SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF THE ESTATE OF SIDNEY COHEN
RE: BARBARA COHEN, Applicant
AND
STEVEN ERIC COHEN, in his capacity as Trustee of the Estate of SIDNEY COHEN, Deceased, and SUSAN CHARENDOFF, Respondents
BEFORE: Madam Justice Julie Audet
COUNSEL: Stephen Victor/Katherine Cooligan/Kathleen McDormand, for the Applicant
Daniel Schwartz/Marta Siemiarczuk, for the Respondent Estate
Jonathan M. Richardson, for the Respondent, Susan Charendoff
HEARD: by written submissions
costs ENDORSEMENT
1On June 28, 2019, I heard a one-day motion brought by the respondent Estate who sought an order bifurcating the issue of the validity of a Marriage Contract from the other issues raised in the case (Cohen v. Cohen, 2019 ONSC 4456, 2019 CarswellOnt 12391). The Estate was the successful party and I ordered the bifurcation.
2The Estate seeks partial indemnity costs in the amount of $74,317 plus disbursements of $2,319.60 and HST (the total fees incurred by the Estate for this motion was $129,560.99). The other respondent, Ms. Charendoff, whose role in the motion was much more limited, seeks her full costs in the amount of $5,796.90.
3The applicant, Ms. Cohen, takes the position that the amount of costs sought is not proportional nor reasonable, particularly when her own costs were less than one third of the Estate’s costs. She asks that the cost for this motion be reserved to the trial judge. Alternatively, she argues that the all-inclusive amount of $20,000 would be reasonable and proportionate.
Legal Framework
4Modern 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).
5Sub-rule 24(1) of the rules creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs (Sims-Howarth v. Bilcliffe (2000), 2000 22584 (ON SC), 6 R.F.L. (5th) 430 (Ont. Sup. Crt. (Fam. Crt.)).
6An award of costs is subject to the factors listed in sub-rule 24(12), sub-rule 24(4) pertaining to unreasonable conduct of a successful party, sub-rule 24(8) pertaining to bad faith, sub-rule 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party (Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730 at para. 94).
7Sub-rule 24 (12) 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.
8In the end, costs awards are discretionary. Each case must be determined on its own particular facts and merits. Two important principles in exercising discretion are reasonableness and proportionality (Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519).
Analysis
Cost payable to the Estate
9It is not disputed that the Estate was successful in this motion. Neither party is alleging that the other party behaved unreasonably or in bad faith so as to trigger a substantial or full indemnity cost award. The issue before the court did not lend itself to compromise: the trial was either bifurcated or it was not. As it was essentially a “yes or no” issue, neither party made an offer to settle. In the circumstances of this case, the parties’ failure to make an offer to settle was not unreasonable.
10The main issue left for determination, therefore, is the amount of costs sought by the Estate for this motion, more specifically, whether the amount sought is reasonable and proportional having regard to the factors set out in sub-rule 24(12).
11The issue raised by this motion was a complex one, from a legal perspective. Further, it was very important to all parties involved. From the Estate’s perspective, there were very significant financial issues at stake involving an estate worth approximately 24 million dollars. In its view, bifurcating the trial was crucial to reduce the overall time and expense associated with trial, to substantially increase the opportunities for settlement and to obtain key evidence which could have otherwise been lost by the passage of time, as most key witnesses regarding the issue of the validity of the marriage contract are deceased.
12From Ms. Cohen’s perspective, the issue of bifurcation had the potential to create a duplication of proceedings, to cause considerable delay, to increase costs to all parties and, more importantly, to be prejudicial to her. She presented a strong defense to the relief being sought.
13From Ms. Charendoff’s perspective, bifurcation was the only way to avoid a very lengthy and costly proceeding in which her involvement is limited to a discrete commercial issue.
14The stakes were high for all parties, and they were all well-aware that the other parties would be investing significant resources to maximize their chances of success in this motion. As I remarked in my earlier decision:
This litigation involves significant amounts of money as well as complex issues of facts and law, and six lawyers in total appeared before me on this temporary motion from five different firms, on behalf of three parties. Litigation in these circumstances takes time, and costs money. Both parties appear to have engaged in what I would call “highly strategic litigation”, and the price to pay for that common decision is increased costs and delays. So be it.
15Nonetheless, and while I acknowledge the high degree of complexity raised by this motion, I am of the view that the costs sought by the Estate for this single issue, one-day motion is wholly unreasonable and disproportionate in the circumstances.
16I accept the Estate’s submission that it had the onus to prove that bifurcation would result in the just, expeditious and least expensive determination of the proceeding on its merits. As such, it had a larger amount of work to do at the outset, including having to prepare the vast majority of the evidentiary foundation upon which the motion could be determined. I also accept the Estate’s submission that since Ms. Cohen had four different lawyers from two different law firms as her own legal team, she should have reasonably expected to have to pay for an equally expensive legal team on the part of the Estate, if she was unsuccessful.
17However, and while the Estate had the right to retain counsel of its choice and to expand as much resources as it deemed desirable into this motion, it had an obligation to keep in mind the primary considerations of reasonableness and proportionality when seeking its costs. From a cost assessment perspective, I find that it was not unreasonable and disproportional for the Estate to:
have half of the research completed by lawyers charging $550 per hour or more;
spend a total of 76 hours on legal research, totaling more than $30,000 for legal research alone;
spend more than 80 hours (more than $40,000) drafting affidavits and assessing evidence (when according to the Estate, this motion ought to have proceeded based on pleadings alone);
spend over $25,000 for three lawyers preparing oral arguments (over 46 hours of preparation in total).
18While the exceptionally high quality of the Estate’s written and oral submissions is undoubtedly reflective of the enormous amount of work and preparation that was invested by the Estate in this motion, the costs determination must reflect proportionality to the issues argued. The rules do not require the court to allow the successful party to demand a blank cheque for their costs (O’Brien v. O’Brien, 2017 ONSC 402). The following words of Justice Smith in Red Rock First Nation Indian Band v. Canada (Attorney General), 2005 28546 (ON SC) reflect my own view regarding the level of costs sought by the Estate in this case:
To award the sum of $138,555 for a four-day motion would be disproportionate and excessive. I adopt the words of Nordheimer J. that “… The time spent is so grossly excessive as to be obvious overkill” and, in Pearson v. Inco Ltd. that “… A client may be prepared to pay for such thoroughness, but it is not fair to saddle the losing party with that level of expense.
19In comparison, Ms. Cohen’s bill of costs shows that a total of 108 hours was spent by the various lawyers involved on her behalf for this motion, almost one half of which were worked by a junior lawyer charging $225 an hour. The legal fees charged to Ms. Cohen for this motion were $43,693.00, inclusive of HST.
20Having regard to all the above, I find that it would be reasonable for Ms. Cohen to pay costs in the amount of $35,000 to the Estate for this motion, all inclusive.
21Ms. Cohen asks that costs be left to the trial judge on the basis that the extent of any resulting efficiency of bifurcation cannot be fully assessed until the ultimate outcome of this matter is determined. I see absolutely no reason to defer the issue of costs for this motion to the trial judge. The Estate was successful in getting this trial bifurcated, and as the successful party, it should immediately receive its reasonable costs for this step in the case.
Costs payable to Ms. Charendoff
22As stated earlier, Ms. Charrendoff’s role in this motion was very limited as she simply supported the Estate’s position without filing any additional evidence or written submissions of her own, although her counsel did make brief oral submissions at the hearing. Her costs for this motion totaled $5,796.90 inclusive of disbursements and HST. I see no basis for her to receive more than partial indemnity costs based on the success she achieved at the motion.
23As such, Ms. Cohen shall pay cost to Ms. Charendoff in the amount of $2,500.
Madam Justice Julie Audet
Date: October 15, 2019
COURT FILE NO.: FC-17-1323
DATE: 20191015
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF SIDNEY COHEN
RE: BARBARA COHEN, Applicant
AND
STEVEN ERIC COHEN, in his capacity as Trustee of the Estate of SIDNEY COHEN, Deceased and SUSAN CHARENDOFF, Respondents
BEFORE: Madam Justice Julie Audet
costs ENDORSEMENT
Audet J.
Released: October 15, 2019