COURT FILE NO.: 327/17
DATE: 20190401
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Arend John Van Eck
Applicant
– and –
Tuyen Ngoc Thi Pham
Respondent
Patrick Morris, for Mr. Van Eck
Ryan Baker, for Ms. Pham
RULING ON COSTS
PETERSEN J.
INTRODUCTION
[1] This ruling deals with the issue of costs of a motion for bifurcation, which was denied by me on February 11, 2019. Mr. Van Eck sought to have the issue of the validity of three domestic contracts adjudicated at a first trial, prior to addressing (at a second trial) Ms. Pham’s claims for spousal support and equalization.
[2] Ms. Pham, as the successful party, is presumptively entitled to her costs of the motion: Family Law Rules, O.Reg.114/99, r.24(1). Mr. Van Eck does not dispute her entitlement to costs, but submits that her request for costs, in the amount of $16,530.75 all inclusive, is grossly excessive. The only issue for me to determine, therefore, is the appropriate quantum of costs to be awarded.
[3] Ms. Pham is requesting costs on a substantial indemnity basis inclusive of the period between August 20, 2018 and February 11, 2019. This period of time incorporates attendance at a Settlement Conference on August 20, 2018, which dealt with the issue of bifurcation, as well as questioning and answers to undertakings that occurred thereafter, which were limited to the issue of the validity of the domestic contracts. Ms. Pham submits that every step in the litigation from the date of the Settlement Conference on August 20, 2018 was in anticipation of and in preparation for the motion for bifurcation.
[4] Mr. Van Eck disputes Ms. Pham’s entitlement to costs on an elevated scale. He also disputes her entitlement to anything other than reasonable costs for the preparation and presentation of the motion. He submits that she is not entitled to costs relating to the Settlement Conference, to questioning or to answers to undertakings. He urges the Court to make an order for costs in the amount of only $3,000, inclusive of disbursements and HST.
Scale of Costs
[5] Ms. Pham made an offer to settle the motion on January 23, 2019, 10 business days prior to the motion hearing on February 7, 2019. The offer stipulated that Mr. Van Eck’s motion for bifurcation was to be dismissed and each party would bear their own costs of the motion. The offer remained open for acceptance until five minutes after the commencement of the motion hearing. Evidently, it was not accepted by Mr. Van Eck.
[6] This offer to settle is relevant to my determination of the appropriate quantum of costs: Family Law Rules, r.18(14), r.24(4), r.24(5) and r.24(12).
[7] Mr. Van Eck submits that the offer to settle should have no bearing on the scale of costs because the offer did not incorporate any compromise. One of the underlying purposes of the Rules with respect to cost consequences of offers to settle is to encourage compromise and settlement of issues in dispute.
[8] Rule 18(1) of the Family Law Rules defines an “offer” as “an offer to settle one or more claims” in a motion. The costs consequences of a failure to accept an offer are set out in r.18(14) as follows:
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:
If the offer relates to a motion, it is made at least one day before the motion date. …
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[9] Ms. Pham’s offer to settle meets the definition of an offer in r.18(1) and satisfies all of the applicable criteria in r.18(14). The offer did not incorporate any compromise on the central issue of bifurcation because that issue does not lend itself to any compromise. The trial would either be bifurcated or it would not. The offer did, however, incorporate a compromise on the issue of costs: the offer provided that the Applicant’s motion for bifurcation would be dismissed and the Respondent’s claim for costs would be withdrawn. Both parties could have saved substantial costs had the offer to settle been accepted. It was not accepted and Ms. Pham achieved a result that was more favourable to her than the terms of her offer – the motion for bifurcation was dismissed and she was awarded her costs. She is, therefore, presumptively entitled to costs on a full recovery basis from the date of her offer to settle, namely from January 23, 2019. I see no basis upon which to deny her that entitlement.
[10] There is, however, no basis upon which to award full indemnity costs prior to the date of the offer of settlement. Mr. Van Eck did not conduct himself unreasonably. Although his motion for bifurcation was unsuccessful, it was not completely devoid of merit. Bifurcation had the potential to narrow the issues to be determined and could have saved Mr. Van Eck some costs relating to the valuation of his assets. Moreover, the motion was brought in a timely way, before the parties had devoted substantial resources to the claims made by Ms. Pham for spousal support and equalization. There is no reason to order costs on a full indemnity scale, except from the date of the offer to settle.
Scope of Costs to be Awarded
[11] Ms. Pham is not entitled to costs relating to the Settlement Conference. Justice Bloom, who presided at the Settlement Conference, reserved those costs to the trial judge, not to the judge who heard the bifurcation motion.
[12] Ms. Pham is not entitled to costs relating to questioning and answers to undertakings. Pursuant to the Order of Justice Bloom, the questioning was limited to the issue of the validity of the domestic contracts. Questioning was not, as Ms. Pham suggests in her costs submissions, related to the issue of bifurcation. Moreover, the questioning (on the issue of the validity of the contracts) would need to be conducted in any event, irrespective of whether or not the trial was bifurcated. The fact that the parties may need to attend again at questioning to address issues of spousal support and equalization prior to the trial has no relevance to the issue of the appropriate quantum of costs for the motion.
[13] I do not accept Ms. Pham’s submission that each step in the litigation process from the date of the Settlement Conference was effectively related to the bifurcation motion. For example, as Mr. Van Eck points out in his costs submissions, the parties exchanged amended pleadings after the Settlement Conference, which had nothing to do with the motion for bifurcation.
[14] As a result of the dismissal of Mr. Van Eck’s motion, Ms. Pham is only entitled to reasonable and proportionate costs related to the preparation of motion materials and court attendance(s) for the motion hearing. She is entitled to those costs on a full indemnity basis after January 23, 2019.
Decision re: Quantum of Costs
[15] Rule 24(12) of the Family Law Rules 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.
[16] Rule 24 (12.1) provides that any claim for costs respecting fees or expenses shall be supported by documentation satisfactory to the court.
[17] Counsel for Ms. Pham has not submitted satisfactory documentation to support her request for costs. In particular, counsel did not provide his hourly rate or the precise amount of time that he devoted to various steps relating to the motion. I am therefore left having to estimate reasonable and proportionate time spent based on the importance and complexity of the issues.
[18] In my view, the motion was properly scheduled as a long motion. It required the preparation of significant affidavit materials, as well as facta and books of authorities. The issue was important to both parties and was of moderate complexity.
[19] In the circumstances, I disagree with the Mr. Van Eck’s submission that 18 hours, including time in court, would be the maximum amount of time that Ms. Pham’s lawyer ought to have devoted to the motion. A more reasonable estimate, in the circumstances of this case, would be 26 hours. I agree with Mr. Van Eck’s submission that an hourly rate of $250 should be used to calculate fees, given the absence of documentation of actual hourly rates from Ms. Pham’s counsel. Mr. Morris, counsel for Mr. Van Eck, advised the court that Ms. Pham’s counsel was called to the bar in 2015. I have no reason to doubt his representation on this point.
[20] Calculating fees for 16 hours on a partial indemnity basis and fees for 10 hours on a full indemnity basis, I conclude that an appropriate and proportionate award of costs is $5,100, plus HST.
[21] Mr. Van Eck is therefore ordered to pay Ms. Pham’s costs of the bifurcation motion in the amount of $5,763 within 30 days of the date of this Endorsement.
Petersen J.
Released: April 1, 2019
COURT FILE NO.: 327/17
DATE: 20190401
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Arend John Van Eck
Applicant
– and –
Tuyen Ngoc Thi Pham
Respondent
RULING ON COSTS
Petersen J.
Released: April 1, 2019