DATE: March 25, 2021 COURT FILE NO.: D21311/18
ONTARIO COURT OF JUSTICE
B E T W E E N:
A.S.
APPLICANT
Counsel: Barry Nussbaum
- and -
M.L. and L.L.M.L.
RESPONDENTS
Counsel: M.L., acting in person; Pauline Malcom, for L.L.M.L.
HEARD: In Chambers
Justice S.B. Sherr
COSTS ENDORSEMENT
Part One – Introduction
1On February 24, 2021, the court released its reasons for decision regarding a trial about the child support arrangements for M.L. (the child). The child is 10 years old. See: A.S. v. M.L., 2021 ONCJ 105.
2The court ordered the applicant (the child’s father) to pay child support to the respondent L.L.M.L. (the child’s maternal grandmother) in the amount of $359 each month retroactive to September 1, 2018. This was based on an annual income of $40,000 imputed to the father. The court also made a finding that there was not a shared parenting arrangement pursuant to section 9 of the Child Support Guidelines (the guidelines). The father was permitted to pay the child support arrears, fixed at $7,020, at $150 each month.
3The parties were given the opportunity to make costs submissions. The maternal grandmother seeks her costs of $22,407 from the father. The father submits that the maternal grandmother’s costs should be fixed at $3,000. The respondent M.L. (the child’s mother) did not seek costs and no one sought costs against her.
Part Two – Legal considerations
2.1 General principles
4The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 set out that modern costs rules are designed to foster four fundamental purposes:
(1) to partially indemnify successful litigants;
(2) to encourage settlement;
(3) to discourage and sanction inappropriate behaviour by litigants and;
(4) to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules (all references to the rules in this decision are to the Family Law Rules).
5Costs can be used to sanction behaviour that increases the duration and expense of litigation or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice. See: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, 2003 S.C.C. 71, paragraph 25.
6Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.
7An award of costs is subject to the factors listed in subrule 24 (12), subrule 24 (4) pertaining to unreasonable conduct of a successful party, subrule 24 (8) pertaining to bad faith, subrule 18 (14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party. See: Berta v. Berta, 2015 ONCA 918, at paragraph 94.
2.2 Success
8Subrule 24(1) creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ-Family Court). To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ). The court should also examine who was the successful party, based on the positions taken in the litigation. See: Lazare v. Heitner, 2018 ONSC 4861.
9Subrule 18 (14) sets out the consequences of a party’s failure to accept an offer to settle that is as good as or better than the trial result of the person making the offer. It reads as follows:
COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER
18 (14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
If the offer relates to a motion, it is made at least one day before the motion date.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
10Even if subrule 18 (14) does not apply, the court may take into account any written offer to settle, the date it was made and its terms when exercising its discretion over costs (subrule 18 (16)) or, in assessing the reasonableness of a party under sub-clause (iii) of subrule 24 (12) (a). See: Mussa v. Imam, 2021 ONCJ 92.
2.3 Costs for prior steps in a case
11Prior to July 1, 2018, pursuant to subrule 24 (10), costs for any step in the proceeding were required to be determined at the time or expressly reserved. In Islam v. Rahman, 2007 ONCA 622, the Ontario Court of Appeal set out that the trial judge should not deal with requests for costs that were addressed or should have been addressed at prior steps in the case. However, this did not preclude courts from awarding costs accrued from activity not specifically related to the step. Activity not requiring judicial intervention is often better dealt with at the end of the case and not by the motions judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98; Ferlisi v. Boucher, 2021 ONCJ 103.
12Subrule 24 (11) came into force on July 1, 2018 and now provides that the failure of the court to order costs in relation to a step in a case does not prevent it from awarding costs in relation to the step at a later stage in the case.
13However, courts continue to be cautious about awarding costs at the trial stage where costs were not awarded at earlier steps in a case. See: Baezner v. Brunnenmeir, 2018 ONCJ 956; Nabwangu v. Williams, 2019 ONCJ 171.
14In Laidman v. Pasalic and Laidman, 2020 ONSC 7068 the court set out that the presumption remains that costs should be determined at each stage and said that there are good reasons for this. Parties should have an ongoing awareness of the cost consequences of litigation decisions they make. Reserving costs may impede final resolution by needlessly inflating and complicating the list of future issues still to be dealt with. A judge who has just completed a step in a case will usually be in the best position to evaluate all of the relevant Rule 18 and 24 considerations. Reserving costs to a future event – often to a different judge – can result in later confusion and controversy about what really happened at the earlier step.
15In Berge v. Soerensen, 2020 ONCJ 265, Justice Roselyn Zisman set out the following circumstances where costs of a prior step should be awarded:
a) Costs have been reserved to the trial judge.
b) When, considering subsequent events, the trial judge is better situated to determine the costs of the prior step than the judge presiding over the step or;
c) In exceptional circumstances.
2.4 Other factors affecting costs orders
16Subrule 24 (12) reads as follows:
24 (12) In setting the amount of costs, the court shall consider,
a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
(i) each party’s behaviour,
(ii) the time spent by each party,
(iii) any written offers to settle including offers that do not meet the requirements of rule 18,
iv) any legal fees, including the number of lawyers and their rates,
v) any expert witness fees, including the number of experts and their rates,
vi) any other expenses properly paid or payable; and
(b) any other relevant matter.
17The Rules do not require the court to allow the successful party to demand a blank cheque for their costs. See: Slongo v Slongo, 2015 ONSC 3327. The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. See: M.(C.A.) v. M.(D.), [2003] O.J. No. 3707; Scipione v Scipione, 2015 ONSC 5982, [2015] O.J. No. 5130 (supra). See: Jackson v. Mayerle, 2016 ONSC 1556.
18In determining the appropriate quantum, the court should consider the amount that the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation. See: Arthur v. Arthur, 2019 ONSC 938.
19The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.). Ability to pay will be less of a mitigating factor when the impecunious party has acted unreasonably, or where their claim was illogical or without merit. See: Gobin v. Gobin, 2009 ONCJ 278; D.D. and F.D. v. H.G., 2020 ONSC 1919.
20Those who can least afford to litigate should be most motivated to seriously pursue settlement and avoid unnecessary proceedings. See: Mohr v. Sweeney, 2016 ONSC 3338; Balsmeier v Balsmeier, 2016 ONSC 3485.
Part Three – Analysis
21It was agreed that the maternal grandmother was the successful party.
22The presumption that the maternal grandmother is entitled to her costs was not rebutted.
23The maternal grandmother and the father conceded that their respective offers to settle did not attract the costs consequences set out in subrule 18 (14).
24At the trial, the maternal grandmother sought retroactive support to September 1, 2018. The father opposed any retroactive award. The court ordered the start date sought by the maternal grandmother. The maternal grandmother asked the court to impute annual income of $50,000 to the father. The father was prepared to pay support based on an annual minimum wage income ($29,640). An annual income of $40,000 was imputed to the father.
25A significant issue during this litigation was whether there was a shared parenting arrangement between the maternal grandmother and the father pursuant to section 9 of the guidelines. The father, at times, sought support from the mother (this was later withdrawn) and an assessment of the maternal grandmother’s income for the purpose of calculating set-off amounts pursuant to section 9 of the guidelines. The father did not concede to a finding that there was not a shared parenting arrangement until the outset of the trial. This significantly added to the costs of the case.
26The case was important for the parties. It was not complex or difficult.
27The maternal grandmother acted reasonably. Although it did not attract the costs consequences of subrule 18 (4) the maternal grandmother made a reasonable severable offer to settle.
28The father acted reasonably by making an offer to settle, dated February 12, 2021. In his offer he was agreeable to a finding that there was not a shared parenting arrangement. His offer was similar to his position at trial.
29The father did not act reasonably by:
a) Failing to provide adequate financial disclosure - disclosure that was ordered three times. He filed income tax returns but did not file the source documentation necessary for it to be meaningful. He left the Statement of Business or Professional Affairs blank on several of his tax returns.
b) Making an unwarranted claim that there was a shared parenting arrangement pursuant to section 9 of the guidelines. This extended the time that had to be spent on this case.
c) Representing to the Canada Revenue Agency that there was a shared parenting arrangement. This has resulted in the father collecting 50% of significant government benefits for this child since September 2019.
30The maternal grandmother is claiming costs starting from November 12, 2019, less $300 that were awarded for costs at a case conference held on November 19, 2019.
31The maternal grandmother claims costs for five attendances prior to trial – four case conferences and one settlement conference.
32The court will not order costs for the four case conferences. Costs were already dealt with at the first case conference. The case management judge was in a better position to determine costs issues at the other conferences. Costs were not ordered or reserved. There are no exceptional circumstances that warrant ordering costs for those attendances at this stage.
33The maternal grandmother will be awarded costs associated with the settlement conference step. This court is in a better position to assess those costs than the judge who was attempting to resolve the case.
34The maternal grandmother is also entitled to costs for time incurred not specifically related to a step in the case.
35The court reviewed the mother’s bill of costs. It was excessive and exceeded what an unsuccessful party should be expected to pay in this case.
36The father will have some difficulty paying the costs that will be ordered. However, he is responsible for these costs due to his unreasonable conduct. A payment order over time will be made to alleviate any hardship.
Part Four – Conclusion
37Balancing all of these factors the father shall pay the maternal grandmother’s costs fixed in the amount of $8,000, inclusive of fees, disbursements and HST.
38The father may pay these costs at the rate of $250 each month, starting on May 1, 2021. However, if he is more than 30 days late in making any costs payment, or any ongoing or arrears support payments, the entire amount of costs then owing, shall immediately become due and payable.
Released: March 25, 2021
Justice S.B. Sherr