COURT FILE NO.: FS-13-78970-00 DATE: 2016 04 26

Ontario Superior Court of Justice

BETWEEN:

JOHN DAVID OGG Self-Represented Applicant

• and -

CHERYL OGG Self-Represented Respondent

HEARD: In Writing

Endorsement Re: Costs

EMERY J

[1] The parties seek their costs of the case against one another after an acrimonious 10 day trial.

[2] The applicant John Ogg seeks costs against the respondent Cheryl Ogg on a full recovery basis for the fees he paid to one firm that represented him on the case between September 27, 2013 and March 2014, and a subsequent firm he retained from February 2014 to January 2015. The fees he incurred from both firms total $67,276.61, including HST. John also seeks costs for his own time to prepare for and attend trial in the amount of $70,000 as a self-represented litigant, based on the equivalent rate a law clerk would charge. John seeks $715.57 for disbursements in addition to recovery of legal expenses and his own time.

[3] Cheryl seeks costs of the case and for the trial through which she was represented by Janet Miliaris as counsel. Cheryl seeks those costs on a full recovery basis for the fees paid to Ms. Miliaris, the associate lawyer and the law clerk who assisted her. These fees amount to $106,435 leading up to the trial, and $88,422.50 from December 11, 2014 forward, including the trial, plus HST and disbursements for a total of $231,675.13. Included in this total is a counsel fee charged by Ms. Miliaris in the amount of $5,000 plus HST for providing services to prepare Cheryl’s submission on costs.

[4] Each of the parties made claims against the other in the application and answer. Specific claims were resolved on consent and incorporated into a final order made by Justice Lemon dated December 24, 2014. This order settled the primary residence of the children with Cheryl, regular access to John, and terms relating to holiday access, travel, child support, child tax benefit, spousal support and life insurance.

[5] The parties proceeded to trial before me in January, 2015. During the trial, another order was made on consent for a restraining order applicable to John that contained terms to replace the temporary order made by Justice Tzimas on February 27, 2014. The parties also agreed to settle Cheryl’s claim for retroactive Section 7 expenses that would have John reimburse Cheryl in the amount of $2,000 for his share of those expenses incurred between the date of separation and December 31, 2014. That amount was made payable from any amount John would receive from the sale of his interest in the matrimonial home at 5938 Mersey Street to Cheryl or to a third party purchaser.

[6] The parties further agreed to a consent order granting leave for John to amend his application to include claims under the Family Law Act for occupation rent and other financial claims for payment or adjustment. Cheryl was granted leave to serve an amended answer pursuant to Family Law Rule 11.

[7] In my Reasons for Judgment, as amended in Supplementary Reasons for Judgment released on December 21, 2015, I made the following orders:

1. Custody – custody of the children was awarded to Cheryl. This essentially meant that she has the decision-making authority for the children.
2. Retroactive spousal support – I ordered John to pay $11,360 for arrears in spousal support in 2013, and $10,284 in arrears of spousal support for 2014, for a total of $21,664.
3. Retroactive section 7 expenses – settled at $2,000.
4. Sharing of section 7 expenses – I ordered John to pay 80 per cent of those expenses, based on his income of $125,755, and Cheryl to pay 20 per cent of those expenses based on an imputed income of $31,000 a year to her.
5. Matrimonial home – I made an order permitting Cheryl to purchase John’s interest in the matrimonial home at 5938 Mersey Street in Mississauga based in part on a formula set out in paragraph 68 of those reasons.
6. Equalization – I ordered John to pay an equalization payment to Cheryl in the amount of $56,603. This included a consideration of the Brewer loan as part of the net family property analysis.
7. Claim for unequal division – This claim was dismissed.
8. Post-separation adjustments – I ordered Cheryl to pay John post-separation adjustments in the amount of $6,050.
9. Occupation rent – this claim was made by John in the amendments to the application for which leave was granted during the trial. The claim for occupation rent against Cheryl was dismissed.
10. Motor vehicles – I determined that I had no jurisdiction to order the actual transfer of title or ownership in a motor vehicle from one party to the other.

[8] Every costs order involves a consideration of entitlement, scale and quantum. Entitlement requires the court to determine the proper party to be awarded costs, leaving the other party to pay them. Scale refers to the level of costs to be paid, in order to reimburse the party awarded costs for legal fees and out of pocket expenses on a partial indemnity, substantial indemnity or full recovery basis. The quantum of those costs calls upon the court to set an actual amount for the costs one party is to pay the other.

[9] In a family law case, the court relies upon Family Law Rule 18 where there is an offer to settle, and Family Law Rule 24 with respect to all other aspects of making a costs award. Family Law Rule 24(1) provides a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. In order to determine which party was the successful party, it is often important to determine if a party achieved a result that meets or exceeds the terms of an offer to settle served in accordance with Family Law Rule 18.

[10] John and Cheryl each served numerous offers to settle. Since they will be important to this costs determination, I set them out in sequence below, by date and subject matter.

[11] John served the following offers to settle:

1. Offer to Settle dated May 30, 2013 with respect to parenting, child support, spousal support, the vehicles, health coverage, equalization, the matrimonial home, and other matters (offer #J1);
2. Offer to settle dated May 26, 2014 with respect to joint custody of the children, generous access to the children, child support, spousal support, property division and equalization, and determination of the restraining order (offer #J2);
3. Offer to settle dated June 19, 2014 regarding vehicles (offer #J3);
4. Offer to settle dated July 14, 2014 with respect to spousal support (offer #J4);
5. Offer to settle dated October 2, 2014 with respect to sharing joint custody and access to the children, child support, spousal support, property division and equalization, and a term that there is no need for a restraining order (offer #J5); and
6. Offer to settle dated December 16, 2014 with respect to sharing joint custody of the children, regular access and holiday access, child support, section 7 expenses, spousal support, retroactive support, equalization, and the termination of all restraining orders (offer #J6).

[12] Cheryl made the following offers to settle:

1. Offer to settle dated May 27, 2014 with respect to custody of and access to the children, child support, spousal support, property division and equalization and a restraining order against John (offer #C1);
2. Offer to settle dated September 23, 2014 with respect to custody of and access to the children, travel for the children, child support, spousal support, property division and equalization, and a restraining order against John (offer #C2); and
3. Offer to settle dated December 23, 2014 with respect to issues for trial, including custody of the children, restraining order against John, child support, arrears in child support, spousal support section 7 expenses, property division and equalization (offer #C3).

[13] When deciding costs in a family law case, a judge is exercising his or her discretion given by s. 131(1) of the Courts of Justice Act. However, that discretion is exercised on a principled basis and is subject to the guidance or direction of any statute or rules of court that apply. The Family Law Rules are rules of court that a judge charged with the responsibility of awarding costs must follow.

[14] It is a fundamental principle in the law of costs that the court should only grant what is a fair and reasonable amount for costs. A measure of what is fair and reasonable is generally considered to be what the unsuccessful party could reasonably expect to pay as those costs: Boucher v. Public Accountants Council for the Province of Ontario et al, [2004] 71 O.R. (3rd) 291.

[15] A party may be entitled to full recovery of his or her costs where Family Law Rule 18(14) applies. Family Law Rule 18(14) states as follows:

(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:

1. If the offer relates to a motion, it is made at least one day before the motion date.
2. 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.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. 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).

[16] It seems to me that when applying the presumption that the successful party is entitled to the costs of a case, those costs would include the costs of the trial. The success of all or most of the issues and claims made by the parties can be determined by comparing the result that was ultimately achieved on consent or at trial over the course of a case, with the issues and claims as they were pleaded in the application and answer. Where offers to settle have been made and Family Law Rule 18 comes into play, the entitlement to costs will often turn on which of the parties was successful in relation to the result achieved on the issues or claims and the offers that have been made, the dates they were made and the terms they contained.

[17] It is within this framework that I now address the various offers to settle served by each John and Cheryl throughout the case to determine firstly entitlement, and then to decide on the scale of any costs to be awarded and the quantification of those costs.

Entitlement

[18] I propose to review in summary fashion the results achieved by John and Cheryl in contrast to the terms contained in their respective offers to settle in a global sense to determine if either party served an offer to settle that would meet the requirements of Rule 18.

[19] John obtained orders from the court for generous access to the two children as part of Justice Lemon’s order, as well as the ongoing child support and spousal support agreed upon. He also obtained an order for the sale of the matrimonial home or a mechanism for Cheryl to purchase his interest in 5938 Mersey Street as ordered in my Reasons for Judgment. The offer that John made in offer #J1 contemplated a resolution of these issues, but not the terms ordered.

[20] John did not obtain a result for joint custody of the children, or a finding of no retroactive child support, Section 7 expenses or spousal support owing. It is also of considerable significance that John capitulated on his previous position that no restraining order was required against him, and that he entered a new restraining order on consent during the trial. These results were not as favourable as the terms found in subsequent offers to settle that John served on Cheryl throughout the proceeding.

[21] The orders made on these several claims when compared with those offers to settle lead me to conclude that no offer to settle that John served in the case met the requirements of Family Law Rule 18(11). Therefore, John cannot rely upon Family Law Rule 18 (11) to argue that he was the more successful party in the case, or that he is entitled to costs on a higher scale.

[22] Cheryl was successful on the issues of custody of the children, the terms of John’s access to the children, retroactive child support, Section 7 expenses and spousal support, and obtaining a mechanism for her purchase of John’s interest in the matrimonial home.

[23] Notwithstanding that outcome, I consider the findings of fact to calculate the net family property to determine the equalization payment owing by one party to another to be more favourable to John than any term of an offer to settle served by Cheryl. I reach this conclusion after calculating either a straightforward amount John has been ordered to pay as an equalization payment, or the calculation of how much Cheryl should pay John for his interest in the matrimonial home, less the equalization payment ordered.

[24] Cheryl made offers to settle that alternatively contemplated John’s payment of a specified amount for an equalization payment to her without regard to the distribution of their respective share of the net proceeds of sale if the matrimonial home was sold, or if Cheryl bought out John’s interest. I refer to offer #C1 or offer #C2, for $80,000 or $79,665.95 respectively in this regard. I have also taken into account the $170,000 that Cheryl offered to pay John representing 50 percent of the net fair market value of 5938 Mersey Street less that equalization payment in offer #C3.

[25] The issues involved with calculating the net family property of each party and the evidence on what the equalization payment should be, and how it should be applied took up a substantial amount of time at trial. The shortfall between the result and the terms of any offer served by Cheryl to cover the equalization payment is significant enough to have me conclude that no offer Cheryl served during the case met the requirements of Family Law Rule 18(11). I therefore conclude that Cheryl cannot rely upon Family Law Rule 18 to determine whether she is entitled to costs, or whether any costs she claims may be awarded at an elevated level.

[26] Neither John nor Cheryl served an offer to settle that meets the requirements of Family Law Rule 18(11) to establish entitlement to costs on that basis. It is therefore necessary to make a determination which of them was the successful party overall, or whether there should be an apportionment of costs to the other if success was divided.

[27] While Cheryl’s various offers to settle were substantially similar to the results obtained on consent under the final order granted by Justice Lemon or at trial except for the equalization claim, she was unsuccessful on her claim for an unequal payment for net family property under Section 5(6) of the Family Law Act. John has argued in his written submissions that 50 percent or more of trial time was used on these issues. This argument would be more appropriate to consider under the issue of the amount Cheryl should receive if she is awarded the costs of the case, and not at the entitlement stage.

[28] When comparing the results achieved at trial with all offers to settle served by Cheryl and all offers to settle served by John, it becomes clear that Cheryl’s offers to settle more closely resembled the results achieved at trial except for the property issues. A consideration of all offers to settle under Family Law Rule 18(16) has become part of the court’s overall exercise of determining success for the purposes of Family Law Rule 24(1) to determine in which party’s favour the presumption as to entitlement to costs should operate.

[29] On reviewing the overall outcome of the claims resolved prior to trial, and those adjudicated at trial in totality, it is my view that Cheryl was the more successful party in the case. I reach this conclusion having regard to the claims made by John in the application and the claims made by Cheryl in the answer, the positions they took at trial with respect to those claims, and the terms of the various offers to settle. Therefore, I find that the presumption operates in favour of Cheryl to entitle her to costs, and John has not rebutted that presumption.

Scale

[30] I must now consider the scale of costs to award Cheryl. Cheryl claims costs on a full recovery basis. The question of scale and of quantum involves the application of principles relating to the determination of what costs would be fair and reasonable to award in the circumstances.

[31] There has been some debate recently in family law about the presumptive scale of costs to award in the normal course of a case. In Berta v. Berta, 2015 ONCA 918, a panel of the Court of Appeal first suggested that a successful party in a family case was presumptively entitled to full recovery costs. The Court of Appeal in Berta subsequently issued a corrigendum to remove that presumptive position and to replace it with the following paragraph:

[94] Thus, a successful party in a family law case is presumptively entitled to costs. An award of costs, however, is subject to the factors listed in r. 24(11), the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith) and r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: M.(A.C.), at paras. 40–43.

[32] I propose to follow the statement of principle made by the court in Berta v. Berta, as restated. Costs in a family case should be awarded on a partial indemnity basis unless there is good reason founded upon a factor in the family law rules or clear binding authority to award elevated costs if warranted by the circumstances. I also note that Family Law Rule 24(1) itself does not describe the level of costs that flows from the presumption that a successful party is entitled to costs.

[33] The Court of Appeal in Davies v. Clarington (Municipality of), 2009 ONCA 722, has narrowed the scope of judicial discretion toward costs on an elevated basis. In Davies, the court reaffirmed the general statement that costs at an elevated level should only be awarded absent an applicable offer to settle, where the conduct of the party who is to pay those costs has been found to be reprehensible or egregious.

[34] Although parties to a case may find the behaviour of the adverse party and the conduct of their side of the case difficult, that behaviour cannot be considered reprehensible or egregious if it is conducted in good faith and with a view to addressing the issues in the litigation. It has often been held by the courts that a party cannot be unduly chastised for diligently pursuing a claim, or for defending oneself. This includes the situation where a party like John is entitled to litigate the issues with the detail he deemed necessary to protect his interests.

[35] Given that I find no evidence of bad faith on John’s part, or any conduct that I consider to be reprehensible or egregious to provide me with a principled basis to award elevated costs, I conclude that Cheryl is entitled to her costs on a partial indemnity basis.

Quantum

[36] When setting the quantum of costs, the court is directed to consider the factors set out in Family Law Rule 24(11). Family Law Rule 24(11) mandates that I consider the following factors:

24 (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. O. Reg. 114/99, r. 24 (11).

[37] I have made reference to John’s arguments that at least 50 percent of the trial was taken up by evidence on the various components that made up the net family property of each party, and Cheryl’s claim that John should pay more than half the difference between their net family properties to her instead of an equalization payment under section 5(6) of the Family Law Act. In this respect, it is important to again make reference to the offers to settle made by the various parties as a factor under Family Law Rule 24 (11) (a), (b) and (d).

[38] Even if the specific requirements of Family Law Rule 18(14) are not met, Family Law Rule 18(16) provides that the court may take into account any written offer to settle, the date it was made and the terms it contains when exercising its discretion over costs.

[39] John made offers to settle for Cheryl to pay him $281,416 and to $251,209 respectively in offer #J5 and offer #J6 premised on Cheryl’s purchase of his interest in 5938 Mersey Street. Each of these offers I have assumed had his basic equalization payment factored into that buyout calculation. Cheryl’s offer in offer #C3 offered John a payout of $170,000 for his interest in the matrimonial home net of the equalization payment, or that she receive an equalization payment without regard to the distribution of the net proceeds of sale from the matrimonial home in the amount of $79,665.95. At trial, I ordered John to pay an equalization payment of $56,603 to Cheryl net of any proceeds from the matrimonial home or her buyout of his interest.

[40] John has made submissions that he ultimately received $248,447 when all other orders for deductions under my judgment have been applied, including those amounts he was ordered to pay for retroactive spousal support. If all claims for retroactive support are added back to the amount John would receive for the competing equalization claims, his offers with respect to the matrimonial home and equalization were more favorable than the result achieved. However, the $248,447 he received was greater than half the fair market value of the matrimonial home, net of any equalization payment, on which the offers to settle were based. The greater recovery was due in large part to the increase in the fair market value of 5838 Mersey Street because of the current real estate market.

[41] As a consequence, I do not consider the terms of the various offers to settle relating to the matrimonial home and equalization issues made by John to be applicable.

[42] Family Law Rule 24(11) also requires me to consider any other relevant matter. I speak of two other relevant matters here that are relevant to making this costs award.

[43] First, Fong v. Chan sets out the three fundamental purposes that the modern costs rules are designed to serve:

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.

[44] The same three purposes for the modern costs rules have been recognized as applicable to family law proceedings in Serra v. Serra, (2009) ONCA 395.

[45] Second, in view of the result achieved by John on these issues, having regard to the terms of the offers to settle that are not otherwise applicable, I consider it appropriate to use the outcome of the property issues to determine whether success was divided for the purpose of allocating costs under Family Law Rule 24(6).

[46] When I consider the purposes for which the modern costs rules set out in Fong v. Chan are designed, I conclude that John’s success on the property issues work in his favour. The stated purpose to partially indemnify successful litigants for the cost of litigation should not reward Cheryl for underachieving on those issues at trial. These issues were of great importance to both parties. Costs are designed to encourage settlement; the property claims should have been settled and no claim for an unequal payment with an exceptionally high threshold under Section 5(6) of the Family Law Act had much chance of success on the evidence given at trial. To award costs to Cheryl for the time taken on those issues would not be appropriate. I will not speculate on whether her position at trial and the offers she was making were informed by discussions with other family members.

[47] Where an issue can be settled by the mutual agreement of the parties, that settlement eliminates the need for a trial, or for a trial on that issue. It therefore follows that if the equalization payment and a purchase of John’s interest in the matrimonial home could have been achieved earlier in the proceeding, all of the parties would have saved legal fees and the purposes under the modern costs rules would have been achieved with respect to those issues.

[48] I therefore consider John’s success on the property issues to have achieved a divided result at trial to allow the court to apply Rule 24(6).

[49] Although Cheryl was represented by Ms. Miliaris throughout the case and at trial, she is now self-represented. Cheryl has filed submissions to claim $106,435 for work on the case before trial, $88,422.50 for the trial and disbursements in the amount of $5,164.73 plus all applicable HST on a full recovery basis.

[50] Cheryl’s submissions set out the following facts that she asks the court to take into consideration:

a) Cheryl’s lawyer, Ms. Miliaris, is a senior family lawyer with in excess of 22 years’ of experience. The bill of costs indicates that Ms. Miliaris has an hourly rate of $400 an hour. b) Where appropriate, Ms. Miliaris delegated various matters to junior counsel and to a law clerk who charged at a lesser rate. The bill of costs shows that Nisha B. Kumar was the junior lawyer. Ms. Kumar’s time was billed out at $250 an hour, and the law clerk’s time was billed out $175 an hour. c) In addition to the amounts noted, Cheryl incurred significant charges because of John’s wish to question Cheryl under oath.

[51] I was not given a detailed breakdown of the actual functions carried out between Ms. Miliaris, Ms. Kumar and the law clerk for the time claimed prior to trial. I do not intend to go through those functions and the time incurred on a line by line basis as the law does not require me to do so. Similarly, the functions between Ms. Miliaris, her associate and law clerk were not broken down for the time spent at trial. I consider it my task to determine what amount would be fair and reasonable for John to be ordered to pay Cheryl having regard to all of the circumstances. It is not the amount that the party entitled to costs actually paid to her lawyer that is the object of the task of setting an amount that is fair and reasonable for one party to pay the other in costs: Boucher v. Public Accountants Council of Ontario.

[52] In order to determine what would be a fair and reasonable amount, I start first by reducing the amounts claimed for the work done before trial by 40 percent to convert the costs Cheryl is claiming from a full recovery to a partial indemnity basis. I do this globally as I have no basis provided in either of the submissions to determine if the time incurred was excessive. Therefore, the $106,435 claimed for work before trial is reduced to $63,861.

[53] I also reduce the amount claimed by Cheryl for work done at trial to convert the claim for total fees in the amount of $88,422.50 to $53,053 on a partial indemnity basis. As a second step, I further reduce that amount by 50 percent to allocate the costs for the divided success of the property issues achieved by John. The costs for the work of Ms. Miliaris and her team during the trial are in this way made commensurate with the allocation of time on those issues. The costs awarded to Cheryl for her legal representation at trial is therefore reduced further from $53,053 to $26,526.

[54] I find the total disbursements claimed in Cheryl’s bill of costs in the amount of $5,164.73 to be reasonable.

[55] Cheryl is therefore awarded costs on a partial indemnity basis in the amount of $63,861 for fees incurred before trial, $26,526 for fees incurred during trial, and $5,164.73 for disbursements, for a total of $95,551.73, plus applicable HST.

[56] In the event that either party might think that I have not awarded costs they have claimed for the preparation of the written submissions on costs they have filed, I can assure them that any such claim has not escaped my attention. I am exercising my discretion to decline making an award for that work because of the divided success on the costs determined above, and on the premise that enough is enough.

EMERY J Released: April 26, 2016