Supreme Court

Mulders v Mulders 2016 NWTSC 12 Date: 2016 02 16 Docket: S-1-DV-2011-104136

IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES BETWEEN: DONNA MULDERS Petitioner - and - ROBERT MULDERS Respondent MEMORANDUM OF JUDGMENT [1] The parties began living together in July 1986 and were married in April 1990. They separated on December 30, 2009. There were two children of the relationship, T.M. and A.M. Following their separation, the parties attempted mediation unsuccessfully. The Respondent’s lawyer retired and he was unable to retain a new lawyer for a period of time. The Petitioner filed for divorce on August 30, 2011.

[2] There were several interim court appearances over the next couple of years. Eventually, the divorce was severed from the other relief and a Divorce Judgment was granted on July 17, 2014. A Certificate of Divorce was issued on August 18, 2014. The parties continued to disagree on child support, expenses for their children, matrimonial property and division of pensions and RRSP’s.

Page 2 [3] The parties agreed to participate in a judicial settlement conference in an attempt to resolve the remaining issues. A Fiat was issued designating me as the Case Management Judge. A settlement conference was held on October 15 and 16, 2014.

[4] Through the settlement conference process, the parties resolved all of the outstanding matters by agreement, except for the issues of costs and pre-and post-judgment interest. The parties agreed to deal with those issues by way of written submissions. The Petitioner filed an initial submission on costs on December 8, 2014 and an amended submissions on costs on January 21, 2015. The Respondent’s submissions were filed on February 18, 2015. The Petitioner filed a Reply on February 23, 2015.

[5] Therefore, the issues to be addressed in this judgment are: 1) Costs; and 2) Interest, both pre-judgment and post-judgment.

COSTS [6] The Petitioner seeks her costs on the basis that she was the successful party. In addition, she seeks solicitor-client costs claiming that she made an Offer to Settle which was not accepted or revoked and the settlement agreed upon was more favourable to the Petitioner than the Offer which entitles her to solicitor-client costs from the date of service of the Offer. Alternatively, if she is not entitled to solicitor-client costs, then elevated costs should be ordered because she was substantially successful, the Respondent delayed matters by failing to respond, her legal fees were reasonable and the tariff amount is not adequate.

[7] The Respondent argues that the Offer to Settle was revoked, that the Petitioner is not entitled to elevated costs and that costs should not be awarded in the event of a settlement as there would be no incentive to settle. Furthermore, each of the parties incurred significant legal costs during the process.

[8] Generally, a successful party is entitled to their costs. This is subject to the Court’s discretion to award costs. The rule regarding costs is applicable in matrimonial litigation as well. Determining whether costs should be awarded becomes more complicated when matters are resolved without the necessity of a trial and, as in many family law cases, there are multiple issues in dispute and where a party may achieve varying degrees of success.

Page 3 [9] In this case, the Petitioner relies upon Rule 201 of the Rules of the Supreme Court of the Northwest Territories (Rules), which states:

201.(1) A plaintiff who makes an offer to settle at least 14 days before the commencement of the hearing is entitled to party and party costs to the day on which the offer to settle was served and solicitor and client costs from that day where: (a) the offer to settle is not withdrawn and is not accepted by the defendant; and (b) the plaintiff obtains a judgment on terms as favourable as or more favourable than the offer to settle.

[10] The purpose of Rule 201 is to provide predictability with respect to the costs consequences of a failure to accept an offer that should have been accepted prior to trial. This is subject to the trial judge’s discretion over costs but the expectation is that Rule 201 will be applicable unless there was a good reason not to apply it. Fair v. Jones, [1999] N.W.T.J. No. 44 (S.C.) at para. 10.

[11] The Divorce Rules, which are also relevant in this matter, also provide for cost consequences for a party who serves an offer to settle in advance of the trial or hearing. Rule 18 provides:

18.(1) At any time before the commencement of a trial or hearing, a party may serve a written offer to settle a claim for the support of a spouse, support for the children of the marriage or division of property.

(….) (6) In exercising its discretion as to costs under Rule 33, the Court may take in to account the terms of the offer, the date on which the offer was served, the date of acceptance if it was accepted, the success of the parties and the conduct of the parties during the litigation.

[12] Rule 18 does not provide specific costs consequences but gives a trial judge the broad discretion to consider relevant factors including the terms of the offer, when it was made and the success of the parties: Fair v. Jones, supra at para. 14.

[13] Rule 287 is also applicable as it permits a conference judge to make an order for costs. In this case, I was appointed as the case management judge pursuant to Rule 282 to conduct a settlement conference or other judicial dispute resolution conference.

Page 4 [14] The Petitioner served a formal Offer to Settle on the Respondent on December 19, 2012. The Petitioner claims that the terms agreed upon at the settlement conference were as favourable as those outlined in the Petitioner’s Offer to Settle and that the cost consequences contemplated in Rule 201 should flow from the date of service of the offer. The Petitioner also argues that the two day settlement conference was akin to a trial or hearing referred to in the Rules. With respect, I do not agree that a negotiated settlement between the parties is similar to a trial or hearing as contemplated in the Rules.

[15] When Part 19 of the Rules dealing with Case Management was enacted, the Court provided a Notice to the Profession regarding Case Management Procedures. Case management, whether it involved a pre-trial conference or a settlement oriented procedure was intended to achieve the objective of the resolution of disputes without trial. Settlement conferences were designed to avoid trials and it was noted that a successful settlement conference required litigants to act in good faith to try and resolve the dispute.

[16] The intent of Rule 201 is to promote reasonable settlements and it was intended to be an incentive to the settlement of litigation and to avoid trials: Fair v. Jones, supra at paras. 10, 21. During a settlement conference, the parties are responsible for achieving an acceptable settlement and it is not the responsibility of the case management judge to impose a settlement on the parties. In this way, a settlement conference, regardless of the preparations required, is different from a trial or hearing. Whether a settlement is reached at a settlement conference is within the control of the parties and their willingness to reach an acceptable settlement. If they are unable to reach a settlement, the parties can proceed to a trial or hearing. Following a trial or hearing, a judge will make a decision and impose judgment on the parties.

[17] The imposition of the cost consequences that flow from an Offer to Settle being made following a negotiated settlement between the parties is not consistent with the intent of Rule 201 and would not, in my view, encourage the reasonable settlement of disputes and avoid trials. If this matter had proceeded to trial and the Petitioner had obtained a judgment as favourable as or more favourable than the Offer to Settle, then the application of Rule 201 would be appropriate: Fair v. Jones, supra at para. 24.

[18] The Petitioner has alternatively sought elevated costs arguing that she was substantially successful, the Respondent delayed matters by failing to respond to requests or respect agreed upon deadlines, the Respondent reneged on his agreement

Page 5 to re-calculate the pension transfer based on revised superannuation estimates, her legal fees were reasonable and the tariff amount is not adequate.

[19] The Respondent argues that each party should bear their own costs and that costs should not be awarded in the event of a settlement as there would be no incentive to resolve matters. The Respondent acknowledges that he was responsible for various delays in the proceedings but argues that the Petitioner had the ability to advance the litigation at any time. Furthermore, that both parties were responsible for part of the delay and there should be no cost consequences resulting from delay.

[20] A court’s discretion with respect to costs is broad. In most cases, when costs are awarded, it is on a party and party basis which provides partial indemnity for the costs of some steps incurred in the course of litigation. These are set out in Schedule “A” of the Rules and the amounts vary in accordance with the amount at issue in the litigation.

[21] Costs can be awarded on an enhanced basis as well. Determining whether costs in excess of the amount prescribed by the Rules requires a consideration of a number of factors including the reasonableness of the fees, the inadequacy of the tariffs, the complexity of the matter, and whether the issues are important for the parties or the larger community: WCB v. Mercer et al; and Mercer v. WCB, 2012 NWTSC 78 at para. 11.

[22] In a divorce matter, the factors referred to in Rule 18 of the Divorce Rules must also be considered: the terms of the offer; date on which the offer was served, the date of acceptance if it was accepted, the success of the parties and the conduct of the parties during litigation.

[23] As stated in Fair v. Jones, supra at para. 15, the courts have a wide discretion with respect to costs in matrimonial litigation:

I think there is good reason to maintain a wide discretion as to costs in matrimonial litigation. As has been noted in many cases, family law trials usually encompass a number of issues, for example, property division, spousal support, custody and child support, and usually these issues are intertwined. Therefore, it is often difficult to determine if a judgment is more or less favourable than an offer since it may be on some points but not others.

[24] While Fair v. Jones dealt with the issue of costs following a trial, the broad discretion afforded by Rule 18 makes it applicable to matrimonial litigation in general, whether a matter is resolved at trial or in another manner.

Page 6 [25] In terms of success, reference to the Offer made by the Petitioner is appropriate as she made an Offer to Settle on December 19, 2012. Had the Respondent accepted her Offer, this matter could have been resolved months or years earlier. The Petitioner successfully negotiated receiving child support in an amount in excess of that proposed in the Offer. The amount payable under the Offer was $13,116.00 for both children and the agreed upon amount following the settlement conference was $20,968.00 (less $5,685.00 that had already been paid by the Respondent).

[26] With respect to section 7 expenses, the Offer contemplated payment of $8,775.00 for the children’s expenses whereas the parties agreed to payment of a lesser amount. The Petitioner’s Offer with respect to matrimonial property was an equalization payment to her of $364,752.50. The parties negotiated an agreement of an equalization payment of $355,188.50 plus occupation rent of $50,000.00 as the Respondent had the benefit of living in the matrimonial home during the course of the proceedings. Several other aspects of the settlement agreement were the same as the Offer.

[27] Taking into consideration the Offer to Settle made on December 19, 2012, the agreement reached by the parties in the settlement conference and the various issues which were resolved by the parties, I conclude that overall, the Petitioner obtained a result that was as least as favourable as her Offer to Settle.

[28] In terms of the conduct of the parties during litigation, this matter has taken years to reach a resolution. The parties separated in 2009. The parties entered into mediation following the separation which was not successful and ended in November 2010. The Respondent’s lawyer retired following mediation and he was not able to retain another lawyer until after the Petitioner filed for divorce on August 30, 2011.

[29] The Respondent’s current lawyer was retained in September 2011. The parties continued to correspond regarding settlement of the issues. The Petitioner served a formal Offer to Settle on December 19, 2012. As this matter continued, there were various court dates, including a Special Chambers hearing on the issue of child support. There were also delays as a result of the failure of the Respondent to provide documents in a timely fashion, the suspension from practice of the Respondent’s counsel, the failure of the Respondent to adhere to agreed upon deadlines, and the failure of both parties to respond promptly at various times.

Page 7 [30] During the settlement conference, the Respondent provided evidence which had not previously been disclosed and indicated that he did not agree with some facts that the parties had previously agreed upon. Following the settlement conference, the Respondent refused to comply with the method of calculating and equalizing their retirement and superannuation plans that had been agreed to by the parties at the settlement conference. The parties were able to resolve this after further negotiation and come to another agreement on this issue.

[31] Overall, I conclude that the conduct of the Respondent in this litigation contributed to the delay in resolving this matter. While there were significant assets at stake and the parties positions on many issues were starkly opposed, this matter could have been successfully resolved much earlier if not for the actions or inaction of the Respondent. The result is that the Petitioner incurred more legal costs than she would have otherwise had the Respondent conducted himself differently. In my view, this case is an appropriate one to award costs to the Petitioner.

[32] The Petitioner has filed documentation indicating that she has incurred the following costs:

Legal Fees GST on fees Disbursements GST on disbursements Accounting expenses Total [33] The Petitioner has also provided a Bill of Costs which indicated that according the Column 4 of Schedule “A” that costs would be payable in the amount of $9,025.00.

[34] Reviewing the materials provided, I conclude that this is an appropriate case to make a lump sum order for costs. I have taken into account the amounts included in Column 4 of Schedule “A”, that the matter did not require a hearing or trial, that there was a Special Chambers application in which the Petitioner was unsuccessful in obtaining an order of child support, that the parties eventually agreed upon the payment of child support to the Petitioner, the issues in dispute in this matter, the success achieved in the settlement process and the overall conduct of the litigation. For those reasons, I conclude that the Petitioner is entitled to costs in a lump sum of $10,000.00, inclusive of disbursements.

$ 40,561.00 $ 2,095.55 $ 435.00 $ 64.50 $ 1,140.00 $ 44,296.05

Page 8 INTEREST, PRE-JUDGMENT AND POST-JUDGMENT [35] The Petitioner is claiming pre-and post-judgment interest on the equalization payment made to her by the Respondent. She argues that the Respondent had the use of the matrimonial property for five years while the issues between them were being resolved. During this time, the matrimonial home increased in value for which the Petitioner was partially compensated through the equalization payment and the payment of occupation rent. However, the loss of the use of this asset and the use of the funds and interest from the matrimonial property for an extended period of time should result in interest being payable to the Petitioner.

[36] The Respondent argues that there should not be a payment of interest since the Petitioner has been compensated by the payment of occupation rent, the increased value of the matrimonial home and the current valuations of the parties’ pensions. During this period of time, the Respondent also claims that he was responsible for maintaining the property and paying interest on the matrimonial debt.

[37] Pre-judgment and post-judgment interest is a discretionary matter and a fact-specific exercise: Gross v. Gross, 2006 NWTSC 66 at para. 81. It has been recognized that, with respect to matrimonial property, pre-judgment interest can be awarded when one spouse has had the use of liquid funds or property which has earned income. Viswalingam v. Viswalingam, [1996] N.W.T.J. No. 30 (S.C.) at para. 48.

[38] Pre-judgment interest can also be awarded on equalization payments. This was recognized in Viswalingam, supra where the Court considered when pre-judgment interest will not be awarded:

The principles for awarding prejudgment interest on equalization payments are not necessarily identical to those used in commercial cases: McQuay v. McQuay (1992), 8 O.R. (3d) 111, 39 R.F.L. (3d) 184 (Div. Ct.). The weight of jurisprudence in family law cases at the trial level indicates that exceptions do exist to the usual award of interest on an equalization payment. Specifically, the court’s discretion will be exercised… and prejudgment interest will not be awarded on an equalization payment where, for various reasons, the payor spouse cannot realize on the asset giving rise to the equalization payment until after the trial, does not have the use of it prior to trial, the assets generates no income, and the payor spouse has not delayed the case being brought to trial.

Burgess v. Burgess (1995), 24 O.R. (3d) 547 (C.A.) at p. 553 cited in Viswalingam, supra at para. 47.

Page 9 [39] In this case, a significant period of time elapsed between separation and settlement between the parties. During this time, the Respondent had the use of matrimonial home. The passage of time is only one factor to consider in determining whether pre-judgment interest is payable. Another factor is whether there has been delay by the payor spouse in the matter being resolved. As previously mentioned, I have concluded that the Respondent is responsible for some of the delay in resolving this matter.

[40] The settlement negotiated required the Respondent to pay the Petitioner a significant amount to equalize the matrimonial property and their pensions and superannuation plans. The parties negotiated an equalization payment based upon sharing equally in the value of the matrimonial home as of 2013. This was the date of the last appraisal prior to the settlement conference and was several years following the date of separation. The Petitioner was therefore compensated for some of the increase in value to the matrimonial home while these proceedings were outstanding. Further, the parties negotiated payment of occupation rent to the Petitioner in the amount of $50,000.00 to compensate the Petitioner for the use of a joint asset solely by the Respondent.

[41] In the circumstances, and taking all of this into consideration, I decline to order the payment of pre- or post-judgment interest.

CONCLUSION [42] For the reasons stated, I order the following: 1) The Respondent shall pay the Petitioner costs of $10,000.00, inclusive of disbursements.

S.H. Smallwood J.S.C.

Dated in Yellowknife, NT, this th 16 day of February, 2016 Counsel for the Petitioner: Margo L. Nightingale Counsel for the Respondent: D. Jane Olson

Docket: S-1-DV-2011-104136 IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES

BETWEEN: DONNA MULDERS Petitioner - and - ROBERT MULDERS Respondent MEMORANDUM OF JUDGMENT THE HONOURABLE JUSTICE S.H. SMALLWOOD