Eustace v. Eustace, 2017 ONSC 4814

CITATION: Eustace v. Eustace, 2017 ONSC 4814

COURT FILE NO.: DC-17-26-00

DATE: 20170809

DIVISIONAL COURT - ONTARIO

RE: EMERENCIA YAMUNA EUSTACE, Applicant

AND:

ERNEST JEYAPRAKASH EUSTACE, Respondent

BEFORE: Barnes J.

COUNSEL: Dilani Gunarajah, Counsel, for the Applicant

Ajay Duggal Counsel, for the Respondent

Hansa Joshi, Counsel for the OCL

HEARD: April 21, 2017

ENDORSEMENT

INTRODUCTION

1The Ontario Children’s Lawyer (OCL) seeks leave to appeal the cost award of Mr. Justice Emery dated December 22, 2016 (Cost Order). In a previous hand written endorsement, I granted leave to appeal pursuant to Rule 62.02(4)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (Rules). These are my reasons which amplify and replace those previously given.

BACKGROUND

2After a 22 day custody and access trial, Mr. Justice Emery awarded sole custody to Ernest Jeyaprakash Eustace (the Respondent/father) with access to Emerencia Yamuna Eustace (the Applicant/mother). This Order (Final Order) was not appealed. The OCL was the legal representative of the child of the marriage, J.M. Eustace (J.M.). Justice Emery awarded costs of $107,403.22, inclusive of HST to the Respondent. The OCL was ordered to contribute 20% towards those costs. The total cost payable by the OCL is $20,000, inclusive of HST, according to the Cost Order. The OCL seeks to appeal the Cost Order.

ISSUES

3These are the issues: 1) Does the Divisional Court have jurisdiction to hear this appeal? 2) If answered in the affirmative, should the OCL be granted an extension of time to seek leave to file a Notice of Motion in order to seek leave to appeal the Cost Order? 3) If answered in the affirmative, should the OCL be granted leave to appeal the Cost Order?

ANALYSIS

Does the Divisional Court have jurisdiction to hear this appeal?

4The Divisional Court has the jurisdiction to hear this appeal. Every judge of the Superior Court is also a judge of the Divisional Court: Section 18(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43. Pursuant to Section 19 of the Courts of Justice Act, the Divisional Court has jurisdiction to hear these matters in three cases: 1) an appeal from the final order of a Superior Court judge subject to sub sections 19(1.1) and (1.2) of the Courts of Justice Act; 2) an appeal from an interlocutory order of a judge of the Superior Court of Justice and; 3) an appeal from the final order of a master or case management master.

5Leave to appeal is required when seeking to appeal the following orders: 1) an interlocutory order of a judge of the Superior Court and from the decisions of tribunals as provided by statute per Rule 61.01(8) and (8.1), and 2) for an appeal of a Cost Order per section 133(b) of the Courts of Justice Act.

6The OCL seeks leave to appeal pursuant to section 133(b). The first issue is whether the Divisional Court or the Ontario Court of Appeal has jurisdiction. This is resolved by section 19(1.2)(a) of the Courts of Justice Act to hear this appeal. For appeals commenced after October 1, 2001, the Divisional Court has jurisdiction if the appeal is of an order “for a single payment of not more than $50,000, exclusive of costs”: section 19 (1.2)(a) of the Courts of Justice Act.

7The OCL submits that the Cost Order is the order under appeal and it is for a payment less than $50,000. Therefore, pursuant to section 19(1.2)(a) of the Courts of Justice Act, the Divisional Court has jurisdiction. The Respondent submits it is the Ontario Court of Appeal which has jurisdiction, not the Divisional Court. The Respondent explains that section 19(1.2)(a) of the Courts of Justice Act mandates that the issue of jurisdiction should be determined “exclusive of costs”. This means that the quantum of costs should not be considered in resolving the issue of jurisdiction. The Respondent submits that the final order of Justice Emery was not a payment order and is not under appeal. Therefore, an appeal of the cost order lies to the Ontario Court of Appeal and the Divisional Court has no jurisdiction. The crux of this issue is the meaning of the words “exclusive of costs”, in section 19(1.2)(a) in Courts of Justice Act.

8The statutory framework in section 19(1.2)(a) of Courts of Justice Act has these main components: 1) the Order under appeal must be for a single payment (a payment order); 2) the quantum of the Order must be $50,000 or less; and 3) the quantum of any cost award cannot be included in the calculation. The statutory framework prohibits the intermingling of a payment order with a cost order in determining quantum of the Order under appeal: section 19(1.2)(a) Courts of Justice Act and Marcus Direct Marketing Inc. v. M & K Plastic Products Ltd., (1989) O.J. No. 467 (C.A.).

9The quantum of the payment order under appeal is the determining factor according to section 19(1.2)(a) of the Courts of Justice Act. Therefore, in circumstances where the payment order under appeal is a cost order, the cost order becomes the “order for a single payment” and the quantum of the cost order under appeal is relevant and determinative. In other words, the statutory prohibition against intermingling a cost order and a payment order for the purposes of determining the quantum under section 19(1.2)(a) of the Courts of Justice Act does not apply where the cost order itself is the subject of the appeal: Sgrignuoli v. Sgrignuoli Estate, (2017) ONSC 65, [2017] O.J. No. 21; Harte-Eichmanis v. Fernandes, (2012) ONCA 266, [2012] O.J. No. 1785; Morden and Perell, Law of Civil Procedure in Ontario, 2^nd edition (Markham: LexisNexis, 2014) at p. 930-934.

10The “single payment” order under appeal in this case is a cost order. It is an order for $20,000. This amount is below the $50,000 threshold. Therefore, the appeal of the cost order lies to the Divisional Court.

[11]

Should the OCL be granted an extension of time to file a Notice of Motion to appeal the Cost Order?

The OCL is granted an extension of time to appeal the Cost Order. The Divisional Court has jurisdiction to grant an extension of time for serving and filing a Notice of Motion for leave to appeal: section 11(2) of the Courts of Justice Act and Rule 3.02(1). The factors to consider in determining whether leave should be granted are: 1) the prejudice, if any, to the respondent; 2) when the applicant formed the intention to appeal; 3) the reason for delay; and 4) whether the justice of the case requires that an extension be granted: Munyal v Dhillon, (2004) O.J. No. 3906 (Ont. S.C.), at para. 17.

12It is not disputed that the OCL was late in seeking to serve and file the Notice of Motion for leave to appeal. The deadline was January 6, 2017. The notice was filed on January 17, 2016. It was filed 10 days late.

13The Cost Order was released on December 22, 2016. This was during the holiday period. OCL counsel at trial received the Cost Order at 2:01 pm on December 22, 2016. OCL counsel sent the Cost Order to her supervisor at 5:32 pm the same day. The supervisor was absent on holidays and did not return until January 5, 2017. She received the Cost Order on that date. On January 5, 2017, the supervisor sent the Cost Order to the legal director of the OCL personal rights department. On January, 9, 2017, this official and the Children’s Lawyer made the decision to appeal the Cost Order.

14The OCL formed the intention to appeal on January 9, 2017. This was three days after the expiration of the deadline for filing the Notice of Motion to seek leave to appeal. The delay was due to the intervening holidays and the internal bureaucratic processes in place at the OCL for making a decision on whether to appeal an Order. Given these circumstances, the reason for the delay is reasonable. In addition, the appeal raises the following issues: 1) whether costs can be awarded against a public agency (OCL) appointed by statute to represent the interests of a third party (the child of the marriage); 2) if such costs can be awarded and under what circumstances they should be awarded; and 3) whether, in this capacity, the OCL has an obligation to seek the assistance of the Court to address a party’s (the Respondent’s) noncompliance with a court order.

15In addition, in this case costs were awarded in favour of the non-compliant party, the Respondent. One of the reasons for awarding costs against the OCL was due to its failure to compel the Respondent to comply with a court order. For all these reasons, the justice of the case requires that leave be granted.

16Despite the objections of the Respondent, I am satisfied that granting the OCL an extension of time to file the Notice of Motion for leave to appeal is not prejudicial to the interests of the Respondent. Any prejudice can be adequately addressed by a cost order. Therefore, the OCL is granted an extension of time to file the Notice of Motion seeking leave to appeal.

Should the OCL be granted leave to appeal the Cost Order?

17The OCL is granted leave to appeal the Cost Order. The basis for the order is open to serious debate and the appeal raises an issue of general public importance that requires a resolution by a higher court. The grounds for leave to appeal are set out in Rule 62.02(4)(a) and in alternative Rule 62.02(4)(b).

18The OCL seeks leave to appeal pursuant to Rule 62.02(4)(b). Under Rule 62.02(4)(b) leave is granted when two conditions are satisfied. Firstly, there must be good reason to doubt the correctness of the order. This does not require the moving party to demonstrate that the order is wrong or probably wrong. Instead, the moving party must demonstrate that the “soundness” of the order is open to serious debate: Oberlander v. Canada (Attorney General) (2004), O.J. NO. 1574, at paras. 8-9 (Ont. S.C.). Secondly, it must be shown “the proposed appeal involves matters of such importance that……leave should be granted”.

19The OCL submits the preconditions of Rule 62.04(4)(b) are satisfied because: 1) the trial judge erred in exercising his discretion in awarding costs; 2) the trial judge erred in making findings of fact not supported by the evidence; and 3) fresh evidence calls into question the findings of fact relied on by the trial judge in awarding costs.

Did trial judge err in exercising his discretion in awarding costs?

20There is reason to conclude that the some of the principles relied on by the trial judge in determining the quantum of costs in this case are open to serious debate, and therefore the cost order is open to serious debate. For this reason, leave to appeal is granted on this ground alone.

21I agree with the Applicant that the trial judge carefully considered the applicable legal principles in exercising his discretion to award costs against the OCL. In thorough and well-considered reasons, the trial judge considered and applied all the factors set out in section 24(11) of the Family Law Rules, O. Reg. 114/99.

22The trial judge concluded that a party is not immune to a cost order simply because it is a government agency appointed pursuant to statute to represent a third party in the proceedings. In effect, all participants in the proceedings can be subject to a cost order within the parameters set by Family Law Rule 24(11) and costs can be awarded against a third party where its conduct is unfair. The trial judge relied on Catholic Children’s Aid Society of Toronto v. S.S.B., 2013 ONSC 5184, [2013] O.J. No. 3651. In applying this principle, the trial judge concluded that the conduct of the OCL most appropriately fell under the “reasonableness or unreasonableness of each party’s behavior” criterion mandated under Family Law Rule 24(11)(b). In effect, the trial judge concluded that the OCL had engaged in unfair conduct which constituted “unreasonable behavior”, as described by Family Law Rule 24(11)(b).

23Despite the submissions of the OCL, I conclude that the trial judge was correct to decide that costs could be awarded against the OCL. A third party’s conduct in a proceeding cannot be immune from scrutiny simply because of its third party status. To reach such a conclusion is to render the Court powerless to control the conduct of the third party where such conduct is unreasonable and detrimental to the proceedings. Such a conclusion is contrary to the proper administration of justice.

24The trial judge awarded costs against the OCL for unfair conduct that unnecessarily prolonged the trial because the Respondent failed to consider options provided by a section 30 Children’s Law Reform Act assessment and to encourage J.M. to meet with counsel appointed by the OCL. Furthermore, the OCL ignored the “general rules of fairness” by not seeking the assistance of the Court to obtain the cooperation of the Respondent before trial. In addition, the OCL took a position adversarial not only to the Respondent but also to J.M. whom it was called on to represent. The relationship between J.M. and the OCL had broken down to the extent that J.M. refused to speak to the OCL.

25The substantive order of the trial judge is not under appeal. It was open to the trial judge to rely on the findings of fact made at trial in making the Cost Order. A cost order is a discretionary order and the decision of the trial judge is entitled to deference unless the judge made an error in principle or his decision was clearly wrong: Van v. Palombi, 2015 ONSC 170, [2015] O.J. No. 74.

26In assessing the proper quantum of costs, the trial judge correctly considered the Respondent’s presumptive entitlement to costs as the successful party at trial and the Respondent’s offer to settle: Family Law Rules 18(4) and 24(1). However, the trial judge’s conclusion that the OCL was under an obligation to seek the intervention of the court to compel the Respondent to cooperate with the OCL in carrying out its court appointed duties is a matter open to serious debate. I do not conclude that such a principle is probably wrong or wrong but rather that it is open to serious debate.

27The reliance on this principle was an integral part of the trial judge’s decision on the quantum of the cost award, and therefore the order is open to serious debate. In effect, the Respondent benefited from his own non-compliance with a court order.

28There is a need for further clarification by a higher judicial authority of the obligations of a third party appointed under section 89(3) of the Courts of Justice Act when a party to the litigation refuses to cooperate with its efforts to carry out its court mandated activity. If such an obligation exists, the extent of any liability that can be attached to the actions of the section 89.3 agency and whether the non-cooperative party can benefit from their own uncooperative action or refusal to cooperate with the section 89.3 agency are issues that should also be addressed by a higher court. These issues extend beyond the interests of the parties to the litigation, impacts on current and future section 89.3 cases, and involves matters relevant to the development of the law and administration of justice that warrant consideration by a higher level of judicial authority: see Rule 62.02(4)(b), Apotex Inc. v. Eli Lilly and Co., 2013 ONSC 1135, [2013] O.J. No. 751.

29Leave to appeal is granted. If the parties are unable to agree on costs such costs are reserved to the judges hearing the appeal.

Barnes J.