COURT FILE NO.: FC-17-1064
DATE: 2019/08/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lynda Van Delst
Applicant
– and –
Thomas John Hronowsky
Respondent
Katharine Shadbolt, Counsel for the Applicant
David Tobin and Trevor Smith, Counsel for the Respondent
HEARD: In Writing
Decision on COsts
Justice Engelking
[1] A trial was held in this matter on January 21 and 22, 2019. Reasons for Judgment were released on April 24, 2019. Written submissions on the issue of costs were invited and received from both parties. This is my decision on costs.
Positions of the Parties
[2] The Applicant, Ms. Van Delst, seeks costs on a full indemnity basis in the amount of $43,993, or in the alternative, on a substantial indemnity basis in the amount of $40,265. She submits that she was the more successful party in the trial, and that the Respondent acted unreasonably.
[3] The Respondent, Mr. Hronowsky, submits that the Applicant is entitled to costs of $8,000, inclusive of HST & disbursements. He submits that Ms. Van Delst’s counsel included in her bill of costs many items which ought not to be included, and that the costs sought are excessive for what ended up being a two day trial.
The Law
[4] The Ontario Court of Appeal has held that the Family Law Rules on costs are “designed to foster three fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, and ; (3) to discourage and sanction inappropriate behaviour by litigants.”[^1]
[5] Rule 24(12) of the Rules sets out a list of factors the court shall consider in determining an appropriate amount of costs, including that there be reasonableness and proportionality in any costs award.[^2] Factors to be considered include each parties’ behaviour, their time spent, any offers to settle, legal fees, expert witness fees and any other properly paid expenses.[^3] Rule 18(14) provides that there are cost consequences to not accepting an offer if the criteria in that rule are met.[^4]
Analysis
[6] The issues in this case were important to both parties, and they were complex. While equalization of the parties’ net family properties was ultimately the only matter to be decided, it encompassed several complex questions having to do with each of the parties’ pensions. They included the treatment of Ms. Van Delst’s leaves without pay, the treatment of a survivor benefit in Ms. Van Delst’s NFP at valuation date, the reasonable age of retirement for Mr. Hronowsky, the treatment of a contingency survivor benefit in Mr. Hronowsky’s NFP, and date of marriage deductions for both. Expert witnesses were required to provide their respective opinions regarding the Family Law Value of each party’s pension.
[7] With respect to the time properly spent on the file, Mr. Hronowsky takes issue with two things: first, he submits that some of the time spent by Ms. Van Delst’s counsel on the file between November 26, 2018 and January 22, 2019, was actually spent on resolving some of the issues that resolved in advance of trial on a no costs basis. In this he includes the five hour settlement conference conducted by Justice Audet on January 9, 2019 as well as the follow-up conference call with her on January 11, 2019. Mr. Hronowsky also submits that much of the time spent and correspondence flowing between his counsel and Ms. Van Delst’s was in relation to drafting the order to settle those issues.
[8] Second, Mr. Hronowsky submits that Ms. Van Delst’s claim for any costs between May of 2017 and November 25, 2018, are not properly before me as they were dealt with on a final basis by Justice Shelston’s Order of November 26, 2018 requiring Mr. Hronowsky to pay Ms. Van Delst $10,000 inclusive of HST and disbursement for “costs thrown away”.
[9] Ms. Shadbolt’s Bill of costs from November 26, 2018 to January 22, 2018, does not break down specific times dedicated to specific issues, and it is not possible for the court to determine how much time was dedicated to the matters that proceeded to trial versus those that were resolved prior to trial (being, inter alia, those related to custody, access, child support, and RESP monies). Mr. Hronowsky submits that the bulk of the time at settlement conference and in the conference call with Justice Audet related to those latter issues, and that no less than 25 emails or letters exchanged between the parties in this time period related to drafting the resulting consent order. I am, consequently, prepared to reduce the 62.7 hours of Ms. Shabolt’s time during this period by 15 hours and to reduce the time of the junior counsel, Ms. Boyce, hours by five. The Applicant’s bill of costs from November 26, 2018 to January 22, 2019 would then become $19,683.96 in fees on a full recovery basis.
[10] With respect to the pre-November 26, 2018 costs, Ms. Van Delst’s position is that Justice Shelston’s Order of November 26, 2018 dealt only with costs thrown away in trial preparation, as the matter was originally on the November trial sittings, but Mr. Hronowsky sought and was granted an adjournment. In her submission, Justice Shelston’s costs decision did not take into account work done on the file since its inception. A review of Justice Shelston’s Endorsement of November 26, 2018 indeed reveals that Applicant was seeking costs “thrown away for the preparation of the trial scheduled for the Nov 2018 trial sittings”. In fact, Justice Shelston acknowledges that the Applicant was seeking from him “costs thrown away representing 50% or close to 50%” of her costs on a full indemnity basis, which he acknowledged to be $18,111.32 (inclusive of HST) plus disbursements. Justice Shelston wrote: “Considering the circumstances, I order the Resp to pay to the applicant the sum of $10,000 inclusive of HST and disbursements to be paid by December 6, 1018…” Justice Shelston also acknowledged that the Applicant would incur further costs subsequent to his endorsement, and in preparation for the trial to proceed in January. It is clear from my reading of Justice Shelston’s Endorsement that Ms. Van Delst was seeking an order of costs covering only the portion, approximately 50%, that was attributable to her preparation for the November trial, not covering the proceedings since their commencement. Were that the case, Ms. Van Delst would have been seeking an order of 100% of her costs on a full indemnity basis. I find, consequently, that she is not barred from seeking an order for the portion she neither claimed nor received from Justice Shelston in November. Again, however, there is no breakdown in Ms. Shadbolt’s bill of costs regarding what time was spent on what issue, and the issues later resolved on a without costs basis would have been very live over this period. I, therefore, deduct 10 hours from Ms. Shadbolt’s time spent on the file from May of 2017 to November 25, 2019, resulting in a total of $5,064.33 in fees.
[11] I find Ms. Shadbolt’s hourly rate of $386.59 to be reasonable for a lawyer of 33 years in practice. Indeed, she appears to have discounted her post-November 26 rate to $298.75, which is more than reasonable.
[12] Mr. Hronowsky also takes issue with the disbursement of $3,870 paid to Ms. Van Delst’s expert, Mr. Guy Martel. Mr. Hronowsky submits that Mr. Martel was required both days of trial by Ms. Van Delst, as she wished to call him in reply, which I did not permit. Mr. Hronowsky submits that he should not pay for two days of the expert’s time when he was only required for one. There is no invoice included in the bill of costs, however, a review of Mr. Hronowsky’s bill of costs reveals that the fee for his expert, who was only present for one (or part of one) day at trial is $4,378.75, which is much more than he is alleging Ms. Van Delst’s cost for two days. Given the cost of Mr. Hronowsky’s expert, I am not inclined to make any reduction for Ms. Van Delst’s.
[13] With respect to offers to settle, Ms. Van Delst made six over the life of the file. In relation to the equalization issue, they provided as follows:
• January 24, 2018 – equalization of $581,132.74 and for Mr. Hronowsky to buy out Ms. Van Delst’s interest in the matrimonial home for $225,000, no costs if accepted by January 31, 2018;
• March 6, 2018 – equalization of $505,687 and for Mr. Hronowsky to buy out Ms. Van Delst’s interest in the matrimonial home for $225,000, no costs if accepted by March 20, 2018;
• July 18, 2018 – equalization of $581.132.74, no costs if accepted by August 3, 2018;
• November 8, 2018 – equalization of $544,715.20, no costs if accepted by November 16, 2018;
• December 31, 2018 – equalization of $544,715.20, no costs if accepted by January 10, 2019; and,
• January 11, 2019 – equalization of $505,000, no costs if accepted by January 15, 2019.
[14] Mr. Hronowsky made two offers to settle with respect to equalization as follows:
• January 30, 2018 – equalization of $150,000 and preservation of the survivor pension to Ms. Van Delst; and,
• January 13, 2019 – equalization of $350,000 and a charge on Mr. Hronowsky’s estate in the event that she became ineligible for the survivor pension.
[15] Mr. Hronowsky’s position is that he could not accept any of Ms. Van Delst’s offers because they had other provisions, including in some of them a regime for how the proceeds of the sale of the matrimonial home would be disbursed and in some, a waiver of entitlement to spousal support. He also submits that there was divided success in relation to the issues in that I found in his favour on the issue of the appropriate treatment of Ms. Van Delst’s leaves without pay.
[16] However, at the end of the day, I found that Mr. Hronowsky owed Ms. Van Delst an equalization payment of $563,560.23, plus pre-judgment interest from the date she amended her pleadings to include a divorce. On the issue of equalization, the outcome of the trial was as or more favourable to Ms. Van Delst than were four of her six offers. Most specifically, it was more favourable to her than was her offer of November 8, 2018, and remained so over her subsequent two offers, the final one of which severed the property issues from all other issues.
[17] With respect to Ms. Van Delst’s November 8, 2018 offer to settle, Mr. Hronowsky takes the position that it included provisions for higher child support than was agreed to, as well as spousal support to Ms. Van Delst and a waiver to spousal support by Mr. Hronowsky. However, the child support ultimately agreed to was $4.00 lower than that offered by Ms. Van Delst, and the spousal support offer was for Mr. Hronowsky to pay Ms. Van Delst $1.00 per month, essentially preserving her possible future right to same. Notwithstanding that the offer in relation to equalization was not severable, I read nothing in the offer which would suggest that Mr. Hronowsky could not have accepted it for financial reasons. In other words, it contained no other financial obligations which would have precluded him from being able to pay the equalization offered. I find, on that basis, that Ms. Van Delst is entitled to full recovery thereafter.
[18] I find that Ms. Van Delst is entitled to costs on a partial indemnity basis for the time spent on the file from May of 2017 to November 25, 2018, as reduced above. I find additionally that Ms. Van Delst is entitled to costs on a full indemnity basis from November 26, 2018 to January 22, 2018, as reduced above.
Order
[19] My order is:
Mr. Hronowsky shall within 30 days pay Ms. Van Delst costs of $32,732,72, inclusive of HST and disbursements; and,
This order bears interest at the post-judgement interest rate set out in the Courts of Justice Act of ____% per year effective from the date of this Order. A payment in default bears interest only from the date of default.
Justice Engelking
Released: August 16, 2019
COURT FILE NO.: FC-17-1064
DATE: 2019/08/16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lynda Van Delst
Applicant
AND:
Thomas John Hronowsky
Respondent
DECISION ON COSTS
Engelking J.
Released: August 16, 2019
[^1]: Mattina v. Mattina, 2018 ONCA 867, paragraph 10 [^2]: Rule 24(12), Family Law Rules, O.Reg. 114/99, as am. [^3]: Ibid. [^4]: A party is entitled to costs on a full recovery basis if the offer was made at least one day before the motion, did not expire or was not withdrawn, is not accepted and the order made is as or more favorable than the offer.