Court File and Parties
COURT FILE NO.: 16-70980 DATE: 2017/05/25 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CAROL LUNDY, Applicant AND SEAN LUNDY, CO-EXECUTOR AND TRUSTEE OF THE ESTATE OF MICHAEL LUNDY and in his personal capacity, MICHAELA MARCIA KREIM, SARA KREIM, LIAM LUNDY, TRISTAN LUNDY AND THE CHILDREN’S LAWYER, Respondents
BEFORE: Madam Justice L. Sheard
COUNSEL: Gail S. Nicholls, for the Applicant Douglas Buchmayer, for the Respondent, Sean Lundy, as Executor and in his personal capacity No one appearing for the other Respondents
HEARD: By Way of Written Submissions
Costs Endorsement
[1] The applicant brought a motion for leave to extend the limitation periods under the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”) to file an Election for an equalization and to bring an application for an equalization. She also sought an order suspending the remaining distribution of the estate and for an order that the estate pay the costs of an expert retained by the applicant to value the deceased’s business and real property assets as at the date of marriage and at the date of death and, also, to applicant’s cost of an expert to value her own life interest in the matrimonial home.
[2] By way of written reasons dated April 12, 2017 the applicant’s motion was dismissed.
[3] In the event they were unable to agree on costs, the parties were invited to deliver written costs submissions. Costs submissions were submitted to me and these are my reasons on costs.
Position of the Applicant
[4] The applicant takes the position that the estate should cover the costs of both parties on this motion on the basis that the deceased failed to adequately provide for the support of the applicant and was “the author of this litigation”.
[5] The applicant concedes that the respondent was wholly successful on this motion, which was brought to extend those limitation periods, well after the expiry of the limitation periods.
[6] In her submissions, the applicant sets out a chronology of events:
(i) February 13, 2017 - the applicant’s motion record was served; (ii) Friday, March 3, 2017, 5:11 p.m.-the respondent served an offer to settle; (iii) March 7, 2017 -the applicant makes an offer to settle; (iv) March 7, 2017 -the respondent makes another offer to settle; and (v) March 14, 2017- motion is argued.
[7] The applicant submits that the offers made by the respondent were not genuine offers to assist in the settlement of the litigation because the applicant had no independent ability to quantify the value of the estate as at the date of marriage and the date of death. The March 7, 2017 offer made by the applicant contemplated the applicant obtaining her own expert valuation reports, the cost of which was to be paid by the estate. Her offer also contemplated the estate paying the applicant’s cost of the motion in the amount of $3,500 plus HST.
[8] The respondent, Sean Lundy (“Lundy”) did not accept the applicant’s offer of March 7, 2017.
Position of Lundy
[9] Lundy seeks his costs of the motion on the basis that he was the successful party. That is undisputed by the applicant. The respondent seeks costs on a full indemnity basis because his offers to settle were favourable to the applicant, whose motion was dismissed. An analysis of Lundy’s offers shows that he is correct in that assertion as well.
The Offers to Settle
[10] In Lundy’s first offer, dated March 3, 2017 but served after 5 p.m. on that day, he consents to extend the time within which the applicant is to file her election and to bring an equalization application to September 14, 2017; he agrees to suspend the distribution of the estate until September 14, 2017; and offers to provide the applicant with an expert report on the value of the deceased’s business interests at the date of marriage and the date of death and with appraisals of the real estate owned by the deceased as at those dates. Lundy’s offer also provides that, if accepted by March 7, 2017 at 10 a.m., Lundy will not claim any costs of the applicant’s motion. His offer also states that if is accepted after March 7, 2017 at 10 a.m., Lundy he will be entitled to his costs on a full indemnity basis.
[11] Had it been accepted, Lundy’s offer would have provided the applicant with the limitation period extensions she sought and needed; with an expert valuation report; and with real estate appraisals, all at no expense to herself. More importantly, had she determined that she could not, or did not wish to, rely on the valuations obtained by the Estate, nothing in Lundy’s offer of March 7, 2017 would have precluded the applicant from seeking the cost of any appraisal or expert report she might have obtained in the context of her equalization application claim.
[12] The applicant asserts that because the offer was not read by her or her counsel until Monday, March 6, 2017, it was not “timely”. The applicant further asserts that Lundy had no reasonable expectation that the applicant would or could accept either of his offers to settle and that they were not “good faith” offers.
[13] I disagree. Had she accepted Lundy’s offer, the applicant would have been in a better position than she found herself in after her motion was dismissed.
[14] At 1:36 p.m. on March 7, 2017 Lundy served a second offer to settle which dealt with the applicant’s motion relating to the issue of the extension of the time limitation periods under the FLA. Again, Lundy consented to extend the limitation period to September 14, 2017 for the election and for the bringing of an equalization application and agreed also to suspend the distribution of the estate to that date. This offer does not withdraw the March 3, 2017 offer and is silent on the issue of the expert reports and the funding of those reports. It would appear to have left open the issue of the funding of the expert reports, to be argued on the motion. This offer stated that each party would pay his or her own costs of the motion “relating to the issue of the extension of the time limitation periods under the Family Law Act”.
[15] Aside from the issue of costs of that issue, there was no downside to the applicant by accepting Lundy’s offer, which dealt only with the time extensions that the applicant wanted and needed. The applicant did not accept this offer and at 13:53 on March 7, 2017 she confirmed the motion and served her own offer to settle that addressed all the issues – extensions of the limitation periods and funding by the estate of the applicant’s costs of securing expert reports and granting the applicant her costs of her motion fixed in the amount of $3500.00 plus HST, to be paid by the Estate. The applicant’s offer was open for acceptance until 10 a.m. on March 8, 2017.
Analysis
Factors
[16] The factors to be considered when fixing costs are set out in rule 24 of the Family Law Rules, O. Reg. 114/99, (the “FLR”) and include that the successful party is presumed to be entitled to costs, the reasonableness of the behaviour of each party and any offer to settle, any acts of bad faith by any party, the importance complexity or difficulty of the matter, the scale of costs, hourly rates and time spent, and the reasonable expectations of the losing party.
Success
[17] In this case Lundy was entirely successful and is presumptively entitled to his costs.
Complexity and Importance
[18] The issues on the motion were not complex but the outcome of the motion was important to both parties.
Unreasonable Behaviour or Bad Faith
[19] Lundy argues that the applicant took unreasonable positions on the motion, which included her request that the estate pay the costs of the applicant’s experts, in an unspecified amount, and without any evidence relating to the anticipated costs of those expert reports. Lundy argues that, in essence, the applicant was asking for the estate to fund her litigation against it.
[20] In fairness to the applicant, her motion was dismissed not on the basis that that the relief she sought was unreasonable but, primarily because the applicant failed to establish that her delay in seeking that relief was incurred in good faith. However, there is merit to Lundy’s argument that the applicant did not provide any estimates of the cost of obtaining those expert reports, and that the order sought, if granted, would have obligated the estate to pay an unlimited amount.
[21] However, I do agree with the Lundy’s submissions that the applicant behaved unreasonably in refusing to accept his offer that dealt with the extensions of time, which would have left for argument on the motion, whether the applicant was entitled to some funding from the estate of the cost of obtaining expert reports.
Offers to Settle
[22] Lundy argues that he served two reasonable and timely offers to settle. I agree. Lundy further argues that the provisions of rule 18 (4) of the FLR apply.
[23] Rule 18(4) of the FLR provides that 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 offer relates to the motion and was made at least one day before the motion date; the offer does not expire and is not withdrawn before the hearing starts; the offer is not accepted; and the party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[24] Rule 18(4) must be viewed in the context of rule 24.
[25] Lundy has provided two Bills of Costs. In the first, Lundy shows total fees and disbursements on a partial indemnity scale, substantial indemnity scale and a full indemnity scale. In the second, Lundy has broken down the time spent prior to, and following the March 3, 2017 offer to settle. In applying the provisions of rule 18 of the FLR, I conclude that the second Bill of Costs is one that should be considered by the Court.
[26] In Lundy’s Bill of Costs, partial indemnity fees are calculated at $4634.10, inclusive of HST up to and including the March 3, 2017 offer to settle. Thereafter, Lundy’s full indemnity fees total $14,695.09 and include 47.4 lawyer hours, 13.3 law clerk hours, and 3.6 articling student hours. The partial indemnity fees combined with the full indemnity fees total $19,329.19 inclusive of HST.
[27] The applicant has submitted a costs outline which sets out the cost submissions of the applicant, in the event she was successful. The applicant’s lawyer records a total of 8.0 hours for preparation of the motion record, an affidavit of the applicant, preparation of the factum and preparation for the motion, 1.95 hours spent by a law student on research. Total fees, disbursements and HST claimed by the applicant are $6,582.39.
Hourly Rates, Time Spent and Proportionality
[28] The applicant submits that the time spent by junior counsel for Lundy of 59.9 hours is unreasonable and disproportionate given the issues before the court and even more so when compared to the 8.0 hours invested by the applicant’s counsel on the motion, plus a counsel fee on the motion of $1,500.00.
[29] The applicant takes no issue with the hourly rates charged by junior counsel but does take issue with the hourly rates charged by counsel for Lundy of $550 per hour whereas the applicant’s lawyer, called to the bar in 1970, charges only to $500 per hour.
[30] The applicant argues that Lundy’s costs on a full indemnity basis should not exceed those incurred by the applicant of $5,500.00.
[31] In the case of Serra v. Serra, 2009 ONCA 395 the Court of Appeal confirmed the costs rules are designed to foster three important principles:
i. to indemnify successful litigants for the costs of litigation; ii. to encourage settlement; and iii. to discourage and sanction inappropriate behaviour by litigants.
[32] The Court must also consider proportionality: what is fair and reasonable and proportionate to the proceedings? The full indemnity costs of the applicant as outlined in her Costs Outline (fees, disbursements and HST) are approximately one-third of the amount being sought by Lundy on a partial indemnity basis and, after his March 7, 2017 offer to settle, a substantial indemnity basis. Given the complexity of the proceedings and the issues on the motion, I cannot conclude that the time spent was reasonably necessary. However, I also do not conclude that the 8.0 hours spent by the applicant’s counsel should be used as the proper amount of time.
[33] As set out in my Reasons, I found the applicant’s materials to be wanting. For example, the applicant’s materials failed to adequately explain why she failed to assert a claim or failed to seek an extension of the FLA limitation periods to allow her time to investigate and evaluate her FLA claim. Also, the applicant’s affidavit referred to correspondence and negotiations that might have had a bearing on the issues on the motion, but did not attach any of those to her affidavit. While it may not be true in all cases, time spent on preparation of materials can be reflected in the end product.
Disposition
[34] In consideration of the above factors and the submissions of the parties, I conclude that Lundy is entitled to costs of this motion fixed in the amount of $15,000.00, payable by the applicant in any event of the cause, should she bring an application under the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”), or by September 14, 2017, should she choose not to pursue a claim under the SLRA.
L. Sheard J.