Court File No.: FS-16-5611
Date: 2018-06-07
Ontario
Superior Court of Justice
B E T W E E N:
Erinn Lindsay Catherine Gravelle, Applicant
- and -
Peter Joseph Welch, Respondent
Counsel: T. Carten, for the Applicant M. Cupello, for the Respondent
Heard: Via Written Submissions
Before: Mr. Justice T.A. Platana
Reasons On Costs
[1] On April 4, 2018, I released reasons on the issues of child and spousal support (Gravelle v. Welch, 2018 ONSC 2096). The focal issue was the applicant’s claim that the respondent was underemployed by choice, and that any award of support claimed by him should be reflective of that. I did not accept the applicant’s claim that the respondent was underemployed.
[2] The application originally included claims for custody and access, and equalization of property. The property issues were resolved at a settlement conference on August 24, 2017, prior to the trial. Custody and access issues were resolved at the outset of trial.
[3] I have received written submissions on costs from the applicant and the respondent, and a reply to the respondent’s costs submissions from the applicant.
[4] The applicant submits that up until August 24, 2017, one third of the time on the file would have been spent on each of the following issues: (1) equalization of property, (2) custody and access, and (3) child and spousal support. Following settlement of the property issues at the settlement conference, the time spent should be equally divided on the issues of (1) custody and access, and (2) child and spousal support. When the issues of custody and access were settled at the opening of trial, all remaining time was on the issues of child and spousal support.
[5] The property issue resulted in a consent order that the matrimonial home be listed for sale and that the net proceeds be paid to the applicant. The applicant argues that she should be awarded costs up to the sale of the settlement conference which resulted in the consent order.
[6] The applicant submits that she then provided an Offer to Settle the custody and access issue on February 13, 2017, which was consistent with the Order agreed upon on December 12, 2017, the opening day of trial. She submits that she should be awarded costs on the custody and access issue up to December 12, 2017.
[7] The applicant argues that although the respondent made offers, those offers were tied to his position on custody and access, and there were no stand-alone offers on the issue of child and spousal support.
[8] The applicant argues that the respondent was awarded less child and spousal support than he was seeking.
[9] The applicant submits that the respondent was unsuccessful in his claim for retroactive child and spousal support.
[10] Further, the applicant argues that she was successful on the issue of benefit coverage and on the issue of the respondent’s request to be named trustee of life insurance proceeds for the children, as that order was not made.
[11] The applicant submits that she was successful in her position that any order made should be subject to review in two years without proving a material change in circumstances.
[12] In summary, the applicant proposes that costs be payable to her, allocated as follows:
(a) From the date of the commencement of the application to the date of the settlement conference (August 24, 2017):
• One-third for property issues;
• One-third for custody and access issues;
• One-sixth for child support issues; and
• One-sixth for spousal support issues.
(b) From the date of the settlement conference (August 24, 2017) to December 12, 2017:
• One-half for custody and access issues;
• One-quarter for child support issues; and
• One-quarter for spousal support issues.
(c) From December 12, 2017 to January 12, 2018:
• One-half for child support issues; and
• One-half for spousal support issues.
[13] As there were no orders with respect to costs at the motions, case conference and settlement conferences, it is submitted that the costs award should not include time spent in preparation for those events and attendance at those events.
[14] The applicant has provided a Bill of Costs in the amount of $61,673.20, including disbursements and HST. She submits that the respondent pay her costs fixed at $22,843.66 (based on a partial indemnity basis of 60% of costs for property, and custody and access issues). She requests that there be no order as to costs with respect to the issues of child support, spousal support, retroactive support, benefit coverage and life insurance as success was divided on these issues.
[15] Mr. Cupello, for the respondent, relies initially on Rules 24(10) and 24(10.1), and the decision in Davis v. Fell, 2016 ONCJ 84 for the submission that a trial judge is not entitled to make a costs award for costs covering prior steps such as case conferences and settlement conferences where costs were not ordered or the issue of costs was not addressed. In the same theme, he submits that judges should be reluctant to make costs orders where the parties settle the merits of the dispute, unless there are compelling reasons to do so.
[16] He notes that the respondent also made Offers to Settle.
[17] Mr. Cupello submits that with respect to the issues of equalization of net family property, and custody and access, there should be no costs awarded to either party. He submits that with respect to the issues of child and spousal support, the respondent was the successful party as the applicant’s claim that income should be attributed to the respondent was unsuccessful.
[18] He notes that in the respondent’s Offer to Settle, dated November 24, 2017, the respondent offered to accept $622.00 per month for child support, and the amount awarded was $750.00 per month. Further, he notes the applicant’s position that there should be no entitlement to spousal support and that an order was made that the applicant pay spousal support in the amount of $250.00 per month.
[19] Mr. Cupello requests that costs be payable to the respondent on a partial indemnity basis up to and including November 24, 2017 (the date of an Offer) in the amount of $18,522.19, and that from that day forward costs be payable on a substantial indemnity basis in the amount of $19,892.36, for a total of $38,414.55.
[20] Further, he submits that the respondent’s Bill of Costs includes all the expenses incurred during the litigation, including time and expenses related to property, custody and access issues. He points out that two-thirds of the time on the file up to the date of trial was spent on those issues.
[21] He further submits that it is unreasonable that the respondent be entitled to 53.25 hours of time for the respondent’s counsel to travel between Thunder Bay (where counsel is situated) and Kenora. Mr. Carten submits that entitlement to travel costs for out of town counsel is subject to the unavailability of legal counsel (which has not been established) or to exceptional circumstances (Allen v. Mueller, 2006 ABCA 101). For the same reason, he submits that travel-related expenses should not be allowed.
[22] In total, he submits that the respondent’s Bill of Costs should be reduced by $2,866.32 (travel time) and $4,143.74 (travel expenses).
The Law
[23] The Family Law Rules do not address costs on a “partial indemnity basis”. Rule 18(14) of the Family Law Rules, which deals with the cost consequences of a failure to accept an offer to settle, does differentiate between “costs” and “full recovery of costs”. Rule 24(8) also refers to “costs on a full recovery basis” where a party has acted in bad faith. In Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.), Aston J. held that the concept of the two traditional scales of costs is no longer the appropriate way to quantify costs under the Family Law Rules. He stated that having determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery, having regard to the factors set out in Rule 24(11), without any assumption about categories of costs. This characterization of costs under the Family Law Rules was approved by the Ontario Court of Appeal in C.A.M. v. D.M., 2003 18880 (ON CA), [2003] O.J. No. 3707 (C.A.), at para. 42.
[24] The starting point in setting costs in family law matters is Rule 24(1):
24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
[25] Rule 24(10) provides that promptly after each step in the case the court should decide who, if anyone, is entitled to costs and should set the amount of costs.
[26] Rule 24(11) sets out the factors which must be considered in awarding costs:
(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 signatures of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter.
[27] An award of costs is a matter in the discretion of the court by virtue of s. 131(1) of the Courts of Justice Act, which provides:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in the proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.
[28] In C.A.M. v. D.M., supra, at para. 40, Rosenberg J.A. held that the Family Law Rules have circumscribed the broad discretion granted by s. 131(1) of the Courts of Justice Act, but that they have not completely removed the court’s discretion. I note that Rule 24(11)(f) allows the court, in setting the amount of costs, to take into account “any other relevant matter.” Read in conjunction with s. 131(1) of the Courts of Justice Act, there remains a discretion to award costs that appear just in the circumstances of the case, while giving effect to the Rules.
[29] The Court of Appeal has made it clear that in assessing costs, the overriding principle is one of reasonableness, and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) at p. 302).
[30] In Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at para. 4, the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.
[31] While Boucher and Zesta Engineering are not family law cases, I accept that the principles enunciated above are applicable to family law matters.
Discussion
[32] In applying the appropriate rules of costs in this case it is necessary to initially determine who the successful party was. This application, commenced in September 2016, originally claimed a divorce, custody and child support, equalization of net family properties, exclusive possession of the matrimonial home and contents, and sale of the family property. Prior to the commencement of the hearing, counsel advised that the parties had settled the property issues, and the issues with respect to custody and access of the children. Counsel for Ms. Gravelle also indicated that she will continue to keep Mr. Welch covered on her benefit plan for two years. The parties also agreed to the claim for divorce. Evidence with respect to the divorce was presented at the commencement of the hearing. The focal issue remained child and spousal support. That issue required a determination of the parties’ respective incomes, in particular whether income should be imputed to the respondent. The respondent was successful on that issue, the only issue upon which evidence was presented.
[33] I do not agree with the submissions of the applicant that success was divided in this trial. Clearly, although some issues had been resolved, or deferred prior to trial, the fundamental issue of child and spousal support was clearly determined in favour of the respondent.
[34] What is significant in the determination of costs is what effect should be given to the offers to settle. Rule 18 of the Family Law Rules deals specifically with what might be described as “formal” offers to settle. Various offers to settle were presented by the parties dealing with the specific issues of joint custody and primary residence, an access schedule and child and spousal support. The applicant presented three offers to settle, the first dated November 20, 2017. That offer was for custody to the applicant; shared residence of the children with specified access to the father; the applicant to pay the respondent $200.00 per month child support, based on imputed income of $50,000.00 to the respondent reviewable after two years; no spousal support; and no costs if the offer was accepted prior to November 23.
[35] On November 27, an offer was made on essentially the same terms for residency of the children but with joint custody. The offer for child support was deleted. On the same date, a further offer contained a term that no spousal support shall be payable by either party, and no costs shall be payable with respect to the issue of spousal support. A third offer dated November 27 from the applicant offered payment of child support in the amount of $200.00 per month, and other terms again based on imputed income of the respondent of $50,000.00. An offer dated December 6, 2017 contained similar, if not exactly the same, terms for residency of the children. Offers to pay child support were based on imputing income to the respondent of $40,000.00, reviewable after two years at the request of either party.
[36] An offer made December 20, 2017 based child support on the income ultimately determining at the trial, and also requesting retroactive child support in the amount of $2,762.50 payable $100.00 monthly.
[37] The respondent made an Offer to Settle on November 24, 2017 with specific terms relating to custody and access, and for child support based on the respondent’s income, with no imputation. The offer contained a provision that the applicant would pay retroactive child support. No retroactive support was ordered. The offer included child support to be based on imputing income to the respondent, ranging from a current figure of $25,000.00, with potential increase to $30,000.00 for the 2019 taxation year.
[38] This was not a complex or complicated issue. The issue as to the determination of income was straightforward after the evidence of the parties and the school board witnesses were presented.
[39] Although the parties disagreed on the focal issue, I do not find that either party acted unreasonably.
[40] The Bill of Costs presented by the respondent and the hourly rates charged are reasonable for Mr. Cupello as counsel of record. However, there is no indication in the Bill of Costs as to the various roles or capacities of others named in the Bill of Costs, and as to whether they are junior counsel, support staff or clerks.
[41] Additionally, the Bill of Costs includes time billed for all work, including conferences where no order for costs was made.
[42] I have further considered that travel time and costs have been charged for travel from Thunder Bay to Kenora. I have not allowed the full costs claimed as it was not established that local counsel could not have been retained.
[43] In reviewing the reasonableness of the respondent’s costs request, I note that the fees shown by the applicant are $49,975.00 based on 245 hours of work since the opening of the file. The respondent’s Bill of Costs shows fees totaling $41,137.64. The respondent claims disbursements of $6,537.40 which, as I noted, includes travel time and disbursements for travel from Thunder Bay to Kenora and return on seven occasions.
[44] The respondent’s Bill of Costs does not show a total time spent other than itemizing each individual’s billing time. As cases have stated, the overriding principle is one of reasonableness. The costs should reflect what a court considers to be a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.
[45] I award costs to the respondent in the amount of $30,000.00 plus HST and disbursements in the amount of $5,000.00 plus HST.
_______“original signed by”
The Hon. Mr. Justice T. A. Platana
Released: June 7, 2018
Court File No.: FS-16-5611 Date: 2018-06-07
Ontario Superior Court of Justice
B E T W E E N:
Erinn Lindsay Catherine Gravelle, Applicant
- and -
Peter Joseph Welch, Respondent
Reasons On Costs
Platana J.
Released: June 7, 2018
/sab