ORILLIA COURT FILE NO.: FC–17– 49-00 DATE: 20220216 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Kevin John Southorn Applicant – and – Chantelle Marianne Ree Respondent

Counsel: Linda Paterson-Kelly, for the Applicant Fay McFarlane, for the Respondent

Heard: Written Submissions

F. Graham J.:

The Issue

[1] Mr. Southorn seeks an order for costs between $86,729 and $97,570 (all inclusive) for a 34-day family law trial on the basis that he was the more successful party. His legal fees were $108,411 (all inclusive).

[2] Ms. Ree seeks an order for costs between $170,018 and $317,397 (all inclusive) on the basis that she was the more successful party. Her legal fees were $317,397 (all inclusive).

[3] The trial judgment is at Southorn v. Ree, 2021 ONSC 7819.

Family Law Rule 18 – Special Offers to Settle

[4] Rule 18 provides that, unless a court orders otherwise, a party who serves a written offer, signed by the party and the party’s counsel (if any), upon the other party (or counsel), at least seven days before a trial date, that is not withdrawn and does not expire before the trial starts, and is not accepted, is entitled to full costs from the date the offer was served if the party obtains an order at trial that is as favourable or more favourable than the offer.

[5] Rule 18 (16) provides that when a court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if the requirements of the paragraph above are not met.

[6] In this case, both parties made written offers that did not meet all the requirements of Rule 18.

[7] Mr. Southorn sent an unsigned offer to settle by email on May 7, 2019. The absence of his signature made the offer ineligible under Rule 18. Furthermore, the offer was non-severable and stipulated, for example, payment of child support in the amount of $1,067 per month commencing on May 1, 2019. The court found that Mr. Southorn’s child support obligation was $1,270 per month throughout 2019. Accordingly, Mr. Southorn did not obtain a result as favourable or more favourable than his offer.

[8] Ms. Ree served a signed offer to settle dated May 15, 2019. The trial started on May 21, 2019. Accordingly, the offer was not served at least seven days before the trial started which made the offer ineligible under Rule 18. Ms. Ree submitted that if the May 15, 2019 offer to settle did not meet the seven-day service requirement of Rule 18, an identical offer (not provided to the court), in her settlement conference brief dated December 18, 2018, complied with the service time requirement. Settlement conference brief offers, however, are mandatory and confidential and, therefore, are not eligible under Rule 18 as explained by Woodley J. in Owen-Lytle v. Lytle, 2015 ONSC 7673, 71 R.F.L. (7th) 364, at paragraphs 16 to 19.

[9] Furthermore, the May 15, 2019 offer was non-severable and stipulated, for example that the children would be with Mr. Southorn for two non-consecutive weeks during the summer in addition to the regular parenting schedule proposed by Ms. Ree. That meant that the children would be with Mr. Southorn for less than half of the summer. The judgment granted him parenting time for half of the summer. Accordingly, Ms. Ree did not obtain a result as favourable or more favourable than that offer to settle or any identical offer.

Family Law Rule 24 and Costs Generally

[10] Rule 24 (1) provides that there is a presumption that successful party is entitled to costs.

[11] Rule 24 (4) provides that 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.

[12] Rule 24 (5) provides that in deciding whether a party has behaved reasonably or unreasonably during a case, the court shall examine the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle, the reasonableness of any offer the party made, and any offer the party withdrew or failed to accept.

[13] Rule 24 (6) provides that if success in a step in a case is divided, the court may apportion costs as appropriate.

[14] Rule 24 (8) provides that 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.

[15] Rule 24 (12) provides that in settling 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) [inapplicable]

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter.

[16] The Ontario Court of Appeal stated in Serra v. Serra, 2009 ONCA 395, that the costs rules are intended to promote three fundamental goals: to partially indemnify successful litigants for the cost of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants. The Court of Appeal added in Mattina v. Mattina, 2018 ONCA 867, that a fourth goal is to ensure that cases are dealt with justly, as stipulated in Family Law Rule 2 (2).

[17] These four goals and Rules 18 and 24 guide the court in determining a proportional, fair, just, and reasonable amount that should be paid for costs in this case.

Decision-making Responsibility and Parenting Time

[18] Both counsel in this matter are very experienced and knowledgeable in family law. They know that the court must determine decision-making responsibility and parenting time based solely on the best interests of a child. They know that a court is entitled to make a decision that is in the child’s best interests, regardless of the parties’ positions in their pleadings or their positions during a trial, provided that the trial process is fair.

[19] Although Mr. Southorn sought sole decision-making responsibility in his Application, it was evident throughout the trial that his position was that joint decision-making responsibility was in the best interests of the children.

[20] Although Ms. Ree sought joint decision-making responsibility in her Answer, it was evident throughout the trial that her position was that it was in the best interests of the children for her to have sole decision-making responsibility.

[21] Yet, in paragraph 31 of Ms. Ree’s Closing Statement, her counsel stated,

Mr. Southorn seeks sole custody with access to Ms. Ree and Ms. Ree seeks an Order for Joint Custody with access to Mr. Southorn. Furthermore, neither party sought any amendments to their pleadings and Mr. Southorn has not amended his pleadings seeking sole custody.

[22] And, in paragraph 32, her counsel stated, “…it is clear in his Application that he specifically seeks sole custody, which document has not been amended.”

[23] Moreover, in paragraph 33, her counsel stated,

… I was clear in my Opening Statement , filed as Exhibit M, that Ms. Ree trusts that the court will make the appropriate Order in the children’s best interests with the corresponding Orders regarding spousal support, child support and financial disclosure , as claimed in her Answer . [emphasis added]

[24] Yet, at paragraph 35, her counsel stated, “Mr. Southorn has demonstrated, as proven by the evidence, that he is unable to co-parent effectively with Ms. Ree who is still unable to trust him.”

[25] And, at paragraph 1 of her Opening Statement. Ms. Ree’s counsel stated, “…although [Ms. Ree] has requested an Order for Joint Custody of the children, with access to Mr. Southorn, she trusts that the court will make the appropriate Order that is in the children’s best interest.”

[26] Moreover, at paragraph 3, she stated,

Although Ms. Ree would like to jointly parent the children with Mr. Southorn, she has come to realize that it may not be possible or in the children’s best interest, for many reasons that will become evident throughout this trial, to have an Order reflecting same. As will be demonstrated by Ms. Ree’s evidence, Mr. Southorn’s behaviour and actions have not been that of a parent who is likely to cooperate in a Joint Parenting regime…The evidence will show that Mr. Southorn has maintained a course of action from the time [of] separation to present that demonstrates that he is unable to co-parent with Ms. Ree .” [emphasis added]

[27] It was obvious from Ms. Ree’s Opening Statement, her counsel’s cross-examination of witnesses, the evidence Ms. Ree led at trial, and her Closing Statement, that she was urging the court to disregard her position in her Answer and find that it was in the children’s best interests for her to have sole decision-making responsibility.

[28] Yet, in her Submissions as to Costs, at paragraph 2, her counsel stated, “Notwithstanding that her pleadings were not amended, the Respondent maintained a position, both with the OCL and at trial, of joint custody.”

[29] This statement is confusing. The use of “notwithstanding” suggests that her pleadings did not seek joint custody, and that joint custody was her position at trial, when, in fact, the opposite is true – her pleadings sought joint custody, but that was not her position at trial.

[30] With respect to the appropriate parenting time regime, Ms. Ree sought a continuation of the de facto status quo.

[31] Her Opening Statement, at paragraph 8, stated that equal parenting time was not in the children’s best interests.

[32] Her Closing Statement stated, for example, at paragraph 71, “… if [the children] spend more time away from [Ms. Ree], the homework will not get done and activities will not continue”, and, at paragraph 86, “…there remains conflict between the parties, which is not conducive to a healthy 50/50 parenting regime that Mr. Southorn is requesting”, and, at paragraph 224, “So, how can the court trust that a shared parenting regime is not sending the children to two warring households…”

[33] Yet, in her Submissions as to Costs with respect to shared parenting, she stated, “At trial, [Ms. Ree’s] evidence was that if the court deems a shared parenting regime would be in the children’s best interest, she would accept such [a] decision.”

[34] This statement is confusing. Ms. Ree strongly opposed an equal parenting time regime at trial.

[35] Ms. Ree suggested in her Submission as to Costs that the court’s order for joint decision-making responsibility and an equal parenting time regime were successful outcomes for her.

[36] The court strongly disagrees.

[37] Mr. Southorn sought joint decision-making responsibility and an equal parenting time regime – Ms. Ree strongly opposed both. He was successful (and she was unsuccessful) on both these very important and complex issues.

[38] Although Ms. Ree’s offer to settle did include a partial parallel decision-making responsibility regime (she would have the final say on education, Mr. Southorn would have the final say on health, and there would be joint decision-making on other major issues), her offer did not meet or beat the court’s decision instituting full joint decision-making responsibility. Furthermore, as noted above, her non-severable offer included other terms that she did not meet or beat, for example, a continuation of the status quo parenting time regime.

Support

Income of Mr. Southorn

[39] The determination of Mr. Southorn’s income was key to establishing his support obligations.

[40] Mr. Southorn made no submissions about his income in 2018. He submitted that his income in 2019 was $46,000, his income in 2020 was about $35,000, and his income in 2021 would be about $50,000.

[41] Ms. Ree made no submission about Mr. Southorn’s income in 2018. She made no specific submission for 2019 other than pointing out that the deposits to his business account totalled about $85,000. She submitted, in general, that his business was lucrative, and she suggested that his income should be imputed at $150,000.

[42] The court determined that Mr. Southorn’s income for 2019 was $84,000. It was coincidental that this figure was close to the $85,000 in deposits to his business account given that the court found that his net business income was only $9,433. The bulk of his income, $71,500, was actual and imputed income from employment. The court’s determination was closer to Mr. Southorn’s position of $46,000 than Ms. Ree’s submission of $150,000.

[43] The court determined that Mr. Southorn’s income for 2020 was $60,500. That amount was much closer to Mr. Southorn’s submission of $35,000 than Ms. Ree’s position of $150,000.

[44] The court determined that Mr. Southorn’s income for 2021 likely would be $65,000 for support purposes. That amount was much closer to Mr. Southorn’s position of $50,000 than Ms. Ree’s position of $150,000.

[45] The court determined that Mr. Southorn’s income for 2022 and beyond likely would be $75,000 for support purposes. That amount was much closer to Mr. Southorn’s estimate of $50,000 than Ms. Ree’s estimate of $150,000.

Income of Ms. Ree

[46] Ms. Ree’s income was key to the determination of spousal support each year and for child support commencing in 2022.

[47] Mr. Southorn submitted that Ms. Ree’s annual income should be imputed at $30,000.

[48] Ms. Ree submitted simply that her income was insecure and that she had to rely on Ontario Works to make ends meet.

[49] Based on limited evidence, the court estimated her net business income at $9,000 for 2018. That was significantly less than Mr. Southorn’s submission of $30,000. It is not possible to make a meaningful comparison with Ms. Ree’s position, however, because she did not suggest a particular amount. Nevertheless, the court infers that she likely sought a lower amount than he did. Her position was, therefore, likely closer to the court’s determination.

[50] The court found that her income for support purposes was $27,000 in 2019. That was very close to Mr. Southorn’s submission of $30,000. Ms. Ree did not suggest a precise amount, but she did file her 2019 income tax return which stated that her net business income (her only income relevant for support purposes) was $8,990. She conceded during cross-examination, however, that she had under-reported her net business income to CRA by $7,000. That meant that her net business income was $15,990. Mr. Southorn’s position was much closer to the court’s determination.

[51] The court found that her income for support purposes was $27,000 in 2020. That was very close to Mr. Southorn’s submission of $30,000. Ms. Ree did not suggest a precise amount. The court infers, however, that she likely sought a lower determination. Mr. Southorn’s position, therefore, was likely closer to the court’s determination.

[52] The court found that Ms. Ree’s income for support purposes was $30,000 for 2021 (and 2022 and beyond) as suggested by Mr. Southorn. Ms. Ree did not suggest a precise amount. The court infers again that she likely sought a lower determination. Mr. Southorn’s position was closer to (and, in fact, identical to) the court’s determination.

Child Support

[53] Mr. Southorn’s closing submission was that child support for 2021 should be based on a shared parenting regime, an income of $50,000 for him, and an income of $30,000 for Ms. Ree. The court found that a shared parenting regime should start in January 2022. Accordingly, his income was the only relevant consideration for child support in 2021 and the court found that it was $65,000. As noted above, that was much closer to his position of $50,000 than Ms. Ree’s position of $150,000.

[54] Mr. Southorn’s submission for 2021 may also be considered with respect to 2022 when the equal parenting regime commenced. The court determined that Mr. Southorn’s income would likely be $75,000 for support purposes, which was much closer to his position of $50,000 than Ms. Ree’s position of $150,000. The court also found that Ms. Ree’s income for support purposes would likely be $30,000 which was precisely Mr. Southorn’s position and likely higher than Ms. Ree sought. Ms. Ree sought the table amount of child support based on Mr. Southorn’s income alone. The table amount for $150,000 (as sought by Ms. Ree) is $2,077 per month. The table amount for $50,000 (the income amount suggested by Mr. Southorn) is $755. The court determined that $900 per month was appropriate. The court’s determination was much closer to the table amount for the income suggested by Mr. Southorn. Furthermore, the court ordered less than the table amount for $75,000.

[55] As noted above, Mr. Southorn’s non-severable offer to settle stipulated child support in the amount of $1,067 per month commencing May 1, 2019. That would have been a reduction from the $1,133 per month he paid for the first four months of 2019, but the court found that he should have paid $1,270 per month throughout 2019, which meant that he did not meet or beat the court’s decision.

[56] Ms. Ree’s non-severable offer to settle simply stated that Mr. Southorn should pay child support in an amount that was commensurate with his income. At the time of the offer, it would have been impossible to know what income amount that meant. It was more of an offer to open negotiations than a meaningful offer to settle child support. Given that her position at trial was that his income should be imputed at $150,000, however, she did not meet or beat her offer.

[57] The court finds that, overall, Mr. Southorn was significantly more successful on the issue of child support.

[58] This issue was important for the parties and the evidence concerning their incomes was complex due to the delayed and disorganized financial evidence presented by both parties.

Spousal Support

[59] Mr. Southorn submitted that spousal support should be terminated on March 31, 2021. It was not, but it was reduced to a nominal $1 per month commencing April 1, 2021, with a termination date of December 31, 2028.

[60] Ms. Ree submitted that she needed spousal support, but the court found otherwise. The court also found that her compensatory entitlement was limited and did not result in any spousal support being payable (other than the nominal $1 per month).

[61] Mr. Southorn’s position was only $1 per month different than the court’s determination. Ms. Ree did not specify the amount of spousal support she sought, but it was undoubtedly a great deal more than $1 per month.

[62] Mr. Southorn’s non-severable offer to settle spousal support was a $3,000 lump sum, payable on or before June 1, 2019, with no further entitlement for spousal support. Because of the duration of the trial, however, he continued to pay spousal support in the amount of $575 per month throughout the balance of 2019, all of 2020, and the first three months of 2021. That amounted to a great deal more than $3,000. If the issue could have been determined earlier, however, he would have been ordered to pay no spousal support for those periods (aside from $1 per month). In that case, as his Submission as to Costs points out, the total amount of spousal support ordered until the termination date would have been about $100 which is considerably less than $3,000. As noted previously, however, other terms of his non-severable offer were not met.

[63] Ms. Ree’s non-severable offer to settle simply stated that Mr. Southorn should pay spousal support in accordance with the parties’ means, needs and financial dependencies pursuant to the Spousal Support Advisory Guidelines. It is impossible to know from her offer what amount she sought. Her proposal was more in the nature of an offer to open negotiations rather than an offer to settle. Of course, the court’s determination was based upon these standard legal principles, but merely setting out the applicable legal principles without quantifying an offer makes the offer incapable of acceptance due to uncertainty, and, therefore, incapable of being met or beaten. If, however, her offer meant that she should receive spousal support based on Mr. Southorn’s income being $150,000, as she submitted the court should find, then it did not meet or beat the court’s determination. In any event, other terms of her non-severable offer were not met.

[64] The court finds that Mr. Southorn had significantly greater success on the issue of spousal support.

[65] The issue was important for the parties and the financial evidence was complex due to the delayed and disorganized financial evidence presented by both parties.

Other Substantive Issues at Trial

[66] The other substantive issues before the court were given very little or no attention during the trial. The court infers that they were significantly less important to the parties than the issues discussed above.

Other Considerations

[67] The court is of the view that both parties behaved unreasonably, and exhibited some bad faith, when they testified. Considerable caution was required with respect to both parties’ credibility and reliability. Similarly, their delayed and disorganized financial disclosure was unreasonable and exhibited some bad faith.

[68] In addition, Ms. Ree’s offer to settle was unreasonable with respect to parenting time and was unreasonably vague with respect to support issues.

[69] Mr. Southorn’s offer to settle, while non-severable, was reasonable overall.

[70] The trial went longer than the issues required. Counsel could have exercised more control over their clients – some unnecessary evidence was presented about parenting, and a great deal of their financial disclosure was very late and disorganized.

[71] The time spent on this matter by Mr. Southorn’s counsel was substantially less than the time spent by Ms. Ree’s counsel. Furthermore, Mr. Southorn’s counsel charged substantially less per hour.

[72] The court finds that Mr. Southorn’s counsel’s Bill of Costs was proportional to the importance and complexity of the issues.

[73] The court found at trial that Ms. Ree’s net worth was likely negative due to her own legal fees. Although the amount she was charged was not unreasonably high for a trial of this length, it is likely that that amount was considerably higher than Ms. Ree anticipated when the trial started. As the trial continued and was taking considerably more time than expected, and her legal fees were mounting, Ms. Ree could have, and should have, made a more reasonable offer to settle. By not doing so, particularly in the face of an overall reasonable offer from Mr. Southorn, she accepted the risk of losing at trial and paying substantial costs. While the financial burden of paying costs to Mr. Southorn will likely be a significant challenge for Ms. Ree, she is fortunate that his counsel’s fees were substantially lower than her counsel’s fees; she could have faced a claim for costs in the same range as her own claim for costs.

Synthesis

[74] Mr. Southorn was completely successful with respect to the very important and evidentially complex issues of decision-making responsibility and parenting time.

[75] Mr. Southorn had significantly greater success with respect to the support issues which were important to the parties and complex due to the delayed and disorganized financial evidence presented by both parties.

[76] The remaining issues were given little or no attention by the parties at trial.

[77] Both parties acted unreasonably and exhibited some bad faith when they testified, and with respect to financial disclosure. Ms. Ree’s non-severable offer to settle was unreasonable. Mr. Southorn’s non-severable offer to settle was reasonable.

[78] Mr. Southorn’s counsel’s time spent, and amount charged per hour, were reasonable proportional in the circumstances (including the fact that Ms. Ree’s counsel spent considerably more time and charged considerably more per hour).

[79] The court finds that about two-thirds of the trial time was spent on parenting issues and about one-third was spent on support issues. In terms of Mr. Southorn’s legal costs, that means that about $72,000 may reasonably be attributed to parenting issues and about $36,000 may reasonably be attributed to support issues.

[80] The court finds that a just, fair, proportional, and reasonable result in these circumstances is for Mr. Southorn to receive very close to full recovery for the parenting issues where he was completely successful, and to receive substantial recovery for the support issues where he had significantly greater success than Ms. Ree.

[81] Ms. Ree is ordered to pay Mr. Southorn costs in the amount of $97,500 all inclusive, comprised of $70,000 for the parenting issues and $27,500 for the support issues, within 60 days.

[82] A support deduction order shall issue for the $27,500 in costs for support, which shall be collected as support by the FRO.

[83] A charge for the $70,000 in costs for parenting issues may be placed upon Ms. Ree’s residential property by Mr. Southorn, to be discharged upon the $70,000 in costs for parenting issues being paid in full.

[84] Mr. Southorn may have orders issued upon these terms without approval as to form or content.

Justice F. Graham

Released: February 16, 2022