Court File and Parties

COURT FILE NO.: FS-19-60 DATE: 2021-10-22 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gaietri Popat, Applicant AND: Amit Popat, Respondent

BEFORE: Justice D.A. Broad

COUNSEL: Emily Carroll (agent for Glenda McLeod) for the Applicant Valda Blenman, for the Respondent

COSTS ENDORSEMENT

[1] The parties have been unable to resolve the issue of costs of the applicant’s motions heard July 7, 2021 and have each delivered written submissions on costs.

Respondent’s position

[2] The respondent seeks costs on a full recovery basis or in the alternative on a substantial indemnity basis. The respondent’s Bill of Costs, which appears to have been prepared on a full indemnity basis, advances a claim for costs in the total sum of $47,056.71 comprised of fees of $37,392.75, HST on fees in the sum of $4,861.06, counsel fee on the hearing of $3,950, HST thereon in the sum of $513.50, and disbursements including HST in the sum of $339.40.

[3] The respondent submits that he is presumed to be entitled to costs because he was the successful party on the applicant’s motion for disclosure, interim disbursements, non-depletion of assets, and questioning of third parties. He further submits that his claim for costs is reasonable given the number of motions filed by the applicant, the number of issues and the voluminous materials on the motions. Moreover, he argues that his Offer to Settle dated February 2, 2021 was “as good” as the outcome of the motions as set forth in the Endorsement released August 3, 2021.

[4] The respondent submits that the applicant’s Offer to Settle dated December 23, 2020 assumed full success on all of her claims and her second Offer to Settle dated July 6, 2021 mirrored her claims in the motions. The applicant was therefore not as or more successful as a result of the decision than her Offers to Settle. Other than the ordered disclosure which the respondent agreed to provide prior to the hearing, the applicant was unsuccessful.

[5] The respondent argues that he acted reasonably with respect to the issues on the motions. Prior to service of the applicant’s initial motion on December 22, 2020 the respondent had been satisfying the applicant’s request for disclosure and continued to do so. He points out that his position respecting the only two requests for disclosure which he disputed was upheld, namely, to permit the applicant’s business valuation expert to speak to him directly respecting his business and income, and that he provide his expert’s notes and correspondence.

[6] The respondent submits that the issue of disclosure was blown up by the applicant and her requests were far-reaching and disproportionate, causing unnecessary expense. The applicant lost on all of the issues which were argued.

[7] Finally, the respondent submits that the court should take into account the fact that the applicant is not impecunious as she has an interest in the former matrimonial home which is unencumbered and can be sold to fund legal expenses as noted in the Endorsement.

Applicant’s position

[8] The applicant submits that the parties ought to bear their own costs, as success on the motions was divided. She says that an order was made in her favour on the issue of disclosure. She also asserts that an order was made in her favour on the issue of costs, a submission which I have difficulty following. The applicant acknowledges that orders were made in favour of the respondent on the issues of interim disbursements and a preservation order. She maintains that neither party was successful on the issue of third-party questioning, given that the Endorsement left it open for the applicant to revisit the issue if and when necessary rather than dismissing her claim for this relief with prejudice.

[9] The applicant submits that she made a comprehensive request for disclosure relating to net family property and income as early as 2018 and it was not until the applicant’s initial motion was served in December, 2020 that the respondent began producing the disclosure necessary for her to obtain expert reports.

[10] The applicant also submits that, although she was unsuccessful on the issue of interim disbursements and the preservation order, being unsuccessful does not equate necessarily to being unreasonable. The claims were made in response to the respondent’s advice that he had sold his business to a friend and business associate.

[11] The applicant disputes that the respondent’s Offer to Settle was “as good” as the outcome. The Offer referenced issues that were not argued or determined by the court and items of disclosure that were ordered produced were improperly labelled by the respondent as having been previously provided. Moreover, the applicant points out that the respondent failed to serve an Offer to Settle the issues of third-party questioning, interim disbursements and the preservation order.

[12] Finally, the applicant submits that the respondent’s conduct in relation to the substantial issues of disclosure and questioning, and procedurally, ought to be characterized as unreasonable.

Guiding Principles

[13] 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."

[14] 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 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.) at para 42).

[15] Rule 18(14) of the Family Law Rules provides that a party who makes an Offer to Settle at least one day prior to a motion or seven days prior to a trial, which did not expire, was not withdrawn and was not accepted, and obtains an order that is as favourable as or more favourable than the offer is entitled to costs to the date of service of the offer and full recovery of costs from that date, unless the court orders otherwise.

[16] 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 23111 (ON SC), [2009] O.J. No. 1887 (Ont. S.C.J.) at para. 4, citing Sims-Howarth v. Bilcliffe, 2000 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.

[17] 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".

[18] When success is divided, the court has discretion under rule 24(6) to determine the allocation of costs.

[19] Rule 24(6) requires a comparative analysis, as most family cases have multiple issues. However, various issues in a motion or trial are not equally important, time-consuming, or expensive to determine. Comparative success can also be assessed globally in relation to the whole of the case, asking:

a. How many issues were there?

b. How did the issues compare in terms of importance, complexity, and time expended?

c. Was either party predominantly successful on more of the issues?

d. Was either party more responsible for unnecessary legal costs being incurred?

[20] If success is divided, the court, in exercising its discretion, may simply determine costs globally or it may look first to success in the primary issue, but subject to adjustments that consider lack of success in any secondary issues, as well as any other appropriate factors.

(see DeSantis v Hood, 2021 ONSC 5496 per Kurz, J. at paras. 37-39, citing Jackson v. Mayerle, 2016 ONSC 1556 and Thompson v. Drummond, 2018 ONSC 4762).

[21] 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).

[22] 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).

[23] As recently emphasized by the Court of Appeal in Beaver v Hill, 2018 ONCA 840 at paras. 12-13, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs in family proceedings and a "close to full recovery" approach is inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances, e.g. bad faith under r. 24(8), or besting an offer to settle under r. 18(14).

Analysis

[24] In my view, the applicant was successful on one of the many issues advanced by her, namely financial disclosure. I would not consider the applicant to have been successful with respect to the issue of third-party questioning on the basis that the court left it open to the applicant to revisit the issue in the future if necessary. The applicant did not propose this as an alternative. The effect of the determination by the court of this issue was that the applicant’s insistence on immediate questioning the third parties was not warranted and was premature.

[25] Although the disclosure which the respondent consented to and which was ordered by the court had not been fully completed prior to the applicant launching her motion in December, 2020, the respondent was in the process of providing disclosure on an incremental basis as information and documentation became available. As evidenced by his Offer to Settle dated February 2, 2021 the respondent was a settlement-focused and, in my view, acted reasonably in responding to the motion for disclosure.

[26] Moreover, had the applicant restricted her motion to the issue of financial disclosure the motion would likely have been readily resolved without the requirement for a hearing and protracted argument.

[27] The respondent was successful with respect to all of the issues which required argument. I do not consider the respondent to have acted unreasonably by not making an Offer to Settle with respect to the issues of interim disbursements, non-depletion of assets, and questioning of third parties, in respect of which he was successful. He was entitled to take the position that these heads of relief should not be granted to the applicant and his position was vindicated by the outcome.

[28] In Beaver v Hill Nordheimer, J.A., writing for the panel, observed at para. 15 that although the presence or absence of offers to settle can properly be taken into account in fixing costs, a party is not under any obligation to proffer an offer to settle and before the absence of an offer to settle can properly be used against a party, the situation has to be one where it is realistic to expect offers to settle to be made. This was not the situation in the case at bar with respect to the issues of interim disbursements, non-depletion of assets, and questioning of third parties.

[29] In my view it is appropriate to take a global approach to the fixing of costs, taking into account the fact that the respondent was successful on the contentious issues which needed to be argued, with an appropriate adjustment for the fact that the applicant was justified in initially bringing the motion for disclosure, given that the respondent had not completed all of the required disclosure and the motion had the effect of pushing the issue of disclosure towards a resolution on consent.

[30] As noted by the applicant in her written submissions, the costs incurred in relation to the portions of the motions which were adjourned to allow for a litigation guardian to be appointed for the proposed added party were not excluded from the respondent’s Bill of Costs. The applicant estimated that one half of the time expended by her counsel was in relation to the portions of the motions that were adjourned. The applicant’s fee portion, on a full indemnity basis as set forth in her Bill of Costs, inclusive of counsel fee on the hearing, is the sum of $35,595 compared to $41,342.75 for the respondent.

[31] I am prepared to ascribe 40% of the respondent’s preparation time, exclusive of the time related to the oral hearing, to the adjourned portions of the motions, reducing the respondent’s total full indemnity fee portion to $26.385.65.

[32] I would reduce the respondent’s full indemnity fee component by 25% to $19,789.24 to account for the fact that the applicant was justified in bringing the motion for disclosure and that it served the purpose of advancing the issue of disclosure to resolution.

[33] The respondent’s Bill of Costs does not break out the time incurred prior to and after service of its Offer to Settle and accordingly, it is difficult to apply rule 18(14),

[34] Taking all of the factors into consideration, including the respondent’s Offer to Settle, I fix the respondent’s costs of the motions, excluding those aspects of the motions which were adjourned, in the sum of $17,754.40, calculated as follows

(a) Fees $15,500

(b) HST on fees $2,015

(c) Disbursements including HST $339.40

Total $17,754.40

rounded to $17,750.

Disposition

[35] It is ordered that the applicant pay to the respondent costs of the motions in the sum of $17,750 within 30 days hereof.

D.A. Broad, J.

Date: October 22, 2021