Kirvan v. Kirvan, 2017 ONSC 5661
CITATION: Kirvan v. Kirvan, 2017 ONSC 5661
COURT FILE NO.: FC-12-2817
DATE: 2017/09/27
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mary Anne Kirvan Applicant
– and –
Myles John Kirvan Respondent
Philip Augustine, counsel for the Applicant
Pam MacEachern, counsel for the Respondent
HEARD: In Writing
costs endorsement
Shelston J.
[1] By judgment dated December 9, 2016, I released my reasons for judgment in this matter. The parties were unable to resolve the issue of costs and I have received their written submissions.
[2] Both parties seek costs in the amount of $50,000 inclusive of disbursements and HST on the basis that although there was divided success, overall each submits that they were more successful than the other party when considering the respective offers to settle.
The Family Law Rules
[3] Under Rule 24(1) of the Family Law Rules, there is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
[4] Rule 24(5) states that 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.
[5] If a party has acted in bad faith, the Court shall decide costs on a full recovery basis and shall order the party to pay them immediately (Rule 24(8) of the Family Law Rules).
[6] The factors to be considered in assessing costs are set out in Rule 24(11) of the Family Law Rules:
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 witness, 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.
[7] The costs rules are designed to foster three important principles:
a) to partially indemnify successful litigants for the cost of litigation;
b) to encourage settlement; and
c) to discourage and sanction inappropriate behaviour by litigants (Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40 at para. 8).
[8] Offers to settle are the yardstick with which to measure success and are significant both in considering liability and quantum, as set out in Osmar v. Osmar (2000), 2000 20380 (ON SC), 8 R.F.L. (5th) 387, [2000] O.T.C. 979 (Ont. Sup. Ct.).
Analysis
Successful party
[9] Both parties submit that they were more successful.
[10] The applicant submits that she was more successful on main issues of the trial being retroactive and prospective spousal support and on the value of the respondent’s pension.
[11] The applicant was successful in obtaining retroactive spousal support commencing in 2011 resulting in a lump sum retroactive payment and ongoing obligation to pay spousal support with no termination date. The respondent’s position at trial was that the applicant was not entitled to spousal support. There were a series of issues regarding spousal support including the applicant’s entitlement, the commencement date, the calculation of income and the quantum of support. In my decision, I found that the applicant had both a compensatory and non-compensatory entitlement to spousal support. The applicant was successful on the issue of spousal support which was the most time consuming part of this trial.
[12] On the equalization issue, the applicant was not successful. The respondent’s position was that there would be no equalization payment owing but if there was, he sought an unequal division on the basis that his pension should be valued using a substandard mortality. Based on my decision, the equalization payment owing was $231. The applicant had requested an equalization payment of $116,831. The respondent was successful on this issue. The issue of the substandard mortality argument was moot and was not addressed but trial time was spent on this issue.
[13] On the issue of life insurance, the applicant was successful as the respondent’s position was that there would be no requirement for life insurance because there was no entitlement to spousal support.
[14] I agree with the applicant that not all issues in the trial were equally important nor equally time consuming. I find that the applicant was the more successful party and is presumptively entitled to a cost award pursuant to the Family Law Rules.
The importance, complexity or difficulty of the issues
[15] The main issues of this trial were spousal support and an equalization of the net family property. There were many issues that were difficult and complex including the value of the respondent’s pension, substandard mortality effect on the value of the respondent’s pension and double dipping and spousal support, I found the issues to be important, complex and difficult. Expert evidence was advanced to deal with these issues.
The reasonableness or unreasonableness of each party’s behaviour
[16] In determining whether a party acted reasonably or unreasonably, I am to examine a party’s behaviour in relation to the issues from the time they arose, determine if an offer to settle was made, determine the reasonableness of any offer and consider any offer that was withdrawn earlier that was not accepted.
[17] There were three offers to settle made in this proceeding. The respondent made an offer on November 20, 2015 and the second offer in November 25, 2015. The applicant made one offer on November 23, 2015.
[18] In the respondent’s offer dated November 20, 2015, he was prepared to waive the applicant’s obligation to pay $56,057.81 to the respondent with respect to the transfer of his interest in the matrimonial home to the applicant as well as $4,000 for contents; a lump sum payment of $80,000 dealing with equalization, spousal support, child support, the mortgage owed to the respondent by the applicant and prejudgment interest and that the respondent would maintain the applicant as the irrevocable beneficiary of a life insurance policy in the amount of $200,000. In addition, the parties were to execute full and final release of spousal support.
[19] In the applicant’s offer dated November 23, 2015, the applicant proposed that the respondent pay $2,590 per month as spousal support commencing November 1, 2015, that the respondent be obligated to maintain a life insurance policy of $200,000 for so long as spousal support is payable; that the respondent pay the applicant lump sum payment on account of spousal support arrears in the amount of $139,167 and finally that the respondent would pay the applicant an equalization payment of $108,000 offset by the debt owing by the applicant to the respondent in the amount of $56,057.81 resulting in the respondent paying to the applicant a net payment of $51,942.
[20] In the respondent’s second offer dated November 23, 2015, the respondent modified his offer of November 20, 2015 by deleting the life insurance clause and inserting an obligation to pay to the applicant $1,000 per month commencing December 1, 2015 but with a provision that the spousal support would not be variable and terminate on his death.
[21] The majority of trial time was spent on the issue of spousal support including determining the applicant’s entitlement to spousal support, the determination of the parties’ income which varied from year to year and the quantum of the support for each year. As a result of the respondent’s position that the applicant was not entitled to spousal support, the applicant was required to provide the evidentiary basis for my findings as to her entitlement and quantum.
[22] The respondent argues that by waiving $56,057.81 owed by the applicant to the respondent regarding contents and the transfer the matrimonial home coupled with the $80,000 in a lump sum payment, his offer dated November 25, 2015 was effectively $136,057.81 as a lump sum payment to the applicant. After deducting the retroactive lump sum spousal support of $29,127.94 ordered as part of my trial decision, the effect is that the respondent offered to pay to the applicant a lump sum payment of $106,869.87. The respondent submits that the net difference between his offer of $1,000 per month and the trial decision of $1,504 per month being $504 per month is effectively, after tax, a difference of $250 per month or $3,000 per year. The respondent argues that the net effect of dividing $106,869.87 by $3,000 per year equals 35.62 years of spousal support resulting in the respondent’s offer being better than the trial decision. The applicant counters that the net after-tax benefit to the applicant of the spousal support is $1,045 per month or $12,540 per year equates to only 8.5 years of support when divided into the figure of $106,869.
[23] I disagree with the respondent’s position because he has not factored into his calculation the obligation to pay the life insurance premiums. Further, his offer to settle was to pay $1,000 per month that terminated upon his death, the support was not variable and there was no life insurance protection. My decision did not include a non-variable component or that it terminated upon the respondent’s death.
[24] While I appreciate that the applicant’s offer did not engage the cost consequences of Rule 18(14) of the Family Law Rules, my decision was greater than the amount offered by the respondent when the cost of the life insurance premiums are factored into the analysis.
[25] I find that the respondent’s position at trial in denying the applicant’s entitlement to spousal support to be unreasonable. I found that the applicant had an entitlement. I find that had the respondent acknowledged the entitlement, a significant portion of the trial would have been avoided.
The lawyer’s rates and disbursements
[26] I find that Mr. St. Marie’s hourly rate of $400 is reasonable based on his 41 years in a practice restricted to family law.
The time properly spent on the case
[27] The applicant’s counsel spent 193.20 hours from November 11, 2015 to May 19, 2016 which totalled $77,280. The applicant is seeking costs of $50,000 which is 65% of the total time.
[28] From November 27, 2015 to May 20, 2016, counsel for the respondent’s spent 147.2 hours while the total bill to the respondent was $75,000. The respondent has also restricted his claim for costs to $50,000 for the trial.
[29] I find that the time spent by both parties was reasonable considering the many issues for trial.
Any other relevant matter
[30] The applicant has made references to discussions at four settlement conferences in this matter. I agree with the respondent that such discussions should not be disclosed to the trial judge including when considering the disposition of costs as mandated by Rule 17(23) of the Family Law Rules.
[31] I do not find that the respondent has more of an ability to pay costs.
Disposition
[32] In assessing those costs, I am to be fair, proportional and reasonable as to what the losing party would expect to pay in costs. In this case, both parties are seeking the same amount of costs.
[33] The applicant was successful in the spousal support issue, on the life insurance issue and partially successful on the retroactive support. The respondent was successful on the equalization issue. This was a case of divided success where most of the trial dealt with the issue where the applicant was the successful party.
[34] The winning party is entitled to costs. I find it fair and reasonable that the respondent pay to the applicant the sum of $30,000 for her costs.
Released: September 27, 2017
Shelston J.
CITATION: Kirvan v. Kirvan, 2017 ONSC 5661
COURT FILE NO.: FC-12-2817
DATE: 2017/09/27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mary Anne Kirvan Applicant
– and –
Myles John Kirvan Respondent
costs endorsement
Shelston J.
Released: September 27, 2017