Court File and Parties

Date: 2019-10-18

Court File No.: Toronto D21006/18

Ontario Court of Justice

Between:

Jeffrey O'Brien Applicant (Responding Party)

— And —

Bia Chuluunbaatar Respondent (Moving Party)

Before: Justice Curtis

Written submissions regarding Costs

Reasons for Decision released on 18 October 2019

Counsel:

• Jane Mukongolo . . . . . . . . . for the Respondent Mother (the Moving Party)
• Tami Waters . . . . . . . . . . . for the Applicant Father (the Responding Party)

Index

1. Over-view
2. The Parties' Positions re Costs
3. Background
4. Litigation History
5. The Parent's Claims and their Positions at Trial
   • (a) The Mother's Claims and her Position at Trial
   • (b) The Father's Claims and his Position at Trial
6. The Issues
7. Orders Made at Trial
8. Availability of Costs Where No Claim Made for Costs
9. The Costs Analysis
   • (a) The Law of Costs
     • i. Entitlement
     • ii. The Evolution of Costs as an Instrument of Social Policy
   • (b) Success
   • (c) Behaviour of the Parties
   • (d) Costs and Ability to Pay
   • (e) Offers to Settle
   • (f) Quantum of Costs
10. Order

Over-view

1. This is the decision about costs in the three day trial regarding the mother's motion to change an earlier order so that she may relocate to Mongolia with the child, who is five years old.

The Parties' Positions re Costs

2. The mother claimed costs of the trial on a full recovery basis of $54,575.20.

3. The father claimed that no costs should be paid by either party, or in the alternative, that costs should be fixed at an amount within the reach of either party (no amount was proposed).

Background

4. The mother, Bia Chuluunbaatar (the moving party in this case), was born on 13 December 1975 and is 43 years old. The father, Jeffrey O'Brien (the responding party), was born on 8 April 1976 and is 43 years old.

5. The parent's relationship began in 2010. They lived together, but were not married, from 1 January 2013 for about 21 months and separated on 24 September 2014.

6. The parents have one child, Caitlyn Az-Ujiin O'Brien, born 12 December 2013, now five years old. The child was 10 months old at separation.

Litigation History

7. The original application in this case was started by the father, in 2014 in Brampton, Ontario, the day after the separation. That case was resolved with a consent order made by W. Sullivan, J. on 9 August 2016 for (among other things) sole custody to the mother, liberal and generous access to the father (including alternating weekends), child support of $876 per month on income of $99,500 from 1 March 2016, and annual financial disclosure. The order of 9 August 2016 did not address the issue of relocation. The trial resulted from the mother's motion to change the original consent order made 9 August 2016.

The Parents' Claims and their Positions at Trial

8. The parents made different claims at the start of the court case than those made at trial. Both parents set out in detail their claims at trial by filing draft orders at the start of the trial and again during closing arguments. Also, both parents made amendments to their claims during the trial.

The Mother's Claims and her Position at Trial

9. The mother started this case on 6 July 2018, as a Motion to Change the order of 9 August 2016. She asked the court to allow her to relocate with the child to Mongolia, and to adjust the father's access accordingly. At trial the mother claimed (among other things) sole custody, that she be permitted to relocate with the child to Mongolia, specified access to the father, child support of $1,027 per month on father's 2018 income of $114,876 from 1 January 2018, and that the father's claims for joint custody and other changes to access be dismissed. She also made specific claims at trial regarding access and child support if she were not permitted to relocate with the child to Mongolia.

The Father's Claims and his Position at Trial

10. The father filed a Response to the Motion to Change on 15 August 2018, and an amended Response to the Motion to Change on 19 March 2019, also asking to change the original consent order, claiming (among other things):

(a) joint custody, an equal parenting schedule for 50/50 time sharing, an order dismissing the mother's claim to move to Mongolia with the child; and,

(b) in the alternative, if the mother is permitted to move to Mongolia with the child, access to be changed to provide equal time with each parent, and, child support to be reduced to account for the cost of exercising access.

At trial the father claimed (among other things) joint custody, child support of $1,027 per month on his 2018 income of $114,876 from 1 June 2019, annual financial disclosure, and dismissing the mother's claim to relocate with the child to Mongolia. If she is not permitted to move to Mongolia with the child he claimed (among other things) a relocation restriction in the Greater Toronto Area, both parents require the consent of the other for travel with the child, and increasing his access to a specific proposed schedule. If the mother is permitted to relocate with the child to Mongolia, the father claimed specified access to him and specific claims regarding travel arrangements and costs of travel, with the mother paying all of the travel costs.

The Issues

11. At the trial, these were the issues in dispute between the parents:

(a) Custody;

(b) Relocation of the child to Mongolia;

(c) Access;

(d) Child support (table amount and special expenses); and,

(e) Whether the parents may travel with the child without the other parent's permission.

12. At trial the issues for the court to determine were these:

(a) Has there been a material change in circumstances since the original order that affects or is likely to affect the best interests of the child?

(b) Is an order for joint custody now in the child's best interests?

(c) Is it in the best interests of the child to permit the mother to move to Mongolia with the child?

(d) If the mother is permitted to move with the child, what are the access arrangements that are in the child's best interests?

(e) Has there been a change in circumstance that warrants adjusting child support, and if so, from what date?

Orders Made at Trial

14. These are the orders (among other things) from the trial decision, released 5 July 2019:

(a) the order of W. Sullivan, J. made 9 August 2016 is changed;

(b) the mother may relocate with the child to Mongolia;

(c) the father shall have specified access of 10 weeks in the summer (starting in summer 2021, with four weeks in 2019, and six weeks in 2020) in Canada and three to four weeks during the child's December school break in Canada;

(d) the father shall pay the table amount of child support (set out below) and the mother shall pay for the airfare costs of the scheduled access in this order (i.e., the December visit and the summer visit);

(e) the parent who is next getting the child to be with them shall be the parent who does the travelling and pick-up of the child;

(f) the child will not travel unaccompanied (or as an unaccompanied minor) on any trip which requires changing flights;

(g) the father can have access to the child in Mongolia any time during the school year during the child's school breaks, for up to two weeks, on one month's notice, in Mongolia until the child turns eight years old, and after that, at another location of the father's choice;

(h) the father can contact the child electronically two times per week, at times to be agreed by the parents;

(i) the father may call the child once per day. The child may call the father whenever she wishes;

(j) both parents may travel with the child outside their home countries without the consent of the other parent;

(k) the father's claim for joint custody is dismissed;

(l) the father shall pay table child support to the mother, for one child, as follows:

• i. From 1 March 2016, $862 per month on income of $97,805;
• ii. From 1 January 2017, $838 per month on income of $94,802;
• iii. From 1 December 2017, $869 per month on income of $94,802;
• iv. From 1 January 2018 $1,027 per month on income of $114,876.

(m) annual financial disclosure;

(n) each parent shall pay for the costs of s. 7 special and extra-ordinary expenses, incurred by them for the child in their home region, without contribution from the other parent; and,

(o) the other claims made by the parents not otherwise specifically addressed are dismissed.

Availability of Costs Where No Claim Made for Costs

13. Neither parent claimed costs in the originating documents on the motion to change. Neither parent claimed costs in the draft orders sought (filed by each at the beginning of the trial and at the end of the trial). Both parents were represented by lawyers during this case and at trial.

14. To her credit, the mother volunteered this information in her written submissions regarding costs. To his credit, the father made no mention of this issue in his written submissions regarding costs and did not rely on this omission as a defense to the mother's claim for costs of the trial (neither regarding entitlement nor the amount of costs). While relevant to the question of whether the mother may now claim costs of the trial, the fact that the father does not rely on this lapse in the originating pleadings is not an answer on this issue.

15. Both parents made Offers to Settle the trial, and both referred to and claimed costs in their Offers to Settle.

16. Under the Family Law Rules, rule 2(2), the court is required to deal with cases justly. This is the primary objective of the Family Law Rules. Parties and their lawyers are required to deal with their cases in ways which promote the primary objective of the Rules (Rule 2(4)). Costs are an important component in any decisions made by parties about continuing to trial in a court case.

17. The purposes of requiring a party to make claims in writing are these:

(a) to put the other side on notice of the case they are to meet; and,

(b) to frame the issues for the court to determine at the hearing.

18. However, the failure to properly plead claims is not always fatal to a party's ability to ask the court to grant relief later in the case or at the trial.

19. The issue of notice is central to this analysis. The father is entitled to notice of the claim for costs made by the mother. He did not take the position that he had no notice of her claim for costs. Again, this fact is not an answer on this issue.

20. The mother served an Offer to Settle the trial and conducted herself in a manner that made it clear that she was seeking costs. The father did not suggest otherwise, or that he was somehow misled on this issue.

21. The court should take into account whether there would be any unfairness or disadvantage to the other party to allow the mother to claim costs of the trial in this way (i.e., absent a claim in the originating documents).

22. Despite the fact a claim for costs was not pleaded, the trial nevertheless proceeded throughout with both parties well aware that the other parent would be seeking costs. There would be no unfairness or disadvantage to either parent for the court to now deal with claims for costs. Indeed, neither party suggested that there would be.

23. The father had notice that the mother was claiming costs of the trial. The lack of a specific pleading did not catch the father by surprise. Under the circumstances, the mother's claim for costs may proceed.

The Costs Analysis

The Law of Costs

Entitlement

24. The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, s. 131(1), which sets out three specific principles:

a) the costs of a case are in the discretion of the court;

b) the court may determine by whom costs shall be paid; and,

c) the court may determine to what extent the costs shall be paid.

25. Modern costs rules are designed to foster four fundamental purposes:

(a) to indemnify successful litigants for the cost of litigation;

(b) to encourage settlement;

(c) to discourage and sanction inappropriate behaviour by litigants; and,

(d) to ensure that cases are dealt with justly.

26. In addressing the issue of costs, the court must ultimately be guided by the primary objective of the Family Law Rules as set out in Rule 2(2), which is to enable the court to deal with cases justly.

27. Rule 2(2) needs to be read in conjunction with Rule 24. Rule 2(4) of the rules states that counsel have a positive obligation to help the court to promote the primary objective under the Family Law Rules. Rules 2(3) (a) and (b) set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense.

28. Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality.

The Evolution of Costs as an Instrument of Social Policy

29. The traditional purpose of an award of costs was to indemnify the successful party in respect of the expenses sustained. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called "outdated" since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps. This change in the common law was an incremental one when viewed in the larger context of the trend towards awarding costs to encourage or deter certain types of conduct, and not merely to indemnify the successful litigant.

30. The traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser, rather than leaving each party's expenses where they fall, they act as a disincentive to those who might be tempted to harass others with meritless claims. In addition, because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs.

31. Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also 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.

Success

32. The starting point in any costs analysis is the presumption that a successful party is entitled to costs, in Rule 24(1).

33. Success must be measured not only against the parties' offers to settle, but also against the claims made by each.

34. An award of costs, however, is subject to the factors listed in rule 24(11), the directions set out under rule 24(4) (unreasonable conduct), rule 24(8) (bad faith) and rule 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party.

35. The mother was the successful party at the trial. The father did not dispute this. She is presumptively entitled to costs.

Behaviour of the Parties

36. One of the purposes of costs is to change behaviour.

37. The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2.

38. Family law litigants are responsible for and accountable for the positions they take in the litigation.

39. The decision respecting liability is ultimately a discretionary one that must be informed by the overall conduct of the parties and all of the circumstances and dynamics of the case. One of the most important functions of costs is to ensure that litigants conduct themselves in a manner that upholds the integrity of our justice system as a whole. A careful consideration of the conduct of the parties is therefore a key component to the costs analysis. The court has an obligation to ensure that litigation is not utilized as a tool to harass parties, and that the resources of the justice system are not unduly drained by unmeritorious claims.

40. Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly, for the purposes of this case, oblivious to the mounting costs of the litigation.

41. Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.

42. Rule 24 (5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in determining quantum, Rule 24 (12)). It reads as follows:

DECISION ON REASONABLENESS

(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.

43. A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules. The court need not find that bad faith or other special circumstances exist to make a costs award approaching substantial or full recovery.

44. When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation.

45. The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.

46. It must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered with the requirement that the parties take a clear-headed look at their case before insisting on their day in court. The court must sanction this behaviour clearly, or it will invite more of this behaviour.

47. The father's "behaviour in relation to the issues from the time they arose" was at times unreasonable. Here are some examples:

a) Father's claim for joint custody: The father's claim for joint custody was brought in response to the mother's claim to relocate with the child. He had made no claim for joint custody before this. He claimed joint custody whether the child was permitted to move to Mongolia or not. There was no evidence that he would have sought joint custody had the mother not sought to move with the child. The claim for joint custody appeared to be a knee-jerk reaction to an unpopular decision by the other parent. There was an existing consent order for sole custody to the mother, and there was no evidence at trial of a material change in circumstances to support a change in custody. This was not a reasonable position for the father to take, and it was pursued at the trial and in his Offer to Settle;

b) The father reacted to the news that the mother planned to relocate with the child to Mongolia by over-holding the child and making threats; and,

c) The father's claims regarding child support: The father acknowledged that he would seek to reduce child support below the table amount of support if the custody arrangement was changed. This request made the mother quite anxious. If the child support had been reduced as a result of time-sharing, the mother would be unlikely to be able to afford the rent in the current area they both reside, forcing her to move away from there, and away from the close proximity the child currently has to both parent's homes.

48. Mobility cases are challenging for everyone involved. By their very nature, an approved move will usually compromise a parent's relationship with his or her child. For this reason such cases are difficult to resolve and often need to be decided by the court. It is understandable for parents to contest such requests.

49. It was not unreasonable for the father to oppose the mother's claim to relocate with the child to Mongolia, and no such finding is made.

Costs and Ability to Pay

50. Success is given presumptive pre-eminence in Rule 24. While Rule 24(11)(f) does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success.

51. Ability to pay may be relevant to the issue of the quantum or scale of costs, but not to another party's entitlement to costs.

52. Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(11).

53. The (financial) means of the unsuccessful party may not be used to shield him from liability for costs, particularly when he has acted unreasonably.

54. A party's limited financial means will also be accorded less weight in quantifying costs if the court finds that the party acted unreasonably.

55. The father earned $114,876 in 2018. He did not claim an inability to pay costs. Rather he claimed that a costs order would be a financial hardship for him.

Offers to Settle

56. Offers to settle are a significant part of the landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.

57. Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (Rule 2(2)). This includes taking appropriate steps to save time and expense (Rule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute.

58. Both parents made Offers to Settle the trial.

59. The father served an Offer to Settle on 23 April 2019. The mother served an Offer on 6 May 2019. The trial started on 7 May 2019.

60. To attract the automatic costs consequences of rule 18(14), an Offer to Settle a trial must be served at least seven days before the trial (rule 18(14) 2). An Offer that does not meet the criteria of rule 18(14) can still be considered under rule 18(16).

61. Both Offers to Settle included clauses relating to the possible outcomes (that is, if the child is permitted to relocate to Mongolia, and if she is not). The father's Offer provided for joint custody no matter what the outcome was on the relocation claim. The mother's Offer provided for sole custody to her no matter what the outcome was on the relocation claim. Both Offers had similar access proposals if the child were to be permitted to relocate. Both Offers had similar child support proposals (although differing on the start date for an increase in support).

62. Regarding the relocation outcome, both parents made reasonable and probably workable Offers to Settle regarding access and support. There is a significant difference in the Offers if the relocation outcome was rejected, particularly regarding custody and access.

63. The mother's offer comes closer to replicating the trial outcome, if the child is permitted to relocate. As her Offer to Settle was not served in compliance with rule 18(14), it can be considered under rule 18(16).

64. The mother is entitled to costs of the trial.

Quantum of Costs

65. Once liability for costs has been established, the court must determine the appropriate quantum of costs. These are general principles relating to the quantum issue:

a) ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay;

b) costs need to be proportional to the issues and amounts in question and the outcome of the case;

c) amounts actually incurred by the successful litigant are not determinative; and,

d) in assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

66. The court's decision on the appropriate quantum of costs must also be informed by the principle of proportionality. Timeliness, affordability and proportionality are essential components of a legal system that ensures true access to justice. In the context of the costs analysis, these factors require the court to ensure that expenses claimed make sense having regard for the importance and complexity of the issues that were litigated.

67. The over-riding principle is reasonableness. 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.

68. In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery.

69. In considering the quantum of costs, the court should also consider Rule 1(8), which provides that the court may respond to a failure to follow the Rules or abide by an order by making an order for costs, and Rule 2(2), which provides that one of the primary objectives of the Rules is to ensure that cases are dealt with justly.

70. Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome.

71. Costs awards should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties, rather than any exact measure of the actual costs to the successful litigant. It is not appropriate to simply take the number of hours spent by counsel on a particular matter and multiply those hours by a determined hourly or per diem rate.

72. Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award. These are the factors in Rule 24(12) to consider in determining the amount of costs in family law matters:

Setting Costs Amounts

(12) In setting the amount of costs, the court shall consider,

(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

(i) each party's behaviour,

(ii) the time spent by each party,

(iii) any written offers to settle, including offers that do not meet the requirements of rule 18,

(iv) any legal fees, including the number of lawyers and their rates,

(v) any expert witness fees, including the number of experts and their rates,

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter. O. Reg. 298/18, s. 14.

73. In determining the amount of costs in this matter, the court took into account these factors set out in R. 24 (12):

(a) the reasonableness and proportionality of each party's behaviour, as it relates to the importance and complexity of the issues: While the issues were important to the parents involved, the case was not complex. The mother's behaviour was reasonable, as reflected in her Offer to Settle. There was no suggestion that the mother had an improper motive in her desire to move back to Mongolia with the child. It was not unreasonable for the father to oppose the mother's claim to relocate with the child to Mongolia. However, the father's claim for joint custody and his consequent claims regarding child support were not reasonable. A finding of unreasonableness is not necessary to the making of a costs order;

(b) the reasonableness and proportionality of the time spent by each party, as it relates to the importance and complexity of the issues: The time spent by each parent's lawyer was similar, and given the issues at stake and their importance to the parents, was reasonable;

(c) the reasonableness and proportionality of any written offers to settle, including offers that do not meet the requirements of rule 18, as it relates to the importance and complexity of the issues: Both parents made Offers to Settle the trial. The mother's offer qualified for consideration under Rule 18(16) and the father's qualified for consideration under Rule 18(14). The terms of the mother's offer come closer to replicating the trial outcome (if the child was permitted to relocate);

(d) the reasonableness and proportionality of any legal fees, including the number of lawyers and their rates, as it relates to the importance and complexity of the issues: The rate claimed by the mother's lawyer was reasonable. The father made no objection on that basis. The father used the services of three lawyers at different hourly rates; and,

(e) the reasonableness and proportionality of any other expenses properly paid or payable, as it relates to the importance and complexity of the issues: The disbursements claimed by the mother were reasonable under the circumstances ($822.70). The father made no objection on that basis.

74. The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of this case. This determination is not merely an arithmetical exercise of calculating time spent by a suitable hourly rate.

75. Parents should not be penalized for asking the court to decide the difficult issue of a request to relocate with the child. This has an affect on the amount of costs the father should pay, not on the mother's eligibility for costs.

76. The mother was successful at trial, and the father should pay her costs. He was unreasonable in his claims for joint custody and the consequent affect he wanted that order to have on child support.

Order

77. The father shall pay the mother costs of the trial. A fair and reasonable costs order, and one that is proportionate to the issues involved, in all of these circumstances, is an order for costs fixed at $25,000 all in (fees plus HST and disbursements plus HST), enforceable as support.

Released: 18 October 2019

Justice Carole Curtis