COURT FILE NO.: FS-16-15042
DATE: 2020Feb4
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Nicole Ann Martin
Applicant
– and –
Chip Gavin Sterling Foster
Respondents
George Karahotzitis, Malanie Larock for the Applicant
Ben Fortino, for the Respondent Chip Gavin Sterling Foster
Pepper Morgan Foster
Robert John Martin
Mary Margaret Kerr Martin
Classic Concepts Inc.
The Marco Corporation
The Marco Corporation, USA
Esther L. Lenkinski, for Respondent Pepper Morgan Foster
HEARD: November 6, 2019
THe honourable mr. justice r john harper
COST ENDORSEMENT
[1] The Respondent Chip Gavin Foster (Chip) brought a motion seeking the following relief:
a. Order setting aside the Order of the Honourable Justice Broad date May 10, 2018,
b. Order reinstating the pleadings of the Respondent, Chip, and
c. Order staying the Applicant, Nicole Ann Martin (Nicole) from initiating and/or proceeding with any claims on an uncontested basis.
Ruling on the Motion
[2] On November 19, 2019 I dismissed all of the relief requested by the Respondent on this Motion.
The Law and Analysis
[3] In determining if costs should be awarded and, if awarded, the proper quantum of those costs, the court must also consider a number of factors that are set out in Rule 24 that reads as follows:
SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. O. Reg. 114/99, r. 24 (1).
NO PRESUMPTION IN CHILD PROTECTION CASE OR IF PARTY IS GOVERNMENT AGENCY
(2) The presumption does not apply in a child protection case or to a party that is a government agency. O. Reg. 114/99, r. 24 (2); O. Reg. 544/99, s. 10 (1).
COURT’S DISCRETION — COSTS FOR OR AGAINST GOVERNMENT AGENCY
(3) The court has discretion to award costs to or against a party that is a government agency, whether it is successful or unsuccessful. O. Reg. 114/99, r. 24 (3); O. Reg. 544/99, s. 10 (2).
SUCCESSFUL PARTY WHO HAS BEHAVED UNREASONABLY
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. O. Reg. 114/99, r. 24 (4).
DECISION ON REASONABLENESS
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept. O. Reg. 114/99,
DIVIDED SUCCESS
(6) If success in a step in a case is divided, the court may apportion costs as appropriate. O. Reg. 114/99, r. 24 (6).
ABSENT OR UNPREPARED PARTY
(7) If a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step or otherwise contributes to that step being unproductive, the court shall award costs against the party unless the court orders otherwise in the interests of justice. O. Reg. 114/99, r. 24 (7); O. Reg. 235/16, s. 4 (1).
BAD FAITH
(8) If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. O. Reg. 114/99, r. 24 (8).
COSTS CAUSED BY FAULT OF LAWYER OR AGENT
(9) If a party’s lawyer or agent has run up costs without reasonable cause or has wasted costs, the court may, on motion or on its own initiative, after giving the lawyer or agent an opportunity to be heard,
(a) order that the lawyer or agent shall not charge the client fees or disbursements for work specified in the order, and order the lawyer or agent to repay money that the client has already paid toward costs;
(b) order the lawyer or agent to repay the client any costs that the client has been ordered to pay another party;
(c) order the lawyer or agent personally to pay the costs of any party; and
(d) order that a copy of an order under this subrule be given to the client. O. Reg. 114/99, r. 24 (9).
DECIDING COSTS
(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.
SETTING COSTS AMOUNTS
(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.
SUPPORTING MATERIALS
(12.1) Any claim for costs respecting fees or expenses shall be supported by documentation satisfactory to the court. O. Reg. 298/18, s. 14.
[4] The Ontario Court of Appeal stated in Serra v. Serra, 2009 ONCA 395, CarswellOnt 2475 at para 12:
As this Court has observed, costs awards, at the end of the day should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties”: See Boucher v. Boucher v. Public Accounts Council (Ontario) (2004).
[5] As part of the Courts determination of costs, the Court must consider the proportionality and reasonableness that the Court of Appeal in Beaver v. Hill 2018, ONCA 840 at para. 12 refers to as: “the touchstone considerations to be applied in fixing the amount of costs.”
[6] The Court of Appeal in Beaver v. Hill also makes it clear that a close to full recovery cost approach is inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances, e.g. bad faith under R. 24(8) or besting an offer to settle under R. 18(14).
[7] In the circumstances of this case, I find that the litigation chronology is important for me to review when considering some of the factors that are set out in FLR 24. Some of the significant events that must be looked at within the factors I must consider include:
a. The success of either party;
b. Whether any party acted unreasonably or in bad faith
c. Whether any party did not comply with court orders;
d. The reasonableness of the quantum that is claimed;
i. The complexity
ii. The importance
iii. Proportionality and reasonableness
e. The reasonable expectations of the unsuccessful party.
Success
[8] I dismissed the Respondent’s motions. The Applicant was therefore successful and is presumptively entitled to her costs.
Unreasonable conduct
[9] In my endorsement dismissing the motions of the Respondent, I reviewed the lengthy communication between the Respondent and the Applicant with respect to the issue of financial disclosure and compliance with the Orders of the court.
[10] I found that the Respondent did make efforts to communicate with the Applicant’s counsel in order to determine if the Applicant was satisfied that the disclosure provided was satisfactory and within the timelines set out in the Order of Justice Broad.
[11] I find that that Applicant’s solicitor did not respond to the Respondent in a timely manner. In my view that lengthy delay in reply to communications from the opposing party is unreasonable and should result in a reduction in costs that would otherwise be proper.
[12] However, that unreasonable non responsive behaviour did not change the onus from the Respondent to the Applicant. That unreasonable conduct relates to an ethical duty by the Applicant’s counsel to opposing council to respond to communications from an opposing counsel. It must be emphasized that it was the Respondent’s pleadings that were struck and there was a positive duty on the Respondent to seek a determination from the court as to whether or not disclosure was sufficient to allow for his reinstatement.
[13] Despite this positive duty to come to court, the Respondent chose not to come to court in order to get an order for reinstatement until it was too late.
[14] This matter was made complex by the Respondent proceeding with his disclosure obligations without regard to the fundamental need for timely, accurate and complete disclosure in family law. Without complying with this fundamental duty, a party who choses this path places road blocks in the way of the other party to even be in a position to assess their rights and consider settlement options. It prolongs litigation and causes financial and emotional stressors that should not be a part of resolving family disputes.
[15] It was the respondent’s conduct that caused his pleadings to be struck and it was the respondent’s conduct in not seeking a court determination of reinstatement within the timeline set out in the court order that resulted in his motions being dismissed.
[16] The primary purpose of the Family Law Rules is to have a: “just determination” of a case.
[17] Compliance with the rules and orders of the court relative to financial disclosure is central to the path of getting a just determination. Parties who do not comply do so at their peril.
The Significant Court Events not complied with
[18] On May 10, 2018, the Respondent’s pleadings were stuck by the Order of Justice Broad after he found that the Respondent failed to comply with three (3) previous orders of the court.
[19] An Order for financial disclosure was made on November 21, 2017. This order was not taken out until the Order of Justice Broad on May 10, 2018. At that time, Justice Broad ordered that the draft order of November 21, 2017 be issued and entered. The draft Order was made on consent of the parties. It provided for a detailed list of financial disclosure to be provided by Chip. It also provided that the separately listed items be provided in different and specified time lines.
[20] After legal argument on May 10, 2018, Chip’s pleadings were struck by Order of Justice Broad.
[21] However, that same Order provided that if the Respondent, Chip, complied with his outstanding disclosure by June 15, 2018, the Respondent would be permitted to set aside the said Order. In addition, the Order provided that if Chip did not comply by that date, Nicole could proceed by way of an uncontested trial.
[22] Paragraph 6 of Justice Broad’s Order of May 10, 2018 provided:
If the Respondent does comply with the foregoing paragraph 3 (a - d) the parties shall confer on a date for the Respondent’s motion to set aside paragraph 1 of the order as contemplated by paragraph 3 of this order. If no agreement is reached on a date, the Respondent may bring his motion returnable on a regular motions date in August 2018. (my emphasis added)
Subsequent Court Involvement
[23] On June 18, 2019 the applicant, Nicole Martin, filed an affidavit for an uncontested trial.
[24] On August 16, 2019, Justice Braid made the following endorsement:
… Balance of the claims against R. Chip Foster (whose pleadings were struck May 10, 2018) shall proceed to uncontested trial without further delay.(my emphasis added)
[25] I find that the Applicant is entitled to her costs with some reduction as a result of the Applicant’s none responsiveness to the Respondent’s communication over an extended period of time.
[26] The performance of the duty was set within a time limit and there was a clear direction in the Order that if no agreement could be reached the Respondent could bring a motion within a specified time. He did not do so. He brought his motion to reinstate 18 months after his pleadings were stuck and 4 months after the Applicant had set the matter down for an uncontested trial.
[27] The matter went before Justice Braid on August 16, 2019. At that time, Braid J. endorsed that the uncontested trial was to proceed “without further delay”.
[28] I find that the Respondent’s conduct amounted to bad faith as contemplated in Rule 24(8) of he Family Law Rules. As I alluded to in the case of Green v. Whyte 2019 ONSC 323 financial timely, accurate and complete financial disclosure is a foundational requirement in family law. Courts cannot condone conduct that amounts to a “scavenger hunt” or “catch me if you can”. This type of conduct amounts to bad faith. Under the circumstances, the Applicant is entitled to full recovery costs with some deduction due to the unreasonable conduct of counsel’s none responsiveness to communications as I have set out above.
[29] Before setting the amount that I consider to be fair, it is important to comment on some of the entries in the Respondent’s counsel’s Bill of Costs.
[30] I find that the number of lawyers noted in the Bill of Costs as “Lawyers Involved” is excessive. The notation refers to five (5) lawyers.
a. Mr. Karahotzitis is a senior lawyer of approximately 17 years experience. His hourly rate is set at $650.00 per hour.
b. Ms. Larock was called to the bar in 2011 she has approximately 8 years experience. Her hourly rate is set at $425.00 per hour.
c. Of the remaining three lawyers noted to have worked on the file, two have 2 years experience with an hourly rate of $300.00 per hour and one has 3 years experience with an hourly rate of $325.00 per hour.
d. In addition to the above noted lawyers, the Bill of Costs also notes that two law clerks also worked on the file. They are charged out at $235.00 per hour each.
[31] I heard two previous motions in this matter, one on October 18, 2019. I ordered costs to be paid by the Respondent in the amount of $1,000.00 those costs were paid. The second motion was heard on November 1, 2019. At that time, I ordered costs to be paid by the Respondent in the amount of $1,500.00.
[32] The costs of this long motion heard on November 5, 2019 are the subject matter of this cost request.
[33] The Applicant seeks costs in the amount of $24,212,77 plus disbursements and HST totalling $1,158.93. total fees and disbursements being $25,371.70.
[34] The claims for full indemnity costs is set at 85% of the total being $21,565.95. costs on a partial indemnity costs are set at 65% of the total being $16,491.61.
[35] Although the Bill of Costs sets out a bullet point review of what legal work was done, there is no assignment of the work to the lawyer/lawyers or law clerk who may have completed the work.
[36] The Bill of Costs only sets out a global break down of the number of hours put in by the various lawyers and law clerks. It is noted that the lawyers in total put in 51.4 hours. The law clerks put in 20.10.
[37] As I alluded to earlier the matter was made complex by the disclosure maze created by the Respondent. Otherwise this matter was not legally complex. Having said that the hours charged are far in excess of what should have been reasonably expected given the issues and facts that had to be addressed. This motion was set and heard in one half day.
[38] In my view, a fair a reasonable amount given the issues, legal and factual would be $15,000.00 inclusive of disbursements and HST. My assessment of these costs considers the bad faith on the part of the Respondent, the unreasonable conduct on the part of the Applicant, a fair reduction in the number of hours given what I find to be the work that needed to completed in proportion to the law and the issues.
[39] The Respondent did not file a Bill of Costs nor an outline of costs. As a result, it is not possible to accurately determine the reasonable expectations of the unsuccessful party.
[40] The Respondent shall pay to the Applicant costs in the amount of $15,000.00 inclusive of fees disbursements and HST.
The Honourable R. J. Harper
Released: February 4, 2020
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ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
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REASONS FOR JUDGMENT
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