NEWMARKET COURT FILE NO.: FS-18-56381-00 DATE: 20181203 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Maria Rita Palumbo, Applicant AND: Guy Palumbo, Respondent

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: K. Larsen, Counsel for the Applicant C. Marchetti, Counsel for the Respondent

HEARD: By written submissions

COSTS ENDORSEMENT

[1] The parties appeared in court with counsel on October 24, 2018, to argue the applicant’s motion. That motion requested that the applicant have exclusive possession of the matrimonial home, and other relief. The motion did not proceed. Instead, the parties spent the day engaged in lengthy negotiations. In the result, the parties entered into a consent temporary order, resolving numerous issues, except for costs. Both parties sought costs, notwithstanding the Minutes of Settlement. The parties were invited to make written submissions if costs could not be agreed upon. Both parties have now made those submissions and submit that they are entitled to costs.

[2] The applicant, Maria Palumbo, seeks costs of $59,131, covering the period June 1 to October 24, 2018. That amount was divided into three components. The third component covered the period August to October, in the amount of $27,000. Mr. Palumbo seeks costs on a full indemnity basis of $20,757, for the period October 1 to October 24, 2018.

Costs after Minutes of Settlement

[3] The discreet issue on this costs hearing is whether or not costs should be awarded after a motion that did not proceed and resolved by way of Minutes of Settlement. If costs are available, what are the factors that the court should consider?

[4] Rule 24 of the Family Law Rules, O. Reg. 114/99 provides a starting point for the consideration of costs:

24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

24(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(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.

24(6) If success in a step in a case is divided, the court may apportion costs as appropriate.

[5] With respect to general principles regarding costs in family law proceedings, the Court of Appeal provided the following guidance in its recent decision, Beaver v. Hill, 2018 ONCA 840. As Nordheimer J.A. stated at para. 4:

I begin with the basic premise that costs awards are discretionary and entitled to deference. However, in my view, the motion judge erred in her costs decision as a result of her failure to apply two important principles. One is proportionality, and the other is the “reasonableness” evaluation of the ultimate award.

[6] In para. 11, Nordheimer J.A. referred to the appropriate considerations in r. 24(12) and stated, “There is no provision in the Family Law Rules that provides for a general approach of ‘close to full recovery’ costs.”

[7] As case law makes clear, costs may be awarded even when parties sign a settlement agreement. In Scipione v. Del Sordo, 2015 ONSC 5982, Pazaratz J. stated at para. 64:

While the court in Davis v. Davis identified that it may sometimes be difficult to determine success (or relative success) when the parties signed the settlement document, the mere fact that the settlement was by way of minutes does not pre-empt a full costs analysis.

In noting that the father brought a motion to change, which was largely unsuccessful, modest costs were awarded to the mother. As the court noted at para. 64(j):

If a party brings a motion asking to change almost everything, and at the last minute signs a Consent which changes almost nothing, how can they possibly argue that a judge will have a hard time figuring out who was successful?

[8] In Witherspoon v. Witherspoon, 2015 ONSC 6378, Leach J. declined to order costs sought by parties after Minutes of Settlement had been executed. As he noted at para. 42, after considering various policy concerns:

…our courts have held that, “where parties make a settlement as between themselves, the court…should be very slow to make an award of costs against one of the parties”, and unless there are compelling reasons to do so, costs in the circumstances of a settlement between parties ought not to be awarded by the court. [Citation omitted.]

[9] In Atkinson v. Houpt, 2017 ONCJ 316, S. O’Connell J. awarded modest costs after stating at paras. 48-49:

However, there may be instances where the settlement is a “clear capitulation” by one party in favour of another, and is very clear who the successful party is in the litigation.

This is one of those cases. The mother was entirely successful.

[10] However, with respect to reviewing offers to settle between the parties, the court cautioned at para. 40:

It is not appropriate to go behind the freely negotiated terms of settlement and to engage in an exercise of determining which party’s position on each issue would have been accepted by the trial judge if the matter had proceeded to trial.

[11] In Talbot v. Talbot, 2016 ONSC 1351, Templeton J. considered costs after parties had settled all outstanding issues on the eve of trial. Justice Templeton refused to order costs in circumstances where she could not determine that either party had capitulated. With respect to settlements, Templeton J. stated at para. 55:

There is presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. In this regard, however, I adopt the opinion of Mr. Justice Perkins in Davis v. Davis, who was of the view that:

In order for there to be a “successful” party, there must be a declared winner or loser on the issues. That declaration will ordinarily come from a judge, after argument. In this case, we have in effect minutes of settlement. I find that the “divided success” approach of r. 24(6) is more appropriate here than the winner/loser approach of r. 24(1).

Consent of October 24, 2018

[12] Before considering the matter in further detail, it is useful to summarize some of the key points that the parties agreed to in their consent. The key points are as follows:

• Both parties were entitled to remain in the matrimonial home with the applicant moving out by January 10, 2019.
• The respondent agreed to pay interim spousal support of $2,350 per month.
• The parties agreed to share equally the costs of carrying the matrimonial home.
• The parties agreed to costs with respect to other rental properties they owned.
• The parties addressed parenting time with their adult child, Carmine.
• The parties agreed that the applicant would take ownership of one of their rental properties.
• The both agreed to be restrained from attending the other party’s place of employment.

[13] It is clear that both parties exchanged offers to settle, but in costs submissions, blamed the other party for the costs of litigation. As Mr. Palumbo states in para. 31 of his submissions:

Ms. Palumbo’s unreasonable positions caused a great deal of financial damage. She has brought her exclusive possession motion on four occasions, twice on an urgent basis, since June 2018. Full indemnity costs should be ordered given her reckless disregard for the costs of this litigation.

[14] In seeking her costs, Ms. Palumbo states at page 3 of her submissions:

The question is whether the Husband crossed the threshold of bad behaviour to acting in bad faith to warrant not just a prevention of his claim for costs but an award of costs to the Wife. This is a case of death by a thousand cuts, any one of his actions would not amount to bad faith but looked at globally as Perkins J. did in S.(C.) v. S. (M.) at para. 19, these actions constitute bad faith to invoke the relief available in r. 24(11).

[15] The parties engaged in lengthy bargaining resulting in a consent, without the necessity of the motion going forward. In my view, there was no clear “winner” requiring an award of costs to a party who capitulated at the last moment. Further, I am satisfied that the behaviour of either party did not rise to the level of unreasonableness requiring costs to be fixed against the party after a consent has been arrived at.

[16] I am also satisfied that the consent represented divided success for both parties. Under the circumstances, having considered the principles of reasonableness and proportionality, I am satisfied that each party should bear their own costs. No order as to costs.

MULLIGAN J. Date: December 3, 2018