Court File and Parties
Court File No.: FS-19–12249 Date: 2021-05-28 Ontario Superior Court of Justice
Between: Saeid Sarrafian, Applicant – and – Olena Leanna Leksikova, Respondent
Counsel: Jaret Moldaver, for the Applicant Alla Koren, for the Respondent
Heard: In Writing
Costs Endorsement
P.J. Monahan J.
[1] On April 16, 2021 I granted the Applicant’s motion for an order for exclusive possession of the property municipally known as 31 Montfort Dr., Toronto (the “Montford Property”) together with an order that the Respondent vacate the Property within 60 days. I also dismissed a cross-motion by the Respondent in which she sought an order permitting her to continue to occupy the Montford Property on a temporary basis.
[2] The parties were unable to resolve the issue of costs and have each filed costs submissions.
Background
[3] My April 16, 2021 Endorsement set out in some detail the circumstances that gave rise to the current motions, and I will not repeat that account here.
[4] By way of general summary and overview, the parties were never married. Their relationship commenced in 2008 and they began cohabiting in or around April 2009. They have two children, an 11-year-old son and nine-year-old daughter. During their period of co-habitation, the parties and their two children lived together in the Montfort Property, which is owned exclusively by the Applicant. In August 2019, the Applicant moved out, while the Respondent and their two children continued to live there.
[5] In the fall of 2020, the Applicant brought a motion for exclusive possession of the Montfort Property. Diamond J. declined to grant the Applicant’s motion at that time and permitted the Respondent to continue to occupy the Property, subject to the following two conditions:
a. commencing in December 2020, the Respondent assume responsibility for the monthly payments towards a $400,000 collateral mortgage secured against the Montfort Property; and
b. the Respondent bring a motion for interim spousal support within 90 days of November 26, 2020.
[6] Diamond J. further ruled that if the Respondent failed to satisfy either of these conditions, the Applicant could renew his motion for exclusive possession. Diamond J. also reserved the costs of the motions argued before him to the judge presiding over the return of the Applicant’s motion for exclusive possession.
[7] The Respondent failed to satisfy either of the conditions and the Applicant’s renewed motion for exclusive possession of the Montfort Property came before me in April 2021. The Respondent cross-moved to have the two conditions identified by Diamond J. set aside or, alternatively, for an order that she should be permitted to continue to occupy the Property because she had been prevented from satisfying these conditions as a result of the conduct of the Applicant.
April 16, 2021 Endorsement
[8] In my Endorsement, I declined to set aside the conditions set by Diamond J. and found that the Respondent had failed to satisfy either condition. I further found that her default in this regard resulted from her own decisions and actions, as opposed to the conduct of the Applicant. In fact, the collateral or second mortgage on the Montfort Property had gone into default because the Applicant had ceased making payments on the mortgage, and the mortgagee was in the process of obtaining an order for exclusive possession of the Montfort Property. The Applicant was not proposing to make any payments towards the carrying costs of the Montfort Property. In these circumstances, her claim for continued possession had no merit, while the Applicant’s claim for exclusive possession was compelling. I therefore granted the Applicant’s motion for exclusive possession and dismissed the Respondent’s cross-motion.
Legal Framework Governing Costs Awards in Family Law Proceedings
[9] It is well established that modern family cost rules are designed to foster three fundamental purposes: (i) to partially indemnify successful litigants; (ii) to encourage settlement; and (iii) to discourage and sanction inappropriate behaviour by litigants.[^1] Moreover, as the Court of Appeal emphasized in Mattina v. Mattina,[^2] a fourth fundamental purpose of costs awards in family law proceedings is to ensure that cases are dealt with justly, in accordance with Rule 2(2) of the Family Law Rules.
[10] Rule 24 (1) creates a presumption of costs in favour of the successful party.[^3] While consideration of success is the starting point in determining costs, this presumption does not automatically require that the successful party be awarded his or her costs.[^4] Entitlement to costs is subject to a variety of factors, including whether one or both parties have behaved unreasonably,[^5] whether there has been bad faith conduct,[^6] and the nature of any offers to settle made by either party.[^7]
[11] In determining the appropriate quantum of costs, Rule 24 (12) sets out the relevant considerations. It provides as follows:
(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,
(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] While Rule 24 (12) sets out the relevant considerations, the key principles governing awards of costs in family law proceedings are proportionality and reasonableness. As Nordheimer J.A. stated in Beaver v. Hill,[^8] “[p]roportionality is a core principle that not only governs the conduct of proceedings generally, but is specifically applicable to fixing costs in family law matters.” This conclusion flows directly from the fundamental Boucher principle, applied by Ontario courts on innumerable occasions, that costs awards should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties.”[^9]
[13] There is no presumption that a successful party in a family law matter should receive costs that “generally approach full recovery”.[^10] However, the Rules do provide for an entitlement to full recovery of costs in specific circumstances, such as bad faith under Rule 24 (8), or besting an offer to settle under Rule 18 (14). That said, “full recovery” of costs does not necessarily equate to the amount legal counsel has billed the successful client, since the quantum of costs must always meet the test of proportionality and reasonableness in light of the importance and complexity of the issues at stake in the litigation.
Relevant Factors in Determining Costs in this Case
a. The Applicant was the Successful Party
[14] In some instances, the identification of the successful party on a motion is unclear or in some doubt. That is not the case here as the Applicant was clearly the successful party. His motion for exclusive possession of the Montfort Property was granted and the Respondent’s cross-motion was dismissed. The only issue on which the Applicant was not entirely successful was, whereas he had been seeking an order for exclusive possession by May 15, I granted the Respondent an additional 30 days before she and the children would be required to vacate the Property. But the key issue on the motion was whether the Applicant should be granted exclusive possession of the Property at all, as opposed to on a particular date, and on this issue the Applicant was successful.
b. The Applicant Matched the Key Terms of his Offers to Settle while the Respondent Failed to Make Any Offers
[15] The Applicant made two Offers to Settle, the first on November 6, 2020 (the “First Offer”) and the second on March 31, 2021 (the “Second Offer”. The Respondent did not make any Offers to Settle.
[16] In the First Offer, the Applicant proposed that the Respondent vacate the Property within 60 days. He also offered to make payments totaling $20,000 to enable the Respondent to find suitable alternate accommodation, and as spousal support. These terms were identical to those ordered in my April 16, 2021 Endorsement. The only term of the First Offer that was not incorporated in my Endorsement was one whereby the Respondent would not have been permitted to remove any household contents from the Montford Property. In her reply costs submissions, the Respondent argues that the term of the First Offer relating to household contents would have required her to leave the residence “with only the clothes on her back”.
[17] I note that the issue of household contents was not discussed in any detail in the oral argument on these motions. If this aspect of the First Offer was of particular concern at the time the Offer was made, it would have been open to the Respondent to make a counter-offer removing or modifying this particular condition in the First Offer. I regard the issue of household contents to be a subsidiary one. Any differences on this matter certainly did not require contested motions on two separate court days.
[18] In the Applicant’s Second Offer, the Applicant proposed that the Respondent vacate the Property by May 15, 2021. Upon vacating the Property, the Respondent would not be permitted to remove chattels or personal property owned by the Applicant. The Applicant also offered to make payments of $10,000 towards the Respondent’s rental accommodation, with such payments being made directly to the Respondent’s arms-length landlord.
[19] The Second Offer modified the term relating to the removal of household contents, by requiring the Respondent to leave behind only property belonging to the Applicant (as opposed to all household contents.) It was thus more favourable to the Respondent. But in her responding costs submissions, the Respondent takes issue with the Applicant’s proposal that he make the $10,000 payments directly to the Respondent’s new landlord, arguing that this reflected a desire on the Applicant’s part to “scrutinize the identity of her landlord, not to mention allow himself to interfere in her plans.”
[20] I see no merit in the Respondent’s objections. The condition proposed by the Applicant was reasonable, on the basis that he wished to ensure that the monies he was proposing to advance were in fact paid to the landlord pursuant to a valid lease, rather than used for some other purpose. The Respondent has provided no evidence to support her claim that the Applicant’s real purpose was to “scrutinize the identity of the landlord” or to interfere with her plans. In any event, she once again failed to make any sort of counter-offer or proposal to address any concerns she may have had at the time regarding this aspect of the Second Offer.
[21] Offers to Settle are an important aspect of family law litigation, as evidenced by the fact that the court is specifically directed to consider such Offers in assessing costs. Parties are expected to make offers since these have been found to facilitate settlement, thereby saving the parties time and money and reducing the demands on scarce court resources.
[22] In this case, the Applicant made two Offers which were both reasonable and, in their key terms, reflected what was ultimately ordered by the court. The Respondent, on the other hand, made no offers, nor is there any evidence that she made any efforts towards resolution. In her costs submissions, she offers little more than a critique of subsidiary aspects of the Applicant’s offers in an effort to justify her refusal to meaningfully engage with them.
c. The Applicant behaved reasonably while the Respondent did not
[23] As the above discussion of the Offers to Settle makes plain, the Applicant attempted in good faith to resolve the issues in dispute, thereby making the motions unnecessary. In my view, he behaved reasonably, particularly as he offered to make substantial payments to the Respondent to facilitate her relocation to another residence.
[24] The Respondent, on the other hand, behaved unreasonably throughout the litigation. The Respondent caused the collateral mortgage on the Montfort Property to go into default by her unilateral decision in October 2019 to cease making payments on that mortgage. This mortgage was her responsibility, since it was been issued in order to facilitate her purchase of another property on Burncrest Drive. I note that throughout the relevant period the Respondent continued to collect $2900 per month in rent from tenants on the Burncrest property.
[25] The Respondent claims that she was unaware until December 2020 that the collateral mortgage was in default, since she believed the Applicant was making the mortgage payments on her behalf. The parties were not subject to cross-examination on their affidavits, and thus I am not in a position to make a finding as to whether or when the Respondent was actually unaware that the collateral mortgage was in default. I would simply observe that she has offered no reasonable basis for her belief that the Applicant had assumed the responsibility to make payments on the collateral mortgage on her behalf.
[26] The only evidence that was offered in this regard on the motion is a November 2019 email in which the Applicant advises the Respondent that he had made the October 2019 mortgage payment on her behalf. The Respondent indicated that he would be claiming reimbursement for this and any other payments he made to service the mortgage. However he does not commit to making any such payments. If the Respondent somehow interpreted this email as relieving her from her responsibility to make mortgage payments on the collateral mortgage, she should have at the very least clarified the matter with the Applicant. Moreover the Respondent has failed to offer any explanation as to who she believed was making payments on the first mortgage as well as the property taxes on the Burncrest Drive property, which calls into question the credibility of her claims that she was unaware of the default on the second, collateral mortgage.
[27] In short, even assuming that the Respondent was not actually aware of the status of the mortgages and property taxes for which she was responsible, she was at the very least willfully blind as to the matter.
[28] In any event, by the time the motions came before me in April 2021, the Respondent was fully aware of the fact that the collateral mortgage was in default and that the mortgagees were taking steps to seize the Montfort Property. She did not propose to do anything to stave off the inevitable order for possession, and merely insisted that she remain in possession until the sheriff arrived to evict her and the parties’ children. By so doing she was frustrating the good-faith desire of the Applicant to refinance the property, reimburse the mortgagees for their costs, and attempt to salvage the remaining equity in the property. This continued the pattern of unreasonable behavior that had characterized the Respondent’s approach throughout the litigation.
[29] Taking into account all the above considerations in light of the purposes of costs determinations in family law litigation, in my view the Applicant is entitled to his costs on a “full recovery” basis. That said, “full recovery” costs does not necessarily equate to the fees a lawyer bills to the successful client. Considerations of reasonableness and proportionality remain relevant, so that the costs award must still reflect “the total reasonable and proportional amount the court determines the party should have spent in dealing with the case.”[^11] It therefore remains necessary to consider the proportionality and reasonableness of the actual costs claimed by the Applicant.
Determining a Reasonable and Proportionate Costs Awards in this Case
[30] Since the costs from the November 2020 motion before Diamond J. were reserved to this motion, the Applicant is seeking costs incurred in relation to both the November 2020 and April 2021 motions.
[31] The Applicant’s Bill of Costs for the November 2020 motion indicate that two lawyers worked on the matter, with the more senior lawyer billing 40 hours at a rate of $310 per hour and a more junior lawyer billing 10 hours at $185 per hour. This resulted in a total fee, inclusive of HST, of $16,331.89.
[32] The Applicant retained different counsel for the April 2021 motion. The new counsel billed at significantly higher hourly rates but spent less time overall, with the more senior counsel (who argued the motion) billing at $675 per hour for five hours of work, and the more junior counsel billing at $525 per hour for 26 hours of work. Total fees for the April 2021 motion, inclusive of HST, were $19,533.18.
[33] Taking into account disbursements of approximately $450, the Applicant’s total fees and disbursements for both motions were $36,319.13.
[34] The Respondent did not submit a Bill of Costs. Nevertheless she argues that the fees incurred on the April 2021 motion were excessive since in her view it was not necessary to have two lawyers work on the file. She asks that the fees charged by the more senior lawyer, apart from his attendance at the oral argument, be disallowed. The Respondent also questions the Applicant’s decision to retain new counsel for the second motion. She submits that the only reason the Applicant changed counsel was because his earlier counsel had misled Diamond J. as to whether the Applicant had been making the mortgage payments on the collateral mortgage. She argues that the Applicant opted to change counsel and increase his costs only because his former counsel was privy to the misrepresentations he had made the court.
[35] I have no evidence before me as to what representations were made by counsel before Diamond J. In any event, counsel who were retained to argue the April 2021 motion spent less time overall than did counsel who argued the November 2020 motion, and the total fees charged on the two motions were similar. I also note that although two lawyers worked on the April 2021 motion on behalf of the Applicant, the vast majority of the preparatory work was undertaken by the more junior counsel. Of the five hours spent on the matter by the senior counsel, two of those hours were taken up with the argument of the motion itself. As such, the more senior counsel spent only three hours on the matter prior to the actual argument. This allocation of resources seems reasonable and cost-effective since it involves the bulk of the work being done by less expensive counsel.
[36] I also observe that the Respondent has not submitted her own Bill of Costs. This makes it difficult to attach much if any weight to her claim that the Applicant’s Bill of Costs are excessive. Moreover, I would point out that the Respondent filed a cross motion just days before the scheduled argument of the Applicant’s motion, outside of the timelines for delivering responding materials. This necessitated the Applicant preparing an additional affidavit responding to the issues raised in the Applicant’s late-filed cross-motion. Having increased the costs incurred by the Applicant in order to successfully respond to the Respondent’s cross-motion, the Respondent can hardly now claim that the Applicant’s costs were excessive.
[37] In light of the range, complexity and importance of the issues raised, and the fact motions were argued on two separate days, I find the time spent and the costs incurred by the Applicant to be reasonable and proportionate. As noted above, the Applicant is entitled to his costs on a “full recovery” basis, which I assess to be 90% of the total costs claimed.
[38] The Respondent shall therefore pay the Applicant costs in the amount of $32,650.00 within 30 days.
P. J. Monahan J.
Released: May 28, 2021
[^1]: Serra v. Serra, 2009 ONCA 395 at paragraph 8. [^2]: 2018 ONCA 867 ("Mattina") at paragraph 10. [^3]: Berta v. Berta, 2015 ONCA 918 at paragraph 94. [^4]: Mattina at paragraph 13. [^5]: Rule 24 (4). [^6]: Rule 24 (8). [^7]: Rule 18 (14) & (16). [^8]: 2018 ONCA 840 at paragraphs 12 and 19. [^9]: Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O. R. (3rd) 291 (Ont. C.A.) at paragraph 24. [^10]: Beaver v. Hill, at paragraph 13. [^11]: Arthur v Arthur, 2019 ONSC 938 at para. 40.