COURT FILE NO.: FS-15-00020455
DATE: 20190910
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lisa Jean Climans
Applicant
– and –
Michael Elliot Latner
Respondent
Bryan R. G. Smith, for the Applicant
Harold Niman and Chloe Van Wirdum, for the Respondent
HEARD: In Writing
Shore, J.
[1] This is the cost decision following an eight-day trial where the primary issue was whether the Applicant, Ms. Climans, was entitled to spousal support, and if so, the quantum and duration of support. Before I could determine the issue of entitlement, I needed to first determine whether Ms. Climans was a “spouse” under Part III of the Family Law Act, R.S.O. 1990, c. F.3. I reserved my decision and released Reasons for Judgement on February 25, 2019, finding that Ms. Climans was a “spouse” for determining spousal support. She was awarded spousal support in the amount of $53,077 per month commencing January 1, 2019 and a lump sum payment of $421,795.12 in satisfaction of retroactive spousal support owing between the parties up to that date.
[2] I invited the parties to settle the issue of costs between them, failing which they were to provide written submissions, to my attention. I have now received their submissions. The total legal fees incurred by the Applicant was $463,114. She is seeking costs of $366,764.44, inclusive of disbursements and HST, based on a 100% recovery rate after her November 30, 2018 offer to settle and a 60% recovery rate from the start of the action until November 30, 2018. The total legal fees incurred by the Respondent, Mr. Latner, was $431,021. His position is that there should be no costs paid between the parties. For the reasons set out below, I fix costs in the amount of $324,179, payable by Mr. Latner to Ms. Climans within 60 days.
Facts:
[3] In determining costs, I rely on the facts set out in my Reasons for Judgement released on February 25, 2019. Any additional facts relied on for determining costs are set out in my analysis below.
Analysis:
[4] Modern costs rules are designed to foster four fundamental purposes: (1) to partially indemnify successful litigants, (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants, and (4) to ensure that cases are dealt with justly under subrule 2(2) of the Family Law Rules, O. Reg. 114/99 (“Rules”): Mattina v. Mattina, 2018 ONCA 867, [2018] OJ No 5625.
[5] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that costs are within the discretion of the court and the court may determine by whom and to what extent costs shall be payable, subject to the provisions of an Act or rules of court. In family law, costs are addressed in rule 24 of the Family Law Rules. Subrule 24(1) creates a presumption of costs in favour of the successful party. Subrule 24(6) provides that if success is divided, the court may apportion costs as appropriate. An award of costs is subject to the factors listed in rule 24(12) (see factors below), rule 24(4) (unreasonable conduct of a litigant), rule 24(8) (bad faith), rule 18(14) (offers to settle), and the reasonableness of the cost sought by the successful party.
[6] However, further guidance was recently provided by the Court of Appeal in Beaver v. Hill, 2018 ONCA 840, 143 OR (3d) 519, which clarified two important principles in exercising discretion, being reasonableness and proportionality.
[7] I have considered the factors set out in subrule 24(12) of the Rules, which reads as follows:
24 (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.
[8] I am required to look at the factors set out in rule 24(12) while considering the principles of reasonableness and proportionality.
[9] Further, subrule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24(12)(a)(1) above). It reads as follows:
DECISION ON REASONABLENESS
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
[10] The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which reimbursement is sought) and the importance or monetary value of the issues at stake.
[11] In considering the four fundamental purposes of cost awards (as will be set out in more detail below), the Applicant should receive costs to partially indemnify her as the successful litigant. Costs should also discourage inappropriate behaviours, such as those displayed by the Respondent in his failure to provide disclosure or answer proper questions. I find that both parties did make reasonable attempts to settle, but neither did as well or better than their offer to settle.
Successful Party
[12] Considering the issues at trial, overall Ms. Climans was successful and is entitled to costs. On the central issue of whether Ms. Climans was a spouse, Ms. Climans was entirely successful. She was also successful on the issue of quantum of support, while Mr. Latner was successful on the smaller issue of life insurance. On the issue of duration of support, Ms. Climans was more successful than Mr. Latner. I say that despite there being no order as to the duration of support (but an acknowledgement that indefinite support does not mean that she will receive spousal support for life), in contrast to Mr. Latner’s position at trial that spousal support be very time-limited in nature.
Offers to Settle
[13] Both parties made several offers to settle throughout the proceedings. Rule 18(14) provides that a party who makes an offer is entitled to costs if that party obtains an order that is as favourable as or more favourable than the offer. I find that rule 18(14) is not invoked in the case before me as neither party beat their offer to settle. In her submissions the Applicant has tried to quantify the ongoing spousal support order to demonstrate that she beat her offers to settle if those two were quantified as an overall lump sum payment. Given that we do not know when or if spousal support will come to an end I do not find this approach helpful. The Applicant’s various scenarios in her offers included $67,000 per month for ten years or $35,000 payable for life. yeah of holding the The duration of spousal support was not determined at trial. It would be difficult to quantify the monthly spousal support payments as a lump sum. Although indefinite support was ordered, it does not necessarily equate to lifetime support. Further, the Applicant was not successful with respect to the lump sum provisions contained in most of her offers to settle.
[14] However, when exercising discretion over costs, the court may consider offers to settle even if rule 18(14) does not apply, pursuant to rule 18(16). In this regard, the Respondent’s offers did show a desire to settle, and the offers included both lump sum amounts along with ongoing monthly payments. However, the Applicant did better at trial. I view the offers to settle as being neutral on the issue of costs.
Each party’s behaviour
[15] The Applicant invites me to find that the Respondent acted in bad faith. Rule 24(8) has a high threshold of egregious behaviour; therefore, courts do not often make such a finding: Belair v. Bourgon, 2019 ONSC 2170, 306 A.C.W.S. (3d) 548 at para. 39. There is a difference between bad faith and unreasonable behaviour. While I find that Mr. Latner acted unreasonably with respect to his disclosure obligation, I do not find that it meets the high threshold of “bad faith”. His position at trial was that his income (found to be at least $6.5 million) was not relevant because he conceded at the outset that he had the ability to pay any amount of spousal support.
[16] As set out above, both parties made offers to settle. Mr. Latner’s offers did include payments for spousal support first 10 years in the amount of $35,000. He also made ongoing payments to and on behalf of Ms. Climans following separation and up to trial. To some extent this works in his favour when determining the issue of costs. However, Mr. Latner acted unreasonably with respect to disclosure and providing evidence at trial.
[17] His position at trial—that the Applicant was nothing more than a travel companion or girlfriend—was unreasonable. Mr. Latner was deliberately evasive and inconsistent in his testimony at trial. Several examples of this behaviour were set out in my Reasons.
[18] Mr. Latner was not forthcoming in his disclosure. There is an absolute obligation in family law to provide reasonable disclosure. Mr. Latner’s response to his lack of disclosure was that the Applicant did not bring a motion asking for the disclosure. This is not an acceptable excuse. The Respondent’s unreasonable behaviour will increase the cost award.
Time spent by each party and legal fees incurred
[19] Neither party takes serious issue with the time spent, hourly rates of counsel, or the fees incurred. Given the voluminous amount of documents relied on during the trial, the complex financial circumstances of the parties, as well as trying to recreate the Respondent’s income and lifestyle with incomplete disclosure, along with all of the steps taken to get this matter to trial over three years and a trial that lasted for eight days, I find the time spent in the fees incurred by the Applicant to be reasonable and proportional. Further, the Applicant’s legal fees were increased significantly by the Respondent’s failure to provide disclosure and his failure to provide reasonable responses to questions asked both prior to and during trial.
[20] Mr. Niman and Mr. Smith are both senior counsel and leaders in their area of law. I appreciate that both Mr. Niman and Mr. Smith relied on more junior counsel to do the brunt of the work in the file to keep down costs. It was clear at trial that the assistance of both Ms. Black and Ms. van Wirdum were needed and relied on. I am not prepared to discount their time.
[21] Both parties each spent in excess of $430,000 in these proceedings. A useful benchmark for determining whether costs claimed are reasonable and proportionate is to compare it to the costs incurred by the other party. Generally, spending over $400,000 on a trial where the only issue is spousal support would not be reasonable or proportionate. However, the legal fees, although high, are proportionate to the quantum of money at stake for both parties and the legal fees spent by the other party. I find that both parties had a significant amount at stake, depending on the outcome of the case. Mr. Latner had very significant resources to contribute to the costs of these proceedings. Ms. Climans was required to respond to the steps/actions taken my Mr. Latner and his legal team. The fees are proportionate to one another and, although high, are reasonable in this specific case.
Summary:
[22] I have considered the facts of the case, the costs submissions of counsel, the behaviour of both parties, the offers to settle, the success of the parties on the various issues, the complexity of some of the issues, the importance of the issue of spousal support for the Applicant, and the proportionality and reasonableness of the legal fees incurred. I find that the Applicant is entitled to her costs on a substantial indemnity basis, fixed at $324,179, being 70% of the total fees she incurred.
Order:
[23] The Respondent shall pay the Applicant costs in the amount of $324,179, inclusive of disbursements and HST, payable within 60 days of the release of this judgement on costs.
Shore, J.
Released: September 10, 2019
COURT FILE NO.: FS-15-00020455
DATE: 20190910
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lisa Jean Climans
Applicant
– and –
Michael Elliot Latner
Respondent
REASONS FOR JUDGMENT
Shore, J.
Released: September 10, 2019