Bailliu v. Chaloux, 2017 ONSC 628

CITATION: Bailliu v. Chaloux, 2017 ONSC 628

COURT FILE NO.: FC-05-2761

DATE: 2017-01-25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Leslie Anne Bailliu, Applicant

AND

Louis Chaloux, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Kellie Stewart, Counsel for the Applicant

Stephanie White, Counsel, for the Respondent

HEARD: In writing

ENDORSEMENT

1By way of Final Minutes of Settlement dated December 5, 2016 (“Minutes”), the parties resolved the issues in a Motion to change the Final Order of Justice Mackinnon dated March 12, 2010 (“Final Order”). The parties were unable to agree on the issue of costs and they have provided the Court with their written submissions.

2After considering the parties’ submissions, the Family Law Rules, O. Reg. 114/99 (the “FLRs”), the offers to settle and the Bill of Costs, the Court awards costs to the Respondent in the amount of $8,500.00 (inclusive of disbursements and HST) for the reasons set out below.

3The Court has not considered the Applicant’s and her husband’s personal statements attached to her costs submissions nor the parties’ email exchange of January 2017 which was included in the Respondent’s reply costs’ submissions. This material is not evidence properly before the Court.

Respondent’s position

4The Respondent is claiming costs of $60,747.20 on the basis that:

− he was successful in the final resolution;

− he has incurred substantial legal fees and disbursements;

− he served two offers to settle and the final Minutes of Settlement which resulted in an Order was more favourable than the terms offered by him;

− the Applicant did not serve any formal offer to settle, and

− the Applicant’s behavior was unreasonable and caused delay and expense. She disregarded Court orders, failed to provide financial disclosure, and attempted to re-litigate matters decided in the Final Order.

5Given, the success and the unreasonable behavior of the Applicant and his total success, he submits that the Court follow Biant v. Sagoo, 2001 CanLII 28137 (Ont. S.C.) where Justice Perkins stated that the preferable approach in family law cases is to have costs generally approach full recovery, so long as the successful party has behaved reasonably and the costs are proportional to the issues and results. See also Justice Aston’s decision in Sims-Howarth v. Bilcliffe 2000 CanLII 22584 (ON SC), 2000 O.J. No. 330.

Applicant’s Position

6The Applicant submits that there were material changes in circumstance which warranted a variation in child support and the Respondent would not address this issue unless she paid increased spousal support. She had no choice but to commence litigation.

7Given the ongoing conflict, the Applicant offered a lump sum of spousal support with the objective of dealing with the issue of spousal support on a final basis. The Respondent would not have been awarded a lump sum support payment on a Motion to change. This compromise made by the Applicant obviates further litigation and conflict on this issue, ultimately benefiting the children.

8She submits that success was divided as child support was adjusted on a go-forward basis, and the lump sum support allows the Applicant to save for her retirement. The lump sum is not more favourable than the Respondent’s offer but rather represents a compromise between the Respondent’s request for increased support and the Applicant’s wish to terminate support. The Applicant also waived retroactive child support thereby putting the Respondent in a good financial position.

9The Applicant bears the largest share of s.7 expenses, which include hockey, school fees, dance lessons, university fees, college fees and dental fees. A costs award will further hinder her ability to provide for the children.

10In addition, she has incurred debt to pay for the children’s s. 7 expenses and the lump sum. As a medical general practitioner, she has no pension, has sizeable debt and is meeting the children’s financial means. A costs award would place a heavy financial burden on her which would ultimately affect the children.

11The Applicant had offered to mediate but the Respondent refused until just before the hearing of the motion. The Respondent indicates that he was not prepared to do so until she provided full financial disclosure

Background

12The parties cohabited from 1986 to June 2005. They have 3 children Alizé (23), Daphné (21) and Julien (16).

13The Applicant is a medical doctor in geriatric care and the Respondent is an analyst.

14The Final Order rendered after a trial in 2010 provided for the following:

− joint custody;

− week on/week off parenting schedule;

− Applicant to pay monthly child support in the amount of $2,212 and monthly spousal support in the amount of $1,000 based on the Applicant’s imputed income of $200,000 per annum;

− retroactive child support of $69,000 and retroactive spousal support in the amount of $21,700; and

− Applicant to pay costs in the amount of $70,000.

15The Applicant brought a Motion to change requesting:

− sole custody of Julien;

− termination of child support for Alizé and Daphné;

− reimbursement of his share of s. 7 expenses; and

− repayment of all spousal support paid by her to him pursuant to the Final Order.

16The Respondent requested:

− set-off amount of child support for the two children in the amount of $1,627 per month;

− spousal support in the amount of $1,777 per month;

− ongoing s. 7 expenses to be shared proportionately;

− no retroactive support payable by either party; and

− an order dismissing all other claims of the Applicant.

17The Minutes provided for the following terms to be incorporated into an Order:

− the Applicant would pay the set-off amount for child support for the two children in the amount of $1,627 per month based on her income of $200,000 per year and the Respondent’s income of $64,296 per year;

− there would be no child support payable for Daphné who is attending Dalhousie University and the parties’ obligations to contribute to her special and extraordinary expenses would terminate on April 20, 2017;

− the Applicant would pay a lump sum of spousal support to the Respondent in the amount of $140,000 as full and final settlement of any spousal support claim;

− child support would be reviewed upon Alizé’s graduation from her current post-secondary program;

− there was no retroactive support payable;

− the parties would share the children’s special and extraordinary expenses according to terms set out in the Final Order;

− costs would be determined by the Court; and

− the balance of the Applicant’s claims were dismissed.

Legal Principles

18The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, 2009ONCA 395 at para. 8 stated that the cost rules are designed for these fundamental purposes:

(1) to partially indemnify successful litigants for the cost of litigation;

(2) to encourage settlement, and

(3) to discourage and sanction inappropriate behavior by litigants

19In Ohanessian v. Kalisz, 2016 ONSC 1276, 2016ONSC 1276 (Ont. S.C.), Justice Kiteley reviewed the case law in cases where all issues are resolved except the issue of costs. She commented that some Courts have hesitated to deal with entitlement to costs unless there is an evidentiary record before it (paras. 18-20).

20Although she was prepared to consider entitlement as she had an evidentiary record to assess, she also indicated that other factors should be considered:

− whether the judge had access to submissions on substantive issues so that success vis-à-vis the positions of parties could be established (paras. 20-21) ;

− whether entitlement should be determined by comparing offers or evaluating the necessity of proceedings: comparing offers is more suitable for cases with narrow issues but where multiple issues with a motion and cross motion, access necessity (at paras. 26-27).

21In Anderson v. Anderson 2016 ONSC 7774, (Ont. S.C.J.), Justice Pedlar J. reviews the issue of costs, pointing to confusion caused by two Ontario Court of Appeal decisions:

When Berta v. Berta, 2015 ONCA 918, 75 R.F.L. (7th) 299 (Ont. C.A.) was initially released, the Court of Appeal stated that a successful party in a family law case was presumptively entitled to "full recovery costs". The Court of Appeal subsequently issued a corrigendum deleting that comment and replacing it with the following paragraph:

Thus, a successful party in a family law case is presumptively entitled to costs. An award of costs, however, is subject to the factors listed in r. 24(11), the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith) and r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: M.(A.C.), at paras. 40-43.

22This correction did not come to the attention of all as a differently constituted Court of Appeal panel in Forrester v. Dennis 2016 ONCA 214, 78 R.F.L. (7th) 114, (Ont. C.A.), followed the original pronouncement in Berta. Some family cases have followed the approach in Forrester, i.e., that a successful party in a family law case is presumptively entitled to full recovery costs as long as the successful party has behaved reasonably and the costs claimed are proportional to the issues in the result.

23Justice Pedlar at paras. 7-10 of Forrester states:

7 This (Forrester) is not the law of Ontario under well settled case law and Rule 24 of the FLRs.

8 The cases relied on in Berta to suggest that full recovery is appropriate do not stand for the proposition for which they are cited and this was a simple error by the Court of Appeal in Berta, which has now been corrected. However, it throws into some doubt the analysis by the Court in Forrester and suggests that the comments on Forrester about costs may well be in error.

9 In Jackson v. Mayerle [2016 CarswellOnt 3329 (Ont. S.C.J.)], Justice Pazaratz fully analyzes the law of costs in Ontario, including the basic principles as set out in Serra v. Serra, 2009 ONCA 105 (Ont. C.A.) and conducts a thorough canvassing of the factors under Rule 24.

10 Justice Pazaratz explores the concept of bad faith and those situations where, even in the absence of bad faith, full recovery costs may be ordered.

24This Court agrees with Justice Perkins’ comments in Biant above and is bound by Berta and corrigendum. In assessing costs, the Court recognizes that a successful party is entitled to costs and it is guided by the FLRs as they pertain to the fixing of costs and consideration of offers to settle.

25Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), provides that, subject to the rules of Court, costs are in the discretion of the Court.

26Mason v. Smissen, ONSC 5928(Ont. S.C.) provides that the Court must award costs that represent a fair and reasonable amount, rather than an exact measure of the actual cost consistent with what the unsuccessful party might reasonably have expected to have to pay and proportional to the actual issues argued.

27The Court can consider a party’s ability to pay a costs order (MacDonald v. Magel (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.) where the Court stated that a party’s limited financial circumstances will not be used as a shield against any liability for costs but will be taken into account regarding the quantum of costs, particularly when they have acted unreasonably and are the author of their own misfortune.

Offers to Settle

28In reviewing the Respondent’s offers to settle dated November 19, 2015 and May 19, 2016, the Court notes the following:

− the Minutes provided for $1,627 per month for child support payable by the Applicant which was the amount offered in his offer to settle dated May 19, 2016;

− the Minutes provided that s. 7 expenses would be shared proportionately to the parties’ incomes, which was a term of his offers to settle dated November 19, 2015 and May 19, 2016;

− Daphné’s university expenses in the Minutes were as reflected in his two offers to settle;

− the Minutes provided for the sharing of Julien’s tutoring and he offered to pay all of Julien’s hockey fees in both his offers;

− the Minutes provided that each party would pay for Julien’s hockey tournaments they attended and this was contained in both offers;

− the Minutes provided that the Applicant would pay all of Julien’s spring hockey fees, his first offer did not mention this term, in his second offer he offered to alternate it between the parties each year;

− he offered to pay for Julien’s soccer fees in the two offers to settle and it was included in the final order;

− in both offers, he agreed to pay all of the children’s medical/dental costs;

− in the Minutes, he is paying for Julien’s Saturday social club but this was not mentioned in his two offers;

− in his first offer he asked for $1,860 per month as spousal support and in his second offer he asked for $1,500 per month, and he settled for lump sum which amounts to $1,500 per month for 153 months or $1,860 per month for 127 months; and

− there were no retroactive support terms in the final order or in the offers to settle.

29The Applicant, on the other hand, did not serve a formal offer to settle. Rather, she provided a proposal in her Settlement Conference Brief and sent an email dated December 2, 2016 with an offer. In summary, the Applicant’s offers to settle did not specify the parties’ income, spousal support or child support. Rather, she demanded an apology for using the Family Responsibility Office (FRO), reimbursement of spousal support, an amendment of the Final Order regarding the parents’ contributions to the children’s expenses, withdrawal from FRO and that the Respondent would not attend her funeral or her family funerals.

30The Applicant indicated that she had made numerous verbal offers to attend mediation.

Decision

31Firstly, the Applicant had merit in commencing the Motion to change as child support was to be decreased. She had been overpaying child support which continued until the parties resolved the matter.

32On the face of the offers to settle, the Final Order was, in certain aspects, more favourable than the Respondent’s last offer to settle of November 2016. The major issue of spousal support did not see a reimbursement of spousal support payments made by the Applicant pursuant to the Final Order.

33The parties decided to finalize the spousal support issue by way of a lump sum. Even though he sought periodic payments, the lump sum support represents a success by the Respondent as the parties agreed that he was still entitled to spousal support. The lump sum is non-taxable and is a significant amount. The Applicant also found success in her efforts to terminate her spousal support obligation and end the possibility of a return to the Courts for a variation of spousal support.

34As discussed above, the Respondent is presumptively entitled to costs subject to the factors listed in r. 24(11), the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith) and r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party.

35In determining the quantum of costs, the Court has considered FLR 24 (11).

(i) The importance complexity and difficulty of the issues:

− There were many issues involved in this litigation. The Applicant complicated the matter by revisiting the terms of the Final Order, including relief in the Motion to change which were not properly before the Court and causing delays by not providing timely disclosure. Court time was spent dealing with these spurious claims. The issues were very important to the parties as they dealt with mapping out the shared financial responsibility for the children, their education and activities, and also dealt with the financial obligation by the Applicant to the Respondent. Despite the myriad of issues for determination, the matter was not complex.

(ii) The reasonableness or unreasonableness of each party’s behaviour in the case:

− The Court finds that the Applicant was unreasonable in her original position as set out in her Notice of Motion requesting relief that was not attainable, e.g. reimbursement of all spousal support paid pursuant to the Final Order. Clearly, the Applicant was disadvantaged by her decision not to be assisted by a lawyer and hence her litigation strategy may have been misguided. However, this legal inexperience should not be borne by the Respondent in payment of legal costs. It is alleged that she delayed in providing disclosure. Although, there was no motion for compliance of financial disclosure orders, non-disclosure affected the ability of the Respondent to enter into meaningful discussions.

(iii) The lawyer’s rates and the time spent on the motion, expenses incurred, expenses properly paid or payable;

− The Court has reviewed the Respondent’s bill of costs and notes that three lawyers worked on the file, a lawyer with 30 years at the bar at $400 per hour, counsel at the motion called in 2009 at rates of $270 before January 1, 2016 and $280 per after that date; and a third lawyer called in 2016 and a rate of $100 per hour;

− There is no explanation why three lawyers worked on the file and no confirmation that there was duplication of efforts;

− the fees charged were as follows:

− review of Motion to change and financial statement, preparation of responding affidavit Financial Statement, Supplementary affidavit and updating financial statement of $18,644;

− preparation and attendance on March 12, 2015 for first appearance and case conference on May 20, 2015 the amount of $5,670;

− drafting of disclosure requests, and review of disclosure the amount of $1,807;

− exchanging offers, preparation of Settlement conference brief and attendance at the conference and mediation the amount of $9,007;

− preparation for hearing of Motion to change and attendance at Court on June 9, 2016 and December 6, 2016 the amount of $17,161;

− disbursements include $980.65 of photocopying and total amount is $1,335.42;

− the preparation of bill of costs and costs submissions is $1,582;

− with HST the total amount for full indemnity is $60,747.20;

− substantial indemnity is $50,013.49; and

− partial indemnity is $37,879.70.

(iv) Any other relevant factor

The Court finds the large lump sum support payment attains the objective of the Applicant to end the acrimonious litigation between the parties. However, in doing so, it comes at a cost to her and will affect her financial situation despite the fact that she is earning six-figure salary as a medical doctor. The Court finds that a burdensome costs award against her will impact on the financial wellbeing of the children.

36In Islam v. Rahman, 2007 ONCA 622, the Court of Appeal at para. 2 stated :

However, we accept the appellant's submission that the trial judge erred in failing to exclude from the award of costs amounts claimed for steps taken in the case where no order was made as to costs or where there was silence on the issue. Rule 24(10) of the Family Law Rules provides that the judge who deals with a step in a case shall decide who, if anyone, is entitled to costs. If a party who has served an offer to settle the case as a whole wishes that fact taken into consideration in relation to a particular step, it is incumbent on that party to raise that issue with the judge who deals with that step. In this case, various steps were taken (e.g. motions, conferences) in relation to which either there was an endorsement that there be no order as to costs or the issue of costs was not addressed. In the absence of a specific order for costs in favour of the Respondent, the trial judge should have disallowed costs claimed by the Respondent in relation to such steps.

37Therefore, given that FLR 24(10) indicates that costs should be decided at each step, the Court cannot now determine costs for the various Court appearances and preparation for them if costs are not reserved.

38Costs were reserved for the appearance on June 9, 2016 before me when the adjournment on consent took place as the Applicant had just retained counsel. The costs at the case conference held before Master Roger (as he then was) on May 20th, 2015 were reserved. The costs claimed by the Respondent at the case conference and first appearance were $5,670.

39Costs were not dealt with at the settlement conference held on Nov. 26, 2015 and hence the Respondent cannot claim these amounts.

40The costs claimed for attendance on June 9 2016 and December 6, 2016 for the motions that did not proceed were $17,161.

41Therefore, the maximum permitted claim is $22,831.

42The Court declines to order costs for the attendance at the case conference. The parties were able to deal with the issues of financial disclosure. I did not preside over that hearing and it is not apparent on the record whether costs should flow from that event. There is no question that the Final Order required a variation as a result of the change of circumstances of the children’s’ situation and the case conference was a necessary step that required the parties to deal with preliminary steps and disclosure.

43The court finds the Respondent is entitled to costs on a partial indemnity basis because:

− the Applicant had no choice but to commence litigation to deal with child support adjustment;

− the Respondent was successful in obtaining Minutes that resulted in a Final Order that was favourable in most aspects than his last Offer to Settle;

− however, the Court considers the significant lump sum spousal support that the Respondent will be receiving to be a concession on the Applicant’s part that he would never have obtained on a Motion to Change. By agreeing to such a significant non-taxable nor deductible amount of $140,000, that undoubtedly will have an impact on the Applicant’s ongoing financial position;

− the Applicant indicates that she gave up retroactive child support, and compromised by paying a larger portion of the s. 7 expenses and a lump sum to end all litigation; and

− most importantly, the Court does not accept the Applicant’s collateral attack on the Final Order of Justice Mackinnon. The Final Order was not appealed nor set aside. A final Court order is presumed correct. The Applicant’s claim for a reimbursement of the spousal support paid pursuant to that order was ill conceived. The Respondent should not bear the cost of the legal fees incurred for those types of claims.

44Therefore, the above reasons, the Respondent is entitled to costs on a partial indemnity basis in the amount of $8,500 (inclusive of HST and disbursements) to the Respondent. These costs relate to spousal and child support and may be enforced as an incident of support by the Family Responsibility Office.