Court File and Parties
COURT FILE NO.: FS-15-401235-01
DATE: 2023-02-07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ANGELA REID
Applicant
– and –
CHAD MACLEAN
Respondent
COUNSEL:
Catherine Hibberd, for the Applicant
Karen Ballantyne, for the Respondent
HEARD: In writing
Costs Endorsement
papageorgiou j.
[1] The respondent, Chad Maclean (“Chad”) brought a motion to change seeking to step down and terminate spousal support paid to the applicant, Angela Reid (“Angela”).
[2] On November 18, 2022 I released reasons finding that material changes alleged by Chad had occurred and varying the consent spousal support order made on May 27, 2016 whereby Chad agreed to pay Angela $3,500 per month indexed.
[3] Pursuant to my decision, Chad is required to pay Angela $3,500 per month until June 2025 after which after which it is stepped down to $1,500, and then terminated in June 2028. The principal basis for my decision was that Angela’s compensatory claim had not yet been satisfied, despite the existence of the material changes which had occurred. I also found that Angela had an ongoing compensatory claim because of ongoing sacrifices she made and ongoing benefits which Chad has continued to receive as a result of the disproportionate share of parenting work she has done post separation. Finally, I found that Angela had a right to share in Chad’s increased income post separation because the skills, credentials and relationship which he formed during their relationship assisted him in obtaining this new position, as did his unfettered ability to pursue his career because of Angela’s ongoing disproportionate share of the parenting work.
[4] Chad takes the position that success was divided and proposes that each side bear their own costs. Angela takes the position that she is entitled to costs because of an offer to settle which she made and beat.
[5] For the reasons that follow, I am awarding Angela $137,151 in costs.
The Law
[6] Modern costs rules are designed to foster four fundamental purposes: to indemnify successful litigants for the cost of litigation, to encourage settlement, to discourage and sanction inappropriate behaviour, and to ensure that cases are dealt with justly under r. 2(2) of the Family Law Rules, O. Reg. 114/99 (the “Rules”): Mattina v. Mattina, 2018 ONCA 867, at para. 10; Probst v. Shah, 2020 ONSC 2290, at para. 2; Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8.
[7] “Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs”: Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12; Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 24, 26 and 37-38. A costs award should always reflect what is a fair and reasonable amount to be paid to the successful party taking into account the reasonable expectations of the parties: Oduwole v. Moses, 2016 ONCJ 653, at paras 7, 41; Boucher, at paras. 24, 38.
[8] Although the Rules provide for an entitlement to full recovery costs in specific circumstances, including bad faith pursuant to r. 24(8), “there is no provision in the Family Law Rules that provides for a general approach of ‘close to full recovery’ costs”: Beaver, at para. 11.
[9] Neither is there a presumptive entitlement to substantial indemnity costs. As the Ontario Court of Appeal commented in Serra, at para. 8, family costs rules are designed to “partially indemnify successful litigants for the cost of litigation.”
[10] The Court of Appeal also confirmed in M. (C.A.) v. M. (D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (C.A.), at para. 43, and Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730, at para. 94 that the overriding consideration in family law cases is “reasonableness of the costs sought” and actual costs are not determinative.
[11] Pursuant to r. 24(12) of the Rules, the court is directed to consider a number of factors as they relate to the importance and complexity of the issues, including: each party’s behaviour; the time spent by each party; any written offers to settle; any legal fees, including the number of lawyers and their rates; any expert witness fees; any expenses paid or payable; and any other matter: see also Belair v. Bourgon, 2019 ONSC 2170, at para. 41.
The Successful Party
[12] Chad proposes that a “no costs” order is appropriate in accordance with r. 24(1)(6) on the basis that success was divided.
[13] I agree that success was divided. While Chad succeeded in establishing that material changes had occurred, the variation driven by these changes was not significant. This was, in part, because one of the material changes Chad asserted was his obtaining a more lucrative job with a substantially higher income. As noted above, I found that Angela was entitled to share in this post separation increase in income because the knowledge, skills, experience and credentials he obtained as well as his ability to form a relationship with this new employer were contributed to by Angela’s sacrifices during the relationship. Further, her ongoing disproportionate share of parenting responsibilities post separation allowed him to focus on his career. This increased her compensatory claim and thus counteracted the implications of the other material changes he established (changes to the parenting schedule and Angela working greater hours)
Offers to Settle
[14] Both parties have referenced offers to settle as relevant.
[15] Angela raises her December 16, 2021 offer to settle (the “December 2021 Offer to Settle”). It provided that Chad would pay monthly support in the amount of $3,785 (the indexed $3,500 figure) until December 1, 2024 at which time it would terminate. It could be accepted on a without costs basis prior to December 20, 2021 at 5:00 pm. It could still be accepted after this time, but would include costs agreed by the parties or fixed by the court. The Offer was open for acceptance until one minute after commencement of the hearing.
[16] Rule 18(14) provides that a party who makes an offer to settle is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery costs from that date if certain conditions are met. Chad does not dispute that the relevant conditions have been met. Angela’s offer was made at least seven days before the trial; it did not expire, was not withdrawn before the hearing began, and Angela obtained a result more favourable at trial.
[17] Chad relies upon the court’s overall discretion and case law which provides that the cost consequences in r. 18 are not automatic; rather, the rule establishes a rebuttable presumption with the court having the final discretion to determine costs taking into account all relevant circumstances; Weber v. Weber, 2020 ONSC 6855 at para 24.
[18] Chad also references r. 24(12)(iii) which provides that the court may consider any written offer to settle in the exercise of its discretion.
[19] Although Chad concedes he cannot seek costs related to parenting and child support issues which were settled prior to this trial, he references offers to settle made by both parties which related to all the issues raised by Chad in this proceeding, namely; i) his request to increase his parenting time with the Children which was settled; ii) his request for child support set-off if his request to increase parenting time was successful, which issue was also settled; and iii) his request to step down and terminate spousal support which proceeded to trial.
[20] Chad served 12 Offers to Settle between March 13, 2019 and December 17, 2021, most of which were severable. Although Angela made an Offer to Settle the parenting issues on December 15, 2021 which Chad accepted, he references prior offers he made which were as favourable, or more favourable, to him than the result finally arrived at with respect to the issue of his parenting time.
[21] There are five such offers, all of which were severable: March 13, 2019, June 19, 2019, June 21, 2019, September 24, 2021, October 1, 2021. Therefore, Angela could have accepted them and still proceeded to trial on the issue of whether there should be offset child support as well as issues related to spousal support.
[22] Chad also references the fact that Angela made fewer offers than him, and that hers were not severable. This meant that he could not obtain additional time with the children unless he agreed to her financial terms. At trial, Angela explained that she wanted to make sure that the changes he proposed were in the Children’s best interests and that once she was satisfied, she made her Offer which he accepted. I accept her evidence.
[23] In my view, the Offers to Settle in respect of issues which the parties settled are not particularly relevant to the costs of the matters that proceeded to trial.
[24] However, the offers Chad made with respect to spousal support are relevant. He made a number of offers to settle the spousal support claim which involved continuing ongoing support until a specified time, or continuing support until a specified time with a lump sum payment made to Angela. His final offer made December 17, 2021 involved his continuing to pay periodic support of $3,785 until December 1, 2023 at which time it would terminate. His offers showed that he had moved considerably off of his initial position that spousal support should be terminated as of September 1, 2019, that he was trying to be fair and was adjusting his expectations, even if his offers were not acceptable to Angela and even if this Court ultimately determined that Angela was entitled to more.
[25] I will be taking Chad’s Offers to Settle into account in the exercise of my discretion and saying more about this when I discuss proportionality and reasonableness of the overall costs award.
Any Other Relevant Matter
[26] Chad also makes the general argument that Angela may not claim costs for case conferences where none were awarded or reserved to the trial judge: Bortnikov v. Raktiova, 2016 ONCA 427 at para 34. He does not reference any particular improperly claimed costs related to case conferences on Angela’s Bill of Costs. I reviewed Angela’s Bill of Costs and compared it to the endorsements made at case and settlement conferences and did find five entries claiming costs in respect of case/settlement conferences where no costs were reserved. The total time claimed amounts to 6.4 hours and I am taking this into account.
[27] He also argues that he was required to obtain two different Voice of the Child Reports at a cost of $9,972. In my view, having settled the parenting issue on a without costs basis, this is not a relevant consideration.
Hourly rates
[28] As to Angela’s counsel’s hourly rates, they are comparable to those incurred by Chad and reasonable. The senior lawyer’s hourly rate at $350 on a partial indemnity basis and $450 at a full recovery basis is reasonable for a lawyer called to the Bar in 1996. By way of comparison, Chad’s lawyer’s hourly rate on a full indemnity basis is $452 per hour and she was called to the Bar in 2003. No time has been sought for law clerks or legal assistants for any work they did to prepare for the trial.
Reasonableness and Proportionality
[29] Angela claims the following costs: a) costs of the trial up to the date she made her Offer to Settle in December 2021 on a partial indemnity basis in the amount of $41,330, plus HST; b) full recovery costs from the date of her Offer to Settle on a full indemnity basis in the amount of $154,700, plus HST due to her Offer to Settle; and c) disbursements of $9,710.41, plus HST.
Angela’s Costs Prior to her December 2021 Offer which she beat.
[30] Chad’s Bill of Costs shows that for the entire period between January 2018 and December 2021, his counsel spent only 65.5 hours or $41,499 in full indemnity costs. He estimates that the bulk of the time prior to December 2021 was spent on parenting issues and estimates only $8,400 was spent on spousal support issues. As such, he argues that Angela’s costs for this period are unreasonable and not within his reasonable contemplation.
[31] However, while Chad estimated the proportion of time spent on the spousal support issue, his entries do not assist the court in concluding that his estimate is correct, nor do they set out the basis for this estimate. For example, he records one entry from January 10, 2018 until May 23, 2018, one entry for August 8, 2018 to March 6, 2019. There are many block entries of this nature.
[32] In Omers Realty v. Management Corp. v. Peel (Regional Municipality), [2000] O.J. No. 3817, Nordheimer J. stressed that a proper Bill of Costs will have daily time entries which show the court how, when and by whom the time was spent.
[33] In my view, Chad’s Bill of Costs for the pre-December 2021 Offer to Settle period is not a reliable measure of the time which would reasonably have been spent on issues related to the spousal support issue prior to December 2021.
[34] In contrast, Angela’s Bill of Costs for this period is detailed by work done each day which is adequately described.
[35] Angela has gone through her dockets and specifically noted time spent on the spousal support issue (for the most part.) In most cases, she has noted specific time spent each day and then apportioned the time which would have related to the spousal support issue. I have gone through her Bill of Costs and have noted that some entries do relate to general matters without any apportionment such as telephone calls related to the motion to change, correspondence, preparation of responding materials etc. However, they do not amount to a significant amount of time and Chad did not even assist the Court by itemizing them. Nevertheless, I am taking this into account in the exercise of my overall discretion.
[36] I accept Angela’s Bill of Costs as a reliable, reasonable and proportionate measure of costs which should have been in Chad’s reasonable contemplation for this period with the exception of time billed for case conferences where costs were not reserved to the trial judge and entries which are not clearly in respect of spousal support issues. These total approximately 20 hours. Therefore the partial indemnity costs awarded to Angela for the period prior to her December 2021 Offer is the amount she claims but reduced by 20 hours X $350 = $7,018 which results in an award of $41,330 - $7,018 = $34,312, subject to my consideration of the reasonableness of the overall award which I consider at the conclusion of these reasons.
Angela’s Costs After her December 2021 Offer to Settle
[37] The more controversial point raised by Chad is that Angela’s costs were not within his reasonable contemplation because he only expended $40,419 for this period, compared to Angela’s $154,700. (I note that there are one day motions on which parties spend more than $40,419 to prepare and argue.)
[38] Trial preparation in this case included the preparation of Affidavits, Exhibit Briefs, written opening statements, as well as review of the opposite party’s materials. The Caselines file is 7349 pages long (although some of this did include copies of cases and the Trial Record). Angela’s affidavit material was approximately 85 pages long. Chad’s was approximately 50 pages long. Angela’s Exhibits were contained in 5 Exhibit Briefs which contained approximately 2,200 pages in total. Chad’s Exhibits were contained in 5 Exhibit Briefs which contained approximately 670 pages. Most of these Exhibits were financial and Chad’s also included significant Divorcemate calculations regarding all the years for which he paid spousal support. Angela also prepared similar Divorcemate calculations.
[39] Chad’s Bill of Costs for this period suffers from the same deficiencies as his pre-December 2021 Bill of Costs entries. That is, there are bulk entries for time periods, for example for the periods: a) December 17, 2021 to December 31, 2021, b) December 31, 2021 to March 6, 2021; and c) February 1, 2022 to March 7, 2022. These entries do not provide a reliable manner of assessing either the time which his counsel spent, or the time which he reasonably should have expected Angela to incur. He has not provided any dockets which could shed further light on these issues even if the Bill of Costs shows bulk entries.
[40] Chad’s Bill of Costs shows only 38.3 hours spent up until the commencement of the trial. In my view, particularly given the bulk entries, this amount of time cannot be said to be a reasonable approximation of the time which Angela’s counsel reasonably spent to prepare for trial or that was in Chad’s reasonable contemplation.
[41] Chad’s Bill of Costs for this six day trial shows only the time in court while the hearing was held with the hours billed ranging from four hours to a single eight hour entry. This is not realistic or reliable. Angela’s Bill of Costs shows the many hours of work that were required prior to and after the time spent in court. In Nova Growth v. Kepinski, 2011 ONSC 4640, at para. 14, Justice Mesbur stressed that for each hour of court time, multiple hours of time will be spent prior to the hearing and during the hearing day to properly present one’s case.
[42] I add that the issues in this trial were complex and reasonably required Angela to expend significant time and effort. Chad’s initial position on his Motion to Change was that Angela’s entitlement to spousal support had ended. Angela was required to marshal the evidence and legal arguments to support her ongoing entitlement to spousal support as well as the ongoing compensatory nature of it. This included evidence as to the roles adopted by the parties post separation and required a fulsome affidavit so that the court could grasp the parties’ roles in parenting their children and the ongoing economic impact on Angela. This also required a focused and effective cross-examination of Chad which bolstered Angela’s position and must have taken considerable time to prepare.
[43] Angela’s counsel was required to craft arguments to address Chad’s positions that payment of Guideline Child support did not impact upon spousal support to which Angela was entitled and to address Chad’s argument that spousal support was linked only to the duration of the marriage.
[44] In my view, in all the circumstances, Chad’s Bill of Costs is not a particularly reliable record of the costs which should have been in his reasonable contemplation regarding the work which would have to be undertaken by Angela to respond to his motion.
[45] As per Fielding v. Fielding, 2014 ONSC 100, 39 R.F.L. (7th) 109, at para. 24, while a court should compare the time expended by the opposite party as part of the inquiry into reasonableness claimed, it does not follow that an unreasonably low expenditure of costs should trump the court’s assessment of costs reasonably incurred by the successful party.
[46] In my view, even if those are the only costs Chad expended, it should not be taken to be representative of what his reasonable expectations regarding Angela’s costs should be. Just as a party can spend as many resources as they wish without those being taken to be within the reasonable contemplation of the other party, so too is it not appropriate to determine that a party’s reasonable expectations should be driven by their decision to spend an unreasonably low amount of costs.
[47] There are a number of ways of considering whether the costs incurred and claimed are proportionate to what was at stake.
[48] Chad’s initial position in his Motion to Change was that Angela’s spousal support should be terminated as of September 1, 2019. If successful, this would mean that Angela would have to repay spousal support paid to her after September 1, 2019. As of the date of the trial decision, if Chad had been successful, this would have amounted to approximately ($3,500 X 38 months = $133,000) to be repaid by Angela, and no further spousal support. ( I am using the date of the decision as the comparator since both parties would have been aware that the trial decision would be released sometime after the trial which was held in March 2022. I am using unindexed spousal support figure in all of this calculations for ease of reference. If the actual spousal support as indexed were used, the repayment would be higher.)
[49] Angela’s position at trial was that there were no material changes and therefore there would be no reductions in spousal support. Measured from Chad’s and Angela’s initial positions, there was a great deal at stake.
[50] However, by the time the trial commenced, Chad’s opening position was that he was seeking to step down spousal support to approximately $2,000[^1] retroactive to June 1, 2021 and then to terminate it on June 1, 2022. If Chad was successful, this would mean that as of the trial decision which was released November, 2022, Angela would be required to reimburse Chad the approximate amount of ($3,500 - $2000) X 12 months + ($3,500 x 5 months) = $18,000+ $17,500 = $35,500. She would also have to forego any future spousal support. Viewed in this way, by the time of trial, Angela had less at stake, but her claim to ongoing entitlement was still significant. As well, there is no evidence that she knew that Chad’s position would be different at the commencement of the trial and so it is difficult to fault her for preparing based upon his position in his initial Motion to Change.
[51] There is yet another way of looking at this. Chad’s December 2021 Offer to Settle offered to pay Angela spousal support until December 2023 compared to Angela’s December 2021 Offer to settle which provided that her spousal support would continue until December 1, 2024. Therefore, by December 2021, the parties were only approximately one year apart. Both had moved significantly off of their initial position and it is apparent that they had each given up as much as they were prepared to, in order to settle this matter.
[52] Viewed from the perspective of what Angela was prepared to accept above Chad’s offer at that time, there was only approximately $45,000 at stake, although I acknowledge that Angela’s December 2021 Offer to Settle was very reasonable measured from the standpoint of what I concluded Angela was entitled to at trial.
[53] In all the circumstances, taking into account all three of the above scenarios, in my view, the costs expended by Angela were not proportionate and there should be some reduction to reflect that.
Disbursements
[54] Angela claims disbursements in the amount of $9,710.87 plus HST. These are for photocopies, facsimiles, a researcher, process servers, title searches, printing, and couriers. Chad did not challenge these disbursements. Therefore, I find them reasonable.
Costs of Chad’s Motion to Introduce Fresh Evidence
[55] Angela also claims costs of Chad’s motion to introduce fresh evidence. Her dockets indicate she spent 13 hours on this issue. I find this a reasonable and proportionate amount of time to have spent on this issue.
Conclusion
[56] It is unfortunate that these parties did not engage in further settlement negotiations after they exchanged their December 2021 offers. They were approximately one year apart in their positions by that time with Angela’s offer that support would continue until December 1, 2024 and Chad offering to continue paying it until December 1, 2023. If Chad had accepted Angela’s December 2021 Offer, then he would have paid $45,420 more than he was prepared to pay pursuant to his December 2021 Offer and it would have been tax deductible to him.[^2] If Angela had accepted Chad’s offer she would have received $45,420 less than her offer.
[57] Angela makes the point that a significant costs award is required to reinforce the crucial role of Offers to Settle in Family Law Litigation. She points out that Chad’s income is almost five times hers (taking into account her income together with her spousal support), and that he was well placed to force her to trial instead of accepting her December 2021 Offer to Settle which was reasonable. While I appreciate this point, the same could be said of her. She could have avoided the significant expense of this trial with an uncertain result by accepting his Offer or seeking to split the difference. There was no evidence that any further settlement discussions took place.
[58] In my view, one of the reasons why all offers to settle may be taken into account in family law matters is the policy interest in resolution of family law matters, instead of all-out war. Resolution is often in the parties’ best interests as it allows them to move on; moreover it is the children’s best interests even when the only issue is financial.
[59] In summary, while success was divided Angela beat her offer and r. 18 results in certain cost consequences, these consequences are subject to the court’s discretion.
[60] Chad has raised some valid arguments which I have referenced. I am also taking into account Chad’s genuine attempts to resolve this matter evidenced by the considerable number of Offers to Settle which he made which demonstrate his significant movement off of his initial position in this proceeding. I am also taking into account my conclusion that the overall costs expended by Angela were not proportionate.
[61] In the exercise of my discretion, I am reducing the overall costs award to which Angela would be entitled based upon her counsel’s docketed time by 50 % for costs incurred after December 2021. It is not possible to provide a precise mathematical reason for this percentage as it is based in large part upon Chad’s genuine attempts to resolve this matter as well as my overall conclusion that the costs claim is not proportionate. I find that both parties bear the responsibility for this matter not resolving after December 2021 when they were so close in their Offers. Therefore, I am having each of them bear 50 % of the responsibility for the costs that Angela incurred after this time.
[62] This results in the following: a) partial indemnity costs prior to the December 2021 Offer to Settle as follows: $34,312 on a partial indemnity basis; b) full indemnity costs after the December 2021 Offer to Settle as follows: $154,700 on a full indemnity basis, reduced by 50 % for a total of ( Pre-December 2021 Costs in the amount of $34,312 + ($154,700 X .5) = $34,312 + $77,350 and c) disbursements $9,710.87 plus HST.
[63] The total awarded is $34,312 + $77,350 + 9,710.87 plus HST = $137,151
[64] Chad has asked that he be permitted to pay costs over a period of two years. Chad’s income is almost $500,000 as set out in the trial reasons. I see no reason why he should be given this amount of time since Angela has had to incur these costs already. Nevertheless, in the exercise of my discretion, I am ordering that the costs be paid within 90 days given the sizeable amount awarded.
Released: February 7, 2023 Papageorgiou J.
[^1]: The actual amount was $1,893 but I am using round numbers for simplicity. The use of round numbers does not have any significant impact on the point I am making. [^2]: I have used the actual spousal support indexed figure of $3,785 for this calculation.