Court File and Parties

COURT FILE NO.: FC-13-42559-00

DATE: 20210216

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: C.Z., Applicant

AND:

J.Y., Respondent

BEFORE: Justice A. Himel

COUNSEL: K. Maurina, Agent for the Applicant

J.Y., Self-represented

HEARD: In Chambers

COSTS ENDORSEMENT

Overview

[1] The wife (the "wife") and the husband (the "husband") married on September 20, 1995 and separated on December 30, 2011.[^1] There are two children of the marriage, CZ (age 17.5) and DY (age 15.5). In accordance with the final consent Order of Kaufman J. dated April 9, 2018 and corrected by the Order of Douglas J. dated September 10, 2018, the wife has sole custody and primary residence of the children.

[2] Mullins J. conducted a trial in this matter between June 11 and 14, 2019. She retired thereafter.

[3] Shortly after the conclusion of the trial the wife brought a successful motion to re-open the trial and additional documentary evidence was filed. Closing submissions were submitted in August 2019.

[4] Mullins J. released her Reasons for Judgment on November 25, 2019.

[5] On March 5, 2020, Regional Senior Justice Fuerst declared the Original Trial Judgment, and the subsequent costs decision, a nullity. The Judgment was rendered on November 25, 2019, which is beyond the time limitation imposed on a retiring judge. This decision was made pursuant to section 123 of the Courts of Justice Act.[^2] The Court ordered that the re-hearing be presided over by a judge who has not read the decision or had any involvement in the case.

[6] This matter proceeded as a re-hearing. The Reasons for Judgment (the "Reasons") are derived from transcript evidence that flowed from the initial four-day hearing in June 2019 (the "Original Trial") and oral evidence from a further two-day hearing in December 2020 (the "Updating Trial").

[7] The final Order and the Reasons[^3] were delivered on January 12, 2021.

[8] The only outstanding issue is costs, as the parties have agreed to the amount payable for pre-judgment interest, and the wife has confirmed that CZ is residing with her on a full-time basis.

[9] As per the Endorsement of Regional Senior Justice Fuerst dated March 5, 2020, I am directed to address the issues of costs as they relate to the Original Trial and the Updated Trial. The Endorsement states as follows:

The rehearing judge will make a fresh assessment of costs of the trial proceedings before Justice Mullins and an assessment of costs of the rehearing. The parties will be provided the opportunity to make submissions as to costs.

[10] As per the Endorsement of Czutrin J. dated November 16, 2020, the issue of costs of the Settlement Conference is adjourned to the re-hearing judge. The wife has on deposit with the Court the sum of $3,390 which she paid as security for costs.

[11] As per my directions before and during the Updating Trial, the transcripts derived from the Original Trial form the basis of the evidence up to and including June 14, 2019, except in respect of a small number of exhibits that the parties agreed required a finite amount of additional evidence.

[12] In other words, I have treated both the Original Trial and the Updating Trial collectively as one six-day hearing (the "Trial"). Given that the Mullins J. decision was deemed a nullity there is no basis to review either party's relative success or loss against that decision. The appropriate approach is to measure same, consider each party's Offers to Settle, and assess costs in light of the relief granted in my Order dated January 12, 2021.

The Nature of the Proceeding

[13] As for the issues at the Trial, they can be summarized as follows:

a. Equalization. The claim of the wife for net equalization was granted in the sum of $29,220, in respect of the equalization payment owed (after accounting for the post-separation date adjustments).

b. Child Support. Commencing February 1, 2021, the table amount payable for two children is the sum of $4,039 per month, based on an imputed income to the husband. Support continues for each child until she is no longer a "child of the marriage."

c. Retroactive Child Support. the sum of $60,033, on account of retroactive child support from September 1, 2016 to January 31, 2021, inclusive.

d. Retroactive Section 7 Expenses. The husband was ordered to pay the sum of $3,281 ($3,409 - $128), on account of retroactive section 7 expenses from 2018 to January 31, 2021.

e. Section 7 Expenses. The husband was ordered to contribute 68% of the section 7 expenses. These expenses shall be based on legible receipts and agreed to by the parties in writing, and in advance of the expense being incurred. Consent shall not be unreasonably withheld. Either party may contact the provider to verify the expense.

f. Spousal Support. Commencing January 1, 2021 to December 31, 2028, the husband shall pay periodic spousal support on a monthly basis in the amount of $4,293, which shall be tax deductible to him and taxable to the wife. Spousal support shall terminate on December 31, 2028, unless the Court makes a different Order upon finding a material change in circumstances that warrants a different amount of spousal support or a different termination date.

g. Retroactive Spousal Support. The wife was entitled to the sum of $87,911, on account of retroactive spousal support from September 1, 2016 to December 31, 2020.

h. Draw on Joint Line of Credit. The wife owed the husband the sum of $12,711.

i. Pre-Judgment Interest. The husband owes the wife $14,585.04.

Offers to Settle

[14] The parties exchanged various Offers to Settle. Some were revoked by subsequent offers and some had cost consequences in addition to that set out below, depending on the timing of acceptance. The relevant offers for consideration in respect of costs are as follows.

[15] On April 9, 2019, the wife served an Offer to Settle that did not address her spousal support claim. The offer provides for the following; a lump sum of $500,000 on account of the property issues/funds owing by the wife to the husband/the husband's investments; no arrears of child support or section 7 expenses; ongoing child support in the amount of $2,317 per month; ongoing contribution to section 7 expenses of $400 per month; the wife need not obtain consent or provide invoices or receipts. The property provisions were severable, however, the wife did not meet or beat her offer in respect of same, or in respect of the combined provisions for child support and section 7 expenses.

[16] On April 10, 2019, the husband served an Offer to Settle which made provision for the following: equalization-nil; property releases; no arrears of child support or section 7 expenses; ongoing child support in the amount of $2,525 per month until the end of high school; ongoing section 7 expenses (and post-secondary not covered by the RESPs) shared at a rate of 50% with caps, contact info, invoices and receipts; and, the amount of $70,000 as lump sum spousal support with releases. The husband's offer was not severable. He did not meet or beat the offer.

[17] On May 6, 2019, the wife served an Offer to Settle which made provision for the following: a lump sum payment of equalization/spousal support/interest $800,000; ongoing child support of $2,317; arrears of child-nil; ongoing contribution to section 7 expenses of $400 per month commencing; the wife need not obtain consent or provide invoices or receipts; costs payable by the husband of $25,000. The wife's offer was not severable. She did not meet or beat the offer.

[18] On March 27, 2020, the wife served an Offer to Settle which made provision for the following: a lump sum payment of $800,000 on account of equalization/funds owed by the wife/the husband's investments/spousal support/interest; child support in the amount of $2,317 per month commencing September 1, 2018; ongoing section 7 expenses of $400 per month commencing January 1, 2018 (not including health, private school or post-secondary expenses); the wife need not obtain consent or provide invoices or receipts. The wife's offer was severable. She beat the offer on child support but did not meet or beat the offer in respect of the lump sum or section 7 expenses.

[19] On March 31, 2020, the husband served an Offer to Settle which made provision for the following; a lump sum of $35,000 on account of equalization/spousal support/child support up to May 2019/money owed by the wife to the husband/interest; ongoing child support in the amount of $2,000 per month until the end of high school; ongoing section 7 expenses (and post-secondary not covered by the RESPs) at a rate of 60% with caps, contact info, invoices and receipts; property and spousal support releases; and, costs payable by the wife of $25,000. He states that this offer was based on the conclusion section of the nullified Mullins' J. decision. The husband's offer was not severable. He did not meet or beat the offer.

[20] On November 8, 2020, the wife served an Offer to Settle which made provision for the following: a lump sum of $1,600,000 on account of equalization/spousal support/husband's investments/interest; ongoing child support of $2,437; arrears of child support - nil; a lump sum of $44,185 on account of retroactive and ongoing section 7 expenses to age 18 (not including health, private school or post-secondary expenses); wife need not obtain consent or provide invoices or receipts. The wife's offer was severable. She beat the offer on child support but did not meet or beat the offer in respect of the lump sum or section 7 expenses.

[21] On December 1, 2020, the wife served an Offer to Settle which made provision for the following: lump sum payment of $660,000 or $880,000 RRSPs on account of equalization/property claims/spousal support/interest; property and spousal support releases; ongoing child support of $2,437; arrears of child support - nil; arrears of section 7 - nil; ongoing section 7 expenses $400 per month or 70% up to $20,000 (not including health or post-secondary expenses); wife need not obtain consent or provide invoices or receipts; costs payable by the husband as determined by the Court. The wife's offer is severable. She beat the offer on child support but did not meet or beat the offer in respect of equalization or section 7 expenses.

[22] I find that neither party provided any reasonable proposal to resolve the issues in dispute. The wife sought a considerable lump sum payment (for equalization/property issues/spousal support/interest) and section 7 expenses which exceed what has been ordered. The husband sought to pay no/nominal equalization and far less in spousal support and child support than was ordered.

[23] The Offers to Settle are entirely unhelpful to the determination of costs in this matter. I decline to consider same in my assessment as to the quantum of costs payable.

The Position of the Parties Regarding Costs

[24] The husband seeks full cost recovery in respect of the Original Trial ($74,229 + $26,285 as a self-rep), full cost recovery in respect of the Czutrin J. November 16, 2020 Settlement Conference ($3,390 as he was represented by counsel), as well as partial cost recovery in respect of the divided success of the Updating Trial ($7,611 - which amounts to 50% of his claimed costs). He bases his requests on the bad faith behaviour of the wife, and his overall success in this matter.

[25] The husband incurred costs of approximately $74,000 prior to his decision to become self-represented in January 2019. The costs related to the issues at trial as well as to the earlier resolution of the custody and access issues. I am not prepared to order costs in respect of parenting.

[26] Apart from the costs that the husband incurred when he did have counsel, the husband seeks his costs as a self-represented litigant. Specifically, he is seeking as part of his total costs of $26,285. He claims an hourly rate of $150 per hour.

[27] The wife objects to the husband's request for costs stating that he did not forgo remunerative activity (in light of my finding that he was intentionally underemployed). She also states that if costs are ordered they should be at rate of $60 per hour.

[28] The wife incurred costs from March 2020 to January 2021, in the approximate amount of $80,000. She claims costs in the amount of $40,000, given the divided success and her belief that numerous of her Offers to Settle were reasonable, particularly given that some included severable options. The wife makes no claim for costs prior to March 2020.

Analysis

[29] Family law litigants are encouraged to settle their disputes without resort to the courts and to seek reasonable compromise whenever possible. Sections 24(1), (5) and (12)(a) and (b) of the Family Law Rules ("the Rules" or "Rule") deal, respectively, frame the exercise of the court's discretion when awarding costs, providing as follows:

SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

DECISION ON REASONABLENESS

(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.

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.

[30] The principles guiding the court's exercise of its discretion pursuant to the Rules are well-established. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. Four fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants;[^4] and (4) to ensure that cases are dealt with justly.[^5]

[31] 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.[^6] As observed by the Court of Appeal in Beaver v. Hill[^7] 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.[^8]

[32] As plainly stated by Pazaratz J. in Scipione v. Del Sordo,[^9] 2015 Carswell ONT 5982 (at para. 6), "Who got what they asked for?":

[33] As I state in the Reasons (at para. 289):

With respect to costs, there has been divided success. The husband is mostly successful on the property issues, and the wife is somewhat successful (in terms of certain relief sought but not quantum) in respect of the support issues.

[34] The driving issue behind this case related to the resulting trust, constructive trust and unequal division of net family property, all of which were pursued ferociously and without merit by the wife. As recently as her offer dated November 8, 2020, the wife continued to pursue a significant lump sum payment on account of property/spousal support/interest ($1,600,000). While I granted retroactive and ongoing (time-limited) spousal support, the after-tax value to the wife falls well below the offered amount of $660,000 (December 2020), $1,600,000 (November 2020) or $800,000 (May 2019 and March 2020). At the Trial, the wife sought an Order for 50% of the husband's investments (valued at approximately $3,500,000 at the Original Trial and $4,300,000 at the Updating Trial).

[35] I imputed an income to each of the parties that exceeds what he/she thought was reasonable and impacts the quantum of child support and spousal support retroactively and on an ongoing basis.

[36] While the husband is ordered to pay more child support that he had offered or sought to pay, given the ages of the children the difference is not significant. He will also pay 68% rather than 60% of the section 7 expenses, however these are nominal at this time. It is likely that the bulk of the post-secondary expenses will be paid by the children's RESPs.

[37] The husband was materially more successful than the wife in respect of the overall outcome of this case. The divided success in respect of the support issue is a consideration in my determination as to the quantum of costs, however, he is clearly entitled to costs. There is no basis for the wife's request for costs.

[38] As a self-represented litigant, the husband is entitled to make a claim of costs. The husband has provided a Bill of Costs setting out the hours that he spent on particular tasks, as is required.[^10] The Ontario Court of Appeal has confirmed a self-represented litigant's entitlement to costs.[^11]

[39] Given that I imputed an annual income to the husband of $90,000, for work that he did not complete, it would be illogical to decline to recognize the work he did complete in respect of this litigation. There is no doubt that the husband would have incurred significantly higher legal costs if he opted to be represented by counsel at the Trial.

[40] The husband ought not to be awarded costs for his attendance at Court conferences and at the Trial, as that would be required in any event. However, the time spent preparing for the Trial (which would otherwise be done by counsel) is appropriately claimed in light of the effort put forward and the overall measure of success.[^12]

[41] The husband's request for the hourly rate of $150, is high in the context of a self-represented litigant. His Bill of Costs notes that he spent 155 hours from January 2019 to February 2020 and 95 hours from February 28, 2020 to January 2021. The time spent is appropriate although I have reduced same to account for the Court attendances (which account for approximately 50 hours).

[42] The wife was billed for 190 hours in legal fees for March 2020 to February 2021. Ms. Maurina, the lead lawyer, is a 14 year call and bills at $440 per hour.

[43] I adopt the reasoning set out in Browne v. Cerasa,[^13] and accept that an hourly rate of $100 per hour is appropriate and reasonable:

The husband represented himself diligently, reasonably and appropriately for much of the trial. He was for the most part well-organized in a manner expected of lawyers.

Allowing for the fact that the husband is not a lawyer, his trial preparation and presentation was generally of a high calibre.

The husband appeared to work cooperatively and respectfully with the agent counsel for the wife.

The husband's conduct of the hearing including her examinations and cross-examination were appropriate and did not unreasonably lengthen the proceedings.

[44] Both parties were entrenched in their positions and have invested emotional and financial energy that cannot be compensated by the Court. At earlier stages in the litigation both parties allowed the proceedings to languish and prolonged the provision of financial disclosure. Costs accrued (and the basis for the wife's property claims evolved) because of both parties' delay in resolving this dispute.

[45] However, once the matter started to move forward in 2017, it is the wife whose actions were both unreasonable and highly problematic. This includes the decision to amend her Application to make resulting and constructive trust claims and a claim for an unequal division of net family property. The claims, which amounted to approximately $2,000,000 were dismissed. The only amounts owing by the husband on account of the property issues is the sum of $29,220 (plus pre-judgment interest and minus the wife's share of the funds she withdrew from the line of credit).

[46] The parties' divergent positions in respect of the section 7 expenses exemplifies the level of conflict and unreasonableness. The husband repeatedly raised concerns about the wife exaggerating claims and falsifying section 7 receipts. He had copies of third party receipts that differed from those provided by the wife. The wife's Offers to Settle deny the husband the requested information (invoices, receipts and contact details). Most of her offers require the husband to make an annual contribution of $4,800 per year for section 7 activity expenses with no accountability. The wife sought this monthly payment ($400) at trial notwithstanding that there have been nominal section 7 expenses since at least early 2020, or the fact that CZ moved out of the wife's home in June 2020.

[47] Aside from the wife's positional behaviour as confirmed in her litigation strategy and Offers to Settle, I have serious concerns about the wife's actions as detailed the Reasons (at para. 41). The wife's repeated attempts to mislead the husband and the Court cannot be condoned.

[48] The wife states that bad faith implies the conscious doing of a wrong because of a dishonest purpose or moral obliquity. To establish bad faith the Court must find some element of malice or intent to harm[^14]. While the wife submits that her actions do not meet the test for bad faith I disagree. The wife's approach to the litigation has elements of bad faith. The wife repeatedly crossed the line that ventures between full disclosure and careless, cavalier and/or conscious non-disclosure in respect of the husband. I decline to comment on the wife's representations to the Canada Revenue Agency other than to reiterate the challenges they presented to the husband's ability to assess her income, assets and debts.

[49] A party who adopts "a catch-me-if-you-can approach to financial disclosure" demonstrates bad faith and breaches Rule 13 of the Family Law Rules.[^15]

[50] Even if the outcome had been more even between the parties (and it is not) the wife's actions would warrant a costs order.

[51] As per the Reasons, "the limited evidence before the Court make it difficult to determine an appropriate income for support purpose" (para. 43). The effort put forward by the husband to uncover the wife's mistruths and to provide a clearer picture of her income, assets and debts is commendable.

[52] To the extent that the husband's lack of cross-examination skills may have added some (not significant) time to the proceedings, his diligence provided for more accurate evidence, and thus a fairer result.

[53] However, I am not prepared to order costs on a full-recovery basis, given the Offers to Settle and the husband's refusal to meaningfully attempt to settle this matter. His disinclination to make an improved Offer to Settle, either before or after the November 16, 2020 Settlement Conference with Czutrin J., is troubling and has been accounted for in my assessment of costs. Moreover, the husband claims full recovery costs for all preparation and attendance on Court conferences and motions from 2013 to February 2020. Some of these costs were/should have been addressed earlier.

[54] In my determination, a reasonable and proportionate quantum of costs is $65,000, (inclusive of the sum $1,695 on account of the Settlement Conference) and inclusive of H.S.T.. I have accounted for the husband's request for costs in respect of the following: (a) representation by counsel; (b) self-representation for the Original Trial; (c) self-representation for the Updating Trial; and, (d) costs for November 2020 Settlement Conference.

[55] I am releasing the funds held by the Court to the husband, and I am setting off the amounts that he owes for pre-judgment interest against what the wife owes on account of the costs.[^16]

[56] My concluding thoughts on this matter are as follows. It is anticipated that CZ will graduate high school in June. The parties are expected to work out the details about the payment of her post-secondary education (perhaps with the assistance of a mediator or the wife's legal agent). I note that milestone events provide all parents with the opportunity for reflection and I encourage each parent to do so. While the parties are no longer the husband and the wife, they shall forever be the father and the mother and, collectively, the children's family.

Order

[57] Based on the foregoing, an Order shall issue as follows:

1. The wife shall pay to the husband costs in the amount of $65,000 inclusive of HST, as follows:

(a) the sum of $3,390 shall be released by the Court to the husband forthwith;

(b) the sum of $14,585.04 in pre-judgment interest shall be set off against the costs ordered; and

(c) the balance of $47,024.96 shall be paid by the wife within 30 days.

Justice A. Himel

Date: February 16, 2021

[^1]: They are no longer husband and wife as I signed the divorce Order on January 12, 2021. These are the terms that I used in the trial reasons and continue to do so for consistency. [^2]: RSO 1990, cC.43. [^3]: 2021 ONSC 256. [^4]: Serra v. Serra, 2009 ONCA 395. [^5]: Mattina v. Mattina, 2018 ONCA 867 at para. 10. [^6]: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317; Peers v. Poupore, ONCJ 615. [^7]: 2018 ONCA 840, at para. 4. [^8]: (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.). [^9]: Supra,note 2 at para 6. [^10]: Jordan v. Stewart, 2013 ONSC 5037, at para. 45. [^11]: Fong v. Chan, 1999 O.J. 4600 [Ont. C.A.]. [^12]: See for example, Genga v. Colaianni, 2017 ONSC 4709, at paras. 13 through 17. [^13]: 2018 ONSC 2242 at paras. 36 and 41. [^14]: Chomos v. Hamilton, 2016 ONSC 6232, at paras. 42-49. [^15]: Parry v. Parry, ONSC 3437 at para. 47, citing Trudel v. Trudel, 2010 ONSC 5177, at para. 17. [^16]: For a discussion of setting off amounts owed against costs see M.B. v. A.F., 2021 ONCJ 45.