Ajayi v. Oziegbe, 2017 ONSC 4524

CITATION: Ajayi v. Oziegbe, 2017 ONSC 4524

COURT FILE NO.: FS-15-0268-00

DATE: 2017 07 25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nosakhare Ajayi – and – Beauty O. Oziegbe a.k.a Beauty Oz

BEFORE: LEMAY J

COUNSEL: R. Fernandes, Counsel for the Applicant

A. Pascuzzi, Counsel for the Respondents

COSTS ENDORSEMENT

1I conducted a six day trial on this matter in March and April of this year. The key issue in the case was whether Ms. Oziegbe had full ownership of a property, or whether Mr. Ajayi was entitled to half of the property. In written reasons released June 6th, 2017 (reported at 2017 ONSC 2732), I found that the property was equally owned.

2I am now required to fix the costs in this matter. Both parties have filed submissions, as well as reply submissions and I have reviewed those matters.

The Positions of the Parties

3The Applicant, Mr. Ajayi argues that he should be entitled to costs in the sum of $44,227.35, inclusive of all fees and disbursements for the following reasons:

a. Mr. Ajayi provided an offer to settle in February of 2017, and was more successful than the offer at trial.

b. Ms. Oziegbe, in her testimony before the Court and the positions she took, behaved in a bad faith manner, and should be required to pay substantial indemnity costs.

4In the alternative, Mr. Ajayi argued that he should be entitled to costs on a partial indemnity basis, and that the amounts he is claiming are entirely consistent with the reasonable expectations of a litigant based on the factors enumerated in Rule 24.11 of the Family Law Rules.

5The Respondent, Ms. Oziegbe, argues that the costs should not be fixed until the property is sold, so that the parties can clearly see the outcome of the Applicant’s offer to settle. In the alternative, the Respondent is also seeking costs in the sum of $31,500 on the basis that she did better than her offer to settle. In the final alternative, the Respondent argues that costs should not be paid to either party.

6Mr. Ajayi, in his reply submissions, challenges Ms. Oziegbe’s position and argues that he was successful in this trial. In her reply submissions, Ms. Oziegbe argues that Mr. Ajayi did not obtain a result at trial that was as favourable or more favourable than his offer, and that there should be some deletions from Mr. Ajayi’s bill of costs even if I am prepared to award Mr. Ajayi costs.

The Applicable Law

7Other than on the issue of bad faith, the applicable law in this case is relatively straightforward. The Court of Appeal’s decision in Serra v. Serra (2009 ONCA 395) sets out the three fundamental purposes of a costs award, as follows:

a. To partially indemnify successful litigants

b. To encourage settlement

c. To discourage and sanction inappropriate behavior by the litigants.

8In addition, the Family Law Rules contain a number of provisions relating to costs. The most relevant ones for the purposes of fixing costs in this case are set out in Rules 18(14), 24(1), 24(8) and 24(11). I have considered all of those Rules in reaching my decision.

9In particular, I note that Rule 24(11) sets out a list of factors that the Court is to consider in assessing costs. For the purposes of this case, the most relevant factors are:

a. The importance, complexity or difficulty of the issues.

b. The reasonableness or unreasonableness of each party’s behavior in the case

c. The time properly spent on the case.

10I will review all of those factors, and the issues raised by counsel, below.

Analysis

Who was Successful?

11Mr. Ajayi argues that he was successful in this case. Ms. Oziegbe argues both that success was divided in this case and that she did better than her offer to settle, and should be entitled to costs. I will return to the offers to settle in the next section.

12As Pazaratz J. noted in Scipione v. Scipione (2015 ONSC 5982), it should not be difficult to determine who was successful. One simply needs to ask the question “who got what they asked for”? In this case, Mr. Ajayi asked for half the house, as well as compensation for chattels that he claimed had been improperly converted. He was substantially successful in obtaining this relief. Indeed, the only deductions from the half of the house awarded to Mr. Ajayi were the carrying costs for the house which Mr. Ajayi conceded should be deducted. Mr. Ajayi was quite successful in this case.

13On the other hand, Ms. Oziegbe asked for a declaration confirming that the house was owned entirely by her, as well as damages for assault, and a permanent restraining order. The only relief that Ms. Oziegbe obtained was a small amount of damages for assault. Ms. Oziegbe was, for the most part, unsuccessful in obtaining the relief she sought in this case.

14In addition, the bulk of the evidence was focused on the nature of the relationship between the parties, and on determining the ownership of the house. On these issues, I accepted Mr. Ajayi’s claims and rejected Ms. Oziegbe’s claims. In the circumstances, therefore, Mr. Ajayi was the successful party in this case. Under Rule 24(1), he is presumptively entitled to costs. I now turn to the effect of the offers made by each party.

The Offers

15I start with the offer from Ms. Oziegbe. On the day before trial, March 6th, 2017, Ms. Oziegbe offered to settle the matter by paying Mr. Ajayi $40,000.00 inclusive of costs and disbursements in four installments between March 7th and June 7th, 2017. Mr. Pascuzzi argues that I should treat this offer as if it complies with Rule 18(14). The problem with this position is that Rule 18(14) is quite clear that it only applies to offers for trial that were served at least seven days before the trial. As a result, this offer does not trigger the mandatory provisions of Rule 18(14).

16However, the existence of this offer is a factor that can be considered under Rule 18(16), which allows the Court to consider any written offer to settle, and the date that offer was made in assessing costs. As a result, I will consider this offer.

17In my view, however, it is not a basis for either awarding Ms. Oziegbe costs, or even reducing the costs that would be payable to Mr. Ajayi for two reasons. First, there is the value of the offer. As of the day before trial, Mr. Ajayi would have spent considerable legal fees. In addition, even on Mr. Pascuzzi’s calculation of the likely value of the house when it is sold, Mr. Ajayi’s recovery exclusive of costs would be more than the “all in” offer that Ms. Oziegbe made. The fact that a party makes a last minute offer to resolve a case that is not as favourable to the other side as the outcome of the case could only have, at most, a modest effect on the outcome of any case.

18This is particularly true when Ms. Oziegbe’s position prior to making this offer is considered. This litigation began in the fall of 2015. Up until February 28th, 2017, Ms. Oziegbe took a hard line position. This position is most clearly set out in a letter from Mr. Pascuzzi to Mr. Fernandes on July 8th, 2016, where Mr. Pascuzzi states “but then again, why should your client get anything especially since he paid nothing towards the property.” This position was maintained until February 28th, 2017, approximately a week before trial, when Ms. Oziegbe served an offer to settle for $20,000.00 all inclusive, which she then increased to $40,000.00 all inclusive the day before trial. Ms. Oziegbe took an aggressive position on this litigation, and was only prepared to make some compromises right before trial.

19In any event, the effect that Ms. Oziegbe’s offer may have on the disposition of costs is eliminated by the offer that Mr. Ajayi served. In dealing with this offer, I start by considering Ms. Oziegbe’s position that fixing costs should be deferred until the house is sold because it is not clear whether Mr. Ajayi has obtained a result as favourable as his offer.

20I reject this argument for two reasons. First, the numbers provided by Ms. Oziegbe in her costs submissions support the conclusion that Mr. Ajayi will most likely receive at least $44,000.00, exclusive of costs, from the sale of the home. Mr. Ajay had offered, almost a month before trial (February 15th, 2017) to accept 40% of the value of the home plus costs. Based on the expert evidence we heard at trial and the submissions of the parties, $44,000.00 is likely the minimum amount, or close to the minimum amount that Mr. Ajayi would receive from the sale of the home. It is likely to be higher than that amount.

21Based on Ms. Oziegbe’s calculations, which favour her position, Mr. Ajayi would have received $37,020.50 if Ms. Ajayi had accepted his offer, plus the costs of either $7,500.00 or $10,000.00. On this basis, Ms. Oziegbe argues that the offer to settle is not as favourable as the outcome at trial because the total value of the offer, inclusive of costs is more than the $44,000.00 that Ms. Oziegbe says that Mr. Ajayi is likely to receive from the sale of the house.

22In support of this position, Ms. Oziegbe argues that the fact that Mr. Ajayi’s offer includes a sliding amount for costs means that the offer is dynamic, rather than static. As noted in Studerus v. Studerus (2014 ONSC 2223 at paragraphs 13 and 14), a litigant who includes cost consequences in an offer runs the risk of being unable to rely on the provisions of Rule 18(14). Ms. Oziegbe argues that Mr. Ajayi’s offer, by including costs, does not meet the requirements of Rule 18(14).

23In this case, however, I note two points. First, the amount claimed in costs was $7,500.00 all-in until the Friday before trial. Then, the amount claimed for costs all-in was to be assessed, but at a minimum amount of $10,000.00. In my view, these amounts are both well below the amounts that the successful party would reasonably receive in costs in this case. As I have indicated above, the Mr. Ajayi has been successful in this litigation. He is presumptively entitled to his costs, and in the circumstances of this case the offer should be considered taking that fact into account.

24Second, even if I deducted the costs from the amount that Ms. Oziegbe says that Mr. Ajay will recover, he would still be either very close to the offer he made, or he would have obtained a result more favourable than the offer he made.

25I also reject Ms. Oziegbe’s position that costs should not be fixed until after the sale of the home because the Courts have an obligation to fix the costs of each step in the proceeding in a prompt manner. It could be several months before the home is sold. Indeed, if an appeal is taken from my original reasons by either party, it could be up to a year before costs are fixed. Given that I have sufficient information to assess Mr. Ajayi’s offer, I am not prepared to delay fixing costs in this matter.

26Mr. Ajayi has obtained an outcome at trial that is more favourable than the offer to settle that he served. The offer was served in accordance with the requirements of Rule 18(14). As a result, under Rule 18(14), Mr. Ajayi is entitled to full recovery of his costs from February 15th, 2017 to the conclusion of the trial.

The Bad Faith Allegations

27Mr. Ajayi alleges that Ms. Oziegbe was behaving in a bad faith manner by misleading the Court with her evidence. As a result, Mr. Ajayi argues that he should be entitled to full recovery costs on this basis as well. Ms. Oziegbe states that she was not acting in bad faith, and that this was a credibility dispute.

28In support of her position, Ms. Oziegbe points to the decision in Studerus, supra, where the Court stated (at paragraph 25) that “a litigant has a right to assert a position at trial, and lose, without having his or her conduct branded as unreasonable.” The Court in that case went on to point out that the mere existence of unfavourable credibility findings did not mean that a party had been unreasonable.

29I accept that statement of the law. However, the case before me is distinguishable from Studerus, supra. The credibility findings in the case before me were wholly one-sided. I did not accept any of Ms. Oziegbe’s evidence, and found that she had not been truthful with the Court.

30However, bad faith is a very high threshold. As noted by Perkins J. in C.S. v. M.S. (2007 CanLII 20279 at paragraphs 16 to 18), bad faith does not merely mean bad judgment or negligence. It requires an affirmative intent to deceive or to inflict financial or emotional harm on the other party.

31While I agree with Mr. Ajayi that Ms. Oziegbe’s conduct was unreasonable, I am not of the view that it rises to the level of bad faith. A court should only find bad faith on the part of a litigant advancing their position when the position is wholly without merit, and is being advanced to frustrate the legal process. Ms. Oziegbe’s conduct does not rise to this level, and does not justify the application of Rule 24(8). However, Ms. Oziegbe’s conduct can be considered under the provisions of Rule 24(11), and I will turn to that issue now.

The Factors Under Rule 24(11)

32When these factors are considered, they also support a significant award of costs to Mr. Ajayi.

33I start with the importance, complexity or difficulty of the issues. In my view, these issues were both important and moderately complex. The outcome of this case was very significant to Mr. Ajayi, as I found that he had made significant contributions to the acquisition of the property. It was also a moderately complex claim, as it required me to consider significant amounts of financial information and evaluate that documentation in the context of a resulting trust claim, along with other issues that had some legal complexity. This factor supports a more significant award of costs to Mr. Ajayi.

34This brings me to the conduct of the parties. Although I have found that Ms. Oziegbe’s conduct does not amount to bad faith within the meaning of the Family Law Rules, it was clearly unreasonable. She adopted a hard line position on an issue where the evidence clearly did not support her position, and she maintained that position to the door of the courtroom. It was only at the last minute that Ms. Oziegbe was prepared to make some compromises. Ms. Oziegbe’s conduct supports a more significant award of costs to Mr. Ajayi.

35Finally, there is the time that was spent on the case. Ms. Oziegbe argues that a reasonable amount of time to spend on this case would have been no more than 80 hours. I reject this assertion. This was a six day trial, with five legal issues, all of which required consideration of relevant case-law. In addition, the documentary record in this case was extensive, and a considerable amount of time was spent by Mr. Fernandes in reviewing this documentation and preparing for the cross-examination of Ms. Oziegbe.

36In terms of Mr. Pascuzzi’s assertion that only 80 hours of time would be reasonable in this case, I note that he spent considerably more time on the file. In fact, Mr. Pascuzzi spent almost the same amount of time on this file as Mr. Fernandes. The amount of time spent by the losing party is an indication of the reasonable expectations of the losing party. Again, this factor supports an award of costs in line with what the Applicant is seeking.

37I do agree, however, with Ms. Oziegbe’s position that the expert reports did not add a great deal of value to the case. As a result, I am not prepared to permit the disbursements associated with those reports, and I will also make some deductions in the amount of time spent on the case to account for expert preparation.

38That being said, however, I am of the view that the amounts claimed by the Respondent are generally reasonable, and I would not make any other significant deductions to the costs award.

Disposition

39Based on the foregoing, I conclude that the Applicant should be entitled to costs in the amount of $37,500.00 inclusive of HST and disbursements. These amounts are to be paid within thirty (30) days of the release of this endorsement.

40Finally, I understand that there may be outstanding issues between the parties. I have expressly reserved jurisdiction to address issues relating to the sale of the home, and I maintain that jurisdiction. Any other issues may be dealt with by making an appointment through the trial office.