DATE: November 29, 2024 Court File Number: 77-23 Ontario Court of Justice 10 Louisa Street, Orangeville, Ontario L9W 3P9
Applicant: Damon Scott Counsel: Zoran Bozic
Respondent: Krystina Scott Counsel: Kateryna Yanovsky
Endorsement Justice M. Cheung
Motion for security for costs – decision released in chambers No one present
Endorsement
1On November 20, 2024, the court heard a motion brought by the respondent mother for an order for security for costs.
2This is the court’s decision and reasons.
Background, Overview and Chronology of Court Proceedings
3The child in this case is Lorenzo Maxwell Scott, born [..], 2015 (age 9). The applicant is his father and the Respondent is his mother.
4The parties were married on June 28, 2014 and they separated on May 18, 2016.
5The parties entered into a comprehensive separation agreement dated October 24, 2016. That separation agreement stated the following terms, in broad strokes:
- The parties would have joint custody of Lorenzo
- Lorenzo would live primarily with the mother
- The father would have visits with Lorenzo every Monday and Thursday from 6:00 to 7:30 pm and alternate Saturdays from 10 am to 7 pm
- The parties committed to a gradual increase in the visits, as they may agree, to include overnights and holiday times, in accordance with Lorenzo’s age, needs and developmental progress
- The father would pay the mother $170 per month in child support based on an income of $21,000 as well as $130 a month for daycare and 50% of certain s.7 expenses
- Various terms regulating the parties’ communications, principles of parenting and other incidents of parenting
6The father’s application is issued on August 30, 2023. In the application, the father asks for joint decision making responsibility, that the parties share residence and parenting time or that the father have Lorenzo primarily residing with him with the mother having liberal parenting time and various other incidents of parenting.
7The mother filed an Answer dated October 17, 2023. In her answer, the mother claims sole decision making responsibility, primary residence with the mother, parenting time by the father in the form of a schedule of day visits on the regular schedule and holiday time, unfettered ability to travel with the child for the mother and various other incidents. The mother also asks for a retroactive adjustment of child support to 2018, with an increased amount corresponding to an imputed income of $120,000.
8The parties had their first appearance court with the court’s clerk on November 1, 2023 – the matter was adjourned to a case conference.
9The parties had an initial case management conference on January 24, 2024. On that date, the court deemed the application to be a motion to change the terms of the separation agreement, and ordered that the parties use a communication book, that they make a bona fides attempt at mediation, that the parties share the cost of mediation equally and that disclosure be completed by February 28, 2024.
10On March 13, 2024, the court conducted a case conference, following which the court granted leave to the mother to bring a motion regarding child support and travel. The court also ordered that the matter be scheduled for a settlement conference.
11On May 8, 2024, the court heard a temporary motion brought by the mother regarding child support and travel. On May 13, 2024, the court released a decision granting the temporary orders that the father is to pay the mother monthly child support in the table amount of $854, commencing May 1, 2024 and payable on the first of each month thereafter, based on imputed income of $90,000. The mother was also granted permission to travel outside of Canada without needing the father’s consent but she is to give the father 5 days notice of a detailed itinerary.
12On June 14, 2024, the court ordered the father to pay the mother’s costs of the motion in the amount of $7,500 inclusive of fees, disbursements and taxes, in full within 60 days.
13On July 3, 2024, the court held a settlement conference. On consent, the parties agreed to vary the court’s June 14, 2024 order in regard to costs. This consent variation did two things -it permitted the father to pay off his costs gradually over a period of six months provided that he pay at least $400 per month towards the total costs award and, it deemed the costs award to be as if an order for support and collected / enforced through The Family Responsibility Office.
14The matter was scheduled for a trial management conference on September 18, 2024 however this was adjourned by the court at the request of the father, who had obtained an LAO certificate and was in the process of retaining Mr. Bozic. The matter was adjourned to be spoken to on October 23, 2024 and to November 20, 2024 for this motion for security for costs.
15On October 23, 2024, the parties agreed to questioning of the father by the mother to take place on November 8, 2024.
16On October 28, 2024, the mother brought a motion without notice seeking specific parenting relief. This was denied as not meeting the requirement for a motion without notice.
17This motion was heard on November 20, 2024. The next court date is December 4, 2024 and it is scheduled as a trial management conference.
Materials considered
18In this motion, the court reviewed the mother’s Notice of Motion, her affidavit sworn on November 11, 2024 and the father’s responding affidavit sworn on November 15, 2024.
19The mother said that the father’s affidavit ought not to have been accepted as it was late filed but when asked whether she wished to adjourn the motion to allow the mother to file a reply, this was declined. The mother asked the court to proceed with the motion and she waived a reply.
20The court had the benefit of hearing submissions from each of the party’s counsel and of reviewing the overarching pleadings in this case as well as the jurisprudence referred to by counsel during submissions.
Positions of the parties
21The mother’s notice of motion asks for the following relief:
- An order for security for costs in the amount of $30,000
- That the father not be permitted to take any further steps in the matter until security ordered by the courts has been given
- That the father’s application be struck and dismissed if the father fails to post security and, in that circumstance, that the mother be permitted to move for final orders on an uncontested basis
- Costs of this motion in the amount of $4,500
22The father’s position on this motion is that the motion should be dismissed.
Analysis
23Subrules 24 (13) to (17) of the Family Law Rules set out the court’s jurisdiction to order security for costs.
Order for security for costs
(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors:
(1) A party habitually resides outside Ontario.
(2) A party has an order against the other party for costs that remains unpaid, in the same case or another case.
(3) A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.
(4) There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.
(5) A statute entitles the party to security for costs.
Amount and form of security
(14) The judge shall determine the amount of the security, its form and the method of giving it.
Effect of order for security
(15) Until the security has been given, a party against whom there is an order for security for costs may not take any step in the case, except to appeal from the order, unless a judge orders otherwise.
Failure to give security
(16) If the party does not give the security as ordered and, as a result, a judge makes an order dismissing the party’s case or striking out the party’s answer or any other document filed by the party, then subrule (15) no longer applies.
Security may be changed
(17) The amount of the security, its form and the method of giving it may be changed by order at any time.
24The purpose of an order for security for costs is to protect a party from nuisance or irresponsible litigation, conducted without regard to the merits of the case or the costs likely to be incurred. See: Izyuk v. Bilousov, 2015 ONSC 3684.
25Orders for security for costs are a blunt instrument. They are not intended to act as a roadblock to genuine claims. They should be used sparingly and carefully because they may well have the effect of barring a party from access to the court process. See: Gauthier v. Gauthier, 2019 ONCA 722; Krzewina v. Beaumont, 2021 ONCJ 351.
26Security for costs is not intended as a roadblock for a person who has a genuine claim. In most instances the merits of a case should not be determined by a party’s inability to post security for costs. See: Bragg v. Bruyere, 2007 ONCJ 515.
27In Izyuk v. Bilousov, 2015 ONSC 3684, at paragraph 40, the court set out the following principles that courts must apply in determining whether to order security for costs:
a) The initial onus is on the party seeking security for costs to show that the other party falls within one of the enumerated grounds in subrules 24 (13) to (17).
b) If the onus is met, the court has discretion to grant or refuse an order for security.
c) If the court orders security, it has wide discretion as to the quantum and means of payment of the order. See: Clark v. Clark, 2014 ONCA 175.
d) The order must be “just” and be based on one or more of the factors listed in subrule 24 (13). See: Hodgins v. Buddhu, 2013 ONCJ 137.
28In Baker v. Rego, 2013 ONSC 3309 (Divisional Court), the court found that while the appeal had little prospect of success, that was not sufficient in itself to allow a finding that the appeal was “frivolous and vexatious” – there must be something more than a low prospect of success to justify security for costs. There must be good reason based on the overall facts surrounding the litigation, or from the conduct of the appellant, which would lead to a conclusion that the claim is without merit and brought for some other purpose.
29Although a claim might appear to have significant challenges, that does not equate to it being a nuisance or a waste of time. See: Krzewina v. Beaumont, 2021 ONCJ 351.
30In cases where custody and access are at stake, security for costs should only be granted in exceptional circumstances. See: Hodgins v. Buddhu, 2013 ONCJ 137.
31Whether an order for security for costs is just in any particular case is an objective determination, based on the record before the court. See: Krzewina v. Beaumont, 2021 ONCJ 351.
32The mother says that the father is in breach of four court orders – the costs orders of June 14, 2024, July 3, 2024, the order for ongoing temporary base child support of $854 of May 13, 2024 and the ongoing temporary s.7 child support order of May 13, 2024. She says that the father’s conduct has delayed this matter unreasonably. She says that he is dishonest in the disclosure of his true financial situation and appears to have sold a property and diverted any equity earned from it to others including the purchase of a new home registered in his partner’s name only. She argues that the father’s conduct has resulted in her legal fees to grow, including the need to conduct an out of court questioning under oath. She says that the father has a history of not paying his debts – he owes to CRA and to credit card loans. She fears that costs, if awarded to her after a trial will not be paid. She argues that the two preconditions to considering the relief for security for costs are that first, the father has an unpaid costs award and second, that his claims are a waste of time or nuisance and the father does not have enough assets in Ontario to pay a costs award.
33The father asks for the motion for security for costs to be dismissed on the basis that the mother, on the evidence in this case, has not met the test. He says that the unpaid temporary child support order is not relevant to the argument for security for costs. While he does not deny that he is not in compliance with his costs obligations, he says that the costs orders of June 14 and July 3, 2024 are one costs award – July 3, 2024 being a variation of June 14, 2024. Finally, he argues that the mother has not met her onus of establishing that the case or specifically, the father’s claims are a waste of time and a nuisance.
34On the evidence in this case and taking into consideration the principle that an order for security for costs is a blunt instrument and should be used rarely, the court is not prepared to make an order for security for costs. In the circumstances in this case, requiring the father to post security for costs in the amount of $30,000 or some other amount would not be just in the situation. The mother has not met her onus to demonstrate that the claims in this matter as a waste of time or a nuisance. I agree with the father’s arguments that unpaid child support evidence falls outside the scope of the Rule 24(13) relevancy which speaks to unpaid costs orders. While the evidence is not contradicted that the father has unpaid costs obligations, to require the father to post a high amount in advance of the trial to account for the possibility of a future costs award would not be just in the circumstances.
35However, this does not mean that the court was not troubled by the conduct of the father in regard to his financial obligations to the mother.
36It was not denied by the father that he is behind in his temporary child support payments – both base amount and s.7 expenses – that flow from the temporary order of Justice Schwarzl dated May 13, 2024. It was uncontradicted that the father has not yet paid what has already come due in his costs obligations.
37These orders are not suggestions and ought to have been paid when they were due.
38The father argues that the issue of imputed income leading to this child support award is a “live issue” and the amount will “be revisited at the trial”. The court does not agree with this statement. While the final claims certainly are a “live issue” for adjudication or hopefully resolution on the proceeding proper, the temporary child support and interim costs awards are not “live” issues. They are payment orders made after adjudicative steps that need to be paid in real time when they are due.
39Temporary orders and costs orders that are made on a step by step basis within a proceeding are meant to promote some level of fairness while matters progress to final resolution or final adjudication. It would be unfair to a party for the court to enable the other party to not pay child support he was ordered to pay on an interim basis or not pay a costs award meant to be paid in short order during the life of a proceeding.
40At the hearing of the motion on November 20, 2024, the father conceded that he is in arrears of child support because he has not paid the amount that was ordered by Justice Schwarzl, he has not paid his contribution of s.7 expenses as ordered by Justice Schwarzl and he has not paid the portion of the costs award that has already come due. I will note that by January 1, 2025, any unpaid portion of the costs award must be paid in full.
41It would be unjust for the court to dismiss the mother’s motion for security for costs without any further consequences placed in the father, in this situation, where the father admits that he is delinquent in his costs obligations flowing from the June 14 and July 3, 2024 costs order of Justice Schwarzl and where the father also admits that he is not in full compliance with the temporary child support order of Justice Schwarzl dated May 13, 2024.
42The mother should not have to go to trial in a financially disadvantaged position because the father fails to pay her the $7,500 costs that he owes her, nor the monthly $854 ongoing child support that was court ordered, nor his share of the limited s.7 expenses framed in Justice Schwarzl’s order.
43Rule 1(8) of the Family Law Rules sets out that if a person fails to obey an order in a case, the court may make any order it considers necessary for a just determination of the matter, including:
a) An order for costs
b) An order dismissing the claim
c) An order striking out any pleading (including documents on motion to change), financial statement or any other document filed by a party.
d) An order that all or part of a document the court ordered produced, and was not, may not be used in the case
e) If the breach is by a party, that the party is not entitled to any further order in the case, unless the court orders otherwise.
f) An order postponing the trial
g) On motion, a contempt order.
44The primary objective of the Family Law Rules is to enable the court to deal with cases justly. The court has the ability to control its own process.
45Rule 1(8) orders may be made at any time and the power to make such orders are available to the court at any time during the case, in addition to any other power to make an order otherwise permitted under the Rules. See Family Law Rule 1(7.1).
46It would be grossly unfair for the court to permit a party to ask the court for final relief while that same party does not comply with temporary court orders that the court has already made on the same issue.
47The option of making an order for costs for the father’s breach is not an effective deterrent to incentivize the father – he is already not paying a cost order for which he asked for and was given a gradual payment plan.
48The option of leaving the enforcement / collection to The Family Responsibility Office in this temporary scenario is also not helpful. The Family Responsibility Office proceedings would take some time to launch and The Family Responsibility Office may simply wish to await the final resolution of the proceeding before taking more aggressive steps in an enforcement proceeding.
49Where children’s interests are involved, the court should avoid the sanction or use utmost caution in striking pleadings because trial court needs participation of both parties and information that each can provide about best interests. See King v. Mongrain, 2009 ONCA 486, [2009] O.J. No. 2466, C.A.). The Court of Appeal noted in Haunert-Faga v. Faga, (2005), 20 R.F.L. (6th) 293 (Ont. C.A.) at paragraph 7 that generally, it is preferable to avoid the sanction of striking pleadings where children’s interests are involved.
50In this situation, the court will strike the father’s claims in regard to the issue of child support only and leave the parenting claims to be adjudicated with the participation of both of Lorenzo’s parents.
51The father will be given an opportunity to bring himself current on his temporary child support obligations and on the costs payments that are due. But he must do so forthwith. If he does so by the next court date (December 4, 2024), the court’s order striking the father’s claim will be stayed and he will be permitted to participate again with respect to the child support portion of the case. The court recognizes that the turnaround time for the father’s payment is tight between now and the next court date, however, the father has known about his obligations for child support since May 2024 and about his costs obligations since June/July 2024.
52The father is warned that he must continue to keep himself current on his financial obligations or any stay may be lifted and may not thereafter be easily re-implemented.
53The father shall provide the court with proof that all payments which are due have been paid in full. Given that The Family Responsibility Office is enforcing and collecting both child support and costs, it should be easy to produce documentary evidence that all amounts have been paid into FRO.
54This is a fair approach and in keeping with the primary objective of the rules as it provides the mother relief in regard to the father’s disregard for the temporary court orders but does provide the father an opportunity to get himself out of the predicament that he put himself in.
55For clarity, the consequences of the father’s claims regarding child support being struck, or remaining struck, are that he is in default of the mother’s claims for variation of the child support portions of the separation agreement and he would not be permitted to participate in that portion of the proceeding. In that circumstance, the mother will be permitted to move for final orders related to child support on an uncontested basis.
Orders:
The mother’s motion for security for costs is denied.
Pursuant to FLR Rule 1(8), the father’s claim in regard to child support is struck.
By the next court date of December 4, 2024, if the father brings himself into full compliance with the temporary child support order of Justice Schwarzl dated May 13, 2024 and has paid his costs obligations as they are due flowing from the June 14, 2024 costs order of Justice Schwarzl (as amended on July 3, 2024) , this order striking the father’s child support claims will be stayed. In this circumstance, and throughout the remainder of this existing proceeding thereafter, the stay will remain as long as the father maintains himself current on his ongoing temporary base and s.7 child support obligations and has paid out the June 14, 2024 costs order in the manner in which the July 3, 2024 court order directs.
The father shall provide the court with proof that all payments which are due have been paid in full (temporary base child support, temporary s.7 expenses and costs). The onus is on the father to provide proof of payment.
There will be no order as to costs. Although the mother’s motion for security for costs was denied, the father’s conduct in not complying with court orders disentitles him to any costs.
Counsel for the father shall take out this order.
CA to release this decision to the parties via their lawyers at emails noted on page 1.
Justice M. Cheung