Court File and Parties

COURT FILE NO.: 55462/20 DATE: 2021-10-04 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Kimberley Louise Aubin, Applicant AND: Timothy Armin Koerber, Respondent

BEFORE: Justice D.A. Broad

COUNSEL: Emily M. O’Keefe, for the Applicant Filomena Andrade, for the Respondent

COSTS ENDORSEMENT

[1] The parties have been unable to settle the issue of costs in respect of the trial of the first stage of the bifurcated proceeding, respecting the validity and effect of the cohabitation agreement entered into by the parties.

[2] The respondent, as the successful party in respect of the bifurcated trial, seeks costs in an amount close to full indemnity or, at a minimum, on a partial indemnity basis.

[3] The respondent calculates his full indemnity costs in the sum of $27,891.90, comprised of fees in the sum of $24,395, HST on fees in the sum of $3,171.35 and disbursements in the sum of $325.55.

[4] The respondent calculates his partial indemnity costs in the sum of $20,015.80, comprised of fees in the sum of $17,425, HST on fees in the sum of $2,265.25, and disbursements in the sum of $325.55.

[5] The applicant submits that there was divided success on the issues, given that the respondent agreed to pay child support for the applicant’s child from a previous relationship despite the cohabitation agreement which barred this right, and given the fact that the applicant is not prevented from pursuing a claim for spousal support pursuant to subsection 33(4) of the Family Law Act. She submits that the court is entitled to apportion costs by taking into account the divided success.

[6] The applicant also asserts that she acted reasonably throughout the proceedings and that, given that she was essentially deprived of all benefits a spouse is entitled to upon the breakdown of the marriage, being rights that she waived without the benefit of independent legal advice, she was left with virtually no choice but to commence an application seeking to have the cohabitation agreement set aside. The applicant submits that the respondent acted unreasonably in failing to canvass settlement options with her, when the respondent was aware of the precarious financial reality that she has experienced since separation.

[7] Finally, the applicant submits that the court should place substantial weight on her inability to pay any costs award and the effect that a substantial award of costs would have on her ability to obtain financial self-sufficiency. She relies upon jurisprudence which indicates that a party’s inability to pay costs order should be considered pursuant to rule 24(12) of the Family Law Rules. The applicant submits that each party should bear his/her own costs for the trial, or in the alternative, the applicant’s costs should be set at $5000 payable in monthly instalments.

[8] In reply, the respondent submits that success at trial was not divided. No time at trial was spent arguing child support or whether the applicant could pursue spousal support pursuant to section 33(4) of the Family Law Act.

[9] The respondent submits that, with respect to the applicant’s financial circumstances, she fails to disclose that she is now living with another partner and her expenses are being at the very least shared with this person. The respondent submits that the applicant should have known when she embarked upon the court proceeding that, if she was unsuccessful, she would be liable for a substantial portion of the respondent’s costs.

Guiding Principles

[10] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid."

[11] Pursuant to rule 24(1) of the Family Law Rules, the successful party is presumed to be entitled to recover costs. Rule 24(11) requires the court, in setting the amount of costs, to consider a number of factors including the importance, complexity and difficulty of the issues, the reasonableness or unreasonableness of each party's behavior in the case, the lawyer's rates, the time properly spent on the case, expenses properly paid or payable, and any other relevant matter. These factors are to be applied flexibly (see M. (C.A.) v. M. (D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.) at para 42).

[12] Consideration of the relative success of the parties on the issues in the case is the starting point in determining costs (see Butty v. Butty, 2009 CanLII 23111 (ON SC), [2009] O.J. No. 1887 (Ont. S.C.J.) at para. 4, citing Sims-Howarth v. Bilcliffe, 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (Ont. S.C.J.)). In the case of Johanns v. Fulford, 2010 ONCJ 756 (Ont. C.J.) at para. 13, it was held that, for the purpose of rule 24(1), "success" is assessed by comparing the terms of an order against the relief originally requested in the pleadings and against the terms of any offers to settle.

[13] In M. (C.A.) v. M (D.) the Court of Appeal confirmed, at paras. 40-42, that:

(a) although the Family Law Rules have circumscribed the broad discretion granted by s. 131(1) of the Courts of Justice Act, they have not completely removed the trial judge's discretion;

(b) although the general provision, rule 24(1), enacts a "presumption" that the successful party is entitled to costs of the case it does not require that the successful party is always entitled to costs;

(c) a successful party may not obtain a costs award in his or her favour even in circumstances not falling within rule 24(4);

(d) there may be circumstances aside from the unreasonableness of the successful party's conduct that rebut the presumption; and

(e) the financial situation of the parties can be taken into account in setting the amount of the costs award either under rule 24 or rule 18 pursuant to the direction in sub rule 24(11) that the court take into account "any other relevant matter".

[14] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 3707 (Ont. C.A.) at para. 24).

[15] Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).

Discussion

[16] In my view, the respondent was the successful party and is presumed pursuant to rule 24(2) of the Family Law Rules to be entitled to the costs of the trial. The applicant has not pointed to any factors which would displace this presumption. I am not satisfied that there was divided success. The respondent acknowledged his responsibility to pay child support, regardless of the term of the cohabitation agreement barring such a claim and did not seek to make his agreement to pay child support conditional upon any concession from the applicant on the remaining issues respecting the cohabitation agreement. The applicant’s ability to seek spousal support pursuant to section 33(4) of the Family Law Act is a function of the statutory provision and does not depend upon a determination by the court.

[17] I am not satisfied that the respondent is entitled to an award of elevated costs in the circumstances.

[18] In the case of Beaver v. Hill, 2018 ONCA 840 the Court of Appeal has recently stressed that proportionality and reasonableness are the touchtone considerations to be applied in fixing the amount of costs in family proceedings. Moreover, a "close to full recovery" approach is inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances, for example bad faith or besting an offer to settle (see paras. 12-13).

[19] I would reduce the respondent’s claim for partial indemnity costs by $1000 to exclude costs associated with the Settlement Conference. Rule 24(10) of the Family Law Rules provides that promptly after dealing with a step in the case, the court shall (a) determine entitlement to costs in relation to that step or (b) expressly reserve the decision on costs for determination at a later stage in the case. There is no indication that the costs of the Settlement Conference were reserved to trial.

[20] The applicant does not take issue with the balance of the hours or the hourly rate proposed by the respondent in his Bill of Costs.

[21] Subject to a consideration of the applicant’s ability to pay costs, I would fix the respondent’s partial indemnity costs in the sum of $16,425 in respect of fees, $2135.25 in respect of HST on fees, $325.55 in respect of disbursements for a total of $18,885.80.

[22] It is well accepted that 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 (see Jackson v. Mayerle, 2016 ONSC 1556 (S.C.J.) at para, 107).

[23] I am satisfied that a sizable costs award against the applicant would have a severe impact on her ability to achieve financial self-sufficiency and would affect her ability to properly care for her child as a single parent. (see Murray v Murray, 2005 CarswellOnt 6278 (C.A.). I am unable to accept the submission of the respondent suggesting that the court should consider the degree to which the applicant’s living expenses may currently be shared with her current partner, as that represents speculation and there is no assurance that this would not be subject to change in the future.

[24] Taking into account the applicant’s financial circumstances, I reduce the partial indemnity costs of the respondent by 50% rounded to $9,000 and provide the applicant with a reasonable period of time to make payment.

Disposition

[25] It is ordered that the applicant pay costs to the respondent fixed in the sum of $9000, to be paid within 120 days hereof.

D.A. Broad, J.

Date: October 4, 2021