Court File and Parties
COURT FILE NO.: FS-20-17282 DATE: 2021-08-04 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Carly Wilson, Applicant AND: Otis Wilson, Respondent
BEFORE: Kiteley J.
COUNSEL: Natalie Derbyshire, counsel for the Applicant Anthony Macri, counsel for the Respondent
HEARD: In writing
ENDORSEMENT AS TO COSTS
[1] On April 13, 2021, the Applicant brought an urgent motion for an order requiring the Respondent to pay to the Applicant the proceeds of a mortgage advance in partial satisfaction of the equalization payment owing to the Applicant, and related order. On April 14, 2021 I released an endorsement granting some aspects of the motion and directing the parties to make written submissions as to costs. I received the Applicant’s submissions dated May 4, 2021 and the Respondent’s submissions dated May 11, 2021.
[2] On April 15, 2021, I dealt with various motions. The Respondent brought a motion for an order that the children attend in-person schooling. Given that it was mid-April and school re-opening was a matter of conjecture, I observed that the motion was premature. At the request of the Respondent, I adjourned that aspect of his motion and scheduled it to be considered at a case conference on August 4. The Respondent also brought a motion for temporary spousal support and temporary child support while the Applicant brought a motion for a s. 30 assessment and set-off child support. In an endorsement dated May 5, 2021, I made the s. 30 order, dismissed the Respondent’s claim for temporary spousal and child support, dismissed the Applicant’s motion for set-off child support, and directed the parties to make written submissions as to costs. I received the Applicant’s submissions dated May 25, 2021 and the Respondent’s submissions dated May 28, 2021.
Costs with respect to the urgent motion
A. Entitlement
[3] The context in which this motion arose is important.
[4] In documents dated March 23, 2021 that he filed in relation to another motion, the Respondent disclosed that in December 2020, he had obtained a mortgage commitment in the amount of $410,000 secured against title to the former matrimonial home registered in his name. He did not disclose where the funds were located. In a letter dated March 25, 2021, counsel for the Applicant asked for details and disclosure. The Respondent provided a copy of the mortgage commitment but no other documents. In the absence of disclosure, the Applicant launched the motion.
[5] On April 9, 2021, the Applicant served the notice of motion and affidavit sworn April 9, 2021. The Respondent’s affidavit sworn April 13, 2021 was served the morning before the motion was heard. Amongst other things, the Respondent deposed that there was “absolutely no risk” that he would dissipate the money, that when he applied for the mortgage, he advised the lender that he was separated, and he acknowledged that through “inadvertence” he had not disclosed that the balance of the advance, namely $320,000 was in an identified bank account.
[6] The Applicant asked for a preservation order, for an order that the funds be paid to her in partial satisfaction of the equalization payment owing to her and for an order for disclosure.
[7] During submissions, in response to my question, Mr. Macri advised that his client agreed to secure $320,000 of the $380,000 advanced and agreed to disclosure. There was no evidence that the advance was only $380,000 (not the $410,000 that was in the mortgage commitment), but for purposes of resolving that aspect of the motion, I made an order on consent that the Respondent would deposit $320,000 in an account in the names of the lawyers. Because it was an urgent motion and because Mr. Macri indicated that his client would comply with the disclosure requests arising from the mortgage commitment in the Applicant’s Request for Information, I made an order only for specific disclosure by April 27, 2021.
[8] As indicated in paragraph 7 of the endorsement dated April 14, 2021, I held that an adverse inference should be drawn against the Respondent, namely that he was hiding the amount he had received and could not be trusted.
[9] As indicated in paragraph 15 of that endorsement, I held that the Applicant was successful in obtaining what was ultimately a consent order consistent with the relief sought and, pursuant to rule 24(1), the Applicant was presumptively entitled to costs. In paragraph 21 of that endorsement, I indicated that if by April 27, 2021, the parties were unable to agree as to costs, they should make written submissions.
[10] The Applicant was successful in the key aspect of the motion. Pursuant to rule 24(1), she is presumed to be entitled to costs. In this case, the fact that she had what appears to be “divided success” is irrelevant.
B. Amount
[11] The Applicant has provided a bill of costs that reflects partial indemnity costs at $5,125.78, substantial indemnity costs in the amount of $6,308.65 and full recovery costs in the amount of $7,885.82. She asks for full indemnity costs.
[12] In considering the amount of costs, the Applicant took the position that the fact that the order was ultimately on consent does not mitigate an order that the Respondent pay costs. The Applicant also took the position that the Respondent satisfied all three of the criteria of bad faith behaviour as described in S.(C.) v. S.(M.) 2007 ONSC 20279, 2007 O.J. No. 2164 at para. 17.
[13] In his submissions the Respondent took the position that the matter was not complex and that there was no bad faith in that the Respondent had not represented one set of facts with the actual goal of another set of facts that is harmful to the other party and there was no harmful outcome for the Applicant. The Respondent pointed out that neither party had served an offer to settle and he argued that the Applicant proceeded to the most litigious option of an emergency motion rather than arrange a case conference. He noted that the Respondent only learned on Monday April 12 that the urgent motion would be heard on the afternoon of April 13 and he did not have a sufficient opportunity for a fulsome response. The Respondent asserted that the Applicant’s fees were “clearly excessive and inappropriate” particularly in comparison to the amount contained in Mr. Macri’s bill of costs that totalled $2,760. He submitted that there was “never any evidence that the Respondent intended to deprive the Applicant of her equity in the home”.
[14] In S.(C.) v. S.(M.) Perkins J. held as follows:
In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person’s sole or primary intent, but rather only a significant part of the person’s intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.
In construing subrule 24(8), I think there is an implication from the context of the provision that the bad faith must relate to the issues at stake in the case or to the conduct of the case – not behaviour outside the issues in the case or in a separate (even if related) case – in order to justify a costs penalty in the case.
[15] It is the case that the Respondent did voluntarily disclose on March 23, 2021 that he had obtained a mortgage commitment but that does not end the bad faith analysis.
[16] The Respondent obtained the mortgage commitment in December, 2020. The matrimonial home, registered in the name of the Respondent, is the most valuable asset that was subject to an equalization of net family property. Pursuant to rule 13(15), he had a duty to correct the form 13.1 financial statement he had delivered earlier. He did not file an updated form 13.1 or updating affidavit at the time of the mortgage commitment and the advance. He did disclose it on March 23 in the context of his motion for temporary spousal support. But it was three months after the duty to correct arose and only in support of his own motion.
[17] As indicated in paragraph 4 of the endorsement dated April 14, one of the conditions of the mortgage commitment was that a solicitor would provide a statutory declaration confirming the borrower did not owe any support payments or any outstanding division of assets. In December, 2020, the Application and Answer disclosed that there was an outstanding issue of the division of assets. During submissions, Mr. Macri confirmed that he was not the solicitor who had prepared the statutory declaration. From that I infer that the Respondent deliberately went to a different lawyer so as not to reveal what he had done. Furthermore, as indicated in paragraph 7 of his affidavit quoted in paragraph 5 of the endorsement, when he applied for the mortgage, he advised the lender that he was separated and “since title to the home was in my name only, they did not ask any further questions”. From that I infer that he knew that the property was a matrimonial home and that the consent of the Applicant was required. I also note that that is inconsistent with the mortgage commitment in which he is described as “single” and not “separated”.
[18] In paragraph 13 of the endorsement, I held as follows:
In his affidavit, the Respondent took the position that, while he owes a substantial equalization payment, the Applicant will likely be ordered to pay significant amount of spousal support and she will likely be ordered to pay it in a lump sum that will likely be set off against the equalization payment. Mr. Macri agreed that the Applicant’s claim for an equalization of net family property is independent of the Respondent’s claim for spousal support. In this motion, the Respondent cannot rely on the speculation as to what is likely to occur.
[19] In my view, the evidence of the Respondent or the lack of evidence of the Respondent, could lead to a conclusion that the Respondent acted in bad faith in obtaining the mortgage funds and in failing to disclose that for three months. However, a finding of “bad faith” in a motion for temporary orders has a tendency to taint the party indefinitely. That finding ought not to be made unless the evidence was provided by the party with sufficient time to comprehensively respond. In my view, the behaviour of the Respondent was unreasonable although it may ultimately be found to have also constituted bad faith.
[20] I do not agree that the bill of costs shows excessive fees. There was a great deal at stake for the Applicant because, based on the limited information available from the Respondent, he had significantly reduced the equity in the home which would have an impact on her ability to recover what appears to be a substantial equalization payment. Four timekeepers were involved: Ms. Derbyshire (called in 2005), two lawyers called in 2015 and a law clerk. In comparison, the bill of costs provided by the Respondent reflects that only so much work can be done in 24 hours; it does not reflect that the services rendered on behalf of the Applicant were excessive.
[21] On the other hand, the Applicant’s behaviour was reasonable. Immediately upon receiving the information about the mortgage commitment, her counsel asked for disclosure that was not forthcoming. To protect the Applicant’s position in respect of the significant reduction in equity in the matrimonial home, making a request for an urgent motion, which was granted, was reasonable. The fact that the Respondent changed his position during the hearing of the motion and acquiesced in a consent order, serves to reinforce the reasonableness of the Applicant’s position.
[22] Based on success, the unreasonable behaviour of the Respondent and the reasonable behaviour of the Applicant, I am satisfied that the Respondent should pay substantial indemnity costs in the amount of $6,308.65.
Costs with respect to the Respondent’s motion for temporary spousal and child support and Applicant’s motion for a s. 30 assessment and set-off child support
A. Entitlement
[23] The endorsement with respect to these motions is found at 2021 ONSC 3439. The Respondent asked for an order for temporary child support in the amount of $1,215 per month and an order for temporary spousal support in the amount of $1,604 per month. The Applicant brought a cross-motion for set-off child support. The Respondent’s motion for temporary spousal support and child support was dismissed. The Applicant’s cross-motion for set-off child support was dismissed.
[24] In paragraph 78 of the endorsement, I noted that each party had provided a bill of costs but I set a timetable for written submissions taking into account the offers to settle. In paragraph 84, I held that if the parties had not agreed by May 21, 2021 as to the costs of the motions, they were required to make submissions in writing.
[25] The Respondent was not successful on his motion for spousal support. Pursuant to rule 24(1), the Applicant is presumptively entitled to costs. Neither party was successful on his/her child support motion. The key issue in the spousal support motion was whether the Respondent had put forward a prima facie case that he was entitled to spousal support. I concluded that he did not. Part of that entitlement issue was his income. As indicated in paragraph 45 of the endorsement, I concluded that it was not possible to identify a credible and reliable income amount for the Respondent; nor was it possible to make a finding as to the amount of income to impute to him.
[26] The Applicant was successful in resisting the Respondent’s motion for temporary spousal support. The failure of the Respondent to provide a prima facie case as to entitlement, which included his income, informed the dismissal of his motion for child support and the dismissal of her motion for set-off child support. Because the Respondent was not successful in his request for child support, there was no set-off required. In other words, his failure to establish his income caused her success in resisting child support. In any event the key issue was spousal support on which the Applicant was successful. Pursuant to rule 24(1), the Applicant is entitled to costs.
[27] The Applicant was successful on her motion for a s. 30 assessment. Pursuant to rule 24(1), the Applicant is entitled to costs.
B. Amount
[28] The Applicant’s bill of costs reflects partial indemnity costs at $13,593.17, substantial indemnity costs in the amount of $16,730.06 and full recovery costs in the amount of $20,912.57. The Applicant asks for full indemnity costs.
[29] On March 23, 2021 the Respondent made a non-severable offer on the support motion only. On April 13th, the Applicant made a severable offer to settle. I agree that the Applicant’s offer to settle was more favourable than the Respondent’s offer to settle and reflects the reasonableness of the Applicant’s offer Lawson v. Lawson [2008 ONSC 23496](https://www.canlii.org/en/on/onsc/doc/2008/2008canlii23496/2008canlii23496.html), [2008] O.J. No. 1978 at para. [7]]. Pursuant to rule 18(14), unless the court orders otherwise, the Applicant is entitled to costs to the date the offer was served (April 13) and full recovery of costs from and including April 14th to 15th.
[30] On the basis of the findings made in paragraphs 25-34 of the endorsement, the Applicant asks that I find that the Respondent engaged in bad faith conduct by providing inconsistent and questionable income and financial information.
[31] In his written submissions, the Respondent acknowledges that the Applicant was more successful than her offer and for that reason, he concedes that she is entitled to costs. He takes the position that a request for $20,912.57 is neither reasonable nor proportionate. He refers to the endorsement by Boucher J. after hearing the original parenting motions in August 2020 when she ordered that the Applicant pay costs in the amount of $8,000.
[32] The motion with respect to spousal support raised the threshold issue of entitlement. It was not straightforward but not complex. The motion with respect to a s.30 assessment caused the Respondent to file evidence in addition to his own affidavit. There was a great deal at stake in both the motions.
[33] I agree that the costs order made by Boucher J. for $8000 is relevant to the issue of proportionality and reasonable expectations of costs. However, to draw comparisons between the amount she ordered and the amount sought in this motion would require a reference to the nature and volume of the evidence and the legal issues that arose. I note that in her endorsement, Boucher J. wrote that the Respondent asked for costs in the amount of $13,000 on a substantial recovery basis which suggests that costs of that amount were within the Respondent’s reasonable expectations on those motions and are within the Respondent’s reasonable expectations on these motions. I do not see the order for $8,000 as a benchmark. It does establish that motions are costly and consequences are immediate.
[34] In respect of the spousal support motion and child support motion, rule 18(14) applies and I see no reason to “order otherwise” than costs to the date of the offer and full recovery thereafter. In respect of the motion for a s.30 assessment, that was a win/loss scenario and offers are less meaningful. In respect of that motion, the Respondent should be required to pay partial indemnity costs.
[35] The bill of costs is not presented in such a way that I could allocate the services rendered before and after the Applicant’s offer and allocate services amongst issues. Indeed in considering costs in respect of motions for temporary support orders or for a s.30 assessment, the court is not expected to embark upon that level of detail. In my view, this is a case where the court should “ballpark” the costs allocated between support issues on the one hand and assessment issues on the other hand. [Scipione v. Del Sordo (Scipione) 2015 ONSC 5982].
[36] I fix the amount of costs in respect of these motions at $15,000.
Date for payment of costs
[37] In her endorsement dated September 4, 2020, Boucher J. ordered the Applicant to pay costs within 60 days. In the absence of submissions as to the timing of payment of these costs, I consider 60 days reasonable.
ORDER TO GO AS FOLLOWS:
[38] The Respondent shall pay to the Applicant substantial indemnity costs with respect to the urgent motion heard April 13, 2021 in the amount of $6,308.65 inclusive of fees, disbursements and HST.
[39] The Respondent shall pay to the Applicant costs with respect to the motions heard April 15, 2021 in the amount of $15,000.00 inclusive of fees, disbursements and HST.
[40] The Respondent shall pay those costs to the Applicant no later than October 4, 2021.
Kiteley J.
Date: August 4, 2021