Court File and Parties
SUPERIOR COURT OF JUSTICE – ONTARIO
FAMILY COURT
RE: JANET LEE NEUFELD, Applicant
AND:
WILMER JACK NEUFELD, Respondent
BEFORE: The Honourable Mr. Justice R. A. Lococo
COUNSEL: Richard H. Barch, Q.C., for the Applicant
Paul Bauerle, for the Respondent
HEARD: By written submissions dated March 20 to April 25, 2019
ENDORSEMENT – costs
[1]
Background
Janet Neufeld and Wilmer Neufeld are parties to matrimonial litigation, in which the division of property (including significant farming operations) is in issue. As set out in Reasons for Judgment dated February 27, 2019 (reported at 2019 ONSC 1277), after the “trial of an issue” lasting 19 days, I granted a partial final order fixing the parties’ date of separation as July 31, 2014. The costs of the separation trial were left to be determined based on written submissions. The rest of the issues in the litigation (other than the parties’ divorce) remain to be determined.
[2]
Positions of the Parties
Based on parties’ costs submissions, there is common ground on the following points:
a. Janet was the successful party and is entitled to an award of costs against Wilmer. (Janet claimed that the parties separated in July 2014. Wilmer claimed they separated in 2000.)
b. Janet served an Offer to Settle on November 7, 2017, offering a compromise separation date of February 1, 2012. The separation date that the court fixed was as or more favourable to Janet than the date Janet offered. Janet is therefore entitled to full recovery of costs from November 7, 2017: see Family Law Rules, O. Reg. 113/99, r. 18(14).
3Janet’s counsel provided a Bill of Costs (as revised in reply submissions), claiming fees and disbursements totalling $229,537.46. That amount includes the following elements: (i) $19,746.00 for fees prior to the Offer to Settle, calculated on a “substantial recovery” basis (80 percent of full recovery); (ii) $152,527.50 for fees after the Offer to Settle, calculated on a full recovery basis; (iii) $22,395.56 for HST on fees; (iv) $29,993.87 for disbursements paid for investigative and forensic accounting services; and (v) $4,874.53 for other law firm disbursements (including HST).
4In response, Wilmer’s counsel suggests that a reasonable costs award in Janet’s favour would be $165,983.27. The principal factors that account for the difference between Wilmer’s and Janet’s proposed amounts are as follow: (i) Wilmer says that fees prior to the Offer to Settle should be calculated on partial recovery basis (60 percent of full recovery) rather than substantial recovery (80 percent); (ii) he challenges the disbursements paid for investigative and forensic accounting services as excessive (suggesting they be reduced to zero) since the underlying invoices indicate that the services performed were clerical in nature; and (iii) he argues Janet’s counsel charged an excessive amount of time for the parties’ pre-trial questioning as well as for a second round of trial preparation. The trial was originally scheduled to proceed in November 2017, but the trial date was postponed by several months when the court failed to reach the matter when originally scheduled.
[5]
Analysis
Subrule 18(10) provides for full recovery costs after a qualified offer to settle, but (as both counsel acknowledge) r. 18(1) is silent as to the scale of costs prior to that date. In Beaver v. Hill, 2018 ONCA 840, at paras. 12, the Court of Appeal indicates that as a general rule in family law proceedings, “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs”, consistent with the wording of r. 24(12). In doing so, the Court of Appeal rejects the lower court’s suggestion that costs fixed in family proceedings are generally “close to full recovery”, finding that the lower court erred in applying that incorrect principle by awarding the successful party 85 percent of full recovery costs: Beaver, at paras. 11 and 17.
6Janet’s counsel argued that awarding 80 percent of full recovery costs prior to the Offer to Settle is proportionate and reasonable because, among other things, (i) Wilmer did not accept Janet’s offer to settle, (ii) Wilmer made his own clearly unacceptable offer to settle only a short time before the second scheduled trial date, and (iii) Wilmer did not fully comply with the court order providing Janet with exclusive possession of part of the matrimonial home. While it may be appropriate to take those and other considerations into account, I am inclined to view 80 percent of full recovery costs as being on the high side in this case, being uncomfortably close to the 85 percent threshold that the Court of Appeal found unacceptable in Beaver.
7In any event, the appropriate scale of costs prior to the Offer to Settle makes little practical difference in this case. The difference between the amount each party suggests for legal fees prior to the Offer to Settle is about $8,000 (plus HST), and part of that difference relates to Wilmer’s position that the amount Janet’s counsel charged for pre-trial questioning was excessive. In fact, I find the time and amounts that Janet’s counsel charged (as set out in the Bill of Costs) to be generally reasonable and proportionate, including the amounts charged for pre-trial questioning as well as for trial preparation after the trial was rescheduled. In doing so, I am taking the approach indicated in the family law context in Docherty v. Catherwood, 2016 ONSC 2140, at para. 50 (relying on Fazio v. Cusumano, 2005 CanLII 33782 (Ont. Sup. Ct), at para. 8.):
In reviewing a claim for costs, I need not undertake a line by line analysis of the hours claimed, nor should I second guess the amounts claimed unless they are clearly excessive or overreaching. I must consider what is reasonable in the circumstances and, after taking into account all of the relevant factors, award costs in a global fashion.
8In this case, I do not find the amounts Janet claimed to be “clearly excessive or overreaching”: see also Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 27, citing Basedo v. University Health Network, [2002] O.J. No. 597 (Sup. Ct), at para. 7.
9I agree with Wilmer’s counsel, however, that the disbursement amount for investigative and forensic services appears on the high side, given the nature of services described in the invoices. While Wilmer’s counsel suggests that no amount should be recovered for those disbursements, I would instead reduce them by half to $15,000.
10In any case, as the Court of Appeal noted in Boucher, at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.” While Boucher is a non-family civil case, that objective is consistent with the principles set out in the Family Law Rules, as interpreted by the Court of Appeal in Beaver.
[11]
Conclusion
In all the circumstances, I would fix the Applicant’s costs at $200,000 including disbursements and tax, payable by the Respondent within 30 days.
The Honourable Mr. Justice R.A. Lococo
Date: June 11, 2019