Court File and Parties

COURT FILE NO.: FS-17-416539 DATE: 20190111 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Christopher Mario Micallef, Applicant AND: Christina Suzanne Micallef, Respondent

BEFORE: Kiteley J.

COUNSEL: Pierre Sicco, for the Applicant Helen Sterling Clarke, for the Respondent on the issue as to costs; Eric Freedman, current lawyer of record for the Respondent

HEARD: In Writing

Endorsement as to Costs

[1] In an endorsement dated November 9, 2018 I dealt with outstanding motions. I directed counsel to provide written submissions as to costs. Mr. Sicco served and filed his client’s submissions by November 23 and Ms. Sterling Clarke (then counsel for the Respondent), filed her written submissions on December 7. At the request of Mr. Sicco, I extended the time for filing Reply submissions which I received on December 20.

Positions Taken by the Parties

[2] The Applicant asks for costs on a full indemnity basis in the amount of $33,680 for fees plus HST in the amount of $4,378.40 and disbursements in the amount of $856.44 for a total of $38,914.84. He takes the position that he should receive costs with respect to the attendances on June 7, 2018, July 16, 2018, September 20, 2018, September 27, 2018 and October 30, 2018 on the bases that he was successful on essentially all of the issues; that the Respondent was unsuccessful in all of her claims that were dismissed; that the Respondent had acted in bad faith to avoid or at least delay the sale of the matrimonial home to which the parties had agreed in the Consent and Minutes of Settlement executed on February 22, 2018; and that the Applicant acted reasonably while the Respondent was extremely unreasonable.

[3] The Respondent asks for partial indemnity costs in the amount of $50,000. She asserted that one of her “interests was to delay the sale of the matrimonial home, (however), that was not the end in itself”. Given her goals (articulated in her evidence on the motion and repeated in the costs submission), she took the position that the fact that the court decided against her is not “indicative of bad faith on her part”. At paragraph 4 her counsel made the following submission:

She recognises that the court found that she attempted to move away from a purportedly fairly made and reasonably made agreement. In the face of this, she respectfully offers her genuine recollection and belief that the Consent and Minutes of Settlement were amended to her detriment.

[4] The Respondent asserted that “it was not unreasonable for Ms. Micallef to entertain the possibility of renegotiating parts of the Consent and Minutes of Settlement”.

[5] The Respondent reported that she had made at least three offers to settle from June to October 2018.

[6] At paragraph 9 the Respondent took the position that notwithstanding the order dated October 11, 2017 and the order to be signed pursuant to the endorsement dated November 9, 2018, the Applicant had failed to “deposit all his income from employment into the parties’ joint account” by withholding the profit share he received annually. At paragraph 11 she asserts that “it is because she was not unreasonable but lost the motion that partial indemnity is sought”.

[7] The Respondent also takes the position that the conduct of the Applicant’s counsel was relevant and, at paragraph 23, she asserted the following:

The Respondent asserts that if she is found to have acted in bad faith in these proceedings for attempting to change, among other things, the listing date of the matrimonial home, then the Applicant ought to be found to have acted in bad faith for his actions through his untoward acts through counsel.

[8] The Respondent referred to her current unemployment and her reliance on “social disability income” and, taking into account what she considered to be an unreasonable listing price, her share of the proceeds of sale of the matrimonial home and her share of the equalization, she asserted that she could not afford to pay costs and instead, she is in need of a costs award.

[9] In Reply submissions, counsel for the Applicant asserts that many of the submissions of the Respondent were not relevant. He again referred to the Respondent’s position after February 22. He pointed out that no formal offers to settle had been presented on behalf of the Respondent from June to October 2018. Mr. Sicco responded vigorously to the allegations as to his professional conduct. With respect to the allegations identified in paragraph 8 above, he pointed out that the Respondent had not provided an updated financial statement and the allegations were not evidence.

Analysis

A. Entitlement to Costs

[10] Both counsel have referred to the attendance on July 16. However, in the endorsement on that date, I ordered that neither party would recover costs.

[11] Pursuant to rule 24(1) of the Family Law Rules, O. Reg. 114/99, there is a presumption that the successful party is entitled to the costs of the motion. The Applicant was successful and is entitled to costs unless, pursuant to rule 24(4) he is found to have behaved unreasonably. If found to have behaved unreasonably, the court may order that the successful party be deprived of all or part of his own costs or ordered to pay all of part of the unsuccessful party’s costs.

[12] Pursuant to rule 24(5) the court is required to consider the reasonableness of the behaviour of the parties and, pursuant to rule 24(8), if a party is found to have acted in bad faith, the court is required to decide costs on a full recovery basis and order the party to pay them immediately.

[13] As the submissions indicate, there is a difference between unreasonable behaviour and bad faith. I do not intend to identify the specific behaviour challenged by each party. Suffice it to say that neither party’s behaviour constitutes bad faith as described in S. (C.) v. S. (M.), 2007 CarswellOnt 3485. Furthermore, there is no basis to suggest that Mr. Sicco acted in bad faith. Rule 24(8) has no application.

[14] I am not persuaded that the Applicant’s behaviour was unreasonable. His objective was to obtain an order consistent with the Consent and Minutes of Settlement that the parties had signed on February 22, 2018. It was reasonable for him to launch the motion in June and reasonable for him to pursue it until the order was made in November. Pursuant to rule 24(1) he is entitled to costs of the motions.

B. Amount of Costs

[15] The recently amended rule 24(12) is as follows:

(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.

[16] The issues were of importance to both parties but they were not complex.

[17] I am persuaded that the Respondent’s behaviour was unreasonable for these reasons. First, as indicated at paragraph 25 of the endorsement dated November 9, 2018, she simply had “buyer’s remorse”. She attempts to describe the rationale for her opposition in a more positive light, but the fact remains that she did not like the deal and treated it as if it were negotiable.

[18] Second, notwithstanding that finding, she persisted in her written costs submissions in taking the position that she was well intentioned. She still has no appreciation for her behaviour. Notwithstanding paragraph 26 of the November 9 endorsement, she makes no mention of the circumstances in which their son C. has been “held hostage” during the many months since February 22, 2018.

[19] Third, she does not accept the decision dated November 9 and, as indicated in paragraph 4 of her submissions quoted above, she “respectfully offers her genuine recollection and belief that the Consent and Minutes of Settlement were amended to her detriment”. This statement is made in the face of uncontradicted evidence that, at the conclusion of the negotiations on February 22, her counsel took possession of the written consent and Minutes of Settlement and, as I held in the June 7 endorsement, it is improbable that the document had been amended to her detriment.

[20] Fourth, in the endorsement dated June 7, 2018 I dismissed paragraphs 1, 2 and 3 of her notice of motion in which, amongst other things, she asked for an order declaring the Minutes of Settlement to be invalid and without force. Yet in her Amended Notice of Motion returnable September 20, she made the same three requests, all of which I dismissed.

[21] As indicated above, the Applicant acted reasonably throughout. Contrary to the submission referred to in paragraph 4 above, it was unreasonable for the Respondent to entertain the possibility of renegotiating parts of the Consent and Minutes of Settlement. It was unreasonable for the Respondent to now characterize her position as an attempt to renegotiate parts of the Consent and Minutes of Settlement when twice she attempted a motion to set aside the Consent and Minutes of Settlement in their entirety. In resisting the Applicant’s motion and in launching her own motion, the Respondent has acted unreasonably.

[22] The bills of costs reflect Mr. Sicco’s rate at $400 per hour and Ms. Sterling Clarke’s rate at $356 per hour. Neither counsel took issue with the rate charged by the other.

[23] The court must consider the time spent on the case. Mr. Sicco allocated over 84 hours to services rendered between May 17, 2018 and October 30, 2018. Ms. Sterling Clarke allocated 182 hours. Neither counsel made a specific submission with respect to the time spent however, based on the bill of costs and on the accounts rendered to the client, a considerable portion of the services Ms. Sterling Clarke performed related to a review of the file after she was retained in April 2018 and are not properly allocated to the motions. Based on my knowledge of the case, I consider Mr. Sicco’s allocation more reasonable.

[24] Neither counsel commented on the disbursements claimed. On my review, those claimed by the Applicant are reasonable.

[25] Pursuant to rule 24(12)(b) the court is required to consider “any other relevant matter” which includes expectations of the parties.

[26] As indicated in paragraph 38 of the November 9 endorsement, counsel for the Respondent had provided a costs outline that reflected services rendered from commencement of her retainer to September 27 that reflected costs of over $77,000. On October 30, 2018, Ms. Sterling Clarke asked for substantial indemnity costs of $50,000. In her written submissions, the Respondent asks again for $50,000 characterized as partial indemnity costs.

[27] Ms. Sterling Clarke provided copies of the accounts rendered to the client dated April 26, 2018, June 1, June 15, July 13, August 15, September 18, September 28, and October 29. In all of those accounts, counsel has discounted the fees by 25% otherwise the fees would have been significantly greater. The Respondent made payments in connection with each of those accounts totalling over $65,000. From that I infer that the Respondent was well aware as the motions started in June and concluded with the endorsement dated November 9, 2018 that the costs that she was incurring were significant. She was kept informed by her counsel and she made frequent substantial payments. I infer that she would expect that the Applicant would incur similar significant expenses. I infer that she was prepared to use whatever of her (unexplained) resources to pursue her multiple unsuccessful attempts to have the Consent and Minutes of Settlement set aside.

[28] The costs incurred by the Respondent were not proportionate in relation to the importance and lack of complexity of the case. Furthermore, her expectations, measured with reference to the costs she actually incurred exceeded the bill of costs submitted on behalf of the Applicant.

[29] Subject to the reduction referred to below, I accept that the bill of costs presented on behalf of the Applicant is reasonable and proportionate, particularly given the sustained resistance by the Respondent.

[30] However, I do not accept 100% of the claim by the Applicant. I discount it for two reasons. First, to remove services rendered in connection with the attendance on July 16. Second, to modify the services rendered to reflect the challenges in converting the Consent and Minutes of Settlement into an order. The February 22, 2018 Consent and Minutes of Settlement were in Mr. Sicco’s handwriting and, to put it bluntly, created problems in legibility. Based on the attendances on June 7, July 16, and September 27 I am satisfied that more than an appropriate amount of time was taken by Mr. Sicco in preparing multiple drafts of the consent order, including, as indicated in paragraph 27 of the endorsement dated November 9, 2018, reorganization and a table of concordance. Part of the reason for the adjournment on June 7 was because the motion brought by the Applicant was to obtain an order incorporating the terms into an order, but the order had not yet been drafted. Having reviewed the bill of costs, I reduce the allowable hours by 10.

[31] Aside from that discount, because of the unreasonable behaviour of the Respondent and the lack of proportionality in her response to the motions, I am persuaded that the Respondent should be required to pay costs on a full indemnity basis.

C. Payment of Costs

[32] If the Respondent is not required to pay by a specific date, I expect that she will put obstacles in the Applicant’s path to prevent recovery. The motions all arose in relation to the sale of the matrimonial home. Having not been successful in any aspect of the motions, this is a case where the Respondent should be required to pay the costs out of her share of the proceeds of sale of the matrimonial home.

Approval of the Order

[33] As indicated above, Ms. Sterling Clarke acted for the Respondent on the motions and she delivered the written submissions as to costs. Since then, the Respondent has changed counsel. The order below is straightforward and ought not to be subject to the process of approval as to form and content.

Order

[34] In relation to the motions returnable June 7, 2018, September 20, 2018, September 27, 2018 and October 30, 2018, the Respondent shall pay costs to the Applicant in the amount of $29,680 plus HST at 13% in the amount of $3858 plus disbursements including HST in the amount of $856 for a total of $34,394.

[35] The Respondent shall pay those costs to the Applicant out of her share of the proceeds of sale of the matrimonial home.

[36] The real estate solicitor who acts on the closing of the sale is authorized and directed to make the payment in accordance with paragraphs 34 and 35.

[37] Counsel for the Applicant may take out this order without approval as to form and content by a lawyer on behalf of the Respondent.

Kiteley J. Date: January 2019