COURT FILE NO.: FC-17-2524
DATE: 20190924
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ERICA ARMSTRONG Applicant
– and –
ROBERT ARMSTRONG Respondent
COUNSEL: Katherine A. Cooligan, for the Applicant
Self-represented
HEARD: In writing
DECISION ON COSTS
Audet J.
[1] This family application was commenced in November 2017. On May 23, 2019, I heard a one-day trial in this matter pertaining to financial issues. This is because by the time the trial was held, most of the issues had been resolved, albeit at the eleventh hour. Custody of and access to the parties’ two children (age 15 and 18) as well as past and ongoing child support obligations were resolved at the last-minute settlement conference held two weeks prior to trial before Justice Kershman. This reduced the length of trial from 7 days to 3 days. Various other issues related to the value of debts, assets and claims related to equalization and post-separation adjustments were also resolved on the eve of trial.
[2] The only disputes that required trial were the following:
- The husband’s claim to exclude two assets from his net family property;
- The husband’s claim for compensation for vacation time taken by him to prepare the matrimonial home for sale;
- The wife’s claim for occupation rent;
- post-separation adjustments claimed by both parties;
- The wife’s request for reimbursement of past special and extraordinary expenses incurred by her for the parties’ two children;
- The wife’s claim for reimbursement of medical and dental expenses incurred by her since the date of the parties’ separation, submitted to the husband’s health insurance plan, and paid to the husband;
- The wife’s request that the husband name her as the beneficiary of his life insurance to secure child support;
- prejudgment interest, and;
- costs.
[3] The wife was the successful party on virtually all issues. Whenever the husband achieved success on any of his claims, it was because the wife readily admitted his entitlement to the claim being put forward. It cannot be possibly argued that the husband achieved any meaningful success on any issues raised in this case, including those that were resolved at the latest possible hour before trial.
Legal Framework
[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 sub-rule 2(2) of the Family Law Rules, O. Reg. 114/99 (“the rules”) (Mattina v. Mattina, 2018 ONCA 867, 2018 CarswellOnt 17838).
[5] Costs can be used to sanction behaviour that increases the duration and expense of litigation or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice (British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 at para. 25).
[6] Sub-rule 18(14) of the rules provides that a party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the conditions set out therein are met. The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order (Wilson v. Kovalev, 2016 ONSC 163, 72 R.F.L. (7th) 362).
[7] The wife made three offers to settle in this case, dated June 13, 2018, August 23, 2019 and April 29, 2019. The husband also made three offers to settle, dated July 7\13, 2018 (two identical copies of the same offer bearing different dates were provided), August 31, 2018 and April 4, 2019.
[8] In order to trigger the cost consequences set out in sub-rule 18(14), the offer must be signed personally by the party making it, as well as by the party’s lawyer, if any. The offer must also be made at least seven days before the trial and must not expire or be withdrawn before the hearing starts. Finally, the offer must be as favourable or more favourable than the outcome achieved by that party at trial.
[9] None of the offers made by the husband would have resulted in an outcome more favourable to him than the result he achieved at trial. Quite the contrary. The wife’s entitlement at the end of this trial far exceeded anything the husband was ever prepared to settle for on the monetary issues.
[10] On the other hand, from the very outset of this proceeding (June 13, 2018) the wife made an offer to settle which was far more favourable to the husband than the result he achieved at trial, particularly as it related to financial issues. As the matter progressed without resolution, and even though she did not have all relevant financial disclosure from the husband, the wife nonetheless continued to present very reasonable offers to settle hoping to avoid the need for lengthy proceedings and a trial. Even though the wife increased the amount she was prepared to settle for in the two offers which followed her June 2018 offer (based on additional disclosure provided by the husband), and added a cost component to her offers ($25,000 sought in her August 2018 offer and $50,000 sought in her April 2019 offer), aside from the costs sought both offers were still more favourable to the husband than what he achieved at trial. In particular, the wife’s August 2018 offer was more favourable to the husband than the result he achieved at trial even if one includes the costs sought by the wife in that offer.
[11] In addition, throughout the course of this proceeding the wife’s offers to settle on parenting and child support issues remained the same and were eventually accepted (integrally) by the husband but only at the eleventh hour, two weeks prior to trial, and despite insisting at a prior settlement conference for a full-blown trial on parenting issues.
[12] In order to trigger the cost consequences of sub-rule 18(14), the offer must not expire or be withdrawn before the hearing starts. The wife’s offers of June and August 2018 were no longer subject to the husband’s acceptation when she made her last offer to settle in April 2019, which required the husband to pay $50,000 towards her legal fees. For that reason, sub-rule 18(14) is not triggered so as to impose full recovery costs based on the wife’s first or second offers to settle, as they were no longer open for acceptance at the time of trial.
[13] Nonetheless, pursuant to sub-rule 18(16), when exercising its discretion over costs the court may consider “any written offer to settle”, the date it was made and its terms, even if sub-rule 18(14) does not apply. I am of the view that it was perfectly reasonable for the wife in this case to add to her offers to settle an increasing contribution towards her legal fees considering the husband’s behaviour throughout this proceeding. I find that the offers to settle the wife made back in June and August of 2018 were significantly more advantageous to the husband then what he achieved at trial. This, in my view, supports a finding that the wife is entitled to her costs on a substantial indemnity basis for all work completed after she made her first offer to settle in June 2018.
[14] Notwithstanding my findings above, I would have concluded that the wife was entitled to costs on a substantial indemnity basis regardless of her offers, as a result of the following:
a. Until two weeks prior to the commencement of the trial sittings, this case was set for a seven-day trial with a full slate of issues, including the parenting of a 15 and 17-year-old. Even though both parties’ offers, by April 2019, were identical on parenting issues, the husband was not prepared to settle those issues without a financial settlement, attempting to use the parenting issues as leverage to obtain a more favourable financial settlement. This was unreasonable. It forced the wife to incur significant costs to prepare for a seven-day trial as if all issues were on the table, where ultimately the parenting and child support issues were settled in accordance with what the wife had been offering all along;
b. The issues pertaining to parenting consumed the vast bulk of communications (and legal expenses) from the date of separation until they were resolved at the last-minute settlement conference. I find that the husband took unreasonable positions given the ages of the children, the status quo during the marriage and since the parties’ separation (the husband had no contact with either of his daughter from early on, yet insisted on a joint parenting arrangement). He insisted for a trial on parenting issues throughout, only to abandon his position completely at the last-minute settlement conference, and ultimately accepting the wife’s position in its entirety (“capitulating”, as he puts it). The husband’s behaviour as it related to parenting issues was unreasonable;
c. The husband’s conduct throughout this proceeding was likewise unreasonable. He refused to comply with standard requests for disclosure and court orders requiring him to disclose. He retained five different experienced family law lawyers at various times throughout these proceedings, interspersed between periods of self representation, only ever retaining one formally on the record. This prevented any effective continuity in settlement discussions;
d. The husband did not pay child support until two days before the case conference was held, even though the children were residing with their mother full-time;
e. The husband unreasonably withheld insurance reimbursements for expenses paid by the wife and refused to pay for reasonable special expenses, unilaterally choosing not to abide by the consent order of Master Fortier based on his conclusion that her order was mistaken;
f. To the date of the trial, the husband had failed to produce all the financial disclosure that he was required to produce by court orders;
g. The husband refused to attend court ordered questioning at first, and when he finally did attend, he chose to walk out of the process after a very short period of time. The wife was required to schedule a motion to compel his re-attendance;
h. To the end of trial, the husband maintained an unreasonable position on the issue of his interest in the farm property, one which was not supported by law, and maintained being entitled to a deduction\exclusion for gifts purportedly received during the marriage but for which he failed to produce any disclosure at all despite being ordered to do so;
i. Despite insisting on a trial and maintaining strong positions on outstanding issues, the husband showed up at trial unprepared. He was not prepared for an opening statement, to examine witnesses, to give sufficient evidence to support his own case or to provide closing submissions. It became quickly apparent that the husband wanted to have his day in court, including on inconsequential issues which had very little monetary value and which ought to have been settled a long time before.
[15] As a self-represented party for most of the proceedings, the husband has not appeared to have taken seriously the wife’s counsel’s repeated warnings that significant costs would be sought at trial if the husband maintained his unreasonable positions. The potential liability for a significant portion of the wife’s costs was clearly and repeatedly brought to the husband’s attention since the wife’s August 2018 offer to settle. Having paid substantial legal fees to his own counsel when he retained one from time to time, the husband knew very well the cost of litigation and was well aware of the mounting fees having to be incurred by the wife to bring the matter to conclusion.
[16] As stated by the court in Kirby v. Kirby, 2019 ONSC 232, “there is nothing wrong with self representation. What is wrong, though, is hijacking the proceeding at the expense of the other side (who has counsel) and then expecting mercy from the court when it comes to deciding costs.” Unlike the husband, I find that the wife took significant steps to contain the disputes, promote early settlement, and reduce costs associated with disputed issues including expenses associated with the trial itself. As one example, the wife took it upon herself to narrow down the issues to be dealt with at trial by preparing a lengthy requests to admit (which the husband did not respond to), to prepare a detailed net family property statement after having deployed much effort in getting the husband to agree on values on the eve of trial, and to produce the vast majority of the evidence necessary for this trial on all issues, in an organized fashion.
[17] Overall, I find that the husband behaved in an obstructionist, uncompromising and unreasonable manner throughout this proceeding and, coupled with the very reasonable and more favourable offers to settle made by the wife throughout this proceeding, I find that the husband should be liable to pay costs in an amount approaching substantial indemnity from the date of the wife’s June 2018 offer to settle to the date of trial.
[18] The wife seeks costs in the amount of $125,168 which represents her full costs from the commencement of these proceedings, and comprises of the following;
a. $105,877.05 ($93,696.50 plus HST) representing her total legal fees incurred following the wife’s August 2018 offer to settle;
b. $16,036.40 ($14,191.50 plus HST) which represents her total legal fees incurred prior to her August 2018 offer to settle;
c. disbursements in the amount of $3254.56 (inclusive of HST).
[19] Ms. Cooligan’s hourly rate is $510. She is a senior counsel and is certified as a specialist in family law by the Law Society of Ontario. While this hourly rate is on the highest end of what is usually charged in this jurisdiction for experienced family lawyers, it is important to note that during the first year of this proceeding, Ms. Cooligan’s fees were discounted to 50% of her standard rate as a benefit to the wife who is an employee of that law firm. This results in a significant saving for the husband as Ms. Cooligan’s effective rate for the first year of this proceeding is actually $255 an hour.
[20] Throughout this proceeding, law clerks and students were used where possible to reduce the wife’s legal costs. Senior law clerks’ rate is set at $200 an hour. While the issues raised by this proceeding were not complex, the conflictual nature of the parenting issues and the husband’s unreasonable behavior required experienced counsel to manage the case with efficiency and to keep costs in check.
[21] I have reviewed the wife’s bill of costs, and I find that the hours charged were reasonable considering the husband’s difficult and uncompromising behavior. When costs were already assessed and dealt with for any given step in the case, all hours related to those steps were not included in the wife’s bill of costs. Costs were reserved for many of the court appearances held throughout this proceeding.
[22] Brining a matter before the court necessarily means that some legal fees will have to be incurred, including to prepare one’s own pleadings, evidence and disclosure, and to attend the first case conference. I do not see any reason to award cost for the period preceding the wife’s June 2018 offer to settle. However, I am of the view that the wife should be entitled to her substantial indemnity costs for all work done from the date of the June 2018 offer forward and including the trial.
[23] Having considered all the above, I order the husband to pay to the wife her costs in the amount of $85,000 inclusive of HST and disbursements. As some of those costs were incurred for the purpose of obtaining child support and forcing the husband to contribute to the children special and extraordinary expenses, 20% of those costs shall be enforceable by the family responsibility office as support.
Madam Justice Julie Audet
Released: September 24, 2019
COURT FILE NO.: FC-17-2524
DATE: 20190924
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ERICA ARMSTRONG Applicant
– and –
ROBERT ARMSTRONG Respondent
decision on costs
Audet J.
Released: September 24, 2019