Superior Court of Justice – Ontario

Court File No.: FS-19-12872
Date: 2025-02-04

RE: Nathan Zane Nugent, Applicant
AND: Melanie Rebecca Nugent, Respondent

Before: M. Kraft
Counsel:
Applicant, acting in person
Anna Towlson, for the Respondent

Heard: In Writing

Costs Endorsement

Background

1. This is the costs decision arising from the 9-day trial which took place in 2023 and the 4-day trial which took place in 2024 before me. Partial Reasons for Judgment were released by me on January 3, 2024 [1] and further Reasons for Judgment on July 19, 2024. [2] The issues to be determined at trial included retroactive child support, retroactive spousal support, ongoing child and spousal support and property division. Prior to the trial in 2023, the parties resolved their parenting issues.

2. The wife served her costs submissions on the husband on August 20, 2024. The husband never filed responding costs submissions despite being invited to do so and advised by the Family Law Trial office that the wife had 30 days from July 22, 2024 to deliver her written costs submissions and he had 7 days from being served with the wife’s costs submissions to serve and file responding costs submissions.

3. By way of brief background, the parties were married for 13 years. They have 2 children, who were 15 and 11 at the time of the trial. They separated on August 7, 2019. During the marriage, the husband was employed as a medical doctor by the Canadian Armed Forces (“CAF”). In May 2022, he was released from the CAF on a medical leave. The husband’s pension was in pay at the time of the trial.

4. After the hearing of the 9-day trial in 2023, the parties agreed to direct the CAF to transfer 50% of the Family Law Value of the husband’s military pension to the wife. Despite the consent order, dated March 30, 2023, obliging the CAF to transfer to the wife the sum of $876,732 (being the Family Law Value of the husband’s pension plus prejudgment interest), the CAF did not divide the pension until 9 months later on December 7, 2023, at which time, the wife received a total of $434,071.41. The shortfall of $392,660.69 was resolved by a consent order, dated June 6, 2024 providing for the husband to make specific monthly payments to the wife to address the shortfall and what remained owing by him on the equalization payment (“EP”).

5. The January 3, 2024 decision determined the two issues of
   a) retroactive and prospective child support owing by the applicant husband to the respondent wife up to and including April 30, 2022; and
   b) retroactive spousal support owing by the husband to the wife up to and including April 30, 2022. Specifically, I ordered:

   • The husband to pay the wife s.7 expense arrears in the sum of $8,449;
   • The husband to pay the wife spousal support arrears in the sum of $215,788 for the period from the date of separation to December 31, 2023;
   • From January 1, 2024 on the first day of each following month, the husband was to pay the wife child support for the two children in the sum of $4,220 a month based on his estimated 2023 income of $328,584;
   • The spousal support order of Shore, J., dated March 31, 2021 was to remain in force with the husband paying the wife temporary spousal support of $2,983 a month; and
   • Starting January 1, 2024, the wife was to be imputed with an income equal to the minimum wage in Ontario or whatever she was earning, whichever amount was higher.

6. On December 21, 2023, the wife received an offer of employment from MNP LLP as a receptionist for a four-month contract from January 22, 2024 to May 3, 2024, earning a salary of $45,000 a year. On February 9, 2024, the wife received a permanent offer of employment from MNP starting February 12, 2024, earning $45,000 a year.

7. The husband did not comply with the support orders I made on January 3, 2024.

8. After the 4-day trial I heard in April and June of 2024, I released further Partial Reasons for Judgment, in which I made, among other things, the following findings on July 19, 2024:

   • The husband’s income in 2022 amounted to $449,003; his income in 2023 amounted to $391,726; his imputed income for 2024 was $420,033, subject to readjustment.
   • The husband was to pay the wife s.7 expense arrears of $7,277 for the period August 2023 to July 31, 2024;
   • As of June 30, 2024 there are no child support guideline arrears owing by the husband to the wife;
   • For the period from the date of separation to July 31, 2024, the husband was to pay the wife spousal support arrears of $428,883;
   • Starting August 1, 2024 and on the first day of each following month, the husband is to pay spousal support to the wife in the sum of $7,649.50 a month using an annual income of $420,033 for him and an annual income of $45,000 for the wife;
   • Starting August 1, 2024 and on the first day of each following month, the husband is to pay the wife child support pursuant to the CSG in the sum of $5,317 a month for the two children of the marriage based on the husband’s estimated income of $420,033 for 2024;
   • Starting August 1, 2024, the parties are to share the children’s s.7 expenses with the husband paying 90% and the wife paying 10%;
   • The husband is to pay the wife an EP of $55,590.40, plus prejudgment interest from the date of separation at 2% to the date of the order; [3]
   • The husband’s CAF pension is to be garnished to pay the support arrears until paid in full.

Costs Being Sought

9. The respondent wife seeks costs in the sum of $220,000, as a global sum, on the basis that she was entirely successful in these proceedings and is presumptively entitled to her costs. Specifically, she submits as follows:

   • She made a severable Offer to Settle all issues to the applicant husband on May 10, 2022 and
     • the consent order on the parenting issues is almost identical to the terms in her Offer to Settle.
     • the support and property issues which proceeded to trial in January, February, March, April, and June 2024, resulted in the wife obtaining orders that were far more favourable to her than the terms she put forward in her Offer to Settle.
   • The husband’s conduct throughout the proceeding was unreasonable and, at times, amounted to bad faith, significantly increasing her costs because:
     • He failed to comply with an aspect of every order made by the court since October of 2019;
     • His non-compliance included a failure to provide income disclosure, notwithstanding the Family Law Rules, repeated requests made by the wife, and court orders that he do so;
     • His failure to file his income tax returns on time or at all when the court ordered him to do so;
     • His failure to pay the s.30 assessor’s account so the parenting assessment could be finalized even after he was ordered to pay these costs by Horkins, J. on July 12, 2021;
     • His failure to obtain a valuation of his CAF pension prior to trial resulted in the wife having to apply for and obtain it;
     • His failure to pay child and spousal support as ordered resulted in significant arrears and multiple court attendances;
     • His failure to transfer the car to the wife as ordered left the wife and children in a find in terms of transportation and mobility;
     • His failure to pay any of the costs orders made by Horkins, J. and Shore, J.;
     • His failure to cooperate with and pursue the pension transfer by the CAF as ordered necessitated multiple virtual court attendances;
     • His failure to cooperate with approving court orders on January 3, 2024 despite being ordered to do so;
     • The husband prolonged the trial to engage a pension valuator which he could have engaged prior to the trial, which then forced the wife to engage her own pension valuator;
     • The husband’s failure to file any materials for trial when it commenced in May 2022 and again, in January 2023;
     • The husband requested an adjournment of the trial in January 2023, claiming serious mental health impairments, when the court determined that he had written medical examinations, exercised parenting time and engaged in last minute disclosure in the weeks leading up the trial, such that the court insisted that the trial proceed;
     • On the 2nd day of trial, the husband requested a specific lunch break to meet with his psychiatrist when, in reality, he met with and retained a lawyer to act as his agent. This was done after the court refused to agree to an adjournment of the trial when he asked to retain counsel;
     • The husband withheld material facts about his employment opportunity and a job offer from Calion;
     • The husband’s failure to be forthcoming about his employment offers resulted in the wife having to summons witnesses from the CAF to get this relevant evidence before the court;
     • He asked to be medically released from his employment with the CAF in May 2022 when the trial was initially to commence which made his income extremely difficult to calculate for support purposes;
     • He was ordered to reinstate the wife on his medical benefits while he also argued that she was mentally ill and unable to care for the children; and
     • He retained four different legal counsel and one agent to assist him resulting in delays and additional costs.

Who Was Successful at Trial?

10. Rule 24(1) of the Family Law Rules, O. Reg. 114/99 (“FLRs”) creates a presumption of costs in favour of the successful party, subject to the factors set out in r. 24: Beaver v. Hill, 2018 ONCA 840, at para. 10.

11. The wife was entirely successful at trial and is, therefore, entitled to costs.

Legislative Framework

12. Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, Courts of Justice Act, RSO 1990, c C.43, s.131. By r. 24(10)(a) of the FLRs, the court is to decide on the costs of a step in the case promptly after dealing with the step, in a summary manner.

13. Modern costs rules are designed to foster four 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 under Rule 2(2) of the FLRs: Mattina v. Mattina, 2018 ONCA 867.

14. While a successful party in a family law case is presumptively entitled to costs, an award of costs is subject to the factors listed in r. 24(11), the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith), r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: M. (A.C.) v. M. (D.), at paras. 40–43; Berta v. Berta, 2015 ONCA 918 at para. 94.

15. The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, at para. 12. In Boucher v. Public Accountants Council (Ontario), at paras. 28-29, 37, the court held that costs must be fair and reasonable, and consistent with the reasonable expectations of the parties.

Offers to Settle

16. There are two schools of thought regarding the role of offers to settle in the determination of success under r. 24. On the one hand, in Lawson v. Lawson, para. 7, Justice J. Wilma Scott wrote that any determination of success "...must take into account how that order compares to any settlement offers made": at para. 7. In Osmar v. Osmar, para. 7, Aston J. was even more direct, in stating that:

Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.

17. On the other hand, in Jackson v. Mayerle, 2016 ONSC 1556, Pazaratz J. considered offers to settle separately from the issue of relative success. His four factors do not include success in comparison to offers to settle. Similarly, Chappel J.'s analysis of divided success in Thompson v. Drummond did not consider offers to settle. Rather, elsewhere in her decision, she describes offers as "[a]nother important consideration in determining both entitlement to and the quantum of costs."

18. In my view, offers to settle are imported into r. 24 only about reasonableness and/or proportionality, not success. Further, while those offers need to be in writing, they do not have to meet the formal requirements of r. 18 in order to be considered under r. 24(12).

19. The wife served a comprehensive Offer to Settle on May 10, 2022. The Offer was severable. Not considering the parenting aspects of the Offer, the wife proposed that:

• The husband pay ongoing child support to her in the sum of $5,116 a month based on his 2021 income of $403,000;
• The husband pay child support arrears of $10,000 to the wife as at April 29, 2022;
• The husband pay his proportionate share of the children’s s.7 expenses, including counselling, two extra-curricular activities per child per year, educational expenses including tuition and further agreeable s.7 expenses;
• The husband pay ongoing spousal support in the sum of $7,300 a month which is the mid-range of the SSAGs using his 2021 income of $403,000 and an imputed income for the wife of $45,000;
• The husband pay arrears of spousal support in the fixed sum of $125,000;
• The husband name the wife as irrevocable beneficiary of his life insurance policy for as long as he is obliged to pay child support;
• The husband continue to maintain the children as beneficiaries on his medical benefits;
• There be no equalization payment;
• The husband shall sign the documents to transfer the Family Law Value of his pension to the wife with interest from the date of separation; and
• The husband pay all costs associated with the s.30 parenting assessment, Andrea Barclay and Brayden Supervision.

20. The husband did not accept the wife’s offer to settle. The husband did not make an Offer to Settle to the wife.

21. To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer; Paranavitana v. Nanayakkara, 2010 ONSC 2257; Scipione v. Scipione, 2015 ONSC 5982).

22. I find that the wife’s offers trigger a presumption of full recovery pursuant to rule 18(14) in relation to all issues.

23. I also consider the wife’s offer as demonstrating reasonable efforts to settle in relation to the parenting issues, including the children’s residency; decision-making responsibility; reunification therapy; and ongoing communication between the parents.

Section 24 Factors

24. 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.

25. The wife submits that she behaved reasonably through this matter. I agree. The wife and her counsel assisted the court in filling in the gaps left empty by the husband and prepared updated support and NFP calculations in real time during the trial when the husband was making disclosure for the first time at trial. Further, the wife produced the financial disclosure required by the FLRs and behaved reasonably throughout the trial.

26. I find that the wife’s legal expenses were significantly increased due to the husband’s conduct in the following ways:

• She had to pay legal counsel fees to write correspondence seeking disclosure he was ordered to produce;
• She had to pay legal counsel fees to remind the husband of court orders and his outstanding obligations under these obligations;
• She had to pay legal counsel fees to upload all of the husband’s documents in a fair and balanced way for the court’s benefit;
• She had to pay legal counsel to prepare the Trial Record when the husband was the applicant in the proceedings;
• She had to pay legal counsel to prepare all support calculations and net family property calculations leading up to the trial and to redo these calculations as disclosure was being uploaded in real time by the husband once the trial commenced;
• She had to pay legal counsel to draft and circulate all court orders obtained in this proceeding both before and after trial;
• She had to pay legal counsel to independently search for and obtain evidence from third parties regarding the husband’s true employment prospects because the husband withheld this information; and
• She had to pay legal counsel to deal with, write to and follow up with the CAF pension centre to obtain information about the husband’s pension when it was clearly his obligation to do so.

27. I do not find that the husband’s behaviour was so extreme as to constitute bad faith behaviour. There is a difference between bad faith and unreasonable behaviour. I find that most of the husband’s unreasonable behaviour, as troubling as it may be, does not reach the threshold of constituting “bad faith” as contemplated by r. 24(8).

Any legal fees, including the number of lawyers and their rates; Any expert witness fees, including the number of experts and their rates; and Any other expenses properly paid or payable:

28. The wife’s Bill of Costs shows all of the legal fees incurred from the commencement of this case to when she engaged Ms. Towlson in January 2022. For the period of September 30, 2019 to May 19, 2020, Ms. Towlson spent 48.1 hours on the matter; David Nisker spent 13.85 hours acting as an agent for Ms. Towlson; and law clerks spent a total of about 22 hours on the matter. This amounted to a total of $19,162.50 in fees for 83.15 hours of work, which I find to be reasonable and proportional over an 8-month period.

29. When the wife retained MacDonald & Partners for the period May 7, 2020 to February 15, 2022, her fees increased as the hourly rates increased, and totalled $42,354.30. I also find this reasonable and proportional during this 21-month period of time, when there were conferences and an urgent motion took place. Since Horkins, J. made an order that the husband pay costs in the sum of $3,000 in connection with a motion before her July 12, 2021, I discounted the fees incurred from June 10, 2021, to and including July 14, 2021, which time was spent reviewing the husband’s urgent motion and responding to that motion which was returnable on July 12, 2023. The Statements of Account for the period June 4, 2021 to June 30, 2021 shows fees incurred of $1,845.29; and for the period July 5, 2021 to and including July 12, 2021, shows fees incurred of $6,698.72. Accordingly, a total of $8,544.02 is deducted from the wife’s fees.

30. From January 2022 onward and through both trials, the wife’s total fees amounted to $158,688.82, which included her expert reports, trial preparation and the trial time, which was extremely labour intensive.

31. Shore, J. ordered the husband to pay costs of $3,500 at the motion before her to strike the husband’s pleadings on May 17, 2022. Accordingly, I have discounted the fees incurred by the wife based on Ms. Towlson’s Statement of Account for the time period from May 13, 2022 to and including May 17, 2022, amounting to $4,437.50.

32. The wife also produced detailed dockets as well as a Bill of Costs, which breaks down the charges by lawyer, year of call, disbursements, etc.

Scale of Costs

33. The preferable approach in family law cases is to have cost recovery generally approach full recovery, so long as the predominantly successful party has behaved reasonably and the costs claimed are proportionate to the issues and the result: Jackson v. Mayerle, at para. 92.

34. The FLRs do not explicitly refer to costs on either a partial or substantial indemnity scale. Rule 24(8) refers to “costs on a full recovery basis,” where a party has acted in bad faith. I did not find bad faith in this case. The court has a range of costs awards open to it, from nominal to just short of full recovery.

35. In Sims-Howarth v. Bilcliffe, Aston J. held that the two traditional scales of costs are no longer an appropriate way to quantify costs under the FLRs. He stated that, having determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery, having regard to the factors set out in Rule 24, without any assumptions about categories of costs. This characterization of costs under the FLRs was approved of by the Court of Appeal in C.A.M. v. D.M., at para. 42.

36. Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs he may face if he is unsuccessful. In appropriate circumstances, unreasonable behavior will result in a higher award of costs.

37. In arriving at a costs figure which is reasonable to both parties, I must balance many considerations.

• The husband’s conduct throughout this matter was unreasonable, both prior to and during the trials. He failed to follow prior court orders, ignored his disclosure obligations under the Family Law Rules, and did not pay child support or spousal support. Further, the husband did not disclose his prospects of employment citing a lack of knowledge that he was obliged to tell the wife about this. I found this to be disingenuous in my partial reasons for judgment.
• Further, the husband tried to adjourn the trial on more than one occasion, he attempted to adjourn the trial to retain counsel when he was advised to do so earlier; he came unprepared to the exit pretrial and showed up for the first day of trial without having uploaded any of the required documentation. This required the wife’s lawyer to do both the job of advocating for her client and doing the work the court required for the husband in her role as an Officer of the Court.
• The wife was successful in obtaining retroactive child and spousal support.
• The wife was successful in obtaining prospective child and spousal support.
• The wife was successful in having the court impute income to the husband; and in having 100% of his pension garnished until the arrears are paid up.
• The husband failed to pay the costs ordered by Horkins, J. on July 12, 2021 of $3,000; or the costs ordered by Shore, J., on May 17, 2022 of $3,500.
• The wife is presumptively entitled to elevated costs pursuant to rule 18(14) and in relation to some incidents of unreasonable behaviour on the part of the husband. Beyond that, there is a presumption that the wife is entitled to recovery for costs by virtue of her success and reasonable behaviour (both as a parent and as a litigant).
• The wife's request for over $220,000 in costs must be considered in the context of fairness, proportionality, affordability and reasonable expectations and allocation of resources.
• The fees incurred by the wife have to be reduced by the time spent by her lawyers for attendances where costs were ordered which reduces the fees by $12,981.52.
• Winning does not automatically mean the loser has to write a blank cheque on costs.
• The greater the amount being requested, the greater the need to explain exactly what legal work was done, and why it had to be done.

Conclusion and Order

38. Considering the wife’s success, the fact that the husband’s conduct was unreasonable, and the husband should have expected to pay costs if he was unsuccessful at trial, the husband shall pay to the wife costs fixed in the sum $200,000, inclusive of all disbursements, and HST within 45 days.

39. The wife asks that costs be enforceable by the Family Responsibility Office. I find that the majority of the trial related to child support and spousal support. Accordingly, this costs order shall be enforceable by the director of the FRO, pursuant to s.1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, 1996, SO 1996, c 31.

Released: February 4, 2025

M. Kraft

[1] N.Z.N. v. M.R.N., 2024 ONSC 17.

[2] N.Z.N. v. M.R.N., 2024 ONSC 4086.

[3] Note the EP does not consider the husband’s CAF pension, as it was dealt with separately.