher v. Public Accountants Counsel for the Province of Ontario (2004), 71 O.R. (3d) 29 (C.A.), 2004 CanLII 14579.
[5] 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 litigate, by choice or necessity, 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: Yacoub, at para. 9.
[6] Where there is divided success, as is the case here, subrule 24(6) provides that I may apportion costs as appropriate. In this application, the applicant prevailed with respect to equalization and the respondent prevailed with respect to not continuing the restraining order. The financial evidence relevant to equalization consumed a considerable amount of trial time. The issue of the continuation of the restraining order did not. Neither side obtained either spousal or child support, and neither side obtained custody or the entirety of their requested access order. Aspects of the findings giving rise to the decisions about support, custody and access aligned with the position taken by one party or the other, but overall, on these issues, neither side was successful.
[7] In keeping with her limited success, the applicant seeks costs in respect of the equalization issue only. She seeks costs of either $36,950.59 on a partial indemnity basis, or in the amount of $56,257.71 if I am inclined to find that the respondent acted in bad faith within the meaning of a subrule 24(8). That subrule provides that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.
[8] The applicant submits that the respondent acted in bad faith by testifying that he had requested the TD Canada Trust mortgage file and that it was no longer available, when it was, and in his evidence and position regarding the down payment on the condominium and related alleged loans from his father. The applicant also relies on the respondent’s failure to comply with the costs order of Kiteley J., dated October 21, 2014.
[9] A finding of bad faith under subrule 24(8) requires a high threshold of egregious behavior, and such a finding is therefore rarely made: Scipione v. Scipione, 2015 ONSC 5982, at para. 99; C.S. v. M.S., [2007] O.J. No. 2164 (S.C.J.), 2007 CanLII 20279, aff’d, 2010 ONCA 196, 262 OAC 225 (C.A.). Bad faith is not synonymous with bad judgment or negligence: Scipione, at para. 96. It implies the conscious doing of a wrong because of dishonest purpose or moral obliquity and contemplates a state of mind affirmatively operating with furtive design or ill will: Ontario (Director, Family Responsibility Office) v. Grant, [2003] O.J. No. 1931, 2003 CanLII 64323, at paras. 6-7.
[10] In this case, the conduct of the respondent as regards the down payment and the purported loans from his father comes perilously close to meeting the high threshold in subrule 24(8). I will not repeat that evidence here. It is described in my Reasons for Judgment. However, I am more inclined to conclude that the respondent made his poor choices for reasons of self-interest, rather than with the intent to harm the applicant, and at trial he seemed oblivious to the import of his conduct, rather than devious. I have also considered the unpaid costs order, but am not prepared to find bad faith within the meaning of this particular rule. I find it more appropriate to have regard for that conduct under subrule 24(11)(b), under which the unreasonableness of a party’s behaviour is a relevant factor in setting the amount of costs.
[11] As for the quantum of the applicant’s claim for costs on a partial indemnity basis, I find the amount high bearing in mind all the factors under subrule 24(11). I return to this issue below.
[12] To the extent that the applicant was successful, the respondent submits that she should be deprived of her costs under subrule 24(4) because of unreasonable behaviour, as defined in subrule 24(5). Specifically, the respondent submits that the applicant ought to have engaged in settlement negotiations and respond to the respondent’s attempts to avoid trial and associated legal costs. However, given the conduct of the respondent, repeatedly making exaggerated and false statements and allegations against the applicant, and repeatedly exercising poor judgment as described in the Reasons for Judgment, I do not conclude that the absence of settlement negotiations is sufficient to disentitle the applicant from her costs under this subrule. While settlement negotiations are always encouraged, in the particular circumstances of this case the failure to do so was not unreasonable.
[13] The respondent did make an offer to settle, but it does not fully qualify for the presumptive costs treatment provided for in subrule 18(14). However, the offer was severable and it was open to the applicant to accept some aspects of it and not others. I therefore take it into account in favour of the respondent, in part. It accurately predicted some aspects of the trial judgment, most significantly the denial of both sides’ request for support.
[14] The respondent also submits that the terms of the offer regarding access were almost the same as the order ultimately made. The offer on access was not the same or better than the trial judgment, and therefore does not meet the requirements of subrule 18(14), but aspects of it do accord with the trial judgment. This is not surprising in this case. With respect to access, both sides put forward proposed terms at trial, many of which overlapped and found their way into the trial judgment. As a result, much of the detail in the access order was not the result of considerable dispute or trial time.
[15] I have considered the required factors for the quantification of costs under subrule 24(11). Without limiting that consideration, I note that the action was complex especially as it related to the respondent’s financial and property claims and his factual allegations against the applicant. The respondent’s poor conduct is also a factor against him, but it is significantly offset by his offer to settle.
[16] With respect to the amount claimed by the applicant, I conclude that it does include some items that are not properly included and, while I accept that the time was spent, the overall amount claimed is high. The applicant estimated that 25% of the trial was focused on matters relevant to equalization, which is also somewhat high.
[17] More extreme is the submission of the respondent that 40% of costs are related to support, which is much too high. Based on this 40%, the respondent seeks $27,000 for his full indemnity costs. In the circumstances of this case, even full recovery costs in respect of support ought to be considerably less than partial indemnity costs in respect of equalization.
[18] In that there was divided success, I return to the question of apportionment. The applicant prevailed on the issue that took more time, and the respondent’s conduct works in the applicant’s favour, but the offer to settle does not. As well, the respondent succeeded in part. Taking all relevant factors into account, I order costs paid by the respondent to the applicant, fixed at $20,000, all inclusive. This order reflects the divided success and all other factors relevant to costs in this case.
Motion costs
[19] Both parties brought urgent motions at the outset of this litigation. Those motions first came before Czutrin J. on May 16, 2014, and then were adjourned and returned before Stevenson J. on May 28, 2014. Both parties bore some responsibility for the events giving rise to the need for those motions, and there was divided success on them. I conclude that there ought to be no order for costs with respect to them.
[20] There is also an outstanding order against the respondent in the amount of $2,800 arising from motions heard by Kiteley J. on October 21, 2014. The payment of that amount is obviously long overdue and should be paid by the respondent immediately. The costs order has already been made and need not be made again now.
Order
[21] The respondent shall pay the applicant $20,000, inclusive of disbursements and taxes, in respect of costs of the application, to be paid within 60 days of today.
[22] There shall be no costs of the motions heard by Czutrin J. and Stevenson J. on May 16, 2014 and May 28, 2014, respectively.
Justice W. Matheson
Released: March 15, 2016