NEWMARKET COURT FILE NO.: FC-13-043942-00 DATE: 20181218 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
SAWSAN HEBO Applicant – and – PETER JACOB PUTROS Respondent
Counsel: Kim Larsen, for the Applicant William H. Abbott, for the Respondent
Heard: By written submissions
Decision as to Supplementary Costs
F. GRAHAM J.
Issues
[1] Ms. Hebo seeks an order for supplementary costs in the amount of $25,000, inclusive of tax and disbursements, in relation to the issue of costs, decided by this court on November 5, 2018, with respect to a ten day family law trial for which final judgment was given on November 27, 2017.
[2] She also seeks an order that costs awarded for support issues be made a charge on the parties’ former matrimonial home owned by Mr. Putros and that all costs be paid to her counsel in trust.
[3] Mr. Putros submits that no supplementary costs should be ordered.
[4] He makes no submission on the other issues.
Background
[5] The trial decision in this matter is located at 2017 ONSC 7043.
[6] On January 15, 2018, Ms. Hebo served submissions as to costs comprised of six pages of argument with attachments including five offers to settle, a purported partial acceptance, and her counsel’s bill of costs. On February 28, 2018, Mr. Putros filed responding submissions comprised of slightly more than six pages of argument and his counsel’s bill of costs. On March 5, 2018, Ms. Hebo filed reply submissions comprised of four pages of argument. She also provided her counsel’s time dockets to the court but not to Mr. Putros. The court subsequently ordered Ms. Hebo to disclose redacted time dockets to Mr. Putros. Redacted dockets were disclosed by way of a letter dated May 11, 2018. The Respondent filed a response with two pages of argument on May 24, 2018. Ms. Hebo filed a reply comprised of one and a half pages of argument and additional redacted dockets on May 31, 2018.
[7] The initial costs decision is located at 2018 ONSC 6662. Ms. Hebo sought costs in the amount of $203,059.19, inclusive of tax and disbursements. Mr. Putros submitted that he should pay costs in the amount of $50,841.61, inclusive of tax and disbursements. Mr. Putros was ordered to pay costs in the amount of $103,000, inclusive of tax and disbursements. The court allocated $40,000 of the costs to support issues and made a support deduction order accordingly. The balance of $63,000 was attributed to the issue of equalization and was made a charge upon the former matrimonial home owned by Mr. Putros.
[8] After the release of the costs decision, the court was informed that Ms. Hebo served the following written offer, signed by Ms. Hebo and her counsel, upon Mr. Putros’ counsel on January 15, 2018:
The Applicant/Mother offers to settle the following issues on the following terms:
COSTS
All costs payable to the Applicant Mother for this proceeding, including trial and costs submissions shall be in the amount of $80,000 including HST, if this Offer to Settle is accepted by 4:00 p.m. January 20, 2018. These costs plus the court award and all arrears are to be paid within 30 days and is a condition of this Offer.
If this offer is accepted after the above date and before the Respondent/Father’s Costs Submissions are served upon the Applicant/Mother’s Counsel, an additional $5,000 plus HST will be payable to the Applicant/Mother for drafting costs submissions.
If the Offer is accepted after the Respondent/Father’s Costs Submissions are served upon the Applicant/Mother’s Counsel and Brief Reply is required, then costs shall be set at a full recovery basis.
All costs payable to the Applicant/Mother shall be paid to LarsenLaw & Associates in Trust.
[9] Mr. Putros did not accept the offer. In an email dated January 31, 2018, his counsel stated that he was prepared to recommend a costs payment of $50,000 to his client, but Ms. Hebo’s counsel replied that $80,000 was the lowest his client would go.
Supplementary Costs - Law
Family Law Rule 18 – Offers to Settle
[10] Rule 18 of the Family Law Rules O. Reg. 114/99, as amended, sets out various rules with respect to written offers to settle that have been signed by the party making the offer and by that party’s lawyer, if any, and served on another party.
[11] Rule 18(5) provides that a party who serves such an offer may withdraw the offer by serving a notice of withdrawal at any time before the offer is accepted.
[12] Rule 18(6) stipulates that an offer that is not accepted within the time set out in the offer is considered to have been withdrawn.
[13] Rule 18(9) stipulates that the only valid way to accept such an offer is by serving an acceptance on the party who made the offer, before the offer is withdrawn and before the court begins to give a decision that disposes of the claim dealt with in the offer.
[14] Rule 18(14) sets out a special rule that if a party serves an appropriately signed written offer to settle at least seven days before the commencement of a trial or a related step other than a motion, and the offer is does not expire and is not withdrawn before the trial or the hearing starts, and the offer is not accepted, and the party making the offer obtains an order at trial or at the hearing that is as favourable or more favourable than the offer, then the party who made the offer is entitled to costs to the date the offer was served and full recovery of costs from that date onward, unless the court orders otherwise.
[15] Rule 18(15) stipulates that the burden of proving that an order is as favourable as or more favourable than an offer to settle is on the party who claims the benefit of rule 18(14).
[16] Rule 18(11) provides that if an accepted offer does not deal with costs, either party is entitled to ask the court for costs.
[17] Rule 18(16) provides that the court may take into account any written offer to settle when exercising its discretion over costs, even if rule 18(14) does not apply.
Family Law Rule 24 – Costs Generally
[18] In the absence of offers to settle that meet the criteria of rule 18(14), rule 18(6) and rule 24 govern the determination of costs for a trial or hearing.
[19] Rule 24(1) and (4) provide that there is a presumption that a successful party is entitled to costs of a case, although a successful party who has behaved unreasonably during the 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.
[20] Rule 24(5) stipulates that in determining whether a party has behaved reasonably or unreasonably, the court must examine: the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle, the reasonableness of any offer the party made, and any offer the party withdrew or failed to accept.
[21] Rule 24(6) states that if success in a step in a case is divided, the court may apportion costs as appropriate.
[22] Rule 24(7) requires that if a party is not properly prepared to deal with the issues at that step in a case or otherwise contributes to that step being unproductive, the court shall award costs against the party unless the court orders otherwise in the interests of justice.
[23] Rule 24(8) stipulates 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.
[24] Rule 24(10), as it read prior to July 1, 2018, required the court to make a decision on costs promptly after dealing with a step in a case or reserve the decision on costs for determination at a later stage in the case.
[25] Rule 24(10.1), as it read prior to July 1, 2018, required a court making a decision on costs in relation to a step in a case, to decide in a summary manner whether anyone was entitled to costs and, if so, determine who is entitled and set the amount of costs.
[26] Rule 24(10), as it reads since July 1, 2018, requires the court, promptly after a step in a case, to summarily determine who, if anyone, is entitled to costs in relation to that step and set the amount of costs, or, expressly reserve the decision on costs for determination at a later stage in the case.
[27] Rule 24(11), as it reads since July 1, 2018, stipulates that if the court fails to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage.
[28] Rule 24(11), as it read prior to being amended on July 1, 2018, provided that in setting the amount of costs, the court shall consider,
(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, (e) expenses properly paid or payable, and (f) any other relevant matter.
[29] Rule 24(12), as it reads since July 1, 2018, provides that in setting the amount of costs, the court shall 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.
[30] The Ontario Court of Appeal stated in Serra v. Serra, 2009 ONCA 395, 66 R.F.L. 6th 40, at para. 8, that the costs rules are intended to promote three fundamental goals: to partially indemnify successful litigants for the cost of the litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants.
[31] These three goals, along with rules 18, 24, and subrules 2(2), 2(3) and 2(4) which stipulate that the primary objective of the rules is to enable the court to deal with cases justly, guide this court in determining a proportional, fair, and reasonable amount that should be paid for costs in this case.
Supplementary Costs – Positions of Parties
[32] Ms. Hebo submits that her offer dated January 15, 2018 complied with rule 18(14) and that she obtained a more favourable order. She submits, therefore, that she is entitled to partial recovery on the issue of costs until the date of the offer and full recovery thereafter.
[33] She also submits that the time spent by her counsel and his law clerk on the initial issue of costs was reasonable given the importance and complexity of the costs issue. Her counsel docketed 23.7 hours on the issue of costs prior to the offer and an additional 37.8 hours after the offer; the total being 61.5 hours. The law clerk docketed 5.4 hours prior to the offer and an additional 35.4 hours after the offer; the total being 40.8 hours. Her counsel billed $400 per hour and the law clerk’s time was billed at $150 per hour.
[34] Mr. Putros argues that 61.5 hours of counsel’s time and 35.4 hours of a law clerk’s time was excessive. Mr. Putros, however, did not disclose how much time his counsel docketed on the issue of costs. He also noted that the amount of costs ordered was closer to his position during argument than Ms. Hebo’s position during argument.
[35] Ms. Hebo replies, given that the time docketed by Mr. Putros’ counsel was not disclosed, the court should accept her counsel’s time as reasonable. She emphasizes that it took considerable time to provide the redacted time dockets.
Supplementary Costs - Analysis
[36] A rule 18(14) offer must be served at least seven days prior to the start of the hearing. The trial judgment permitted costs submissions to be served and filed within 14 days of the release of the decision. At the request of both counsel, that period was extended. Ms. Hebo’s offer to settle was served on the same day as her submissions as to costs. The court is of the view that a hearing as to costs started upon the filing of Ms. Hebo’s submissions. Accordingly, she did not serve her offer at least seven days before the hearing started. As a result, rule 18(14) does not apply.
[37] Nevertheless, her offer to settle may and will be considered under rule 18(16) and rule 24.
[38] Ms. Hebo obtained a result that was more favourable to her than her offer to settle. That fact is more significant than the fact that the amount of costs ordered was closer to the amount suggested by Mr. Putros, rather than the amount sought by Ms. Hebo, during argument.
[39] The issue of costs was important to the parties and somewhat complex given the constellation of offers to settle the trial issues. Neither party acted unreasonably with respect to the issue of costs. The hourly rates for Ms. Hebo’s counsel and the law clerk were reasonable. The $461.14 charged for disbursements was reasonable.
[40] The court is unable to find, however, that the total number of hours docketed by Ms. Hebo’s counsel and the law clerk were reasonable on the issue of costs. Furthermore, the amount of supplemental costs sought by Ms. Hebo is not proportionate to the initial issue of costs.
[41] The court finds that the reasonable and proportionate amount of supplemental costs Mr. Putros should pay is $8,000, inclusive of tax and disbursements.
[42] The court allocates $3,000 of the supplemental costs to the initial costs relating to support issues. This amount shall be enforceable by the Family Responsibility Office as support. A support deduction order shall issue accordingly.
[43] The court allocates the remaining $5,000 of the supplemental costs to the initial costs relating to equalization. For the same reason as the initial costs for equalization, this amount shall also be a charge upon the former matrimonial home owned by Mr. Putros as security for payment. This charge shall not be discharged until the full amount of this charge is paid.
Charge – Costs for Support
[44] Section 9 of the Family Law Act R.S.O. 1990, c. F3, as amended, which permitted the court to order charges on Mr. Putros’ property for the orders relating to equalization does not provide the same relief for support orders.
[45] Furthermore, the reason given for Ms. Hebo’s request for a charge for costs for support is to secure the financial interest of an organization which provided Ms. Hebo with litigation funding. That organization is not a party to the proceedings. As a result, it does not have standing to seek relief, directly or indirectly, in this proceeding.
[46] Accordingly, Ms. Hebo’s request for a charge on the former matrimonial home as security for costs relating to support is denied.
Payment of Costs
[47] Payments of costs in relation to equalization in this matter shall be made to LarsenLaw & Associates in trust. Payments of costs in relation to support shall be made to the Family Responsibility office unless this matter is withdrawn from the Family Responsibility office in which case such payments shall be made to LarsenLaw & Associates in trust.
Order
[48] Order to go accordingly without approval as to form or content from the Respondent.
F. GRAHAM J.