Superior Court of Justice - Ontario
COURT FILE NO.: FS-20-16582
DATE: 20210413
RE: Heather Liddell-MacInnis, Applicant
AND:
Joseph Gavin MacInnis, Respondent
BEFORE: M. Kraft, J.
COUNSEL: Catherine Hibberd, for the Applicant
Gary S. Joseph and Stephen Kirby, for the Respondent
HEARD: In writing
COSTS ENDORSEMENT
[1] This is the costs endorsement in respect of a temporary child and spousal support order I made on March 9, 2021, which set out as follows:
a. For the period March 1, 2021 to September 1, 2021, the husband is to pay temporary child support for two of the parties’ children, in the sum of $5,077 a month, based on an imputed income of $400,000, plus 74.6% of the children’s s.7 expenses;
b. For the period March 1, 2021 to September 1, 2021, the husband is to pay temporary spousal support in the sum of $8,452 a month, being the mid-point between the mid-range and high range of spousal support of the Spousal Support Advisory Guidelines;
c. Commencing September 1, 2021 until further court order, the husband is to pay temporary child support for two of the parties’ children in the summer months only, in the sum of $1,692 a month, annualized, based on an imputed income of $400,000, plus 64,5% of the children’s s.7 expenses;
d. Commencing September 1, 2021 until further court order, the husband is to pay temporary spousal support in the sum of $11,828 a month;
e. Commencing March 1, 2021, the parties are to be jointly responsible for the monthly mortgage and related expenses, including house insurance and property taxes, subject to reapportionment;
f. The temporary child and spousal support orders are without prejudice to either party seeking a higher or lower amount at trial, retroactive to the date of the order;
g. The wife’s claim to retroactive child and spousal support for the period April 1, 2020 to the date of the order, is to be adjourned to the trial judge; and
h. The husband is to maintain the wife as the irrevocable beneficiary of his life insurance policy with a face value of $500,000 and maintain the policy in good standing until further court order.
[2] The wife seeks costs on a substantial indemnity basis for her legal fees in connection with her motion for temporary child and spousal support, heard by the Court on March 4, 2021; December 15, 2020 and December 16, 2020, in the total sum of $38,778.78, inclusive of disbursements and HST. Alternatively, she seeks costs on a partial indemnity basis in the sum of $29,846.12, inclusive. The wife’s motion was initially scheduled to proceed on December 15, 2020, on which date the husband sought an adjournment. Justice Boucher’s Endorsement set out that any prejudice to the wife resulting from the delay in requesting the adjournment and granting of the request was to be addressed by a costs order and an interim interim without prejudice order. The wife’s motion was adjourned to March 4, 2021, and the costs from the appearances on December 15th and 16th, 2020, were to be addressed by the judge hearing the motion.
[3] The husband submits that any costs ordered ought to be deferred to trial and off-set against the equalization payment that is owed to him by the wife, pursuant to s.111(2) of the Courts of Justice Act. The husband further submits that he does not have the funds to pay the costs sought by the wife and has limited access to credit since the matrimonial home is in the wife’s name. Alternatively, the husband submits that if costs awarded in the wife’s favour, they ought not to be more than the partial indemnity costs that he sets out in his Bill of Costs, in the sum of $10,343.57 since the wife’s claim for costs are disproportionate to the issues addressed on the motion.
[4] In my view the wife was largely successful on the temporary child and spousal support issues decided at the motion. She is, therefore, presumptively, entitled to costs pursuant to Rule 24 of the Family Law Rules, O. Reg. 114/99.
Legislative framework
[5] Modern costs rules are designed to foster four fundamental purposes (1) to partially indemnify successful litigants; (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under Rule 2 (2) of the Family Law Rules: Mattina v. Mattina, 2018 ONCA 867.
[6] Rule 24(1) of the Family Law Rules creates a presumption of costs in favour of the successful party, subject to the factors set out in r. 24: Beaver, at para. 10.
[7] The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840, at para. 12. In Boucher v. Public Accountants Council (Ontario), 2004 14579, at paras. 28-29, 37, the court held that costs must be fair and reasonable, and consistent with the reasonable expectations of the parties.
[8] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. By r. 24(10)(a) of the Family Law Rules, O. Reg. 114/99 (FLRs), the court is directed to make a decision on the costs of a step in the case promptly after dealing with the step, in a summary manner.
[9] The factors to consider in setting the amount of costs are listed in r. 24(12). The court must consider the reasonableness and proportionality of a number of factors as they relate to the importance and complexity of the issues. These factors include each party’s behaviour, the time spent by each party, any written offers to settle, including those that do not meet the requirements of r. 18, any legal fees and any other expenses, and any other relevant matter. In particular, an award of costs is subject to: the factors listed in Rule 24(12), Rule 24(4) (unreasonable conduct of a successful party), Rule 24(8)(bad faith), Rule 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: Berta v. Berta, 2015 ONCA 918 at para. 94.
[10] There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. Rather, full recovery is only warranted in certain circumstances, such as bad faith under r. 24(8), or beating an offer to settle under r. 18(14): Beaver, para. 13.
[11] I have considered the factors set out in Rule 24 (12) of the Family Law Rules which reads as follows:
24(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
[12] Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in clause 24(12)(a) (1) above). It reads as follows:
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.
Who was successful on the motion?
[13] The wife submits she is entitled to costs because she was considerably more successful than the husband at her motion for temporary child and spousal support and in obtaining an order that she be named the irrevocable beneficiary of the husband’s life insurance policy. The husband does not disagree that the wife was successful on the motion. Instead, he claims that costs ought to be determined at trial; offset against monies that are owing to him as an equalization payment by the wife; and/or ordered in a lower sum that being claimed by the wife.
[14] Additionally, the wife made an Offer to Settle, dated December 9, 2020. She submits that the order of Boucher, J., dated December 15, 2020 (“Boucher order”), and my order, dated March 4, 2021 (“Kraft order”), were as favourable as or more favourable than her Offer to settle, which contributes to her success.
[15] There are two schools of thought regarding the role of offers to settle in the determination of success under r. 24. On the one hand, in Lawson v. Lawson, 2008 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.), Justice J. Wilma Scott wrote that any determination of success "...must take into account how that order compares to any settlement offers made": at para. 7. In Osmar v. Osmar, 2000 20380 (ON SC), [2000] O.J. No. 2504 (S.C.J.), at para. 7, Aston J. was even more direct, in stating that:
“Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.”
[16] On the other hand, in Jackson v. Mayerle, 2016 ONSC 1556, Pazaratz J. considered offers to settle separately from the issue of relative success. Similarly, Chappel J.'s analysis of divided success in Thompson v. Drummond, 2018 ONSC 4762 (, did not consider offers to settle. Rather, elsewhere in her decision, she describes offers as "[a]nother important consideration in determining both entitlement to and the quantum of costs."
[17] In Lazare v Heitner, 2018 ONSC 4861, McGee J. clearly planted her flag on the side of the relief sought in the case rather than any offer. She wrote at para. 16:
A comparison of what was sought in the litigation, rather than within the Offers must be the primary Rule 24(6) (divided success) analysis if I am to give effect to the purposes of costs award: to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants. To do otherwise is to encourage all in, or all out litigation; or in other words, the all too familiar "accept my terms or I'll fight you on everything."
[18] In Spadacini-Kelava v. Kelava, 2021 ONSC 2490, Kurz J. found that while there are merits to each approach taken by McGee, J. Pazaratz, J. and Chappel, J., offers to settle are to considered to determine reasonableness and proportionality and not success. He concluded as follows:
“In conclusion on the place of offers to settle in the determination of success, the FLR's costs rules offer a number of routes to the determination of costs. One of them is through favourable offers to settle and another is through success. The scheme under r. 18 compares the ultimate order to the offers that precede it, seen through the lens of favourability to the offeror. On the other hand, r. 24(1), (4) and (6) looks to success by comparing the result to the relief that each party sought. Where r. 24 looks to offers, it does so only in order to determine reasonableness and proportionality, not relative success. Thus, offers to settle are not a factor in the determination of success in a proceeding.” (at paragraph [72]).
[19] I agree with the conclusions of Kurz, J. Success in the case at bar can be determined by reviewing the relief sought by the wife in her Notice of Motion and comparing it to both the Boucher order and the Kraft order, summarized as follows:
a. The wife sought child support for the three children of the marriage, in the sum of $7,078 a month, based on an income attributed to the husband in the sum of $450,000, effective April 1, 2020. Boucher ordered the husband to pay child support for one child, in the sum of $3,178, based on an attributed income of $411,000 to the husband. I ordered the husband to pay child support in the sum of $5,077 a month for two children, from March 1, 2021 to September 1, 2021, based on an income attributed to the husband in the sum of $400,000. The wife was not successful in obtaining child support in the quantum she sought, for the number of children, nor in attributing the husband with an income of $450,000 as she sought.
b. The wife sought spousal support in the sum of $9,556 a month (high range of the SSAGs), effective from April 1, 2021, with spousal support to be indexed annually. Boucher, J. ordered the husband to pay spousal support in the sum of $10,786 (mid-range of the SSAGs). The wife was successful on the Boucher order. I ordered the husband to pay spousal support in the sum of $8,452 from March 1, 2021 to September 1, 2021. Commencing September 1, 2021, I ordered the husband to pay spousal support in the sum of $11,828 a month. In this regard, the wife was considerably successful, except for the first six-month period (March to September 2021), on the quantum of spousal support;
c. The wife sought an order requiring the husband to pay his proportionate share of the children’s s.7 expenses. I made the same order. The wife was successful in this regard.
d. The wife sought an order that the husband maintain her and the children as beneficiaries of his extended, health, medical and dental plan. Both Boucher order and Kraft order were silent as to this issue;
e. The wife sought an order that the husband name her as the irrevocably beneficiary of his life insurance policy with a face value of not less than $500,000 and that the policy be maintained in good standing until further order of the court. Both the Boucher order and Kraft order included this term. The wife was successful in this regard;
f. The wife did not seek an order regarding the sharing of the matrimonial home expenses. Both the Boucher order and the Kraft order obliged both parties to equally share the mortgage expenses, house insurance and property taxes related to the matrimonial home. This issue was addressed in Offers to Settle.
[20] It appears, therefore, that the wife was 100% successful on the issue of the parties’ sharing the children’s s.7 expenses proportionately and life insurance. The wife was considerably successful on the issue of spousal support, except for a brief six-month period. In terms of child support, the wife was not successful. While she obtained an order for child support from the husband, the quantum of child support in both the Boucher order and Kraft order was less that what the wife sought; the orders made were for less children than the number of children she sought in her notice of motion; and were based on attributed incomes for the husband is amounts less than what she sought in her notice of motion. Finally, when the Boucher order and Kraft order are considered in terms of the husband’s obligation to contribute 50% to the matrimonial home expenses, along with the child and spousal support orders made, the wife was, in my view, considerably successful, overall, on the issues to be determined at the motion, thereby entitling her to costs.
Factors to be considered
[21] Again, rule 24(12) of the FLRs lists the factors the court should consider when quantifying costs.
Importance, complexity, and difficulty
[22] The motion was of significant importance to both parties but the issues were not overly complex or difficult.
Unreasonable Conduct or Bad Faith
[23] Rule 24(4) of the FLRs explicitly authorizes the use of costs orders to express the court’s disapproval of a litigant’s unreasonable conduct. It provides:
24.(4) Despite sub-rule (1) [which provides that a successful party is presumed to be entitled to the costs of a motion], 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.
[24] In determining reasonableness, Rule 24(5) of the FLRs, sets out what ought to be considered and is referred to above in paragraph [12].
[25] The wife claims that the husband’s tactics on the motion made the process more expensive and time consuming. In particular, the wife submits that the husband’s conduct on the motion was unreasonable and amounted to bad faith, causing her and the children emotional and financial harm, for the following reasons:
a. He failed to provide 3rd party evidence to support his assertions that his income would be lower than what was provided in the BDO Offer Letter from his employer. He submitted that his income for support purposes was $226,800 and the Court found his income for support purposes to be $400,000;
b. He unilaterally withdrew all of the remaining funds in the parties’ overdraft facility on their joint account in the sum of $242,509.90 (maxing out the total credit available on the account at that time) after the December 15, 2021 hearing before Boucher, J., necessitating a second appearance before the court on December 16, 2020. The husband justified his action because the wife had accessed the overdraft account to fund the expenses of the children and herself.
c. He caused the vehicle being driven by the parties’ daughter Ceilidh to be seized by the bailiff from the daughter’s place of employment on December 17, 2020, when the wife was clear that she was prepared to return the vehicle and the husband’s actions in this regard was unnecessary and embarrassing for the daughter; and
d. He refused to pay child and spousal support in any quantum requiring her to bring the motion.
[26] There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W. 2015 ONCJ 94 (OCJ).
[27] A bad faith determination impacts on costs only with respect to the potion of the case where bad faith was demonstrated. An order of full indemnity costs is not appropriate where a party’s behaviour did not meet the standard of bad faith or even unreasonableness in other areas of the motion. J.S. v. M.M., [2016] O.J. No. 2404 (Ont. S.C.J.)
[28] The husband’s inability to provide 3rd party evidence to support his assertion that he would not receive his bonus or discretionary income as set out in the BDO Offer Letter was explained by him to be tied to the timing of the motion and the fact that the BDO Board had not yet approved the bonuses by the time the motion was heard by the court. Accordingly, this lack of information does not amount to bad faith on the part of the husband, since it was not intentional.
[29] The husband’s withdrawal of the balance of the funds in the parties’ overdraft facility was intentional on his part. The fact that the husband voluntarily restored the line of credit when the wife discovered his unilateral action by returning the sum of $234,820.54 (and retaining $15,658.01) does not, in my view, take away the bad faith nature of this act. While it was a smart decision for the husband to return the funds to the joint account prior to the parties’ return to Court, this does not, in my view, detract from the fact that the husband engaged in self-help just after he was ordered to pay temporary “without prejudice” child and spousal support.
[30] The husband’s conduct in having the Lexus vehicle seized by the bailiff from the daughter’s place of employment on December 17, 2020, was an intentional decision he made. He could have arranged to seize the vehicle from the parties’ home or attempted to reach an agreement with the wife about the timing of the return of the vehicle. The wife had agreed to return the Lexus vehicle to the dealership on December 28, 2020. The wife deposed that her lawyer contacted the husband’s counsel in the morning of December 17, 2020 advising that the husband could retrieve the Lexus from the dealership on December 28, 2020. Notwithstanding this, the husband arranged for a uniformed bailiff to attend at the daughter’s place of work to present her with a warrant for the Lexus and seize the car. The daughter was instructed to remove her personal belongings from the car and left in the parking lot with bags of groceries in front of work colleagues. She was embarrassed and distressed by this, all of which was avoidable and unnecessary.
[31] Based on the above, I find that a) the husband’s withdrawal of the balance of the funds found in the parties’ joint account and overdraft facility after the initial return date of the motion before Boucher, J. on December 15, 2021, and b) the husband’s seizure of the vehicle being driven by the parties’ daughter at her place of employment amounted to bad faith behavior. The husband claims he withdrew the funds from the overdraft facility because the wife had used the overdraft facility to fund expenses for herself and the children. The husband was aware that he was withdrawing the funds from the joint account unilaterally. He did so after Boucher, J. made an order that he pay the wife child and spousal support. He clearly understood that it was wrong for him to have withdrawn the funds or he would not have voluntarily returned the funds to the joint account immediately upon the wife’s discovery of his withdrawal. In terms of the seizure of the Lexus, the husband claims he needed to have the vehicle seized by the sheriff because it was not affordable for the car to be kept. Again, the seizure of this car took place on December 17, 2020, the date after Boucher, J. released her Endorsement. The husband was aware from the wife’s Offer to Settle, dated December 9, 2020, and from the wife’s counsel, that she was agreeable to the return of the vehicle. Instead of arranging for the return of the vehicle through counsel, the husband chose to have the vehicle seized at the daughter’s place of employment by the bailiff. He knew or ought to have known that the seizure of the vehicle in this manner would have caused the parties’ daughter upset and embarrassment.
[32] I make no finding of bad faith or even unreasonable behavior in relation to the balance of the husband’s approach to the motion. I find that the wife acted reasonably throughout.
Written Offers to Settle
[33] On December 9, 2020, the wife made a Rule 18 Offer to Settle the issues on the motion. The offer did not expire and was never withdrawn. The husband did not accept the Offer. The husband made an Offer to Settle on March 3, 2021. His offer was not severable and it expired on the hearing of the motion. The wife did not accept the husband’s Offer. The below chart identifies which party obtained as favourable or more favourable results in the Boucher order and the Kraft order, in comparison with his/her Offers:
Issue
Wife’s December 9th Offer
Husband’s March 3rd Offer
Boucher, J. order, dated December 16, 2020 “without prejudice” order pending return of motion
Kraft, J. order dated March 9, 2021
Successful Party in relation to Offer
Temporary child Support
$6,521 a month for 3 children commencing December 1, 2020, based on an imputed income for the H of $450,000
$1,852 a month for 1 child commencing January 1, 2021, based on an income for H of $226,800
$3,178 a month for 1 child commencing January 1, 2021, based on an income for H of $411,000
$5,077 a month for 2 children, commencing March 1, 2020 to Sept. 1, 2021, based on an income for H of $400,000 f Commencing September 1, 2021, $1,692 a month for 2 children in the summer months only, annualized based on an income of $400,000 for the H
Divided success.
Temporary spousal support
$8,000 a month commencing December 1, 2020. Spousal support to be indexed annually
$5,267 a month based on an income of $226,800 a year for Husband and $0 for Wife and the low-end of the SSAG range. Husband to share any bonus he receives from BDO from March 1, 2021 onward such that the W receives the net amount that she would have received if the income was known and child and spousal support orders were made
$10,786 a month being the mid-range of the SSAGs, based on an income of $411,000 for the H and $0 for the W.
$8,452 a month from March 1, 2021 to and including Sept. 1, 2021, being the mid-point between the mid-range and high-range of the SSAGS and an income of $400,000 for H. Starting September 1, 2021, spousal support of $11,828 a month.
Wife is the successful party as order is more favourable than her Offer.
Matrimonial Home expenses
Nothing in Offer
Wife to be solely responsible for the carrying costs of the matrimonial home
Parties to be jointly responsible for monthly mortgage and related expenses including house insurance, property taxes and mortgage, subject to reapportionment
Parties to jointly share the mortgage, house insurance, and property taxes, subject to reapportionment.
Neither party is successful.
Retroactive child and spousal support for the period of April 1, 2020 to the date of the Order
To be dealt with on further motion or at trial
To be dismissed on a without prejudice basis
Silent
To be dealt with a trial
Wife is successful as order is as favourable as her offer.
s.7 expenses
To be paid proportionally by the parties, including William’s hockey expenses (when resumed), training expenses, boxing expenses (when resumed), children’s uninsured medical and dental expenses, Maggie’s dental implants and wisdom teeth, Maggie’s rent while she is at University and the children’s vehicle expenses
To be dismissed on a without prejudice basis
Silent
From March 1, 2021 to and including August 1, 2021, husband to pay 74.6% of 2/3 of Ceilidh’s tuition; Maggie’s uninsured dental expenses including wisdom teeth; Maggie’s car insurance’ Maggie’s rent at Brock; William’s personal training; William’s uninsured medical and dental expenses. From September 1, 2021, husband to pay 64.5% of the children’s s.7 expenses, same as above, but William’s post-secondary expenses not covered by the family RESP
Wife is successful as order is as favourable as her offer.
Health plan
Wife and children to be maintained as beneficiaries
To be dismissed on a without prejudice basis
Silent
Silent
Neither party is successful
Life Insurance
Wife to be named irrevocable beneficiary of life insurance with the face value of the policy to be $500,000 until further court order
To be dismissed on a without prejudice basis
Wife to be named irrevocable beneficiary of life insurance policy with a face value of $500,000
Wife to be maintained as the irrevocable beneficiary of his life insurance policy with a face value of $500,000 until further order.
Wife is the successful party because the order is as favourable as her offer.
Lexus Vehicle being driven by child
To be returned to the husband
Not referred to in offer
Silent
Silent as car had been seized by husband before the motion
N/A
Joint HSBC Account
Husband to cease using the account and to remove his monthly cell phone bills, car payments for Lexus and Porsche, and car insurance from account
Not referred to in Offer
Boucher, J. asked the parties to return to court on December 16, 2020 and was advised that the husband returned the funds to the joint HSBC account
Silent as the H had returned the funds
N/A
[34] With the exception of child support, where there was divided success, the Kraft order was either as favourable or more favourable than the wife’s Offer to Settle, dated December 9, 2020 on all other issues. Had the husband accepted the wife’s Offer to Settle, all of the legal fees incurred from the middle of December 2020 until March 4th, 2021 could have been avoided. The fact that the wife achieved an order that was as or more favourable that her Offer to Settle is important for the purpose of my setting the amount of costs.
Time properly spent on the case and any legal fees, including the number of lawyers and their rates, etc.
[35] The FLRs do not explicitly provide for costs on either a partial or substantial indemnity scale. Rule 24(8) refers to “costs on a full recovery basis,” where a party has acted in bad faith. In a family law case, the court need not find “special circumstances” before ordering costs on a full recovery basis, see Sordi v. Sordi, 2011 ONCA 665, 283 O.A.C. 287. It has a range of costs awards open to it, from nominal to just short of full recovery.
[36] In Sims-Howarth v Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.), Aston J. held that the two traditional scales of costs are no longer an appropriate way to quantify costs under the FLRs. He stated that, having determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery, having regard to the factors set out in Rule 24, without any assumptions about categories of costs. This characterization of costs under the FLRs was approved by the Ontario Court of Appeal in C.A.M. v D.M., 2003 18880 (ON CA), [2003] O.J. No. 3707 (C.A.), at para. 42.
[37] Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs he may face if he is unsuccessful. In appropriate circumstances, unreasonable behavior will result in a higher award of costs.
[38] Again, the wife seeks costs on a full indemnity basis in the sum of $38,778.78, inclusive of HST and disbursements, based on the fact that the Boucher order and Kraft order were as or more favourable than her offer to settle; the husband’s tactics in responding to the motion were unreasonable; and the husband’s conduct in relation to draining the parties’ joint bank account overdraft facility and the seizure of the Lexus vehicle amount to bad faith, supporting this award of costs. Alternatively, she seeks costs in the sum of $29,846.13, inclusive of HST and disbursements.
[39] Again, the husband seeks that any costs order be deferred to trial or offset against the equalization payment (“EP”) the wife will owe him. The husband estimates that the EP owing to him will be no less than $693,509.90, based on a draft net family property statement prepared by the wife. Alternatively, if the court is inclined to award the wife costs, the husband submits that the amounts set out in the wife’s Bill of Costs are disproportionate to the issues raised; the motion was not a long motion; affidavits were limited to 10 pages as per the Notice to the Profession; the issues were not factually or legally complex; and his full indemnity costs are less than half of the substantial indemnity amount of costs sought by the wife. Further, the husband submits that he does not have the funds to pay costs; he has limited capital which he needs to pay his income taxes and equity contribution to BDO; and he has limited access to credit because the matrimonial home is in the wife’s sole name. Finally, the husband submits that his conduct on the motion did not amount to bad faith. He explains that he was unable to obtain confirmation from BDO about his bonus because of the timing of the motion; the vehicle had to be returned because it was unaffordable; and since the husband returned the funds he unilaterally withdrew from the parties’ joint HSBC account prior to the second attendance before Boucher, J. on December 16, 2021, this cannot be seen to be bad faith on his part.
Lawyer’s rates
[40] The wife’s solicitor, Catherine Hibberd, is a 1996 call, with an hourly rate of $400. Ms. Hibberd’s associate, Cleo Mackenzie-Armes, is a 2018 call and her hourly rate is $150.00. The wife’s solicitor’s fees are reasonable, especially in light of Ms. Hibberd’s seniority.
[41] The husband’s lawyers, Gary Joseph, is a 1978 call and his hourly rate is $725; Stephen P. Kirby is a 2016 call and his hourly rate is $330. A legal assistant, Annamaria Savaglio, assisted on the husband’s case, with an hourly rate of $205; and Keisha Dawkins, a law clerk, has an hourly rate of $205. It is reasonable that the bulk of the fees by the husband’s lawyers were completed by Mr. Kirby, at a lower hourly rate.
Time properly spent on the case
[42] Ms. Hibberd and her associate spent a total 81.2 hours on this matter, 76.9 of which spent by Ms. Hibberd, for the period December 6, 2020 to March 29, 2020.
[43] Mr. Joseph, Mr. Kirby, Ms. Savaglio and Ms. Dawkins, spent a total of 43.1 hours on this matter, 28.9 of which spent by Mr. Kirby, for the period December 9, 2020 to March 29, 2021.
[44] The preparation time charged by the wife’s counsel appears to be somewhat high, given that the parties were dealing with fairly common legal or factual issues. As noted in my reasons, dated March 9, 2021, however, the parties filed extensive materials on the motion. The wife’s filed four affidavits on this motion, along with a financial statement, a Factum and a Supplementary Factum. The husband filed two affidavits, a financial statement and a Factum. It is not surprising therefore, that the wife’s costs are higher than the husband’s given that additional materials on the motion were prepared and filed on her behalf and, given that she had the onus to prove that the two older children remained “child of the marriage” as defined in the Divorce Act, and had to set out the details of the s.7 expenses for all three children, which were extensive. Overall, I find the time spent by the wife’s lawyer to be reasonable and proportionate to the issues argued at the motion, and in line with what the husband’s reasonable expectations ought to have been in terms of the costs he might face, if he was unsuccessful. I accept the record of time set out in the wife’s Bill of Costs.
Ability to Pay
[45] I have considered the husband’s submissions that he does not have the ability to pay a costs award.
[46] A court must consider a party’s ability to pay costs. MacDonald v. Magel (2003) 2003 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.). But while a party’s limited financial circumstances is a factor for the court to consider, it should not be used as a shield against any liability for costs and should only be taken into account regarding the quantum of costs. Snih v. Snih, 2007 20774 (SCJ).
[47] An unsuccessful party’s ability to pay must be assessed in conjunction with the successful party’s ability to absorb legal fees which shouldn’t have arisen in the first place. Sciopino v. Scipioni, 2015 ONSC 5982, at para. [138].
[48] In this case, the husband earns significant income, has savings and savings plans in excess of $200,000; proceeds from the sale of his vehicle of about $20,000; and over $200,000 from the return of his capital from RSM which he received at the end of January 2021, as set out in his sworn financial statement, dated on February 25, 2021. In my view, therefore, he does have ability to pay a costs award.
Set-off
[49] Section 111 of the Courts of Justice Act empowers the Court to order legal set off. To make out a claim for legal set off under s.111 of the Courts of Justice Act, the proceeding must be an action for a payment of a “debt”, and the responding party must have a claim to set off a “debt” owing to him or her from the plaintiff of applicant. If so, those debts may be set off against each other, even if they are of a different nature: M.P.A.N. v. J.N. 2018 ONCJ 769 (O.C.J.).
[50] The husband submits that any costs ordered against him out to be set off against the equalization payment that the wife will owe him. Although the husband provided no case law in support of this, there is judicial authority for setting off costs against child support arrears” Burisch v. Gosal, 2007 ONCA 569 (Ont. C.A.);
[51] In H.P. v. W.P., 2008 ONCJ 615, Justice Spence, held that off-setting a costs award against child support was a fair and just order to make in this case. Spence, J. reviewed case law which showed divided views on the propriety of setting off costs against a support award, but the cases did not offer an in-depth analysis of the issue. Spence, J., stated, “one of the primary goals of rules and, in particular, the costs provisions, is to discourage litigation, to encourage parties to act reasonably, and to ensure that parties are potentially held liable for unreasonable choices that they decide to make.” In this case, the husband seeks to set any costs ordered against an equalization payment, not support. I agree, however, with Justice Spence, costs are meant to encourage litigants to act reasonably and to discourage litigation.
Disbursements
[52] The wife seeks disbursements of $3,291.13, relating to photocopies and legal research which was outsourced. The husband does not seek disbursements. I find the disbursements to be reasonable in the circumstances.
CONCLUSION AND ORDER
[53] In light of the extent of the wife’s success in relation to the issues of the sharing of the children’s s.7 expenses; spousal support; and security for spousal support; the reasonableness and proportionality of the work performed by her counsel; the fact that the husband should have expected to pay costs, if the wife succeeded on the motion; the fact that the wife matched or beat her Offer to Settle, dated December17, 2020, except on the issue of child support; the impact the legal costs will have on the husband; the fact that there was divided success on the issue of child support; the husband’s bad faith in relation to the withdrawing the funds from the parties’ joint overdraft facility and in seizing the vehicle at the daughter’s place of employment; the father’s stated limited ability to pay costs, and the husband’s submission that the costs award be set off against the equalization payment the wife will owe him, the wife shall have her costs which are fixed in the amount of $25,000, inclusive of disbursements and HST, as I believe on all of the factors considered, this sum represents a reasonable and fair contribution to the costs she incurred of the motion.
[54] Accordingly, this Court orders that Joseph Gavin MacInnis shall pay costs of the motion to Heather Liddell-MacInnis in the amount of $25,000, inclusive of fees, disbursements and HST; such that the sum of $15,000 shall be payable by him forthwith; and the sum of $10,000 shall be payable when the issue of the equalization payment has been determined on a final basis, or agreed upon, and the costs may be set-off against any equalization owing by the wife to the husband.
M. Kraft, J.
Date Released: April 13, 2021