Court File and Parties

COURT FILE NO.: FS-17-5414 DATE: 20190530

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Linda Audrey Leitch, Applicant AND Steven Clark Kemp Leitch, Respondent

BEFORE: Sproat J.

COUNSEL: Glenna McClelland, for the Applicant Allen Wilford, for the Respondent

C O S T S E N D O R S E M E N T

Sproat J.

[1] The Respondent accepted the Applicant’s Offer to Settle which provided that the Respondent would make an equalization payment of $35,780 plus pay the Applicant $29,162 being the amount the Applicant effectively paid to eliminate line of credit debt of the Respondent post-separation which was secured against the matrimonial home and so had to be paid when it was sold. There were other provisions including that spousal support at the latest would end August 31, 2022. The costs were to be determined based on written submissions which I have reviewed.

[2] The Applicant submits that there was “one dominant issue” whether the limitation period should be extended to allow the Applicant to seek an equalization of net family property.

[3] The Applicant submits, in part, that the Respondent acted in bad faith or unreasonably in continuing to assert the limitation defence. The Applicant refers to a comment by a judge at conferences suggesting that the Applicant had a stronger argument than the Respondent on this point. The Applicant also quotes a comment by Justice Gibson at a conference in support of her position that the Respondent was unreasonable. In my view, given Rule 17(23), I am not entitled to consider matters discussed at a conference and these references should not have been made.

[4] I do agree with paragraphs 30 – 33 of the Applicant’s submission that the Respondent failed to make reasonable offers.

[5] In late March the Respondent failed to respond to a proposed Statement of Agreed Facts or to agree on what the equalization payment would be if the limitation period did not apply. All of this required the Applicant’s counsel to fully prepare for trial. In addition, the Respondent did not serve a Fresh Financial Statement before trial or a current paystub.

[6] Both parties, but in particular the Respondent, referred in their cost submissions to allegations they expected to prove at trial and which they apparently wanted me to find relevant to my costs award. I will provide some examples.

[7] The Applicant made reference to: a) The Respondent being abusive and threatening to kill the Applicant. b) That she received minimal support and for many years was destitute. c) That she was unaware of the limitation period until 2017.

[8] The Respondent made reference to: a) The Applicant had free access to a joint bank account. b) The Respondent never abused the Applicant. Any bruising was the result of her continual drunken activity. c) Evidence from which the Respondent suggests I should infer that the Applicant got independent legal advice in 2008. d) The Respondent “had no options but to accept a very unjust settlement or the very real likelihood of death from his failing heart issues”. e) The Applicant has unexplained deposits in her bank account. f) Many witnesses in public settings saw the Respondent abused by the Applicant. g) That I should infer that the Applicant has lied about the extent of her foreign travel because she refused to produce her passport for inspection. h) The Applicant having “outright lied” in court affidavits.

[9] I cannot factor into a costs award submissions of counsel that are not in evidence. Even if there was evidence, much of it would be sharply contradictory and of the type that would require a trial.

[10] I, therefore, approach this on the basis that the Applicant commenced a claim and recovered and obtained a settlement. The Applicant is presumptively entitled to costs.

[11] The Applicant’s counsel’s time spent and hourly rate and hourly rate are reasonable given the settlement occurred only three days before the trial was scheduled to start. On a full recovery basis the Applicant claims $43,853 inclusive of disbursements and HST. Partial indemnity costs would be in the order of $28,500. ($43,853 x 65% = $28,504.48)

[12] In Serra v. Serra, 2009 ONCA 395 the court stated:

[8] Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330, at para. 22.

[9] Rule 24(11) of the Family Law Rules, O. Reg. 114/99, provides that, in exercising its discretion to award costs, the court must consider the following factors: (a) the importance, complexity or difficulty of the issues; (b) the reasonableness or unreasonableness of each party’s behaviour in the case; (c) the lawyer’s rates; (d) the time properly spent on the case; (e) expenses properly paid or payable; and (f) any other relevant matter.

[13] In Beaver v. Hill, 2018 ONCA 840 Nordheimer J.A. stated:

[8] Yet, that is not how the costs in this case were determined. Rather, the resulting award approached a full recovery amount. In defence of that result, the respondent relies on what is contended to be the principle from Biant v. Sagoo, [2001] O.J. No. 3693, 20 R.F.L. (5th) 284 (S.C.J.) that costs in family proceedings should “generally approach full recovery”. I would make a couple of points in response to that contention.

[9] First, while the judge in Biant does make that statement, it is based on two decisions of other Superior Court judges, a close reading of which do not support the thrust of that statement. What those other cases do establish is that under the Family Law Rules, O. Reg. 114/99, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, since no scales of costs are mentioned in the Family Law Rules. Also, 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.

[10] Second, the respondent’s assertion that this court’s decision in Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730 supports the “full recovery” approach to costs in family matters also reflects a failure to read the decision closely. What this court endorsed in that case was the principle that “a successful party in a family law case is presumptively entitled to costs” (at para. 94) subject, though, to the factors set out in Rule 24. This caveat is an important one since, as this court pointed out in Frick v. Frick, 2016 ONCA 799, 132 O.R. (3d) 321, the Family Law Rules “embody a philosophy peculiar to a lawsuit that involves a family” (at para. 11).

[11] There is no provision in the Family Law Rules that provides for a general approach of “close to full recovery” costs. Rather, r. 24(12) sets out the appropriate considerations in fixing the quantum of costs. It reads:

(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

[12] As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.

[13] Further, a “close to full recovery” approach is inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances, e.g. bad faith under r. 24(8), or besting an offer to settle under r. 18(14). Consequently, the motion judge erred in principle in adopting a “close to full recovery” approach in fixing the costs of these motions. I would note that such a result also appears inconsistent with her determination that full recovery costs were not appropriate in this case.

[14] The Respondent claims an inability to pay costs. The Respondent failed to provide an updated Financial Statement before trial or a current 2019 paystub. He had substantial earnings in 2018. I do not accept that he has an inability to pay, such that costs should be reduced on that account.

[15] The Applicant recovered an equalization payment of $35,780 plus spousal support which may continue to August 31, 2022 being approximately 40 months. The matter was only settled on the eve of trial so I do not consider the costs I intend to award to be disproportionate to the recovery or beyond the reasonable expectations of the Respondent. I note that the Respondent did not produce his own bill of costs or dockets which provides further support for my conclusion that the time spent and hourly rate claimed by the Applicant are reasonable.

[16] I find that the Applicant is entitled to something more than partial indemnity costs taking into account the factors I referred to in paragraphs 4 and 5. As such, I order that the Respondent pay costs of the action fixed in the amount of $33,000 which is slightly more than 75% of full recovery costs. To that I add $1,627 in costs related to the Reply cost submissions which were largely necessitated by the extensive reliance by the Respondent on unsupported and largely irrelevant allegations which the Applicant then had to respond to.

Sproat J.

DATE: May 30, 2019