Herr v Rebelo, 2016 ONSC 4829

Court File and Parties

COURT FILE NO.: FD861/12 DATE: 2016/07/29 SUPERIOR COURT OF JUSTICE – ONTARIO FAMILY COURT

RE: NATALIE ANNE HERR, Applicant AND: GREGORY JOSEPH REBELO, Respondent

BEFORE: VOGELSANG J.

COUNSEL: Monique Rae Bennett for the Applicant Respondent appearing in person

HEARD: Written submissions filed

Endorsement on Costs

[1]

Background

The parties married in July, 2005 and separated almost five years later. They have three children, the eldest of which is now almost ten years old.

2Ms. Herr commenced an application in 2012, seeking a divorce, orders with respect to custody and access and support. Mr. Rebelo failed to deliver an answer and did not attend the summary hearing on October 14, 2012, where Korpan J. dissolved the marriage and granted custody relief but gave Mr. Rebelo even more time to file a financial statement, which she ordered by November 23, 2012. He did not do so and did not attend court on the adjourned date of November 27, 2012. When the support issues were finally determined on January 18, 2013, Mr. Rebelo was not present and a final order issued, in which income for support purposes was attributed to Mr. Rebelo.

3After support arrears built up of almost $49,000 including costs, the Director of the Family Responsibility Office commenced enforcement procedures. Mr. Rebelo started this motion to change, claiming that the final support order was inappropriate on his actual 2010 to 2015 income.

4For almost all of the years in which Mr. Rebelo relied on his declared business income to justify the “do-over” he sought, eventual disclosure of his actual records and questioning under oath revealed a pattern of extensive and unwarranted deduction of personal expenses as business costs. When Mr. Rebelo’s actual income was correctly calculated, only in 2011 was his actual gross income less than attributed to him by Korpan J., and that discrepancy was so small that the whole year’s overpayment would have been less than $900.

5By the terms of the settlement which was reached only at the trial management conference, the Director’s arrears stood unchanged at just under $43,000. Added to those arrears were about $7,000, the agreed total of the underpayment of child support revealed in Mr. Rebelo’s productions and discovery. Agreements were reached for higher payments commencing January 1, 2015, adjustment of s. 7 expenses and a minor change to the children’s access. A monthly payment scheme was initiated to cover the arrears.

[6]

Entitlement to Costs

It would be hard to argue that Mr. Rebelo achieved anything remotely resembling success. His thesis throughout was that his income over the years was far less than the income attributed at the uncontested trial. That was shown to be not the case and child support was reassessed to his disadvantage.

7Some cases stand for the proposition that the nature of a negotiated settlement makes any attempt to argue costs entitlement and quantum misconceived and inappropriate. See Witherspoon v. Witherspoon, 2015 ONSC 6378 (Sup. Ct.); Dhillon v. Dhillon Estate, 2009 ONSC 58607, [2009] O.J. No. 4459 (Sup. Ct.); Talbot v. Talbot, 2016 ONSC 1351 (Sup. Ct.). In Witherspoon, supra Leach J. agreed that courts should be very slow to make a costs award against one of the parties absent “compelling reasons to do so”.

8In my view, the reluctance to award costs of a settled depends entirely on the circumstances, the claims made (and the context of the claims) and the general nature of the settlement achieved: Johanns v. Fulford, 2011 ONSC 5268 (Sup. Ct.), Kearly v. Renfro, 2012 ONSC 5391 (Sup. Ct.), C.(A.) v. K.(G.), 2015 ONCJ 398 (Ont. Ct.). In Johanns, supra Aston J. refused leave to appeal a costs award where parties had settled all of the issues except costs, rejecting the argument that resolution by minutes of settlement rendered a reasonable determination of “success” impossible. In his view, the award was properly made on “a very extensive record with supporting documentation on the positions taken by the parties, their claims in the litigation and the ultimate result, as well as the terms of Offers to Settle and the dates such offers were made.” This case is the same.

9No compelling reasons to award costs need be found here. Mr. Rebelo advanced a claim based on facts (his income over time) which were found to be not true through the discovery and disclosure process. He settled and had to pay more support retroactively. It is the opposite of what Templeton J. said in Talbot, supra:

59 I have reviewed all of the material filed by the parties and can find no evidence that would allow me to find on the balance of probabilities that either party “capitulated” to the other to the extent that there is a “successful party” in this litigation.

10Ms. Herr was the successful party. She was forced to incur significant expense in defending the claims made by Mr. Rebelo, in which she ultimately prevailed. She is presumptively entitled to costs.

[11]

Factors and Quantum

I have adopted, I hope, a somewhat holistic view of the circumstances of his proceeding and the costs claimed. Of special importance are the following:

1. Ms. Herr advanced an early formal offer to settle on the basis that Mr. Rebelo’s motion be dismissed with costs to be agreed or assessed.
2. Two later formal offers to settle were served by Ms. Herr in an effort to stop the legal expenses. Only at the trial management conference did Mr. Rebelo sign the minutes of settlement.
3. Mr. Rebelo put forward no offer to settle, thereby breaching his obligation to make all reasonable efforts to settle: Husein v. Chatoor, (2006), 2005 ONCJ 487 (Ont. Ct.).
4. The costs outline submitted includes fees for conferences where no costs order was made and recovery is not permitted at this juncture: Islam v. Rahman, 2007 ONCA 622 (C.A.); Page v. Desabrais, 2012 ONSC 6875 (Sup. Ct.).

12I am trying to view the issue of costs of this motion in a flexible and balanced way, recognizing the wide discretion afforded by r. 24 of the Family Law Rules, O. Reg. 114/99: Ostapchuk v. Ostapchuk, 2003 ONCA 57399, 2003 CarswellOnt 1661, [2003] O.J. No. 1733 (C.A.). Ms. Bennett’s client is entitled to her costs, but the quantum to be paid must reflect the factors in r. 24(11) viewed flexibly; C.A.M. v. D.M. (2003), 2003 ONCA 18880, 67 O.R. (3d) 181 (C.A.). The costs award, as well, must represent a fair and reasonable amount that should be paid by Mr. Rebelo, rather than any exact measure of the actual costs to Ms. Herr: Zestra Engineering Ltd. v. Cloutier, 2002 ONCA 25577, [2002] O.J. No. 4495 (C.A.).

13I am required to step back and make an assessment of a sensible and fair result consistent with what the unsuccessful party might reasonably have expected to have to pay: Moon v. Sher (2004), 2004 ONCA 39005, 246 D.L.R. (4th) 440, [2004] O.J. No. 4651 (C.A.). The costs assessment, as well, must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created: Pagnotta v. Brown, 2002 CarswellOnt 2666 (Sup. Ct.).

[14]

Disposition

To my mind, a balanced, fair costs award to Ms. Herr to reflect her significant success is $13,400, inclusive of recoverable disbursements and H.S.T. That figure includes the almost $500 disbursement for discovery transcript described in Ms. Bennett’s addendum to her submissions.

15The overwhelming preponderance of the costs awarded were incurred with respect to the order for support. They are “legal fees or other expenses arising in relation to support or maintenance” and, as such, should be enforceable by the Director. See s. 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31 (as am.); Wildman v. Wildman (2006), 2006 ONCA 33540, 82 O.R. (3d) 401 (C.A.).