Court File and Parties
Date: 2021 01 13 Court File No.: Toronto D81725/15 Ontario Court of Justice
Between:
HASMIK DERZIYAN Applicant (Responding Party)
— AND —
ALEXANDER SHEBARIN Respondent (Moving Party)
Before: Justice Curtis
Written submissions regarding Costs Reasons for Decision released on 13 January 2021
Counsel: Alla Koren, for the Applicant Mother (the Responding Party) Alexei Goudamenko, for the Respondent Father (the Moving Party)
CURTIS, J.
Index
- Over-view
- The Parties’ Positions re Costs
- Background
- Litigation History
- 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
- Order
Over-view
- This is the decision about costs of a motion to change brought by the father regarding the consent order of 28 February 2019 about access to the child David (now 7). The motion to change was stayed on 21 July 2020.
The Parties’ Positions re Costs
The mother claimed costs of the motion to change on a full recovery basis of $5,195.50.
The father claimed that costs should be reserved until the motion to change is resumed (i.e., until the stay is lifted) and the motion is determined on the merits. If costs were to be awarded and determined now, the father offered no proposal regarding amount.
Background
- The mother (the responding party in this motion to change) is 46 years old (born 18 March 1974). The father (the moving party) is 45 years old (born 5 July 1975). The parties were not married and did not lived together. They are the parents of a child, David, 7 years old (born 26 April 2013).
Litigation History
There is a long history of acrimonious and high conflict litigation between these parents regarding access and child support. Both parents have usually been represented by lawyers. The father has been represented by his current lawyer since at least early 2017 (with a modest break in 2019).
The original application was started on 6 October 2015. The case was litigated for over three years before final orders were made.
A consent order on 7 July 2016 provided custody to the mother, travel and passport orders, and temporary supervised access to the father weekly. Final orders regarding support were made on consent on 8 May 2018.
The child began to have mental health issues (at the age of 5), that matter became very serious in 2018, and the court became very concerned over the situation. Repeated endorsements addressed the high conflict between the parents and the obvious impact it was having on the child. For a time, both parents were unrepresented. During this period, the court repeatedly urged the parents to get lawyers.
The conflict regarding access continued until a final consent order on 28 February 2019. The mother was represented by her current lawyer then, and the father was assisted by duty counsel that day. The consent order was lengthy and detailed. For these purposes, these are the important clauses (there are many other clauses regarding access):
(a) The purpose of the order was to allow for a two year suspension of any litigation on the issue of access;
(b) The father was to produce a report from a psychiatrist as a condition precedent to resuming any form of access;
(c) The psychiatrist report was to be a psychiatric assessment by a qualified psychiatrist providing a comprehensive report addressing the issue of whether or not the father suffers from any mental health issues that impair his ability to function in any manner whatsoever, as well as any mental health issues that have an impact on his ability to parent (the investigation shall include the question of whether or not the father is addicted to alcohol);
(d) The father is to submit to hair follicle analysis forthwith to establish the presence or absence of drug use.
(e) If the parents could not agree to an expanded access schedule by 1 March 2021, each parent was at liberty to bring a motion to change; and,
(f) Either parent could bring a motion to change before 1 March 2021 if there was a material change in circumstances impacting the best interests of the child;
The father brought a motion to change on 14 November 2019 regarding access and produced a report from a psychiatrist in support.
On 21 July 2020 at a case conference the court stayed the father’s motion to change on terms and made the following endorsement:
Case conference held re terms of consent order 28 Feb. 2019, threshold issue of whether father may bring a motion to change, father’s psychiatric report, hair follicle testing, and the next steps to take
The terms of the consent order made 28 Feb. 2019 are detailed and clear
Father must comply with certain terms as a condition precedent to resuming access to the child
The psychiatrist retained by father wrote a report which did not address many of the specific criteria set out in the order
Also the report criticized and was dismissive about the terms of the court order, an opinion and position which was not helpful (not helpful to this process and not helpful to the father)
As well, the order contains a prohibition from further litigation until 1 March 2021, unless there has been a material change in circumstances which affects the best interests of the child
Father’s motion to change is stayed until he satisfies the court that he has complied with the terms of the consent order made 28 Feb. 2019
Father was urged to consider retaining a different psychiatrist for a better and more detailed report
And was urged to consider retaining a psychiatrist that the mother agrees to
Stay may be lifted on consent or on request, with a Form 14B, affidavit in support maximum 2 pages (with additional exhibits maximum 10 pages)
Motion to change is stayed
The mother claims costs of the motion to change.
The Costs Analysis
The Law of Costs
Entitlement
Under the Family Law Rules, O. Reg. 114/99, 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 with a court case.
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, R.S.O. 1990, c. C. 43, 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.
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.
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.
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.
Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality.
The Evolution of Costs as an Instrument of Social Policy
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.
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.
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
The starting point in any costs analysis is the presumption that a successful party is entitled to costs, in Rule 24(1).
Success must be measured not only against the parties’ offers to settle, but also against the claims made by each.
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.
The mother was the successful party, in that the motion to change was stayed. She is presumptively entitled to costs.
Behaviour of the Parties
One of the purposes of costs is to change behaviour.
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.
Family law litigants are responsible for and accountable for the positions they take in the litigation.
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.
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.
Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.
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.
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.
When awarded on a full recovery scale, costs can serve to express the court’s disapproval of unreasonable conduct during the litigation.
The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.
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.
While the father’s behaviour in bringing the motion to change may not have been unreasonable, his decision to continue the court case after being warned that his psychiatric assessment was inadequate for his purposes may have been unreasonable, particularly as the mother’s lawyer set out in detail her reasons for her position that the report did not comply with the terms of the consent order.
Costs and Ability to Pay
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.
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.
Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(11).
The (financial) means of the unsuccessful party may not be used to shield him from liability for costs, particularly when he has acted unreasonably.
A party’s limited financial means will also be accorded less weight in quantifying costs if the court finds that the party acted unreasonably.
Offers to Settle
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.
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.
The mother identified early on that the father’s psychiatric report did not comply with the standard set out in the consent order for the report required as a condition precedent to the father resuming access. She made a proposal on 27 January 2020, very early on in the litigation, and before her lawyer prepared a Response to the Motion to Change, that the father should withdraw his motion to change and proceed with a proper psychiatric assessment, and that if he accepted this proposal, there would be no costs. This proposal, although not in the form of an Offer to Settle, and not signed by the mother, was identified in the body as an offer to settle, with a timeline for expiration. This proposal was very close to the result that eventually occurred in July 2020, seven months later.
The father did not make an offer to settle the motion to change.
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).
The central premise of the mother’s offer was that the psychiatric assessment offered by the father in support of the motion to change did not meet the standard set out in detail in the consent order of 28 February 2019. That is exactly the finding made by the court on 21 July 2020. The mother’s offer is very close to the result on the motion to change. As her Offer to Settle was not in compliance with rule 18(14), it can be considered under rule 18(16).
The mother is entitled to costs of the motion to change.
Quantum of Costs
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.
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.
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.
In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery.
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.
Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome.
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.
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.
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, and that she made this proposal before she drafted her court papers in response. The father should have seriously considered the mother’s position and her proposal made in January 2020, when she raised with him the inadequacy of the psychiatric report he wanted to rely on. 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: The mother’s offer qualified for consideration under Rule 18(16). The terms of the mother’s offer come very close to replicating the motion to change outcome;
(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; 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 ($121.80). The father made no objection on that basis.
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.
Order
- The father shall pay the mother costs of the motion to change. 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 $5,000 all in (fees plus HST and disbursements plus HST). In all of the circumstances, this is a modest amount, but it is what was claimed.
Released: 13 January 2021 Justice Carole Curtis
