Court File and Parties

COURT FILE NO.: 385/20 DATE: 2022-07-08 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michael Patrick Clarke, Applicant AND: Mary Heather Gayle Maher, Respondent

BEFORE: Justice D.A. Broad

COUNSEL: Darryl A. Willer, for the Applicant Catherine Haber, for the Respondent

COSTS ENDORSEMENT

Background

[1] The parties have been unable to resolve the issue of costs of the interim motions and have now delivered costs submissions in accordance with my Endorsement dated April 7, 2022.

[2] Each party claims that they were the successful party on the cross-motions and advance a claim for costs.

[3] The respondent seeks an order for costs in the amount of $21,150 for fees plus HST of $2,749 for a total of $23,899.50. She submits that she was the more successful party in respect of the applicant’s motion to reduce his child and spousal support obligations from that set out in the parties’ Without Prejudice Separation Agreement dated June 27 2018 and was entirely successful in respect of her motion requiring the applicant to obtain and maintain a policy of life insurance in the amount of $1.0 million designating her as the irrevocable beneficiary.

[4] The respondent points out that the applicant sought to pay spousal support retroactive to January 1 2021 in the sum of $3,764 per month whereas he was ordered to pay $6,000 per month for 2021 and $7,000 commencing January 1, 2022 and onwards. She refers to her Offers to Settle, the most recent of which provided for the applicant to pay $7,257 per month in spousal support commencing January 1, 2022. In contrast she notes that the applicant’s most recent Offer to Settle called on him to pay $5,500 per month in spousal support commencing January 1, 2021. He also proposed that income be imputed to her for Spousal Support purposes which was not ordered.

[5] The respondent also submits that the applicant made no Offer to Settle respecting her motion in relation to the life insurance policy.

[6] The applicant seeks his costs of the motions on a substantial indemnity basis in the sum of $8,075.44 comprised of $6,786.90 in respect of fees, disbursements in the sum of $359.50 and HST in the sum of $929.44.

[7] The applicant submits that his severable Offer to Settle proposed that his income be fixed at $250,000 retroactive to June 1, 2021. In contrast, neither of the respondent’s Offers to Settle included any retroactive relief for the 2021 year.

[8] The applicant points out that his combined child and spousal support payments were reduced from $11,355 per month to $7,795 per month for the 2021 calendar year and to $9,068 per month for 2022 and following.

[9] The applicant also submits that the life insurance issue raised by the respondent’s motion was a minor one and that, contrary to the respondent’s submission, he did make an Offer to Settle in relation to it, proposing that his child and spousal support obligations constitute a first charge on his estate.

[10] The applicant submits that his Bill of Costs setting forth costs on a full indemnity basis in the amount of $8,928, substantial indemnity in the sum of $8,074 and partial indemnity in the sum of $5,519 is fair and reasonable in comparison to the respondent’s Bill of Costs totalling the sum of $23,899.

Guiding Principles

[11] 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."

[12] 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).

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

[14] 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.

[15] 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.

[16] 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".

[17] 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).

[18] 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).

[19] 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).

Discussion

[20] The predominant issue before the court was the determination of the applicant’s income in 2021 and 2022 for child and spousal support purposes, with the question of whether income should be imputed to the respondent for spousal support purposes less so. Considerably less time was utilized in submissions related to the insurance policy and less affidavit evidence was devoted to it in comparison to the other two issues.

[21] The applicant served four offers to settle and the respondent served two. Neither party obtained a result more or as favourable as their offers, with the exception of the one aspect of applicant’s severable offer dated February 22 2022 in relation to child support. The court’s finding with respect to spousal support for 2021 and commencing January 1 2022 fell between the parties’ respective positions in their offers for the two periods under consideration. The respondent was entirely successful in resisting the applicant’s claim that income should be imputed to her for spousal support purposes.

[22] I would not consider the applicant’s offer respecting the insurance policy issue to be relevant to the costs determination as a first charge on his estate would not provide for a security to the respondent for the applicant’s support obligations.

[23] I find that the result in relation to the issue of the applicant’s income for child spousal support was divided. As such, neither party is entitled to an award of costs in relation to that issue The respondent was successful on the issue of whether income should be imputed to her. She was also successful in relation to the issue concerning the insurance policy. The respondent is entitled to costs in relation to these two issues.

[24] The quantum of the fee portion set forth in the respondent’s Bill of Costs in the sum of $21,150 in my view is disproportionate and would not have been within the reasonable expectation of the applicant. The respondent’s fees comprise a total of 56.4 hours of lawyer’s time, whereas the applicant’s Bill of Costs discloses 14 hours of lawyer’s time and 6.6 hours of clerk’s time.

[25] Applying the principles of proportionality and reasonableness I find that an award of costs to the respondent of $4,500 plus HST in the sum of $585 for a total of $5,085 would be appropriate.

Disposition

[26] It is ordered that the applicant pay costs of the motions to the respondent fixed in the sum of $5,085, inclusive. This amount is to be paid within 30 days hereof.

D.A. Broad, J.

Date: July 8, 2022