Schmid v. Schmid, 2020 NSSC 114

SUPREME COURT OF Nova Scotia FAMILY DIVISION Citation: Schmid v. Schmid , 2020 NSSC 114 Date: 2020-03-31 Docket: SFH 1201-070473 Registry: Halifax Between: Michael Schmid Applicant v. Susan Schmid Respondent Decision on Costs Judge: The Honourable Justice Theresa M. Forgeron S ubmission s : November 13 and 26, 2019 D ecision : March 31, 2020 Counsel: Michael Schmid, Applicant, Self-Represented Christine Doucet for the Respondent, Susan Schmid Introduction [ 1 ] Ms. Schmid (Webb) seeks substantial costs as a result of my decision reported as Schmid v. Schmid , 2019 NSSC 329 . In contrast, Mr.

Schmid states that each party should bear their own costs. In the alternative, he says that $4,000 is the maximum costs award that can be ordered in the circumstances. Issue [ 2 ] What is the appropriate award of costs? Background [ 3 ] After a 26-year relationship, the parties separated and ultimately signed Minutes of Settlement at the conclusion of a two-day settlement conference. In February 2010, the Minutes were incorporated into a Consent Order. The Minutes set spousal support at $3,000 per month. Spousal support would terminate if Ms. Webb married or lived in a common-law union. Further, Mr.

Schmid was entitled to seek an adjustment in the event he retired at an “appropriate” age. [ 4 ] In December 2016, Mr. Schmid filed a variation application and then a Petition for Divorce. Following a binding settlement conference, MacKeigan J. gave an oral decision which was incorporated into the CRO. The CRO required Mr. Schmid to continue to pay $3,000 per month in spousal support, together with arrears. The CRO confirmed that spousal support was subject to review no later than December 2018. [ 5 ] In November 2018, Mr. Schmid requested a hearing.

The parties participated in a nonbinding settlement conference on May 7, 2019. It was unsuccessful. [ 6 ] On May 9, 2019, Ms. Webb sent a settlement offer to Mr. Schmid. The following terms were offered in full and final settlement of the matter: • Spousal support in the amount of $2,000 per month commencing May 1, 2019. • Payment of all arrears which Ms. Webb calculated at $6,000. • Termination date of December 31, 2023.

• No further variations. [ 7 ] On May 10, 2019, Mr. Schmid responded with a counteroffer which included the following: • $1,300 per month in support with the last payment on November 1, 2023. • No payment of arrears which Mr. Schmid calculated at $4,500. • No further variations. • No costs. [ 8 ] Ms. Webb did not respond to the counteroffer. On May 15, 2019, Mr. Schmid emailed Ms. Webb’s counsel to determine if the counteroffer was received. On May 21, 2019, Ms. Webb’s lawyer responded via email, with a re line entitled “Documents for Trial”, as follows: Yes, the offer was received and I reviewed it with Ms.

Webb. She does not accept the offer. Her offer remains outstanding and will be used for the purposes of seeking costs of the hearing. I look forward to receipt of the requested financial disclosure. Thank you. [ 9 ] There were no further settlement offers exchanged. [ 10 ] Mr. Schmid’s contested application proceeded to a hearing on June 7 and August 22, 2019. I adjourned the matter for oral decision. [ 11 ] On October 15, 2019, MacKeigan J. ordered Mr. Schmid to pay costs of $5,000 to Ms. Webb arising from the November 2018 binding settlement conference. [ 12 ] My oral decision was rendered on October 30, 2019.

Spousal support was to continue at a rate of $3,000 per month, inclusive of arrears. No termination date was set. The parties were also directed to present cost submissions. Ms. Webb’s brief was filed on November 13, 2019; Mr. Schmid’s brief on November 26, 2019. Analysis [ 13 ] What is the appropriate award of costs? Position of Ms. Webb [ 14 ] Ms. Webb seeks costs of $13,985.62 because she states that she was the successful party in that she was prepared to settle with Mr. Schmid on terms that were more advantageous to Mr. Schmid than ultimately decided. Ms.

Webb states that the $13,985.62 figure represents 66% of her legal costs incurred until the date of her May 2019 settlement offer, and full indemnification for her legal expenses incurred after the settlement offer was made. Position of Mr. Schmid [ 15 ] Mr. Schmid disputes an obligation to pay costs. He provided several reasons to support his position, including the following: • The court should not consider the “without prejudice” settlement offer because settlement negotiations “could not be put before the court”. • Ms.

Webb and her counsel left the settlement conference within one hour of it starting, refusing to negotiate. • He did not appreciate the significance of Ms. Webb’s settlement offer or the response to his counter proposal. Mr. Schmid said that the response to his counter proposal was not timely; the response focused on litigation and not settlement. As a self-represented litigant, not trained in the law, Mr. Schmid said that he failed to understand the process. Had he properly understood, Mr.

Schmid would have reconsidered the offer between the time of the hearing and the time of decision. • The amount claimed is excessive. • The matter was not complex. The issue was whether a material change in circumstances was proved. • The hearing was originally scheduled for half a day. The parties appeared on a second day to provide closing argument. This additional time would not have been required had Ms. Doucet not strayed from relevant issues. Ms. Doucet’s cross-examination and disclosure requests addressed matters unrelated to a change in circumstances. • His court filings were punctual and appropriate.

He did not act in a vexatious manner. There were real issues to litigate given the sale of his business and his loss of income. • In contrast, Ms. Webb prolonged the proceeding because it was in her best interests to do so. • Tariff A is appropriately used in calculating costs. Ms. Webb is entitled to not more than $4,000: $3,000 per scale 1, plus $1,000 for one half day of trial. • The complex case of Armoyan v. Armoyan , 2013 NSCA 136 is not relevant to this proceeding given the significant difference in

facts. • Ms. Webb’s legal fees are tax deductible. Because she is in a 30% tax bracket, Ms. Webb will receive tax savings of about $5,000. In contrast, Mr. Schmid is not permitted to deduct any costs which he is ordered to pay. • An award of costs will not do justice between the parties. The proceedings have taken a toll on Mr. Schmid’s health. An order of costs will negatively affect his ability to pay spousal support. Law - General Principles [ 16 ] Rule 77 governs awards of costs in matters before the Supreme Court of Nova Scotia. In the leading family law case of Armoyan v.

Armoyan , supra, Fichaud J.A. reviewed principles that are to be applied when determining costs. The following relevant points stem from that decision: • The court's overall mandate is to "do justice between the parties": para. 10. • Solicitor and client costs are engaged in "rare and exceptional circumstances as when misconduct has occurred in the conduct of or related to the litigation": para. 11. • Unless otherwise ordered, party and party costs are quantified according to the tariffs.

The court has discretion to raise or lower the tariff costs by applying listed factors, which include unaccepted written settlement offers and the conduct of the parties insofar as it affects the speed or expense of the proceeding: paras. 12 and 13. • The basic principle is that a costs award should afford a substantial contribution to the party's reasonable fees and expenses which means not a complete indemnity, but rather more than 50 and less than 100% of a lawyer's reasonable bill for services: para. 16. Law - Which Tariff [ 17 ] In determining costs, I must first look to the tariffs.

Tariff C generally applies to applications heard in chambers. Tariff A applies to trials. Tariff C generally produces costs awards that are less than tariff A. Although Mr. Schmid’s application was not technically a trial within the meaning of the Rules, neither was the application a chambers matter. In Moore v. Moore , 2013 NSSC 281 , Jollimore J. discussed the dilemma associated with family matters which do not fit comfortably within the parameters of either tariff A or C as follows: [14] Initial guidance in determining costs is the tariff of costs and fees. The proceeding before me was a variation application.

Formally, Tariff C applies to applications. As I said in MacLean v. Boylan , 2011 NSSC 406 at paragraph 30 , applications in the Family Division are, in practice, trials. Rule 77’s Tariffs have not changed from the Tariffs of Rule 63 of the Nova Scotia Civil Procedure Rules (1972). Despite the distinction between an action and application created in our current Rules, the Tariffs have not been revised. My view has not changed since I decided MacLean v.

Boylan , 2011 NSSC 406: I don’t intend to give effect to the current Rules and their incorporation of the pre-existing Tariffs where this routinely results in lesser awards of costs for the majority of proceedings in the Family Division, such as corollary relief applications, variation applications and applications under the Maintenance and Custody Act or the Matrimonial Property Act . In these situations, I intend to apply Tariff A as has been done by others in the Family Division: Justice Gass’ decision in Hopkie , 2010 NSSC 345 and Justice MacDonald in Kozma , 2013 NSSC 20 .

Law - Lump Sum Option [ 18 ] In Armoyan v. Armoyan , supra, Fichaud J.A. held that departure from the tariffs was permitted in specified circumstances. In his discussion, Fichaud J.A. notes as follows: • Tariffs are the norm and there must be a reason to consider a lump sum: paras. 14 and 15. • Tariffs deliver the benefit of predictability by limiting the use of subjective discretion. This works well in a conventional case whose circumstances conform generally to the parameters assumed by the tariffs. Some cases, however, bear no resemblance to the tariffs’ assumptions.

For example, a proceeding begun nominally as a chambers motion may assume trial functions; a case may have no "amount involved"; efforts may be substantially lessened by the efficiencies of capable counsel, or handicapped by obstructionism; the amount claimed may vary widely from the amount awarded; the case may assume a complexity with a corresponding work load that is far disproportionate to the court time by which costs are assessed under the tariffs; there may be rejected settlement offers, formal or informal, that would have saved everyone significant expense: paras. 17 and 18. • When subjectivity exceeds a critical level, the tariffs may be more distracting than useful.

In such a situation, it is more realistic to circumvent the tariffs and channel that discretion directly to the calculation of a lump sum. A principled calculation should turn on the objective criteria that are accepted by the Rules or case law: para. 18. Law - Settlement Offers [ 19 ] Mr. Schmid’s belief that without prejudice settlement offers cannot be disclosed to the court is incorrect. Generally speaking, settlement privilege is a class privilege that, subject to certain exceptions, prevents parties from leading evidence about negotiations or concessions made, during the course of the hearing or trial.

While such particulars are not to be led during the hearing or trial, settlement offers are nevertheless appropriately placed before the court for the calculation of costs: Rule 77.07(2)(

b) and Armoyan v. Armoyan , supra, para 27 . In Armoyan , when calculating the appropriate lump sum based on reasonable legal fees, Fichaud J.A. applied a percentage of 66% to represent a substantial contribution for legal fees and disbursements incurred before the settlement offer, while 80% was applied after the settlement offer was made. Decision

[ 20 ] I find that a lump sum costs award of $9,500, inclusive of disbursements, is appropriate for the following reasons: • The application to reduce spousal support was an important issue between the parties. • This proceeding did not involve a simple chambers matter. It was more complex in process and outcome. The application of tariff C would produce a costs award that would be too modest. • It is challenging to apply tariff A because the amount involved is difficult to calculate despite the issue being a monetary one.

For example, I ordered the continuation of $3,000 per month in spousal support without specifying a termination date. Ms. Webb offered to settle for $2,000 per month until December 2023 while Mr. Schmid offered $1,300 per month until November 2023. There are many ways of calculating an amount involved given these facts; such calculations would inevitably involve an unhealthy dose of speculation. • Mr. Schmid should not have applied to reduce spousal support. His application to do so met with complete failure. Ms. Webb, who is of limited means, should not have been forced to respond to Mr.

Schmid’s fruitless application. • Ms. Webb spent considerable time preparing for the hearing. Contrary to what Mr. Schmid alleged, Ms. Webb’s efforts were for the most part focused, efficient, reasonable and proportional. Further, counsel for Ms. Webb did not stray from relevant topics during cross-examination or when seeking financial disclosure. • Although Ms. Webb is able to claim her legal fees for income tax purposes, she likewise must report any costs received as taxable income. [ 21 ] In addition, I find that the settlement offer plays an important role in my analysis.

The settlement offer was a valiant attempt to resolve the ongoing litigation once and for all. Both parties targeted 2023 as the appropriate time for the termination of spousal support. In the circumstances, Mr. Schmid should have accepted the offer. [ 22 ] Further, I reject Mr. Schmid’s attempt to diminish the significance of the offer based on what he characterizes as his misunderstanding. Mr. Schmid is not an unsophisticated, vulnerable litigant. Mr. Schmid is a CA, CPA who operated his own business for many years and who appeared before this court on numerous occasions. Further, Ms.

Webb’s counsel used simple, direct and uncomplicated language when communicating the settlement offer and her response to the counteroffer. I do not accept that Mr. Schmid had difficulty grasping the content of either. If he did, Mr. Schmid could have easily sought clarification. Conclusion [ 23 ] Costs of $9,500.00, inclusive of disbursements, must be paid by Mr. Schmid to Ms. Webb because she was the substantially successful litigant. Ms. Doucet is to prepare the order. Forgeron, J.