Court File and Parties

Date: 2024-08-16 Superior Court of Justice – Ontario

Re: Raymond Reichert, Applicant And: Tamara Ann Bandola, Respondent

Before: M. Kraft, J.

Counsel: Harold Niman, for the Applicant Trevor Smith, for the Respondent

Heard: In writing

Costs Endorsement

[1] This is the costs endorsement arising out of a partial summary judgment motion in which I declined to dismiss Ms. Bandola’s spousal support claims on the basis that the parties’ relationship did not qualify them as “spouses” as defined in s.29 of the Family Law Act, R.S.O. 1990, c.F.3 (“FLA”). On July 2, 2024, I released an endorsement, finding that the question of whether these parties lived together continuously for 3 years or more is a complex issue, which involves multiple facts and credibility issues. I determined that this case was not appropriate for partial summary judgment, dismissed Mr. Reichert’s motion, and found that a trial was needed because granting partial summary judgment at this stage in the case could result in two different sets of determinations based on the same fact.

[2] The starting point in any costs analysis is the presumption that a successful party is entitled to costs: rule 24(1) (Jackson v. Mayerle, 2016 ONSC 1556, supra, Sims-Howarth v. Bilcliffe). Ms. Bandola is entitled to her costs of this motion. The question is in what amount.

The Amount of Costs being Sought

[3] Ms. Bandola seeks full recovery costs on the following basis: 1) she was entirely successful in the Court dismissing Mr. Reichert’s partial summary judgment motion; 2) Mr. Reichert behaved unreasonably, by wasting the court’s resources; 3) Mr. Reichert was ordered to pay nominal costs at a case conference on November 4, 2022, with the potential to assess additional costs after his motion for partial summary judgment because he refused to file a sworn financial statement on the grounds that whether the parties’ were spouses was a threshold issue; 4) she made an offer to settle; and 5) the issues were complex and time consuming given the subjective nature of the test for cohabitation.

[4] Specifically, Ms. Bandola seeks full indemnity costs in the sum of $89,561.88. [1] Alternatively, Ms. Bandola seeks partial indemnity costs of $58,390.39. [2]

[5] Mr. Reichert seeks an order that costs be deferred to the trial judge or, in the alternative, that costs of the motion be fixed in the sum of $30,000, inclusive of HST and disbursements. Mr. Reichert argues that Ms. Bandola is not entitled to her costs on a full recovery basis because she did not meet her offer to settle. Further, Mr. Reichert argues that the costs sought by Ms. Bandola inappropriately include preparation for several court attendances in addition to the partial summary judgment motion. Finally, since much of the work completed by Ms. Bandola’s counsel can be relied upon at trial, including the transcripts from questioning and legal research, Mr. Reichert submits that the costs ordered should be determined by the trial judge or reduced significantly.

Legislative Provisions

[6] 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.

[7] 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 Family Law Rules, O. Reg. 114/99 (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.

[8] 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.

[9] 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.

[10] 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 ONCA 35; Delellis v. Delellis, [2005] O.J. No. 4345, 2005 CarswellOnt 4956 (S.C.J.); Serra, supra; 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.)).

[11] 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.)).

[12] 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

[13] To determine whether a party has been successful, the court should take into account how the order or eventual result compares to any settlement offers that were made (Lawson v. Lawson, [2008] O.J. No. 1978).

[14] 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).

[15] 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).

The Respondent’s Offers to Settle

[16] On July 17, 2024, Ms. Bandola made an Offer to Settle which provided as follows:

a) She would withdraw her claim for spousal support; b) Mr. Reichert would compensate her for her financial losses in the sum of $2,400,000 as follows: i) $204,463.25 for lost wages for her 2-year leave of absence; ii) $902,619.96 for the difference between her full salary and reduced pension for the years after she retired early; iii) $833,432.80 for the long-term difference in value between her reduced pension and what her pension would have been if she had not retired early; iv) $46,009.51 for the value of the medical benefits plan she gave up when she left her career; v) $210,000 for the three-and-a-half years of labour provided managing Mr. Reichert’s homes; vi) $288,000 for the value she lost by selling her home earlier than she would have if not for Mr. Reichert’s inducement to leave London; and vii) $a reduction of $84,525.52 as a settlement compromise. c) This offer was non-severable and was open for acceptance with no costs until the commencement of the motion.

[17] Ms. Bandola’s Offer to Settle was not accepted by Mr. Reichert. While it was reasonable for her to make an offer to settle the partial summary judgment, Ms. Bandola did not meet the terms of her offer and Rule 18(14) is not triggered.

[18] Mr. Reichert did not make an offer to settle. I do not consider the lack of an offer on Mr. Reichert’s part to demonstrate unreasonable behaviour since there is no compromise position that could have been taken by him. A party is not obliged to make an Offer to Settle, and it is not unreasonable to not serve an Offer to Settle: Beaver v. Hill, 2018 ONCA 840.

Rule 24 Factors

[19] Rule 24(5) provides that in determining whether a party has behaved reasonably or unreasonably, the court shall examine the party’s behaviour in relation to the issues from the time they arose.

[20] Ms. Bandola argues that Mr. Reichert was unreasonable because he only brought the partial summary judgment motion in an effort to avoid serving a financial statement. She further claims that his failure to file a financial statement rendered the case conference before Steele, J. a wasted appearance. I do not agree with Ms. Bandola in this regard. The Endorsement of Steele, J., dated November 4, 2022 clearly states that Mr. Reichert was prepared for the case conference; he filed a comprehensive case conference brief setting out his position; and he did not file a financial statement because he took the position there is a threshold issue that needs to be determined first. In taking this position, Mr. Reichert relied on Mantella v. Mantella, [2006] O.J. No. 1336, at para. 64, which discusses a line of cases that severs threshold issues of liability before requiring a party to make financial disclosure. It cannot be said that Mr. Reichert failed to file a financial statement contrary to the Family Law Rules. That is not the case here. Mr. Reichert, from the outset, took the legal position that the threshold issue of whether the parties are “spouses” is to be determined prior to his filing a financial statement – a position that has support in caselaw. I do not find that Mr. Reichert’s failure to file a financial statement for the case conference was unreasonable conduct in the context of ordering costs. This is particularly the case once Ms. Bandola consented to stay the requirement of Mr. Reichert to file a financial statement until after the long motion.

[21] Although Steele, J.’s Endorsement stated that the judge hearing the partial summary motion may consider ordering additional costs, this is not the same as deferring the issue of costs to the motion hearing the summary judgment motion. I am not, therefore, bound to order additional costs beyond the $100 ordered by Steele, J.

[22] Further, I do not find that it was unreasonable for Mr. Reichert to have brought this motion for partial summary judgment. Although summary judgment motions always carry significant risk, a litigant is entitled to make a strategy decision to bring such a motion. Had Mr. Reichert been successful, a trial would not be necessary.

[23] Mr. Reichert argues that Ms. Bandola is seeking costs of this matter from October 24, 2022 to July 22, 2024. In this time period, the parties attended a settlement conference, motions, a TBST attendance and questioning. Mr. Reichert submits that while a party may claim previous costs in the final resolution or trial of the matter, it is not reasonable for Ms. Bandola to claim these costs where the prior attendances were not reserved to the motions judge. I agree with Mr. Reichert that some of the costs claimed by Ms. Bandola ought not to be reimbursed in connection with the summary judgment motion.

Amount of Legal Fees

[24] I have reviewed Ms. Bandola’s Bill of Costs. Her counsel, Mr. Smith was called to the bar 14 years ago and his hourly rate is $550. Two other lawyers, more junior to Mr. Smith, assisted on the motion, and billed out at hourly rates of $350 and $275, respectively. A law clerk and administrative assistant also worked on the matter. It is reasonable and appropriate that Mr. Smith utilized a team approach to work on this matter.

[25] I have discounted Ms. Bandola’s fees for the time she prepared for the case conference, including the drafting of the case conference brief, and attending at the conference, which amounted to $5,800 of fees. A total of $20,300 was charged to Ms. Bandola for the period of time after the case conference until after the questioning. The summary judgment motion could not have proceeded without the questioning having been completed, however, the transcripts and evidence from the questioning will be used at trial and have utility far beyond the summary judgment motion. I decline to order costs in Ms. Bandola’s favour in connection with the questioning. Further fees of $51,570 were charged to Ms. Bandola for the period from September 2023 to the date the partial summary judgment motion was argued. Some of this time was associated with the TBST attendance while much of the time was spent on the summary judgment motion.

[26] In terms of secretarial time vs. law clerk time, I find that such costs are part of a lawyer’s overall overheard and are recovered in the hourly rate charged by Mr. Smith. Work completed by a law clerk is properly chargeable under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and the Tariff under the Rules. I have conducted a review of the dockets and reduced Ms. Bandola’s account for “secretarial work” as sought by Mr. Reichert: Beerthuizen v. West Arthur Place, [2008] O.J. No. 110; L.(J.K.) v. S.(N.C.), 2009 ONSC 1017; Grimba v. Bossi, 2012 ONSC 3290; Lanteigne v. Lanteigne, 2016 ONSC 1514.

[27] I have also reduced Ms. Bandola’s legal fees for the time spent by lawyers "reviewing file" or "conferring" or "filing": Czegledy-Nagy v. Seirli, 2012 ONSC 1077; Doering v. Doering, 2016 ONSC 2551.

[28] A useful benchmark for determining whether costs claimed are fair, reasonable and proportional is to consider the time that the other party has spent and the amount they have paid for their own legal fees and disbursements in the matter (Smith Estate v. Rotstein, 2011 ONCA 491 (C.A.); Durbin v. Medina, 2012 ONSC 640 (S.C.J.); Scipione). Although there is no requirement that a party resisting costs file their own Bill of Costs, it is preferable that they do so to assist the court in dealing with costs in a fair and reasonable manner (Risorto et al. v. State Farm Mutual Automobile Insurance Co., at para. 10). Failure on their part to provide details regarding their own time spent and costs incurred is a factor that the court may take into account in considering the reasonable expectations of the losing party and may entitle the court to draw an adverse inference (Smith Estate, at para. 50; Scipione, at para. 126; 206637 Ontario Inc. (c.o.b. Balkan Construction) v. Catan Canada Inc., 2013 ONSC 5448 (S.C.J.), at para. 7). In addition, a significant discrepancy in the amount of fees that the parties have incurred may prompt the court to embark upon a more detailed scrutiny of the costs claimed to ensure that the amount meets the overall objectives of a costs order (Jackson, at para. 99).

[29] Mr. Reichert’s Bill of Costs demonstrates that his counsel also worked in a team approach, with the most senior counsel, Mr. Niman, charging an hourly rate of $1,375 and two more junior lawyers being billed out at $495 and $375 an hour respectively. An articling student and law clerk were also used. Mr. Reichert’s fees totalled $51,128 but this did not include time prior to April 28, 2024 and relates only to the summary judgment motion.

[30] I agree with Mr. Reichert that if Ms. Bandola is awarded costs in the amount she is seeking, and he is successful a trial, he may be denied the opportunity to claim the fees incurred by him preparing for the main issues at trial. As a result, the fees incurred by Ms. Bandola up to March 2024, ought not to be included in the costs associated with this partial summary judgment motion, which reduces her full indemnity costs from $51,570 to $43,540.

[31] 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, supra).

[32] 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.

[33] In Sepiashvili v. Sepiashvili, 2010 ONSC 200, Justice Wildman J. 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. [page706]

[34] 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).

[35] There is no doubt that this matter was of significant importance to both parties and each party incurred spent significant legal fees on the partial summary judgment motion. As a result, Mr. Reichert should have expected to pay costs if he were unsuccessful.

Conclusion

[36] The Court has considered the factors set out in Rule 24 of the Family Law Rules and a fair, reasonable, and proportional award for costs of is that Ms. Bandola be awarded $50,000 (inclusive of HST and disbursements) payable by Mr. Reichert within 30 days.

M. Kraft, J. Released: August 16, 2024

[1] Comprised of $1,794.67 for disbursements, plus $6,554 for time spent on the parties’ case conference, less $100 ordered in costs at the conference, plus $22,939 for work done after the parties’ case conference up to questioning, and $58,274 for work done after the questioning.

[2] Comprised of $1,794.67 for disbursements, plus $4,325.64 for time spent on the parties’ case conference less $100 ordered in costs at the conference, plus $15,139.74 for work done after the parties’ case conference and up to questioning, plus $38,460.91 for work done after questioning.