Court File and Parties

COURT FILE NO.: 44587-10 DATE: 2018-12-19 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: DALE BEVERLEY KARGES, Applicant AND: RICHARD GERARD KARGES, Respondent

BEFORE: The Honourable Mr. Justice C.S. Glithero

COUNSEL: Kaitlin A. Jagersky, Counsel for the Applicant C. Richard Buck, Counsel for the Respondent

RULING ON COSTS

[1] For written reasons released November 8, 2018, I granted the respondent’s motion in large measure and invited written submissions on costs. They have now been received from both sides.

[2] The respondent has submitted a bill of costs indicating fees and HST on a partial indemnity rate in the amount of $98,180.73, and on a full recovery rate in the amount of $151,799.68. In addition, there are disbursements, plus HST, in the amount of $7,789.64.

[3] The respondent made two offers to settle this matter. The first was dated September 12, 2018, confirming an oral offer extended at a settlement/trial management conference, in the amount of $25,000, open for acceptance until one minute after the commencement of trial.

[4] The second was dated September 20, 2018 and offered an immediate payment to the applicant in the amount of $50,000, with each party paying their own costs if the offer was accepted prior to the commencement of trial.

[5] The applicant made three offers to settle, the first was dated September 7, 2018 and offered that the motion be dismissed and the respondent pay costs in the amount of $25,000. This offer was then revoked the same day.

[6] A second offer was made on September 14, 2018 and provided that the respondent would pay monthly spousal support in the increased amount of $5,600 per month from September 2018 to May 31, 2029, then would pay spousal support to a reduced amount of $3,600 per month from June 1, 2029 to May 31, 2034. And, that as of June 1, 2034 the respondent would make a lump sum spousal support payment in the amount of $45,000, which would not be taxable to the applicant, nor tax deductible to the respondent, together with other ancillary terms relating to life insurance.

[7] A second option provided that commencing September 1, 2018 the respondent would pay increased spousal support in the amount of $5,557 per month and provide life insurance and would pay a lump sum retroactive spousal support amount fixed at $36,000 for the period August 1, 2015 to August 31, 2018. If either offer were accepted, then the offer continued to provide three different amounts that would be payable by the respondent to the applicant for costs depending on which option was selected.

[8] A third offer to settle dated August 30, 2018 provided that the respondent would pay a $600,000 lump sum payment forthwith, plus costs in the amount of $15,000.

[9] None of the offers were accepted by either party.

[10] The applicant came nowhere near meeting or exceeding any of her offers as she recovered spousal support at the reduced amount of $1,000 a month for approximately 65 months.

[11] The respondent contends that he achieved a result as favourable as or more favourable than that extended in his second offer. He has provided spousal support advisory guideline calculations indicating that the present value or lump sum equivalent of the periodic spousal support I awarded is $46,536 (midpoint). He submits that if the applicant had accepted his second offer, for a $50,000 lump sum payment, plus interest at 5%, would have left her with $65,515.95, plus the tax savings.

[12] Whether or not that is so, which in turn depends on interest rates applied, it is clear that the respondent’s offer came very close to matching the award at trial.

[13] Rule 18(14) of the Rules of Civil Procedure provides that the successful party is entitled to costs to the date a successful offer was served, and full recovery thereafter.

[14] Importantly, subrule (16) provides that in exercising its discretion over costs, the court may take into account any written offers to settle even if subrule (14) is not met.

[15] In my estimation, the offers made by the respondent were realistic and a meaningful effort to reasonably settle the issues between the parties.

[16] In my assessment, the offers made by the applicant were not terribly helpful and realistically were unacceptable from the respondent’s point of view.

[17] Turning to the respondent’s bill of costs, if allowed partial indemnity costs to the date of his $50,000 offer and full recovery costs thereafter, the total is $127,596.31.

[18] The respondent’s counsel was called to the Bar in 1975, has practised family law exclusively since then and is a certified family specialist. He charges his time at $450 per hour and that of a law clerk with 15 years’ experience in family at $220 per hour.

[19] I remind myself, as set forth in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), the fixing of cost does not fall to be determined simply by the calculation of hours charged and hourly rate sought.

[20] The bill of costs of the respondent indicates the expenditure of approximately 300 hours, if you take the total fees divided by Mr. Buck’s hourly rate. While the majority of the time is his, a significant portion is that of his law clerk and when you take her hourly rate into account, the number of hours increases.

[21] The applicant’s bill of costs shows a time expenditure of 178 hours, mostly by Ms. Jagersky.

[22] Rule 24(11) of the Rules of Civil Procedure directs that I take into account the importance, complexity or difficulty of the issues, the reasonableness or unreasonableness of each party’s behaviour and the time properly spent, as well as the lawyers’ rates.

[23] This matter was of importance to both parties. The result would determine whether the respondent was going to be able to retire as early as he wished, and on what terms, and also would impact on whether or not the applicant would be able to afford to continue with the lifestyle she had, as I commented on in my ruling. The respondent’s final offer to settle was essentially in accordance with the terms reached in my ruling. The applicant’s final offer to settle for a $600,000 lump sum was in my view unreasonable, as it would have more than wiped out the entire life savings of the respondent, particularly inasmuch as she had received her equalization payment years previously and dealt with it as I have described.

[24] As indicated in my ruling, the applicant appears to have a negative net worth. This is somewhat confused by her assertion at trial that she is paying privately to have had counsel throughout these proceedings, although no corresponding entry appears anywhere in her financial documentation.

[25] The order sought by the respondent is that he receive costs in the total amount of $65,000 which would amount to less than partial indemnity. He makes that offer indicating that it is clear that the applicant will never pay any costs anyway and likely will declare bankruptcy. He suggests that amount be awarded for costs and be recoverable by way of offsetting against the $65,000 total for monthly support for 65 months at $1,000 per month.

[26] While the applicant submits that she made attempts to compromise and the respondent did not, I disagree. While she asserts that she behaved properly in this matter, again I disagree.

[27] The applicant attacks the bill of costs as presented by the respondent. She makes no submissions with respect to the reasonableness of the order actually sought by the respondent, namely costs in the amount of $65,000. She does not attack that amount.

[28] She relies upon Murray v. Murray, [2005] O.J. No. 5579 where the Court of Appeal took into account the devastating effect of a cost order on the successful party and concluded that in the circumstances of that case, each side should bear their own costs.

[29] In my opinion that would not be an appropriate outcome here. I conclude that the position of the applicant was unreasonable. She paid privately for counsel throughout and had to realize that if she were unsuccessful at trial, there would be cost consequences. To now say she shouldn’t award costs because I can’t afford to pay them renders futile the costs regime we have. In such circumstances, a party can advance a meritless position, assisted by counsel with impunity for costs.

[30] There is ample authority to permit setoff of a costs order as against spousal support: Uriu v. Rivadeneyra, 2017 ONSC 7457, Bemrose v. Fetter, 2007 ONCA 637 and Church v. Church.

[31] In the end result, I conclude that the respondent’s suggestion that costs be fixed in the total amount of $65,000 payable by the applicant to the respondent is reasonable in the circumstances of this case. I further order that payment of that amount can be offset against the spousal support previously ordered by me in the amount of $1,000 per month for 65 months starting January 1, 2019. The net result is that the spousal support obligations of the respondent towards the applicant are at an end as of December 31, 2018. An order will also go directing the Director of the Family Responsibility Office to cease any and all enforcement of the previous support order of Justice Reilly effective December 31, 2018.

C.S. Glithero J. Date: December 19, 2018