Court File and Parties

DATE: September 19, 2022 COURT FILE NO.: D40578/20 ONTARIO COURT OF JUSTICE

B E T W E E N:

JEANNE AMAYA ISAYA, APPLICANT FERNANDO PIETRAMALA, for the APPLICANT

- and -

JAY AIZY OZO, RESPONDENT SUNDAY ADEYEMI, for the RESPONDENT

HEARD: In Chambers

JUSTICE S.B. SHERR

COSTS ENDORSEMENT

Part One – Introduction

[1] On July 12, 2022, the court released its reasons for decisions after a focused half-day trial about the respondent’s (the father’s) child support obligations for the parties’ 5-year-old daughter (the child). See: Isaya v. Ozo, 2022 ONCJ 321.

[2] The court fixed the father’s support arrears at $17,152 and ordered him to pay ongoing child support of $359 each month, plus 50% of the child’s ongoing piano expenses.

[3] The court set timelines for the parties to make written costs submissions. The applicant (the mother) seeks her full recovery costs of $4,269.23.

[4] The father was given an extension to file his costs submissions. He submits that the costs claimed by the mother are excessive. He did not specify what costs should be ordered.

Part Two – Legal considerations

2.1 General principles

[5] 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).

[6] 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, 2003 S.C.C. 71, paragraph 25.

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

[8] 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

[9] 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).

[10] To determine whether a party has been successful, the court should examine who was the successful party, based on the positions taken in the litigation. See: Lazare v. Heitner, 2018 ONSC 4861. This assessment includes the positions taken in the pleadings, and the specific relief sought at the hearing, if different. See: Kyriacou v. Zikos, 2022 ONSC 401. The court may also take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ); Todor v. Todor, 2021 ONSC 3463; Kyriacou v. Zikos, supra.

2.3 Offers to settle

[11] Subrule 18 (4) sets out that an offer shall be signed personally by the party making it and also by the party’s lawyer, if any.

[12] 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 trial 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.

[13] Even if subrule 18 (14) does not apply, the court may take into account any written offer to settle, the date it was made and its terms when exercising its discretion over costs (subrule 18 (1)) or, in assessing the reasonableness of a party under sub-clause (iii) of subrule 24 (12) (a).

[14] 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 ONSC 4609.

[15] 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.

[16] Close is not good enough to attract the costs consequences of 18 (14). The offer must be as good as or more favourable than the trial result. See: Gurley v. Gurley, 2013 ONCJ 482.

2.4 Behaviour

[17] 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.

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

[19] 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 ONSC 5809.

[20] 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.) (2007), 38 R.F.L. (6th) 315 (Ont. SCJ).

[21] Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation. See: Scipione, supra.

2.5 Other factors affecting costs orders

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

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.

[23] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.). Difficult financial circumstances are a factor but not are always a reason to deprive a successful party of costs or to reduce the amount of costs. See: Beaulieu v. Diotte, 2020 ONSC 6787. Ability to pay will be less of a mitigating factor when the impecunious party has acted unreasonably, or where their claim was illogical or without merit. See: Gobin v. Gobin, 2009 ONCJ 278; D.D. and F.D. v. H.G., 2020 ONSC 1919.

[24] 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.

[25] In determining the appropriate quantum, the court should consider the amount that the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation. See: Arthur v. Arthur, 2019 ONSC 938.

[26] A useful benchmark for determining whether costs claimed are fair, reasonable and proportionate is to consider the amount that the unsuccessful party paid for their own legal fees and disbursements in the same matter. See: Laidman v. Pasalic and Laidman, 2020 ONSC 7068.

[27] An adverse inference may be drawn against a party who does not provide their own bill of costs when challenging the rates and time of the party claiming costs. This is now required pursuant to subrule 24 (12.2). See: S. W.-S. v. R.S., 2022 ONCJ 11; M.H.S. v. M.R., 2022 ONCJ 28.

Part Three – Offer to settle and success

[28] The mother made a severable offer to settle. The father did not make an offer to settle.

[29] The mother submitted that her offer to settle was more favourable to the father than the trial result and that the costs consequences set out in subrule 18 (14) apply. The court disagrees.

[30] The mother combined the issues of retroactive child support and ongoing support in the first Part of her offer to settle. Her proposal for retroactive child support was more favourable for the father than the trial result. However, her proposal for ongoing child support was far less favourable for the father than the trial result. The mother proposed imputing the father’s annual income at $60,000 for support purposes. The court imputed the father’s annual income at $32,564 on an ongoing basis.

[31] The second Part of the mother’s offer proposed that the father pay 65% of the child’s piano expenses. The court ordered the father to pay 50% of these expenses.

[32] The court finds that neither part of the mother’s offer to settle attracted the costs consequences set out in subrule 18 (14).

[33] At trial, the mother sought to impute the father’s annual income at $90,000 for support purposes and asked that support be ordered retroactive to September 1, 2017. The father asked that his annual income be imputed at $32,564 for support purposes and that support only be ordered retroactive to November 1, 2020.

[34] The court made the following orders:

a) Based on an imputed annual income of $40,000, the father shall pay the mother monthly child support of $359 each month, starting on September 1, 2017.

b) Based on an imputed annual income of $47,886, the father shall pay the mother monthly child support of $444 each month, starting on January 1, 2020.

c) Based on an imputed annual income of $40,000, the father shall pay the mother monthly child support of $359 each month, starting on January 1, 2021.

d) Based on an imputed annual income of $32,564, the father shall pay the mother monthly child support of $359 each month, starting on January 1, 2022.

[35] Further, at trial, the mother asked that the father pay 50% of the child’s piano expenses. The father asked that he not be required to contribute to these expenses. The court made the order sought by the mother.

[36] Although the mother did not achieve everything she sought at trial, the court finds that she was the much more successful party.

[37] The father did not rebut the presumption that the mother is entitled to her costs.

Part Four – Amount of costs and order

[38] This case was important to the parties. It was not complex or difficult.

[39] The mother acted reasonably. She made a reasonable offer to settle. It was difficult for her to evaluate what income should be imputed to the father due to his failure to provide timely or complete financial disclosure.

[40] The father did not act reasonably. He was warned about the consequences of failing to provide timely and complete financial disclosure and still did not provide this. He failed to pay appropriate support. He also did not make an offer to settle, despite the court endorsing at the trial management conference that both parties should make offers to settle.

[41] However, the father’s conduct did not reach the high threshold required to make a finding of bad faith against him.

[42] The rates claimed by the mother’s counsel were very reasonable.

[43] The father failed to file his counsel’s bill of costs for the trial. An adverse inference is drawn against him for failing to do so.

[44] The time claimed by the mother’s lawyer was reasonable and proportionate.

[45] The father should have reasonably expected to pay the costs that will be ordered if he was unsuccessful.

[46] The father can afford the costs that will be ordered. He will be given a reasonable period of time to pay them.

[47] An order shall go that the father pay the mother’s costs fixed in the amount of $3,600, inclusive of fees, disbursement and HST.

[48] The father may pay these costs at the rate of $300 each month starting on October 1, 2022. However, if he is more than 30 days late in making any costs or support payment, the full amount of costs then owing shall immediately become due and payable.

Released: September 19, 2022

Justice Stanley B. Sherr