Court File and Parties

Court File No.: Toronto D219/98 Date: 2012-06-19 Ontario Court of Justice

Between: Edyta Katarzynski, Applicant

— And —

Jacek Katarzynski, Respondent

Reasons for Judgment: dated May 10, 2012 Order as to Costs: dated June 19, 2012

Counsel:

• Claire Hepburn, Jennifer Wall and Amanda Carling, for the applicant
• Jacek Katarzynski, on his own behalf

ZUKER J.:

BACKGROUND

[1] In the Reasons for Judgment of Justice Zuker in the matter of Edyta Katarzynski v. Jacek Katarzynski, Court file No. D219/98 dated 10 May 2012, the Applicant Edyta Katarzynski was successful in her case for child support and section 7 expenses.

[2] Pursuant to section 24(1) of the Family Law Rules, originally O. Reg. 114/99 as amended, there is a presumption that a successful party is entitled to the costs of a motion, endorsement, case or appeal.

[3] Costs in family law proceedings are determined by Rules 18 and 24 of the Family Law Rules. As indicated, the successful party, the Applicant, is presumptively entitled to costs (Rule 24(1)). In deciding the amount of costs to be awarded to the successful party, the court must, at the outset, determine whether either party is entitled to a cost benefit pursuant to Rule 18.

Offers

[4] Offers to settle were as follows:

a. March 7, 2012, Father offers to settle for:

• i. An imputed income of $28,800;
• ii. 34% of extraordinary expenses;
• iii. Return of overpayment of child support from 2010/2011 totalling $8,807.27.

b. March 8, 2012, Mother offers to settle for:

• i. An imputed income of $45,000;
• ii. 50% of extraordinary expenses;
• iii. Arrears fixed at $1,100.

[5] The Respondent's offer does not trigger cost consequences in his favour.

[6] The Applicant's offer, and her overall efforts to settle this action, is more relevant. At trial, the Applicant obtained a comprehensive result which, in every respect, was more favourable than the terms of her offer. The Respondent should have accepted the offer the Applicant submitted. The Applicant's offer was served "at least seven days before the trial or hearing date" as per Rule 18(14)(2).

[7] The offer is relevant to the issue of costs pursuant to Rule 18(16) which allows the court to "take into account any written offer to settle."

[8] The Applicant made exhaustive and commendable efforts to encourage settlement and avoid going to trial.

[9] I conclude the Applicant acted reasonably. In contrast, the Respondent behaved unreasonably.

[10] There was no element of divided success.

[11] Both parties were prepared for trial, in the Applicant's case, exceptionally well-prepared (Rule 24(7)).

[12] Rule 24(8) states:

If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.

[13] I have no hesitation in characterizing much of the Respondent's behaviour in this litigation as unreasonable and relevant under a Rule 24(11) analysis. Focusing on the trial, I find, however, that the Respondent's unreasonable behaviour does not cross the threshold of bad faith.

[14] I believe full recovery of costs is an appropriate starting point in relation to those issues impacted by the Respondent's bad faith conduct.

[15] Rule 24(1) sets out the factors to be considered in determining costs.

[16] The Respondent made little effort to avoid this litigation.

[17] In contrast, the Applicant displayed a reasonable attitude.

[18] Ability to pay costs can also be considered as "any other relevant matter" under subrule 24(11). The financial means of the unsuccessful party is a factor that may rebut the presumption that the successful party is entitled to full recovery for costs: See M.(C.A.) v. M. (D.) (2003), 67 O.R. (3d) 181 (Ont. C.A.); Harrington v. Harrington (2009), 2009 ONCA 190, 63 R.F.L. (6th) 274 (Ont. C.A.).

[19] However, ability to pay is relevant on the issue of quantum or scale of costs, but not to another party's entitlement to costs. A party's limited finances may not be used to shield liability, particularly where that party has acted unreasonably. Takis v. Takis, [2003] O.J. No. 4059 (Ont. S.C.J.); Parsons v. Parsons, (2002), 31 R.F.L. (5th) 373 (Ont. S.C.J.); Panny v. Gifford, [1997 CarswellOnt 2028 (Ont. Prov. Div.)]; Spears v. Spears, 2010 ONSC 4882 (Ont. S.C.J.); Stemmler v. May (2008), 49 R.F.L. (6th) 431 (Ont. S.C.J.); Beckett v. Beckett, 2010 ONSC 2706 (Ont. S.C.J.).

[20] The Respondent's approach to the litigation was inflexible and misleading.

[21] Rules 18 and 24 make it clear that, at least presumptively, the Applicant should be entitled to a substantial level of indemnification for costs.

[22] Those who can least afford to litigate should be most motivated to pursue settlement seriously and avoid proceedings. See Glithero J. in Balaban v. Balaban, 2007 CarswellOnt 1518 (Ont. S.C.J.), at paragraph 7: "... when a person's financial position is such that they cannot really afford the cost of litigation, then there is all the more reason to attempt compromise of a meaningful nature."

[23] Encouraging settlement and discouraging inappropriate behaviour by litigants is important in all litigation, particularly family law. No litigant should perceive they have the ability to say or do anything they want in court, without consequences.

[24] Since the DBS decision in 2006, 2006 SCC 37, historical financial disclosure has become the focal point of support law matters. Assessing every case which involves a change in monthly child support or section 7 expenses, an adjustment relating to arrears or termination of child support necessitates a detailed review of the sufficiency of historical annual disclosure provided by the parties.

[25] In DBS, Justice Bastarache emphasized the fact that specific analysis is required in each case to balance the competing interests of fairness to children and certainty to the payor.

[26] There is often, as was the case in this matter, significant debate regarding such issues as whether there is a different consideration where there is an agreement or an order, whether there is a disclosure provision and the nature of that disclosure provision, the determination of historical income, what constitutes blameworthy conduct and to what degree, if any, has there been blameworthy conduct, and whether there has there been unreasonable delay in obtaining income information and is that delay justified.

[27] There is certainly also strong sociological evidence that exchanges between parties over finances create tension and foster conflict. This has a significant impact on children. The stress-producing effect of legal involvement is obvious.

[28] The failure to disclose and exchange information in this case persisted despite detailed agreements or orders, which clearly spelled out the disclosure and information-exchange obligations of the parties, in particular the father.

Costs Order

[29] I find that the Applicant is entitled to costs on a substantial indemnity basis.

[30] The order as to costs includes the court's necessary assessments underlying the findings of fact I made.

[31] Applying all of the required factors including reasonable expectations of each party, the parties' financial circumstances (particularly in the context of the Respondent's continuing responsibilities), I will fix the overall fees component at $9,000.00.

[32] Accordingly, the Respondent shall pay to the Applicant costs of the trial fixed in the sum of $9,000.00 inclusive of fees, disbursements and HST.

[33] There is an outstanding costs order for $1,000 of October 4, 2011, which the Respondent shall also pay.

[34] The order as to costs should be enforced as support orders through the Family Responsibility Office of Ontario.

[35] Parties to be notified.

Released: June 19, 2012

Signed: "Justice Marvin A. Zuker"