Court File and Parties

COURT FILE NO.: FS-20-16486 DATE: 20210311 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Linda Jane Roberts, Applicant AND: Frank D’Amico, Respondent

BEFORE: Kimmel J.

COUNSEL: John G. Cox, for the Applicant/Responding Party Cheryl Goldhart, for the Respondent/Moving Party

HEARD: January 21, 2021 (supplementary written submissions regarding costs received February 16, 2021 and March 1, 2021)

Costs Endorsement

[1] In my endorsement dated January 29, 2021 (Roberts v. D’Amico, 2021 ONSC 707), I granted a without prejudice temporary-temporary order changing the spousal support obligations of the respondent, Frank D’Amico under the consent order of Miller J., made July 3, 2018 (the “Support Order”).

[2] Mr. D’Amico is a senior pilot with Air Canada. He sought to reduce his monthly spousal support obligations as a result of the effects of the COVID-19 pandemic on the airline industry and, in turn, on his employment. The Support Order required him to pay $10,283.00 per month in spousal support, calculated based on his then agreed annual income of $300,000.00 and the respondent’s then agreed annual income of $53,000.00.

[3] The Support Order provides that the spousal support obligation is “fixed and non-variable” and can only be reviewed if there is a “catastrophic change in circumstances in the respondent’s employment, including the respondent’s termination from Air Canada, or the respondent failing the Air Canada medical examination.” I found that the COVID-19 pandemic had been catastrophic to the airline industry generally, to Mr. D’Amico’s employer Air Canada, and to his circumstances of employment specifically. I also found that he had suffered a material reduction in his employment income that justified a corresponding interim adjustment in his monthly support obligations, but the amount of the reduction that I awarded was less than he was asking for.

[4] The motion before me was preceded by two case conferences before Moore J. and an appearance before Akbarali J. on June 9, 2020. At that time, the respondent was projecting that, based on a Memorandum of Agreement (“MOA”) entered into on March 24, 2020 between Air Canada and its pilots’ union, his annualized income would be reduced effective May 1, 2020 to $185,000.00 based on a projected 55 hours of flying time per month, with some prospect for the hours to increase after June. That MOA expired at the end of September and it was anticipated that there would be further negotiations and a further MOA.

[5] In June of 2020, Akbarali J. concluded that the significant uncertainty that existed about how the respondent’s income would be affected over 2020 rendered the motion premature because she was not in a position to assess whether the respondent had a strong prima facie case for variation at that time. She accordingly adjourned the respondent’s motion until after the next round of negotiations between Air Canada and the pilots’ union when a new MOA had been entered into. It was thought that this would allow for greater certainty about the respondent’s 2020 income and possibly more information about his income prospects going forward. Certain disclosure was also ordered by Akbarali J. about the applicant’s business and her annual income, which was thought might also be relevant to the issues to be decided on the motion. That disclosure was made by the applicant.

[6] A second MOA was entered into that became effective on October 1, 2020, which did increase the monthly block hours for senior pilots such as the respondent from a minimum of 55 to a minimum of 63 (with a corresponding increase in his annualized income, which I determined to be $220,000.00 for 2020).

[7] Having concluded that the respondent’s 2020 income was ascertainable when the matter came before me on January 21, 2021 and that he had satisfied the test laid down in Berta v. Berta, 2019 ONSC 505, at para. 40, I made an interim order varying the Support Order as follows:

a. Varying paragraph 7 of the Support Order (Final Order of Justice Miller dated July 3, 2018) so as to reduce the monthly spousal support payable by the respondent to the applicant to $6,738.00 per month, effective October 1, 2020 and continuing until further written agreement or court order; and

b. Requiring the applicant to pay the respondent back the over-payments of support received from and after October 1, 2020 on a monthly basis starting on February 1, 2021 through minimum monthly installments of $2,500.00 until the overpayments of support by the respondent from and after October 1, 2020 have been repaid.

[8] The parties are both seeking costs of the prior attendances, including two case conferences, the motion before Akbarali J. and the cost submissions that were made following it. They also both seek their costs of the motion decided following their appearance before me on January 21, 2021. I encouraged them to try to reach an agreement on costs, but they have not been able to do so. I have received their written cost submissions and cost outlines in accordance with the directions provided in my first endorsement.

The Parties’ Positions as to Costs

The Respondent’s Position

[9] The respondent succeeded on the motion before me in reducing his monthly support obligations from $10,283.00 to $6,748.00, retroactive to October 1, 2020 (a difference of approximately $3,535.00 per month). The respondent also relies upon his partial success on his motion for financial disclosure from the applicant, some of which was ordered by Akbarali J. on June 10, 2021.

[10] He claims to have incurred actual costs of $117,482.00 for the two case conferences and two court appearances and the preparation of materials and intervening steps leading up to the motion that was argued before me on January 21, 2021.

[11] The respondent made two settlement offers, the last of which, made on October 23, 2020, proposed a reduction in support that was only $838.00 per month less than what the court ultimately ordered, but included retroactive support for a longer period of time. The respondent cannot say he has done better than any offer he made, but, conversely, argues that the applicant made no settlement offers and opposed the court making any reduction in the respondent’s support obligations. The respondent argues that the applicant behaved unreasonably in her unwillingness to negotiate or make any offer of compromise.

[12] The respondent is asking the court to award him costs of $75,000.00 which represents approximately 2/3 of his actual costs. There is no breakdown or sub-total of costs for the various steps and appearances leading up to the hearing before me, but the daily dockets of the respondent’s counsel have been provided from March 17, 2020 to January 31, 2021.

The Applicant’s Position

[13] The applicant is arguing that she should have her costs of the case conferences and court appearances because, among other reasons:

a. the respondent’s motion was determined to be premature and not urgent in June 2020, and was adjourned to be heard after his 2020 income could be ascertained;

b. the respondent’s “success” in the production order that was made by Akbarali J. against the applicant in June 2020 was a notional victory in that the partial production was ordered in support of the respondent’s request that additional income be imputed to the applicant for the purposes of determining the variation in support he was seeking, and that was not ultimately accepted as a basis for the order made to reduce his monthly support; and

c. she “won” (her position prevailed) on more of the issues that the court had to decide than the respondent did, even though, ultimately, he succeeded in having his monthly support obligations reduced over her opposition. The main “wins” she focusses on are: (i) her argument that no additional income should be imputed to her, and (ii) that the NDI should be split 50/50 in determining the amount of support. What she “lost” on was how much income should be attributed to the respondent for purposes of that calculation.

[14] The applicant claims to have incurred costs of $66,317.00 and is asking for an award of approximately 2/3 of those costs, totalling $40,045.00. This is claimed on an overall basis for all work done by counsel between March 24, 2020 and January 21, 2021. The applicant breaks down these costs as follows: $8,993.22 in partial indemnity costs for the two case conferences before Moore J., $17,454.76 in substantial indemnity costs for the June 9, 2020 attendance before Akbarali J. and $13,597.55 in partial indemnity costs of the motion that was argued on January 21, 2021.

[15] The applicant argues that the respondent’s costs are excessive, totalling in excess of $50,000 more than the total costs of the applicant, on a full indemnity basis, for the same appearances. She also claims that she could not have made a meaningful settlement offer prior to October of 2020 because of the prematurity of the respondent’s motion and the inability to ascertain what his 2020 income would be prior to then. The applicant further argues that the financial disparity between the parties be taken into consideration in the court’s assessment of costs.

The Rules and Authorities on Costs

[16] Under Rule 24 of the Family Law Rules, O. Reg. 114/99, there is a presumption that a successful party is entitled to the costs of a motion.

[17] The respondent relies upon certain costs endorsements of I.F. Leitch J., in which various principles underlying awards of costs in matrimonial/family litigation are outlined as follows:

Pursuant to Section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended, and 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 the costs shall be paid”.

Costs of matrimonial/family litigation such as this proceeding are governed primarily by Rule 24 of the Family Law Rules, O.Reg. 114/99, which reads in part as follows:

(1) SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS – There is a presumption that a successful party is entitled to the costs of a motion … . …

(4) SUCCESSFUL PARTY WHO HAS BEHAVED UNREASONABLY – 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.

(5) DECISION ON REASONABLENESS – 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.

(6) DIVIDED SUCCESS – If success in a step is divided, the court may apportion costs as appropriate. …

(8) BAD FAITH – 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. …

(10) DECIDING COSTS – Promptly after each step in the 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. …

(12) SETTING COSTS AMOUNTS – 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, [which includes, amongst other things, presumptive cost consequences when a party achieves a more successful outcome than certain extended settlement offers not accepted by another party],

(iv) any legal fees, including the number of lawyers and their rates; …

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter.

General principles relating to the application of Rule 24, reflected in reported decisions, include the following:

a. Although Rule 24 has circumscribed the court’s otherwise broad discretion in relation to cost matters, otherwise conferred or confirmed by s. 131 of the Courts of Justice Act, supra, that discretion has not been completely removed. In particular, numerous factors, considered collectively, may rebut the presumption set forth in the rule, and otherwise move the court to exercise its residual discretion.

b. Rule 24 demands flexibility in examining the list of factors set out therein, without any assumptions about categories of costs. In that regard:

i. Judges are not constrained by the normal scales of costs contemplated by the Rules of Civil Procedure, and the traditional scales of partial indemnity and substantial indemnity costs are no longer the way to quantify costs in relation to proceedings governed by the Family Law Rules, supra;

ii. It nevertheless also is not true to say that costs in family law proceedings should generally approach full recovery, particularly insofar as a judge clearly has discretion to increase or decrease cost awards having regard to matters such as party conduct, the presence or absence of settlement offers, and the “touchstone” considerations of proportionality and reasonableness;

iii. A judge assessing costs under Rule 24 therefore effectively is permitted to consider a broad range of possible cost awards, from no costs or nominal costs to full recovery; and

iv. At the end of the day, cost awards in family law proceedings should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party.

c. In relation to determinations of success or relative success:

i. There generally must be some unusual circumstance, gap or other good reason to warrant departure from the Rule 24 presumption that a successful party is entitled to his or her costs of the proceeding. The rule otherwise will come to have little meaning, and the exception will become the rule.

ii. However, while “success” is the starting point in cost determinations made pursuant to Rule 24, the Rule clearly contemplates and demands the consideration of other factors in arriving at a final just and appropriate cost award.

iii. “Divided success” does not necessarily mean “equal success”, and “some success” may not be enough to have an impact on cost determinations. Rule 24 requires a contextual analysis, which takes into account that most family law cases involve multiple issues, not all of which will be equally important, time-consuming or expensive to determine.

iv. Determinations of success are not governed by party positions set forth in pleadings, but by positions adopted and advocated at the time disputes are heard, if different from those set forth in pleadings.

v. Offers to settle are another useful “yardstick” by which to measure “success”.

d. In relation to determinations of reasonable and unreasonable behaviour:

i. A court’s view of reasonable litigation conduct is gauged over the totality of a proceeding, from the time a dispute arose to the time of hearing, and includes consideration of efforts throughout the dispute to find compromise and resolution. The court should not consider the reasonableness of conduct lying outside the time when the issues for which costs are being determined first arose.

ii. In looking at reasonableness, it accordingly is necessary to review and consider any offers to settle either party has or has not made. It is unreasonable behaviour for a party not to make an offer to settle.

e. In relation to determinations of “bad faith”:

i. The essence of bad faith is a representation that one’s actions are directed towards a particular goal while one’s secret goal is something else; something that is harmful to other persons affected or at least something they would not willingly support or tolerate if the truth had been known. However, not all bad faith involves an intent to deceive; for example, it may be demonstrated by failure to abide by agreements or court orders.

ii. However, conduct that is merely unreasonable, negligent or reflecting bad judgment must not be equated with bad faith conduct. Bad faith implies the conscious doing of something wrong because of some dishonest purpose or moral obliquity. It contemplates a state of mind affirmatively operating with furtive design or ill will.

iii. The bad faith must have occurred in relation to the issues in respect of which costs are being decided, from the time those issues arose, or be the direct and immediate cause of those issues.

See: Rafeiro v. Bolhuis, 2020 ONSC 7205, at paras. 10-12; Stephens-Hinds v. Hinds, 2020 ONSC 6187, at paras. 11-13; Wilson v. Jurewicz, 2020 ONSC 6186, at paras. 10-12. [1]

[18] The applicant has not disputed these principles, but argues for their application in a manner that favours her over the respondent. The applicant focusses on the following additional principles to be considered by the court in awarding costs:

a. Any costs awarded should be fair and reasonable in the particular circumstances and need not be fixed by the actual costs incurred. The expectations of the parties are relevant to consider: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A), at paras. 37-38.

b. Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs in a family law matter: Beaver v. Hill, 2018 ONCA 840, 17 R.F.L. (8th) 147, at paras. 4 and 12.

[19] The Court of Appeal in Beaver, at para. 13, made it clear that “close to full recovery” is not the norm under the Family Law Rules, but is reserved for the specific circumstances indicated in the Rules, such as bad faith under R. 24(8) or besting an offer under R. 18(4).

Analysis

[20] I will review and apply the relevant principles to the circumstances of this case.

Who is Entitled to Costs?

[21] The respondent was the successful party. There were two issues ultimately decided by the court during the relevant appearances:

a. First, whether the applicant should make further financial disclosure to inform the analysis of the calculation of spousal support; and

b. Second, whether there should be a without prejudice temporary-temporary reduction in the respondent’s monthly support obligations.

[22] Both issues were decided in the respondent’s favour, although he was not awarded the full extent of what he was asking for. This is not a case of divided success, where the parties succeeded on different issues. The situation here is that the respondent succeeded but did not get as much production or as much of a reduction in spousal support, or for as long a period of retroactivity, as he was asking for. Those may be considerations in the determination of the quantum of costs that the respondent is entitled to.

[23] There was no “divided success” in the sense that would give rise to an entitlement to, or apportionment of, costs in favour of the applicant. The applicant is not entitled to an award of any of her costs.

What Quantum of Costs is the Respondent Entitled to?

[24] The next issue I must decide is what is a fair and reasonable amount of costs to award the respondent. In the context of determining the appropriate quantum of costs to award the respondent, it is relevant to consider that he did not get all that he was asking for. He wanted a more significant reduction in his monthly support obligations and for that to extend back retroactively to May 2020.

[25] The extent of the respondent’s success also ties into the consideration of the settlement offers that he made. He did not do “better” than any settlement offer he made. He made no offer on the production motion and he did not achieve a better outcome on his support motion than what he proposed in his second offer made in October 2020.

[26] However, the respondent did behave reasonably to the extent that he made settlement offers, including one that came close to the outcome, whereas the applicant made no offer on the support issue and her offer on the production issue would have simply prolonged matters because it would have bifurcated the consideration of the quantum of the reduction of support from the threshold question of whether there should be a review of his support obligations at all. While the applicant was justified in waiting for the further disclosure about the respondent’s 2020 income, I do not consider it to have been reasonable for her to refuse to consider any reduction in support after the second MOA was signed between Air Canada and the pilots’ union and his income for 2020 was ascertainable, particularly having regard to the circumstances of the respondent’s employment as a pilot with Air Canada during the pandemic. Her prematurity argument justified her position up to October 2020 but not beyond then.

[27] Nor does the prematurity argument disentitle the respondent to his costs entirely for that earlier period. It was not unreasonable for him to have been concerned that there had been a catastrophic change in the circumstances of his employment when the COVID-19 pandemic shut down air travel and for him to have raised that issue when it became apparent. However, absent dire financial circumstances, it was appropriate to allow the record to be more fully developed before the motion was decided, hence the adjournment of his motion. This was a unique circumstance and there is no road map for how it would play out that could be followed as the events of the pandemic and its effects on air travel were unfolding. The work done in preparation for the first appearance before Akbarali J. was sufficiently close in time to the appearance before me that the efforts cannot be said to have been wasted.

[28] Turning next to the fees charged, there is a fairly wide discrepancy between the fees charged by counsel ($117,000.00 compared to $66,000.00). Much of this can be attributed to the difference in hourly rates. There are some differences in the number of hours and different levels of experience of the lawyers as well. It is also no uncommon for the moving party’s legal fees to be higher than those of the responding party. It is not for the court to second guess a party’s choice of counsel or the number of hours docketed by counsel, within reason. As a general rule, the court will not engage in a line by line review of the dockets of each counsel. However, the fee discrepancy is a relevant consideration, and ties into the assessment of what the applicant would reasonably have expected to pay if she was not successful in her opposition to this motion. The fees charged to the applicant by her own lawyer is one benchmark of what she ought to have expected.

[29] That said, there are proportionality concerns on both sides, in that the reduction in the respondent’s support obligations of $3,535.00 per month translates into a reduction in support on a temporary basis of $42,420.00 per year. Both parties spent well in excess of this amount on their lawyers for this motion. Granted, more was at stake in what the respondent was seeking (a reduction in the range of $80,000.00), but even with the higher stakes, it is still important not to lose sight of the fact that the legal fees on both sides are difficult to rationalize with the amounts that were at issue on this interim motion.

[30] Taking into account these various considerations with a focus on the touchstones of proportionality and reasonableness, and in the exercise of my discretion under s. 131 of the Courts of Justice Act and R. 24 of the Family Law Rules, I am awarding the respondent his costs of the motion before me, including the previous attendances before Akbarali J. and Moore J., fixed in the amount of $45,000.00 for legal fees, plus applicable taxes and claimed disbursements on his lawyer’s bill of costs.

[31] I recognize that it is significantly lower than the actual costs incurred by the respondent, and my decision to reduce his cost recovery is not meant as a criticism of him or his counsel. It is the amount that I consider to be fair and reasonable in the circumstances for this without prejudice temporary-temporary motion, having regard to what he sought and what was ordered, and having regard to the particular circumstances of this case.

Implementation

[32] I am not requiring the applicant to pay these costs in a lump sum. These costs are ordered to be paid over time. During the period of retroactivity in which the applicant is re-paying the overpayments of spousal support pursuant to my January 29, 2021 endorsement in monthly installments of $2,500.00, the obligation to pay the costs awarded by this endorsement is suspended. The applicant shall begin paying the costs awarded in favour of the respondent by this endorsement in monthly installments of $2,500.00 commencing in the next month after the retroactive overpayments of support have been repaid. I would estimate this will be in July 2021. If the costs of this motion have not been paid by the trial, then the time for payment of this costs award may be revisited at the trial, although the amount of costs awarded by me on this motion will remain fixed, with a credit to be given for any amounts paid.

[33] This endorsement is an order of the court, enforceable by law from the moment it is released without the necessity of formal issuance and entry.

Kimmel J. Date: March 11, 2021

[1] The various authorities cited for the above propositions are found in the endnotes to these decisions.