CITATION: McMurter v. McMurter, 2017 ONSC 725
COURT FILE NO.: FS-08-0046-02
DATE: 2017 January 30
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KELLY ANN McMURTER
Applicant
– and –
JAMES ROBERT GORDON McMURTER
Respondent
Self-represented
Mr. Abba Katz, for the Respondent
HEARD: written submissions
MacLeod-Beliveau J.
COSTS ENDORSEMENT
[1] The applicant Kelly Ann McMurter, a self-represented litigant, seeks costs of the 15 day trial against the respondent James Robert Gordon McMurter, represented by counsel, as a result of the dismissal of the respondent’s Motion to Change commenced April 14, 2013 to terminate spousal support. This costs endorsement should be read in conjunction with my Reasons for Judgment cited at McMurter v. McMurter [2016] ONSC 1225 (S.C.J.).
[2] The respondent in his Motion to Change sought to terminate spousal support payable to Mrs. McMurter in the amount of $2,500.00 per month. Mrs. McMurter opposed the claim on the basis that there had not been a material change of circumstances and that Mr. McMurter’s financial situation and net worth had improved not worsened. Mrs. McMurter sought orders in relation to implementation of the consent final divorce judgment of Justice C. McKinnon dated April 6, 2010.
[3] On July 15, 2016, in my Reasons for Judgment, I dismissed Mr. McMurter’s claim and made additional ancillary orders as referenced in my written reasons.
Position of Mrs. McMurter
[4] Mrs. McMurter’s position is that she was totally successful at trial and is entitled to costs as a self-represented litigant, including an award of costs for her legal fees that she paid to her previous counsel. She seeks the total amended sum of $18,239.85, broken down as follows: legal fees paid to her former solicitor between from December 9, 2013 to January 15, 2014 of $9,414.66; less costs ordered January 14, 2014 and paid of $1,500.00; less costs ordered on April 24, 2014 and paid of $2,000.00 for a net amount of legal fees of $5,914.66. She seeks costs of the case conference on November 25, 2015 of $1,000.00. She seeks costs of preparation during the trial and the conduct of the trial, including preparation of costs submissions of 263 hours at $34.35 per hour for a total of $9,033.31, corrected to $9,034.05, an increase of $0.74. She seeks disbursements of $250.00 for assistance from a chartered accountant, transcript fees of $103.98 and photocopies and supplies of $590.48. HST is claimed on the $9,414.66 of legal fees and the accounting fee totalling $1,256.40, plus HST on the transcript fees and photocopies and supplies disbursements of $50.24, corrected to $90.28, for a grand total cost claim of $18,239.85.
Position of Mr. McMurter
[5] Mr. McMurter’s position as submitted by Mr. Katz is that at most, the costs should be $4,818.16 based on the 263 hours that Mrs. McMurter has claimed for preparation and conduct of the trial at $18.32 per hour. This is based on Mrs. McMurter’s 2015 annual income of $38,100 or $18.32 per hour as her opportunity cost that she has foregone while preparing and presenting the case for trial. Mr. Katz objects to the claim for legal fees for Mrs. McMurter’s former counsel as no account or dockets were provided, even though requested from her on August 30, 2016. He objects to the $1,000.00 costs claim for the case conference, as no endorsement as to costs was made by the case conference judge.
Governing Principles
[6] Rule 24.1 (1) of the Family Law Rules provides that there is a presumption that a successful party is entitled to the costs of a case. Rule 24 (11) sets out the relevant factors that the court shall consider in an award of costs as follows:
FACTORS IN COSTS
(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.
[7] There is no specific Rule that references cost awards in respect of self-represented litigants. In 1999, the Ontario Court of Appeal provided some guiding principles on this issue in Fong v. Chan, [1999] O.J. No.4600 (C.A.) which have been followed in other cases:
Self-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel;
All litigants suffer a loss of time through their involvement in the legal process;
The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case;
Costs should only be awarded to those lay litigants who can demonstrate that they have devoted time and effort to the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by foregoing remunerative activity;
A self-represented lay litigant should receive only a “moderate” or “reasonable” allowance for the loss of time devoted to preparing an presenting the case; and
Routine awards on a per diem basis to litigants who would ordinarily be in attendance at court in any event are excluded.
[8] In Witter v. Gong [2016] O.J. No.6333 (S.C.J.) at paras. 8-12, E.B. Murray, J. reviewed the case law since Fong v. Chan and noted in summary:
Indemnification of a successful litigant is not the only objective of the costs rules which are also designed to encourage settlement and to discourage and sanction inappropriate behaviour by litigants;
Courts have awarded costs to successful self-represented litigants who have not foregone remunerative activity to do what would otherwise be lawyer’s work on the case.
Without the option of awarding meaningful costs to self-represented litigants, the court’s ability to encourage settlements and discourage inappropriate behaviour will be greatly diminished;
To require proof of lost income would disqualify litigants who are homemakers, retirees, students, unemployed, unemployable, and disabled and deprive courts of a tool required re: administration of justice;
There is a wide variation in the approach taken by courts to quantify costs that are payable to the self-represented litigant;
Most courts base the award at least in part on the time spent doing legal work. But self-represented litigants are not in the practice of keeping dockets as to what is legal work done as compared to the time that was spent devoted to the case as if they were represented by counsel;
The rate varies widely, from $20.00 per hour to $150.00 per hour, less time the party would still have spent on the case if represented;
Some courts have used the lawyer’s rates for the unsuccessful party if represented or the actual legal fees that party has incurred as a measuring stick to determine compensation to the self-represented party;
Some courts have used a rule of thumb allowing so many hours of preparation time and so many hours of trial time;
Courts have considered the quality of the work performed by the self-represented litigant as a factor in a costs decision;
Consideration must be given to the appropriate level of indemnification, assessed by reference to degree of success and reasonableness of each party’s litigation behaviour;
The amount of costs awarded must be reasonable, proportional and within the losing party’s expectation.
Analysis
[9] Mrs. McMurter was successful in this case. In applying the principles and in consideration of the factors as set out in Rule 24 (11), I begin with the importance, complexity or difficulty of the issues. This case was of great importance to Mrs. McMurter. If successful, Mr. McMurter would have stopped paying her spousal support after a long term marriage. If successful, it was Mr. McMurter’s position that he had overpaid support and that Mrs. McMurter owed him money. The effect on Mrs. McMurter’s income would have been severe. Mr. McMurter’s position in the litigation was found to be without merit.
[10] This was a most complex and difficult case on many levels. The case involved issues and findings of fact over many years, and complicated reviews of inadequate financial materials. Mr. McMurter failed to produce timely, organized and complete financial disclosure. This increased the trial time from the original estimate of 3-5 days to 15 days. Mr. McMurter’s sworn financial statements were misleading and inadequate. Mrs. McMurter as a self-represented did not delay the trial to any degree of significance.
[11] Mrs. McMurter conducted an organized case and presented it well. She did in-depth financial analyses of the financial material, most of which was regrettably provided during the trial. Her position was that Mr. McMurter was being untruthful about his income which I found to be the case. Mrs. McMurter successfully used a net worth assessment approach to establish her position on the balance of probabilities that Mr. McMurter’s income was significantly more than what he swore it was.
[12] As well, the legal issues in this case were extremely complex and involved the application of aboriginal law and its interaction with the Divorce Act, the Family Law Act, and the Indian Act and the court’s jurisdiction.
[13] The reasonableness or unreasonableness of each party’s behaviour in the case is another consideration. As a self-represented litigant, I find that Mrs. McMurter’s behaviour was appropriate. While not a lawyer, and while making some errors, she did do her best at providing her position and materials in a clear and forthright manner. The presentation of her case was very impressive for a non-legally trained self-represented litigant. She did the work of a lawyer in addition to the work expected of her as a litigant.
[14] Mr. McMurter’s behaviour in respect of his financial situation and the lack of appropriate financial disclosure, was a deliberate attempt in my view to mislead the court. This behaviour was the main substantive reason for the increased length of the trial.
[15] I am unable to use Mr. Katz’s hourly rate as a measuring stick in this case is as it was not disclosed. Mrs. McMurter ran out of money and could not afford to retain lawyer for the trial. She was quoted $25,000.00 in fees if the trial lasted one week. It lasted three weeks.
[16] While both parties referred in their written submissions to offers to settle made, neither party produced the details of the offers to settle for the court’s consideration on the issue of costs.
[17] I do agree with Mr. Katz’s position as to the claim by Mrs. McMurter for legal fees and costs for the case conference. I do not award any costs for Mrs. McMurter’s former counsel’s net legal fees of $5,914.66 or for the case conference of $1,000.00. Firstly, at a minimum, Mrs. McMurter should have produced her former counsel’s legal account to be reviewed and assessed by the court. Without the actual legal account, I cannot review that account for its reasonableness. Mr. Katz is also unable to respond in his submissions to the appropriateness of that account. Secondly, in family law proceedings, costs are to be assessed after each step in the case as set out in Rule 24 (10). As no costs were awarded by the case conference judge, and as no decision to reserve the costs for determination at a later stage in the case was made, I do not order an award of costs for a case conference after a trial in these circumstances.
[18] It is obvious to me as the trial judge that Mrs. McMurter spent a significant amount of time on this complex case doing the work that a lawyer normally would do. The time Mrs. McMurter claims for “preparation during the trial for next day’s trial – January 11, 2016 to February 9, 2016, and for the preparation of the submissions on costs” is 263 hours at $34.35 per hour. I am satisfied that these hours referred to are hours that were spent outside of the court trial time proper in evening preparations for the following day’s trial, and during the gaps in the trial that were allowed to enable the parties to prepare. Additional time was given to the parties due to the disclosure issues to do additional preparation during the trial by not always sitting on the next consecutive day. The magnitude of the financial analysis was just too enormous. Mrs. McMurter would also be entitled to claim for substantial trial preparation time in advance of the trial which was not detailed by her in her written submissions. It is obvious to me however, that she did substantial preparation and lawyer type work in advance of this trial as well.
[19] I am also satisfied considering the material and detailed analysis produced by Mrs. McMurter, that these were hours spent by her. The rate claimed of $34.35 an hour I find to be woefully inadequate considering the nature and the quality of the work done by Mrs. McMurter, and the benefit of the financial analysis done by Mrs. McMurter in advancing the trial. The quality of Mrs. McMurter’s work was comparable to that of junior counsel in most aspects, and in other more minor aspects was comparable to that of a very experienced law clerk.
[20] In Izyuk v. Bilousov [2011] O.J. No. 5815 (S.C.J.) Justice A. Pazaratz found that a rate of $100.00 per hour was reasonable for a well prepared self-represented litigant. In Burns v. Krebss [2013] O.J. No.1991 (O.C.J.), S. O’Connell, J. agreed with Justice Pazaratz and fixed the rate of a $100.00 per hour as being appropriate for a self-represented litigant that was well organized and well prepared. The rate used in Witter v. Gong [2016] O.J. No.6333 (O.C.J.) was $150.00 per hour.
[21] While it is difficult for me to assess exactly what time she spent on this case as a litigant and what time she spent doing work that otherwise a lawyer would have done, I am satisfied that the 263 hours claimed and referenced were spent doing the work of a lawyer and are reasonable.
[22] It is worthwhile to take a closer look at the Izyuk v. Bilousov case. That case involved a 17 day trial where the successful litigant was self-represented and the unsuccessful litigant was represented by counsel on Legal Aid. The respondent father Mr. Bilousov was overwhelmingly successful at trial. He sought costs of $15,000.00. If he had been represented by counsel, his recoverable costs were stated to have been $50,000.00. The applicant’s counsel submitted that $3,000.00 was the appropriate award of costs. The judge concluded that the applicant mother had acted unreasonably. The respondent father had claimed fees for 390 hours of lawyer like work at $35.00 per hour. Justice Pazaratz found that 300 hours was reasonable or $10,500.00. At the rate of $100.00 per hour that sum became $30,000.00. The trial judge found that the respondent father was extraordinarily well prepared. The father represented himself at trial because he had run out of money for a lawyer. The mother was supported by Ontario Works. In the result, Justice Pazaratz allowed substantial indemnity costs at the hourly rate of $100.00 for 200 hours totalling $20,000.00. Due to the Applicant mother’s financial circumstances and inability to pay, this sum was reduced to $10,000.00 plus disbursements and HST which he ordered the applicant mother to pay.
[23] In this case and in my view, a rate of $100.00 per hour is reasonable and appropriate for a well prepared self-represented litigant and the 263 hours claimed I find are reasonable. In addition I allow Mrs. McMurter an additional 50 hours for legal preparation before trial for a total of 313 hours. Mrs. McMurter was extraordinarily well prepared. Use of this rate would yield a cost award of $31,300.00. I have no issue with the disbursements and the HST claimed. I find them to be reasonable in the total amount of $1,067.24. I find that Mr. McMurter has the clear ability to pay the cost award. An hourly rate times the hours spent, plus disbursements and HST however, is only one factor to consider in the proper determination of costs.
[24] Mrs. McMurter did lose income as a result of this case. In particular, during the trial she would not have been able to properly attend to her real estate listings and clients on evenings and weekends or promote new listings. She would have been unable to do her part time work at the band office of the Mohawks of the Bay of Quinte but that work would normally be done during business hours when she would have been at the trial as a litigant in any event. The magnitude of the review and analysis of the materials was significant in this case and would have consumed Mrs. McMurter outside of her normal work time and would be lawyer type work.
[25] I have carefully considered the Rules and guiding principles in making an award of costs and the facts and circumstances of this particular case. In the result, I find that an award of costs fixed at $30,000.00 inclusive of disbursements and HST is reasonable and appropriate in all the circumstances.
[26] Litigants cannot and should not assume that if a party is self-represented that they will not bear the consequences of a significant cost award in the litigation in the appropriate circumstances if they are unsuccessful.
Conclusion
[27] I order that the respondent James Robert Gordon McMurter pay to the applicant Kelly Ann McMurter the sum of $30,000.00, inclusive of disbursements and HST as her fixed costs of this trial, on a substantial indemnity basis, payable forthwith. This amount shall be enforced as spousal support by the Director of the Office of the Family Responsibility Office. A support deduction order shall issue.
[28] This amount of an award of costs would have been within Mr. McMurter’s reasonable expectation as an unsuccessful litigant considering the issues in this case and the length of the trial. Mr. McMurter is a very experienced litigant.
[29] The court office shall prepare the order for review and approval by MacLeod-Beliveau, J. and then issue the order. Approval of the order by the respondent Mr. McMurter is dispensed with. Copies of the issued order shall be provided to Mrs. McMurter and to Mr. Katz, counsel for Mr. McMurter.
The Honourable Madam Justice Helen MacLeod-Beliveau
Released: January 30, 2017
CITATION: McMurter v. McMurter, 2017 ONSC 725
COURT FILE NO.: FS-08-0046-02
DATE: 2017 January 30
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KELLY ANN McMURTER
Applicant
– and –
JAMES ROBERT GORDON McMURTER
Respondent
COSTS ENDORSEMENT
MacLeod-Beliveau J.
Released: January 30, 2017