Court File and Parties
ORILLIA COURT FILE NO.: FC-18-193-00 DATE: 20200505 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Tammy Reynolds Applicant – AND – Kyle McCormack Respondent
Counsel: John W. Craig, Counsel for the Applicant Self-Represented, for the Respondent
HEARD: In Writing
Ruling on Costs
JARVIS J.
[1] This Ruling deals with costs of a six-day trial, the outcome of which awarded the mother final decision-making authority with respect to the parties’ (then) three and a half-year-old daughter (the parties had agreed on shared parenting) and upheld the terms of a domestic contract that the father had challenged.
[2] The mother claims that she was the overwhelmingly successful party and seeks full indemnity costs of $73,495.06 comprising fees ($64,266.50), disbursements ($773.37) and HST ($8,455.19). Accompanying her submissions were an Offer to Settle and a Bill of Costs.
[3] The father says that neither party was wholly successful and, essentially, that the mother adopted a “Take it or Leave it” offer making a trial inevitable. He has asked that the proceeds of sale from the parties’ residence that he was awarded ($14,246.82) be released to him and that his trial costs be reimbursed (he was self-represented at trial but incurred lawyer’s costs of $5,871.50 for, among other things, trial preparation). He submitted what he says was a severable Offer to Settle dated April 26, 2019 and a Bill of Costs for $20,870.09 comprising fees ($17,966), disbursements ($514.38) and HST ($2,389.71). The total costs he has actually requested are $6,634.79 representing his trial-related costs ($5,871.50) and HST ($763.30) on that amount.
Law
[4] The provisions of Family Law Rules (“the Rules” or “FLR”) 18(14) 2-5 and 24(1), (5), (10), (11) and (12)(a) and (b) guide the court in the exercise of its discretion over costs and provide as follows:
(14) 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 following conditions are met:
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. (5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine, (a) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order; (b) expenses properly paid or payable; and (c) any other relevant matter. (10) Promptly after dealing with a step in a case, the court shall, in a summary manner, (a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or (b) expressly reserve the decision on costs for determination at a later stage in the case. O. Reg. 298/18, s. 14. (11) 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. O. Reg. 298/18, s. 14. (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. O. Reg. 298/18, s. 14.
[5] There are certain well-established principles guiding the court’s exercise of its discretion pursuant to the Rules. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. [1] Three fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants. [2] Family law litigants must act in a reasonable and cost-effective way: they should, and will, be held accountable for the positions they take in their litigation. [3]
[6] In Beaver v. Hill [4] the Court of Appeal observed that reasonableness and proportionality frame the exercise of the court’s discretion. The amount to be awarded is what the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”: Boucher v. Public Accountants Council for the Province of Ontario. [5]
[7] It is frequently observed that assessing costs is not a simple mechanical exercise of tallying hours and applying an hourly rate. [6] I agree with A.J. Goodman J. who, in Miziolek v. Miziolek and Miziolek [7], observed that;
[32] There must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration.
[8] Lastly, when assessing costs, severability of terms of an Offer to Settle can be particularly helpful to the settlement process. [8] Adopting this strategy can enhance the likelihood of a party being awarded full recovery costs. All-or-nothing Offers only tend to fuel litigation.
[9] It is these principles and guidelines that frame the assessment of the parties’ costs in this case.
Analysis
[10] Each of the party’s Offer to Settle in this case complied with FLR 18. The mother’s Offer remained open for acceptance on a no-costs basis until shortly after the start of trial: the father’s Offer remained open for acceptance until May 8, 2019 and then remained open afterwards on a full indemnity basis, also until shortly after the start of trial (which started on May 29, 2020). The father’s Offer indicated that it was severable.
[11] Mr. Craig’s Statement of experience and hourly rate accompanied his Bill of Costs. No clerical time was recorded or costs sought for that service, if provided. Mr. Craig’s hourly rate is very reasonable. I will deal with the hours recorded below. The disbursements requested are also reasonable.
[12] The father consulted and was successively represented by two lawyers for whom the father provided lump sum amounts but no account-breakdowns or statements of professional experience or hourly rates. This is relevant to his trial costs claim for one of the lawyers but the details are too sparse to be of any assistance to the court.
[13] Dealing with the child’s parenting and decision-making authority issues, several observations may be made:
(a) The mother’s Offer was, for the most part, mirrored by the later Offer made by the father but where the two Offers principally differed related to the parent with whom the child should be primarily resident (the mother’s Offer, to which the father elided reference); (b) Except for (a) the terms of the Offers were practically identical, the father taking the lead from the mother’s Offer to such a degree that I am surprised that a trial on the parenting issues was even needed. Equally surprising is that the trial evidence revealed two parents who had significant communication and co-operation challenges that calls into question the sincerity of the Offers made; (c) Although required to file a draft Order when the trial started, the father did not do that until the third day of trial. Had that been done, it is likely that trial time could have been saved and better focus brought to the critical issue(s) impacting the child’s parenting; (d) Despite both parties’ Offers to jointly share important decision-making responsibility for the child, I awarded that authority to the mother.
[14] The father’s Offer did not link its severability to any specific issue, term or group of terms. It is puzzling why the mother could not have accepted those of the father’s terms which were, in fact, her terms in the month after his Offer was served before the trial started.
[15] As for the father’s challenge to the domestic contract, the mother clearly succeeded. This, I think, was the main propellant of the litigation and, while the mother was not wholly successful with respect to all the financial issues she had raised, she prevailed on the most important, that being the validity of the parties’ domestic contract; she also offered to pay the father $10,000. The father was prepared to acknowledge the validity of the contract and to distribute the net sale proceeds from the parties’ former residence according to the contract’s terms but wanted, in addition to his presumptive entitlement (which I calculated was $24,414.80), another $6,000 representing his original contribution to the purchase of the home and for the difference between what he paid for the mortgage and his truck loan about which claim there was little, if any, evidence led at trial by him quantifying this amount.
[16] The mother was not, as she described it “overwhelmingly” successful but she succeeded on the parenting issue, which should have been settled, and was successful on the critical issue of the contract’s validity. Her submission that the father should have accepted her Offer has merit, although it is regrettable that proposal was made so shortly before trial. The father could have avoided the expenses incurred by the mother immediately after their home was sold (and which I ordered that he substantially reimburse to her) had he acted more quickly and reasonably.
[17] The mother’s Bill of Costs was broken-down into seven categories: the drafting of pleadings and preparation for, and attending, an urgent motion before Vallee J. on August 9, 2018 ($4,424 all-inclusive claimed); a motion before McDermot J. on October 25, 2018 ($2,923 all-inclusive claimed); a case conference held by Wood J. on December 12, 2018 ($4,661 all-inclusive claimed); a settlement conference on February 8, 2019, again held by Wood J. ($3,831.50 all-inclusive claimed); a trial scheduling conference on February 22, 2019 ($2,251.50 all-inclusive claimed); six days of trial over a three month period ($45,385.50 all-inclusive); and finally, preparation of costs submissions ($790 claimed).
[18] In my Reasons for Decision I commented on the father’s non-responsiveness to questions of the court (paragraph 11) and the casual disregard that the father demonstrated to dealing with overtures from the mother to, for example, mediate issues and, particularly, his dilatory responses to Mr. Craig and, later, the mother (paragraph 32). There were other examples referenced in the Decision. This conduct increased the mother’s costs during a time when the father was, for the most part, self-represented. The two adjournments of the trial also increased the time spent because the parties would have needed to refamiliarize themselves with the case to that date and pick-up from where it had left off, although it cannot be said, in fairness, that either party was responsible for that extra time.
[19] In reviewing each of the mother’s categories, I find that the mother is presumptively entitled to the following costs:
(a) For the motion before Vallee J., the sum of $3,500. This involved meeting the client, drafting the Application and preparation for and attending the motion which resulted in the child being entrusted to the mother’s primary care. There is no indication that the mother had made a FLR 18-compliant Offer. While waiting at court to be heard is usually unavoidable full recovery is not warranted; (b) For the motion before McDermot J. on October 25, 2018, the sum of $2,400. The urgent motion had to be brought by the mother. The father’s conduct made the motion unavoidable and caused the mother to incur unnecessary costs. The time recorded spent corresponding with the lawyer whom the father had consulted and wait time suggest a modest reduction in the amount claimed. There was no pre-motion Offer to Settle but the mother’s position that the terms of the contract should be honoured was well known to the father; (c) At the December 12, 2018 case conference held by Wood J. in Orillia, the sum of $3,250. The preparation time is somewhat excessive (1.5 hours charged) as is the time spent communicating with the other lawyer involved and client; (d) For the February 8, 2019 settlement conference held by Wood J., the sum of $3,250. Mr. Craig’s Bill of Costs details what disclosure was reviewed, the preparation for, and attendance at, the conference; (e) The Trial Scheduling Conference proceeded on February 22, 2019. I do not think that 4.5 hours for attending the conference is appropriate. In my view a fair and reasonable amount is $1,250; (f) The mother claimed $45,385.50 for the six days of trial. Mr. Craig recorded 48.8 hours of trial preparation, distinct from document preparation (such as Exhibit Books, opening statement and closing argument) and Offer to Settle, which was recorded as 9.0 hours. Actual trial time recorded was 40 hours. Further time was spent in preparation of written closing submissions. This list is not exhaustive of the other elements to the Bill submitted. In my view the time spent was somewhat excessive. In my view a fair and reasonable award is $33,000 for this category. As already observed, the mother could have, and should have, accepted some of the parenting terms of her own Offer as reflected back at her by the father, she advanced a claim for the parties’ use of a line of credit that had never been pleaded (see paragraphs 76-83 of the Reasons for Decision) and which had no obvious merit. This extended the trial; (g) The mother’s $790 claim for preparation of her costs submissions is reasonable.
[20] The foregoing categories total $44,190. This shall be reduced to $40,000. The mother’s Offer was delivered very late in the proceedings and was not severable. While she ultimately prevailed on the most important issues, she should have demonstrated greater settlement flexibility. This is not a case for full recovery of costs.
Disposition
[21] Accordingly, the following is ordered;
(a) The father shall pay to the mother her costs of these proceedings in the amount of $46,073 comprising fees ($40,000), disbursements ($773.37) and HST ($5,299.63), rounded to $46,000; (b) The entirety of the balance of the funds from the sale of the parties’ former residence remaining in trust shall be forthwith released and paid to the mother. The father shall be entitled to a credit of $14,246.82 towards the costs awarded in (a) above, thereby reducing what he owes the mother to $31,753.18.
[22] In the circumstances of the COVID-19 emergency, this Order is operative and enforceable forthwith without any need for a signed or entered, formal, typed Order. Approval is dispensed with: the mother may submit a formal Order for signing and entry once the court re-opens.
The Honourable Justice David A. Jarvis Date: May 5, 2020
Footnotes
[1] FLR 2(2). And see Mattina v. Mattina, 2018 ONCA 867. [2] Serra v. Serra, 2009 ONCA 395. [3] Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317; Peers v. Poupore, ONCJ 615. [4] 2018 ONCA 840, at para. 4. [5] (2004), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 2001, [2001] O.J. No. 2634, 2004 CarswellOnt 521 (Ont. C.A.). [6] Delillis v. Delillis and Delillis, [2005] O.J. No. 4345 (Ont. S.C.). [7] 2018 ONSC 4372. [8] Jackson v. Mayerle, 2016 ONSC 1556, at para. 35.