Court File and Parties
Court File No.: F472/11 Date: 2014-08-26
Ontario Court of Justice
Re: Jacqui Potter – Applicant And: Luis Filipe Neves Da Silva – Respondent
Before: Justice Roselyn Zisman
Counsel: Steven McCutcheon - for the Applicant Peter Callahan – for the Respondent
Heard On: By written submissions
Costs Endorsement
Introduction
[1] The trial in this matter lasted 7 days over several months. The issues at trial were with respect to parenting arrangements for the child of the parties, Jordon David DaSilva Potter and included the issue of what weight should be given to a report by the Office of the Children's Lawyer. The trial also dealt with the issue of child support, both retroactive and ongoing and a determination of the father's income.
[2] My decision was released on June 19th, 2014. Any party seeking costs was requested to file written submissions in writing within 30 days and any response to be submitted 30 days thereafter. Counsel for the mother served the respondent with her cost submissions on July 18th, 2014. Counsel for the respondent served his response on August 18th, 2014.
Position of the Applicant
[3] The mother seeks $60,000 in costs on a substantial indemnity basis based on the following factors:
a. The mother was the successful party at trial;
b. The trial was necessitated by the unreasonable position by the father in particular his refusal to pay any child support arrears;
c. The mother made an offer to settle that was not accepted by the father and the results at trial were better than or equal to the offer.
Position of the Respondent
[4] It is the father's position that costs should not exceed $10,000 and that most or all of the costs of the proceeding should be payable by the Office of the Children's Lawyer. It is submitted that based on the decision of the court not to accept the recommendations of the Office of the Children's Lawyer report because it lacked any depth of analysis specifically, that the clinical investigator either neglected or ignored to investigate relevant information, applied the wrong legal considerations and placed undue weight on the views of a six year old, that this amounts to a finding a gross negligence on the part of the Office of the Children's Lawyer. It is submitted that the father relied on the expertise of the Office of the Children's Lawyer to his detriment and therefore if there is any award of costs it should be made against the Office of the Children's Lawyer and not him.
[5] The father also seeks a set-off of costs of $1,169.55 for a further settlement conference on October 1, 2013 necessitated by the mother's late amendment to her pleadings seeking retroactive support.
Offers to Settle
[6] Counsel for the father served an offer to settle on the mother on April 15, 2013 that simply stated that the custody and access issues be settled in accordance with "paragraphs 1 to 14 of the key recommendations of the Office of the Children's Lawyer Report" and child support in accordance with section 9(a) of the child support guidelines and agreed upon 7 expenses proportion of their respective incomes. The offer to settle also provided that there be no order of costs as of the date of the order with respect to custody and access.
[7] It appears that the mother did not respond to this offer to settle which is understandable given its vagueness.
[8] Counsel for the father emailed the mother a further offer to settle on July 12, 2014. The offer to settle set out in detail the parenting arrangements that essentially mirrored the main recommendations of the Office of the Children's Lawyer with respect to joint custody with an alternate week schedule but with further refinement to deal with some of the issues that had been causing conflict between the parties. The offer to settle proposed child support on a set-off basis of $518.00 per month and a sharing of the section 7 expenses with the father paying 70% and the mother 30%.
[9] The mother who was self-represented up until just before the commencement of this trial served the father's counsel with an offer to settle on July 16, 2013. The offer to settle with respect to the parenting issues again essentially mirrored the recommendations in the report of the Office of the Children's Lawyer in that, it proposed joint custody with an alternate week schedule. The mother also added provisions to clarify some of the issues that had caused conflict between the parties. With respect to child support the offer proposed a set-off formula with the father paying child support of $750.00 per month in order to equalize the standard of living in each home and account for the increased cost if shared parenting. The mother proposed the same ratio for the payment of section 7 expenses. Despite the mother's calculation of child support arrears of $32,360 from 2007 to 2013, she proposed the father only pay arrears fixed at $11,131.00 that represented arrears from 2010 to 2013.
[10] A trial in this matter had been scheduled to proceed on July 18, 2013. However, rather than starting the trial, counsel for the father and, the mother, who was not represented, attempted to settle the matter and spent the whole day attempting to do so. Counsel for the father submits that they had come to an agreement in principal and as a result he prepared Minutes of Settlement that evening. He has provided a copy of those Minutes of Settlement and his email correspondence to the mother. The email states that he understood that the terms had been agreed upon in principal with some wording still to be finalized except perhaps for the mother's position regarding some payment of child support arrears by the father. Having reviewed the proposed Minutes of Settlement, it appears that the main issue that apparently caused these parties to proceed to trial was the issue of child support arrears. As the parties were unable to settle the mother's email response to father's counsel suggested a further settlement conference that was refused by counsel.
[11] Counsel for the mother submitted that the father's offer to settle dated July 12, 2013 was not properly served or filed as it was only served by email. Although I accept this is correct, in this case nothing turns on this as the offer to settle was not accepted by the mother and the result she achieved at trial was much more favourable to her than the father's offer to settle. Neither offer to settle was severable which I note could have significantly narrowed the issues for trial.
[12] I find it remarkable that the father did not accept the mother's offer to settle or at the very least offered to severe the issues. The mother up to trial was self-represented and the trial had already been postposed on at least one occasion because the parties were attempting to settle the issues. The mother was in a much more vulnerable position than the father as she was faced with proceeding to trial, without counsel and in face of a report from the Office of the Children's Lawyer that recommended joint custody and an equal time schedule despite the fact that she had been the child's primary parent and despite the fact the parties did not get along well. Having now reviewed the offers to settle, it appears that the father took the chance of going to trial to avoid paying $11,131.00 in child support arrears and a slightly higher amount of child support and instead incurred his own substantial legal fees and now must pay the mother's legal fees.
[13] The mother achieved a much better result at trial than her offer to settle. The mother was awarded sole custody and the time sharing and parenting arrangements were essentially as she requested. The child support arrears from June 2006 to February 1, 2012 were fixed at $21,185.00 with further arrears to be calculated as a result of the Family Responsibility Office adjusting their records. The father's ongoing child support was fixed at $961.00 per month.
Applicable Legal Principles
[14] Rule 24(1) of the Family Law Rules provides guidance on costs on a family law context. Rule 24 (1) sets out the basic assumption that a successful party is entitled to costs. This provision still permits a court broad discretion in determining if costs should be paid, by whom and in what amount.
[15] Rule 24 (11) provides a further list of factors a court should consider in dealing with costs:
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 behavior in the case;
c. the lawyer's rates
d. the time properly spent on the case, including conversations between the lawyer and the party, 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.
[16] In Serra v. Serra 2009 ONCA 395, [2009] O.J. No. 1905 at para. 8, the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:
to partially indemnify successful litigants for the cost of litigation;
to encourage settlement; and
to discourage and sanction inappropriate behavior by litigants.
[17] I also agree with the comments by Justice Perkins in Biant v. Sagoo, [2001] O.J. No. 3693 (S.C.J.) that:
the preferable approach in family law cases is to have cost recovery generally approach full recovery, so long as the successful arty has behaved reasonably and the costs claimed are proportional to the issues and the result.
[18] I am also mindful that the court's role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As was pointed out in Boucher v. Public Council (Ontario) (2004), 2004 CarswellOnt 2521, [2004] O.J. No. 2634 (Ont. C.A.), the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings rather than an exact measure of actual costs to the successful litigant.
[19] Subsection (b) of Family Law Rule 24(11) relates to the reasonableness of each party's behavior in a case.
[20] In considering if a party acted reasonably, Family Law Rule 24 (5) directs the court to consider if a party served made an offer to settle and the reasonableness of any offer to settle.
[21] Rule 24 (5) provides that:
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
[22] Offers to settle are an essential part of family litigation. The parties and counsel have a positive obligation to conduct their cases to ensure that the primary objective of the Family Law Rule 2 (2) is met that is, to deal with cases justly. This includes taking appropriate steps to save time and expenses, per Rule 2(3). Offers to settle play an integral role in saving time and expenses by promoting settlements, focusing parties and often narrowing the issues in dispute. Offers to settle are therefore important in any consideration of the issue of costs. In my view it is unreasonable behavior for a party not to make an offer to settle.[1]
[23] The consequences of an offer to settle are set out in Family Law Rules 18(14) as follows:
(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.
Application of Legal Principles to the Facts
[24] In this case the mother's offer to settle dated July 16, 2013 meets all of these conditions of sub-rule 18(14) and she is therefore entitled to her costs from the date the offer was served and on a full recovery basis from that date.
[25] In determining the amount of costs, I have considered the legal principles and the following factors as set out in Rule 24 (11) as follows:
a. the importance, complexity or difficulty of the issues: The case was of importance to the parties as it relates to the future parenting arrangements of their child. Although the issues individual issues were not complex or difficult, the number of issues, the time span involved and the amount of documentary evidence made it more complex factually and legally.
b. the reasonableness or unreasonableness of each party's behavior in the case: The mother acted reasonably throughout. It is submitted that the father acted unreasonably as he chose to fight each issue, fabricating stories to rationalize his position or to make himself look good. It is also submitted that the father acted unreasonably by the filing of substantial document briefs and additional disclosure during the trial sittings and as a result increased the mother's counsel's preparation time and extending the trial unnecessarily. In the decision rendered, it is correct to state that I found the father's evidence to be vague, inconsistent and not corroborated by any third party and that I found that his relationship with the mother to be controlling and abusive. However, I cannot find that the father acted unreasonably in his conduct in the case as he was acting in a way he perceived to be in Jordon's best interests. His position regarding the parenting arrangements was bolstered by the fact that it was in accord with the recommendations of the Office of the Children's Lawyer although I do note that he attempted to seek even more favourable provisions with respect to travel and extracurricular activities. I agree with counsel for the mother however, that the amount and manner of the financial disclosure lengthened the trial.
c. the lawyer's rates: Counsel for the mother has been practicing exclusively family law for 27 years. His hourly rate of $400 is reasonable as are the hourly rates of his law clerks that vary from $125 to $100. Father's counsel does not take issue with these hourly rates.
d. the time properly spent: Counsel for the mother was retained just before the trial and his bill of costs therefore only is as of October 2013. The total bill of costs is $74,575.43 but counsel concedes that some of the time includes time spent on a motion by the father for travel in November 2013 and some unrelated parenting issues. He therefore seeks only $60,000. This trial was heard on January 20, 21 and 22, 2014 and then continued on March 24, 25 and 31 and then concluded on April 29, 2014. It was unfortunate that the trial proceeded in this manner as it necessarily increases the costs for the parties as counsel inevitably to spend more time refreshing themselves on the prior days' evidence.
Counsel for the father points out that on two of the days the trial was delayed as the court has other matters to deal with and his client should not be penalized for costs incurred outside of his control due to institutional backlog of the court. I find no merit in this argument. The parties are required to pay counsel for their court attendances that are frequently interrupted or delayed, it is part of the cost of trials that counsel should alert their clients to.
Counsel for the father also submits that the time claimed by mother's counsel and his clerks is excessive. As a comparison he submits his own bill of costs for the same time period for $40,544.40 including all applicable taxes and disbursements. I have considered that the mother's counsel had a more difficult case in that he had the evidentiary burden of convincing the court that the recommendations of the Office of the Children's Lawyer report should not be followed, he had the onus of proving that the mother had a legitimate retroactive child support claim and that income should be imputed to the father. It is therefore understandable that he would have spent more time preparing for the trial and the trial continuations.
Having reviewed the bill of costs I find that the time spent was reasonable and that the discount by mother's counsel of time and costs with respect to issues other than the trial was generous to the father.
e. the expenses properly paid and payable: The usual disbursements are claimed for process serving and couriers. In addition, the mother's counsel ordered a copy of the father's evidence in chief that I find was reasonable as the trial was adjourned before cross-examination was commenced.
f. any other relevant matter:
(i) costs against the Office of the Children's Lawyer:
Firstly, a report from the Office of the Children's Lawyer and the recommendations of a clinical investigator are only one piece of evidence and parties should not assume that a court will automatically accept those recommendations. Prior to trial, the evidence relied upon by the clinical investigator has not been subject to the scrutiny of cross-examination and the court may be presented with evidence that was not available to the clinical investigator. Just because a trial judge does not accept recommendations or the basis for the recommendations or may be critical of the process does not mean that the shortcomings amounted to findings of "gross negligence" as alleged by father's counsel. I also point out that it is the duty of counsel to scrutinize the strength of all of the proposed evidence for trial including a report from the Office of the Children's Lawyer.
Secondly, in this case the clinical investigator was a witness and not counsel or a party. Counsel for the father relies on the case of [Walker v. Yarde][2] only considered whether or not to order costs against counsel for the Office of the Children's Lawyer as a result of her delaying the court proceedings. Counsel also relies on the case of [Children's Aid Society of the City of St. Thomas and County of Elgin v. L.S.][3]. However, in that case, costs were ordered against the Office of the Children's Lawyer because counsel for the child did not consent to an order that had been agreed upon by the children's aid society and the parents placing the child with the grandparents. As a result of counsel's position a six day trial was necessary. Justice Schnall held that the position of counsel for the child lacked common sense, was internally inconsistent and the trial was unnecessary. Neither of these cases is applicable to the situation in this case.
Thirdly, if counsel was serious about seeking costs against the Office of the Children's Lawyer then surely that office should have been served.
In this case, the clinical investigator was simply a witness and her report was evidence in the trial. Both parties and the court were entitled to scrutinize her evidence and her recommendations as it done with all other evidence. The expectation that a litigant may be entitled to costs against the Office of the Children's Lawyer because a recommendation of a clinical investigator is not accepted by the court would effectively prevent the Office of the Children's Lawyer from making recommendations because of the concern that the unsuccessful litigant may seek costs against the Office of the Children's Lawyer. Taken to its logical conclusion, it begs the question of why a trial is necessary if there is an expectation that the court and litigants should just accept every recommendation in Office of the Children's Lawyer report. I find no basis for costs being ordered against the Office of the Children's Lawyer.
(ii) set-off for costs of unnecessary settlement conference:
On August 1, 2013 the parties attended before me at a trial assignment court and the mother was granted leave to amend her pleadings to bring a claim for retroactive child support. I reserved costs as part of the trial and directed the parties to attend for another settlement conference before the case management judge. I also reserved costs of this further settlement conference to myself on the basis that if the claim had been clearly before the court this added settlement conference might not have been necessary. Counsel for the father seeks a set-off of $1,169.55 for the cost of attending at the settlement conference regarding "this new issue".
I have reviewed the pleadings and the endorsement by the case management judge. At the case conference on February 29, 2012 the temporary child support order was made without prejudice to a claim for retroactive support and the mother was given leave to amend her pleadings. I infer from this endorsement that the issue of retroactive child support was before the court and known to both parties, despite the fact it had not formally been pleaded. The mother did file a further amended application[4] seeking retroactive child support for the table amount only and not for any special expenses. Although father's counsel is correct in stating that the mother was ordered to provide any documents to support her claim and did not do so, as stated in the trial judgement, both the mother and her father testified that that there were only verbal requests for child support and I accepted this evidence. I also found credible the mother's evidence that she was afraid to ask the father for child support or proof of his income and simply accepted the amounts he offered. I have also reviewed the endorsement of the settlement conference held on October 1, 2013 and it appears that the mother did provide father's counsel with her calculation of the child support arrears based on the father's actual income for the relevant years. The father was also ordered to provide proof of his income and Notices of Assessment for several years.
In conclusion I agree that the father is entitled to some credit for his attendance at the October 1, 2013 settlement conference but not the full amount claimed as counsel should have been aware of the claim for retroactive child support and could have requested whatever further documentation he required. I note that in the trial, child support was awarded based on the father's income for the relevant years not based on his actual income with add backs that I assume the mother did not ask for at the settlement conference. Further, it appears father did not provide all of the disclosure he needed to provide. Both of these issues were dealt with at the settlement conference and so it was not a wasted attendance for the father or the mother. I would give the father credit for $500.00 for this attendance.
(iii) financial circumstances of the parties: I have considered that the cost order requested of $60,000 is substantial and the father is also faced with paying a substantial amount of child support arrears. But the father has been able to accumulate assets and he has savings from which he is able to pay both the child support arrears and any cost order. The mother on the other hand has no savings and as a result of this trial has incurred substantial debt. The father had the opportunity to settle this case in a manner that was much more favourable than the result at trial. He chose to proceed to trial and must bear the consequences. It is the responsibility of parties and their counsel to take a hard look at the merits of a case and conduct a cost/benefit analysis before choosing to proceed to trial. The father should have considered that the mother was prepared to capitulate on the parenting issues, mainly because she was unrepresented and could not afford a trial, and if his primary concern was with respect to the parenting issues rather than financial issues, he could have accepted her offer to settle and avoided his own legal fees and the cost consequences of a being the unsuccessful litigant in a trial.
[26] In considering all of these factors, I find that the mother is entitled to full recovery of all of her costs as she served a comprehensive offer to settle and she was the successful party. I agree with the submissions of counsel for the mother that $60,000 is a reasonable amount of costs. I would award the father $500.00 in costs for the attendance at extra settlement conference on October 1, 2013.
[27] Neither counsel made submissions with respect to the issue of the enforcement by the Family Responsibility Office of any costs order made. The Family Responsibility Office can only enforce costs related to financial issues. In this case the trial to both financial and parenting issues and it is impossible with any precision to delineate the time spent regarding these issues. However, I find that it is fair to attribute half the costs to the financial issues. Accordingly, I am prepared to order that the Family Responsibility Office enforce $30,000 of the cost order at a rate of no less than $1,000.00 per month. The remainder to be paid within 60 days to permit the respondent time to arrange any necessary financing.
Order
The Respondent shall pay to the Applicant costs fixed at $59,500.00 inclusive of disbursements and applicable taxes.
The Family Responsibility Office shall enforce $30,000.00 of the $59,500.00 owing at the rate of no less than $1,000.00 per month as of September 1, 2014 as a support order. The remainder of $29,500.00 shall be payable within 60 days.
Support Deduction order to issue.
Justice Roselyn Zisman
Date: August 26, 2014
Footnotes
[1] J.V.M. v. F.D.P. 2011 ONCJ 616; Menchella v. Manchella 2013 ONSC 367; Clarke and Collymore [2013] O.J. No. 4138 (OCJ)
[2] Walker v. Yarde [2009] O.C. No. 5886 (OCJ)
[3] Children's Aid Society of the City of St. Thomas and County of Elgin v. L.S.
[4] The document is a copy of the original Application but has added and underlined to the claims an order of retroactive child support to the date of the birth of the child. It is filed at Volume 1 Tab 21 of the continuing record but was not in the Trial Record.
