Court File and Parties
DATE: July 5, 2024 COURT FILE NO.: D70561/14
ONTARIO COURT OF JUSTICE
B E T W E E N:
TRICIA LYNCH APPLICANT
- and -
MICHAEL LEWIS RESPONDENT
COUNSEL: Lauren Israel, for the Applicant Acting in Person, for the Respondent
HEARD: In Chambers
JUSTICE S.B. SHERR
Costs Endorsement
Part One – Introduction
[1] On June 3, 2024, the court conducted a focused trial regarding the applicant’s (the mother’s) claim for retroactive child support for the parties’ two children. See: Lynch v. Lewis, 2024 ONCJ 279.
[2] On June 7, 2024, the court released its reasons for decision. The court fixed the respondent’s (the father’s) support arrears at $18,086.
[3] The court found that the mother was entitled to her costs and gave the parties the opportunity to make costs submissions.
[4] The mother seeks her full recovery costs of $6,864.75. The father opposed the mother’s claim for costs. He did not propose a different amount in his written submissions.
Part Two – Legal considerations - 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:
a) to partially indemnify successful litigants;
b) to encourage settlement;
c) to discourage and sanction inappropriate behaviour by litigants and;
d) 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.
Part Three – The mother’s offer to settle
[9] 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.
[10] 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:
If the offer relates to a motion, it is made at least one day before the motion date.
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.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[11] 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 4600.
[12] The mother made an offer to settle dated May 13, 2024. She proposed to fix arrears at $10,000. She also offered that the father could pay the arrears in five equal instalments of $2,000.
[13] The mother’s offer met all the pre-conditions set out in subrule 18 (14). Her offer was more favourable to the father than the trial result. She is presumptively entitled to her costs until May 13, 2024 and to her full recovery costs after that date.
[14] The father did not rebut that presumption.
[15] The father did not submit an offer to settle.
Part Four - Bad faith
[16] Subrule 24 (8) of the rules 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.
[17] 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 5970.
[18] 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).
[19] 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; Kardaras v. Kardaras, 2008 ONCJ 616; Jones v. Hugo, 2012 ONCJ 381.
[20] A party who adopts “a catch-me-if-you-can approach to financial disclosure” demonstrates bad faith and breaches. See: Parry v. Parry, 2020 ONSC 3437.
[21] The court finds that the father acted in bad faith. The court made the following findings of fact in its reasons for decision:
a) The existing order required the father to provide the mother with annual financial disclosure. He did not comply with the order. The mother did not learn about the father’s significant increases in annual income until he issued his motion to change.
b) The existing order required the father to immediately notify the mother if he obtained employment and the details of that employment. He did not do this.
c) The father failed to advise the mother about his increases in annual income.
d) The father is not an unsophisticated litigant. He has litigated child support issues several times over the past 10 years. He is aware of his obligation to pay child support pursuant to the guidelines and to provide annual financial disclosure to the mother. He acted coyly at trial when he kept justifying his failure to provide annual financial disclosure, as ordered, by saying, “she never asked for it”.
e) In its reasons for decision dated January 2, 2020, on an earlier motion to change, the court commented on the father’s failure to provide timely and accurate financial disclosure and his failure to pay adequate child support.
f) The father’s failure to disclose his increases in income to the mother was deliberate and done with an intent to avoid his child support obligations. The father felt justified doing this. He expressed his belief at trial that the mother would only use the increased support to benefit herself and her other children – it would not benefit the children. He expressed his bitterness at trial that he is the only father of the mother’s children she has taken to court.
[22] The court wrote the following at paragraphs 67 to 69 of its decision:
[67] Courts at all court levels, including Colucci, are trying to send litigants the strong message that the failure to provide financial disclosure and to pay proper child support will not be tolerated. The Supreme Court of Canada in Michel observed how this has led to the feminization of poverty. This case proves that point.
[68] To change behaviour, courts must make orders that send clear and strong messages to support payors, such as the father, that such conduct will result in significant financial consequences for them. This will not dissuade all dishonest payors. However, increasing the risks for such conduct may dissuade many more of them.
[69] Here, the father made a calculated gamble that he would be able to control how his support was spent by not disclosing his income to the mother. He has lost that gamble.
[23] The court, in its reasons for decision, concluded at paragraph 72 that as a consequence of his conduct the father could expect that it will make a significant costs order against him if requested by the mother.
Part Five - Other factors affecting costs orders
[24] 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. 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.
[25] 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:
b) each party’s behaviour,
c) the time spent by each party,
d) any written offers to settle including offers that do not meet the requirements of rule 18,
e) any legal fees, including the number of lawyers and their rates,
f) any expert witness fees, including the number of experts and their rates,
g) any other expenses properly paid or payable; and
h) any other relevant matter.
[26] 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.
[27] The court finds that the rates charged by the mother’s counsel ($450 per hour) are reasonable for senior counsel.
[28] The time claimed by the mother was reasonable and proportionate.
[29] The father should have expected to pay this amount of costs if he was unsuccessful.
[30] The parties advised the court at the hearing that they had settled the parenting issues and the issue of ongoing temporary child support. Orders were made in accordance with the consent. The father seeks to reduce the mother’s costs because he says he was successful on those issues. The court will not do that in this decision. This trial was only about retroactive child support, and the costs submissions are limited to that issue. The father is free to pursue costs claims on the other issues in this case when the matter returns to court.
[31] The court finds that the father can afford to pay this costs order.
Part Six – The order
[32] An order shall go as follows:
a) The father shall pay the mother’s costs fixed in the amount of $6,864.75, inclusive of fees, disbursements and HST.
b) The costs are due and payable within 30 days.
Released: July 5, 2024 _____________________ Justice S.B. Sherr