CITATION: Hogarth v. Hogarth, 2016 ONSC 5131
COURT FILE NO.: FS-15-407147
DATE: 20160812
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CONSTANCE FRANCES HOGARTH
Applicant
– and –
TIMOTHY HOGARTH
Respondent
Aaron Franks and Michael Zalev, for the Applicant
F. Yehia, for Antony Nella
Jonathan Lisus and Paul Michell, for the Respondent
HEARD: June 9, 2016
COSTS ENDORSEMENT
GLUSTEIN J.:
Overview
[1] By endorsement dated June 17, 2016 (the “Reasons”), I dismissed the motion by Connie[^1] and Antony (collectively, the “Moving Parties”) to remove Niman and his law firm as lawyer for Tim.
[2] Pursuant to the Reasons and a brief consent modification to the timetable, I received (i) written costs submissions from Tim, (ii) collective responding written costs submissions from the Moving Parties (from Connie’s counsel), and (iii) reply written costs submissions from Tim (received between June 30, 2016 and July 27, 2016). My costs endorsement follows below.
[3] Tim seeks costs in the amount of $88,729.26 (inclusive of disbursements and HST), payable forthwith from the Moving Parties on a substantial indemnity basis (80% of actual costs). The Moving Parties submit that costs should be fixed at $30,000 in favour of Tim, payable in any event of the cause.
[4] The following issues are raised in the costs submissions:
(i) What is the appropriate quantum of costs? and
(ii) Should costs be payable forthwith or in any event of the cause?
[5] I address each issue below.
Quantum of costs
[6] I rely on the following principles with respect to my assessment of the quantum of costs:
(i) Rule 24(1) provides that a successful party is presumed entitled to costs;
(ii) In family law matters, costs recovery approaches substantial recovery so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and result (Berta v. Berta, 2015 CarswellOnt 19550 (CA) (“Berta”), at para. 92, citing Biant v. Sagoo (2001), 2001 CanLII 28137 (ON SC), 20 RFL (5th) 284 (Ont. SCJ) (“Biant”), at para. 20);
(iii) Substantial indemnity costs have been defined as “about 80%” of the total costs (Biant, at para. 21);
(iv) Offers to settle in family law cases carry costs consequences. Rule 18(4) stipulates that if a party makes an offer and obtains an order that is “as favourable as or more favourable than the offer”, that party is entitled to “full recovery of costs from that date” (Berta, at para. 91);
(v) However, the court retains a discretion not to make an award of full recovery of costs even if a party has met the conditions in Rule 18(14) (Berta, at para. 91);
(vi) In family law disputes, a court need not find special circumstances to make a costs award approaching substantial indemnity (Sordi v. Sordi, 2011 ONCA 665, 2011 CarswellOnt 11272 (CA), at para. 21);
(vii) Under Rule 24(8), full recovery costs shall be awarded and paid immediately when a party acts in bad faith, including failing to provide disclosure. However, a finding of bad faith is not the only basis upon which a court can consider a costs award in the full recovery range (Bourgeois v. Bourgeois, 2011 CarswellOnt 3152 (SCJ), at para. 27; Reisman v. Reisman, 2007 CarswellOnt 9256 (SCJ), at para. 3);
(viii) Under Rule 24(5), the court can consider whether a party made an offer to settle or any offer a party failed to accept when deciding whether a party has behaved reasonably or unreasonably;
(ix) Rule 24(10) mandates that costs are to be decided at each step of the case;
(x) The court must fix an amount for costs that is fair and reasonable for the unsuccessful party to pay in the particular proceeding (Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), 2004 CarswellOnt 2521 (CA), at para. 26);
(xi) Even on a “full recovery” basis, quantification of costs still requires an overall sense of fairness, reasonableness, and proportionality (Scipione v. Del Sardo, 2015 CarswellOnt 14971 (SCJ), at para. 113); and
(xii) Under Rule 24(11), the court setting the amount of costs shall consider factors including (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 and (e) expenses properly paid or payable.
[7] As I discuss above, Tim seeks $88,729.96 in costs based on a substantial indemnity scale (based on 80% of actual fees incurred and inclusive of disbursements and HST). On an actual fee basis, Tim incurred $96,117.50 in fees for the motion ($108,612.77 inclusive of HST), and a total cost of $109,452.51 (inclusive of $839.74 for disbursements and applicable HST).
[8] The Moving Parties submit that the quantum is unreasonable, based on (i) no reported case “where a court awarded anywhere close to the level of costs claimed by Tim for this type of motion”, (ii) the comparison to full indemnity fees of $48,000 incurred by the Moving Parties collectively[^2], (iii) the hours claimed by Tim’s counsel to prepare for and attend the hearing, (iv) the hourly rates charged by Tim’s counsel, (v) the importance, complexity or difficulty of the issues, and (vi) the reasonableness or unreasonableness of each party’s behaviour in the case, including consideration of offers to settle. I address these issues below.
[9] The Moving Parties acknowledge that they “do not take issue with the time it took Tim’s lawyers to prepare their materials for the motion, and they acknowledge that their own lawyers spent similar amounts of time on these tasks”.
[10] The Moving Parties’ submissions as to excessive time focus on preparation for and attendance at the hearing, as they challenge the necessity of two senior lawyers incurring over 40 hours of preparation and attendance, amounting to approximately $40,000 (inclusive of HST).
[11] Both lawyers for Tim at the hearing were very experienced counsel, and it is not disputed that they have expertise in conflicts motions such as the type brought before the court. In those circumstances. I agree with the Moving Parties that the number of hours to prepare for and attend the hearing were excessive, since (i) one counsel could have prepared and presented the entire argument and (ii) counsel billed a collective 21.7 hours for preparation and attendance at the initial hearing which was to take place on May 19, 2016, and then billed a further 19 hours three weeks later for preparation and attendance after the initial hearing was adjourned to a long motion.
[12] Tim’s lawyers charged hourly rates that were 15%-50% higher than those charged by counsel for the Moving Parties, even though Antony’s principal lawyer (who was not directly involved with the motion) was called in 1975 and the Moving Parties’ senior lawyer on the removal motion was called in 1992. By way of example, the “junior” lawyer for the Moving Parties (with almost 20 years of experience)[^3] was called to the bar in 1997, one year before the senior lawyer for Connie, but with an hourly rate almost 40% higher.
[13] I agree with Tim’s counsel that the fact that the Moving Parties’ counsel’s rates were lower does not, by itself, make the rates sought disproportionate (Fram Elgin Mills 90 Inc. v. Romandale Farms Ltd., 2016 ONSC 174 (“Fram”), at paras. 34-35).
[14] However, under Rule 24(11), the court shall consider “rates”.
[15] Dunphy J. held in Fram that “I do not conclude that Bay Street firms are entitled to their own special scale of costs at some lofty multiple of the costs available to the rest of the Province” (Fram, at para. 35). Similarly, I conclude that senior lawyers who charge significantly more than comparable senior lawyers are not entitled to “their own special scale of costs”. Consequently, I take this factor into account when assessing the quantum of costs.
[16] Conversely, as in Fram, all parties in this litigation have chosen to engage top-level counsel whose rates are accordingly high (Fram, at para. 35). However, when rates of one party’s top-level counsel are significantly higher than the other party’s top-level counsel, and two senior lawyers are retained to act collectively to prepare and attend on a motion at a combined rate of almost $2,000 per hour (inclusive of HST), the court can take that difference into account when assessing the reasonableness of costs.
[17] Neither party cited an authority in which the quantum of costs ordered for a removal motion approached the amount claimed in this matter. That factor on its own would not be determinative, as the court still has to consider the importance, complexity, and difficulty of the issues in the particular motion. The highest quantum of costs in the authorities provided was $50,000 in Boktor v. Reddy, 2014 ONSC 4411.
[18] I agree with Tim’s submissions that the present motion was of critical importance. Removal of a party’s counsel of choice is not a trivial matter. While the Moving Parties submit that “Tim would have invariably been able to retain another excellent lawyer to represent him if the motion had been granted”, Tim was entitled to retain Niman who the Moving Parties describe as “admittedly a first-rate family lawyer”. Further, Tim would have incurred additional costs for any new lawyer to review and take over the file.
[19] Also, the amounts at issue in the application are significant, given Tim’s acknowledged net worth.
[20] On the other hand, I do not find that the motion was excessively complex or difficult, particularly for such experienced counsel. The factual issues were concisely set out in the affidavits and the factums, and the legal principles were not novel.
[21] Overall, I agree with the assessment of the Moving Parties that the motion was of “moderate” complexity, although I do not agree with the Moving Parties’ submission that the motion was of “moderate” importance.
[22] With respect to the reasonableness of the parties’ conduct, including offers to settle, I find that both parties acted reasonably. While I did not accept the Moving Parties’ submissions at the hearing, I did not find them to be frivolous or vexatious. I did not find that the motion was brought for “tactical” reasons.
[23] Tim submits that it was unreasonable for the Moving Parties not to accept Tim’s offer to settle on the basis of a dismissal of the motion without costs. Tim’s offer to settle was delivered after all motion material had been prepared and served. The Moving Parties responded with their own “binary” offer of removing Niman as lawyer without costs. These offers to settle a binary issue should not be given great weight as they do not reflect a real element of compromise (Murphy v. Murphy, 2010 ONSC 6204, 2010 CarswellOnt 8616 (SCJ), at paras. 27-28; and Cornaz v. Cornaz-Nikyuluw, 2005 CarswellOnt 7474 (SCJ), at para. 74).
[24] I found in the Reasons that Antony’s belief (after he learned of the allegations in the Answer) that Niman was “mining” him for information relevant to the Hogarth case was not founded on the evidence, and that the alleged conversation about Antony dating Connie did not occur. However, a conclusion that a conversation did not take place or an unfounded belief does not render a party’s position unreasonable, particularly when the court accepted Tim’s submissions that such a discussion would have been irrelevant in any event.
[25] Also, I do not find that the Moving Parties’ (i) legal submissions as to Niman disclosing documents to external counsel to obtain legal advice about his professional obligations, or (ii) comments in correspondence about a potential conflict for Tim’s counsel on the removal motion, were unreasonable (even if not well-founded) or raised any significant legal or factual issues, and as such did not result in any excessive fees even though those submissions were not pursued at the hearing.
[26] Consequently, I do not find that the Moving Parties acted unreasonably on the motion.
[27] Finally, Tim relies on the decisions in Ganie v. Ganie, 2016 ONSC 1831 (“Ganie”), at para. 33, and Frazer v. Haukioja, 2010 ONCA 249 at para. 73, in which the courts held that if a party fails to produce its own bill of costs before the court, an attack on the reasonableness of fees “is no more than an attack in the air” or “may undermine the strength of the unsuccessfully party’s criticisms of the successful party’s requested costs”.
[28] In the cases relied upon by Tim, the unsuccessful parties offered no evidence to the court as to costs. In the present case, the Moving Parties set out their combined costs of $53,000 for both parties in their submissions, without producing a bill of costs.
[29] While a bill of costs provides more of a “useful context” than a statement of fees incurred, this does not mean that such a statement has no weight. Further, it remains open to the court to consider all of the factors relevant to exercising its discretion to fix costs, even if no information is provided as to the costs of the unsuccessful party (Risorto v. State Farm Mutual Automobile Insurance Co., (2003) 2003 CanLII 43566 (ON SC), 64 OR (3d) 135 (SCJ), at para. 10, cited at Ganie, at para. 33).
[30] Based on the above factors, I fix the quantum of costs for this motion at $50,000 inclusive of HST and disbursements. I find that this amount is fair, reasonable, and proportionate and consistent with the quantum that an unsuccessful party would reasonably expect to pay for costs given the importance of the motion, the amounts at issue in the application, the seniority of counsel, and the other factors I discuss above.
Payment of costs
[31] Tim submits that costs should be payable forthwith. The Moving Parties submit that costs should be payable in any event of the cause. For the reasons that follow, I find that costs should be payable forthwith.
[32] There is no dispute between the parties that under Rule 24(10), the court should fix costs. The Moving Parties submit that costs should not be made payable forthwith because:
(i) “Tim has not yet paid Connie the ‘sizeable equalization payment’ that he admits he owes her, and has refused her requests for even a relatively small lump sum advance”;
(ii) “Connie is not receiving any spousal support from Tim, she has no access to liquid funds, and the only way that she will be able to pay costs to Tim now would be by cashing in her small RRSP or whole life insurance policy”; and
(iii) “Tim is fully secured for any costs as there is at least $2,000,000 of equity in the Hogarth’s Matrimonial Home, title of which is registered in Connie’s sole name. He also does not need the costs to be paid at this time as he has a net worth of at least $45,000,000 and a line 150 income in 2015 of $7,961,197.53.” [Emphasis and italics in the Moving Parties’ submissions]
[33] I address these submissions below.
[34] Connie provided no authority that the potential for an equalization payment, or even an acknowledgment that an equalization payment will be owed, is sufficient to merit an order that costs of a motion be paid in any event of the cause. In O’Brien v. O’Brien, 2013 ONSC 6634 (“O’Brien”), the court ordered costs payable in any event of the cause because the costs incurred were from a bifurcated trial, not from a motion.
[35] In O’Brien, McDermot J. held that “I am not in a position to prejudge the result at trial, and whether an equalization payment will or will not be owing by the Applicant to the Respondent” and “I am also not in a position to pre-judge the effect of the domestic contract signed by the parties” (O’Brien, at paras. 31-32).
[36] However, an order for costs payable in any event of the cause in the context of a bifurcated trial with the equalization payment yet to be determined is different from costs of a removal motion. A bifurcated trial is a mechanism to address some trial issues to assist in the trial process, so it may be appropriate in certain circumstances depending on the nature of the issues bifurcated to defer payment of the costs until the end of trial.
[37] Conversely, on a motion which is not related in any way to the determination of an equalization payment, costs generally are paid forthwith, unless the court is satisfied that such an order is not just.
[38] In the present case, I do not find that an order that costs be paid forthwith is unjust. It ought not matter whether (i) a successful party is “fully secured” for payment of costs, or (ii) “does not need the costs to be paid at this time” since the successful party has a significant net worth and high income. Under the submissions of the Moving Parties, a successful party without financial need would not be entitled to costs payable forthwith, a position I do not find is consistent with general principles of costs award or Rule 24.
[39] I accept the Moving Parties’ submission that it may be a relevant factor to the payment of costs orders to consider evidence as to the financial situation of the parties[^4]. However, in the present case, Connie filed no evidence to support the Moving Parties’ submissions that “she has no access to liquid funds, and the only way that she will be able to pay costs to Tim now would be by cashing in her small RRSP or whole life insurance policy” [Italics in Moving Parties’ costs submissions].
[40] Attaching a financial statement to responding costs submissions without evidence before the court does not satisfy Connie’s evidentiary burden and does not establish that Connie “has no access to liquid funds, and the only way that she will be able to pay costs to Tim now would be by cashing in her small RRSP or whole life insurance policy”.
[41] Further, the lack of evidence on financial means is even more telling when the Moving Parties’ actual fees for this motion are stated as $53,000, with no evidence of Connie’s inability to make such payment. As Tim chose to retain a “first-rate family lawyer”, so has Connie in this matter, with commensurate fees.
[42] Finally, the Moving Parties made no submissions about Antony’s financial circumstances. He was a moving party on the motion, and is jointly and severally required to pay costs of an unsuccessful motion. Antony was separately represented by counsel on the motion who made submissions on his behalf. Consequently, there is no basis to alter the general principle that costs are paid forthwith by Antony as the unsuccessful party.
[43] For the above reasons, I order the Moving Parties to pay Tim costs of $50,000 (inclusive of fees, disbursements, and HST) within 30 days of this order.
Justice Glustein
DATE: 20160812
[^1]: All defined terms are the same as in my Reasons. [^2]: (based on $53,000 of actual fees, with full indemnity fees based on 80% of actual fees plus HST, although the Moving Parties only advised the court of the fees in their costs submissions without producing a bill of costs, as I discuss further below) [^3]: (with the “senior” lawyer for Tim having almost 25 years’ experience) [^4]: (although I note that the court in M. (C.A.) v. M. (D.), 2003 CanLII 18880 (ON CA), 2003 CarswellOnt 3606 (CA), at para. 42, relied upon by the Moving Parties, holds that “the financial situation of the parties can be taken in to account in setting the amount of the costs award under Rule 24 or Rule 18”, as opposed to the manner of payment. [Italics added]