Court File and Parties

Date: April 25, 2023 Court File No.: D41738/21 Ontario Court of Justice

Between: SABEEN ALI HASSAN, Applicant And: TURKI IBRAHIM ALI ABDULLAH, Respondent

Before: Justice S.B. Sherr

Counsel: Nilufa Husein, for the Applicant Dilani Gunarajah, for the Respondent

Heard: In Chambers

Costs Endorsement

Introduction

[1] On March 6, 2023, the parties entered into final minutes of settlement at a trial management conference. They resolved all remaining issues in the case but costs. The parties were given timelines to make costs submissions.

[2] Both parties seek costs. The applicant (the mother) seeks her costs of $24,520. The respondent (the father) seeks his costs of $28,662.

Background Facts

[3] The parties are the parents of a three-year-old child (the child).

[4] The mother issued an application on August 18, 2021, seeking orders for decision-making responsibility and primary residence for the child, incidents of parenting and child support.

[5] The father filed an Answer/Claim seeking orders for joint decision-making responsibility, the child to reside in both parties’ homes, and spousal support.

[6] The parties attended at First Appearance Court on October 20, 2021. The matter was adjourned for a case conference.

[7] The first case conference took place on February 7, 2022. Justice Carole Curtis made temporary orders. She ordered that the mother have decision-making responsibility for the child, that the father pay child support to the mother starting on May 1, 2020, and that the father provide the mother with financial disclosure. Costs were not ordered or reserved.

[8] The second case conference took place on May 19, 2022. Justice Curtis endorsed that the parties were close to settling parenting issues and asked them to submit any consent to the court. Costs were not ordered or reserved.

[9] On August 10, 2022, the court heard parenting motions brought by both parties regarding the father’s temporary parenting time. The parties consented to the parenting time schedule but disagreed on its terms. The court made rulings on these terms. The parties were given until August 17, 2022 to serve and file written costs submissions. Neither party made submissions.

[10] A third case conference was held before Justice Curtis on October 17, 2022. The parties did not settle the case and it was adjourned for a trial management conference. Costs of this conference were reserved.

[11] A trial management conference was conducted by Justice Debra Paulseth on November 24, 2022. At this conference, the parties consented to final orders that the mother have sole decision-making responsibility for the child, that she be able to obtain government documentation for the child without the father’s consent and that she be able to travel with the child outside of Canada, for up to 23 days without the father’s consent. The consent also set out terms for communication and the father’s ability to obtain information regarding the child. The parties also consented to a temporary parenting time schedule. The father withdrew his claim for spousal support.

[12] The trial management conference was adjourned. Costs of this conference were reserved.

[13] The parties resolved the remaining issues, except for costs, on March 6, 2023.

Positions of the Parties

[14] The mother’s position is that:

a) The father has acted in bad faith. b) The father strung out the litigation and took untenable positions. c) The father was obstructive during the litigation. He would not approve orders and delayed in providing financial disclosure. d) The father acted this way to control her and run up her costs. e) The father paid her no child support after they separated until Justice Curtis made her temporary support order on February 7, 2022. f) The father only agreed to what she had asked for once a trial was imminent. g) She was completely successful in this matter.

[15] The father claims that:

a) He negotiated in good faith and entered into a series of agreements, including those increasing his parenting time. b) The mother unreasonably stopped his parenting time and he required court intervention to resume it. c) He reasonably attended a settlement conference with Legal Aid Ontario in an effort to resolve the matter. d) He provided the financial disclosure ordered. e) The mother acted in bad faith.

General Costs Considerations

[16] 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).

[17] 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.

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

[19] 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.

[20] 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).

Legal Considerations in Awarding Costs After a Final Settlement

[21] Courts have often held that where parties reach a settlement, the court should be slow to award costs in favour of one of the parties unless there are compelling reasons to do so. Courts want to encourage parties to settle their cases in order to avoid costs. It is also sometimes very difficult to determine who is the “winner” and the “loser” in a negotiated settlement. See Witherspoon v. Witherspoon, 2015 ONSC 6378; Davis v. Davis, [2004] O.J. No. 2256 (S.C.J.); Talbot v. Talbot, 2016 ONSC 1351.

[22] The decision of Justice Marvin Kurz. in Frape v. Mastrokalos, 2017 ONCJ 915, 6 R.F.L. (8th) 486 summarizes previous authorities, advancing the theme that there ought to be a compelling reason to make an award of costs in a situation where a matter settle. He relies on a number of decisions, and in the end, adopts the reasoning of Justice Victoria Starr in Shute v. Shute, 2017 ONCJ 533, where she stated, at para. 33:

Where a matter settles, the success and/or reasonableness of the conduct of the parties is a consideration but not the most important one. In such cases, the emphasis should be on discouraging inappropriate conduct and promoting settlement. Thus, instead of identifying a reason not to award costs, the court must identify a compelling reason to make an award.

[23] The determinations of success, reasonableness and proportionality presuppose the existence of objective benchmarks against which they can be measured. Those objective benchmarks are present when a court makes findings of fact and law and issues an order. It is for this reason that costs are generally regarded as “incident to a determination of the rights of the parties, and ought not to be made themselves the subject matter of the litigation.” These benchmarks are absent when parties consent. It therefore follows that, where parties compromise their claims and settle litigation, the award of costs is very much the exception rather than the rule. Another way of expressing this principle is that “when parties reach a settlement as between themselves, the court should be very slow to make an award of costs against one of them. See: Goetschel v. Goetschel, 2022 ONSC 5860.

[24] However, there are cases when costs may be awarded when parties reach a signed agreement. There may be instances where a settlement is a “clear capitulation” by one party in favour of another, and it is obvious who the successful party is in the litigation. See: Atkinson v. Houpt, 2017 ONCJ 316. Also see: Johanns v. Fulford, [2011] O.J. No. 4071 (SCJ); Snelgrove v. Kelly, 2017 ONSC 4625.

[25] If the parties have reached a negotiated resolution of some or all of the issues in their case, costs can nonetheless be ordered if the court determines that one party was more successful overall than the other party. See: Scipione v. Del Sordo, 2015 ONSC 5982. At para. 64, the court writes that a party’s decision to enter into Minutes of Settlement at the end of the litigation journey “doesn’t automatically wipe out any history of bad litigation choices which would otherwise justify costs - if we make execution of Minutes the determining factor precluding costs, it will create a disincentive for settlement at trial”.

[26] In A.C. v. G.K., 2015 ONCJ 399, costs were ordered and Justice Ellen Murray wrote:

Thus, there is no question that a court may determine the costs of a case that has been settled prior to trial. The question is, when will a court take that step? My review of the caselaw does not suggest that it is only in “compelling” circumstances that costs will be awarded when a case is resolved by a settlement.

[27] A.C. was followed in Beardsley v. Horvath, 2022 ONSC 3430, where the court found that the terms of that consent order permitted it to evaluate the success of the parties in relation to the settled issues. The applicant was clearly successful on two significant primary issues: primary residence and decision making. It was apparent that the respondent bowed to the inevitable in resolving these issues just prior to the commencement of trial.

[28] Where the factual trail is easy to follow and the court can ascertain success and unreasonable behaviour costs can be ordered after a settlement. See: Okafor v. Okafor, 2022 ONCJ 290.

Analysis of Entitlement to Costs

[29] The factual trail is not too difficult to follow here.

[30] The mother sought primary residence and sole decision-making responsibility for the child in her application. The father sought joint decision-making responsibility and an order that the child reside in both homes. The father did not consent to a final decision-making responsibility order until November 24, 2022, or to a final parenting schedule (that was well short of what he had sought) until March 23, 2023. The final order provides the father with day parenting time, on terms, with the right to return to court if he obtains appropriate accommodation for overnight visits and the parties cannot agree on a parenting schedule.

[31] Given his limited parenting time with the child after the parties separated and the fractious relationship between the parties, the father’s claims for decision-making responsibility and parenting time were unrealistic and he should have consented to this relief much earlier.

[32] The father did not withdraw his claim for spousal support until November 24, 2022. This claim had no merit and should never have been made.

[33] There is no evidentiary basis to support a finding that the father is entitled to any costs. This meritless claim only reinforced the mother’s submission that the father litigated this matter unreasonably.

[34] The court finds that the father unnecessarily extended this litigation and increased the mother’s costs with his meritless claims. This is a compelling reason to award the mother costs, notwithstanding the final settlement.

[35] The mother was the successful party and is presumptively entitled to costs. The father did not rebut that presumption.

Analysis of the Amount of Costs

[36] 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.

[37] The parties are alleging bad faith against each other. 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.

[38] 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 5982.

[39] 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).

[40] 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.

[41] The evidence falls well short of a finding that either party acted in bad faith. Making poor litigation decisions, as the father did here, is not bad faith. It is unreasonable behaviour.

[42] 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.

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

[44] The parties each made a rule 18 offer to settle temporary terms. Neither made a rule 18 offer to settle the entire matter. One or more of such offers should have been made.

[45] Otherwise, the mother acted reasonably in the case.

[46] The father acted unreasonably in taking and maintaining untenable positions and failing to pay child support until the first court order of Justice Curtis.

[47] It is difficult for the father to challenge the rates and time claimed by the mother when he has claimed more costs than she has. The court finds the rates and times claimed by the mother to be reasonable.

[48] The mother included significant time in her bill of costs for prior steps in the case. This included time spent for a First Appearance Court attendance, three case conferences, a motion, a settlement conference and two trial management conferences.

[49] Subrule 24 (11) provides that the failure of the court to order costs in relation to a step in a case does not prevent it from awarding costs in relation to the step at a later stage in the case.

[50] However, courts continue to be cautious about awarding costs at the trial stage where costs were not awarded at earlier steps in a case. See: Baezner v. Brunnenmeir, 2018 ONCJ 956; Nabwangu v. Williams, 2019 ONCJ 171.

[51] In Laidman v. Pasalic and Laidman, 2020 ONSC 7068 the court set out that the presumption remains that costs should be determined at each stage, and there are good reasons for this. Parties should have an ongoing awareness of the cost consequences of litigation decisions they make. Reserving costs may impede final resolution by needlessly inflating and complicating the list of future issues still to be dealt with. A judge who has just completed a step in a case will usually be in the best position to evaluate all of the relevant Rule 18 and 24 considerations. Reserving costs to a future event – often to a different judge – can result in later confusion and controversy about what really happened at the earlier step.

[52] In Berge v. Soerensen, 2020 ONCJ 265 Justice Roselyn Zisman set out the following circumstances where costs of a prior step should be awarded:

a) Costs have been reserved to the trial judge. b) When, considering subsequent events, the trial judge is better situated to determine the costs of the prior step than the judge presiding over the step or, c) In exceptional circumstances.

[53] The cautious approach to ordering costs for prior steps in a case is even more salient when the court is assessing costs after a case has been settled, for the reasons set out in the jurisprudence above.

[54] The court will order costs for the preparation for and attendance at First Appearance Court. These are appearances before a court clerk to ensure that the case is ready to send to a judge for a case conference. There should be no expectation that costs will be addressed at this step of a case. See: Thomas v. Saunchez, 2022 ONCJ 532.

[55] Justice Curtis only reserved costs for the October 17, 2022 case conference. She did not order or reserve costs for the case conferences held on February 7, 2022 and on May 19, 2022. She was better able to determine the costs for these appearances than this court. No exceptional circumstances apply to order costs for those appearances. The court will only address costs for the October 17, 2022 case conference.

[56] This court gave the mother the opportunity to make costs submissions after the temporary parenting motions were determined on August 10, 2022. She did not make them. She did not seek an extension of time to make them. It is too late now to make them. The father is entitled to litigation certainty. She cannot hold the costs for the temporary motion in reserve having foregone the opportunity given to claim them. See: P.I. v. R.O., 2022 ONCJ 184.

[57] Costs were reserved for the November 24, 2022 trial management conference and the court will address costs for that appearance.

[58] The court will also consider costs accrued from activity not specifically related to a step in the case. Activity not requiring judicial intervention is often better dealt with at the end of the case and not by the case management judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98; F.S. v. M.B.T., 2023 ONCJ 144. The court will award costs for this activity which includes the drafting and review of pleadings, client meetings and pursuing and reviewing financial disclosure.

[59] 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.).

[60] However, parties cannot expect to be immune from an order of costs based on their limited financial resources. If this were the case, parties would be free to conduct litigation as they wished without fear of reprisal in the form of adverse costs orders and this would be contrary to the philosophy and requirements of the rules. See: Culp v. Culp, 2019 ONSC 7051; Mark v. Bhangari, 2010 ONSC 4638.

[61] 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.

[62] 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.

[63] The court has taken into consideration that the father is of limited means. He is paying child support based on an annual income of $30,411 – less than minimum wage.

[64] Taking into account all of these considerations the father shall pay the mother her costs of $6,000. The court will permit him to pay these costs over time, provided that he keeps his payments in good standing.

Order

[65] A final order shall go as follows:

a) The father shall pay the mother her costs fixed at $6,000, inclusive of fees, disbursements and HST. b) The father may pay the costs at $200 each month, starting on May 1, 2023. However, if he is more than 30 days late in making any payment, the entire amount then owing, shall immediately become due and payable.

Released: April 25, 2023 Justice Stanley B. Sherr