COURT FILE NO.: FS-15-83684 (Brampton)
DATE: 20221103
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Paul Tintinalli
Applicant
-and-
Grace Tutolo
Respondent
Julie Layne, for the applicant
Hayley Cairns, for the respondent
Heard: July 15, 2022 by video conference
Justice. R. Chown
Endorsement
[1] On March 31, 2020, the applicant accepted a May 25, 2018 offer to settle made by the respondent. The offer included a provision as follows: “In the event that this Offer to Settle is accepted after June 1, 2018, Paul shall pay costs to Grace on a full indemnity basis, to be assessed.” This is a motion to determine the costs payable pursuant to the accepted offer. The respondent claims costs of over $120,000.
[2] An important limiting clause in the offer is found in its preamble, which says: “The Respondent offers to settle the access issues … in these proceedings on the following terms…” [emphasis added]. The terms of the accepted offer were incorporated into a consent order of Lemay J. dated July 22, 2020. The order says that the applicant shall pay costs to the respondent “on parenting issues on a full indemnity basis, to be assessed.”
[3] It is not disputed that by accepting the offer, the applicant agreed to pay full indemnity costs relating to the parenting issues. The extent to which the costs relate to parenting issues is contested.
[4] Shortly after the applicant accepted the respondent’s offer, the respondent asserted that there was no enforceable agreement arising from acceptance of the offer. This resulted in preparation for a motion by the applicant to enforce the settlement. That motion was resolved on terms that the offer was enforceable. The respondent agreed the applicant should recover $1,500 in costs for that motion.
General Principles
Purpose of Costs Rules
[5] The Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 said, at para. 10, that modern family cost rules are designed to foster these fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are dealt with justly. In the same paragraph, the court stated that rule 24(12)1, which lays out the factors relevant in setting the amount of costs, “specifically emphasizes ‘reasonableness and proportionality’ in any costs award.”
[6] The applicant argues that the factors listed in rule 57.01 of the Rules of Civil Procedure are applicable by virtue of rule 1(7) of the Family Law Rules. In support of this position, the applicant cites Khan v. Yakub, 2008 55141, at para. 26. That decision was made in 2008, before Frick v. Frick, 2016 ONCA 799; Beaver v. Hill, 2018 ONSC 3352, leave to appeal refused, [2019] S.C.C.A. No. 82; and Mattina.
[7] In Frick, the Court of Appeal suggests that it will be a “rare instance when a matter is not adequately covered by the family rules.”
[8] In Beaver, at para. 9, Nordheimer J.A. stated that “under the Family Law Rules, O. Reg. 114/99, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, since no scales of costs are mentioned in the Family Law Rules.”
[9] And in Mattina, the Court of Appeal said that “case law pertaining to costs decided under the Rules of Civil Procedure should be approached with some caution.” At para. 10 of Mattina, the Court of Appeal cited, with approval, E.H. v. O.K., 2018 ONCJ 578, in which Scherr J. held at para. 34 that “Costs decisions in family law cases are governed by the Family Law Rules and the jurisprudence interpreting them, not the Rules of Civil Procedure and the jurisprudence interpreting them.” He also said at para. 37 that “Rule 24 provides the court with a comprehensive model to determine costs in family law cases.”
[10] The holding in Khan v. Yakub that civil rule 57.01 is applicable by virtue of family rule 1(7) is no longer good law.
Overriding Principles
[11] It has repeatedly been held that reasonableness and proportionality are “touchstone considerations” (Beaver, at para. 12) or “overarching considerations” (Liu v. Huang, 2020 ONCA 495, at para. 3; Shah v. Irvine, 2018 ONSC 7359, at para. 57; Fearon v. Ellsworth, 2020 ONCJ 583, at para. 81) and that reasonableness is an “overriding principle” (Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 52) in the assessment of costs. These principles are applicable in both civil and family cases.
[12] This is so even where full indemnity costs are awarded. Per Rosenberg J.A. in C.A.M. v. D.M. (2003), 2003 18880 (ON CA), 67 O.R. (3d) 181 (C.A.), at para. 41: “[E]ven when making an award of full recovery the trial judge must ensure that the costs sought by the successful party are reasonable.”
Expectations of the Parties are Relevant
[13] The Court of Appeal held in Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), at para. 38, that in deciding what is fair and reasonable for a costs award, “the expectation of the parties … is a relevant factor.” This built on the holding in Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), at para. 4, that “the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.” Again, this principle is applicable to both civil and family cases: Gravelle v. Welch, 2018 ONSC 3475, at para. 31; Schneidermeier v. Bernosky, 2018 ONSC 7052, at para. 16; Curry (formerly D’Ignazio) v. D’Ignazio, 2015 ONSC 2405, at para. 13; Chan v. Town, 2014 ONSC 2217, at para. 75.
[14] When full indemnity costs are assessed, however, this principle appears to be modified slightly.
Reasonable Expectations of the Paying Party when Determining Full Indemnity Costs
[15] The offer uses the phrase “costs … on a full indemnity basis.” The Family Law Rules use the phrase “full recovery” (rule 18(14) and 24(8)). In my view, the phrases “full indemnity” and “full recovery” are functionally equivalent and, in the context of this case, refer to reimbursement for the full amount of the reasonable actual legal costs incurred in this proceeding. Put differently, “full recovery” is “the total reasonable and proportional amount that a court determines the party should have spent in dealing with the case”: Thompson v. Drummond, 2018 ONSC 4762, at para. 39.
[16] In cases where counsel have deferred some or all of their fee pending resolution, “full recovery” would refer to the reasonable actual legal costs that the party “has incurred or will incur.” With that said, costs actually incurred and paid by the client may in some cases be more convincing than costs that will be incurred.
[17] The phrase “full indemnity” is also functionally equivalent to “actual costs,” in my view. In Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc., [2005] O.J. No. 1604, 2005 13778 (C.A.), the Court of Appeal dealt with an interpretation of s. 134(5) of the Condominium Act, 1998, S.O. 1998, c. 19, which includes the phrase “actual costs.” (More accurately, the section in question refers to “costs, together with any additional actual costs to the corporation in obtaining the order,” but I do not think the additional language is significant.) The Court of Appeal held, at para. 45, that “the principles governing the assessment of legal bills as between a lawyer and his or her client” should govern the determination of “actual costs.” The court said, at paras. 48 to 49, that this is distinct from the principles governing the assessment of costs between parties.
[18] When awarding “actual costs,” the cost order must still be reasonable: Toronto Standard Condominium Corporation v. Baghai Development Ltd., [2012] O.J. No. 2746 (C.A.), at paras. 77 to 81, but the measure of reasonableness differs with the two approaches. Mark M. Orkin, The Law of Costs, 2nd ed. (Toronto: Thomson Reuters, 1987), at §6:41 describes this as follows:
There is a clear distinction between a judge fixing the costs of a successful litigant and an assessment officer assessing the fees of the successful litigant's counsel. A judge fixing costs must determine what is reasonable for the losing party to pay. By contrast, an assessment officer conducting a solicitor-client assessment must determine what is reasonable for the client to pay in light of the circumstances between the solicitor and the client..
[19] Often, there will be no difference in these measures. But sometimes the difference will be significant. Take for example a case where the client has agreed to pay an exorbitant hourly rate to a lawyer. That high hourly rate should be reflected in what is reasonable for the client to pay, because it amounts to a contractual term between the lawyer and client. But should it govern what is reasonable for an adverse party to pay when full indemnity costs are payable? Here, as much as $1,090 per hour is claimed for Mr. Niman’s time in this matter. Should the applicant be saddled with that high hourly rate?
[20] In my view, even full indemnity costs should reflect, to some extent, the reasonable expectations of the paying party. If this is not the law, it would discourage anyone from ever accepting an offer that included a term that called for payment of full indemnity costs. In addition, this approach merely requires that the resulting costs award be reasonable, and it reflects the extensive jurisprudence holding that reasonableness is an overriding principle. The reasonable expectation of the paying party must include, however, an appreciation that costs are being determined on a full indemnity basis.
[21] Of the cases cited to me by counsel, two are especially helpful because they deal with the assessment of costs on a full indemnity basis: Chan v. Town, 2014 ONSC 2217, at paras. 19 and 58, and Benzeroual v. Issa and Farag, 2017 ONSC 6225, at paras 41 to 47. These cases both recognize that the reasonable expectation of the paying party remains relevant in the determination of full indemnity costs.
Approach Taken Here
[22] In this case, the claim for costs and the surrounding arguments do not lend themselves to determination through arithmetic. This is especially so because of the limited detail in the dockets of respondent’s counsel.
[23] The approach I have taken is to identify an overall number that I consider to be fair and appropriate and then to reflect on whether it is within the reasonable expectations of the parties – both parties. But because this is largely a determination of costs on a full indemnity basis (i.e., a full recovery basis), I have been especially mindful of whether the overall amount is within the reasonable expectations of a client who might be assessing his or her lawyer’s bill.
[24] I have weighed the various arguments of the parties and have applied discounts to the amounts claimed. I have provided qualitative descriptions of the merits of the arguments but, generally, I have not attempted to articulate a specific quantitative discount associated with each argument.
Amount Claimed
[25] The respondent claims costs of about $120,700 (or under an alternate calculation $126,800). This includes legal fees for the respondent’s two previous lawyers.
[26] According to the respondent, these amounts represent appropriate partial indemnity fees to the date of the offer and full indemnity fees thereafter, reduced in acknowledgement that: (1) only costs for the parenting issues have been settled; and (2) she owes costs to the applicant under previous orders.
[27] According to the applicant, his legal fees associated with parenting issues from the date of the offer to settle to the date he accepted the offer are about $19,000.
[28] Assessing these discrepant positions has been difficult, in part because neither party has been fully transparent:
a. I have not been provided any actual client invoices or confirmation of payment of invoices by either party.
b. I have not been provided with a retainer agreement indicating that the respondent specifically agreed to any given hourly rate.
c. I have not been provided with any dockets or invoices for the respondent’s prior lawyers.
d. Significant portions of the dockets of counsel for the applicant have been redacted and the totals in the dockets have been redacted (the redactions go beyond what seems necessary to protect client privilege).
Conduct of the Parties
[29] The respondent argues that the applicant conducted himself in an unreasonable manner “by waiting over two years to accept [the] offer,” and because of some of the positions he took. I have done a detailed review of the dozens of pages of affidavit material and exhibits, and still find it difficult to assess whether the applicant has been unreasonable.
[30] The conduct of the parties is less important in this case because I am determining costs on a full indemnity basis. I acknowledge that the conduct of the parties may be relevant to the time spent because parties who take unreasonable positions should expect that they will be required to pay costs to compensate adverse parties for the effort required to respond. However, the applicant has not criticized any individual docket, or the overall time spent as excessive. He has focussed on other arguments. As the applicant states in his factum, this is not a motion about who was right or wrong.
Start date for full indemnity
[31] The offer requires that “Paul shall pay costs to Grace on a full indemnity basis, to be assessed.” This immediately follows a paragraph stating that if the offer is accepted by June 1, 2018, no costs are payable. There is no specific temporal limitation or indication as to when the full indemnity costs should start. There is ambiguity in the offer as to whether it requires full indemnity costs from the beginning of the proceeding.
[32] The respondent’s factum acknowledges (at para. 6) that partial indemnity costs to the date of the offer are appropriate and full indemnity should be payable thereafter. I agree with this approach. The evidence does not support a claim for full indemnity costs prior to the date of the offer so it is unlikely that that was the intention.
[33] Of course, the further required qualifier is that only costs relating to the parenting issues are recoverable under the offer.
End Date for Full Indemnity
[34] One of the most important reasons for an offeree to accept an offer is that it terminates the offeree’s continued exposure to liability for full indemnity costs. In the normal course, the offeree would immediately comply with the terms of the settlement and the parties would move on.
[35] On close review of the dockets, it is apparent that the respondent claims for continued full indemnity costs beyond the date of acceptance of her offer. That may be appropriate in some cases, but in this case, there was effectively a new dispute with its own cost consequences after acceptance of the offer. The respondent should not recover costs for her unsuccessful attempt to resile from the offer.
[36] By my estimate, the fees incurred by the respondent for time after March 31, 2020, including HST, add to over $10,000. From the available information in the dockets and other information in the record, it appears that the time was spent trying to resile from the settlement that the respondent now relies on, including addressing the applicant’s motion to enforce it. None of this time can be properly claimed.
Prior Lawyers’ Fees
[37] The work of the respondent’s two previous lawyers, Mr. Cochrane and Ms. Oliver, was done before the offer was made and therefore before full indemnity fees are payable.
Mr. Cochrane’s Fees
[38] Mr. Cochrane’s invoiced amount was exclusively for work done prior to the application being started. While it may be appropriate in some cases to include pre-litigation legal fees in an award of costs, in this case I would not do so. There are several reasons for this.
[39] First, courts often disallow claims for pre-litigation efforts: see, e.g., McNaught v. McNaught, 2015 ONSC 5010, at para. 81(7), and Marsh v. Gibson, 2011 ONCJ 276, at para.13.
[40] Second, another lawyer took over the matter before the claim was issued.
[41] Third, Mr. Cochrane’s fees are not supported by dockets, and his invoices have not been provided. No documentation is provided from which it might be possible to infer the amounts that relate to parenting. I have little evidence to assess what work he did and the value of this work.
[42] Fourth, while Mr. Cochrane was retained, the parties tried parenting mediation. There is strong authority for the proposition that the court should not award costs for a voluntary mediation: Dostie v. Poapst, 2015 ONSC 1532, at para. 30, at least when determining a partial indemnity award: Saltsov v. Rolnick, 2010 ONSC 6645 (Div. Ct.), at para. 9; Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, at para. 96. The Court of Appeal has said that Saltsov has no application in the context of mandatory mediation: Pavlov v. The New Zealand and Australian Lamb Co., 2022 ONCA 655, at para. 18, but my understanding from the material is that the parenting mediation in this case was a voluntary mediation.
Ms. Oliver’s Fees
[43] Ms. Oliver’s invoiced amount included preparation of the respondent’s reply and attendance at a case conference and settlement conference. However, again, no dockets or invoices are available from Ms. Oliver. The respondent did depose that after Ms. Oliver delivered her answer, the parties “continued to have significant issues relating to parenting, which remained the primary issue between us.” In contrast, the applicant’s materials emphasize that other issues remained live issues including disclosure and financial issues.
[44] The award I have made reflects an amount for partial recovery of Ms. Oliver’s fees, but discounted significantly to reflect the limitations in the proof provided as to whether her fees relate to parenting issues and whether the fees were reasonable for the tasks completed.
Transition Work
[45] It is also appropriate to disallow some of the fees of respondent’s counsel’s firm (“NM LLP”) because there would have been some duplication of effort when they assumed carriage of the file, which the applicant should not be expected to pay: Goryn v. Neisner, 2015 ONCJ 318, at para. 34. I discount the costs claim by a very modest amount based on this consideration.
Costs of prior steps in the proceeding
[46] The prior steps in this proceeding (i.e., prior to acceptance of the offer) include the 2016 case conference and 2016 settlement conference that Ms. Oliver attended; a trial management conference set for February 16, 2017 (adjourned); a settlement / trial management conference on June 9, 2017; a motion over the summer 2017 parenting schedule heard on June 20, 2017 (respondent ordered to pay $5,000 in costs); a cross motion over child support set for the same date (resolved – no costs); a settlement conference on December 15, 2017; a motion by the respondent over ballet and therapy originally returnable February 25, 2020, rescheduled for March 24, 2020 (postponed due to pandemic – issue later resolved).
Motions
[47] The parties agree that the fees associated with the motions need to be backed out to the extent that the costs consequences of those motions were previously addressed. The respondent’s approach is to simply subtract the costs awards made from whatever award is made here. The applicant argues that the dockets associated with those motions need to be examined and fully backed out. Before acceptance of the offer, the only motion that resulted in a costs order was the motion over the 2017 summer parenting schedule. The applicant was successful in the motion and recovered $5,000 in costs. In addition, the ordered schedule does not appear to be the same as what the offer called for. The respondent should not recover costs for any efforts associated with that motion. The dockets associated with that motion totalled $26,000 to $28,000, inclusive of HST (Ms. Cairns and Mr. Niman were both involved in that effort). This is an immense amount for a fight over a summer schedule.
Conferences
[48] The general rule under rule 17(18) is that costs are not awarded for conferences unless the conference was unproductive because of the conduct of a party. There are exceptions including the exception in rule 17(18.1), that says rule 17(18) does not prevent the court from awarding costs at a later stage in the proceedings.
[49] Relying on Cameron v. Cameron, 2018 ONSC 6823, at para. 86, Thompson v. Drummond, 2018 ONSC 4762, at para. 55, and Ferslisi v. Boucher, 2021 ONCJ 103 at paras. 14-16, the applicant argues that nothing should be allowed for the fees associated with prior steps in the proceeding, and in particular, case conferences.
[50] The conferences in this matter all predate the amendments that created rules 17(18.1) and amended rule 24(11) (these amendments came into effect on July 1, 2018). However, as procedural provisions, these amendments have retroactive effect: Cameron, at para. 77.
[51] I see no reason to depart from the plain meaning of “full indemnity.” The costs of the case conferences should be recoverable, to the extent that they dealt with parenting. The cases cited by the applicant are distinguishable because in this case the applicant has agreed to pay full indemnity costs. Cameron and Thompson were costs determinations after trials. Ferlisi was a costs determination after a motion. Furthermore, part of the reason for adding rule 17(18.1) may well have been to allow the court to ensure a party is fully indemnified for costs in an appropriate case.
[52] Quantifying the fees associated with the conferences is difficult because of the lack of detail in the dockets.
Breakdown of Costs Claimed
[53] There is no form for a bill of costs or a costs outline under the Family Law Rules. That is, there is no equivalent to form 57A or 57B required by the Rules of Civil Procedure.
[54] The bill of costs filed by the respondent in this motion takes the form of a list of hourly rates and a list of dockets for the NM LLP work. The bill of costs also shows the totals for the fees of the respondent’s previous lawyers (and only the totals).
[55] Examples of the dockets include: “To reviewing file”; “To reviewing material from client, preparing memo, meeting with client”; “To emails to client, drafting letter”; “To preparing for motion, drafting affidavit”; “To emails.” Most of the dockets describe activities but provide no information relating those activities to the parenting issue or other issues. Because the bill of costs does not follow a traditional format, the materials filed by the respondent provide no breakdown of the time spent on various activities or issues. Instead, as indicated, the respondent suggests that estimated percentages be applied for the work relating to parenting issues, being 50% for the work of the previous lawyers, 60% for NM LLP’s work prior to acceptance of the offer, and 100% for NM LLP’s work after the date of acceptance, plus 100% of the disbursements. In fairness, the respondent does provide considerable detail in her affidavit describing the issues between the parties that were addressed over the time in question. I note that a somewhat similar approach was advanced in Gravelle. It is a legitimate approach but does not provide a benchmark based on an arithmetic approach, which can be a helpful starting point.
[56] In contrast, the applicant has attempted to categorize the elements of the respondent’s bill of costs into categories as follows: Transition Costs; Previous Steps; Unspecified Dockets; Parenting; Financial Issues; After Settlement. The applicant asserts that only about $14,000 of the documents are clearly connected to parenting issues.
[57] The applicant has provided considerable authority in support of his argument that the court must be provided with a detailed breakdown of what services were rendered and which issue those services relate to. In Benzeroual, at para. 55, Pazaratz J. held:
There is no absolute requirement that a bill of costs must follow an “itemized by date and task” format. But particularly where large amounts of money are being claimed, the party seeking costs has an obligation to provide sufficient information:
a. To particularize what work had to be performed and why.
b. To address varying levels of indemnification which may apply to different issues.
c. To reassure the court that costs are not currently being claimed for previous steps or events where costs have already been dealt with (or should already have been dealt with). This requires more than a generic statement that unrecoverable costs are not being claimed [citation omitted].
[58] In Blank v. Micallef, 2009 60668 (ON SC), at para. 18, Ricchetti J. (as he then was) found it impossible “to determine whether the hours were reasonably necessary without a breakdown of the time spent on each task.”
[59] In Shah v. Shah, 2021 ONCJ 77 para. 34, Parent J. said: “Unfortunately, the Bill of Costs and the docket entries provided, are not clear as to the precise number of hours spent” on the tasks for which costs were recoverable, so it was impossible to assess the appropriate amount for costs. No costs were allowed in that case.
[60] And in Oppong-Nketiah v. Oppong-Knetiah, 2021 ONSC 7151 para. 31, Somji J. said: “Ms. Kenney did not specify when the 25.8 hours was completed and whether it was on all issues or just the one that was principally litigated. Without a clear breakdown of her billings, it is difficult to determine whether all 25 hours were reasonably necessary.”
[61] In this case, it is appropriate to discount the claimed fees substantially to reflect the onus on the respondent and the limitations of the evidence provided. With that said, it is important not to severely penalize the respondent for the lack of detail in the dockets or the failure to categorize the time spent. The respondent’s affidavit does provide a detailed narrative description of the matters in issue, the steps taken, the nature of the correspondence between the parties, and the activities involved that gave rise to the docketed time. It is appropriate to infer that considerable time was spent on the parenting issues, although it is difficult to determine the time with any degree of precision.
Hourly Rates
[62] I have reviewed the Form 13.1 financial statements, tax records, and corporate statements in the materials to try to get a sense of these parties’ wealth and the amount in issue. It is difficult to discern. In her affidavit of December 1, 2021, the respondent indicates, “I am not of significant means,” and, “I lived in my parents’ home up until very recently as I could not afford to have my own place to live.”
[63] The issues appear to have been contentious but not complex.
[64] I saw nothing in the materials and did not hear any argument to justify extreme legal expense or high hourly rates. Mr. Niman’s hourly rates are not justified in this case, although in fairness he did not docket a great deal of time to it. Ms. Cairns stated in argument that she docketed 200 hours and Mr. Niman only docketed 12.
Conclusion
[65] I find an appropriate amount for costs pursuant to the accepted offer and partial settlement of this matter to be $49,000. This represents:
a. none of Mr. Cochrane’s fees;
b. a portion of Ms. Oliver’s fees but heavily discounted because they were incurred before the offer and therefore full indemnity is not applicable and because I cannot discern how much of these fees relate to parenting issues;
c. a portion of NM LLP’s fees from January 2017 to May 25, 2018, but subtracting the fees associated with the 2017 summer schedule motion and discounting the remaining fees heavily because they were incurred before the offer and therefore full indemnity is not applicable, and because I cannot discern how much of these fees relate to parenting issues;
d. almost all of NM LLP’s fees from May 26, 2018 to March 31, 2020;
e. none of NM LLP’s fees after March 31, 2020;
f. $1,500 for disbursements.
[66] If the parties cannot agree on the costs of this motion, I will receive written submissions. I did receive the parties bills of costs as requested. The parties may each file written submissions of not more than six double-spaced pages (plus attachments, if required). These are to be filed by both parties by November 23, 2022. Reply submissions by both parties may be filed by November 30, 2022, limited to proper reply and not more than three double-spaced pages.
Chown J.
Released: November 4, 2022
Corrected version released: November 16, 2022. Changes were made to paragraphs 20, 44, 47, and 62 to correct typographical errors, and to paragraph 21 to correct a paragraph reference in a citation.