Court File and Parties

COURT FILE NO.: 78/20 (St. Catharines) DATE: 2021-01-06 SUPERIOR COURT OF JUSTICE – FAMILY COURT – ONTARIO

RE: Lisa Ann Smith, Applicant AND: Kevin Reginald Smith, Respondent

BEFORE: The Honourable Mr. Justice R. A. Lococo

COUNSEL: Monica Scholz, for the Applicant Lydia Moritz, for the Respondent

HEARD: By written submissions dated December 1-14, 2020

Endorsement – Costs

[1] Lisa Smith and Kevin Smith are parties to an ongoing family law application that Lisa commenced in early 2020. Following the parties’ separation after 39 years of marriage, they continued to reside (separate and apart) in their former matrimonial home, which included the home office for their jointly-held gas servicing business.

[2] As set out in Reasons of Decision dated November 10, 2020 (reported at 2020 ONSC 6824), I made a temporary order that (i) dismissed Lisa’s request for interim exclusive possession of the matrimonial home, (ii) granted Kevin’s motion for sale of the matrimonial home and Lisa’s cross-motion for the sale of their jointly-owned cottage, and (iii) dismissed Lisa’s request for a non-depletion order and an order restoring the financial status quo prior to separation (with a proviso referred to further below). Each of the parties was also ordered to provide certain financial disclosure to the other. Costs were left to be determined following written submissions.

[3] In their written submissions, each party claims partial indemnity costs against the other. Kevin seeks $15,137.37 in costs from Lisa. Lisa seeks costs of $23,995.00 from Kevin.

[4] The determination of costs is in the court’s discretion: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131. For family law proceedings, there is a presumption that a successful party is entitled to costs: Family Law Rules, O. Reg. 114/99, r. 24(1). However, 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: rr. 24(4) and 24(5). If success is divided, the court may apportion costs as appropriate: r. 24(6).

[5] As a general rule, “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs” in family law proceedings: see Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12. That principle is reflected in r. 24(12)(a), which directs the court to consider the “reasonableness and proportionality” of a number of listed factors as they relate to “the importance and complexity of the issues”. Those factors include (i) each party’s behaviour, (ii) any written offers to settle, and (iii) legal fees and expenses.

[6] When fixing costs, r. 18(14) provides additional direction that applies where a party who makes a written offer to settle obtains an order that meets the requirements set out in that rule. One of those requirements is that the offering party obtains an order that is “as favourable as or more favourable than the offer.” If the requirements are met, the offering party is “entitled to costs to the date of the offer and full recovery costs from that date”. When fixing costs, the court may take into account any written offer to settle, whether or not r. 18(14) applies: see r. 18(16).

[7] Kevin’s $15,137.37 claim for partial indemnity costs includes fees of $13,357.50 plus HST. To support his claim, he provided a costs outline, with actual fees calculated at $22,262.50. By way of explanation, his counsel indicated that Kevin had tempered his claim for fees to take into account a severable offer to settle that Lisa made two weeks before the motion hearing, which Kevin did not accept. In that offer, Lisa offered to settle the motions on terms that included the sale of both the matrimonial home and the cottage, or alternatively, a mutual transfer of interests that would leave Lisa with the matrimonial home and Kevin the cottage. The offer terms would not have provided Lisa with interim exclusive possession of the matrimonial home but would have restrained Kevin from depleting his assets (except as required for day-to-day business transactions) and required him to make wide-ranging disclosure to Lisa.

[8] In her responding costs submissions, Lisa argued that a partial indemnity costs award should be made in her favour. She concedes that “it may at first blush appear that Kevin was the successful party” but goes to argue that in making a costs award, the court should not reward Kevin’s unreasonable conduct, including (i) his failure to accept any part of her offer to settle, and (ii) his conduct that gave rise to Lisa’s unsuccessful claim for a non-depletion order. The latter conduct included his refusal soon after separation to maintain the financial status quo and negotiate a settlement agreement. Instead, he removed Lisa’s access to bank accounts and credit cards and limited her involvement in the family business. Lisa argues that instead of granting costs to Kevin, the appropriate order would be to order him to pay costs to Lisa.

[9] I disagree.

[10] Contrary to Lisa’s hesitant quasi-acknowledgement of Kevin’s success on the motions, there can be no doubt that he was the successful party. In fact, it is difficult to imagine his success being more complete. During the all-day motion hearing, Lisa’s counsel vigorously argued in favour of an order for interim exclusive possession of the matrimonial home. Instead, as Kevin requested, the matrimonial home was ordered sold. Little time was spent on Lisa’s late-breaking cross-motion for sale of the cottage (requested only if sale of the matrimonial home was ordered). Kevin agreed to the cottage’s sale during submissions. Lisa’s request for a non-depletion order (as well as an order to restore the pre-separation financial status quo) was dismissed, with one proviso. The temporary order requires Kevin to continue paying virtually all expenses associated with the matrimonial home pending its sale, which he has been doing since separation without a court order.

[11] With respect to the Lisa’s offer to settle, I am entitled to take Kevin’s response to it into account under r. 18(16), even though the offer (considered as a whole) does not meet the requirements of r. 18(14). Kevin acknowledged that the motion hearing would have been shortened had he accepted that part of the offer relating to sale of all jointly-held real estate. However, other matters Lisa raised in her motions (including the non-depletion of assets) would have been left for argument at the motion hearing. Those matters were substantially determined in Kevin’s favour. In addition, as Kevin’s counsel argued, by the date of the offer to settle, substantial time had already been spent on the matrimonial home-related issues. As well, Reid J. had previously denied Lisa’s request (based on urgency) for a hearing prior to a case conference to determine exclusive possession and non-depletion, with costs being reserved to the motion judge. Clearly, Kevin should recover those costs.

[12] In reaching the conclusion that a costs award should be made in Kevin’s favour, I also considered the submissions of Lisa’s counsel relating to Kevin’s conduct soon after separation. While his conduct was ill-considered and inappropriate (as Kevin acknowledged), I also found that Lisa was not financially disadvantaged by his conduct (as Lisa alleged).

[13] While it is open to me to take Kevin’s conduct into account when determining the costs of these motions, I do not agree it justifies denying him costs, let alone awarding costs to Lisa as if she were the successful party. I prefer the general approach taken in Kevin’s costs submissions, that is, to award Kevin partial indemnity costs, with a downward adjustment to account for his response to Lisa’s offer to settle as well as his post-separation conduct.

[14] To determine quantum, I find the time and charges set out in Kevin’s costs outline to be generally reasonable and not out of line with the amount Lisa claimed. In any case, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26. As well, I am guided by the “touchstone considerations” of reasonableness and proportionality when fixing the amount: see Beaver, at para. 12.

[15] In all the circumstances, I fix Kevin’s costs at $10,000, including disbursements and HST, payable by Lisa within 60 days.

The Honourable Mr. Justice R.A. Lococo

Released: January 6, 2021