Court File and Parties
Ontario Court of Justice
Date: July 13, 2018
Court File No.: D11689/17
Between:
Victoria Palod Applicant
— AND —
Daniel MacDonald Respondent
Before: Justice Roselyn Zisman
In Chambers
Reasons for Judgment released on July 13, 2018
Counsel:
- Aristoteli Lebedev, counsel for the applicant
- Murray Lightman, counsel for the respondent
Reasons for Judgment
Zisman, J.:
Introduction
[1] The Applicant seeks costs against Respondent that arise from a temporary motion and cross motion with respect to the parenting arrangements for their daughter and a claim for child support.
[2] The Applicant seeks costs of $9,288.40 on a partial indemnity basis to the date of her offer to settle and on a full indemnity basis for costs incurred after that date and that the cost order be treated as support and collected by Family Responsibility Office.
Position of the Parties
[3] It is the Applicant's position that she was successful on the parenting issues except for a minor variance regarding the access schedule. The order made substantially matched her offer to settle and with respect to the location for the access exchanges the order that was made was more favourable than the terms of the offer to settle.
[4] Although the Applicant concedes that she was not successful on the issue of retroactive child support, it is submitted that the Applicant's offer to settle was severable and the Respondent could have accepted all of the terms of the offer to settle with respect to the parenting issues and then the only issue for the motions would have been the issue of retroactive child support.
[5] The Respondent concedes that the Applicant was largely successful with respect to the parenting issues but submits that the offer to settle was not as favourable or more favourable than the offer as the Applicant was not successful on the issue of retroactive child support. It is submitted that although the Respondent was unsuccessful on the motion he acted reasonably. It is also submitted that the time spent by Applicant's counsel was excessive. The Respondent proposes that an appropriate award based on a partial indemnity basis and divided success would be $6,000 and agrees that costs be treated as support and collected by Family Responsibility Office.
The Law
[6] Costs considerations are governed by s. 131 of the Courts of Justice Act and subrule 24 of the Family Law Rules ("FLR").
[7] Section 131(1) of the Ontario Courts of Justice Act, R.S.O. 1990, c. C-43, provides as follows:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[8] Accordingly, section 131 of the Courts of Justice Act provides the court with broad discretion in awarding costs which has been circumscribed by the FLR. FLR 24 sets out the parameters within which a court's broad discretion as to entitlement and quantum should be exercised.
[9] FLR 24(1) sets out the basic assumption that a successful party is entitled to costs.
[10] FLR 24 provides guidance on costs in a family law context. The relevant sections with respect to the issues in this case are as follows:
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party's own costs or ordered to pay all or part of the unsuccessful party's costs.
(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.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(7) If a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step, the court shall award costs against the party unless the court orders otherwise in the interests of justice.
(8) 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.
(10) Promptly after dealing with a step in the case, the court shall,
(a) make a decision on costs in relation to that step; or
(b) reserve the decision on costs for determination at a later stage of the case.
(10.1) In making a decision on costs in relation to a step in a case, the court shall decide in a summary manner whether anyone is entitled to costs and, if so, determine who entitled and set the amount of the costs.[1]
[11] FLR 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.
[12] As indicated the consideration of success is the starting point in determining costs. Pursuant to FLR 24(1) there is a presumption that a successful party is entitled.
[13] In considering if costs should be awarded, the Court is directed to consider if a party acted reasonably pursuant to subsection (b) of FLR 24(11).
[14] In considering if a party acted reasonably, the court is also directed pursuant to FLR 24(5) to consider if a party made an offer to settle and the reasonableness of any offer to settle.
[15] FLR 18(14) and (16) address the cost consequences of offers to settle and provides 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.
(16) When the court exercises its discretion over costs, it may take into account any written Offer to Settle, the date it was made and its terms, even if subrule (14) does not apply.
[16] In Serra v. Serra at paragraph 8, the Ontario Court of Appeal confirmed that the FLR 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 behaviour by litigants.
[17] FLR 2(2) adds a fourth fundamental purpose for costs to ensure that the primary objectives of the FLRs is met and that cases are dealt with justly. This provision needs to be read in conjunction with FLR 24.
[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 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.
Analysis
Offer to Settle and Reasonableness
[19] 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. The position each party took at trial should also be examined.
[20] FLR 24(11)(b) relates to the reasonableness of each party's behavior in a case.
[21] In considering if a party acted reasonably, FLR 24(5) directs the court to consider if a party made an offer to settle and the reasonableness of any offer to settle.
[22] FLR 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.
[23] 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 FLR 2(2) is met that is, to deal with cases justly. This includes taking appropriate steps to save time and expenses, per FLR 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. Severable offers to settle or separate offers to settle specific issues are particularly helpful in attempt to settle cases. 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.
[24] The consequences of an offer to settle are set out in FLR 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.
[25] In this case both counsel made Offers to Settle. The Applicant's Offer to Settle was served on May 7th and was open for acceptance on a no cost basis until May 15th and thereafter on a partial indemnity basis or as fixed by the court. The Offer to Settle was severable and therefore the parenting issues were open for acceptance by the Respondent and he could have left the issue of retroactive child support or any of the parenting provisions to be determined by the court.
[26] The Respondent's Offer to Settle was served on April 30th and only provided the Applicant with 2 days to accept the Offer to Settle on a no cost basis and if accepted thereafter but before the motion was heard then costs were payable on a partial indemnity basis and then on a full indemnity basis. The Offer to Settle was not severable. I find that to only give an opposing party 2 days to consider an Offer to Settle before there are costs consequences is not reasonable. Further, it is not reasonable when there are very distinct issues not be provide severable Offer to Settle as litigants have an obligation to make reasonable attempts to settle litigation.
[27] The motions was heard on May 17, 2018 and therefore the Applicant's Offer to Settle was served within the timelines required by the FLR. The Offer to Settle was as favourable or more favourable than the order made, except for the issue of retroactive child support. I agree with the observations of Justice Chappel in Wilson v. Kovalev:
With respect to the requirement that the order obtained be as or more favourable than the Offer to Settle, the court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order
[28] I have also considered that the issue of retroactive child support was severable and that the primary issue on the motions were the parenting issues. I find that it is appropriate that the Applicant be entitled to seek costs on a full indemnity basis as of the date the Offer to Settle was served.
Consideration of Relevant Factors
[29] In determining the amount of costs, I have considered the legal principles and the following factors as set out in FLR 24(11) as follows:
a) the importance, complexity or difficulty of the issues:
The issues were extremely important to the parties. The issue of where the child would primarily reside and therefore what school she would attend was of utmost concern and highly contested. The motion was made complex due to the issue of the admissibility of the Respondent's audiotapes of the child and of the child's step-grandmother.
b) the reasonableness or unreasonableness of each party's behavior in the case:
[30] FLR 24(5), 24(8) and 24(11)(b) all require the court to consider the reasonableness of each party's behaviour.
[31] The Applicant acted reasonably throughout. Both parties spent almost the entire day at the first case conference on January 12, 2018 negotiating a temporary without prejudice agreement which created a regular schedule for the child. Although not perfect, the Applicant was prepared to abide by the agreement. However, at the next case conference on April 13, 2018, the Respondent took the position that he wished to proceed with a motion despite the fact that the parties had agreed to the appointment of the Office of the Children's Lawyer. The Applicant then had no choice but to defend the Respondent's motion that in addition to a claim of joint custody and primary residence sought an order of child support on a set off basis.
[32] It is submitted that the Respondent's behaviour and his position on the motion were reasonable. Although the Respondent was entitled to proceed with his motion for joint custody and primary residence of the child, it should have been obvious given the highly conflictual relationship between the parties that an order for joint custody was highly unlikely. In retrospect it would have been more prudent to wait for the outcome of the investigation of the Office of the Children's Lawyer, nevertheless I do not find that the Respondent's position on the motion was unreasonable but there is a consequence to being unsuccessful on a motion.
[33] The court is also entitled to examine the Respondent's behaviour from the time the issues arose. In this case, prior to the litigation the Respondent's text messages and attitude towards the Applicant were extremely inappropriate. As indicated in the reasons for decision his text messages were among the most vile seen by this court and his refusal to agree to any schedule proposed by the Applicant forced her to commence this litigation. I find that his behaviour prior to the litigation was unreasonable.
[34] Counsel for the Respondent also points out that he was successful on the issue of the admission of the most of the audiotapes.
[35] In my ruling on the motion I held that the secret recordings the Respondent made of his discussions with the step grandmother were not admissible on a public policy basis and that courts should discourage family law litigants from secretly taping conversations. I further found those recordings not be probative of the issues before the court. However, despite many concerns about the alleged "spontaneous" and "unedited" recordings of the child, I ruled that these were admissible. As indicated in the reasons, the court was left with the dilemma of discouraging such secret recordings and the fact that the recordings were probative of corroborating the Applicant's position that the Respondent was manipulating the child and that he was not child focused. The court was highly critical of the Respondent's behaviour and his parenting as a result of listening to the audiotapes.
[36] If not clear enough in the reasons, then I reiterate the Respondent's behaviour in secretly taping the step grandmother and the child was not reasonable and should be sanctioned.
c) the lawyer's rates:
[37] Applicant's counsel was called to the bar in 2006 and his hourly rate is only $275. The hourly rate for his legal assistant is $75. Based on counsel's years of experience his hourly rate is somewhat less than is commonly seen by the court. Therefore the rates are reasonable.
d) the time properly spent:
[38] Based on the Bill of Cost submitted, Applicant's counsel spent a total of 32.2 hours and his assistant spent 15.5 hours. All of the time outlined in the Bill of Costs relates only to the preparation and for the court attendance to argue the motions.
[39] It is submitted by Respondent's counsel that the time spent was excessive. It is submitted that Applicant's counsel spent 11.5 hours researching the law and preparing a factum and a further 2 hours by his legal assistant is assembling the book of authorities and the factum. It is submitted that Applicant's counsel did not refer to factum in oral argument. By contrast, Respondent's counsel submits that he spent only 20.6 hours with respect to the motions. The Bill of Costs submitted by the Respondent's counsel indicates that based on his hourly rate of $450[2] on a full recovery basis and an hourly rate of $350 on a partial recovery basis, that his costs for the motion are respectively $10,475.10 and $8,147.30.
[40] Although the Applicant's counsel did not refer to his factum, at the outset of the motion counsel were advised that I had read all of the affidavits and the Applicant's factum. In preparing for hearing the motion and in the preparation of the reasons for decision, the court relied on the factum and the book of authorities. I find that the Applicant's factum was useful as was the book of authorities prepared for the court. I find that it is of no consequence that direct reference was not made to the factum during the oral argument.
[41] Respondent's counsel also submits that the Applicant's affidavit was filled with factual claims which are disputed and goes to great lengths about matters that occurred early in the child's life and that the Respondent was put to unnecessary expense in responding to these allegations. As both parties relied on their past parenting of the child to support their respective positions, I do not find that the affidavits filed on behalf of the Applicant were unnecessarily lengthy or contained irrelevant information.
[42] I do not find that the time spent by the Applicant's counsel was excessive given the issues involved and in particular the number of affidavits filed by the Respondent and the fact that counsel was required to listen to the tapes and research the law with respect to the admissibility of secretly recorded audiotapes.
e) the expenses properly paid and payable:
The usual disbursements are claimed for a total cost of $468.18.
f) any other relevant matter:
[43] Applicant's counsel submits that any cost order should be enforced as a support order by Family Responsibility Office. Respondent's counsel agrees as this will permit the cost order to be collected in regular installments until it is paid.
[44] In this case, the support issue involved a minimum of time, the Applicant did not seek to change the temporary without prejudice child support order as the Respondent has not produced proof of his 2017 income. The issue of retroactive child support was deferred for the trial due to the conflict in the evidence and the lack of sufficient evidence to deal with the issue on a temporary motion.
[45] The primary focus of the motions was with respect to parenting issues.
[46] Most importantly, the purpose of a cost order should be to sanction inappropriate behaviour and to change that behaviour. I find that in this case, given the Respondent's behaviour that permitting him to pay a cost order in installments will not be a sufficient sanction to indicate that his behaviour is not acceptable. The Respondent has the financial ability to pay a lump sum immediately and the Applicant should not have to wait months or even years to collect costs.
[47] I agree as submitted by Respondent's counsel that any cost order should be fair and reasonable for the unsuccessful party to pay the successful party and not just a mechanical exercise of adding up a lawyer's docket.
[48] I have also considered that based on the Respondent's counsel's Bill of Costs, the Respondent must have anticipated that if he was unsuccessful the Applicant's counsel's fees would be in the same range as his own namely, between about $8,147 to $10,475.
[49] Even if the Applicant's offer to settle should not be considered as an offer to settle pursuant to FLR 18(14) due to the inclusion of an order for retroactive child support, I would have ordered close to full recovery due to the Respondent's unreasonable behaviour in this case.
Conclusion
[50] In considering all of these factors, I find that a fair and reasonable cost order and one that is proportionate to the issues involved in all of the circumstances is the amount requested by counsel namely, $9,288.40.
Order
The Respondent shall pay to the Applicant costs fixed at $9,288.40 inclusive of disbursements and applicable taxes.
The Respondent shall pay this amount in full by August 15, 2018.
Released: July 13, 2018
Signed: Justice Roselyn Zisman
Footnotes
[1] Motion and cost submissions were made prior to amendments to FLR effective July 1, 2018
[2] Counsel was called to the bar in 1977 and has 40 years of experience
