SUPREME COURT OF Nova Scotia
Citation: C. M.(P) v. C. M., 2021 NSSC 96
Date: 20210316
Docket: Bridgewater No. 1201-68877
Registry: Bridgewater
Between:
C. M.(P)
Applicant
v.
C. M.
Respondent
|
Judge: |
The Honourable Justice Pierre L. Muise |
|
Heard by Correspondence: |
|
|
|
|
|
Counsel: |
Meg Green, for the Applicant Kim Johnson, for the Respondent |
COSTS DECISION FOLLOWING APPLICATION TO VARY
Introduction
[1] C. M.(P) filed, on March 16, 2020, an application in chambers to vary the parenting and child support provisions in the variation order granted, by Justice Beaton, as she then was, on May 30, 2019, and issued July 8, 2019.
[2] At the request of C. M., and upon the direction of Justice Gabriel, the preliminary issue of material change in circumstances was determined based on the written submissions of the parties, without cross-examination or oral argument. I rendered an oral decision on the issue of material change on December 11, 2020.
[3] I found that C. M.(P) had failed to establish a material change in circumstances, except for that related to the issue of caring for the children during absences from school that are not regularly scheduled, for which C. M. has been unable to arrange childcare, or has not done so. That issue was resolved between the parties.
[4] However, they have not been able to resolve the issue of the costs of the application.
Positions of the Parties
[5] C. M. seeks costs of $7,000, plus disbursements, for the following reasons:
1. Costs should be augmented to account for what he describes as the frivolous nature of the application, which C. M.(P) ought to have been aware of from the beginning, and him having alerted her lawyer to that factor early on.
2. He was successful in having the matter dismissed.
3. In doing so, he incurred legal fees slightly exceeding $9,000, plus taxes and $242.17 in disbursements, for a total of $10,476.56. It included the cost of: obtaining a transcript of Justice Beaton’s decision; “reviewing and summarizing voluminous evidence from the previous trial”; preparing a detailed Pre-Conference Summary, filed September 16, 2020, to prompt C. M.(P) to withdraw the application; seeking severance of the material change in circumstances issue, which request was opposed; and, preparing extensive written submissions on the material change issue.
4. He earns only slightly over $50,000 per year. He has primary care of three small children and is responsible for all childcare costs. The costs of defending this proceeding put him, and the children, in a difficult financial situation.
5. The Tariffs are not helpful as there was no “amount involved” and no “actual ‘court’ time”, but a lot of “behind the scenes” work.
6. He “deserves substantial indemnification” for his legal fees, meaning 2/3 to 3/4 of his actual costs [based on Armoyan v. Armoyan, 2013 NSCA 136].
7. She unilaterally quit her job. Therefore, she should not be able to avoid a costs award based on inability to pay. Plus, it allowed her to qualify for Legal Aid and to pursue litigation at no cost to her. The Court should treat her as being capable of earning $41,500, as she had been before leaving her job.
8. The Court in Pelley v. Peters, 2014 NSSC 277, awarded costs against a litigant able to earn over $40,000, who had not incurred legal fees and approached the litigation in an unreasonable manner.
9. Plus, C. M.(P) did not make any advance motion under Rule 77.04 to be insulated from costs, which had to be made “as soon as possible” after the application was opposed: Illingworth v. Illingworth, 2020 NSSC 371.
[6] C. M.(P) seeks an order that each party is to bear their own costs, for the following reasons:
1. Courts should exercise restraint in ordering costs in parenting cases to avoid deterring “a parent from pursuing matters that are relevant to the children’s best interests”: Goodrick v. Goodrick, 2009 NSSC 284.
2. The best interests of the children is one of the “further considerations”, beyond the general rule that successful parties are entitled to costs, to be taken in to account when assessing costs in family law matters: Thompson v. Grant, 2009 NSSC 284.
3. C.M.(P) made the application because she believed that, with her move to Bridgewater, where the children resided, it would be in their best interests to change the parenting arrangement. She cannot be assumed to know how the prior decision would affect the basis for her application.
4. She did not review the transcript of Justice Beaton’s decision. She based her decision on her review of the order emanating from that decision. Her lawyer did not requisition a transcript of the decision, because of Legal Aid’s finite resources and because she saw nothing in the order which would have caused her to believe the move would not constitute a material change in circumstances.
5. She quit her job in Halifax, after she moved to Bridgewater, because of the physical and financial drain of the commute, and to facilitate a more flexible schedule to accommodate the best interests of the children.
6. She had surgery in the fall of 2020, and recovery has been slow.
7. She does not have the financial means to pay a costs award. She has accumulated child support arrears. It has resulted in her limited income being garnished. She would suffer financial hardship if ordered to pay costs. That would not be in the best interests of the children.
8. It is proper to refuse to award costs if doing so would “create an undue financial hardship”: Goodrick, supra.
9. The Court in Connolly v. Connolly, 2005 NSSC 203, ordered costs in a substantially reduced amount, to make them more affordable, in light of the unsuccessful party’s responsibility for substantial arrears, high access costs, and that continued access was important for the emotional well-being of the children.
10. The brief filed on behalf of C. M. was very similar to that filed in September 2020, which was unnecessary for the date assignment conference (“DAC”) held at that time.
11. C. M.(P) did not “drag out” the proceedings. The restrictions put in place to combat the Covid-19 pandemic stalled the application from when it was filed to early-summer 2020. By the Fall of 2020, all the materials had been filed. All submissions were in writing. All appearances were by phone. A decision was rendered in December 2020. In contrast, in Pelley v. Peters, the costs award followed a full trial.
12. Pelley v. Peters is distinguishable from the case at hand because it included evidence regarding what income Ms. Peters could be making at her place of employment. There was no evidence in the case at hand regarding what work C.M.(P) could have found in Bridgewater or the sustainability of the commute to and from Halifax for work.
Preliminary Issue
[7] There is also a preliminary dispute between the parties regarding whether C. M. can refer to comments made by C. M.(P)’s counsel, regarding the viability of one of her claims, in a settlement discussion email sent “without prejudice”.
[8] C. M.(P) points to Morrison v. Morrison, 2017 NSSC 63, where the Court, at paragraph 65(4), ruled that the settlement offers marked “without prejudice” were not admissible, even in the costs assessment, as the authors did not reserve the right to refer to them for the issue of costs. As such, they did not qualify as Calderbank Letters (from Calderbank v. Calderbank, [1975] 3 All ER 33 (C.A.)).
[9] For the purposes of this decision, I need not determine whether the common law Calderbank principle applies in every circumstance in Nova Scotia. If I had to decide, I would be inclined to conclude that, where the settlement offer fits within a codified rule, such as our Civil Procedure Rule 10, that the codification supersedes the common law rule. Rule 10.03 permits reference to settlement offers, fitting within the Rule, in assessing costs “unless the offer was made at a settlement conference or under an agreement that the offer would not be admissible in relation to costs”. Rule 10, except in the course of a settlement conference, puts the onus on the parties to turn their mind to whether they want to specify that the offers cannot be referred to on assessment of costs. That is inconsistent with the Calderbank principle, which puts the onus on the offeror to specifically reserve the right to refer to the offer on costs.
[10] This approach appears to be the general approach taken when one considers, as a whole, the flurry of British Columbia decisions rendered on the issue in 2002. They started with Brown v. Lowe, 2002 BCCA 7, where the majority ruled that Calderbank did not apply in British Columbia, as B. C. Rule 37 was a “complete code”. The flurry of cases subsided when the Rules of Court were amended to eliminate increased costs. [See Valmet Paper Machinery Inc. v. Hapag-Lloyd AG, 2002 BCSC 1475.] Brydges v. British Columbia Transit, 2002 BCSC 208, provides a good summary of jurisprudence discussing the issue.
[11] The reason I need not decide the issue in this case is that, as suggested by C. M.(P), C. M. is not presenting the comments as an offer he made, that was rejected by her, and subsequent to which he obtained a “favourable judgment” as described in Rule 10.09. As such, it is not an offer, within the provisions of Rule 10, that a judge could consider in determining costs.
[12] I will go on to address the points raised by the parties and the ultimate issue of appropriate costs in this matter.
Law and Analysis
[13] “The Court’s overall mandate, under Rule 77.02(1), is to do justice between the parties”: Armoyan, supra, para. 10.
[14] Though “Rule 77.08 permits the court to award lump sum costs”, “[t]he tariffs are the norm, and there must be a reason to consider a lump sum.” However, pursuant to “Rule 77.07(1), the court has discretion to raise or lower the tariff costs, applying factors such as those listed in Rule 77.07(2)”. [ Armoyan, supra, paras. 13 to 15.
[15] The Court in Irwin v. Irwin, 2020 NSSC 27, at paragraph 11, stated:
Arriving at a costs assessment in family matters is difficult given the often-mixed outcome and the need to consider the impact of an onerous costs award on the families; and the children in particular. The need for the court to exercise its discretion and to move away from a strict application of the tariffs is often present.
[16] In that case, the Court did stray from the tariffs to do justice between the parties.
[17] In many ways, it was similar to the case at hand. The main issue was whether a material change of circumstances had been established. “Mr. Irwin was the successful party”, parenting was a “significant issue before the Court”, and “Ms. Irwin had a genuine belief in her position as being in the best interests of the children”. Also, “a significant costs award would represent a hardship for her”.
[18] It differed from the case at hand in that it involved a three-day hearing and five pre-trial appearances, and “Ms. Irwin prolonged the proceeding”.
[19] The hearing of evidence over three days brought in the applicability of Tariff A, rather than Tariff C, despite it being a variation application. The Court referred to the comments on that point in Moore v. Moore, 2013 NSSC 281, at paragraph 14, and in Armoyan, supra, at paragraph 20.
[20] Ms. Irwin prolonging the proceedings militated in favour of augmented costs.
[21] Tariff A costs of $21,000 were requested.
[22] However, at paragraphs 19 and 20, the Court concluded and stated:
[19] I am satisfied a costs award in the amount of $7,000 inclusive of HST and disbursements is appropriate. This is on the low end of the range.
[20] The Court is influenced by a desire to balance the need for a costs award in favour of Mr. Irwin with the desirability of minimizing hardship to Ms. Irwin. A costs award must be meaningful for the successful party and also serve as a deterrent to those accessing the Courts to ensure litigation is not initiated with a view to pursuing claims without merit and the costs award should reflect as much as is appropriate the factors enumerated in Rule 77.07(2) supra.
[23] In the case at hand there was no hearing of oral evidence or submissions. The parties submitted affidavits and written submissions only. They then appeared by telephone for an oral decision and a follow-up status review. In these circumstances, Tariff C remains the applicable Tariff. Tariff A would not be an appropriate tariff to apply.
[24] The question is whether it is necessary to stray from Tariff C to do justice between the parties.
[25] As stated in Pelley v. Peters, supra, at paragraph 39, quoting from Lubin v. Lubin, 2012 NSSC 93, “a party and party costs award should ‘represent a substantial contribution towards the parties’ reasonable expenses in presenting or defending the proceeding, but should not amount to a complete indemnity”.
[26] In the case at hand, there is no detailed breakdown of the legal fees or rates charged to assess their reasonableness. There is only a total figure and a general description of the work done. The legal fees actually billed is only one of the factors to consider in any event: Smith v. Smith, 2015 NSSC 73, para. 3, item 10.
[27] $9,000 seems high for a matter heard by correspondence, with only one affidavit having been filed by C. M.(P), which was three and one-half pages long and attached only Justice Beaton’s Order. C. M. did not file any affidavit. Even C. M. himself acknowledges that the amount “may seem high for a motion”.
[28] C. M. explains the work involved in reviewing and summarizing evidence from the previous hearing to help avoid the need for a further two-day hearing. I agree with C.M.(P) that the brief in the material change motion was very similar to that submitted for the DAC. However, if it had not been prepared then, it would have to have been prepared for the material change motion in any event. The conversion of the DAC brief to a motion brief ought only result in a relatively small increase in legal fees.
[29] I disagree with C. M.’s suggestion that, according to Armoyan, supra, “substantial contribution” means 2/3 to 3/4 of actual legal fees in all cases. The Court in Armoyan, at paragraphs 16 and 37, stated:
The basic principle is that a costs award should afford substantial contribution to the party’s reasonable fees and expenses. In Williamson, while discussing the 1989 tariffs, Justice Freeman adopted Justice Saunders’ statement from Landymore v. Hardy (1992), 112 N.S.R. (2d) 410:
The underlying principle by which costs ought to be measured was expressed by the Statutory Costs and Fees Committee in these words:
“… the recovery of costs should represent a substantial contribution towards the parties’ reasonable expenses in presenting or defending the proceeding, but should not amount to a complete indemnity.”
Justice Freeman continued:
In my view a reasonable interpretation of this language suggests that a “substantial contribution” not amounting to a complete indemnity must initially have been intended to mean more than fifty and less than one hundred per cent of a lawyer’s reasonable bill for the services involved. A range for party and party costs between two-thirds and three-quarters of solicitor and client costs, objectively determined, might have seemed reasonable. There has been considerable slippage since 1989 because of escalating legal fees, and costs awards representing a much lower proportion of legal fees actually paid appear to have become standard and accepted practice in cases not involving misconduct or other special circumstances.
….
As noted in Williamson, with which I agree, generally speaking the “substantial contribution” should exceed fifty percent of the appropriate base sum, but should not approach the full indemnity of a solicitor and client award. The percentage should vary, in a principled manner, according to the circumstances of the case. Considering Mr. Armoyan’s conduct, as discussed, and the rejected settlement offer of October 2011, a substantial contribution here should represent: (a) 66% of the $100,000 base sum before the settlement offer of October 2011 for the forum conveniens proceeding in the Family Division (i.e. $66,000); plus (b) 80% of the $200,000 base sum after that settlement offer for the forum conveniens proceeding in the Family Division (i.e. $160,000); plus (c) 80% of the $100,000 base sum in the Court of Appeal for both appeals (i.e. $80,000). …
[30] The 66% and 80% awards in Armoyan emanated from the “misconduct or other special circumstances” in that case. They were not meant to rectify the fact that cost awards much lower than the historic range of 2/3 to 3/4 “have become standard and accepted practice in cases not involving misconduct or other special circumstances”, “because of escalating legal fees”. Armoyan only stated that, absent special circumstances, a substantial contribution should exceed 50%.
[31] In the case at hand, actual legal fees, exclusive of disbursements, were $10,234.39. Half of that is $5,117.20. In addition, for reasons which I will outline, the case at hand did not involve misconduct or special circumstances warranting an increased range. So, even assuming all of the legal fees had been established as being reasonable, Armoyan only directs that, to represent a “substantial contribution”, costs should exceed $5,117.20.
[32] In Irwin, supra, the hearing spanned over three days and there were five pre-trial appearances. Tariff costs were $21,000. Therefore, more likely than not, the actual legal fees incurred were significantly more than twice the $7,000 in costs ordered. That was despite the fact that the unsuccessful party had prolonged the proceedings. Irwin demonstrates that: a costs order need not provide substantial contribution to do justice between the parties; and, even in the face of litigation misconduct, other factors such as “the desirability of minimizing hardship” to the unsuccessful party may justify a costs award well below the tariff amount.
[33] It cannot be said that C. M.(P) prolonged the proceeding, or otherwise, engaged in litigation misconduct. She did refuse to consent to severance of the material change in circumstances issue. That was an unreasonable position to take. However, the question was summarily dealt with during the DAC and did not cause any delay.
[34] As she noted, all materials had been filed by the Fall of 2020. There were no personal appearances or oral submissions. The decision was rendered in December 2020.
[35] The mere fact that I concluded there was no material change in circumstances justifying a review of most of the issues she raised does not show that her application was frivolous.
[36] She indicated that she believed her move to Bridgewater would be in the best interests of the children and justify a change in the parenting arrangement, because it provided increased contact opportunities.
[37] That was not an unreasonable belief for C. M.(P) to have held. As I indicated in my decision on the material change issue, it is tempting to import the maximum contact principle to justify treating any change that facilitates greater contact with the access parent as being a material change. However, Justice MacDonald, in Mahaney, at paragraph 8, warned against succumbing to that temptation. She stated:
Just because a parent may have arranged his or her life to be able to parent under a schedule that was not practical at the date of the last hearing does not mean a change should be made. The change, as it would affect the child, must have considerable significance ‑ it must be "material" or as some courts have said "substantial". Only when a court has concluded that this threshold has been reached is the court to inquire into the child's best interests which then includes consideration of section 16 (10) of the Divorce Act ‑ the provision relating to "maximum contact" with a parent. The argument must not be reversed by applying this type of analysis ‑ it is in the best interest of children to have "maximum contact" therefore anything that will permit a parent to have more contact with a child is a material change. This analysis presupposes more contact is in the best interest of children without recognizing the requirement that the best interest must be proven by evidence after a material change has been found to exist.
[38] As it turned out, I found that, subject to the limited exception noted, the reasons for Justice Beaton’s decision were such that an increased opportunity for contact would not have changed her decision. However, the move did provide some rationale for making the application.
[39] The transcript of Justice Beaton’s decision revealed that, subject to the exception noted, C.M.(P)’s chances of establishing a material change were poor. She continued with her application even after reading that transcript. It still left some arguable points. It did not make her application absolutely doomed to fail.
[40] However, it clearly showed that her case was very weak. In addition, Justice Beaton had determined the best interests of the children, following a hearing spread over four dates and an in-depth analysis, only nine and one-half months before she filed her application to vary. In these circumstances, the concern over fear of costs deterring a parent from pursuing an application they perceive to be in the best interests of the children carries less weight.
[41] I disagree with C. M.(P)’s submission that Pelley v. Peters is distinguishable on the basis that there was evidence of what Ms. Peters could be making at her place of employment. I found that she voluntarily left her job as a dental office administrator, where she was earning $41,520 per year, and could still be earning that amount, but was earning much less in the new casual work she had found. Whether she could be earning more at the job she voluntarily left, or could be earning more at a job she currently has, is a distinction without a difference. Either way, she is intentionally under-employed.
[42] She submitted, without an evidentiary foundation, that she had surgery in the Fall of 2020 and recovery had been slow. There is no evidence regarding whether she received benefits as a result or would have received benefits had she remained at her previous employment.
[43] It is not disputed that she: has been failing to fulfill her child support obligations; has accumulated arrears as a result; and her much reduced income is being garnished. As such a costs award would create financial hardship for her.
[44] However, it would not result in money being diverted away from being used for the best interests of the children. Whether she pays the money in child support or costs, it still goes to C. M. He can use either payment for the benefit of the children. Irrespective of whether she pays him support or costs, or neither, except for what is garnished, he still has to pay his legal bill. That money will not be available for the children either way.
[45] He himself has a moderate yearly income of only slightly over $50,000. That is not much higher than her income earning ability of $41,520, and he is now primarily responsible for the care and financial support of the children, subject to such amounts as can be garnished from her. So, to require him to be responsible for all his own legal expenses would result in financial hardship to him with no hope of future rectification. That would result in a more direct detrimental impact on the best interests of the children.
[46] It would be unjust to deny him costs simply because she voluntarily chose to be under-employed. Even if he may be unlikely to succeed in collecting on a costs award at this time, he may still be able to do so in the future if she secures employment which provides her with a better income. That would help rectify financial sacrifices he would have to make now to ensure the children are provided for.
[47] I agree with C. M. that, if she wanted to seek insulation from costs, C. M.(P) ought to have made an application under Rule 77.04 “as soon as possible” after he opposed her application. To wait until after a determination that she was unsuccessful is unfair to C. M. It deprived him of the opportunity to make litigation choices based on her being relieved of liability for costs.
[48] Unlike in Connolly, supra, a reasonable costs award will not, in the case at hand, interfere with C. M.(P) exercising access as the access costs are relatively minimal. Though she may not be able to afford costs now, there is a reasonable chance she will be able to so in the future. She is only 35 years of age. She ought to be able to return to earning income at her full capacity within a reasonable time.
[49] On the other hand, unlike in Pelley v. Peters, this variation application did not result in an equalization payment exceeding the costs award, from which costs could be paid.
[50] Pelley v. Peters is further distinguishable, as suggested by C. M.(P), on the basis that it involved a trial lasting two and one-half days, and no actual hearing was required in the case at hand.
[51] In the case at hand, the oral decision, ensuing discussion, plus the additional status review appearance to deal with the issue of caring for the children during absences from school, occupied more than one hour, but less than one-half day. The Tariff C range is, therefore, $750 to $1,000.
[52] The decision on the material change issue, combined with C. M. agreeing with the relief requested by C. M.(P) on the remaining very minor point, was determinative of the entire application. Therefore, pursuant to Tariff C, the Court may apply a multiplier of “2, 3 or 4 times, depending on the following factors:”
(a) the complexity of the matter,
(b) the importance of the matter to the parties,
(c) the amount of effort involved in preparing for and conducting the application.
[53] The matter was not complex. However, it was of great importance to the parties because C.M.(P)’s variation application sought to change the parenting and child support arrangement dramatically. Even though there was no actual oral hearing, there was a lot of effort involved in preparing the brief filed by C. M. It required an in-depth review of the voluminous evidence submitted in the two-and-one-half-day hearing, over four days, before Justice Beaton, and a detailed analysis of her decision. In the absence of the availability of oral argument, as agreed in advance by the parties, additional care in the preparation of the brief was required, because there was no opportunity to clarify or expand upon it.
[54] In the circumstances, it is appropriate to apply a multiplier of 3.
[55] That produces costs in the range of $2,250 to $3,000. The high end of that range is only about 1/3 of C. M.’s actual legal costs, exclusive of disbursements. That is less than substantial contribution. However, it is an amount which: is still meaningful for C. M., as the successful party; minimizes the financial hardship to C. M.(P); and, still provides deterrence against pursuing parenting applications with little merit, resulting in wasting of financial resources that would otherwise be available for the benefit of the children.
Conclusion
[56] Considering the points outlined, I conclude that requiring C. M.(P) to pay C. M. $3,000 in costs will do justice between the parties, and I so order. She shall have until March 1, 2022 to pay. That will allow her the opportunity to regain employment at, or at least closer to, her former level of income.
[57] As such, it is unnecessary to stray from the Tariffs.
[58] Pursuant to Rule 77.10, “an award of party and party costs includes necessary and reasonable disbursements”. C. M. indicates his disbursements total $242.17, most of which was spent to obtain and transcribe the CD of Justice Beaton’s decision. That was needed to determine the material change issue. The amount is reasonable. Therefore, I also order C. M.(P) to pay C. M. $242.17 in disbursements by March 1, 2022.
[59] I ask Counsel for C. M. to prepare the order.
Pierre L. Muise, J.