COURT FILE NO.: FS-16-247
DATE: 2019-02-06
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Donna Lee Doris Martin
Mr. Smith, for the Applicant
Applicant
- and -
Rick John Martin
Ms. Currie, for the Respondent
Respondent
HEARD: Written Submissions
Mr. Justice J.S. Fregeau
Decision on Costs
Introduction
[1] This is a decision on the costs of a four day family law trial heard May 14 – 17, 2018. The primary issues at trial were spousal support and the equalization of the net family properties (“NFPs”) of the parties.
[2] The issues with respect to spousal support included whether income should be imputed to each of Mr. and Ms. Martin and the quantum of spousal support to be paid by Mr. Martin to Ms. Martin on a final basis.
[3] The issues with respect to the equalization of NFP’s included whether various assets and liabilities should be included in the parties’ NFPs, including Mr. Martin’s federal employment pension and Ms. Martin’s entitlement to a survivor’s pension.
[4] The issue of Mr. Martin’s federal pension, in pay at the time of separation, was a significant issue at trial, impacting both spousal support and the equalization issue.
[5] In my Reasons for Judgment, dated November 15, 2018, I found that income should not be attributed to Ms. Martin and that income should be attributed to Mr. Martin for the purposes of determining the quantum of spousal support to be paid by Mr. Martin on a final basis.
[6] I also made numerous findings as to which assets and liabilities of the parties should and should not be included in their NFP’s. Success on these issues was divided.
[7] At trial, Ms. Martin submitted that the value of Mr. Martin’s pension should be included in his NFP and that Mr. Martin should be ordered to transfer the maximum transferable amount of his pension to Ms. Martin as a component of the equalization payment.
[8] Ms. Martin further submitted that the quantum spousal support should be determined in one amount prior to the pension transfer and in another, reduced amount, after the pension transfer. She also submitted that her right to a survivor’s pension should not be included in her NFP if the court accepted her position as to the transfer to her of a portion of Mr. Martin’s pension in a lump sum.
[9] Mr. Martin submitted that the value of his pension should not be included in his NFP and that the pension should be “divided” by way of a spousal support order in favour of Ms. Martin equal to one-half of his gross monthly pension payments. Mr. Martin also submitted that the entire value of Ms. Martin’s survivor’s pension should be include in her NFP.
[10] In my Reasons for Judgment, I included the value of Mr. Martin’s pension in his NFP and ordered that he transfer to Ms. Martin the maximum transferable amount of his pension in partial satisfaction of the equalization payment owing to her. I further ordered that the value of Ms. Martin’s survivor pension was not to be included in her NFP.
[11] The quantum of spousal support to be paid by Mr. Martin to Ms. Martin was determined taking into account the division of Mr. Martin’s pension and consistent with the position taken by Ms. Martin at trial.
[12] At paragraph 235 of the Reasons for Judgment, I directed the parties to file written submissions as to costs if they were unable to agree on the costs of the trial. The parties have now done so and they have been reviewed.
[13] Counsel for Ms. Martin presents a Bill of Costs seeking costs in the amount of $130,065.45 on a full recovery basis, inclusive of disbursements and HST. In the alternative, counsel for Ms. Martin seeks costs in the amount of $80,166.06, inclusive of disbursements and HST, on a partial indemnity basis. Neither the Bill of Costs nor Ms. Martin’s written Submissions on Costs provide total hours expended by counsel or support staff.
[14] Ms. Martin’s Bill of Costs includes the costs of all conferences and motions.
[15] Counsel for Mr. Martin submits that the appropriate quantum of costs payable to Ms. Martin is $17,250.00. Counsel for Mr. Martin has filed a Respondent’s Bill of Costs for Comparison Purposes showing total fees of $36,200.00.
[16] Rule 24 of the Family Law Rules addresses the costs of family law proceedings. The rules were amended effective July 1, 2018 and Rule 24(11) was added. Rule 24(11) provides that:
The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case.
[17] Ms. Martin has submitted that Rule 24(11) should be applied retrospectively such that she should be awarded costs not only for the trial, but also for all conferences and motions prior to trial, with the exception of motions in which costs were specifically ordered at the time.
[18] Mr. Martin argues to the contrary, suggesting that it would be unfair to apply the new Rule 24(11) to cases heard before the amendment came into effect as parties were operating under the understanding that if costs were not specifically addressed at each interlocutory step, then there would be no further costs ordered for that step later in the proceeding.
[19] This issue has been considered by this court on three previous occasions and in each case the court has chosen not to apply Rule 24(11) retrospectively to legal services provided prior to July 1, 2018. Tsinokas v. Kucerak, 2018 ONSC 4154 (July 6, 2018), Kang v. Kang, 2018 ONSC 4943 (August 17, 2018), Schneidermeier v. Bernosky, 2018 ONSC 7052 (November 26, 2018).
[20] In my opinion, these cases correctly dealt with this issue and I intend to follow these decisions. In this case, the proceedings for which costs are sought and will be ordered concluded prior to July 1, 2018. The pre July 1, 2018 costs provisions of the Rules should be applied.
[21] Family Law Rule 24(1) establishes a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. Rule 24(11) sets out the factors which must be considered by the court in setting the amount of costs:
(a) The importance, complexity or difficulty of the issues;
(b) The lawyer’s rates;
(c) The time properly spent on the case;
(d) Expenses properly paid or payable; and
(e) Any other relevant matter.
[22] Ultimately, an award of costs is a matter in the discretion of the court by virtue of s. 131(1) of the Courts of Justice Act, which provides:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.
[23] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R., (3d) 330 (Ont. C.A.), at para. 22:
To partially indemnify successful litigants for the costs of litigation;
To encourage settlement; and
To discourage and sanction inappropriate behaviour.
[24] The Court of Appeal has made it clear that in assessing costs, the overriding principle is one of reasonableness, and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.
[25] In Zesta Engineering Ltd. v. Cloutier, (2001) O.J. No. 4495 (Ont. C.A.), at para. 4, the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”
[26] In C.A.M. v. D.M., 2003 CanLII 18880 (ON CA), [2003] O.J. No. 3707 (C.A.), at para. 40, Rosenberg held that the Family Law Rules have circumscribed the broad discretion granted by s. 131 of the Courts of Justice Act, but that they have not completely removed the court’s discretion. I note that former Rule 24(11) and the present Rule 24(12) both allow the court, in setting the amount of costs, to take into account “any other relevant matter.” Read in conjunction with s. 131 of the Courts of Justice Act, there remains a discretion to award costs that appear just in the circumstances of the case, while giving effect to the Family Law Rules.
[27] In Beaver v. Hill, 2018 ONCA 840, at para. 12, the Court of Appeal emphasized that “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs” in family law proceedings. In rejecting the motion judge’s award of costs on a “close to full recovery” basis, the court held, at para. 19, that the motion judge “did not consider the principle of proportionality. Proportionality is a core principle that not only governs the conduct of proceedings generally, but is specifically applicable to fixing costs in family law matters.”
[28] Ms. Martin was largely successful on the primary issues at trial. She is presumptively entitled to costs.
[29] I reject the submission that Mr. Martin acted in bad faith or unreasonably throughout this litigation. Mr. Martin has specifically responded to each of Ms. Martin’s allegations as to his litigation conduct in paragraphs 1 – 13 of his costs submissions. I accept those submissions.
[30] Both Ms. Martin and Mr. Martin made numerous comprehensive Offers to Settle the issues in the proceedings. In exercising my discretion as to costs, I take all offers by both parties into account but decline to strictly apply the cost consequences in the Family Law Rules.
[31] In my opinion, taking all circumstances into account, Ms. Martin is entitled to a fair amount for the costs of this family law trial, with the award of costs in her favour being determined on the basis of proportionality and reasonableness, taking into account the relevant factors set out in the Family Law Rules.
[32] The Bill of Costs filed by counsel for Ms. Martin shows total fees for all steps up to and including the trial to be $81,000.00, not including costs for conferences and motions. In reviewing the entries on this Bill of Costs, I find that the time expended by counsel to have been excessive.
[33] Having said that, I have no doubt that the hours claimed were in fact expended by counsel for Ms. Martin. I also note that the trial proceeded efficiently and effectively as a result of counsel’s preparation and organization. Further, the court was assisted a great deal by Ms. Martin’s counsel’s written submissions. However, excessive preparation and the resultant fees should not, in my opinion, be visited upon the unsuccessful party by way of a costs award.
[34] I also find that Mr. Martin’s suggestion that $17,250.00, plus HST and disbursements, is a reasonable amount for the costs of an involved four day family law trial to be completely without merit.
[35] Counsel for Mr. Martin has filed a Bill of Costs for Comparison Purposes. This Bill of Costs calculates fees for all steps in the proceeding including the trial, at $36,200.00, based on a partial indemnity rate of $200/Hr. This would be consistent with the amount of costs that Mr. Martin, as the unsuccessful party, could reasonably expect to pay for this trial.
[36] In my opinion, the fair amount that should be paid by Mr. Martin in costs, as the unsuccessful party, bearing in mind the principles of proportionality and reasonableness, is $40,000.00, inclusive of disbursements, plus HST.
Justice J. S. Fregeau
Date: February 6, 2019
COURT FILE NO.: FS-16-0247
DATE: 2019-02-06
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Donna Lee Doris Martin
Applicant
- and –
Rick John Martin
Respondent
DECISION ON COSTS
Fregeau, J.
Released: February 6, 2019
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