This recent decision from the Superior Court of Justice clarifies the confusion for family law counsel in Ontario following the release of the conflicting decisions of the Ontario Court of Appeal in Berta v. Berta 2015 ONCA 918, and Forrester v. Dennis 2016 ONCA 214 regarding costs, and confirms the decision of Jackson v. Mayerle 2016 ONSC 1556 as the go to case for analysis of Rule 24 of the Family Law Rules.
This case addresses the issues regarding costs that a court can award to a successful party for that party’s legal fees upon succeeding at trial or on a motion. The court provided an overview of many issues surrounding the determination of costs including the following key issues:
- What are the costs consequences of an Offer to Settle?
- What does it mean to be the successful party and how does success impact costs?
- How are costs allocated if the parties settle the matter before the final determination of same?
- How are costs dealt with when success is divided between the parties for various issues?
- How is the quantum of costs determined and what documentation is required to warrant a certain quantum of costs?
Following the end of a relationship of more than 20 years, the parties engaged in a lengthy dispute largely over child and spousal support. When the parties could not resolve their issues, the husband commenced a court application. At the conclusion of a lengthy trial, the court handed down an order that resolved all issues. As the husband was mostly unsuccessful at trial, the court awarded costs to the wife in the amount of $52,000.00.
The husband subsequently brought (less than one year after the conclusion of trial) a motion to reopen almost all of the same issues regarding support which were addressed in the trial.
The wife initially sought to have the husband’s motion dismissed, but she ended up bringing counter-claims while making it clear to the court that said claims were brought entirely in response to the husband’s motion and she would prefer that the whole matter be dismissed.
The parties then resolved all issues except for the determination of costs by way of a consent on the third day of the hearing of the motion, however, it was not entirely clear who was the successful party for the purposes of determining costs.
PARTIES POSITIONS REGARDING COSTS
The wife sought full indemnity for her costs of $83,034.46 exclusive of taxes on same as she submitted that the husband was “entirely unsuccessful” and that his motion cost her a substantial amount of fees to essentially readdress the same issues dealt with at trial.
The husband argued that he should receive $20,000.00 in costs as he felt that success was divided and he felt that costs consequences were not triggered as the matter was resolved by settlement instead of a final decision of a court. The husband’s total fees amounted to approximately $55,375.00 exclusive of taxes on same.
The court held that the husband must pay $70,000.00 in costs to the wife (inclusive of tax and disbursements) because he was mostly unsuccessful on the motion, however, the wife’s bill of costs did not provide sufficient information to warrant full recovery of all of her legal expenses.
SUMMARY OF COSTS ANALYSIS
Implications of Offers to Settle
The court addressed the issue of what constitutes an Offer to Settle for the purpose of triggering costs consequences. Rule 18(14) of the Family Law Rules (“the Rules”) provides that a party is entitled to costs, unless ordered otherwise, if he or she has made a written offer at least 7 days before trial and achieved a result that was as good as or better than the terms of his or her offer. Provided that said condition is met, the party is entitled to partial recovery up to the date that the offer was served and full recovery from that date onward.
Implications of Success and Determination of Who was the Successful Party
The court stated that the starting point for assessing the determination of costs is to ascertain who was the successful party. Additionally, Rule 24(1) of the Rules provides for a presumption of entitlement to costs for the successful party.
Success Where the Matter is Resolved by Agreement, Minutes of Settlement, or Consent
The court reviewed the caselaw and found that there is only a successful party if there was a “declared winner or loser” and said declaration would usually be in the form of a final decision of a judge. However, the caselaw further stated that resolution by agreement in the form of Minutes of Settlement would not negate the need for a full costs analysis because parties are always encouraged to settle their matters out of court and the successful party should not be penalized for making a “good litigation choice” by agreeing to settle their matter in order to prevent further accumulation of expenses from continuing litigation. Additionally, the caselaw stated the following regarding how to determine success on settlement:
If a party brings a motion asking to change almost everything, and at the last minute signs a Consent which changes almost nothing, how can they possibly argue that a judge will have a hard time figuring out who was successful?
The caselaw further specifies that in determining who was successful, the court should compare the eventual result (in the form of an order or agreement) to any offers the parties exchanged.
The court also clarified that divided success does not necessarily mean that the parties were equally successful and the court has the discretion to determine the success of the parties on each issue in addition to deciding which issues may impact costs and to what extent. The court can assess comparative success with respect to individual issues or with respect to the whole case on a global scale.
When assessing success on individual issues the court should consider the following:
- Did a mid-point number prevail on a financial issue?
- Did a compromise result on a parenting issue?
When assessing global success, the court should consider the following:
- How many issues were there?
- How did the issues compare in terms of importance, complexity and time expended?
- Was either party predominantly successful on more of the issues?
- Was either party more responsible for unnecessary legal costs being incurred?
Consequences of Unreasonable Behavior
The court noted that costs may even be awarded against the successful party where his or her litigation behavior was unreasonable, drawing out the litigation longer than necessary or needlessly contributing to the legal expenses incurred by the parties.
Assessing the Quantum of Costs
The court stated that proportionality is important in determining the amount of costs to be awarded. The court reviewed the relevant caselaw, which indicates that costs must reasonable and fair overall given the circumstances and complexity of issues dealt with and the court has the discretion to determine the amount of costs that is reasonable and fair considering all of the circumstances.
The court also referred to caselaw that supports the notion that full recovery is the preferable approach in family law, however, the court has the discretion to award an amount other than full recovery where a party has behaved unreasonably or where costs are not proportional to the issues addressed and the result achieved. The court may also consider proportionality with respect to the “importance or monetary value of the issues at stake”.
The court also examined the issue of the sufficiency of the successful party’s bill of costs to justify the amount of costs sought.
The husband in this case referred to caselaw that held that in order to assess the reasonableness of costs, the court must have sufficient detail in the bill of costs to ascertain what work was done and how much of the lawyer’s time was spend on particular tasks. The case referred to by the husband held that a general breakdown was not sufficiently detailed to assess the reasonableness of 49.2 hours of legal work for which costs were claimed.
The court, however, held that there is “no absolute requirement” regarding format of the bill of costs and a bill of costs need not be “itemized by date and task”. However, the court also held that, where detail was lacking, the court must be hyper vigilant to ensure that the overall costs determination is fair.