Newmarket Court File No.: FC-14-47180-00
Date: 2017-05-25 Ontario Superior Court of Justice
Between: Brian Joseph Barnett, Applicant – and – Jennifer Kim Lindsay, Respondent
Counsel: Sheila Bruce, Counsel for the Applicant Valerie Brown, Counsel for the Respondent
Heard: In writing
Ruling on Costs
Jarvis J.:
[1] This Ruling deals with costs. On July 29, 2016 Reasons for Decision were released (amended August 29, 2016) after a four-day trial. Submissions on costs were invited if the parties were unable to agree about them but, for reasons not entirely clear, the parties’ submissions were not provided to me until the week of May 8, 2017. Neither counsel alerted the court beforehand about any delay concerns.
[2] The mother seeks costs of $64,161.87 plus HST and pre-judgment interest of $3,293.39. The father claims that he was the more successful party at trial and should be awarded trial costs of $45,165.73 inclusive of disbursements and HST. Alternatively, if the parties’ success at trial was divided, then each party should bear his or her own costs.
[3] The mother made three Offers to Settle, only two of which were compliant with Family Law Rule 18. The father made one such rule-compliant Offer.
[4] The mother's first Offer was restricted to the property issues between the parties. It was contained in an e-mail to the father dated June 18, 2014 before these proceedings started and proposed that the father pay her $119,500 in full settlement of their property issues. Her second and third Offers, respectively dated January 29, 2015 and October 15, 2015, proposed that the father pay her $230,000 and later $190,000, respectively. The third Offer also referenced the father's child support obligation, basing his qualifying child support income at a substantially higher level (i.e. $110,000) than acknowledged in his pleadings or to Canada Revenue Agency. The court accepted this level of income for the father and a lower income for the mother than she proposed.
[5] The father's Offer was dated November 11, 2015. It proposed an $80,000 property settlement to the mother and set-off child support based on his income of $94,000.
[6] Both Offers contained detailed parenting provisions.
[7] With the exception of the mother’s third Offer, in respect to which she was wholly successful on the issue of the parties’ qualifying incomes for child support determination purposes, there was divided success on the property issues. Even so, the amount awarded to the mother on the property issues was substantially greater than what the father proposed. The child and parent scheduling issues addressed in paragraphs [72] to [79] of the Reasons for Decision, while important to the parties, occupied comparatively little of the court’s time.
Law
[8] As observed by the Court of Appeal in Serra v. Serra [2], modern costs rules are designed to foster three fundamental purposes:
(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.
[9] The overall objective in determining costs is fixing an amount that the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”; Boucher v. Public Accountants Council for the Province of Ontario [3]. 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, by choice or necessity, litigate 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: Heuss v. Sarkos [4], and Peers v. Poupore [5].
[10] Family Law Rule 18, subrules (14), (15) and (16) deal with Offers to Settle. The provisions of those rules relevant to this ruling are as follows:
- (14) The 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:
- Not relevant.
- 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.
- The offer does not expire and is not withdrawn before the hearing starts.
- The offer is not accepted.
- The party who made the offer obtains an order that is as favourable as or more favourable than the offer. (15) 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 subrule (14). (16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.
[11] Family Law Rule 24 governs costs awards. Subrules (1), (4), (5), (6) and (11) are relevant, and provide as follows:
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. (4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. (5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine, (a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle; (b) the reasonableness of any offer the party made; and (c) any offer the party withdrew or failed to accept. (6) If success in a step in a case is divided, the court may apportion costs as appropriate. (11) In setting the amount of costs, the court 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.
Analysis
[12] The “full recovery” costs sanction referenced in Family Law Rule 18 (4) applies to the mother’s third Offer regarding the child support issues from and after October 15, 2015. Rule 24 (6) applies where success is divided, as it was in this case dealing with the property issues. Viewed overall the mother was the more successful party.
[13] Costs of these proceedings shall be considered as required by Rule 24 (11).
(a) Importance, Complexity or Difficulty of the Issues
[14] The issues in this case were important to the parties but not unduly complex or difficult.
(b) Reasonableness or Unreasonableness of Each Party’s Behaviour
[15] The father acted unreasonably. He was not a credible witness, failed to provide disclosure ordered by the court, was dishonest in his reporting to Canada Revenue Agency and disobeyed an Order of Kaufman J. made April 8, 2015 with respect to mortgaging one of the properties without the mother's consent or court Order. As observed in paragraph [17] of the Reasons for Decision, the father's testimony was often implausible, self-serving and contradicted by documentary evidence.
(c) The Lawyers Rates
[16] Both counsel were experienced family lawyers. Their hourly rates ($335 for Ms. Bruce and $300 for Ms. Brown) were reasonable.
(d) Time Properly Spent
[17] Counsel for both parties submitted Bills of Costs which, in each case, was little more than a summary of time and disbursements.
[18] The mother's Bill was divided into two parts; the first described as “Pre-Offer” ($15,630 fees) and the second “Post-Offer” ($44,815 fees). It is likely that the second category referred to the period after the mother's third Offer dated October 15, 2015 but that is not clear. While several descriptions of services were provided they were more in the nature of summaries. No, more informative, details were provided of time spent or steps taken in the case. Total time spent was slightly in excess of 228 hours, most of which appears to have been incurred by counsel.
[19] By comparison, the father's counsel recorded 115 hours of time spent. The father contends that the mother's claim for $64,161.87 costs is excessive for what was for all practical purposes a two and a half day trial involving five witnesses. This is substantially more than his costs of $45,165.73. I agree that the mother's claim is excessive but note that her evidence in chief was tendered by affidavit which reduced overall trial time.
[20] In light of the absence of greater detail from the Bills of Costs it is neither desirable nor even possible in this case to more critically assess the costs applicable to each step taken in this case. As observed by Aston J. in Delellis v. Delellis [6],
[95] It is important to reiterate that when the court is fixing costs, it is not undertaking a simple mechanical exercise. Such an exercise would be inappropriate and in fact undesirable. I have no intention of going line-by-line through the applicant’s bill of costs…
[21] Taking into account the mother's success on the child support issue and her greater success on the property issues than the father a fair and reasonable award for the time spent by her lawyer is $30,000.
Expenses Properly Paid or Payable
[22] The mother claimed disbursements of $3,716.37 and the father claimed disbursements of $1,632.48. The mother's Bill included process server and courier fees totalling $1,402.50: the father incurred charges of $1,325.59 for the same items. Neither party provided greater detail about these charges or any supporting invoices. In each case a solicitor's Affidavit of Disbursements would have been of great assistance since the charges seem inexplicably high for a relatively uncomplicated case involving few witnesses, all of whom resided locally and the parties were represented by counsel.
[23] In the absence of more detailed information only $2,000 in disbursements will be allowed.
Any Other Relevant Matter
[24] Not applicable.
Costs Award
[25] The father shall pay to the mother of costs of $32,000 inclusive of disbursements, plus HST.
Pre-judgment Interest
[26] The jurisdiction to award Pre-Judgment interest (“PJI”) is conferred by sections 128 and 130 of the Courts of Justice Act [7] (“CJA”),
(1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.
(1) The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129, (a) disallow interest under either section; (b) allow interest at a rate higher or lower than that provided in either section; and (c) allow interest for a period other than that provided in either section. (2) For the purpose of subsection (1), the court shall take into account, (a) changes in market interest rates; (b) the circumstances of the case; (c) the fact that an advance payment was made; (d) the circumstances of medical disclosure by the plaintiff; (e) the amount claimed and the amount recovered in the proceeding; (f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and (g) any other relevant consideration.
[27] In Burgess v. Burgess [8], the court held that as a general rule PJI should be paid on an equalization payment unless exceptions applied, and also set out the circumstances to be considered when making such an award. While that case dealt with married spouses to which the provisions of the Family Law Act [9] applied, there is nothing in section 128 of the Courts of Justice Act which prevents such an award being made in cases involving unmarried domestic partners. The factors to consider include circumstances where,
(a) the payor spouse cannot monetize the asset giving rise to the equalization payment (in Burgess the asset was a party's future entitlement to a pension); (b) the payor had no use of the asset before trial; (c) the asset generated no income; and (d) the payor spouse had not delayed the case being brought to trial.
[28] Burgess does not purport to restrict the circumstances in which an exception might apply. Nor is the general rule restricted to issues involving property - retroactive support awards may attract interest from the date that the support payment accrued: Debora v. Debora [10], affirmed in Debora v. Debora [11]. Section 130 (2) (f) also allows a court to award PJI where a party has unreasonably lengthened the duration of the proceedings. Care must be taken, however, to avoid penalizing a party twice for unreasonable litigation conduct when dealing with costs.
[29] In this case the mother claims PJI of $3,293.39 most of which relates to the property award. This calculation was based on the total value of that award calculated from August 17, 2014, then adjusted to take into account the $60,000 paid to her pursuant to the Order of Kaufman J. made April 8, 2015.
[30] The father contends that no PJI should be awarded because he had to borrow funds to advance the mother $60,000 in May 2015, the mother benefited from the properties’ appreciation after the parties separated and that he will need to further refinance his residence to pay anything further ordered.
[31] Complicating this analysis is the fact that there is no evidence as to what the properties were worth when the parties finally separated in June 2014. They agreed at trial that the combined property value as of late 2015 was $973,555.
[32] It seems likely that there was some appreciation in value after the parties separated but the father cannot raise as a shield to the mother’s claim his choice of retaining the properties or having to refinance them to advance her funds or to pay the Judgment or any consequent costs award. The mother should not be penalized in subsidizing the father’s decision to retain the family residence. He could have at any time taken steps to try to sell the properties: he also disobeyed the Order of Kaufman J. dated April 8, 2015 in mortgaging the vacant lot to enable him to pay the $60,000 to the mother for her title transfer to him of their residence.
[33] This court has broad, but principled, discretion to award an amount for PJI which it considers just. In my view, it would be fair and reasonable to award the mother $2,500 for PJI relating to the property and support issues.
Disposition
[34] Accordingly, the father shall pay to the mother costs in the amount of $34,500 comprising fees ($30,000), disbursements ($2,000) and PJI ($2,500) plus HST. Of the amount awarded, the sum of $7,500 is related to support and shall therefore be enforceable as a support Order by the Family Responsibility Office. A Support Deduction Order shall issue for that amount.
Justice D.A. Jarvis Date Released: May 25, 2017
Footnotes: