Setareh Namdar v. Amir Ali Maali, 2024 ONSC 4307

Court File No.: FS-23-38496 Date: 2024-08-01 Superior Court of Justice - Ontario

Re: Setareh Namdar, Applicant And: Amir Ali Maali, Respondent

Before: M. Kraft, J.

Counsel: Harold Niman and Meysa Maleki, for the Applicant Dani Frodis, for the Respondent

Heard: In writing

Costs Endorsement

[1] This is the costs endorsement arising out of a jurisdiction motion argued before me on March 25, 2024, and a Rule 25(19) motion argued before me on July 2, 2024, in connection with my Endorsement arising from the jurisdiction motion. The issue before the Court was whether Ontario had jurisdiction simpliciter to deal with Ms. Namdar’s application and if the answer was yes whether Ontario or Iran was the more appropriate forum under the doctrine of forum non conveniens.

December 7 2023 Motion before Vella, J.

[2] Ms. Namdar also seeks costs of the attendance before Vella, J. on December 7, 2023, since she had served a Notice of Motion seeking an order to preserve the parties’ properties in Ontario and Mr. Maali served his own Notice of Motion on November 22, 2023, seeking a dismissal or stay of the Ontario proceeding started by Ms. Namdar. Ms. Namdar argues that Mr. Maali’s jurisdiction motion was premature at that point in time, and the parties reached a consent order before Vella, J. on December 7, 2023. The motion did not resolve until the morning of the return of the motion and Ms. Namdar was put to the significant cost of preparing an affidavit and factum that addressed the issue of jurisdiction in case the court decided to deal with that issue. The consent order of Vella, J. reserved the costs of both motions to the judge hearing the long motion on March 25, 2024.

[3] I agree that the costs associated with the motion before Vella, J. are to be included in this costs order and note that both parties have included their fees incurred prior to the December 7, 2023 motion in his/her Bills of Costs.

[4] On March 25, 2024, I released an Endorsement: a) dismissing Mr. Maali’s motion for an order and declaration that Ontario lacked jurisdiction over this matters; b) declaring Ms. Namdar’s divorce application a nullity such that Ontario has no jurisdiction to consider the divorce or corollary relief, without prejudice to her recommencing the application once she has resided in Ontario for 12 months; and c) finding the Ontario Family Law Act (“FLA”) applies with respect to Ms. Namdar’s spousal support claims and that the FLA does not apply to her property division claims or her equitable claims for unjust enrichment and joint family venture, because s.15 of the FLA is applicable.

[5] Subsequent to the release of my Endorsement, counsel for Ms. Namdar sought directions from the Court regarding a motion she wished to bring under Rule 25(19) of the Family Law Rules, seeking that I correct an aspect of my Endorsement on the basis that I made a decision about whether Ontario or Iranian law applied to the property issues, which she claims was not an issue that was before me.

[6] On May 16, 2024, I made an order on consent that Ms. Namdar’s Rule 25(19) motion would be returnable before me on July 2, 2024; no further evidence was to be filed by either party; and a schedule for the delivery of Facta was determined.

[7] On July 2, 2024, I heard Ms. Namdar’s motion in which she sought an order that I remove the last two sentences (italicized) from paragraph 63 of my Endorsement, dated March 25, 2024, being:

63. The Ontario FLA applies with respect to Setareh’s claims for spousal support. Although I have found that this family had more than one ordinary residence, both in Iran and Ontario, the place where both spouses had their last common habitual residence was Iran. As such, the FLA will not apply to Setareh’s property division claims, or her equitable claims for unjust enrichment and joint family venture. Section 15 of the FLA is applicable such that the law of Iran will govern the property rights of both spouses.

[8] On July 3, 2024, I made an order deleting paragraph 63 of my Endorsement and replaced it with a paragraph that clarified:

63. The Ontario FLA applies with respect to Setareh’s claims for spousal support. Although I have found that this family had more than one ordinary residence, both in Iran and Ontario, the place where both spouses had their last common habitual residence was Iran. As such, the FLA will not apply to Setareh’s property division claims or the proprietary elements of her equitable claims for unjust enrichment because s.15 of the FLA is clear that the law of Iran will govern the property rights of both spouses. (Emphasis added)

Costs Being Sought

[9] Ms. Namdar seeks costs on a substantial indemnity basis in the sum of $70,782, comprised of legal fees of $64,532.98, plus her expert’s costs of $6,250. She submits that she was the successful party on the motion since Mr. Maali’s motion, in which he sought a stay of the Ontario proceedings so the financial matters could be addressed in Iran, was entirely dismissed.

[10] Mr. Maali also seeks costs on the basis that success was divided. He takes the position that he made an Offer to Settle on March 11, 2024, 3 days prior to the long motion, and obtained a result that was equal to or better than his offer by my judgment. Mr. Maali’s offer was that all the financial issues would be determined by the Ontario Superior Court of Justice with the property claims being determined in accordance with the internal law of the parties’ last common habitual residence (Iran) as required by s.15 of the FLA. He seeks costs in the fixed sum of $38,716.65.

[11] I do not agree with Mr. Maali that success on the motion was divided. The fact that I declared Ms. Namdar’s divorce application a nullity arose because she had not resided in Ontario for the requisite 12 months before she issued her application. However, that finding was without prejudice to her right to reapply for a divorce and corollary relief once she has resided in Ontario for 12 months. This finding does not constitute success on Mr. Maali’s part. As a result, Ms. Namdar was the successful party on the motion and is presumptively entitled to costs: rule 24(1) (Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330).

Legislative Provisions

[12] Modern family costs rules are designed to foster four fundamental purposes: to indemnify successful litigants for the cost of litigation, to encourage settlements, to discourage and sanction inappropriate behaviour by litigants, and to ensure that cases are dealt with justly: Mattina v. Mattina, 2018 ONCA 867, at para. 10. The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840, at para. 12. The reasonable expectations of the unsuccessful party are a relevant consideration: Delellis v. Delellis, [2005] O.J. No. 4345.

[13] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s.131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. By r. 24(10)(a) of the FLRs, the court is directed to make a decision on the costs of a step in the case promptly after dealing with the step, in a summary manner.

[14] Pursuant to r. 24 of the FLRs, the successful party is presumptively entitled to costs, subject to the factors set out in r. 24: Beaver, at para. 10. In setting the amount of costs, the court must consider the reasonableness and proportionality the factors listed in r. 24(12) as they relate to the importance and complexity of the issues. These factors include each party’s behaviour, the time spent by each party, any written offers to settle, including those that do not meet the requirements of r. 18, any legal fees and any other expenses, and any other relevant matter.

[15] There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. Rather, full recovery is only warranted in certain circumstances, such as bad faith under r. 24(8), or beating an offer to settle under r. 18(14): Beaver, at para. 13.

[16] The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant (Selznick v. Selznick, [2013] O.J. No. 252, 2013 ONCA 35; Delellis v. Delellis, [2005] O.J. No. 4345, 2005 CarswellOnt 4956 (S.C.J.); Serra v. Serra, 2009 ONCA 395; Murray v. Murray (2005), 79 O.R. (3d) 147, [2005] O.J. No. 5379; Guertin v. Guertin, [2015] O.J. No. 4585, 2015 ONSC 5498 (S.C.J.)).

[17] Rules 18 and 24 of the FLRs govern the determination of both liability for costs and the amount of costs. While these rules have not completely eliminated judicial discretion, the rules nonetheless circumscribe the broad discretion previously granted to the courts in determining costs (Jackson v. Mayerle, 2016 ONSC 1556 (SCJ); M. (C.A.) v. M. (D.) (2003), 67 O.R. (3d) 181, [2003] O.J. No. 3707; Andrews v. Andrews, [1980] O.J. No. 1503, 21 R.F.L. (2d) 348 (C.A.); Wilson v. Kovalev, [2016] O.J. No. 103, 2016 ONSC 163 (S.C.J.)).

[18] Rules 18 and 24, and most of the case law, focus on two words: "Success" and "Reasonableness". The latter entails two components: a) reasonableness of behaviour by each party; and b) reasonableness of the amount of costs to be awarded.

Rule 18 Offers to Settle

[19] Rule 18 deals with the formalities and consequences of offers. Rule 18(14) provides that a party who makes a written offer at least seven days before the trial and obtains an order as favorable as or more favorable than the offer, is entitled, unless the court orders otherwise, to costs to the date that the offer was served and full recovery costs from that date.

[20] Rule 18 sets out cost consequences where a party fails to accept an offer which the other party then meets or exceeds at trial. The successful party is entitled to costs until the offer was served, and "full recovery" of costs from that date: Angle v. Angle, 2024 ONSC 1758 (SCJ).

[21] The party seeking elevated costs pursuant to Rule 18(14) has the onus of proving that the order obtained at the motion or trial is as favourable as or more favourable than the terms set out in the offer to settle: Neilipovitz v. Neilipovitz [2014] O.J. No. 3842 (SCJ); F.B. v. C.H. 2021 ONCJ 333 (OCJ); Saroli v. Grette, 2022 ONSC 3560 (SCJ); Fenton v. Charles 2023 ONCJ 74 (OCJ).

[22] Offers need not be exactly the same as the order obtained. What is required is a general assessment of the overall comparability of the offer as contrasted with the order. The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms: Jackson v. Mayerle 2016 ONSC 1556 (SCJ); Chomos v. Hamilton 2016 ONSC 6232 (SCJ).

[23] Rules 24(5) and 24(8) require that the court consider the reasonableness of each party’s behaviour. The principles of reasonableness and proportionality still prevail in determining the amount of costs, even if the conditions for Rule 18(14) are otherwise satisfied.

[24] Where the costs obligation in Rule 18(14) is satisfied, the existence of Offers to Settle made by the other party “simply can have no impact on [the Court’s] cost rulings”. Rossi v Rossi ONSC (SCJ).

[25] I will review the parties’ respective Offers to Settle.

Mr. Maali’s March 11, 2024 Offer

[26] As stated above, Mr. Maali offered to settle the long motion on the basis that the spousal support claims be determined by the Ontario Superior Court of Justice, and the property claims be determined in accordance with the internal law of the place where both parties had their last common habitual residence, namely, Iran, in accordance with s.15 of the FLA. This Offer to Settle was left open for acceptance until the commencement of the long motion on March 14, 2024.

Ms. Namdar’s March 12, 2024 Offer

[27] Ms. Namdar offered to settle the long motion on the basis that the spousal and property claims be determined by the Ontario Superior Court of Justice, with the spousal support claims being determined in accordance with the laws of Ontario. In terms of the issue of the application of law to the property issues, Ms. Namdar proposed that this issue be returnable before me on an agreeable long motion date. Ms. Namdar’s Offer to Settle was open for acceptance until long motion. If it was accepted on March 13, 2024 at 5 p.m., then there was to be no costs. Otherwise, costs were to be determined by an order of the court.

Analysis of the Offers to Settle as Compared with the Order made at the Long Motion

[28] Had Ms. Namdar accepted Mr. Maali’s March 11th 2024 Offer to Settle, Mr. Maali argues that the long motion could have been avoided; the 14B motion to correct my March 25, 2024 Endorsement and the attendance before me on May 16, 2024 for which costs was reserved could have been avoided, as well as the r.25(19) motion on July 2, 2024. As a result, he seeks his full indemnity costs from March 11, 2024 onward pursuant to r. 18(24).

[29] Ms. Namdar argues that Mr. Maali’s March 11th Offer to Settle was not capable of being accepted because she took the position that s.15 of the FLA and the determination of which internal law applied to the property claims in this case was not an issue before the court.

[30] Ms. Namdar argues that neither she nor Mr. Maali beat their Offer and that the Offers to Settle are neutral factors. She was of the view that the issue of the application of the law was not before the Court and this is why she was not able to accept Mr. Maali’s Offer to Settle.

[31] Further, Ms. Namdar takes the position that even if the court finds that Mr. Maali met the terms of his March 11, 2024 Offer to Settle, he did not make the offer until the eve of the motion, after five months of expensive litigation where substantial legal fees were incurred. Further, Ms. Namdar submits that she is still entitled to a substantial cost award because my decision of July 2, 2024 enables her to argue that Ontario law applies to her equitable and joint family venture claims for non-proprietary relief.

[32] In paragraph 8 of my July 2, 2024 Endorsement I found that:

“The issue is not whether s.15 of the FLA applies to this case. Having found that Iran is the parties’ last common habitual residence, it follows that s.15 applies and the laws of Iran govern the parties’ property rights. Section 15 of the FLA is prescriptive. Section 15 applies by its terms whether it was before me or not. That finding was neither a mistake nor was made without notice to her, such that I have jurisdiction to change my Order pursuant to r. 25(19) of the FLRs.”

[33] I also found that whether the FLA applies to Ms. Namdar’s equitable claims was not an issue before me on the long motion. My reference to s.15 of the FLA in the Endorsement emanated from my finding that Iran was the parties’ last common habitual residence and the fact that s.15 is prescriptive over the parties’ property rights, whether referred to or not. I determined that the language in paragraph 63 of my March 25, 2024 Endorsement was ambiguous and required clarification because as in its current form it conveys a broader meaning than was intended. I also found that whether the FLA applies to Ms. Namdar’s equitable claims was not an issue before me on the long motion.

[34] As a result, I agree with Ms. Namdar that whether the FLA applies to her equitable claims for unjust enrichment and joint family venture was not before me and it was on that basis that I clarified the language in paragraph 63 of my March 25, 2024 Endorsement to show that I intended to refer to “property rights” not specific equitable claims that may or may not result in a proprietary interest for Setareh.

[35] In Beaver, Nordheimer, J.A. stated that before the absence of an offer to settle can properly be used against a party, the situation has to be one where it is realistic to expect offers to settle to be made. On the costs appeal before the court in Beaver, the case was not a situation where the issues could have been settled in any practical way. Either the result of the appeal would be that the appellant would be able to proceed with his constitutional claim or he was not. There was no way of compromising on that central issue. Consequently, it was not a case where the presence or absence of offers to settle should have played any material role in determining the appropriate quantum of costs: at para. 15. Nordheimer, J.A. further commented that this salient point also impacted the offer to settle that the other party had made, noting that the offer did not reflect a compromise because it required that the respondent completely abandon his constitutional argument. He stated as follows: “It is recognized 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.”: at para. 16. [Emphasis added].

[36] In this case, similar to Beaver, I find that rule 18(14) is not triggered because Mr. Maali’s March 11, 2024 Offer to Settle did not reflect a compromise because it required that Ms. Namdar abandon her equitable claims of unjust enrichment not connected to a proprietary claim, and in that manner, the March 11th Offer to Settle ought not to be one which impacts the award of costs.

[37] I agree with Ms. Namdar that the term of Mr. Maali’s March 11th 2024 Offer to Settle, namely that the FLA applies to her equitable claims, made his offer an all-or-nothing offer, which she could not accept without conceding a critical point. In other words, Mr. Maali’s offer was not capable of being accepted by Ms. Namdar because of its ambiguity to a significant part of Ms. Namdar’s case, being her equitable claims of unjust enrichment. Given that on July 2, 2024 I found that whether the FLA applies to Ms. Namdar’s equitable claims was not an issue before me on the long motion and I clarified my Endorsement, it would be unreasonable and unjust for her to be required to pay the full recovery costs referred to in rule 18(14) from March 11th, 2024 onward because she did not accept his Offer. In this manner, both parties’ Offers to Settle the jurisdiction motion are neutral.

[38] It is also important to note that both Ms. Namdar and Mr. Maali served an Offer to Settle the December 7, 2023 motion before Vella, J. Ms. Namdar served a severable Offer to Settle setting out a procedural timetable leading up to Mr. Maali’s long motion. Mr. Maali served an Offer to Settle the day before the December 7, 2023 motion which provided for a case conference to timetable the next steps. Ms. Namdar accepted Mr. Maali’s Offer to Settle with some modifications. The fact that both parties attempted to settle the December 7 2023 motion confirm that each of the parties behaved reasonably in this litigation.

[39] Having determined that the presumptive costs consequences contained in rule 18(14) should not apply in the circumstances before me, in order to determine the costs issue, I am guided by the costs provisions contained in rule 24(12).

Rule 24 Factors

[40] Rule 24(4) provides that a successful party who has behaved unreasonably may be deprived of all or part of their costs or ordered to pay all or part of the unsuccessful party's costs.

[41] Neither party argued that the other behaved unreasonably or acted in bad faith in this case.

Importance, Complexity and Difficulty

[42] The issues on the long motion were complex and highly important to both parties, particularly to Ms. Namdar given the consequences she would face if these matters were to be determined in Iran.

Amount of Legal Fees

[43] I have reviewed both parties’ Bills of Costs.

[44] Mr. Frodis’ accounts set out the total fees bills from November 13, 2023 to the date of Mr. Maali’s Offer to Settle on March 11, 2024, at $30,421.29. The fees incurred after the March 11th, 2024 Offer to Settle to the date of the long motion and the r.25(19) motion amount to $18,842.82.

[45] Mr. Frodis bills out at an hourly rate of $695 and he downloaded work to associate lawyers who bill out at much lower hourly rates. In the circumstances, the fees charged by Mr. Frodis’ offer are reasonable and proportionate. The total amount of fees incurred by Mr. Maali amounted to $49,364.11.

[46] Ms. Namdar’s Bills of Costs were extensive. She argues that a team approach was adopted given the complexity of the issues and, as such, she maintains that the costs incurred were proportional to the issues at stake in the case. Mr. Niman’s hourly rate is $1,250 an hour and Ms. Maleki’s hourly rate is $600 an hour. Other lawyers and a law clerk were also utilized at lower hourly rates. Ms. Namdar’s fees incurred were substantially higher than Mr. Maali’s fees, amounting to $86,916.23.

[47] While it makes sense that Ms. Namdar’s fees would be higher than Mr. Maali’s, particularly, since she retained an expert report on Iranian law and there were two senior lawyers on her file, I find the fees to be disproportionate to the issues argued at the long motion. Specifically, over $9,600 was billed for Mr. Niman’s time emailing and/or reviewing things with Ms. Maleki and Ms. Maleki also billed for that same time (i.e. on Feb 27/24; May 7, 24; March 11/24; Mar. 13/24; Mar. 25/24/ Mar. 31/24/ April 4/24; April 5/24; April 9/24; April 10/24; July 1/24, etc.).

Discretion to set the Amount of Costs

[48] The Rules do not require the court to allow the successful party to demand a blank cheque for their costs (Slongo v. Slongo, [2015] O.J. No. 2648, 2015 ONSC 3327 (S.C.J.)). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances (M. (C.A.) v. M. (D.), supra; Scipione v. Scipione, 2015 ONSC 5982).

[49] In Biant v. Sagoo, [2001] O.J. No. 3693, Justice Perkins stated [at para. 20]:

[T]he preferable approach in family law cases is to have cost recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result.

[50] In Sepiashvili v. Sepiashvili, Justice Wildman stated, at para. 20:

Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term "full recovery costs", there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner. [page 706]

[51] Simplistically, a common theme in the "reasonable expectations" and "proportionality" analyses is that the loser should not have to reimburse the winner for excessive or unnecessarily expensive litigation behaviour which might be regarded as "overkill" (Scipione v. Scipione, supra).

Conclusion

[52] While I accept that both parties’ Bills of Costs accurately reflect the time spent by all of the lawyers in this matter and the hourly rates charged, despite the undoubted importance of the motion to Ms. Namdar, the $70,782 amount claimed by her is an extraordinarily large amount for the jurisdiction motion and related r.25(19) motion. Ms. Namdar only seeks half of her fees for the December 7 2023 motion dealing with preservation. In the circumstances of this case, given that Ms. Namdar is entitled to costs; she conducted herself reasonably throughout the case and both parties made Offers to Settle both the long motion and the motion before Vella, J., dated December 7, 2023, I find that a just determination of trial costs, keeping in mind the principle of proportionality would be for Mr. Maali to pay Ms. Namdar’s costs and disbursements fixed in the sum of $26,000, inclusive of HST, plus her experts fees of $6,250, for the total sum of $32,250 all inclusive.

Released: August 1, 2024

M. Kraft, J.