Court File and Parties

COURT FILE NO.: FC-17-FS-6596 DATE: 2020/05/01 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LARRY LORIMER, Applicant AND: EDNA LORIMER, Respondent

BEFORE: Justice D.A. Broad

COUNSEL: A. Justine Lyons, Counsel for the Applicant James Battin, Counsel for the Respondent

Costs Endorsement

[1] The parties have been unable to resolve the issue of costs and have now delivered their costs submissions. The following is my disposition on the question of costs following trial.

Positions of the Parties

[2] The applicant submitted a Bill of Costs for preparation for and attendance at trial in the total amount of $9,230.29, comprised of fees in the sum of $7,750, HST in the sum $1,007.50 and disbursements in the sum of $472.79. In his written submissions the applicant seeks costs in the sum of $3,000 for trial and $500 for the motion before Justice Breithaupt Smith on August 27, 2019 which resulted an Order suspending enforcement of the existing order for spousal support, in respect of which costs were reserved to the trial judge. This reduction is evidently in recognition of the hardship an award of costs would represent for the respondent.

[3] The applicant submits that he was the successful party with respect to the predominant issue at trial, namely the termination of his obligation to pay spousal support. Although spousal support was terminated effective September 1, 2019 and not January 1, 2018 as he claimed, this was only because the court found that requiring the respondent to reimburse his over payment of spousal support would impose hardship on her.

[4] The applicant pointed to his Offer to Settle dated December 19, 2019 proposing the termination of spousal support upon acceptance, reduction of all claims for spousal support to zero, no repayment by the respondent of any overpayment of spousal support, with each party to bear his/her own costs. The applicant says that his offer mirrors the disposition following trial.

[5] In response to the applicant’s claim for costs, the respondent submits as follows:

(a) the applicant’s Financial Statement of January 7, 2020 contained misleading/incorrect information respecting his monthly interest and investment income, upon which she relied;

(b) the respondent incurred substantial post-secondary education and accommodation expenses for the parties’ children without any contribution by the applicant to those Section 7 expenses;

(c) there was divided success following trial on the basis that the applicant sought the termination of spousal support effective January 1, 2018, whereas spousal support was terminated effective September 1, 2019;

(d) the order of Justice Breithaupt Smith was “essentially” on consent;

(e) any obligation to pay costs would represent a significant financial hardship for the respondent; and

(f) the amount claimed for costs by the applicant is unreasonable.

Guiding Principles

[6] Pursuant to subrule 24(1) of the Family Law Rules, the successful party is presumed to be entitled to recover costs. Subrule 24(11) requires the court, in setting the amount of costs, to consider a number of factors including the importance, complexity and difficulty of the issues, the reasonableness or unreasonableness of each party's behaviour in the case, the lawyer's rates, the time properly spent on the case, expenses properly paid or payable, and any other relevant matter. These factors are to be applied flexibly (see M. (C.A.) v. M. (D.), (2003), 67 O.R. (3d) 181 (Ont. C.A.) at para. 42).

[7] Rule 18 deals with the impact of offers to settle which may have been served by the parties on the costs determination. Subrule 18(14) provides that, unless the court orders otherwise, a party who makes an offer at least seven days before the trial, and obtains an order as favorable as, or more favorable than the offer, is entitled to costs to the date that the offer was served and full recovery of costs from that date. Even if subrule (14) does not apply, the court may, under subrule 18(16), take into account any written offer to settle served by a party, the date the offer was made and its terms.

[8] Consideration of the relative success of the parties on the issues in the case is the starting point in determining costs (see Butty v. Butty, 2009 ONSC 23111, [2009] O.J. No. 1887 (Ont. S.C.J.) at para. 4, citing Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (Ont. S.C.J.)). In the case of Johanns v. Fulford, 2010 ONCJ 756 (Ont. C.J.) at para. 13, it was held that, for the purpose of subrule 24(1), "success" is assessed by comparing the terms of an order against the relief originally requested in the pleadings and against the terms of any offers to settle.

[9] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour by litigants (see Royal Bank of Canada v. Roland Home Improvements Ltd., [1999] O.J. No. 3707 (Ont. C.A.) at para. 24).

[10] Although the case law requires the Court to consider the means of the parties, the limited financial resources of a party against whom an award of costs is sought does not necessarily afford immunity from a costs order, but, may affect the scale or quantum of costs (see Parsons v. Parsons (2002), 31 R.F.L. (5th) 373 (Ont. S.C.J.) at para. 12).

[11] Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).

Discussion

[12] In my view, the applicant was the successful party following trial with respect to the issues requiring determination, namely, whether his obligation to pay spousal support should be terminated, and if so when such termination should take effect. It was determined that the applicant overpaid spousal support in each of 2018 and 2019. The only reason that the court ordered termination effective September 1, 2019 was that to make the termination effective on an earlier date would result in an obligation on the respondent to repay the applicant’s overpayment which would be a hardship to her.

[13] It is evident that the reality that the imposition of an obligation to repay an overpayment would represent a hardship to the respondent was reasonably recognized by the applicant by his Offer to Settle. The terms of the Offer to Settle satisfy the elements of Rule 18(14) of the Family Law Rules. Notwithstanding this, the applicant quite reasonably does not seek full recovery costs from and after the Offer to Settle.

[14] In my view the applicant’s Offer to Settle represented a reasonable good faith attempt to settle the matter in order to avoid unnecessary costs of preparing for and attending at a trial. The respondent acted unreasonably in not accepting the Offer to Settle.

[15] I do not accept the submission by the respondent that no award of costs should be made.

[16] It was evident that the applicant’s Financial Statement of January 7, 2020 contained a typographical error by expressing his estimated annual investment income as monthly. It was clear from the Financial Statement that he did not have investments which could generate monthly interest or investment income in the amount expressed. Moreover, the applicant was not cross-examined on this aspect of his Financial Statement at trial. Any reliance that the respondent placed on the error in the applicant’s Financial Statement was unreasonable.

[17] Section 7 expenses for post-secondary education of the parties’ children was not a live issue at trial. The reason for the applicant having not been previously ordered to contribute to the children’s post-secondary education expenses was not explored. The respondent did not advance any claim for s. 7 expenses at trial.

[18] As indicated, the reason that spousal support was terminated effective September 1, 2019 was to relieve against the hardship to the respondent that would result from an order to repay the applicant’s overpayment of spousal support.

[19] With respect to the argument that the order of Justice Breithaupt Smith was “essentially” on consent, it is evident that, in order to achieve a suspension of enforcement of the order for payment of spousal support, it was necessary for the applicant to bring a motion and to appear before Justice Breithaupt Smith. The claim of $500 for that motion is reasonable.

[20] The issue of hardship to the respondent that would result from the imposition of a costs award is already reasonably addressed by the applicant’s submissions reducing its claim for the costs of preparing for and attending on the trial by over two-thirds. As indicated previously, the limited financial resources of a party would not generally afford immunity from a costs award but rather may serve to mitigate the quantum of the award.

[21] In my view the claim for costs sought of the applicant in the sum of $3,500 is reasonable and reflects the principles of indemnity, proportionality and the avoidance of hardship.

Disposition

[22] It is ordered that the respondent pay costs to the applicant in the sum of $3,500 within 30 days hereof.

D.A. Broad J. Date: May 1, 2020