Court File and Parties

Court File No.: 56106/12 Date: May 30, 2018 Ontario Court of Justice

Between:

G.S.W. Applicant

- and -

C.S. Respondent

Counsel:

• Bradley Berns, for the Applicant
• Lisa Baumal, for the Respondent

Heard: In Chambers

Before: Justice S.B. Sherr

Costs Endorsement

Background

[1] On May 1, 2018, the court released its reasons for decision arising out of an eight-day trial about the parenting and child support arrangements for the parties' six-year-old child (the child). See: G.S.W. v. C.S., 2018 ONCJ 586.

[2] The court gave the parties the opportunity to make written costs submissions. The respondent (the father) seeks his costs of $20,377.

[3] The applicant (the mother) asks that no costs be ordered.

Legal Framework for Costs

[4] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, [2009] O.J. 1905 (Ont. C.A.), 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 Family Law Rules (all references to rules in this endorsement are to the Family Law 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. See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711, [2012] O.J. No. 5404 (Ont. C.J.).

[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.

[7] Subrule 24(1) creates a presumption of costs in favour of the successful party.

[8] Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ-Family Court). To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ).

Settlement Offers and Costs Consequences

[9] Subrule 18(14) reads as follows:

Costs Consequences of Failure to Accept Offer

18(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:

1. If the offer relates to a motion, it is made at least one day before the motion date.
2. 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.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

[10] The onus of proving that the offer is as or more favourable than the trial result is on the person making the offer. See: Neilipovitz v. Neilipovitz, [2014] O.J. No. 3842 (SCJ).

[11] Even if an offer to settle does not attract the costs consequences set out in subrule 18(14), it can be considered pursuant to subrule 18(16).

Father's Settlement Offer

[12] The father made a global offer to settle the case dated November 25, 2016. The offer to settle is quite detailed. In short, the father sought sole custody of the child, supervised access for the mother, together with expectations for her to fulfill before her access would be expanded, and child support of $186 each month starting on December 1, 2017, together with a provision that the mother pay 30% of child care costs during the summer.

[13] The father concedes that the offer is not as favourable to the mother as the trial result.

[14] The father's offer was non-severable. This was unfortunate for him as his offers with respect to custody, incidents of custody and child support were more favourable, or as favourable to the mother, than the trial result. However, these proposals were linked to the access issue. The court order provided the mother with gradually increasing unsupervised access and did not impose the conditions for the increased access sought by the father.

The Problem with Non-Severable Offers

[15] Several courts have discussed the value of severable offers.

[16] In Lawson v. Lawson, 2004 O.J. No. 3206 (SCJ), Quinn J., wrote at paragraphs 25 and 26:

25 The wife's offer to settle of 28 April 2004 was a non-severable, all-or-nothing offer. This is apparent from the manner in which it was to be accepted. As such, I do not think much is to be gained by examining its provisions paragraph by paragraph except, perhaps, to gauge its general, overall reasonableness. It is difficult to prove that an order made is more favourable to a party than, or equal to, a non-severable offer.

26 I would discourage the making of all-or-nothing offers. The severable variety allows for the prospect that some of the outstanding issues might be settled, thereby reducing the length and expense of the motion or trial, as the case may be. All-or-nothing offers sometimes have a heavy-handed air about them and certainly they possess a much lower chance of being accepted than severable offers.

[17] In Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (SCJ), Wildman J. writes at paragraphs 13 and 14 as follows:

13 Unfortunately, this offer was not severable. There would have been no disadvantage to the wife in making the custody offer, in particular, severable from the financial and property terms. Severable offers are an underused tool that can confer considerable settlement and cost advantages. Because of the full recovery provisions of Rule 18(14), they can provide much more flexibility to the court to award full recovery for at least a portion of the overall costs, if the party is successful on only some of the issues. Had the custody terms of the wife's offer been severable from the other terms, I would have been prepared to consider ordering full recovery costs on the custody issue from the date of the offer forward. As this was the majority of the trial time, that would have been a significant cost advantage to the wife.

14 However, as the offer was not severable, the wife would have to do as well or better than all the terms of the offer, in order to take advantage of the full recovery cost provisions of Rule 18(14). Since the husband got an additional week of access, as well as an order that spousal support would reduce from $1000 in three years, Ms. Nanayakkara did not do as well as or better than her offer in its totality. Rule 18(14) does not apply but I can take this offer into account in determining costs under Rule 24, along with any other offers that have been made (Rule 18(16)).

[18] In Paragraph 35 of Jackson v. Mayerle, 2016 ONSC 1556, Pazaratz J. writes:

Offers to settle are to be encouraged, and severable offers (or offers on specific issues) are particularly helpful to the settlement process.

Pre-Trial Evidentiary Motion

[19] The father also made five separate offers to settle a pre-trial evidentiary motion. He had brought this motion to exclude the evidence of five medical professionals the mother sought to call as witnesses at trial. The father proposed in each offer to settle to have the witness excluded without any order for costs. The mother did not accept any of these offers.

[20] The motion to exclude these witnesses was heard on December 8, 2017. For oral reasons given on that day, the court excluded one medical professional and placed limits on what the second medical professional could testify about. The court determined that it would need to conduct an oral voir dire regarding the other three medical professionals at trial to determine admissibility.

[21] The father sought costs of that motion on December 8, 2017. The court deferred the costs issue until the completion of the trial, but found that the father had established entitlement to costs for the exclusion of the one medical professional.

[22] At trial, the court excluded one of the medical professionals after her voir dire and narrowly defined the evidence of a second medical professional after his voir dire. The mother chose not to rely on the evidence of the third medical professional.

[23] The father was substantially successful on these evidentiary issues. Considerable time was spent on them, both before and at the trial. The presumption that he is entitled to his costs for his exclusion motion was not rebutted.

Mother's Settlement Offer

[24] The mother served a severable offer to settle dated April 9, 2018. It was also very detailed (16 pages).

[25] The mother's offer to settle did not come close to the final result. In short, she sought shared or joint custody of the child, equal parenting time and no child support.

[26] The mother submitted that the father should have accepted some sections of her offer, such as the holiday schedule. The court does not agree. The holiday proposal was tied into the father accepting an equal parenting schedule. The mother included many details in other sections of her offer that were not ordered by the court.

[27] The court considered the parties' global offers to settle pursuant to subrule 18(16).

Trial Positions and Success

[28] The court next looks at the positions taken by the parties at trial.

[29] Absent a lot of the detail set out in the offers to settle, the parties' positions on the major issues were similar to their offers to settle.

[30] The father was the successful party on the issues of custody and incidents of custody. The court substantially accepted his position on these issues.

[31] The father was also the successful party on the child support issues, including the issue of the start date for support. The mother agreed to pay child support of $275 each month on an ongoing basis. However, she only agreed to pay this amount at trial – she had failed to pay any child support after the child was placed with the father in January, 2016. The mother resisted any order for support pre-dating April 1, 2018. The court ordered the mother to pay the father $2,396 for her support obligation up until the end of March, 2018.

[32] The mother did not rebut the presumption that the father is entitled to his costs for these issues.

[33] There was divided success on the access issues. The mother achieved unsupervised access, without the pre-conditions for its increase sought by the father. However, the final access order did not come anywhere close to the equal-parenting plan sought by the mother. The court is proceeding with increasing the mother's access in a gradual and cautious manner.

[34] When success on an issue is divided, pursuant to subrule 24(6) the court may apportion costs as it considers appropriate.

Factors in Determining Costs

[35] In making this decision, the court considered the factors set out in subrule 24(11), 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.

Application of Factors

[36] The case was important for the parties. It was also difficult and complex because of the volume of evidence and the issues regarding the admissibility of the evidence of the medical professionals.

[37] The father's behaviour was reasonable.

[38] The trial decision set out evidence of unreasonable behaviour by the mother (see paragraphs 266 and 267). This included breaches of court orders or the spirit of court orders, failure to provide timely financial disclosure and her failure to pay any child support.

[39] The mother is fortunate that the father is only claiming rates of $155 per hour for the time spent on the case by his lawyer. This is very reasonable.

[40] The mother alleges that the time spent on the case by father's counsel was excessive and that counsel spent inordinate amounts of time examining the mother. The court does not agree. The mother's bill of costs shows that her counsel spent 144.5 hours on the pre-trial motion and the trial. The father's bill of costs shows that his counsel spent 154.4 hours for these steps – within the same range. The court considered that the father had to spend additional time successfully challenging the admissibility of the medical evidence presented by the mother.

[41] The father seeks payment of 80% of his costs for the pre-trial motion and 67% of his costs for the trial.

[42] The court accepts the mother's submission that a portion of the December 8, 2017 appearance was spent on trial management issues.

[43] The father properly restricted his costs claim to the pre-trial motion and trial steps.

[44] The expenses claimed by the father are reasonable.

Proportionality of Costs

[45] The court considered both Boucher et al. v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (Ont. C.A.), and Delellis v. Delellis and Delellis, [2005] O.J. No. 4345. 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.

[46] The father was awarded over $68,000 in costs for the trial that took place before Justice Roselyn Zisman in 2015. The parties were well aware going into this trial about the costs consequences if they were unsuccessful.

Mother's Ability to Pay

[47] The court considered the mother's ability to pay the costs order. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.). A party's limited financial circumstances will not be used as a shield against any liability for costs but will be taken into account regarding the quantum of costs. See: Snih v. Snih pars. 7-13. In the case of Takis v. Takis, [2003] O.J. No. 4059 (S.C.J.), the court found that the respondent's lack of income and assets, though a relevant consideration, could not be used as a shield in unnecessary litigation.

[48] The court adopts the comments of Justice Heather McGee in Mohr v. Sweeney, 2016 ONSC 3338, 2016, where she writes, "those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings."

[49] Justice Robert Del Frate of the Ontario Superior Court of Justice awarded costs of $8,754 against the mother on April 5, 2016, when she unsuccessfully tried to stay Justice Zisman's trial decision. The court has considered his comments in paragraph 6 of his costs decision where he writes about the mother:

….. What she fails to understand is that impecuniosity does not grant a litigant the right to unrestricted access to the courts. Such access has to be exercised responsibly and reasonably.

[50] The mother earns annual income of about $32,000 and has no assets. However, as noted in the trial decision, she has been able to access significant monies to fund extensive litigation. In this proceeding she was able to raise over $30,000 from friends and internet fundraising campaigns to pay for lawyers and experts. During this time she paid no child support.

Costs Award

[51] Taking into account these considerations, the mother shall pay the father's costs fixed in the amount of $15,000, inclusive of fees, disbursements and HST.

[52] The court will permit the mother to pay the costs at the rate of $250 each month, starting on July 1, 2018. However, if she is more than 30 days late in making any child support or costs payment, the entire amount of costs then owing shall immediately become due and payable.

Designation of Costs as Support

[53] The father asked that the costs be payable as support and enforced by the Family Responsibility Office. He points to the fact that the mother filed for bankruptcy almost immediately after receiving Justice Zisman's costs decision for the 2015 trial and none of it was collected.

[54] In Sordi v. Sordi, 2011 ONCA 665, the court wrote at paragraph 25:

25 The court has considerable discretion over how to deal with a request that legal costs be designated as support for the purposes of enforcement by FRO, a designation that is complicated when, as here, in addition to support, a number of other issues are litigated. In this case the trial judge approached the problem one way - he did his best to identify the portion of the trial consumed by the support dispute, assigned a cost amount to it and ordered that amount designated as support. He may have chosen not to attempt to perform what is admittedly a somewhat arbitrary dissection of costs. But he cannot be faulted for doing what he did. The statute and case law support an approach of this nature: see Hatcher v. Hatcher, [2009] O.J. No. 3342, [2009] W.D.F.L. 5320, at paras. 30-36 (Ont. S.C.)

[55] While the court has sympathy for the father it will only make the order sought by him for the costs that were actually attributable to the support issues. The court estimates that roughly 15% of the time was spent on this issue. However, the father was completely successful on this issue, so the court finds that 20% of the overall costs award is attributable to support.

Final Order

[56] A final order shall go on the following terms:

a) The mother shall pay the father costs of $15,000, inclusive of fees, disbursements and HST.

b) The mother may pay the costs at the rate of $250 each month, starting on July 1, 2018. However, if she is more than 30 days late in making any child support or costs payment, the entire amount of costs then owing shall immediately become due and payable.

c) The sum of $3,000 for the costs order shall be payable as support and shall be enforced by the Family Responsibility Office as an incident of support.

Released: May 30, 2018

Justice S.B. Sherr