WILLIAM MICHAEL PHIPPEN, Applicant, — v. —, 2014 ONCJ 730

Kitchener Registry No. 173/12 DATE: 2014·IX·04 CITATION: Phippen v. Ontario (Director, Family Responsibility Office) , 2014 ONCJ 730 ONTARIO COURT OF JUSTICE BETWEEN: WILLIAM MICHAEL PHIPPEN, Applicant, — AND — DIRECTOR OF THE FAMILY RESPONSIBILITY OFFICE, Respondent. Before Justice Lynda J.

Rogers Heard on 18 November 2013 Reasons for Judgment released on 4 September 2014 (Corrections to text of reasons made on 4 February 2015) CIVIL PROCEDURE — Costs — Entitlement or liability — Costs for or against government agency — Special and unusual circumstances — Enforcement agency’s deliberate blindness to ongoing proceedings that precluded need for further litigation — Payor husband had agreed to spousal support provisions in separation agreement that was filed with court and with Director of Family Responsibility Office — About 1½ years ago, Director was aware that spouses were quarrelling over amount of support and thus chose not to suspend payor’s driver’s licence, but instead required that he launch motion to vary, which payor promptly did but wife’s requests for adjournments delayed hearing date of that motion — At all times, payor kept Director informed of developments and had even invited Director to attend motion — Several months later and without warning, Director served payor with notice to suspend his driver’s licence, giving payor deadline to get refraining order from court — Payor made motion for order to refrain suspension of his driver’s licence, returnable 2 days before deadline but, curiously, Director filed no material in response — On return date of motion, payor and wife filed minutes of settlement whereby they agreed to withdraw enforcement of their separation agreement from Director’s office, thus depriving Director any further enforcement authority and nullifying Director’s notice to suspend — Nevertheless, payor now sought costs against Director for having needlessly required him to apply for refraining order — Motion judge found that payor was successful on refraining motion and had not behaved unreasonably — By contrast, Director had behaved unreasonably in issuing notice to suspend driver’s licence, thereby forcing payor to make refraining motion — Director’s unprovoked decision to restart aggressive enforcement without prior notice or consultation constituted sufficient “special and unusual circumstances” that justified costs award against government agency — Admittedly, quantum of monthly support under agreement was large and wife had arguably insisted on enforcement, but it was still within Director’s sole discretion how and when to enforce support obligation — In this case, Director’s inappropriate exercise of that discretion constituted unreasonable behaviour — Motion judge ordered Director ordered to pay costs fixed at $7,141.60 within 30 days on full recovery basis.

STATUTES AND REGULATIONS CITED Family Law Rules , O. Reg. 114/99 [as amended], subrule 24(1) , subrule 24(3) , subrule 24(4) , subrule 24(5) and subrule 24(11) . Family Responsibility and Support Arrears Enforcement Act, 1996 , S.O. 1996, c. 31 [as amended], clause 7(1) ( k ). CASES CITED Director of the Family Responsibility Office v. Ramsay , 2005 ONCJ 324 , 144 A.C.W.S. (3d) 890, [2005] O.J. No. 5545, 2005 Cars​well​- Ont 7434 (Ont. C.J.). Emhecht v. Ontario (Family Responsibility Office) and Lake , 2011 ONSC 2644 , [2011] O.J. No. 2438, 2011 Cars​well​Ont 3949 (Ont. S.C.).

Tsaros v. Ontario (Director, Family Responsibility Office) , 2012 ONSC 2449 , 294 O.A.C. 171, 23 R.F.L. (7th) 320, [2012] O.J. No. 2598, 2012 Cars​well​Ont 7226 (Ont. Div. Ct.). Michael J. Mara ................................................ counsel for the applicant, William Michael Phippen Gregory R. Sutter ............... counsel for the respondent, Director of the Family Responsibility Office JUSTICE L.J.

ROGERS:— 1: INTRODUCTION [ 1 ] The applicant William Michael Phippen seeks costs against the Director, Family Responsibility Office (FRO), in the amount of $12,767.19, plus $2,034 (for the costs argument appearance) as a result of the motion he brought, returnable on 28 October 2013, for an order refraining the suspension of his driver’s licence.

The Director FRO disputes the claim for costs, claiming in its factum that “the Director at all times acted in good faith to fulfill its statutory duty to enforce the arrears in light of the ongoing dispute between the parties”, and that “no special and unusual circumstances exist in this case to justify a costs award”. [ 2 ] The motion to refrain the suspension of his driver’s licence was brought by Mr. Phippen in response to a First Notice to Suspend Driver’s Licence dated 20 September 2013, from the Director FRO. The notice gave Mr. Phippen until 30 October 2013 to obtain a refraining order.

In support of his motion to refrain, Mr. Phippen filed a detailed affidavit, sworn on 22 October 2013, setting out the history of the previous enforcement proceedings initiated by the Director FRO, and the status of the motion to change that he had commenced on 30 April 2013. [ 3 ] The Director FRO filed no material in response to Mr. Phippen’s motion to refrain. On the return of the costs argument on 18 November 2013, the Director, FRO filed a factum, that contained an affidavit by an enforcement officer in the Director’s employ. Mr.

Phippen objected to the affidavit on the basis that it was evidence that was properly in response to the motion to refrain. After submissions by both counsel, the affidavit was removed from the factum filed by the Director, on the costs issue, and was not reviewed by the court. [ 4 ] On the return date of the motion to refrain, Mr.

Phippen and the support recipient Christine Phippen, filed minutes of settlement in which they agreed to withdraw the enforcement of their separation agreement from the Director’s office and entered into a temporary spousal support arrangement pending the resolution of the motion to change. As a result, as the Director had no enforcement authority, the driver’s licence suspension notice became a nullity. 2: HISTORY [ 5 ] Michael and Christine Phippen are parties to a separation agreement dated 10 December 2009, which agreement was filed in the Ontario Court of Justice on 4 April 2012. [ 6 ] Mr.

Phippen was required to pay spousal support to Ms. Phippen in the amount of $27,000.00 per month for each year his income exceeded $1,000,000.00. In November 2011, Mr. Phippen was terminated from his employment. He paid the required spousal support in 2012, as the agreement precluded any variation until he could produce his 2012 income tax return and supporting documents to Ms. Phippen. Mr. Phippen commenced a motion to change on 30 April 2013, in which he alleged that he had overpaid his spousal support in 2012 by reason of his reduction in income, and that any support owing to Ms.

Phippen in 2013 should be set off as against that 2012 overpayment. [ 7 ] According to Mr. Phippen, he attempted to negotiate a change in his spousal support obligation in early March 2013 with no success. In late March, Mr. Phippen received a First Notice of Intention to Suspend Driver’s Licence from the Director FRO. Mr. Marra, counsel retained by Mr. Phippen’s lawyer Mr. Keller, entered into negotiations with an employee in the Director’s office that resulted in a withdrawal of the licence suspension process. In a letter from Mr.

Marra, dated 17 April 2013, he stated: I confirm our telephone conversation of this morning wherein you advised that you would put the Federal License and Driver’s License enforcement actions on hold provided that you received written confirmation from me that a Motion to Change the payment terms of the Separation Agreement, including arrears and ongoing monthly payments, would be issued within two weeks. On that basis, you agreed that no steps would be taken to suspend the driver’s license and a Refraining Order was therefore not necessary and you would not request the suspension of Federal licenses.

I hereby confirm that the Motion to Change will be issued within two weeks a copy will be provided to you immediately upon issuance. [ 8 ] Mr. Phippen’s motion to change was issued on 30 April 2013 with a first return date of 20 June 2013. The support recipient, Ms. Phippen, retained counsel and the matter was adjourned on consent to 19 July 2013 and then to 22 August 2013, to permit Ms. Phippen time to file responding materials. On 28 August 2013, the motion to change was adjourned to 31 October 2013 for case conference. Mr.

Keller confirmed the case conference date with the Director’s Office by letters dated 29 August 2013 and 6 September 2013. In addition, in the 6 September 2013 letter, he provided Mr. Phippen’s reasoning behind his motion to change, as follows:

For the calendar year 2012, Mr. Phippen paid $324,000.00 in spousal support pursuant to the separation agreement. Under the Spousal Support Advisory Guidelines , Mr. Phippen should have paid $127,404.00 which resulted in an overpayment of $196,596.00. Mr. Phippen is asking that the court treat the overpayment of spousal support for the year 2012 as a credit toward past and future spousal support obligations. Mr. Phippen calculates that the proper amount of spousal support effective January 1, 2012 should have been $10,617.00 per month. Therefore, utilizing the credit, Mr.

Phippen would have a credit against all spousal support payments until mid-2014. If you have any further questions regarding this or any other issue, please contact me at your earliest convenience. If FRO wishes to attend and make submissions at the case conference on October 31, 2013, please invite them to do so. [ 9 ] According to Mr. Phippen, no response to Mr. Keller’s letter of 6 September 2013 was received from the Director’s office. 3: MOTION TO REFRAIN [ 10 ] On 20 September 2013, the Director FRO issued a First Notice of Intention to Suspend Driver’s Licence to Mr. Phippen. Mr.

Marra was once again retained, and he contacted the Director FRO by letter dated 10 October 2013. In his letter, Mr. Marra confirmed that he would bring a refraining motion on Mr. Phippen’s behalf, prior to the Director’s stated deadline of 30 October 2013, and would claim costs against the Director. [ 11 ] According to Mr. Phippen, counsel for the Director’s office contacted Mr. Marra on 10 October 2013 to request time to respond to his letter. On 15 October 2013, Ms. Horrocks, counsel for the Director, confirmed to Mr.

Marra that the licence suspension process would proceed. [ 12 ] As previously noted, the refraining motion was resolved by the parties’ withdrawal of the support agreement from the Director’s office, thereby ending the Director’s enforcement process. 4: THE APPLICANT’S POSITION [ 13 ] Mr. Phippen claims full recovery costs of $9,356.40 for Mr. Marra’s fees and $5,444.79 for the fees of Mr. Keller’s office, for a total of $14,801.19.

He takes the position that the Director FRO acted unreasonably in proceeding with a driver’s licence suspension when an earlier suspension process had been withdrawn on the undertaking to commence a motion to change. The motion to change was commenced and the two adjournments in June and July 2013 were at the request of Ms. Phippen. The case conference was scheduled for 31 October 2013, a not unreasonable period of adjournment, and the Director was informed of that date on 6 September 2013 and invited to participate at the conference. [ 14 ] In addition, Mr.

Phippen alleges that the Director acted in bad faith by not abiding by its original agreement not to proceed with enforcement if a motion to change was commenced, and by serving a Notice to Suspend that required a motion to refrain being scheduled by 30 October 2013, the day before the case conference in the motion to change was to occur. 5: THE POSITION OF THE DIRECTOR FRO [ 15 ] Counsel for the Director, Mr. Sutter, filed a factum in which certain facts were alleged from an affidavit that was not allowed to be filed. Clearly those facts cannot be relied on by the court. Mr.

Sutter argued that the Director FRO has an ongoing obligation to enforce a support order filed in its office, and that in pursuing the suspension of Mr. Phippen’s licence, the enforcement was efficacious, particularly in light of the adjournment of the motion to change. He added that an order for costs against a government agency should be made only in special and unusual circumstances, though bad faith, demonstrated by reprehensible, scandalous or outrageous conduct need not be established. See Director of the Family Responsibility Office v. Ramsay , 2005 ONCJ 324 , 144 A.C.W.S. (3d) 890, [2005] O.J.

No. 5545, 2005 Cars​well​Ont 7434 (Ont. C.J.). 6: CONCLUSIONS [ 16 ] I have reviewed the cases provided by counsel. I am particularly persuaded in awarding costs against the Director FRO by the cases of Emhecht v. Ontario (Family Responsibility Office) and Lake , 2011 ONSC 2644 , [2011] O.J. No. 2438, 2011 Cars​well​Ont 3949 (Ont. S.C.), and Tsaros v. Ontario (Director, Family Responsibility Office) , 2012 ONSC 2449 , 294 O.A.C. 171, 23 R.F.L. (7th) 320, [2012] O.J. No. 2598, 2012 Cars​well​Ont 7226 (Ont. Div. Ct.). [ 17 ] In the case of Emhecht v.

Ontario (Family Responsibility Office) and Lake , supra , the applicant support payor sought costs against the Director FRO in a motion to refrain the suspension of his driver’s licence, and sought an order clarifying the provisions of a support order made on 7 November 2005. The parties (support payor and recipient) eventually resolved the dispute regarding the original order but the support payor sought costs for the legal fees related to his dealing with the Family Responsibility Office. In awarding costs against the Director, Justice Kendra D.

Coats stated in paragraph [6], as the first of the eleven reasons for her decision, that:

1. It should have been clear to the Family Responsibility Office that there was a real and substantial dispute between the parties as to the arrears alleged by Ms. Lake to be outstanding and owing to her by Mr. Emhecht. There is extensive correspondence between Ms. Oliver and the Family Responsibility Office and Ms. Oliver and the Ombudsman (some of which was also sent to the Family Responsibility Office) which reflects that there was significant disagreement between Mr. Emhecht and Ms. Lake about the

interpretation of certain provisions of the 2005 order. Notwithstanding the apparent disagreement between the parties concerning the

interpretation of the 2005 order, the Family Responsibility Office enforced the arrears as submitted by Ms. Lake, necessitating the refraining order. [ 18 ] In Tsaros v. Ontario (Director, Family Responsibility Office) , supra , the Divisional Court dismissed an application for judicial review of the Director’s decision not to enforce a support order where it would be “unreasonable and impractical” to do so, pursuant to clause 7(1) (

k) of the Family Responsibility and Support Arrears Enforcement Act, 1996 , S.O. 1996, c. 31, as amended (“ FRSAEA ”). In delivering the judgment of the court dismissing the support recipient’s application for judicial review of the Director’s decision not to enforce her claim for child support arrears, Justice William L. Whalen stated at paragraph [6]: [6] Subsection 5(1) of the Act states that it is the Director’s duty to enforce support orders filed with his office.

Subsection 6(1) of the Act provides that the Director shall carry out that duty in the manner that seems practical to him, including commencing enforcement proceedings in the recipient’s name. However, subsection 7(1) lists a number of situations where the Director may exercise his discretion not to enforce a support order, including under clause 7(1)(

k) where “enforcement of the order is otherwise unreasonable or impractical”. This provision seems to be a “catch-all” for situations not listed in the previous subsections, which all fall generally within one of the following categories; it is uncertain how much is owing; whether any amount is owing, and/or; it is impractical to enforce, for example, because it is for a nominal amount or the payor is receiving social benefits. [ 19 ] In this case, the Director was aware that there was a dispute between the parties as to the quantum of support owing by Mr. Phippen.

In not proceeding with a driver’s licence suspension in April 2013 and requiring Mr. Phippen to commence a motion to change by 30 April 2013, the Director was exercising its discretion pursuant to clause 7(1) (

k) of the FRSAEA . The motion to change was commenced and the delay in securing a case conference date was to accommodate Ms. Phippen’s requests for adjournments to serve and file her response to the motion. There appears to be no reasonable explanation for the Director’s decision, in September 2013, to aggressively pursue the enforcement of a support agreement that was before the courts, when it had decided not to pursue enforcement in April 2013. While the quantum of monthly support is large ($27,000.00) and the recipient, according to Mr.

Sutter, insisted on enforcement, it is in the Director’s sole discretion as to how and when it enforces support orders, and if that discretion is exercised unreasonably, then the Director may be liable for costs. The evidence is clear that Mr. Marra provided an opportunity for the Director to reconsider the suspension of Mr. Phippen’s licence in his letter of 10 October 2013, and advised the Director that, if it proceeded, costs would be pursued.

In this, the Director was no different than any litigant who receives an offer to settle and must consider the costs consequences of not accepting the offer. [ 20 ] As the motion to refrain was resolved by way of an agreement between the parties to withdraw the support agreement from the Director’s office, the applicant Mr. Phippen can be considered to have been “successful” on his motion. He is, therefore, pursuant to subrule 24(1) presumptively entitled to his costs.

In addition, subrule 24(3) provides that the court has discretion to award costs against a government agency party whether it is successful or unsuccessful, though the case of Director of the Family Responsibility Office v. Ramsay , supra , requires that such an award should only be made in “special and unusual circumstances”. Given the Director’s earlier agreement not to proceed with a driver’s licence suspension against Mr.

Phippen and given his compliance with the Director’s requirement to commence a motion to change by 30 April, coupled with his diligent pursuit of the motion to change, I am satisfied that the Director’s actions in restarting aggressive enforcement without prior notice or consultation, constitutes sufficient “special and unusual circumstances”. [ 21 ] It is not alleged, nor is it found, that Mr. Phippen has behaved unreasonably, as set out in subrules 24(4) and 24(5). [ 22 ] Subrule 24(11) sets out the checklist of factors that the court must consider in quantifying costs. Mr.

Marra seeks costs not only for the work he did for the refraining motion, but also for the costs of Mr. Keller, who is Mr. Phippen’s counsel in the motion to change. His costs claim is for $5,444.79 for the period from 26 August 2013 to 24 October 2013. Since the suspension notice was not issued until 20 September 2013, any fees incurred in Mr. Keller’s office prior to that date relate to the motion to change and are not recoverable. Furthermore, the balance of fees mostly relate to what appears to be administrative work done by Kim Anger of Mr. Keller’s office, whose work is billed out at $150.00 per hour. Mr.

Marra was counsel of record on the refraining motion, and fees incurred by Mr. Keller’s office in communicating with Mr. Marra and their client are not properly recoverable as costs of the refraining motion, nor are the fees incurred for Mr. Keller’s review of the file, during the period of time the refraining motion was being prepared by Mr. Marra. In any event, while the motion to refrain was an important and necessary procedure for Mr. Phippen, it was not complex, nor difficult, and did not require the work of two lawyers, each of whom has hourly rates of $400.00. The fees and disbursements of Mr.

Keller’s office will not be included in the order for costs. [ 23 ] Mr. Marra’s fees and disbursements for the preparation of the motion and all correspondence and communications related to same total $7,322.40. He also seeks $2,034.00 (fees of $1,800.00 plus HST) for his attendance on the costs argument. [ 24 ] In considering the criteria for setting amount of costs in subrule 24(11), I find, as previously stated, that the matter while important, was neither complex nor difficult — the affidavit in support of the motion was relatively brief at three and a half pages.

A motion without notice was required to secure the court’s permission to file Mr. Phippen’s financial statement without the previous three years’ notices of assessment. [ 25 ] The Director FRO had the opportunity to revoke its notice to suspend Mr. Phippen’s driver’s licence and consideration

was given to that possibility, as evidenced by the Director’s legal counsel, Ms. Horrocks, requesting time to seek instruction. In proceeding with the notice, thereby requiring the motion to be brought by Mr. Phippen, the Director did not behave reasonably. This is especially so in light of the provisions in the FRSAEA that give the Director the absolute discretion regarding enforcement procedure and given the Director’s prior agreement not to pursue such enforcement if Mr. Phippen commenced a motion to change. [ 26 ] Mr.

Marra’s hourly rate is $400.00 which is not unreasonable given his 32 years of experience. [ 27 ] I take little issue with the time spent by Mr. Marra on the case, save for the time spent in reviewing Mr. Phippen’s motion to change and Mr. Keller’s costs outline. Costs for the motion will be adjusted down to $6,463.60. An appropriate fee for arguing the costs motion is $600.00 plus HST, for a total amount of costs on a full recovery basis of $7,141.60.

I have not found that the Director FRO acted in bad faith, and therefore full recovery is not indicated on that basis. [ 28 ] However, I have determined that, in failing to exercise its discretion appropriately, the Director FRO has behaved unreasonably. Having reduced the costs originally claimed by Mr. Phippen, and having regard to the principal of “proportionality” and what the Director FRO ought to have anticipated concerning responsibility for costs of this proceeding, I find that the full recovery of costs of $7,141.60 by Mr.

Phippen is appropriate. [ 29 ] For these reasons, the following order shall issue: 1. The Director, Family Responsibility Office, shall pay to the applicant William Phippen his costs of the refraining motion on 30 October 2013 fixed in the amount of $7,141.60, payable within 30 days.