COURT FILE NO.: FS-18-1414

DATE: 20210318

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: M.V.N., Applicant

AND:

F.K.D., Respondent

BEFORE: Kiteley J.

COUNSEL: George Karahotzitis and Rebecca D. Organ, counsel for the Applicant

Ren Bucholz, counsel for the Independent Supervising Solicitor

Gary S. Joseph and David Rappaport, counsel for the Respondent

Ian Smith, counsel for witness C.B.W.

HEARD: in writing

ENDORSEMENT AS TO COSTS

[1] In an endorsement dated October 1, 2020 [ONSC 5911], I dealt with the motion and cross-motion. I received the Applicant’s submissions as to costs dated October 26, 2020, followed by the Respondent’s submissions dated November 2, 2020 and reply submissions dated November 9, 2020.

Positions of the parties

[2] The Applicant provided a summary bill of costs that totalled $25,541 for fees plus H.S.T. on fees in the amount of $3,320 for a total of $28,861. The disbursements with HST totalled $711. The Applicant took the position that her full indemnity fees totalled $29,572; substantial indemnity (at 85%) were $25,136; and partial indemnity (at 65%) were $19,222. She added the fees of counsel for the Independent Supervising Solicitor in the amount of $1520 (actual amount) and $912 (partial indemnity).

[3] The Applicant asked for costs fixed in the amount of $25,000 inclusive of H.S.T. and disbursements on the basis that the motion addressed complex procedural and evidentiary issues that are not commonly considered by the Court or counsel and required preparation of comprehensive materials. She took the position that her conduct was reasonable and necessary given the serious allegations. While the decision dated October 1, 2020 restricted the scope of the Respondent’s response, in the end result, the decision gave effect to the Applicant’s position. She argued that the Respondent’s motion and his position were unreasonable, especially when the best interests of the child were at stake. She submitted that the amount sought was a fair and reasonable contribution by the unsuccessful party and reflected the expectation of the parties. In that connection, for comparison and to demonstrate that her claim was proportionate, she attached the Respondent’s draft bill of costs which was similar to hers.

[4] At paragraph 20 of her submissions, the Applicant indicated that she should not be penalized for not serving an offer to settle given the nature of the issues and the claims in the motions and she observed that the Respondent did not serve an offer.

[5] In his submissions, the Respondent calculated his total costs at $9546 plus HST, partial indemnity costs at $5727; and substantial indemnity costs in the amount of $7636. The Respondent takes alternative positions. He asks that costs related to the motion heard on July 30, 2020 be reserved to the hearing of the section 30 assessment and parenting time motions. He argues that the motions heard July 30, 2020 were essentially procedural related to substantive motions yet to be heard. He points out that the extensive materials will be relied on in the upcoming substantive motions and it is impossible to separate the services rendered on the motions heard in 2019 and the motions heard on July 30. He noted that the Applicant’s bill of costs is not particularized and was lacking in detail. He took the position that he does not have the ability to pay; he is presently unemployed and cannot find work largely as a result of the serious allegations made against him in this proceeding and he asserted that the Applicant will likely owe him a large equalization payment and other financial payments. The Respondent observed that the Applicant had not provided a detailed Bill of Costs and he explained the significant differences between the draft bill of costs prepared by his solicitor that was attached to the Applicant’s submissions and his claim that included different periods of time and different hourly rates. He took the position that full recovery costs are appropriate where there has been bad faith yet there are no allegations of bad faith in relation to these motions. While the Respondent acknowledged the importance and complexity in respect of some of the issues, he asserted that the balance of the motions was not complex.

[6] In relation to means, he pointed out that, pursuant to rule 24(12)(b), the court may consider “any other relevant matter”, in this case, the means of the parties. He took the position that he will suffer financially if he is required to pay costs. He is not working and has suffered significant financial reversals since 2009 (which preceded the marriage). He does not have the ability to pay. He is pursuing his entitlement to an equalization payment and his claim for spousal support. He asserted that he is entitled to costs arising out of an access motion and he ought not to be required to pay costs when costs to which he was entitled are outstanding.

[7] In the alternative, if costs are granted, he submits they should be in the amount of $5000 plus HST inclusive of disbursements and he asks for 120 days to pay.

[8] In her reply submissions, the Applicant pointed out that she had made an error in her original submissions when she noted that neither party had made an offer to settle. She attached a copy of the Respondent’s offer to settle dated March 16, 2020 and a copy of her offer to settle dated March 18, 2020. She noted that her counsel had contacted the Respondent’s counsel who had suggested that counsel might have a conference call with me to give the Respondent an opportunity to respond on this point.

[9] The Applicant was opposed to postponing the fixing of costs and relied on rule 24(10) that provides that promptly after dealing with a step in a case, the court shall determine who, if anyone, is entitled to costs in relation to that step and set the amount.

[10] Given the Respondent’s criticism of her original submissions, the Applicant provided a revised bill of costs with detailed information. The Applicant also made submissions about multiple counsel, that services were rendered prior to the initial return date of the motion in March 2020 and different hourly rates.

[11] On the Respondent’s position about means, the Applicant observed that he has access to investment accounts and a property located in Muskoka; and that he has not provided a financial statement for purposes of the motion that would justify the position he has taken. She made the submission that a party’s limited financial circumstances cannot be used as a shield against liability for costs if that party has behaved unreasonably. She took the position that the fact that the Applicant may owe the Respondent an equalization payment does not shelter the Respondent from costs incurred for these motions. She argued that the issue of costs to which the Respondent made reference left over from an access motion was an irrelevant factor.

Offers to Settle

[12] As indicated above, counsel suggested that there should be a conference call to enable the Respondent to make submissions on this issue that was raised in reply submissions.

[13] In view of the conclusion I have reached, it is not necessary to have a conference call.

[14] The timing of the offers is significant. In an endorsement dated January 27, 2020, Diamond J. granted leave to the parties to bring specific motions. The motions were scheduled for March 26, 2020. On Wednesday, March 11, 2020, the World Health Organization declared a pandemic. The Respondent made an offer dated Monday March 16. Effective Tuesday March 17, 2020, the Chief Justice suspended the regular operation of the courts. On Wednesday March 18, 2020, the Applicant served an offer to settle. The motions scheduled for March 26 were postponed without immediately setting a new date. In his role as Case Management Judge Diamond J. scheduled the motions for July 30, 2020.

[15] The offers straddled the suspension of regular court operations. The parties and their lawyers are commended for making the attempt to resolve these outstanding motions. Given the postponement of the motions, it is understandable that momentum was lost.

[16] In the offers, each party made a reasonable attempt to resolve the impasse. The offers do not draw any automatic cost consequences at least partly because of the challenge in determining whether, pursuant to rule 18(14) the order made was “as favourable or more favourable than the offer”. In my view, the content of the offers has no impact on the decision as to costs.

Factors relevant to costs

[17] The Respondent’s motion was dismissed. In that respect, the Applicant was successful. The Applicant’s motion was not granted in full. In that respect, the Applicant achieved some success, as did the Respondent. In other words, success was divided. However, in an important respect, the Applicant achieved success because the Respondent is required to deliver an affidavit which he had resisted for many months. Pursuant to rule 24(1), she is presumed to be entitled to costs.

[18] These were procedural motions with complexity and significance. While related to other motions, such as the assessment motion, the costs of these motions are independent of the outcome and the costs of any substantive motions and there is no reason to postpone a decision on costs of these motions.

[19] The record on these motions consisted of hundreds of pages of documents and evidence. I agree that much of that record was relied on when the Anton Pillar motion was launched in September 2019 and will be relied on in the subsequent motions and for that reason, all of the services rendered in the creation of the record will likely be of benefit in other motions.

[20] The Applicant asserts that the Respondent was not acting reasonably. I disagree. While he was not successful, it was not unreasonable for him to take the positions he did either on his motion or on the Applicant’s motion. There is no basis to award costs other than partial indemnity costs.

[21] The differential in hourly rates is not so substantial as to have a bearing on the amount recovered. In both cases, the services were allocated between and among the time-keepers dependent on what work was involved. Mr. Rappaport did approximately 2/3 of the work at a much lower hourly rate than did Mr. Joseph. Ms. Organ docketed twice as many hours as Mr. Karahotzitis. How senior lawyers collaborate with associates and law clerks is not something to be micromanaged in fixing costs on motions such as these. In both cases, services are referred to that are unrelated to the motions.

[22] In her submissions, the Applicant calculates partial indemnity costs at 65% or $19,222 plus partial indemnity costs of the Independent Supervising Solicitor at 60% or $912. I consider the factors of divided success, complexity, importance, and reasonable expectations. In my view, the Respondent should be required to pay costs of the motions fixed in the amount of $12,000 inclusive of fees, disbursements and HST.

Terms of payment

[23] I have not considered the Respondent’s submission about ability to pay in deciding how much the costs ought to be. In this case, if relevant, it is on the question of terms of payment.

[24] The Respondent has raised his limited means without any evidence. I do not mean to encourage parties to provide evidence in the context of costs. Where it is relevant, the submission is usually founded in existing financial statements form 13.1. I was not given financial statements from either party.

[25] I do not consider the submission that the Respondent has made a claim for spousal support. There are too many unknowns on that claim. However, pursuant to the Family Law Act, a spouse is entitled to an equalization payment. The Respondent asserts that it is likely the Applicant will be ordered to make such a payment. Indeed, the Applicant did not challenge his submission. Her response was the fact that she may owe him an equalization payment at the conclusion of the proceedings does not shelter him from incurring costs. I agree with that submission. It does not shelter him from being ordered to pay costs, but, even with the limited information available, I agree that his means are relevant to when he must make the payment. There are many important issues involved in this case. The Respondent ought not to be threatened with having his Answer and Claim struck for immediate non-payment of costs on the motions heard on July 30, 2021. The request for 120 days is reasonable.

ORDER TO GO AS FOLLOWS:

[26] The Respondent shall pay to the Applicant costs in the amount of $12,000 inclusive of fees, disbursements and HST with respect to the motions heard July 30, 2021, provided that the Respondent shall pay those costs no later than July 19, 2021.

KITELEY J.

Date: March 18, 2021