COURT FILE NO.: FC-20-1115
DATE: 2021-07-23
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Roberto Santaromita Villa, Applicant
-and-
Melanie Santaromita Villa, Respondent
BEFORE: Justice P MacEachern
COUNSEL: Kevin Kavanagh, for the Applicant
John Guest, for the Respondent
HEARD: By videoconference
ENDORSEMENT ON COSTS OF THE MOTION HEARD JUNE 30, 2021
[1] This proceeding involves a claim for a divorce under the Divorce Act, corollary relief (spousal support) and claims with respect to property under the Family Law Act and Partition Act.
[2] This endorsement determines costs following my decision released on July 6, 2021.
[3] Both parties have provided written submissions on costs.
Applicant's Position
[4] The Applicant seeks costs of $5,337.99. This amount comprises two parts: full recovery of his costs on the motion for partition and sale plus partial indemnity of his costs on the Respondent's cross-motion.
[5] The Applicant seeks full recovery of his costs related to the motion for partition and sale of the matrimonial home, inclusive of H.S.T., of $2,737.99. The Applicant seeks full recovery of these fees under Rule 18(14).
[6] The Applicant seeks partial indemnity costs of $2,600 related to the Respondent's cross-motion, being 70% of his total costs of $3,696.23 incurred on the cross-motion. The Applicant takes the position that he was largely successful on the cross-motion, the Respondent acted unreasonably, he acted reasonably, the Respondent served her material late, and the Respondent failed to comply with the previous disclosure order.
[7] The Applicant seeks that the costs be payable from the Respondent's share of the sale proceeds.
Respondent's Position
[8] The Respondent agrees that the Applicant was the successful party on the sale of the matrimonial home. She acknowledges that it is appropriate for her to pay some costs to the Applicant and agrees to pay these from her share of the sale proceeds. She takes the position that an award of costs fixed at $2,500 would be just.
[9] The Respondent does not take issue with the reasonableness of the Applicant's lawyer's hourly rate. The Respondent also does not take issue with the reasonableness of the total fees incurred by the Applicant, given that she incurred similar fees.
[10] The Respondent argues that the Applicant should not receive costs related to her cross-motion because of the divided success, particularly given the order requiring the Applicant to produce an income report related to her claim for spousal support.
Factors in Determining Costs
[11] 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 (Rule 2(2) of the Family Law Rules)[^1].
[12] Rule 24(12) of the Family Law Rules sets out factors relevant to setting costs and specifically emphasizes "reasonableness and proportionality" in any costs award.
[13] There is a presumption of costs in favour of the successful party. This presumption does not, however, require that the successful party always be entitled to costs[^2]. An award of costs is subject to the factors listed in Rule 24(12), Rule 24(4) pertaining to unreasonable conduct of a successful party, Rule 24(8) pertaining to bad faith, Rule 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party[^3].
[14] Rule 24(12) sets out a list of factors the Court shall consider in determining an appropriate amount of costs:
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.
[15] The Family Law Rules only expressly contemplate full recovery costs in specific circumstances, e.g. where a party has behaved unreasonably, in bad faith or has beat an offer to settle under Rule 18(14).
[16] Rule 18(14) provides that a party is, unless the Court orders otherwise, entitled to costs on a full recovery basis from the date an offer was served if the following conditions are met:
a. If the offer relates to a motion, it is made at least one day before the motion date.
b. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
c. The offer does not expire and is not withdrawn before the hearing starts.
d. The offer is not accepted.
e. The party who made the offer obtains an order that is as favourable as or more favourable than the offer. O. Reg. 114/99, r. 18(14).
[17] Rule 24(4) addresses the situation in which a successful party 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.
[18] Rule 24(5) guides how to evaluate 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.
[19] Where the parties have divided success, the Court may apportion costs as appropriate. (Rule 24(6))
[20] Rule 24(8) discusses the cost consequences for a party who has acted in 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.
Success of the Parties
[21] The parties do not dispute that the Applicant was successful in his motion for partition and sale. The home's sale was the critical issue on this motion, and, I find, gave rise to the Respondent's cross-motion which ultimately was her attempt to delay the sale. She was unsuccessful in doing so.
Offers to Settle
[22] Although the Applicant served an offer that came very close to the disposition of the motion for sale, I do not find that the Applicant's offer qualifies for full recovery cost under Rule 18(14) because of the cost term included in the offer.
[23] To qualify under Rule 18(14), the party who made the offer must obtain an order that is as favourable as or more favourable than the offer. The Applicant did so in all respects except for the cost term of the offer that required the Respondent to pay $1,000 in costs if she accepted the offer before the deadline, plus additional substantial indemnity costs incurred thereafter if accepted after the deadline. The problem is that the Applicant's submissions state that no fees were incurred on the motion for sale until after the deadline passed, which means that the Respondent would have paid $1,000 in costs if she accepted the offer, that this Court is not requested to award. Therefore, I cannot find that the Applicant achieved a result that is as good as or better than his offer.
[24] The result ordered by the Court also differs from the offer in that my order provided for all of the sale proceeds to be paid out, whereas the Applicant provided for the proceeds to be held in trust, except for $10,000 being paid to each party. On this factor, I find that the result achieved was better than the terms of the Applicant's offer.
[25] Although the Applicant is not entitled to full recovery of costs under Rule 18(14), his offer is a relevant consideration under Rule 24(12)(a)(iii). Under this factor, the Applicant's offer demonstrates that he acted reasonably in proposing a resolution and attempting to minimize legal fees. I find that his offer is a factor that warrants a higher award of costs in his favour.
[26] The Respondent also served an offer to settle. Her offer, however, proposed a final resolution of all issues that included significant lump sums related to spousal support and the Applicant's business. The Respondent submits that her offer is a relevant factor to consider under Rule 24(12)(a)(iii) and demonstrates her desire to settle the issues. However, I cannot find on the evidence before me that the Respondent's offer demonstrates that she was acting reasonably to resolve the issues. This is because I am not determining her entitlement to a lump sum spousal support award, nor, as I found in my reasons on the motion, has she put forward an evidentiary basis in support what she says the Applicant's business is worth. Given this, I find that the Respondent's offer is a neutral factor in determining costs.
The Respondent's Behaviour
[27] Rule 24(12)(a)(i) expressly directs the Court to consider the reasonableness and proportionality of each party's behaviour as it relates to the importance and complexity of the issues.
[28] I find that the Applicant acted reasonably on both his motion for sale and in response to the Respondent's cross-motion, particularly given the late service of the Respondent's material and her changing position.
[29] I find that the Respondent did not act reasonably, such that her conduct resulted, unnecessarily, in increased legal fees being incurred by the Applicant. The Respondent's unreasonable conduct included the following:
a. filing an initial affidavit sworn June 22, 2021, wherein the Respondent stated she was not opposing the sale of the matrimonial home, followed by an affidavit sworn a June 24, 2021, served late, in which the Respondent stated that she was opposed to the immediate sale of the home and sought exclusive possession;
b. filing initial motion material seeking an order of spousal support of $1,000 per month, which mirrored what the Applicant had been paying her, and to which he consented, followed by new motion material served two days later (and late), seeking additional support; and
c. despite seeking an order for spousal support, failing to serve her updated financial statement until the day before the motion and failing to provide all of the disclosure ordered by Justice Ryan Bell on January 13, 2021.
[30] The Respondent's unreasonable conduct weighs in favour of a higher cost award to the Applicant.
Other Factors
[31] I have considered that the Respondent was successful in obtaining an order requiring the Applicant to provide an income report. Again, however, the Respondent's conduct was unreasonable, as stated above, which mitigates this factor's weight in reducing the cost award.
[32] I have considered that both parties sought to amend their pleadings and consented to each doing so. I find that the amendment issue does not weigh for or against either party.
[33] The parties incurred similar legal fees, which I find were reasonable and proportional given the importance and complexity of the issues in dispute. I also find that given the Respondent's legal fees, she should have expected that the Applicant was incurring similar fees.
[34] I do not find that either party's conduct qualifies as bad faith within the meaning of Rule 24(8)).
Disposition
[35] Considering these factors, I order the Respondent to pay the Applicant his costs of the motion heard on June 30, 2021, fixed at $4,200, inclusive of tax and disbursements. These costs shall be payable upon the sale of the matrimonial home from the Respondent's share of the net sale proceeds.
[36] This order shall bear post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, C. C.43 ("C.J.A.").
Justice P MacEachern
Date: July 23, 2021
COURT FILE NO.: FC-20-1115
DATE: 2021-07-23
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Roberto Santaromita Villa, Applicant
-and-
Melanie Santaromita Villa, Respondent
BEFORE: Justice P MacEachern
COUNSEL: Kevin Kavanaugh, for the Applicant
John Guest, for the Respondent
ENDORSEMENT
Justice P MacEachern
Released: July 23, 2021
[^1]: Family Law Rules, rule 2(2); Mattina v. Mattina, 2018 ONCA 867 [^2]: M.(C.A.) v. M.(D.), 2003 CanLII 18880 (ON CA), [2003] O.J. No. 3707, at para. 40 [^3]: Berta v. Berta, 2015 ONCA 918 at para. 94