Karinna Margaret Gerda Petersoo v. Tonu Elmar Petersoo

COURT FILE NO.: FS-17-21786

DATE: 20181121

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Karinna Margaret Gerda Petersoo

AND:

Tonu Elmar Petersoo

BEFORE: J.T. Akbarali J.

COUNSEL: Karen Ballantyne for the Applicant/Respondent in Appeal

Michael Stangarone and Stephen Kirby for the Respondent/Appellant in Appeal

HEARD: In writing.

ENDORSEMENT

Overview

[1] On November 1, 2018 I released reasons in an appeal brought by the appellant from an arbitrator’s decision: 2018 ONSC 6519. I upheld the arbitrator’s decision with respect to financial issues and costs, but set aside the decision as it related to parenting issues due to a denial of natural justice in the arbitration process. I varied the interim parenting arrangements pending a rehearing of the parenting issues before a new arbitrator.

[2] In the context of the appeal I also addressed a motion for fresh evidence brought by the respondent. I admitted her affidavit and the appellant’s responding affidavit. I did not admit the affidavit of her educational expert, because it was not necessary given the parties’ agreement that the children’s educational status quo would remain undisturbed pending the next arbitration.

[3] These reasons deal with costs of the appeal and costs of the motion for fresh evidence. In addition, these reasons deal with costs of a motion the appellant brought to set a date for the appeal which was heard by Monahan J. on July 23, 2018 and in respect of which he reserved costs to the judge hearing the appeal.

General Principles Regarding Costs

[4] Modern family costs rules are designed to foster four fundamental purposes: to indemnify successful litigants for the cost of litigation, to encourage settlements, to discourage and sanction inappropriate behaviour by litigants, and to ensure that cases are dealt with justly: Mattina v. Mattina, 2018 ONCA 867. The cornerstone of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840 at para. 12.

[5] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. By r. 24(10)(a) of the Family Law Rules, O. Reg. 114/99, the court is directed to make a decision on the costs of a step in the case promptly after dealing with the step, in a summary manner.

[6] Pursuant to r. 24 the successful party on an appeal and a motion is presumptively entitled to costs, subject to the factors set out in Rule 24 – a caveat the Court of Appeal recently called “important”: Beaver v. Hill, at para. 10.

[7] The factors to consider are set out in r. 24(12), and include the reasonableness and proportionality of a number of enumerated factors as they relate to the importance and complexity of the issues. These factors include each party’s behaviour, the time spent by each party, any written offers to settle, including those that do not meet the requirements of r. 18, any legal fees and any other expenses, and any other relevant matter.

[8] There is no general approach in family law of “close to full recovery costs”: Beaver, at paras. 9-13. Rather, full recovery is only warranted in certain circumstances, such as bad faith under r. 24(8) or besting an offer to settle under r. 18(14): Beaver, para. 13.

[9] I now turn to the parties’ various claims for costs which I evaluate using the legal framework described above.

The Motion to Set an Appeal Date

[10] The parties disagree on which one of them was more successful on the motion to set an appeal date. The motion appears to have had its genesis in the respondent’s position that the appeal date should be set and her appeal materials delivered after she had obtained fresh evidence from her educational expert and had her motion for fresh evidence determined by the court. The appellant argued the motion to admit fresh evidence should be heard by the appeal judge. The appellant’s position was correct; motions to admit fresh evidence are generally heard by the appellate court together with the main appeal.

[11] The respondent states that she delivered an offer to settle on July 17, 2018, proposing that the motion would be heard by the appellate court and that she would serve her responding materials by October 1, 2018. She states that the motion was not necessary in view of this offer.

[12] The appellant also delivered an offer on the motion, also on July 17, 2018, providing that the respondent would serve her responding materials by October 1, 2018 and that the appeals would proceed on October 23, 2108. He states that he bettered the terms of this offer because the timeline imposed by Monahan J. was more aggressive that the timelines that would have applied to the respondent under the Family Law Rules.

[13] I agree with the parties that in view of each of their offers, the motion was a waste of time. How two parties with offers so functionally close together ended up proceeding to a motion is beyond me. It was a waste of their resources and of the court’s resources. Monahan J.’s endorsement reflects an agreement of the parties that the appeal would proceed on October 23, 2018. It also sets out a timetable, although it does not indicate if the timetable is on consent.

[14] In my view, the respondent’s incorrect position that the motion for fresh evidence needed to be heard before the appeal spawned the motion. Because of that, the appellant is entitled to costs from the respondent. He succeeded in getting a date set and the proper procedure adhered to by virtue of bringing the motion.

[15] However, the quantum of costs is subject to the factors set out in r. 24. The appellant seeks $4,681.70 on a partial indemnity scale, representing collectively over 15 hours of time from four different timekeepers. The full indemnity costs for this motion are $7,571.57. Almost five hours of Mr. Stangarone’s time – the most expensive timekeeper – occurred after the exchange of the July 17, 2018 offers and relate to preparation for, and argument of, the motion.

[16] I note that the respondent states that the appellant delivered a bill of costs at the hearing disclosing costs of $6,283.00. It is not clear to me what scale this purports to be on, and the figure does not match any scale – partial, substantial or full – in the appellant’s bill of costs that was provided to me. The respondent also states that her own costs for the motion were $6,025. These appear to be full indemnity costs, which, as I have noted, are not awarded absent specific circumstances.

[17] Given the offers exchanged, in my view, the time Mr. Stangarone spent after July 17, 2018 was not reasonable. Nor, in my view, is the amount sought proportionate to what was, in effect, a scheduling issue. In my view, for this step in the proceeding, costs of $3,000 all-inclusive are fair and reasonable and is an amount consistent with the respondent’s reasonable expectations of costs, given her own full indemnity costs of about $6,000 on this motion.

The Appeal

[18] The parties disagree as to which one was the more successful on the appeal. The respondent argues that she succeeded on the financial issues and costs, while the appellant only succeeded in obtaining a new arbitration on the parenting issues. Those issues may ultimately be determined in her favour. She seeks her costs of $25,592.

[19] The appellant argues that the parenting issues were the main focus of the appeal, and he succeeded in setting aside the parenting award. He seeks his costs of $25,723.16 plus the costs of transcripts in the amount of $5,681.64.

[20] In my view, there is divided success on the appeal. The appellant succeeded in obtaining relief in the setting aside of the parenting provisions of the arbitrator’s decision but did not succeed with respect to the financial issues and costs. However, I accept the appellant’s argument that the parenting issues took up the bulk of the time spent on the appeal. That is apparent from the written argument filed and the oral argument made. Very little was said about the financial issues, and even less about costs.

[21] While the ultimate question of the parenting arrangements remains uncertain, the costs of that determination will be for the arbitrator in the new arbitration. The issue before me is the costs of the appeal, in which the respondent did not succeed in preserving the parenting award. Thus, the fact that the parenting issues may ultimately be resolved in her favour is not, in my view, relevant to the question of apportioning costs of the appeal.

[22] In the result I conclude that the appellant is entitled to his costs of the appeal, reduced to account for the divided success.

[23] The quantum of costs must also reflect the other relevant factors. To that end, I note:

a. The issues in the appeal were very important to the parties. Both parties are loving parents. One cannot imagine issues more important to the parties than their parenting arrangements, and the question of where the children will live. One would expect the parties to treat these issues with the gravity they deserve and invest their resources in advancing their positions.

b. The respondent’s bill of costs discloses fees of $25,180.92 on a full indemnity scale. On a full indemnity scale, the appellant’s bill of costs discloses fees of $35,117.30. It is not clear to me whether these figures include the costs of the motion for fresh evidence; the docket entries do not clearly refer to the motion, and the written submissions do not illuminate the issue. However, I note that if one were to consider the respondent’s costs of the motion for fresh evidence and her costs of the appeal, her full indemnity costs approach $35,000. Thus, one of two things may be said: (i) if the appellant’s costs of the motion are included in the bill of costs for the appeal, the parties had remarkably similar costs; or (ii) if the appellant’s costs of the motion are not included in the bill of costs for the appeal, the parties had a discrepancy in their costs which cannot be explained simply by the appellant’s greater burden of putting together the appeal record.

c. Neither party misconducted themselves in the course of the appeal.

d. Only the respondent delivered an offer to settle on the appeal, which called for a withdrawal of the appeal and a payment of $5000 to her in costs. She did not better the offer.

e. As I have noted, there is divided success on the appeal.

[24] As I have stated, the appellant did not clarify what his costs of the motion for fresh evidence were as distinct from the costs of the appeal. I will proceed on the basis that the appellant’s costs for the motion to admit fresh evidence are about $9,500 (roughly the same as the respondent’s) and deal with those separately below.

[25] I will thus proceed on the basis that his full indemnity costs of the appeal are $25,617.30. In my view, despite the confusion about the appellant’s costs of the motion to admit fresh evidence, this is justified because either (i) $9,500 of costs from his full indemnity bill is properly allocated to the motion to admit fresh evidence but has not been described that way on the bill of costs, or (ii) because a discount is warranted from the appellant’s bill of costs to reflect the reasonable expectations of the respondent, whose own bill was significantly lower than the appellant’s.

[26] In my view, costs in the amount of $15,000 all-inclusive (except for transcripts, which I address below) is fair and reasonable. This amount reflects partial indemnity costs, discounted for the divided success on appeal. In addition to this amount, in my view, the costs of the appeal transcripts should be apportioned equally between the parties, since they were equally relevant to both the parenting issues and the financial issues, and there was divided success on those issues. The full indemnity cost of the transcripts is $5,681.64. The appellant is thus entitled to half the cost, or $2,840.82, from the respondent.

The Motion for Fresh Evidence

[27] The appellant argues he was partially successful on the motion to admit fresh evidence, because I declined to admit the affidavit of the educational expert on the motion. While he does not specifically state he is seeking these costs, as I have noted there is confusion about whether he is claiming them in his bill of costs on the appeal. If he did, he is seeking them.

[28] The respondent argues she is entitled to costs. She states the only reason I did not admit the educational expert’s affidavit is because the parties agreed to leave the children’s educational situation undisturbed pending a new arbitration, a position only very lately adopted by the appellant. Had he not agreed, I would have needed the affidavit from the educational expert to address the interim educational arrangements pending the new arbitration.

[29] I agree with the respondent. She is the substantially successful party on the motion to admit fresh evidence. It was reasonable for her to bring forward evidence of the children’s current circumstances. Among the relief the appellant sought was a request that I make a determination as to the children’s best interests which, could I have done so, would have required current information about their situation, including their educational situation. In the end, I relied, in part, on the fresh evidence I admitted to make determinations about the interim parenting arrangements.

[30] The respondent is presumptively entitled to her costs of the fresh evidence motion.

[31] The respondent claims $8,998.19 in full indemnity fees inclusive of HST, and $410.72 in disbursements. There is no reason to award costs on a full indemnity scale on this motion. By my calculation, the respondent’s partial indemnity fees, inclusive of HST, are $5,848.82. She is entitled to this amount plus $410.72 in disbursements, for a total of $6,259.54, from the appellant.

Conclusions on Costs

[32] Based on the foregoing analysis, the respondent owes the appellant $3,000 in costs for the motion that proceeded before Monahan J., costs for the appeal of $15,000 for fees, HST and most disbursements, and costs of $2,840.82 for her share of the transcripts. These total $20,840.82.

[33] At the same time, appellant owes the respondent $6,259.54 in costs with respect to the fresh evidence motion.

[34] These amounts should be netted out against each other. In the result, the respondent owes the appellant $14,581.28. This amount shall be paid within thirty days.

J.T. Akbarali J.

Date: November 21, 2018.

CORRECTION NOTICE

COURT FILE NO.: FS-17-21786

DATE: 2018-11-22

CORRECTION ISSUED: 2018-12-03

Paragraphs 26, 32, and 34 have been amended to reflect the correct cost of transcripts, and the resultant total costs liability.

• In paragraph 24 – “The full indemnity cost of the transcripts is $9,902.21. The appellant is thus entitled to half the cost, or $4,951.11, from the respondent.”

• In paragraph 32 - “…and costs of $4,951.11 for her share of the transcripts. These total $22,951.11.

• In paragraph 34 – “In the result, the respondent owes the appellant $16,691.57.

The Honourable Madam Justice Akbarali

December 03, 2018.