Court File and Parties

COURT FILE NO.: FS-14-19313 DATE: 20181115 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

RENE NEGIN Applicant – and – PERRY MICHAEL FRYERS Respondent

Counsel: Bhupinder Nagra, for the Applicant Dani Z. Frodis and Arin Tint, for the Respondent

HEARD: In writing

M. D. FAIETA j.

Reasons for Decision

Introduction

[1] The Respondent seeks his costs, on a full recovery basis, in respect of both his motion to vary his spousal and child support obligations, and the Applicant’s motion for the payment of arrears of spousal and child support, which culminated with an eight day trial. See Negin v. Fryers, 2018 ONSC 959 (“Trial Decision”) and Negin v. Fryers, 2018 ONSC 4486 (“Supplementary Decision”).

[2] The parties separated in June 1998 when their three children were ages 6, 3 and 1. At the time of trial, Taryn was 25 years old, Corey was 22 years old and Jared was 21 years old. Taryn had completed two undergraduate degrees and was employed as a teacher. Corey and Jared were completing an undergraduate degree at McMaster University.

[3] In an order dated October 7, 2002, the parties agreed that the Respondent would pay child support to the Applicant based on his income for the previous year in accordance with the Child Support Guidelines, along with an additional amount for spousal support so as to provide the Applicant with 60% of the family’s net disposable income in the previous year. The parties also agreed that the Applicant would be responsible for the children’s section 7 expenses but would share their children’s reasonable post-secondary expenses according to their incomes. The obligation to pay child support would continue only so long as each child was a “child of the marriage”.

[4] The Applicant has been unemployed from the date of separation. Accordingly their family’s net disposable income has largely been the Respondent’s net disposable income. The Respondent has not paid for the children’s post-secondary expenses as he argued that the agreement should not be interpreted in that fashion as it would leave him with little or no money for his own living expenses.

[5] In 2014, the Respondent filed a motion to change the 2002 Order to terminate spousal support and child support and to vary the sharing of post-secondary educational expenses. In response, the Applicant asked for an order requiring payment of arrears for the children’s post-secondary education and for an order that support be paid on income that the Respondent had allegedly failed to disclose.

[6] The issues raised by these motions were as follows:

(1) Is the Respondent obliged under the 2002 Order to pay for the children’s reasonable post-secondary school expenses in addition to paying 60% of his net disposable income to the Applicant? The Respondent denied that he was obliged to do so. I accepted the Applicant’s interpretation of the 2002 Order. See paragraphs 158-166 of the Trial Decision;

(2) What amount of arrears for post-secondary school expenses is owed to the Applicant? The Applicant submitted that $343,376.54, being 75% of the actual costs, should be paid by the Respondent. The Respondent submitted that $195,000.00 should be paid based on $15,000 per child per year. I accepted the Respondent’s position. Subsequently, by agreement of the parties, the sum of $26,550 in interest was added to these arrears. See paragraphs 167-172 of the Trial Decision;

(3) When should the Respondent’s obligation to pay child support in respect of Taryn end? The Applicant submitted that Taryn was no longer a “child of the marriage” effective January 1, 2016. The Respondent submitted that Taryn was no longer a “child of the marriage” effective June 30, 2014. I accepted the Respondent’s position. See paragraphs 115-127 of the Trial Decision;

(4) When should the Respondent’s obligation to pay child support in respect of Corey end? It was anticipated that Corey would complete his undergraduate degree in the Spring of 2017. It was his intention to apply for admission to a medical school. The Respondent’s position was that Corey would no longer be a “child of the marriage” effective June 30, 2017. The Applicant submitted that Corey should be considered a “child of the marriage” until August 31, 2021. I accepted the Respondent’s position. See paragraphs 128-141 of the Trial Decision;

(5) When should the Respondent’s obligation to pay child support in respect of Jared end? It was anticipated that Jared would complete his undergraduate degree in the Spring of 2018. It was also his intention to apply for admission to a medical school. The Respondent’s position was that Jared would no longer be a “child of the marriage” effective June 30, 2018. The Applicant submitted that Jared should be considered a “child of the marriage” until August 31, 2022. I accepted the Respondent’s position. See paragraphs 142-157 of the Trial Decision;

(6) What amount of child support should be paid from July 1, 2014 by the Respondent in respect of Corey and Jared while they attended university? The Applicant submitted that the full table amount should be paid. The Respondent submitted one-third of the table amount should be paid. I ruled that two-thirds of the table amount should be paid for each child. See paragraphs 173-177 of the Trial Decision;

(7) Has there been a material change in circumstance that justifies a change in spousal support? The Applicant submitted that the payment of spousal support should continue as there had been no change in circumstances. The Respondent submitted that spousal support should be terminated effective June 30, 2019. I ruled that there was neither a needs basis nor any other basis for continuing spousal support beyond June 30, 2018 shortly following Jared’s scheduled graduation from McMaster. See paragraphs 178-188 of the Trial Decision;

(8) What amount of spousal support should be paid? The Applicant submitted that the Respondent should continue to pay 60% of the family’s net disposable income even after the obligation to pay child support for one or more children ended. The Respondent submitted that spousal support be changed to $2,000 per month effective July 1, 2014. I ruled that spousal support effective July 1, 2014 shall be calculated by deducting the amount of table child support that the Respondent would have had to pay during that period as if one or more children (as the case may be at the relevant time) was still a child of the marriage from the amount of spousal support otherwise payable. See paragraphs 9-12 of the Supplementary Decision; and

(9) What amount of income should be imputed to the Respondent’s income for purposes of calculating support? The Respondent admitted that he gave his current spouse the sum of $675,000 in September 2016. Further, the Respondent admitted that he had never included the imputed value of the health insurance plan and the automobile provided by his employer. The only issue was the proper amount to impute for investment income. See paragraphs 189-196 of the Trial Decision.

[7] As a result of the above findings, the Respondent has overpaid support to the Applicant in the amount of $165,892.00 (including those amounts being held in trust). Offsetting the arrears of post-secondary school expenses against the overpaid support, there remains $88,020.00 owed by the Respondent to the Applicant.

[8] The Respondent seeks his costs of $173,023.96, on a full recovery basis. The Applicant submits that both parties were equally successful and therefore there should be no costs payable by either party.

Position of the Respondent

[9] The Respondent makes the following submissions:

• The Respondent submits that the Applicant’s continued hostility towards him and her successful alienation of the children from him amount to bad faith within the meaning of Rule 24(2) and entitles the Respondent to recover $173,023.96, being his costs on a full recovery basis from March 21, 2014;
• Alternatively, the Respondent submits that the he is entitled to recover (1) his costs on a full recovery basis from and after August 23, 2016 pursuant to Rule 18 given that his offer dated August 23, 2016 was more favourable to the Applicant than the trial decision; and (2) his costs on a partial recovery basis (85%) prior to August 23, 2016, in the amount of $168,698.49; and
• Alternatively, the Respondent seeks his costs on a partial recovery basis (85%) in the amount of $147,070.37.

Position of the Applicant

[10] The Applicant submits that both parties were equally successful in their relief and accordingly there ought to be no costs payable by either party to the other; in the alternative, if the Court is inclined to award any costs, then the Applicant submits that she has been slightly more successful than the Respondent.

Analysis

[11] In a family law proceeding, the award of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as well as by the Family Law Rules, O. Reg. 114/99. The principles governing the award of costs were recently reconsidered by the Ontario Court of Appeal in Beaver v. Hill, 2018 ONCA 840, at paras. 8-13, and Mattina v. Mattina, 2018 ONCA 867, paras. 9-18, and can be summarized as follows:

• An award of costs under the Family Law Rules should promote the following purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, and; (3) to discourage and sanction inappropriate behaviour by litigants; (4) to ensure, in accordance with Rule 2(2), that cases are dealt with justly: Mattina, para. 10;
• While under Rule 24(1) there is a presumption that a successful party is entitled to their costs of the proceeding, Rule 24(4) provides that a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. Rule 24(5) provides that whether a party has behaved unreasonably turns on: (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. Unreasonable behavior “in relation to the issues” includes behavior that: (1) is disrespectful of other participants or the court; (2) unduly complicates the litigation, (3) increases the cost of litigation: Beaver v. Hill, 2018 ONSC 3352, para. 51, rev’d 2018 ONCA 840 (but not on this point);
• A successful party is not entitled to its costs on a full recovery or “close to full recovery” basis (meaning 85% of full recovery costs) unless such result is expressly contemplated by the Family Law Rules, such as when a party obtains a result that is at least as favourable as its offer to settle (Rule 18(14)) or when a party has acted in bad faith (Rule 24(8)): Beaver, paras. 13, 17;
• Proportionality and reasonableness are the “touchstone considerations” to be applied in fixing the amount of costs: Beaver, para. 12;
• In setting the amount of costs, Rule 24(12) requires a court to consider: (a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues: (i) each party’s behaviour, (ii) the time spent by each party, (iii) any written offers to settle, including offers that do not meet the requirements of Rule 18, (iv) any legal fees, including the number of lawyers and their rates, (v) any expert witness fees, including the number of experts and their rates, (vi) any other expenses properly paid or payable; and (b) any other relevant matter.
• A party’s ability to pay costs is a relevant consideration in assessing the amount of costs payable only for the purpose of justifying a reduction, not an increase, in the amount of costs awarded: Beaver, para. 18;
• A claim for costs cannot include a risk premium that reflects the fact that counsel provided legal services while bearing the risk that they might ultimately not be fully paid for their services: Beaver, para. 7;
• The absence of an offer to settle cannot be used against a party in assessing costs unless it was realistic to expect an offer to settle to be made. Further, if an offer to settle that is not compliant with Rule 18 is made, it may be considered in assessing costs if it contains a “true element of compromise”: Beaver, para. 16; and
• An award of costs may be adjusted to reflect the parties’ divided success: Beaver, para. 21.

[12] The application of the above principles is addressed below.

Who was the “Successful Party”?

[13] As previously stated, Rule 24(1) of the Family Law Rules directs that the successful party is presumed entitlement to costs. By contrast, Rule 24(6) indicates that in a case of “divided success”, I may apportion costs “as appropriate”. A determination of the applicable Rule thus turns on my assessment of the parties’ respective success in this proceeding.

[14] A person is “successful” if he or she accomplishes an aim or purpose: See Concise Oxford English Dictionary, (12th ed. 2011) at p. 1439. Success is assessed by comparing the terms of the order made against the relief requested in the pleadings and, where applicable, against the terms of an offer to settle: C.(A.) v. K.(G.), 2015 ONCJ 399, 64 R.F.L. (7th) 496, para 17; Johanns v. Fulford, 2010 ONCJ 56, 15 R.F.L. (7th) 148, para 13.

[15] The nine issues at trial are described at the beginning of this decision.

[16] The Respondent obtained most of the relief that he sought at trial. He was successful in having child support, including the payment of post-secondary expenses, and spousal support resolved on terms that he proposed at trial or better. On the other hand, the Applicant was successful in obtaining an order requiring the Respondent to pay his share of past post-secondary school expenses based on the Respondent’s mistaken interpretation of the 2002 Order. The Applicant was also successful in obtaining an order imputing certain income to the Respondent for the purposes of calculating support.

[17] Given the above outcomes, the Respondent was the substantially “successful party” at trial given that he had greater success in obtaining the relief that he sought than did the Applicant.

[18] Success need not be equally divided in order for Rule 24(6) to apply: Lazare v. Heitner, 2018 ONSC 4861, para. 9. Further, “some success” may not be enough to impact on costs: Scipione v. Del Sordo, 2015 ONSC 5982, 68 R.F.L. (7th) 66 at para. 68.

[19] Whether there has been divided success turns on whether the important relief sought by a party was granted. Success on a minor or ancillary relief that did not account for much trial time does not support a claim of divided success: Lazare, para. 9; Butty v. Butty (2009), 70 R.F.L. (6th) 181 rev’d on other grounds 2009 ONCA, 119 O.R. (3d) 721, para. 30.

[20] The bulk of the evidence heard by the court was related to the seven important issues upon which the Respondent succeeded. There was relatively little evidence at trial devoted to the two issues described above on which the Applicant succeeded. The issue of whether there were arrears of post-secondary school expenses was an important issue; however, it turned on the interpretation of the 2002 Order and required little evidence. The second issue of whether income should be imputed was a relatively minor issue that involved little in the way of evidence and largely turned on submissions.

[21] I find that it is just to make a small deduction from any costs awarded to the Respondent on the basis of divided success.

Bad Faith

[22] Rule 24(8) provides that:

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.

[23] In S.(C.) v. S.(M.), 38 R.F.L. (6th) 315 (Ont. S.C.), aff’d 2010 ONCA 196, 76 R.F.L. (6th) 14, Justice C. Perkins enunciated the following principles to inform the application of Rule 24(8):

• The impugned behavior “… must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent….”: S.(C.), para. 17 [emphasis added]. Put another way, the essential components of bad faith are intention to inflict harm or deceive: Scalia v. Scalia, 2015 ONCA 492, 126 O.R. (3d) 341, para. 68;
• The bad faith must relate to the issues at stake in the case or to the conduct of the case — not behaviour outside the issues in the case or in a separate (even if related) case: S.(C.), para. 18;
• Full recovery costs should only be awarded in relation to the issues affected by the bad faith: S.(C.), para. 24; and
• As one example, bad faith conduct may arise when a parent engages in a campaign to alienate the children from the other parent in order to inflict emotional harm on the other parent: S.(C.), para. 21; Cantave v. Cantave, 2014 ONSC 5999, R.F.L. (7th) 396, paras. 9-11.

[24] Each party claims costs on a full recovery basis because of the other party’s alleged bad faith conduct.

Applicant’s Alleged Bad Faith Conduct

[25] The Respondent submits that the Applicant’s successful alienation of the children from him and the Applicant’s continued hostility towards him amount to bad faith and entitle the Respondent to recover his full costs.

[26] The Respondent submits:

Rene cut Perry out of their children’s lives. The children grew up without the benefit of having any relationship with Perry. Rene refused to provide to Perry information about the children. She instructed her lawyer to convey to Perry that he did not even that the right to request information about the children. Rene testified that she had no obligation to provide Perry with any information about the children. Rene referred to Perry’s attempt to connect online with his daughter as stalking. Jared testified that Perry never came up as a topic of conversation at home. Perry sent over 40 cards to the children from 1998-2017 and not once did Perry ever receive an acknowledgement, although the cheques that accompanied the cards were cashed.

[27] The Applicant submits:

Contrary to the position of the respondent, Rene’s conduct does not amount to bad faith. The issue of access or custody was not before the court on the motion to change and there has been no finding of parental alienation. The issue before the court was at what point in time child support and spousal support terminates and alienation was certainly not a factor to be considered in deciding the respondent’s issue and further, there is no such finding. For the respondent to raise this issue now is simply improper and done for the sole purpose of flavoring the motion. There has been no bad faith and the Courts are clear that for costs to be paid based on an assessment of bad faith, the conduct of a party must be egregious.

[28] Unlike S.(C.) and Cantave, custody and access were not at issue in this Application. The outcome of the child support or post-secondary expense issues were not affected by the powerful and uncontradicted evidence that after the Applicant demanded that the Respondent move out of their home in June 1998 because she suspected that he was having an affair, the Applicant’s continued hostility towards the Respondent has led her to take revenge against him in various ways. As outlined in the Trial Decision, this included successfully doing all that she could to ensure that the Respondent was not part of his children’s lives. While this conduct is reprehensible, it does not amount to bad faith in this context.

Respondent’s Alleged Bad Faith Conduct

[29] The Applicant submits that the Respondent exhibited bad faith conduct during the trial in two ways.

[30] First, the Applicant submits that:

Jared was required as a witness at trial because the respondent’s counsel took the position that Jared’s psycho-ed assessment was not to be entered as a business record. Despite this issue having been dealt with before Justice Perkins, the author of the report was still required to be brought to trial despite the reports not being prepared for litigation purposes.

[31] Jared was not “required” to testify; rather, the Applicant chose to call Jared to testify even though the Respondent indicated that he did not dispute that Jared had learning difficulties and that the Applicant spent a significant amount of time assisting Jared with his studies. I also note that the Trial Scheduling Endorsement provided that the Applicant’s fourth witness would be “the authors of children’s psychoeducational reports if available”. In taking the position that the Respondent’s conduct in resisting the admission of a psycho-educational assessment amounted to bad faith, the Applicant challenges not only Respondent’s position but also my mid-trial ruling that accepted the Respondent’s position. The Respondent’s conduct in these circumstances does not remotely qualify as bad faith.

[32] Second, after the Respondent’s mother passed away, the Respondent received net proceeds of $775,000 from the sale of her home. By Order dated August 9, 2016, Justice Mesbur dismissed the Applicant’s motion to have $300,000 paid into court from the net proceeds of sale of the Respondents mother’s house as security for any award for the payment of support or post-secondary education expenses. She found that the Respondent had met his support obligations on a timely basis and that such an order was unnecessary. The Respondent transferred $675,000 to his spouse on or about September 1, 2016. The Applicant submits that such transfer amounted to “bad faith” because the Respondent assured Justice Mesbur that he “would not alienate funds”. However, Justice Mesbur’s decision does not reflect any such assurance, nor does the Applicant’s costs submissions reference the evidentiary basis for this assertion. In my view, such conduct does not amount to “bad faith”. The Respondent’s disposition of funds did not breach any court order, nor did the Respondent attempt to deceive the court.

Offers to Settle

Rule 18(14) Compliant Settlement Offers

[33] Rule 18(14) provides that:

A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

1. If the offer relates to a motion, it is made at least one day before the motion date.
2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

[34] Given the phrase “unless the court orders otherwise”, a court has discretion to refuse to order full recovery costs even where the five conditions found in Rule 18(14) are satisfied. Relevant considerations include the unsuccessful party’s ability to pay the costs award and the reasonableness of the unsuccessful party’s conduct before and during trial: C.A.M. v. D.M. (2003), 67 O.R. (3d) 181 (C.A.), paras. 43-45.

[35] The Respondent made offers to settle on November 6, 2014, August 23, 2016 and June 6, 2017. The Respondent obtained a result at trial that was more favourable than his last two settlement offers. At trial the Respondent was ordered to pay the Applicant the sum of $88,020. The August 23, 2016 offer required the Respondent to pay the Applicant the sum of $265,352. The June 6, 2017 offer required the Respondent to pay the Applicant the sum of $320,761.

[36] However I find that none of the offers made by the Respondent satisfy the conditions found in Rule 18(14). The last offer was not made at least seven days before the commencement of trial. The August 23, 2016 was revoked by the June 6, 2017 offer and thus had expired before the start of trial.

[37] The Applicant did not make any offers to settle until less than two weeks before trial. An offer dated June 1, 2017 expired within 26 hours. It required the Respondent to pay the Applicant the sum of $833,012 plus ongoing, indefinite spousal support. A second offer, dated June 5, 2017, required the Respondent to pay the Applicant the sum of $881,759.00 plus ongoing, indefinite spousal support. The Applicant did not obtain a more favourable result at trial.

[38] There were five parts to the Applicant’s offer dated June 5, 2017. The parts were severable. The Applicant asserts that Parts 1 and 2 were more favourable than the outcome at trial and thus acceptance of the offer would have “substantially reduced” the length of the trial.

[39] There are two problems with this submission.

[40] First, offers to settle under the Family Law Rules are result oriented, not issue oriented: Baldwin v. Funston (2004), 9 R.F.L. (6th) 239 (Ont. S.C.) at para 3.

[41] Second, there is no merit to the Applicant’s position on an issue-by-issue basis.

[42] The Applicant states that Part 1 of her settlement offer would have resolved the issue of arrears of child support and post-secondary costs at $175,000.00. However, Part 1 requires that $175,000 be paid by certified cheque and that funds held in trust by the Respondent’s counsel also be released. Given the lack of evidence regarding the amount held in trust, it is not clear that Part 1 was a preferable outcome. At trial, there was a finding that there had been an overpayment of support and arrears of post-secondary school expenses which left $88,020.00 owed.

[43] The Applicant submits that Part 2 of her settlement offer “… stated that post-secondary costs would have been payable at $15,000 per child per annum which is what Rene received based on the decision”. However, Part 2, which addresses prospective child support, also required payment of child support for Corey until August 31, 2021 and for Jared until August 31, 2022 which is not as favourable as the result at trial.

[44] I find that none of the settlement offers made by the Applicant satisfy the conditions of Rule 18(14).

Non-Compliant Rule 18(14) Settlement Offers

[45] The court may take into account any written offer to settle, the date it was made, and its terms even if Rule 18(14) is inapplicable: Rules 18(16) and 24(12)(a)(iii).

[46] To have any relevance in assessing costs, an offer to settle must contain “a true element of compromise”. Further, while Rule 18(16) highlights the integral role of reasonable offers to settle in family law proceedings, a court should not rely too heavily on this consideration to increase or decrease the quantum of costs: Beaver, paras. 15-16.

[47] The Respondent submits that while it has had offers to settle continually available for acceptance since November 6, 2014, the Applicant’s first offer to settle was made less than two weeks before trial on June 1, 2017. However, the late timing of the Applicant’s offers is not an aggravating consideration for purposes of assessing costs as there is no obligation on a party in a family law proceeding to make a settlement offer: Beaver, para. 15.

[48] The Respondent further submits that his offers were more reasonable than the Applicant’s offers when compared to the trial decision as well as more favourable to the Applicant than the trial decision. The Applicant’s offer, dated June 5, 2017, required that the Respondent pay the sum of $881,759 to the Applicant. The Respondent’s offer, dated June 6, 2017, required that the Respondent pay the sum of $320,761.00 to the Applicant.

[49] It is my view that there is no true element of compromise in the Applicant’s offers as they appear to approximate the value of her best case given the relief sought by both parties. On other hand, had the Respondent delivered his last offer only twelve hours earlier, the Applicant would be facing the prospect of paying costs on a full recovery basis from the date of that offer. Given that one of the objectives of the Family Law Rules is to encourage settlement, it is my view that a small increase in the assessment of the Respondent’s costs is just.

Importance, Complexity or Difficulty of the Issues

[50] The Respondent submits that although the issues were not overly complex, they were extremely important and difficult for the parties to agree on. He states that the primary issue was whether the Applicant was entitled to receive 60% of the family’s net disposable income 15 years after the 2002 Order was issued in addition to the Respondent’s contribution to the children’s post-secondary expenses.

[51] The Applicant made no submissions regarding the importance, complexity or difficulty of the issues.

[52] I find that the issues raised by these motions were of great importance to the parties; however, they were neither complex nor difficult.

The Reasonableness of Each Party’s Behaviour

[53] The Respondent submits that the Applicant’s behavior before and during trial was unreasonable in the following ways:

• The Applicant failed to provide the Applicant with accurate information about the children and her own circumstances. This led to Questioning being held one month prior to trial. The Respondent learned at Questioning that Taryn lived in residence for her first year of her undergraduate degree and later in an apartment, that Corey did not complete his Grade 12 year at Toronto Preparatory School, and that Jared finished high school by taking classes with “Whiz Kids”;
• The Respondent testified that all of the information that he knew about Corey’s special needs was gained from the Applicant’s answers during her Questioning and from third party institutions. The Applicant refused to provide copies of her bank statements and credit card statements until immediately before trial. The Applicant has not provided complete copies of her income tax returns to the Respondent along with Notices of Assessment for the relevant years;
• Despite the Respondent’s statement that he was not disputing the children’s special needs, the Applicant devoted a significant portion of trial time to eliciting evidence from two witnesses and Jared as to the extent of Jared’s and Corey’s special needs. The Respondent saw his son Jared for the first time since he was two years old in the hallway outside the courtroom prior to Jared testifying at trial;
• In her opening statement, the Applicant raised the very serious allegation that the Respondent had sexually assaulted Taryn and then chose not to lead any evidence to support this allegation;
• The Applicant failed to provide forthright answers to questions at trial and failed to substantiate her claims relating to her property ownership;
• In advancing a claim for the Respondent’s contribution to the children’s post-secondary expenses, the Applicant included unrelated expenses including her own hotel expenses;
• The Applicant took the disingenuous position that even after table child support owed for Taryn and Corey was reduced, she was to continue to receive 60% of the family’s net disposable income; and
• The Applicant changed counsel three times during this proceeding which resulted in unnecessary delays and legal fees for the Respondent.

[54] The Applicant made no submission regarding the reasonableness of the Respondent’s behavior before or during trial other than those circumstances alleged to amount to “bad faith”.

The Lawyers’ Rates, Time Properly Spent on the Case, Expenses Paid or Payable

[55] The Respondent has been represented throughout this proceeding by Mr. Frodis and his associates. Their hourly rates are as follows: (1) Dani Frodis (1993 Call): $510-$535 over the course of this proceeding; (2) Ildiko Moktassi (2009 Call): $245-$300; (3) Arin Tint (2010 Call): $310-$350.

[56] The Respondent states that the majority of the day-to-day work in this matter was completed by junior associates, first Ms. Moktassi, and later Ms. Tint, under the supervision of Mr. Frodis. The Respondent was not billed for any duplication of work or time spent in transitioning the file from Ms. Moktassi to Ms. Tint. While Ms. Tint and Mr. Frodis both attended trial, Ms. Tint’s rate was reduced to one-half during the trial. Further, the Respondent was not billed for legal research and preparation for trial undertaken by another associate, an articling student and law clerks.

[57] The Respondent claims:

(1) Costs of $173,023.96 on a full recovery basis;

(2) Alternatively, costs of $168,698.49 comprised of costs on a full recovery basis from date of his settlement offer dated August 23, 2016 and 85% of his costs before the offer; and

(3) Alternatively, “partial recovery” costs of $147,070.37 representing 85% of his actual costs;

[58] The Applicant made no submissions regarding the reasonableness of the Respondent’s fees or disbursements other than to observe:

The amounts on a partial indemnity submitted by Perry are very close to Rene’s costs, further evidencing that both parties spent an equal amount of time and each party should bear their own costs.

[59] The Applicant’s legal fees and disbursements are as provided by counsel:

(1) Costs of $142,560.45, including disbursements of $6,706.70, on a full recovery basis in respect of services provided solely by Ms. Kerr after April 20, 2016 at a rate of $400 per hour;

(2) Costs of $36,390.66, including disbursements of $1,010.66, on a full recovery basis in respect of services provided solely by Ms. Nakonechny at a rate of $400 per hour from February 25, 2014 to January 5, 2017. Some of the services provided were in relation to two motions heard by Justices Mesbur and Glustein; those services should be excluded from this assessment of costs given that such costs were already assessed in respect of those motions. Given the lack of specificity in the account, I can only estimate from the description of services that about one-half of the amount billed during the period October 29, 2015 to January 5, 2017, or about $8,000.00, related to one or both of the two motions; and

(3) Costs of $6,573.65, including disbursements of $136.15, on a full recovery basis in respect of services provided by an unnamed lawyer from December 6, 2016 to December 13, 2016 in respect of the motion heard by Justice Glustein.

[60] Costs in respect of conferences are recoverable even if costs were not awarded by the presiding judge: Rule 17(18.1). However, the costs awarded by the judges who heard two pre-trial motions should be excluded from the Respondent’s Bill of Costs and thus reduce his Bill of Costs to $170,951.11.

[61] The Bill of Costs delivered by the Respondent and the accounts for legal services delivered by the Applicant are similar in time spent on the case and are a reminder of the high cost of litigation and the need for parties to take full advantage of the opportunities presented at a judicial case conference, settlement conference and a trial management conference to take a hard, realistic look at the merits of their position at the earliest opportunity rather than run the significant risk of having it imposed upon them only after they have incurred significant legal costs and a great amount of litigation anxiety.

[62] The costs incurred by the Respondent were not unreasonable and were within the reasonable contemplation of the Applicant given that she incurred costs of a very similar amount.

Any Other Relevant Matter

[63] No other considerations were raised by the parties except for the matters described below.

[64] The Respondent submits that I ought not to consider the Applicant’s costs submissions because it was delivered two days after the deadline for delivery. In my view such result would be neither a proportional nor a reasonable response to the breach. The Respondent could have asked for two extra days to deliver his reply submissions; however, no such request was received or perhaps required.

[65] As noted earlier, by Order dated August 9, 2016, Justice Mesbur dismissed the Respondent’s motion to pay security. The Order provides that: (1) costs to the Respondent shall be fixed at $4,500.00, all inclusive, on a partial indemnity basis; (2) payment of these costs shall be deferred until the completion of trial and a trial decision rendered, or the ultimate settlement of the Motion to Change. The Applicant submits that the costs ordered by Justice Mesbur should be paid to the Applicant, not the Respondent, despite the clear language of her Order given that the Respondent allegedly assured the Court that he would not dispose of any of the net proceeds of sale. I have dealt with this submission earlier in these Reasons under the discussion of Bad Faith. Justice Mesbur’s Order remains unchanged and outstanding.

[66] On December 22, 2016, Justice Glustein granted the Applicant’s request for an adjournment of this trial. He fixed costs in the cause in the amount of $2,000.00. Given that I have awarded costs of this Application to the Respondent, I order that the Applicant pay costs of $2,000.00 in respect of the order made by Justice Glustein to the Respondent within 30 days.

Conclusion

[67] The Respondent was the successful party at trial. Full recovery costs are not justified on the basis of the settlement offers that were exchanged nor the alleged bad faith behavior. Neither party satisfied the burden of proving that they made an offer to settle that satisfied the conditions of Rule 18(14) and thus full recovery costs is not justified on that basis. Further, while I find that the Applicant has made every effort to ensure that the children have no relationship with the Respondent, other than for the children to receive funds from the Respondent, it is my view that such conduct did not amount to bad faith as neither custody nor access were issues at trial. Similarly, the Respondent’s behavior does not amount to bad faith.

[68] It is appropriate to make a small reduction in the award of costs given that there was limited divided success in this matter; most of the significant issues were resolved in favour of the Respondent.

[69] The Applicant’s unreasonable behavior in relation to the issues both before and at trial is worthy of sanction and offsets any reduction in the costs award arising from the Applicant’s limited success. I also find that the Applicant’s last settlement offer was unreasonable and her failure to accept the Respondent’s last offer was unreasonable. I note that the Respondent’s last settlement offer was more favourable to the Applicant than the outcome at trial and, had it been served one day earlier, may have led to costs being assessed on a full recovery basis.

[70] While it is not possible to put a precise figure on the amount claimed by the Applicant in this proceeding given that some of the support payments were indefinite in nature, it is clear from her last offer to settle that she placed a total value of more than $800,000.00 on her claims. The differences in their positions were more than $500,000.00. I find that the Respondent’s costs were reasonable and proportional to the issues presented at trial. I find that it is just to order that the Applicant pay costs in the amount of $120,000.00 to the Respondent, inclusive of disbursements and taxes, within 30 days. The award of full recovery costs or “close to full recovery” costs is not justified in these circumstances. The amount of costs awarded is approximately 70% of the Respondent’s reasonable costs. The amount of this costs award should have been within the Applicant’s reasonable contemplation given the amount that she has spent for legal services in this case.

Mr. Justice M. D. Faieta Released: November 15, 2018