Court File and Parties
COURT FILE NO.: 17-297 DATE: 20190405
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Danielle Belair Applicant – and – Marcel Bourgon Respondent
Counsel: Eric Lavictoire, for the Applicant Alice Weatherston and Natasha Chettiar, for the Respondent
HEARD: Cornwall, In Chambers
COSTS DECISION
Desormeau, j.
Overview
[1] This costs decision is following the court hearing a five day trial where the primary issues were unjust enrichment and joint family venture, as well as unpaid monies for rent, repairs and labour. At the trial, Ms. Belair sought a finding of unjust enrichment and joint family venture, seeking monetary relief of $104,357.15. Meanwhile, Mr. Bourgon pursued $31,500 in unpaid rent, and $45,035.90 for unpaid fees for repairs and labour toward the Applicant’s investment property.
[2] After the trial, the parties resolved amongst themselves a number of issues, which are therefore not addressed herein.
[3] After making credibility findings against both the Applicant and the Respondent, I ordered that Mr. Bourgon pay to Ms. Belair a total of $818.64, and dismissed the remaining outstanding claims.
[4] I invited the parties to settle the issues of costs between them, failing which they were to provide written submissions to my attention. I have now received the submissions, and for reasons set out below, I fix costs in the amount of $75,673.85, payable by Ms. Belair to Mr. Bourgon, forthwith.
Background
[5] Following the breakdown of a five year common law relationship, both parties felt they were owed money by the other.
[6] As noted in the judgment, the parties were equally affected with imprecise memories regarding critical issues. Ms. Belair’s evidence lacked certainty and sincerity. I found that she was loose with the truth regarding the quantum of monies paid to Mr. Bourgon. Equally, Mr. Bourgon was evasive in his answers, dismissive, argumentative, and cagey.
[7] With regard to Mr. Bourgon’s claims, I found that the testimonial evidence proffered was at odds with the documentary evidence produced. Given the significant credibility issues presented by both parties regarding their finances, I relied on the objective documentary evidence. I was persuaded that Ms. Belair had paid the claimed rent, repairs and labour invoices in full, as reflected in the receipts and invoices filed as exhibits at the trial. I therefore dismissed Mr. Bourgon’s claims.
[8] Ms. Belair’s claims were for unjust enrichment and joint family venture. On the issue of her work at The Groomery, I was not persuaded that Ms. Belair established any benefit to Mr. Bourgon by her efforts, nor did she demonstrate a corresponding detriment. On the issue of breeding and selling puppies, I again found no enrichment or corresponding detriment. I also found that Ms. Belair had been sufficiently compensated for her efforts in the business through the monies received by her from the sales. Nevertheless, I found that Mr. Bourgon still owed Ms. Belair $368.64 for her outstanding interest in the puppies sold by the couple while they were still together. With regard to the dog show expenses, I found that there was no credible link with regard to the dog shows and any enrichment to Mr. Bourgon. I was also not persuaded that Ms. Belair suffered any corresponding detriment. Ms. Belair’s claim for reimbursement for dog show expenses was dismissed. Finally, with regard to her interest in the jointly owned dogs, while I did not find enrichment or corresponding deprivation, I nonetheless found that Mr. Bourgon owed Ms. Belair $400.00 for her share of the value of the five dogs. At the end of the day, I was not persuaded that there had been unjust enrichment nor a joint family venture.
[9] In her costs submissions, Ms. Belair seeks costs of $47,440.87 for substantial indemnity, or $32,185.87 for partial indemnity. In the alternative she takes the position that no costs be payable by either party in the circumstances.
[10] Mr. Bourgon meanwhile seeks full recovery of his costs from the date of his offer to settle in the amount of $79,067.73 based on having done significantly better at trial than if Ms. Belair had accepted his offer to settle.
[11] Despite my conclusions above, the award of a nominal amount to Ms. Belair, and dismissing the remainder of the claims of the parties, they both nonetheless advance in their submissions that costs be payable by the other based on substantial indemnity basis. To quote Justice Pazaratz in Scipione v. Scipione, 2015 ONSC 5982:
(1) Why do written costs submissions frequently try to lead us into some sort of parallel universe where losers are actually winners?
(2) If you lost, don’t re-write the faces to argue you won. It only makes the judge go back – repeatedly – to see if we’re talking about the same case.
(3) And if the best you got was a mixed result on one of the issues, don’t claim you were right to relentlessly pursue all of the issues. Especially when you ignored repeated opportunities to pursue only the claims which might have had some merit.
Issue: Costs
[12] The starting point in addressing the issue of costs is section 131 of the Courts of Justice Act, which provides that subject to the provisions of an Act or rules of court, costs are within the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[13] Rule 24 of the Family Law Rules (FLR) addresses the issue of costs, and states that there is a presumption that a successful party is entitled to the costs of a motion.
[14] Modern costs rules are designed to foster four fundamental purposes (1) to partially indemnify successful litigants; (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules: See Mattina v. Mattina, 2018 ONCA 867.
[15] The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2: Lawrence v. Lawrence, 2017 ONCJ 431, at para. 52.
[16] Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation: Lawrence v. Lawrence, supra, at para. 54.
[17] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 (S.C.C.), para. 25; Lawrence v. Lawrence, supra, at para. 31.
[18] In Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (Ont. C.A.), the Ontario Court of Appeal indicated that a costs award should be a "fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs of the successful litigant". A "fair and reasonable amount" is that amount which the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation: Lupien v. Carmichael, 2017 ONSC 2929, at para. 9.
[19] One measure of what is “fair and reasonable” to pay in costs may be arrived at by looking at what the unsuccessful party paid for their own legal fees. (see Goryn v. Neisner, 2015 CarswellOnt 8562, and Mohr v. Sweeney, 2016 ONSC 3238)
[20] A successful party in a family law case is presumptively entitled to costs, subject to the favours set out in Rule 24 FLR. The Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded. See Beaver v. Hill, 2018 ONCA 840, at paras. 9 and 10.
[21] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome: Boucher v. Public Accountants Council (Ontario), supra.; Lawrence v. Lawrence, supra, at para. 64.
[22] Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs. Proportionality is a core principle that not only governs the conduct of the proceedings generally, but is specifically applicable to fixing costs. Beaver v. Hill, supra, at paras. 12 and 19.
[23] An award of costs is subject to: the factors listed in Rule 24(12) FLR, Rule 24(4) FLR pertaining to unreasonable conduct of a successful party, Rule 24(8) FLR pertaining to bad faith, Rule 18(14) FLR pertaining to offers to settle, and the reasonableness of the costs sought by the successful party. See: Berta v. Berta, 2015 ONCA 918 at para. 94.
[24] In making a determination, the court must consider Rule 24(12) FLR, which outlines the factors to be considered in quantifying costs:
(12) 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. O. Reg. 298/18, s. 14.
[25] Rule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24(12)(a) (1) above). It reads as follows:
DECISION ON REASONABLENESS
(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.
[26] Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.
[27] Rule 18(14) sets out the costs consequences of failure to accept an Offer to Settle:
(14) 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.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing 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. O. Reg. 114/99, r. 18 (14).
[28] The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of Rule 18(14) FLR: Rule 18(15) FLR. (See Neilipovitz v. Neilipovitz, [2014] O.J. No. 3842 (SCJ)).
[29] When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, when exercising its discretion over costs, even if Rule 18(14) FLR does not apply: Rule 18(16) FLR.
[30] Close is not good enough to attract the costs consequences of 18 (14). The offer must be as good as or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in Rule 18 (14) FLR, it may be considered under Rule 18 (16) FLR: Gurley v. Gurley, 2013 ONCJ 482.
[31] The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order. See: Wilson v Kovalev, 2016 ONSC 163.
[32] Rule 24(6) FLR provides that where success in a step in a case is divided, the court may exercise its discretion to order and apportion costs as appropriate. However, the determination of whether success was truly "divided" requires a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues that required adjudication (Jackson v. Mayerle, 2016 ONSC 1556 (Ont. S.C.J.); Slongo v. Slongo, 2017 ONCA 687 (Ont. C.A.)): Lippert v. Rodney, Norton and Norton, 2017 ONSC 5406, at para. 14.
[33] While Rule 24(12)(b) FLR [previously 24(11)(f)] does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success. (See Biant v. Sagoo, 2001 CarswellOnt 3315, [2001] O.T.C. 695, 20 R.F.L. (5th) 284 (Ont. S.C.J.): Lawrence v. Lawrence, supra, at para. 33)
[34] Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(12). (See Peers v. Poupore, 2008 ONCJ 615 (Ont. C.J.), para. 42; Lawrence v. Lawrence, supra, at para. 35)
[35] The (financial) means of the unsuccessful party may not be used to shield them from liability for costs, particularly when they has acted unreasonably: Gobin v. Gobin (2009), 2009 ONCJ 278, 71 R.F.L. (6th) 209 (Ont. C.J.), para. 24; Lawrence v. Lawrence, supra, at para. 36.
[36] From: Balsmeier v Balsmeier, 2016 ONSC 3485:
I adopt the comments of McGee J. in Mohr v. Sweeney 2016 ONSC 3338, 2016 CarswellOnt 7716, at para. 17, citing Balaban v. Balaban, 2007 CarswellOnt 1518, at para. 7: “[T]hose who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings.”
[37] To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made: Lawson v. Lawson, 2008 CarswellOnt 2819, [2008] W.D.F.L. 3600, 167 A.C.W.S. (3d) 723, [2008] O.J. No. 1978 (Ont. S.C.J.). The position each party took in the case should also be examined: Lawrence v. Lawrence, supra, at para. 41.
[38] Rule 24(8) of the rules states 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. Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith. See: DePace v. Michienzi (2000), 12 R.F.L. (5th) 341 (Ont.SCJ); Kardaras v. Kardaras, 2008 ONCJ 616. A bad faith finding on some specific issue does not necessarily have a spill-over effect to other issues. Hunt v. Hunt [2001] O.J. No. 5111 (SCJ).
[39] Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See: Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Scipione, 2015 ONSC 5982. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. See: S.(C.) v. S. (M.) (2007), 38 R.F.L. (6th) 315 (Ont. SCJ). Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation. See: Scipione, supra.
[40] Even where the "full recovery" provisions of the Rules are triggered -- either by an offer which meets Rule 18(14) requirements, or by a finding of bad faith -- quantification of costs still requires an overall sense of reasonableness and fairness. Goryn v. Neisner 2015 ONCJ 318 (OCJ). The Rules do not require the court to allow the successful party to demand a blank cheque for their costs. Slongo v. Slongo 2015 ONSC 3327 (SCJ). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. M.(C.A.) v. M.(D.), [2003] O.J. No. 3707 (supra); Scipione v. Scipione, supra.; Jackson v. Mayerle, 2016 ONSC 1556.
Analysis
[41] In determining the quantum of costs, I have taken into account the factors set out in Rule 24(12):
(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
I note that Ms. Belair, who was seeking a determination of unjust enrichment and joint family venture suggests that the claims were of average complexity. I reject this submission as I find the issues to be objectively complex. The issues at trial were important to both parties. Both parties provided extensive evidence to support their claims.
(i) each party’s behaviour:
Mr. Bourgon made repeated offers to settle. On August 31, 2018, Mr. Bourgon made an offer to settle that both parties walk away without any reimbursement from the other. While this offer was not beat at trial, this was very close to what was ultimately awarded by the court. Furthermore, this demonstrated, in my view, Mr. Bourgon’s reasonableness in trying to resolve the matter.
Ms. Belair made an offer to settle the trial on November 30, 2018, the Friday before the Monday trial commencement date.
It was advanced that Ms. Belair failed to provide the material facts of her claim in advance of the trial, and that she produced volumes of financial disclosure. However, this is somewhat mitigated by her reasonableness at trial to permit Mr. Bourgon to rely on financial records not in evidence or produced prior to the trial commencing.
While the onus was on Ms. Belair to quantify and substantiate her claims, she failed to produce a comprehensive summary of the financial transactions and quantifications of her claims in her final submissions despite the court’s request for same. Mr. Bourgon however complied with the court’s request, and in same proffered a reasonable position on what had been established in evidence.
(ii) the time spent by each party:
Mr. Bourgon was represented by two counsel at trial. However, as noted in the bill of costs, given the voluminous documentation presented by Ms. Belair, the level of complexity of the issues, and that the junior lawyer billed half of her usual hourly rate to account for some duplication, I take no issue with the bill of costs as presented. Contrary to Ms. Belair’s assertions, I do not find Mr. Bourgon’s bill of costs excessive. Both parties spent what I find to be a reasonable amount of time in the file.
(iii) any written offers to settle, including offers that do not meet the requirements of Rule 18:
As noted above, on August 31, 2018, Mr. Bourgon made an offer to settle that both parties walk away without any reimbursement from the other. This is very close to the ultimate result on all issues following trial.
On November 16, 2018, Mr. Bourgon offered to pay Ms. Belair $7,500.00. He sweetened the deal on November 30, 2018 when he offered to pay Ms. Belair $12,500.00. Both of these offers were more than was the court awarded at trial.
(iv) any legal fees, including the number of lawyers and their rates:
Given the complexity of the issues, I have no difficulty with Mr. Bourgon being represented by two lawyers. I note again that one of Mr. Bourgon’s counsel charged half her hourly rate during the trial due to duplication, which I find extremely fair and reasonable. I also have no issue with the hourly rate of counsel and find their legal fees to be reasonable in the circumstances.
(v) any expert witness fees, including the number of experts and their rates: n/a
(vi) any other expenses properly paid or payable:
The disbursements claimed by each party appear reasonable.
(b) any other relevant matter:
I take this opportunity to note that Ms. Belair, in her costs submissions, devotes five of her 24 paragraphs to raise issues which were not plead at trial, most of which occurred following the trial. These complaints are highly improper in costs submissions.
[42] I am mindful that the Court’s role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees: Aprile v. Aprile, 2016 ONCJ 678, at para. 13.
[43] I have considered the facts of the case, the cost submissions of counsel, and the behaviour of both parties. After reviewing the offers to settle, I find that Mr. Bourgon did significantly better at trial then if Ms. Belair had accepted his offers to settle. As a result, Mr. Bourgon is entitled to a full recovery of his costs from November 16, 2018, which are fixed at $71,587.74, including of HST and disbursements.
[44] I have also considered Mr. Bourgon’s offer to settle of August 31, 2018, wherein he offered that both parties walk away with nothing. After trial, I awarded a nominal amount to Ms. Belair ($818.64). Under Rule 18(16), the court has the discretion to consider any offers to settle even when it does not comply with Rule 18(14). The August 31, 2018 offer was not as favourable as or more favourable than what was awarded at the end of trial, and therefore it is clear that Mr. Bourgon is not entitled to full recovery of his costs. However, I have considered that following that offer to settle, Mr. Bourgon incurred legal fees of approximately $80,022.07, inclusive of HST ($76,962.59 plus $3,059.48). Ms. Belair incurred legal fees of roughly $37,431.25, inclusive of HST (based on her counsel’s bill of costs from the date of Mr. Bourgon’s offer). In total, both parties together spent over $117,000.00, exclusive of disbursements, for a judgment of $818.64. I find it is reasonable to award Mr. Bourgon partial indemnity costs from the date of the August 2018 offer, as well as for the Settlement Conference where costs were reserved. Those costs are fixed at $4,086.11, inclusive of HST.
[45] While on its face the costs award appears high given my decision following trial, the claims were for $104,357.15 and $76,535.90, and it was necessary for counsel to go through volumes and volumes of documentary disclosure in order to properly defend its case.
Disposition
[46] Costs are fixed at $75,673.85, payable by Ms. Belair to Mr. Bourgon, forthwith.
Madam Justice Hélène C. Desormeau