Court File and Parties

Date: April 21, 2020

Court File No.: D30066/19

Ontario Court of Justice

Between:

Mary Gordon

Applicant

- and -

Paul Wilkins

Respondent

Counsel:

• Brad Berns, for the Applicant
• Acting in Person, for the Respondent

Heard: In Chambers

Before: Justice S.B. Sherr

Costs Endorsement

Part One – Introduction

[1] On February 28, 2020, the court released its decision regarding the respondent's (the father's) temporary child and spousal support obligations for the applicant (the mother) and the parties' two children. See: Gordon v. Wilkins, 2020 ONCJ 115.

[2] The parties filed written costs submissions. The mother seeks her costs of $7,067.02. The father asked the court to take his financial circumstances into consideration in making its decision. He did not suggest a figure for the costs award.

Part Two – Legal Considerations

2.1 General Principles

[3] The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867, set out that modern costs rules are designed to foster four fundamental purposes:

1. to partially indemnify successful litigants;
2. to encourage settlement;
3. to discourage and sanction inappropriate behaviour by litigants; and
4. to ensure that cases are dealt with justly under subrule 2(2) of the Family Law Rules (all references to the rules in this decision are to the Family Law Rules).

[4] 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, 2003 SCC 71, paragraph 25.

[5] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.

[6] An award of costs is subject to the factors listed in subrule 24(12), subrule 24(4) pertaining to unreasonable conduct of a successful party, subrule 24(8) pertaining to bad faith, subrule 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party. See: Berta v. Berta, 2015 ONCA 918, at paragraph 94.

2.2 Success

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

2.3 Offers to Settle

[8] Subrule 18(14) sets out the consequences of a party's failure to accept an offer to settle that is as good as or better than the hearing result of the person making the offer. It 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.

[9] 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).

[10] 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. See: Wilson v. Kovalev, 2016 ONSC 163.

[11] Close is not good enough to attract the costs consequences of 18(14). The offer must be as good or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in subrule 18(14), it may be considered under subrule 18(16). See: Gurley v. Gurley, 2013 ONCJ 482.

2.4 Bad Faith and Unreasonable Behaviour

[12] The mother is alleging bad faith against the father.

[13] Subrule 24(8) states that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.

[14] Subrule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See: Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Del Sordo, 2015 CarswellOnt 14971 (Ont. SCJ).

[15] There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. See: S.(C.) v. S. (M.), 38 R.F.L. (6th) 315 (Ont. SCJ).

[16] Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith. See: DePace v. Michienzi, 12 R.F.L. (5th) 341 (Ont. SCJ). In Stevens v. Stevens, 2012 ONSC 688, Justice John Harper commented as follows:

[22] I also found in my decision that Joel was not credible or reliable with respect to what his income was. I agree with the comments of J.W. Quinn J. in Hatcher v. Hatcher, [2009] O.J. No. 148 at paragraph 77:

"The husband's catch-me-if-you-can approach to his income is to be condemned. This conduct alone warrants full-recovery costs. Deliberate non-disclosure is not merely unreasonable conduct, it is an example of bad faith."

[23] One of the most significant contributors to lengthy and costly litigation is untimely and inaccurate disclosure. All too often, one party makes every effort to thrust economic havoc on the other when this game of litigation hide and seek forms a part of their litigation strategy. This cannot be permitted by the court. I find that Joel participated in such conduct and drove up the cost of this litigation in reckless disregard to the ultimate consequences.

[17] Even if a party's behaviour does not rise to the level of bad faith, if the party has acted unreasonably this will be an important costs consideration. Subrule 24(5) provides some criteria for determining the reasonableness of a party's behaviour in a case. 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.

2.5 Other Factors Affecting the Amount of Support

[18] Subrule 24(12) reads as follows:

24(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.

[19] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel, 67 O.R. (3d) 181 (Ont. C.A.). However, 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.

[20] Those who can least afford to litigate should be most motivated to seriously pursue settlement and avoid unnecessary proceedings. See: Mohr v. Sweeney, 2016 ONSC 3338; Balsmeier v. Balsmeier, 2016 ONSC 3485.

[21] Family law litigants are responsible for and accountable for the positions they take in the litigation. See: Heuss v. Surkos, 2004 ONCJ 141.

[22] Even where the "full recovery" provisions of the rules are triggered – either by an offer which meets the subrule 18(14) requirements, or by a finding of bad faith – a quantification of costs still requires an overall sense of reasonableness and fairness. See: Goryn v. Neisner, 2015 ONCJ 318. The rules do not require the court to allow the successful party to demand a blank cheque for their costs. See: Slongo v. Slongo, 2015 ONSC 3327 (SCJ). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. See: Jackson v. Mayerle, 2016 ONSC 1556.

Part Three – Offers to Settle

[23] The mother made an offer to settle dated January 24, 2020. It was served on the father on January 28, 2020. The father did not make an offer to settle. At the hearing he took the position that he should pay no temporary child or spousal support.

[24] The mother's offer to settle included proposals to settle both the temporary parenting and support issues. The father accepted the mother's proposed parenting terms at the outset of the hearing of the motion and they were incorporated into the court order. The mother is not seeking costs for her time spent on the parenting issues.

[25] The mother offered to impute the father's annual income at $100,000 for the purpose of the support calculations. She offered that starting on October 1, 2019, the father would pay total temporary child support of $1,650 each month for the parties' two children[1] and temporary spousal support of $310 each month.

[26] The court imputed the father's annual income at $150,000 for the period from October 1, 2019 until March 31, 2020 and imputed it at $100,000 starting on April 1, 2020.

[27] The court made a temporary order that the father pay total child support of $2,101 and spousal support of $1,800 each month from October 1, 2019 until March 31, 2020. The total child support was reduced to $1,499 each month and the spousal support was reduced to $300 each month starting on April 1, 2020.

[28] The court finds that the mother's offer to settle was more favourable to the father than the motion result. The court finds that the costs consequences set out in subrule 18(14) apply and that there is no basis to order otherwise.

[29] Approximately 25% of the time claimed by the mother in her bill of costs took place prior to the date of the service of her offer to settle – 75% of the time after it was served on the father.

Part Four – Bad Faith

[30] The court finds that the father has acted in bad faith. In its reasons for decision the court found that the father:

a) Avoided providing the mother with meaningful financial disclosure in a deliberate attempt to avoid his support obligations.

b) Unduly delayed this process.

c) Stopped paying any support in May 2019 despite having the ability to do so.

d) Gave none of the $60,000 proceeds he claimed that he received from the sale of his home in September 2019 to the mother for support.

e) Paid none of the $8,000 he had been ordered to pay to the mother (as a term of the adjournment of the motion) for temporary support.

f) Clearly earned far more than the $70,000 annual income he claimed to have earned in 2016 and 2017. A review of the 2016 tax reassessment for the father's corporation showed revenue of $2,187,229, salaries paid of $1,037,915 and net (after-tax) income of $340,324. The father's personal 2016 notice of reassessment showed income of $210,000. The father provided no explanation or meaningful documentary evidence about how these figures were arrived at.

[31] The father did not address these findings in his costs submissions. Instead, he essentially tried to reargue the temporary support motion. He also explained again why he felt that the Law Society of Ontario had been wrong in suspending his licence and in refusing to grant his subsequent request for a stay of proceedings.[2]

[32] The full recovery costs consequences set out in subrule 24(8) will be applied. The father did not provide the court with any basis to order otherwise.

Part Five – Analysis of Other Factors

[33] This motion was important to the parties. It was made more complex and difficult due to the father's incomplete and late financial disclosure. This increased the time that counsel for the mother had to spend on the motion. Such behaviour dictates that the court be generous in reviewing the time claimed by the mother. To do otherwise, only encourages the obstructive party. These "chase" files are time-intensive. Disclosure (what there is of it) often comes in increments. The case requires constant review to stay on top of outstanding disclosure and undertakings. Continual analysis must be conducted by opposing counsel to put together the financial puzzle pieces and establish the payor's true income. That was the case here.

[34] The court finds that the time and rates claimed by the mother are very reasonable and proportionate. The father is very fortunate that the mother is not claiming any time spent on the parenting issues.

[35] The nominal expenses of $54 claimed by the mother are reasonable.

[36] The mother acted reasonably. She tried very hard to resolve this matter by making a reasonable offer to settle. The father did not act reasonably.

[37] The court found that the father should pay a significant amount of temporary child and spousal support. This was based both on his earning capacity and his misconduct that has resulted in the reduction of his income. The court also found that he should have directed proceeds from the sale of his home towards his support obligations. Given these findings and the findings of bad faith the court will not reduce the costs award as sought by the father.

Part Six – Final Order

[38] Taking into account all of these factors the father shall pay the mother's costs fixed in the amount of $7,067.02, inclusive of fees, disbursements and HST, payable immediately.

Released: April 21, 2020

Justice S.B. Sherr

[1] This amount included the Child Support Guidelines table amount plus a contribution towards the children's special expenses pursuant to section 7 of the Guidelines.

[2] The parties were instructed to limit their costs submissions to 3 pages, not including any bill of costs or offer to settle. The father filed 40 pages. This was consistent with the father's pattern of disregarding court orders. The court read and considered his entire submission.