Court File and Parties

COURT FILE NO.: FC-15-131 DATE: 2019/01/09 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Karine Malboeuf, Applicant -and- Phillip Hanna, Respondent

BEFORE: Justice P. MacEachern

COUNSEL: Gil Rumstein, for the Applicant Eric Letts, for the Respondent

HEARD: In Writing

Endorsement

Overview

[1] This is my decision on costs of the contempt motion heard on September 4, 2018. The issue in that motion was that Mr. Hanna had not irrevocably designated Ms. Malboeuf as the irrevocable trustee in trust for the children on the life insurance to secure child support. I found that Mr. Hanna was not in contempt.

Positions of the Parties

[2] The parties agree that Mr. Hanna was successful on the contempt motion. He is presumptively entitled to costs of the motion [^1].

[3] As the successful party, Mr. Hanna seeks his costs on a full recovery basis in the amount of $4,154.47. Mr. Hanna argues that Ms. Malboeuf’s conduct, in bringing the motion, contains a vexatious element as it had no viable likelihood of success. Mr. Hanna also relies on his informal offer to settle, contained in counsel’s email sent on August 30, 2018, in which Mr. Hanna proposed that a consent order be obtained to remedy the issue, and Ms. Malboeuf pay him $250 for his costs.

[4] Mr. Hanna also relies on Ms. Malboeuf’s formal offer to settle, dated June 20, 2018, in which she offered to settle by Mr. Hanna designating her as the irrevocable trustee (which the insurer did not allow) and to pay all of her costs of the motion, as evidence in support of an award of costs to him.

[5] Ms. Malboeuf argues that no costs should be awarded for the motion or, in the alternative, that these should be limited to $650 plus HST, reflecting reduced costs payable on a party-to-party basis. She states that Mr. Hanna failed to address her concerns about the designation in a timely manner, and did not advise her that RBC would not allow such a designation until after she served her contempt motion, when Mr. Hanna served his responding affidavit on August 29, 2018, just a few days prior to the motion being heard on September 4, 2018.

Legal Principles

[6] The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 [^2] recently confirmed that the modern costs rules are designed to foster four fundamental purposes (1) to partially indemnify successful litigants; (2) to encourage settlement, and; (3) to discourage and sanction inappropriate behaviour by litigants; (4) and to ensure that cases are dealt with justly [^3].

[7] Rule 24(12) of the Family Law Rules sets out factors relevant to setting the amount of costs, and specifically emphasizes “reasonableness and proportionality” in any costs award.

[8] There is a presumption of costs in favour of the successful party. This presumption does not, however, require that the successful party always be entitled to costs [^4]: An award of costs is subject to: the factors listed in Rule 24(12), Rule 24(4) pertaining to unreasonable conduct of a successful party, Rule 24(8) pertaining to bad faith, Rule 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party [^5].

[9] Rule 24(12) sets out a list of factors the court shall consider in determining an appropriate amount of costs:

“(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.”

[10] The Family Law Rules only expressly contemplate full recovery costs in specific circumstances, e.g. where a party has behaved unreasonably, in bad faith or has beat an offer to settle under Rule 18(14).

Analysis

[11] The dispositive factor in this motion was that the insurer did not allow the irrevocable trustee designation. It is concerning that Mr. Hanna did not provide the letter from the insurer confirming that it would not allow such a designation until he served his responding materials on August 29, 2018, despite the fact that the letter is dated July 13, 2018. I find this delay was unreasonable and a factor in reducing the costs to which Mr. Hanna would otherwise be entitled to as the successful party.

[12] But even after Ms. Malboeuf was provided with the letter from the insurer, she persisted with her motion. It appears, therefore, that even if this letter had been provided earlier, Ms. Malboeuf would still have brought her motion. This factor tempers the reduction attributable to Mr. Hanna’s delay.

[13] Mr. Hanna is not entitled to full recovery of his legal fees. I do not find that Ms. Malboeuf has acted unreasonably to the extent that would warrant an award of full costs against her, or that she has acted in bad faith.

[14] Mr. Hanna’s offer is not a formal offer under Rule 18 that entitles him to full recovery of his costs. His informal offer is however a factor to be considered under Rule 24(12). The weight placed on this offer is diminished given Mr. Hanna’s insistence that Ms. Malboeuf pay him $250 in costs, at a time when he had only just provided the letter from his insurer, but this offer is still a factor that weighs in Mr. Hanna’s favour and offsets, to some extent, the reduction due to his delay in providing the letter from the insurer.

[15] I agree with Ms. Malboeuf’s concerns that Mr. Hanna’s legal fees are somewhat excessive given the brief material filed on his behalf, particularly in comparison to Ms. Malboeuf’s material, which was more extensive, yet her legal fees were less. I find that Mr. Hanna’s legal fees should be reduced to $2,500, exclusive of HST, to reflect reasonable and proportional legal fees incurred.

[16] Given that under the Rules, Mr. Hanna is not entitled to full recovery of his costs, I would have awarded him costs fixed at $1,875 plus HST had I not found factors that warranted a reduction in those costs. Taking into consideration Mr. Hanna’s delay in providing the letter from the insurer, Ms. Malboeuf’s persistence in her motion regardless, Mr. Hanna’s informal offer, as well as all of the other factors and the submissions of the parties, I order Ms. Malboeuf to pay Mr. Hanna his costs of the motion argued on September 4, 2018 fixed at $1,000 plus HST.

[17] Ms. Malboeuf requested that I set these costs off against cost ordered against Mr. Hanna. I decline to do so. Both parties are required to pay the costs as ordered. If they fail to do so, in the absence of a written signed agreement to the contrary, they will be subject to enforcement measures under the Rules.

[^1]: Family Law Rules, O. Reg. 114/99, Rule 24(1) [^2]: Mattina v. Mattina, 2018 ONCA 867 [^3]: Family Law Rules, O. Reg. 114/99, Rule 2(2) [^4]: M.(C.A.) v. M.(D.), [2003] O.J. No. 3707, at para. 40 [^5]: Berta v. Berta, 2015 ONCA 918 at para. 94

Justice P. MacEachern Released: January 9, 2019