Court File and Parties

COURT FILE NO.: FS–16–20680 DATE: 20190102 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter A. M. Henderson Applicant – and – Kelly Ann Winsa Respondent

Counsel: Theresa MacLean, for the Applicant Kelly Ann Winsa, on her own behalf

HEARD: September 24-28, 2018 & October 1, 2018

P.J. Monahan J.

REASONS ON COSTS

[1] On October 17, 2018, following a 6-day trial, I ordered the Applicant, Peter Henderson (“Pete”), to pay spousal support to the Respondent, Kelly Winsa (“Kelly”) in the amount of $3,010 per month, commencing October 1, 2018. This was based on Pete’s income of $216,000, an imputed income to Kelly of $40,000, and the fact that the two children of the marriage have resided with Pete for the past two years and are entirely supported by him. I further ordered Kelly to pay table child support to Pete of $597 monthly for their children, OWH and CWH, and contribute $210 monthly for their s. 7 expenses.

[2] I then set off the child support payments from Kelly against the spousal support payable by Pete. The net spousal support payable by Pete to Kelly, on the basis that Kelly will not be required to actually pay child support to Pete, is $1900 per month.

[3] Pete seeks his costs on a full indemnity basis. In addition to arguing that he was the successful party and thus presumptively entitled to his costs, Pete argues that Kelly has acted unreasonably throughout the parties’ court proceedings and, in some instances, has acted in bad faith. He seeks costs in the amount of $51,992.40, consisting of fees of $44,880, HST on fees of $5,834.40, disbursements (including HST) of $678, and an outstanding costs award of $600 ordered against Kelly on June 15, 2018 that has not been paid.

[4] Kelly did not file any costs submissions.

Legal Framework Governing Costs Awards in Family Law Cases

[5] It is well established that modern family cost rules are designed to foster three fundamental purposes: (i) to partially indemnify successful litigants; (ii) to encourage settlement; and (iii) to discourage and sanction inappropriate behaviour by litigants. [1] Moreover, as the Court of Appeal emphasized recently in Mattina v. Mattina, 2018 ONCA 867, [2] a fourth fundamental purpose of costs awards in family law proceedings is to ensure that cases are dealt with justly, in accordance with Rule 2(2) of the Family Law Rules.

[6] Rule 24(1) of the Family Law Rules creates a presumption of costs in favour of the successful party. [3] While consideration of success is the starting point in determining costs, this presumption does not automatically require that the successful party be awarded his or her costs. [4] Entitlement to costs is subject to a variety of factors, including whether the successful party has behaved unreasonably, [5] whether there has been bad faith conduct, [6] and the nature of any offers to settle made by either party. [7]

[7] In determining the appropriate quantum of costs, Rule 24(12) of the Family Law Rules sets out the relevant considerations. It provides as follows:

(12) SETTING COSTS AMOUNTS – 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.

[8] While Rule 24(12) sets out the relevant considerations, the key principles governing awards of costs in family law proceedings are proportionality and reasonableness. As Nordheimer J.A. stated recently in Beaver v. Hill, 2018 ONCA 840, [8] “[p]roportionality is a core principle that not only governs the conduct of proceedings generally, but is specifically applicable to fixing costs in family law matters.” This conclusion flows directly from the fundamental Boucher principle, applied by Ontario courts on innumerable occasions, that costs awards should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties.” [9]

[9] Nor is there any principle mandating that a successful party should receive costs that “generally approach full recovery”. [10] In fact, any such “full recovery” principle would be inconsistent with the first objective of costs awards as set out by the Court of Appeal in Serra, which is that costs are intended to “partially indemnify successful litigants”. While the Rules contemplate full recovery in specific circumstances, such as bad faith under Rule 24(8), or besting an offer to settle under Rule 18(14), the quantum of costs must always meet the test of proportionality and reasonableness in light of the importance and complexity of the issues at stake in the litigation.

Considerations Relevant to the Appropriate Costs Award in This Case

[10] In my view, there is no question but that Pete was the more successful party in this litigation. All other matters in dispute having been settled, the only issues remaining at trial were the appropriate quantum of spousal and child support. Pete conceded Kelly’s entitlement to spousal support, and the level of spousal support ordered was significantly less than that claimed by Kelly. In addition, Kelly’s claims to retroactive child and spousal support were dismissed.

[11] I find no reason to deprive Pete of his costs on the basis of Rule 24(4), which provides that a successful party may be deprived of costs in the event that they behaved unreasonably during the case. In my view, Pete conducted himself in a reasonable manner, including the fact that his Offers to Settle (both in respect of parenting issues as well as in relation to spousal and child support) were in some respects more favourable to Kelly than the ultimate results obtained at trial. (For example, Pete’s September 6, 2018 Offer to Settle provided that Pete would pay Kelly $3000 per month in spousal support, and did not require Kelly to pay any child support in respect of OWH and CWH.) On this basis, Pete is presumptively entitled to his costs pursuant to Rule 24(1).

[12] Pete claims that he is entitled to costs on an enhanced or fully indemnity basis since, in his view, Kelly acted unreasonably throughout the court proceedings and, in some cases, acted in bad faith. In his costs submissions, he highlights the following aspects of Kelly’s conduct during the course of the litigation:

a. Kelly did not act reasonably in resolving the custody and access issues, which were only resolved at a Trial Management Conference just prior to trial;

b. on a number of occasions, Kelly failed to comply with court orders, including the May 2017 order of Wilson J. to produce a sworn affidavit outlining the rental income which she received from the parties’ jointly owned property in Hawaii;

c. at trial, Kelly acknowledged that she had withdrawn funds from CWH’s RESP in early 2018 without disclosing that fact on her sworn financial statements;

d. Kelly took an unreasonable position in the amount of spousal support arrears she sought in her closing submissions;

e. Pete made a reasonable offer to settle, proposing to pay spousal support at a level similar to that ordered by the court, and not requiring Kelly to pay any child support for either child of the marriage.

[13] While I agree that Pete was the more successful party, I do not find that Kelly behaved in an unreasonable manner such that an enhanced order of costs would be appropriate.

[14] I would note, first, that the custody issues were resolved on consent prior to trial. This significantly simplified and shortened the time required for trial. The settlement on parenting issues was reasonable and, in my view, it would not be appropriate to award enhanced costs against Kelly for her acceptance of these terms. An enhanced costs award when the parties have genuinely compromised their claims (as occurred here) could have the unintended effect of discouraging rather than encouraging settlement, which is contrary to the second of the three principles underlying costs awards identified in Serra.

[15] With respect to Wilson J.’s May 2017 order requiring Kelly to disclose rental income received from the parties’ Hawaii property, Kelly’s disclosure was incomplete and difficult to assess. Nevertheless, at trial she made a genuine attempt to provide the court with all the information she had in her possession regarding the amount of rental income she received in the past. She further acknowledged that she received an average of approximately US$1650 per month from the rental of the Hawaii guesthouse from June 2014 to May 2017. While her record-keeping was disorganized, I find that she attempted in good faith to disclose all rental income she received. I therefore would not require her to pay enhanced costs on the basis of her disclosure with respect to rental income she received.

[16] Kelly’s withdrawal of funds from CWH’s RESP early in 2018 was indeed a matter of concern. Nevertheless, to her credit, Kelly volunteered this information at trial. Moreover, her receipt of this income was taken into account by me in my determination that no retroactive spousal support was required. I find that it would be unfair to require her to also pay enhanced costs due to this withdrawal of funds.

[17] Kelly did seek a substantial amount of retroactive spousal support arrears at trial, and this claim was dismissed. Nevertheless, her claim was not entirely without foundation and had merit, since it based on expenses which she had actually incurred and for which she believed she was entitled to reimbursement. I do not believe she should be penalized for advancing this claim even though it was ultimately unsuccessful.

[18] I acknowledge that Pete’s offer to settle issues of child and spousal support was entirely reasonable and, had it been accepted by Kelly, would have placed her in a better position than she achieved at trial. Nevertheless, because the offer would have required Kelly to pay costs to Pete, it does not trigger the costs consequences provided for under Rule 18(14). [11] The reasonableness of Pete’s offer confirms his entitlement to costs, but not necessarily on a full indemnity basis.

[19] A final consideration relates to the fact that it is appropriate in family law cases to consider the financial condition of the parties in awarding costs. [12] In this instance, it is clear that Kelly has very limited financial means. Moreover, she will now be required to attempt to re-enter the paid workforce at an age where such re-entry will be challenging. In these circumstances, while acknowledging that Pete is entitled to his costs, I do not believe it would be fair or appropriate to make an order of enhanced costs in his favour.

[20] I therefore award Pete his costs on a partial indemnity basis.

[21] I have reviewed the Bill of Costs submitted by Pete. It reflects a reasonable amount of time to prepare for and conduct a 6-day trial. Even though the legal issues were not overly complex, this was a lengthy litigation and the factual issues were detailed and required a great deal of time and attention from counsel. I also find the hourly rate of $425 per hour for senior counsel with 29 years of experience to be reasonable.

[22] The only issue of concern with respect to the Bill of Costs from Pete’s counsel is a claim of 15.6 hours for letters and emails sent to/received from client, the OCL and the Respondent. There were apparently 156 such letters or emails, but the items and the time spent on them are not described. Instead, the amount of .10 hour per letter or email is claimed on a blanket basis for these 156 items, resulting in the 15.6 hours claimed.

[23] I recognize that some amount of time is appropriate to take account of counsel’s dealing with correspondence and email, particularly given the fact that all communications between Pete’s solicitor and Kelly were by email to avoid any claims of harassment or stalking. Nevertheless, in the absence of any specific dockets, I am unable to assess the reasonableness of the time spent. Recognizing that some amount of time should reasonably be recognized for dealing with these matters, I would reduce the time claimed for review of correspondence by 50%, to 7.8 hours.

[24] This results in a reduction of the full indemnity claim for the trial to $47,646, consisting of fees of $41,565, HST on fees of $5,403.45, and disbursements of $678. I would fix Pete’s partial indemnity costs at $28,600, plus the prior costs award of $600, for total costs payable by Kelly to Pete of $29,200, payable within 60 days.

P. J. Monahan J. Released: January 2, 2019

COURT FILE NO.: FS–16–20680 DATE: 20190102 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter A. M. Henderson Applicant – and – Kelly Ann Winsa Respondent

REASONS FOR JUDGMENT

P. J. Monahan J. Released: January 2, 2019

[1] Serra v. Serra, 2009 ONCA 395 at paragraph 8. [2] Mattina v. Mattina, 2018 ONCA 867 ("Mattina") at paragraph 10. [3] Berta v. Berta, 2015 ONCA 918 at paragraph 94. [4] Mattina at paragraph 13. [5] Rule 24(4) of the Family Law Rules. [6] Rule 24(8) of the Family Law Rules. [7] Rule 18(14) & (16) of the Family Law Rules. [8] Beaver v. Hill, 2018 ONCA 840 at paragraphs 12 and 19. [9] Boucher v. Public Accountants Council (Ontario), 71 O. R. (3rd) 291 (Ont. C.A.) at paragraph 24. [10] Beaver v. Hill, at paragraph 13. [11] See Chomos v. Hamilton, 2016 ONSC 6232, holding that Rule 18(14) contemplates full indemnity for costs where all of the terms of an offer have been obtained in the trial judgment. An offer which includes costs obligations not yet determined by the court cannot satisfy the strict requirements of this rule. [12] M. (A.C.) v. M. (D.), 67 O. R. (3rd) 181 (C.A.).