Court File and Parties

Court File No.: D21134/02 Date: 2013-10-21

Ontario Court of Justice

Toronto North Family Court

Between:

Barry Ayow Applicant

William Sullivan, for the Applicant

- and -

Laura James Respondent

The Respondent, Acting in Person

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background and Prior Decision

[1] On September 23, 2013 I released my reasons for decision after hearing the trial of the motions to change in this case. The primary issue in the case was child support, including a claim for retroactive support by the respondent (the mother). I ordered the applicant (the father) to pay the mother $1,050 per month for child support, starting on March 1, 2013. I also ordered the father to pay the mother the sum of $20,000 for retroactive support, for the period prior to March 1, 2013.

[2] The trial was completed in one day. The parties were given permission to make written costs submissions.

[3] The mother represented herself at the trial. She has asked the court to award her costs of $4,057.47. The father has asked the court to award him costs of $7,859.

Principles Governing Costs Awards

[4] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395 stated that modern costs rules are designed to foster three fundamental purposes, namely to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants bearing in mind that the awards should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party.

[5] Sub-rule 2(2) of the rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the rules is met – that cases are dealt with justly. This provision needs to be read in conjunction with rule 24 of the rules. See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711.

[6] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. Costs 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, 2002, S.C.C., supra, paragraph 25. When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation. See: Sabo v. Sabo, 2013 ONCJ 545, per Justice Carole Curtis.

Bad Faith Conduct

[7] The mother has asked for substantial indemnity costs based on the father's behaviour in this case. Subrule 24(8) of the Family Law Rules (the rules) states that 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.

[8] Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith. See: DePace v. Michienzi; Kardaras v. Kardaras, 2008 ONCJ 616; Jones v. Hugo, 2012 ONCJ 381. That is the case here.

[9] In my reasons for decision I made the following findings of fact that support making a finding of bad faith against the father:

a) The father was not transparent about his income starting in 2012. In his response to motion to change and sworn financial statement sworn on June 19, 2013, the father represented that he only earned $80,000 per annum. He disclosed no interest in any business. He did not attach complete income tax returns, corporate financial statements or give any indication to the mother (or the court) that he was employed through his corporation.

b) It was clear from the father's material that he hoped to convince the mother and the court to have this case resolved based on an income to him of $80,000 per annum. The father knowingly attempted to misrepresent his income.

c) On July 7, 2013, the father was ordered to produce financial disclosure, together with an updated financial statement. The father did not meet the court's filing deadline and delivered his material (with incomplete financial disclosure) to the mother on the day before the trial. The mother learned at that point, for the first time, about the father's corporation.

d) It became crystal clear to the court that the father was the corporation and the father was using it as a vehicle for income-splitting and tax reduction.

e) The father's misrepresentation of his actual income, and failure to provide full and timely financial disclosure to the mother and the court was found to be blameworthy behaviour.

f) The father's ongoing income was imputed at $180,000 per annum, instead of the $80,000 per annum figure that he represented he was earning.

g) The father unreasonably refused the mother's request (once the child began living with her 50% of the time) to cancel her ongoing support obligation.

h) The father unreasonably failed to pay any child support to the mother after she brought her change motion – even when it should have been obvious to him that he had a child support obligation.

[10] A clear message needs to be sent to payors who act in this manner that such behaviour is unacceptable. It is critical to the integrity of the family law system that such behaviour be met with meaningful costs consequences. This behaviour went beyond the threshold of unreasonable behaviour to an attempt by the respondent to deceive the court about his income. See: S. (C.) v. S. (M.).

Costs for Self-Represented Litigants

[11] The next step is to determine the amount of costs that should be awarded to the mother, given that she is self-represented.

[12] In making this decision, I considered the factors set out in sub-rule 24(11) of the rules, which reads as follows:

24(11) A person setting the amount of costs shall consider:

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party's behaviour in the case;

(c) the lawyer's rates;

(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(e) expenses properly paid or payable; and

(f) any other relevant matter.

[13] The court also considered the following principles in determining costs for self-represented litigants that were recently set out by Justice George Czutrin in Jordan v. Stewart, 2013 ONSC 5037:

a) A self-represented litigant does not have an automatic right to recover costs. The matter remains fully within the discretion of the trial judge. Moreover, self-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer to conduct the litigation, and that as a result, they incurred an opportunity cost by foregoing remunerative activity;

b) Parties who litigate against a self-represented person should not be able to ignore the potential for costs. The court retains the discretion to fashion an award of costs that is fair and reasonable in the circumstances of the case before it;

c) Where one party is represented by a lawyer and the other is not, the hourly rate that the represented litigant's lawyer is entitled to claim on an assessment of costs should inform the reasonable expectations of both parties as to the costs that they will likely be required to pay if unsuccessful. Otherwise, litigants represented by lawyers would be less circumspect with regard to their conduct and their response to the opposing party's efforts to settle because that party is a self-represented litigant.

d) It is near impossible to come up with an objective way of fixing an in-person party's hourly rate or the amount of time they spent, not at the court, doing what we might otherwise consider lawyer's work.

e) Ultimately, the overriding principle in fixing costs is "reasonableness".

f) Courts addressing costs should consider Bills of Costs certified by lawyers who have provided assistance, even if not on the record throughout the case.

Analysis of Case Factors

[14] The case was important for the parties. It was not complex, but was made far more difficult by the father's attempts to hide his true income and his failure to provide timely disclosure.

[15] Both parties made offers to settle. Neither offer was close to being as favourable as the final result. The mother's offer for ongoing support was better than the final award, but her offer for retroactive support was far greater than the amount that she was awarded. The father's offer for ongoing support was less than 50% of the final amount ordered. He offered to pay $10,000 for support arrears. He was found to owe the mother $27,350, as of September 23, 2013 (the $20,000 retroactive support order plus support accumulated since March 1, 2013).

[16] The mother had some justification for not making a better offer to settle, as the father did not produce highly relevant disclosure until the afternoon before the trial.

[17] The court considered that the mother made some minor claims that were dismissed due to lack of jurisdiction. These claims involved very little time.

[18] The court made a finding that the mother's 2012 income disclosure made little sense and imputed income to her of $50,000 per annum. This was unreasonable behaviour, but did not rise to the level of bad faith. The mother did offer at one point to impute her annual income at $40,000 per annum.

[19] Subrule 24(4) of the rules states that a successful party who has acted unreasonably during a case may be deprived of all or part of their own costs, or be required to pay the other party's costs. I find that this subrule applies, even when the other party has acted in bad faith. To find otherwise, would sanction unreasonable behaviour. This would be inconsistent with one of the purposes of costs set out in the case law above. I considered the mother's unreasonable behaviour concerning production of her 2012 income by slightly reducing her costs claim.

Assessment of Costs Claims

[20] The father's behaviour in this case was very unreasonable, rising to the level of bad faith.

[21] The mother claimed costs of $1,001.47 she paid to counsel (not on the record) to assist her with the preparation of the case and to assist with settlement negotiations. I found this claim to be very reasonable and it will be fully compensated.

[22] The mother also claimed the sum of $2,960 for her personal time spent on the case and $96 for disbursements. She claimed her personal time at the rate of $40 per hour.

[23] The mother emphasized in her submissions that she restricted her claim to time spent on the case, that she would have otherwise spent earning income in her business – she did not claim the time she actually spent on the case. The mother spent time researching the family law rules, court procedure and the legal principles she needed to know to properly present her case. I commented in my reasons for decision that she did an excellent job for a self-represented litigant. The time she claimed was time well-spent and proportionate. I am also satisfied that the mother had to sacrifice income-earning opportunities to prepare for this case.

[24] This is not a case where time is claimed for costs that should have been claimed at prior steps. At the one case conference held, it was apparent that oral evidence was required to properly determine the issues on the motions to change, due to the radically different evidence of the parties, and an early trial date was set.

[25] The expenses claimed by the mother are reasonable.

[26] The father can afford to pay the costs that will be awarded.

[27] The father's costs claim is entirely without merit. He forced this litigation by his failure to terminate the mother's support obligation when the child began living with the mother 50% of the time. He failed to pay any child support once the mother started the case. He did not offer any retroactive support until the end of August of 2013. Even then, much of this offer was constituted of support he should have been paying since March 1, 2013. He deliberately misrepresented his income. The mother was the more successful party on the imputation of income. She overreached on the retroactive support issue, but was still awarded a significant amount. The mother was the successful party in this case.

Proportionality of Costs

[28] I have also considered both Boucher et al. v. Public Accountants Council for the Province of Ontario and Delellis v. Delellis and Delellis. Both these cases point out that when assessing costs it is "not simply a mechanical exercise." In Delellis, Aston J. wrote at paragraph 9:

However, recent cases under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended have begun to de-emphasize the traditional reliance upon "hours spent times hourly rates" when fixing costs....Costs must be proportional to the amount in issue and the outcome. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant.

Order

[29] Taking into account all of these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $4,000, inclusive of fees, disbursements and HST. They shall be paid by the father forthwith.

[30] The father's claim for costs is dismissed.

Justice S.B. Sherr

Released: October 21, 2013