Court File and Parties

Court File No.: FC-16-2183 Date: 2023/03/13 Ontario Superior Court of Justice

Between: Kirsten Torgersrud, Applicant And: Albert Maxwell Lightstone, Respondent

Counsel: Michael Rankin and Marie-Eve Jean, for the Applicant Philip Augustine and Shawn Duguay, as agents for Carol Crawford, for the Respondent

Heard: In writing.

Costs Endorsement

Justice A. Doyle

Overview

[1] On December 16, 2022, after a two-day focused hearing, the court made the following orders:

• Both Quebec instruments comply with all of the essential and formal validity requirements under both Quebec law and the Family Law Act, R.S.O. 1990, c.F.3, as am., (“Act”).
• The provisions of the Quebec instruments do not oust the application of Part 1 of the Act.
• Alternatively, the court set aside the Quebec instruments under section 56 (4) of the Act.

[2] If the parties were unable to agree on the issue of costs, they were to provide me with costs submissions.

[3] Having considered the parties’ costs submissions, bill of costs and Family Law Rules, the court awards the applicant costs in the amount of $200,000 (inclusive of HST) plus disbursements of $65,106.73 (inclusive of HST) payable within 30 days.

Applicant’s Position

[4] As the successful party, the applicant submits that she is presumptively entitled to costs of $408,665.51, which include costs on a partial recovery basis for costs incurred prior to February 18, 2022, the date of the offer to settle (“offer”), and full recovery costs from the date of the offer to present day.

[5] The offer provided that the respondent consent to the following:

• That the Quebec instruments do not prevail over the applicant’s claim to an equalization of net family property; and
• In the alternative, if the Quebec instruments were a bar to the applicant’s equalization payment, then the Quebec instruments should be set aside pursuant to the Act.

[6] The offer remained open for acceptance until immediately after the commencement of the focused hearing.

[7] The case was complex, important, required detailed opinion testimony and the stakes were high as the applicant would be able to claim an equalization payment of several million dollars if successful.

[8] Counsel Michael Rankin’s rate is $550 to $725 per hour and the rate of Marie-Eve Jean ranges from $280 to $395 per hour.

Respondent’s Position

[9] The respondent submits that the amount requested by the applicant for costs is excessive and disproportionate for a two-day focused trial and that 680.8 hours of lawyers’ time is not reasonable and proportionate.

[10] The costs claimed go well beyond what would be anticipated by reasonable parties.

[11] The respondent accepts the claim of disbursements of $65,106.73 as expert legal opinions concerning the operation of the Quebec law were necessary and there is similarity with what the respondent expended on disbursements.

[12] He submits that a reasonable and proportionate amount of costs is $119,510.52 on a partial indemnity basis for fees and $65,106.75 for disbursements (including HST). This would be in line with the respondent’s bill of costs filed.

Legal principles

[13] In Mattina v. Mattina, 2018 ONCA 867, [2018] O.J. No. 5625, the Court of Appeal confirmed the purposes of costs: (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 under r. 2(2) of the Rules.

[14] Subrule 24(1) of the Rules creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (S.C.).

[15] One of the considerations in an assessment of costs is to fix costs in an amount that is “fair and reasonable” for the unsuccessful party to pay in a particular proceeding.

Analysis

Applicant was successful

[16] The applicant was entirely successful at the focused hearing and is presumptively entitled to costs.

[17] Regarding her offer, Rule 18(14) (15) is relevant and reads as follows:

(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

1. If the offer relates to a motion, it is made at least one day before the motion date.
2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favorable as or more favorable than the offer. O. Reg. 114/99, r. 18 (14).

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14). O. Reg. 114/99, r. 18 (15).

[18] The applicant’s offer meets the criteria set out in Rule 18 as it was signed by the applicant and served on the respondent and remained open until after the commencement of the hearing. The applicant was successful in obtaining a final decision as favourable as the terms set out in the offer.

[19] The respondent states that he responded with his own offer to settle dated March 1, 2022, which was the exact opposite.

[20] The court retains some discretion under Rule 18(14).

[21] However, the court must be guided by reasonableness and proportionality.

[22] The Court Appeal in Beaver v. Hill 2018 ONCA 840, at para. 16, noted that “the failure of an offer to settle to contain a true element of compromise is a factor to be considered in deciding whether the offer properly impacts on the appropriate award of costs.” The offer to settle mirrored the relief sought in the application and the respondent’s offer mirrored their response.

[23] The Court of Appeal found that neither offer contained a true element of compromise so as to impact an appropriate award of costs and did not find that an award of full indemnity was warranted.

[24] In Beaver v. Hill, Justice Nordheimer speaking on behalf of the Court of Appeal reminded us of the basic principle of costs awards:

[12] As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.

[25] The court must review the hours spent and expenses claimed with the proportionality and reasonableness principles in mind (Beaver para.14).

[26] At para. 15, the court found that success could only be achieved by one party, and it was not a case that could be settled. In that case, it was a question of whether a party was going to be able to proceed with its constitutional claim or not. The Court of Appeal found that there was no way of compromising on that central issue.

[27] Therefore, offers to settle in these types of cases should not play “any material role in determining the appropriate quantum of costs.” (para. 15). That is, the failure of an offer to settle to contain a true element of compromise is only one of the factors to be considered in deciding whether the offer properly impacts on the appropriate award of costs (para. 16).

[28] In this case, neither offer to settle reflected terms of compromise as this focused hearing was binary in nature, with the final result being either in favour of the applicant or the respondent. There was no possibility of divided success as no compromise could be offered.

[29] The court is entitled to review the costs claimed from the date of the offer to determine if it is reasonable and proportional to the issues as they relate to importance and complexity.

Previous steps

[30] There were previous conferences including case management conferences and a settlement conference.

[31] Rule 24 (10) and (11) is relevant:

(10) Promptly after dealing with a step in a case, the court shall, in a summary manner,

(a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or (b) expressly reserve the decision on costs for determination at a later stage in the case. O. Reg. 298/18, s. 14.

(11) The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case. O. Reg. 298/18, s. 14.

[32] In the Ontario Court of Appeal decision in Islam v. Rahman, 2007 ONCA 840, the court of appeal ruled that a trial judge could not award costs for previous steps.

[33] Since then, Rule 24 was amended to include subsection (11) which now permits the court to review and award costs for previous steps.

[34] Previous court appearances were:

• Justice Sheard’s endorsement of March 22, 2017 indicated that “there was no order as to costs”: The court will not award costs for this step;
• Justice MacEachern’s endorsement of October 18, 2019 was silent as to costs. The court declines to award costs for this step as terms of the order predominantly deal with financial disclosure issues;
• Justice Mackinnon’s endorsement of December 9, 2019 confirming that she is the case management Judge and offering dates for the first case conference was silent as to costs. There was no appearance; this was a chambers’ endorsement. The court declines to award costs of this step;
• Justice Mackinnon’s endorsement of February 6, 2020 predominantly dealt with disclosure issues and was silent as to costs. The court notes that the marriage contracts were discussed and some costs should be awarded for this step;
• Justice Mackinnon’s endorsement of March 4, 2021 after a settlement conference indicates that the parties discussed the Quebec marriage contracts and was silent as to costs. However, she also covered the issue of the marriage contracts creating a log jam for further discussions. The court discussed the expert evidence and the issues for the focused hearing. Some costs should be awarded for this step;
• Justice Mackinnon’s endorsement of October 5, 2021 confirmed that the parties were proceeding to a focused hearing on the issue of the Quebec marriage contracts and it was silent as to costs. This clearly was dealing only with the focused hearing and some costs should be awarded as the conference included discussion of the Quebec marriage contracts.

[35] There were 159.9 hours docketed for these conferences. I will permit costs for the appearances before Justice Mackinnon on February 6, 2020, March 4, 2021, and October 5, 2021.” Those appearances dealt with the issues in the focused hearing. Costs at these steps are included in my global award of costs.

Quantum of Costs

[36] As stated by the Ontario Court of Appeal in Beaver v. Hill, costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality.

[37] The respondent, as the unsuccessful party, would not have anticipated that costs would be sought against him in the amount of almost half a million dollars for a two-day focused hearing.

[38] The court will review the factors set out in Rule 24(12) of the Family Law Rules. The key principles set out in subsection (a) are reasonableness and proportionality as they related to the importance and complexity of the issues.

[39] The complexity of the matter involved the proof of foreign law where the court had to consider the affidavits of experts along with oral testimony regarding the Quebec matrimonial property regime.

[40] In addition, the court heard extensive evidence on the circumstances surrounding the signing of the Quebec instruments.

[41] The stakes were high for both parties as the equalization payment claimed is several million dollars.

[42] Both parties provided very long and detailed final written submissions for the court’s consideration.

[43] On the other hand, the two-day focused hearing involved only the testimony of the parties and their respective experts. The court was not required to review extensive viva voce evidence with a multitude of witnesses.

[44] Regarding the various subsections found in Rule 24(12), the court has considered that neither party is alleging that the other party acted unreasonably or demonstrated bad faith.

[45] The applicant’s hourly rates are not contested by the respondent.

[46] I have reviewed the applicant’s bill of costs and note the following:

• the applicant had the benefit of two lawyers assisting on the file and this is reasonable given the value of the equalization payment at stake (the respondent also had the benefit of two counsel);
• It is reasonable to engage an expert witness and the court referred to his testimony extensively in its final decision;
• The applicant has claimed costs for questioning in 2018 for 29.9 hours to deal with the issue and this is reasonable;
• The applicant claims of costs pertaining to “review of pleadings” of 12 hours, seems high;
• There is also 101.2 hours claimed for “general research” on this issue which seems high;
• I note that excessive time is being claimed in some aspects of this case: preparation of costs submissions and bill of costs of $19,652 (75% of actual) and $26,193 (full recovery). This is not reasonable and proportionate; and
• The preparation of written submissions was thorough and obviously persuasive but a claim of over $24,000 (75% of actual) to $32,735 (full recovery) seems excessive.

[47] The disbursements included the opinion evidence of Mr. Gerald Stotland, a Quebec lawyer specializing in family law and a member of both the Ontario and Quebec Bar. Time was required to prepare this expert witness and he also spoke about the duties required of notaries representing both parties.

[48] The expert’s opinion along with the book of supporting authorities was over 1000 pages.

[49] The applicant’s expert opinion was referred to extensively in the court’s analysis and determination of the issues at the focused hearing.

[50] The time expended was necessary given the stakes involved.

[51] The respondent was well represented and took the risk of proceeding to this hearing. At some point, the respondent must assume responsibility for his litigation strategy. The court has not made a finding that he was unreasonable nor demonstrated bad faith.

[52] Although this trial was two days in length, preparation was required which was time consuming and expensive. The bill of costs shows that applicant’s counsel were conscientious in their preparation and conduct of the trial.

[53] However, the court is concerned that there seems to be duplication of efforts between the two lawyers on the file and the high amount claimed for costs is disproportionate given my above findings. As noted, it is not reasonable to incur over $26,000 in preparing costs submissions.

[54] I am not bound by the respondent’s submission regarding reasonable fees. The court questions why the respondent’s fees are approximately ½ of that of the applicant’s fees.

[55] In Robb Estate v. St. Joseph’s Healthcare Centre [1999] O.J. No. 1461, at para. 4, the court stated that a court may disregard the other party’s hours as a benchmark.

[56] Higher risk or stakes can justify one party expending more time and effort. Canadian Real Estate Assn v. American Home Assurance Co., 2014 ONSC 702 at paras. 10-11.

[57] I agree that the stakes were very high and that after a 29-year marriage the applicant will now be able to seek her multi-million-dollar equalization payment.

[58] As stated by Justice Pazaratz in Jackson v. Mayerle, 2016 ONSC 1556 (at para. 99): “The size of an unsuccessful party’s legal bill does not in any way dictate that the successful party’s legal bill is limited to the same amount. Sometimes, the winner was successful precisely because their lawyer put more work in the file.”

[59] In determining costs, the court is mindful of reasonable predictability of the parties and the interests of justice.

[60] The respondent has raised the fact that the applicant’s costs are being paid out of the parties’ line of credit on their jointly owned matrimonial home and interest on that line is currently being paid by the respondent. The court is not in a position to determine how this will affect the ultimate disposition of the case, and will not embark on the exercise of quantifying the benefit to the applicant.

[61] Taking into consideration the above findings, the court finds that a reasonable and proportionate fee is $200,000 (inclusive of HST) plus disbursements of $65,106.73 (inclusive of HST) payable to the applicant within 30 days.

Justice A. Doyle Released: March 13, 2023