Court File and Parties

COURT FILE NO.: FC-16-FS000365-0000 DATE: 2021/03/02 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Steve Vasa Muncan, Applicant AND: Andreea Elena Muncan, Respondent

BEFORE: Madam Justice D. Piccoli

COUNSEL: Tania Harper, Counsel for the Applicant Lawrence Greaves, Counsel for the Respondent

Costs Endorsement

[1] This Endorsement follows the release of my decision in this matter on January 4, 2021.

[2] The court heard a five-day trial which commenced on November 12, 2020.

[3] In his application dated April 26, 2016, the Applicant (“Father”) sought 13 heads of relief including the following:

1. Changes to the parenting schedule and other parenting issues;
2. The manner in which pick up and drop offs were to occur;
3. That he pay set-off child support of $840 per month based on his income of $119,013 and the Mother’s income of $54,436;
4. Sharing of s.7 expenses under the Child Support Guidelines, O. Reg. 391/97 (the “Guidelines”) and a process with respect to same;
5. A process for the exchange of income information and the sharing of dependant tax credits.
6. That he retain the children’s original documents, including passports, birth certificates, health cards and social insurance numbers; and
7. A reduction in his life insurance.

All of this relief was in replacement of various paragraphs, namely paras. 7, 8 and 12, of the separation agreement, dated September 1, 2011 (the “Separation Agreement”). The Father also sought costs.

[4] The Respondent (“Mother”) disputed the Father’s claims. Other than costs, she did not seek any relief.

[5] At the commencement of the trial, I was advised that the parenting schedule had been resolved, such that it remained the same as the parties had negotiated in their Separation Agreement.

[6] During, and subsequent to the trial, the parties were able to reach agreements on various other issues as follows:

1. The parties shall participate in the email monitoring and parenting coaching service offered By Peaceful Waters for a minimum of two years (unless otherwise agreed upon in writing between the parties), with the costs to be shared proportionally between the parties. This will be the only method of communication except in the case of an emergency, where text messaging or a call is permitted (i.e. the children are in hospital or have a medical need). The children forgetting items at one parent’s home is not an emergency.
2. The parties shall retain Annette Katchaluba of By Peaceful Waters to assist the parties in providing parenting co-ordination services to discuss any issues or topics either party deems necessary. The parties will meet with Annette Katchaluba for four (4) one-hour sessions per year, once every three (3) months, until the end of the year 2025. The cost of the sessions will be shared proportionally between the parties. On consent in writing the parties may alter this timeline. Both must agree.
3. The parties will exchange the children at school. Where the children are not in school, the parties will exchange the children by dropping them off at the other’s residence at the commencement of their parenting time. The parent doing the drop off will park their vehicle on the road in front of the other’s residence.
4. Commencing May 15, 2021 and every May 15 thereafter, the parties shall exchange their T4’s, and as soon as they are available, exchange their Income Tax Returns and Notices of Assessment and/or Reassessment for the purpose of determining their respective child support obligations and proportional share of the children’s section 7 special and/or extraordinary expenses set out below. The parties shall adjust the child support to be paid using the Child Support Guidelines with the change to be effective commencing June 1 of each year, for the following twelve (12) months with payments to be made bi-weekly.
5. The parties shall cooperate to equally share the dependant tax credits as permitted by the Canada Revenue Agency, as well as equally share the Canada Child Benefits, and any other government benefits.
6. The parties shall conduct themselves in the following manner related to the children’s extracurricular activities and costs: (a) The children are entitled to participate in house league hockey and the select teams, house league baseball, and/or house league basketball without further consent required. This is not an exhaustive list; (b) Neither parent shall discuss with either child, or within their ear shot, the financial issues between them. They will not ask the children to ask the other parent to pay for anything or to have access to funds from the other household including for cellphones, sports, or activities; (c) Neither parent is permitted to instruct or request that third-party professionals such as doctors, dentists, or other service providers not communicate with the other in anyway. Both parents are entitled to full open communication and to be copied on emails or text messages related to the children’s appointments and the results from those appointments. Either parent may communicate directly with third parties to receive this information.
7. The parties shall share all section 7 expenses pro-rata based on the Child Support Guidelines income. There will be a budget for sports and extracurricular activities (i.e. registration and rep fees) up to $3,500.00 per year. The budget will be used towards the children’s sports and extracurricular activities in that year, based on the children’s preferences. The parties will communicate activity, cost and timeline to each other prior to enrollment for confirmation of consent.

[7] I was required to decide the following outstanding issues:

1. Whether the children should be required to attend counselling;
2. The determination of income for each of the parties, in the relevant periods of time;
3. The amount of child support payable commencing May 1, 2019;
4. The pro rata share that each party would contribute towards s. 7 expenses. This pro rata determination will also apply to the sharing of the By Peaceful Waters Services that the parties have now consented to; and
5. Wording with respect to discussions involving travel.

[8] After the trial I made the following orders:

1. Father’s request that the children attend counselling is dismissed.

2. Father’s request for an order with respect to travel is dismissed.

3. An income is imputed to Mother as follows:

   2018 - $54,056.97 2019 - $37,442 2020 - $61,667.07*

   *Note: If the Mother’s actual income in 2020 is different than set out herein, her actual income plus her imputed income of $21,970 shall be used to recalculate support in May 2021. Retroactive and on-going child support shall be calculated based on the set-off approach. On a go forward basis, should Mother not obtain employment earning at least $30,000 per annum, that employment income shall be imputed to her.

What Each Party Seeks

[9] The Mother seeks “a significant cost order” but does not particularize the amount of costs she seeks. The bill of costs attached to her cost submissions indicates that her legal fees totalled $65,591.98, but she was given a special reduction in fees of $7,965. Her total fees including HST are $56,491.93. The Mother’s disbursements including HST total $4,840.22. Accordingly, the fees, HST, and disbursements add to a total of $61,331.75.

[10] The Father seeks an order that each party be responsible for their own costs. His bill of costs is broken down as follows: Legal fees including HST are $68,281.38 and disbursements including HST are $1,536.56 for a total of $69,817.94.

[11] The major difference in the parties’ disbursements is that Mother seeks reimbursement for her share of counselling with By Peaceful Waters ($2,638.03) and payment of the two reports with By Peaceful Waters (December 2017 for $759.39 and April 2020 for $700) which she paid for in full.

[12] Combined, the parties spent over $130,000 with respect to this litigation. This is troubling, particularly given that the Separation Agreement outlined a process for dispute resolution. Although the language used in the Separation Agreement was “may” instead of “shall” in respect of mediation, alternative dispute resolution should be considered a first option when dealing with parenting issues that are not urgent in nature.

[13] It has been Mother’s position throughout that the issues raised by Father should have been dealt with in mediation as the agreement indicated. This alternative would have been a fraction of the cost of litigation, a small percentage of the time, and most importantly done in a manner that reduced stress for children and the parties.

[14] Despite Father’s letter of September 2015, it was clear under cross-examination and in his submissions that he took the position that court intervention was required to address the issues and reduce the conflict. One wonders how litigation, as opposed to alternative dispute resolution, can be advanced as a means to reduce conflict.

Analysis

[15] The award of costs is within the discretion of the court: Courts of Justice Act, R.S.O. 1990, c. C.43, at s. 131(1).

[16] The modern costs rules are designed to foster four fundamental purposes:

i. to partially indemnify successful litigants for the costs of litigation; ii. to encourage settlement; iii. to discourage and sanction inappropriate behaviour by litigants; iv. to ensure that cases are dealt with justly pursuant subrule 2(2) of the Family Law Rules, O. Reg 114/99 (“FLR”).

See: Mattina v. Mattina, 2018 ONCA 867, at para. 10; Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8 (herein after referred to as the “Serra Costs Decision”).

[17] The Court of Appeal for Ontario has stated that proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12.

Determination of Success

[18] Rule 24(1) of the FLR, states that a successful party is presumptively entitled to their costs. Rule 24(12) outlines the factors to be considered by a court in setting the amount of costs, which centers around:

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 behavior; 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 the experts and their rates; vi. any other expenses properly paid or payable; and b) any other relevant matter.

[19] Rules 24(4) and 24(5) direct the court to evaluate whether a party has behaved reasonably or unreasonably, by examining:

a) the party’s behavior 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.

[20] Rule 24(6) allows the court to apportion costs as appropriate where success in a case is divided.

[21] Rule 24(8) deals with what the court may do if a party has acted in bad faith. Neither party is alleging bad faith.

[22] If offers to settle which meet the requirements of r. 18 were made, I am required to consider r. 18(14), which sets out the costs consequences of failing to accept an offer, which refers to a written offer that was made at least seven days before the trial and obtains an order as favourable or more favourable than the offer.

[23] Rule 18(15) provides that the burden of proving that the order is as favourable as, or more favourable than the offer to settle, is on the party that claims the benefit of the rule.

[24] Rule 18(16) states that costs are at the discretion of the court and the court may consider any written offer to settle, the date it was made, and its terms, even if r. 18(14) does not apply.

[25] Offers to settle play an integral role in saving time and expense by promoting settlements, focusing parties, and often narrowing the issues in dispute. Severable offers to settle or separate offers to settle specific issues are particularly helpful in attempts to settle cases (see Forlippa v. Khabemba, 2019 ONCJ 170, at para. 34).

[26] Pazaratz J. in Chomos v. Hamilton, 2016 ONSC 6232, 82 R.F.L. (7th) 395, at para. 19, stated that 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.

[27] Mother made six attempts to settle the outstanding issues on November 4, 2016; March 3, 2017; May 24, 2018; April 29, 2019; and February 13, 2020.

[28] Mother also offered to resolve the counselling issue by email in June 2019. She stated she would agree that the children attend counselling if Father’s entire family attended counselling together – she did not want to single out the children.

[29] Mother’s November 4, 2016, offer meets the formal requirements of r. 18. Mother offered that each party pay his and her own costs if Father withdrew his application on or before November 18, 2016. If Father accepted this offer thereafter, he would pay her costs on a substantial indemnity basis.

[30] Mother’s March 3, 2017, offer was part of Mother’s settlement conference brief. Mother offered that if Father withdrew his Application by March 3, 2017, he would pay to her the sum of $5,650 in costs and if he accepted thereafter, he would pay her costs on a substantial indemnity basis.

[31] On July 19, 2017, by way of letter, Mother offered that “in light of the findings above against a change in schedule we would ask that Steve Vasa Muncan Jr. withdraw his Application and reimburse my client, Andreea’s legal costs.” The amount of costs was not specified. By this time both parents were aware of the children’s views and preferences with respect to the parenting schedule, had been involved with Ms. Katchaluba, and the matter should have settled.

[32] On May 24, 2018, Mother made a further offer in her settlement conference brief that if Father withdrew his application by June 1, 2018, at noon, he would pay her $5,000 in costs inclusive of tax and disbursements. If he accepted thereafter, but before the commencement of questioning, the costs would be $10,000 inclusive of tax and disbursements and if he accepted after the Application was set down for hearing he would pay her legal costs on a substantial indemnity basis.

[33] On April 29, 2019, Mother made another formal offer to settle that Father withdraw his Application, that the parties retain Annette Katchaluba to assist in providing parenting co-ordination services and follow the recommendations made, with the costs to be shared in proportion to income. If Father accepted the offer on or before May 2, 2019, there would be no costs and if accepted between May 2, 2019, and June 14, 2019, Father would pay Mother her legal costs on a partial indemnity basis (no amount specified), and if he accepted after June 14, 2019, he would pay her costs on a substantial indemnity basis to the date of acceptance (no amount specified).

[34] On February 13, 2020, Mother made a further formal offer to settle, that Father withdraw his Application, that the parties retain Ms. Katchaluba to assist in providing parenting co-ordination services to discuss any issues or topics either party deems necessary, the parties meet with Ms. Katchaluba for four one-hour sessions per year, once every three months until the end of 2025 and the costs of the sessions would be split pro rata to the respective gross incomes. Father was to pay Mother her costs on a partial indemnity basis if the offer was accepted on or before February 28, 2020, and on a substantial indemnity basis if accepted thereafter. Without knowing what Mother was seeking for costs on a partial indemnity basis which Father must pay under the terms of the offer if he accepted, it is difficult to understand how Father could accept this offer. If a party is making acceptance of an offer conditional on the payment of costs no matter when it is accepted, then it is incumbent upon that party to set out the amount of costs he or she is seeking.

[35] None of Mother’s offers speak to the issue of child support. Child support became an issue in April 2019 when Father learned that Mother had been on leave from work since some point in 2018 due to mental health reasons. Mother’s failure to address this issue indicates that her settlement position was the same as her position at trial, namely that the Separation Agreement be followed, and that the prior year’s Line 150 income be used and the set-off applied.

[36] Father also made a number of offers to settle. He served four formal offers and made four informal offers in his conference materials. In addition, he made an informal offer during the trial and other offers in letters dated September 1, 2015; June 25, 2019; July 22, 2019; and October 15, 2020. The Father’s offers were not better than or similar to what I ordered at the trial.

[37] Father’s June 28, 2018, offer to settle was his first formal offer. Father did not make a severable offer. He made a 17-paragraph offer dealing with among other things, that the children attend counselling, the use of Our Family Wizard, that neither party be able to initiate communication with the children when in the care of the other parent except on birthdays, child support and s.7, exchange of information, life insurance, the dependent tax credit, that he be able to retain the children’s original documents, and that the parties withdraw from FRO.

[38] On June 7, 2019, Father made a 12-paragraph offer. Six paragraphs were dealing with child support issues and one of the issues was disclosure. Parenting issues included counselling for the children, the use of Our Family Wizard, that neither party be able to initiate communication with the children when in the care of the other parent except on birthdays, and then an added section that in the event of an impasse regarding extracurricular activities that the parties retain Annette Katchaluba as a parenting co-ordinator and she have the ability to impose a resolution.

[39] On February 21, 2020, Father made a third formal offer to settle (13 paragraphs). He added new requirements with respect to parenting including email monitoring by Annette Katchaluba for a minimum of one year with this being the only form of communication between the parties except in the case of an emergency with the costs to be “shared” by the parties (removed the requirement for Our Family Wizard), a requirement that neither parent discuss trying out for sports without first discussing and reaching an agreement with the other, a prohibition on discussing travel opportunities with the children, that the parties be prohibited from discussing financial issues within earshot of the children, requiring that neither parent permit or instruct third-party professionals not to communicate with the other parent. Father sought an order that the parties and their spouses attend a minimum of three (3) parenting sessions with Hilary Diouf of By Peaceful Waters (as the spouses were not made parties the court had no jurisdiction to even consider this order).

[40] On November 15, 2020, Father made a further formal offer to settle. This offer revoked all others. This offer included the requirement for the children to attend counselling, email monitoring and coaching for a minimum of two years with the cost to be shared equally – this being the only method of communication unless there is an emergency, the retention of Ms. Katchaluba for parenting co-ordination sessions for four one-hour sessions per year once every three months, that the children will be exchanged at school, and when not at school, in their vehicle on the road in front of the other’s residence, not discussing ability to participate in sports without first discussing it with the other parent and reaching agreement and if no agreement to be resolved by Ms. Katchaluba, that the parties be prohibited from discussing financial issues within earshot of the children, requiring that neither parent permit or instruct third-party professionals not to communicate with the other parent. Father’s position on child support was that neither pay the other. The offer also dealt with s.7 and the purchase of items for the children. If the offer was accepted on or before November 16, 2020, each party would pay his and her own costs.

[41] When Father withdrew his claims to alter the parenting schedule, he decided he would proceed to litigate matters not raised in his pleadings, namely counselling for the children. Hundreds of emails were exchanged between the parties and shortly thereafter Mother went on disability leave. Despite two reports from Ms. Katchaluba and the Front Door Assessment with respect to the children, Father persisted in demanding counselling for the children.

[42] I find that the Mother was substantially successful at trial on the parenting issues and that she acted reasonably throughout with respect to those issues. She made good faith offers to settle on the parenting issues.

[43] With respect to the issue of Mother’s income and the imputation of income, this issue first arose in April 2019. I imputed income to the Mother based on her failure to provide financial disclosure. I find that the Mother did not provide the required disclosure, nor was her position on this issue reasonable. The Father should have been provided with the required disclosure. Having said that, the Father was not successful with respect to the manner in which s.9 of the Guidelines was to be applied in that I ordered the set-off amount.

[44] Although neither counsel set out the amount of time spent dealing with the child support issue, I estimate, based on the time spent at trial on the child support issues, that those issues took approximately a quarter of the time.

Father’s Withdrawal of Claims

[45] Although neither party referred to r. 12 in their costs’ submissions, the rule must also be considered given Father’s withdrawal of his claim for a change in parenting schedule. Rule 12(3) states:

A party who withdraws all or part of an application, answer or reply shall pay the costs of every other party in relation to the withdrawn application, answer, reply or part, up to the date of the withdrawal, unless the court orders or the parties agree otherwise.

[46] The Court of Appeal in Serra v. Serra, 2009 ONCA 105, 93 O.R. (3d) 161, at para. 103, stated that “if the withdrawing party seeks to avoid cost consequences flowing from the withdrawal, that party must persuade the court to make an order avoiding or minimizing the costs.” The Court continued, at para 104, noting that “the trial judge has the residual discretion, pursuant to the court’s inherent jurisdiction to control its own process, to consider [the applicant’s] application.”

[47] In this case, the Father asserted that he believed a different parenting schedule was in the children’s best interests. When Mother advised she did not agree and provided sound reasons, Father persisted and, instead of attending mediation, proceeded by way of the courts. Even after the parents met with Annette Katchaluba on June 20, 2017, Father persisted with his request. It was not until the parties received a written report from Ms. Katchaluba on December 7, 2017, and more specifically in February 2018, that Father withdrew his request for a change in the parenting schedule.

[48] By the time Father withdrew his claim for a change in the schedule, by my calculations, Mother’s legal fees, disbursements, and HST totalled approximately $9,000. Presumably not all of those fees and disbursements were in reference to the parenting schedule. Unfortunately, neither party addressed the issue in their cost submissions and as such, although I find that the Father shall pay the Mother’s legal fees in relation to the issue of the parenting schedule, I will take this matter into consideration in deciding the overall amount of costs payable.

Settlements Reached by Agreement of the Parties

[49] Father asks me to consider “the matter as a whole” including agreements reached by the parties prior to and following the trial. He stated in his costs submissions that if I consider only the issues I was asked to decide, namely counselling and an income determination, then “looking at that relief and outcome, the trial seems unnecessary and trivial”. Father states that “conflict between these parents needed to resolve.”

[50] Father points to what took place at conferences and that after hearing from judges, Mother “reluctantly conceded limited participation in parenting coordination and disclosure.” Mother disputes Father’s characterization of what took place and who was more reasonable, asserting that she was more reasonable during conferences and throughout.

[51] In Davis v. Fell, 2016 ONCJ 84, at para. 79, O’Connell J. states:

[W]here parties make a settlement as between themselves, the court should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of a settlement between parties ought not to be awarded by the court.

[52] The decision of Kurz J. 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 Starr J. 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.

[53] In Krueger v. Krueger, 2017 ONSC 1446, at para. 30, George J., after a review of applicable authorities, including the decision of Templeton J. in Talbot v. Talbot, 2016 ONSC 1351, 76 R.F.L. (7th) 370, stated that: “[t]he bottom line is this. Courts should be wary to award costs when the parties reach a settlement.”

[54] There is insufficient clarity in the submissions to ascribe cost consequences to settled component, to determine whether one party achieved success or who behaved reasonably in reaching the consents. Accordingly, I am unable to consider the consents reached in the overall determination of costs.

Quantum of Costs for the Trial

[55] Once liability for costs has been established, the court must determine the appropriate quantum of costs. Rule 24(12) prescribes some of the factors which the court must consider in deciding the appropriate quantum.

[56] Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: see Beaver, at para. 12.

[57] Given that the Father does not dispute the reasonableness of the Mother’s bill of costs, I would have thought the parties should have been able to resolve the issue of costs.

[58] The assessment of costs is not a mechanical exercise. It is not just a question of adding up a lawyer’s dockets. The overall purpose is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances of the case: Jackson v. Mayerle, 2016 ONSC 1556, 130 O.R. (3d) 683, at paras. 16-21.

[59] In the Serra Costs Decision; Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.); and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.), the Court of Appeal for Ontario set out the following additional general principles relating to quantum:

(i) Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay. (ii) Costs need to be proportional to the issues and amounts in question and the outcome of the case. (iii) Amounts actually incurred by the successful litigant are not determinative. (iv) In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

See also Selznick v. Selznick, 2013 ONCA 35.

[60] Rule 24(12)(a)(i)-(v) set out specific factors the court should consider. These include:

a. Each party’s behavior: In this respect, I find that the Mother’s behavior in respect of the parenting issues was reasonable. Her behavior with respect to the child support issues was not. Father, on the other hand, took an ever-changing position with respect to parenting and was not reasonable. With respect to child support, although he did not have the required disclosure, his position that no support be paid was not. On balance, I find that Mother was the more reasonable party. b. The time spent by each party: On this topic, I am satisfied that the time set out in the bill of costs is reasonable. As stated, I decline to make costs orders in references to matters that were settled, nor does either party’s bill of costs separate the time spent on issues that were resolved. c. Written offers to settle: I have already commented on the written offers exchanged in this case. d. The legal fees, including the number of lawyers and their rates: In this respect, both lawyers’ hourly rates are reasonable in light of their experience level. e. Any other expenses: Save and except those disbursements that Mother seeks in relation to Ms. Katchaluba all of the disbursements claimed are reasonable. In terms of Ms. Katchaluba, each party should be responsible for his and her own counselling fees; the costs of the report should be shared equally.

[61] Applying the principles of success to this case, the Mother is clearly entitled to some costs as it pertains to the parenting issues. Although I do not find that the Father acted in bad faith, I find that he did not act reasonably throughout. His offers to settle were not severable and some of the orders he was seeking, including a mandatory withdrawal from FRO and requiring people who are not parties to the action to attend parenting courses, are orders this court has no jurisdiction to make. It is clear that, Father’s primary goal at trial was that an order be made that the children attend counselling, and on this he was not successful. This is the issue that took up the bulk of the court’s time. The Mother’s failure to produce proper disclosure has negatively impacted her claim for costs.

[62] In all of the circumstances of this case, I find that the Mother is entitled to $30,000 in costs, inclusive of HST and disbursements payable forthwith.

D. Piccoli, J. Date: March 2, 2021