Court File and Parties
COURT FILE NO.: FS-20-19879 DATE: 2022-02-17 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RANDI JOY COGAN SHINDER, Applicant/Appellant AND: NEIL ALLEN SHINDER, Respondent
BEFORE: Kimmel J.
COUNSEL: Gary Joseph and Kira Beck, for the Applicant/Appellant Daryl Gelgoot and Vanessa Amyot, for the Respondent
HEARD: December 9, 2021 (Supplementary written cost submissions dated January 28 and 31 and February 4, 2022)
Appeal – Costs Endorsement
[1] The applicant/appellant appealed from two arbitration awards (the “Arbitral Awards”) of Alfred Mamo (the “arbitrator”). In a decision released on January 7, 2022 (Shinder v. Shinder, 2022 ONSC 181), I granted part of her appeal, in relation to the Forest Hill property expense accounting that had been determined in an October 13, 2020 Arbitration Award (which was declared on this appeal to be a nullity) and dismissed the balance of her appeal, in relation to the children’s expenses (which had been determined in an October 1, 2020 Arbitration Award that was upheld on this appeal).
[2] I made the following remarks at the end of my appeal reasons in relation to the issue of costs,
a. [e]ven though the appellant was successful on the Forest Hill property expense accounting issue, her conduct in having orally agreed to this issue being arbitrated and backtracking on that agreement after learning of the unfavourable outcome to her, does not create a favourable impression upon the court.
b. While the appellant has benefited, after the fact, from the court’s determination that the agreement to arbitrate the Forest Hill property expense accounting needed to be in writing to confer jurisdiction upon the arbitrator to decide it (having regard to, among other things, the manner in which the parties had conferred jurisdiction upon the arbitrator to resolve certain specified disputes in the existing written agreement to arbitrate that required all amendments to be in writing), the court is not impressed by her conduct on this issue or by her attempts to challenge the entirety of the arbitrator’s originating jurisdiction.
c. If the parties are not able to settle the issue of costs and the court is asked to decide costs, the parties are directed to address this issue of the appellant’s conduct (r. 24(4) and (8) of the Family Law Rules), among the other relevant r. 24 considerations.
The Parties’ Positions on Costs
The Appellant’s Position
[3] The appellant asks for costs payable to her in the all-inclusive amount of $20,000.00, asserting that she was “more successful” than the respondent overall on the appeal. She claims that her “win” on the Forest Hill property expense accounting was worth $90,981 (representing the expenses that she is seeking to offset against the distribution of the proceeds of sale of that property to the respondent that remain in reserve in a solicitor’s trust account), whereas the respondent’s “win” in relation to the children’s expenses still requires him to pay her $34,654.96. She characterizes this outcome of the appeal as putting her ahead by $125,635.96, with no monies flowing to the respondent, even though the Forest Hill property expense accounting remains to be determined.
[4] The appellant made an offer to settle the appeal (only) on October 5, 2021, which, if accepted, would have seen both arbitration awards set aside, and each party would pay their own costs of the appeal. Her offer did not specify that these issues would be thus “settled” for all purposes. While she suggests now in her cost submissions that this was the case, it is not a fair reading of the offer itself. Thus, the effect of her offer, if it had been accepted and implemented, would have been that, until a further agreement or determination was made regarding the Forest Hill property expense accounting and/or a further determination was made about the children’s expenses, she would have been in a position of a net gain of $56,326.04 (keeping the $90,981 in reserve from the Forest Hill property sale proceeds but not receiving the $34,654.96 in children’s expenses).
[5] The appellant argues that the outcome of the appeal (which she characterizes as putting her ahead by $125,635.96) was more favourable to her than what she had offered to the respondent (which she characterizes as putting her ahead by $56,326.04).
[6] The appellant’s bill of costs for the appeal indicates an all-inclusive amount of costs of $27,729.64 and partial indemnity costs of $16,801.64. Although not calculated, the reasonable inference from these values is that the $20,000 in costs that she is seeking would equate roughly to an award of costs on a substantial indemnity scale.
The Respondent’s Position
[7] The respondent does not accept the appellant’s characterization of the outcome or her offer. Most significantly, he submits that the appellant’s offer just put the parties back to square one on all issues by setting aside the arbitrator’s awards but not settling the underlying issues or providing for any releases. The respondent contrasts this with his offer dated August 4, 2021, in which he proposed to settle the appeal and the matters that were before the arbitrator at first instance on a without costs basis (each to bear their own costs).
[8] The respondent’s offer proposed not only to set aside the two Arbitral Awards but also proposed that the relief sought by the motions decided by the arbitrator at first instance be settled on the basis that no amounts be paid by either party in respect of the Forest Hill property expense accounting (thus, he would forego his claim to the $90,981 held back from the sale proceeds) and he would not pay the net $34,654.96 found to be owing by him to the appellant for the children’s expenses that were the subject of the arbitration.
[9] If the respondent’s offer had been accepted and implemented, it would have been a net concession by him of $56,326 (net gain to the appellant of $56,326). It would also have the added certainty of resolving the issues for all purposes, rather than being back at square one for them to be determined. However, the respondent also proposed that the parties agree that there would be no future amounts owing as between them for all past, current, and future expenses paid for or on behalf of the children. His justification for this was that the children had, by the time of the offer, both completed at least one university degree (one had also completed a master’s degree) and each of their parents could choose to assist them, or not, on their own terms without involving the other. Whatever the justification, his offer sought to settle issues beyond the scope of the appeals.
[10] Recognizing that neither side’s offer to settle falls strictly within r. 18(14) of the Family Law Rules, O. Reg. 114/99, the respondent argues that the settlement positions are simply one of the factors to consider in the mix (under rr. 24(4) and (5)). He contends that his offer was more reasonable and in service of an important objective of certainty.
[11] However, the respondent’s main arguments in support of his request for an award of full indemnity costs of the appeal, in the all-inclusive amount of $27,251 (or, in the alternative, his partial indemnity costs of $17,986), are based on rr. 24(4), (5), and (8) and the unreasonableness of the appellant’s conduct in relation to the Forest Hill property expense accounting issue. The appellant is said to have acted unreasonably by indicating in her sworn testimony before the arbitrator that she had agreed that the arbitrator could decide that issue, and then (successfully) arguing on this appeal that the arbitrator had no jurisdiction to do so.
Costs Analysis
Guiding Principles and Cost Rules
[12] I have had the opportunity to consider the matter of costs in some recent cases, in which the same rules, principles, and caselaw cited by the parties in this case were considered. For ease of reference, I have set out below the applicable guiding principles, as were summarized in Habibi v. Aarabi, 2022 ONSC 240, at para. 29:
a. Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, provides that awarding costs is at the discretion of the Court. Rule 24 of the Family Law Rules provides a court with discretion to award costs in the amount that is just in all the circumstances after taking into account the factors set out in r. 24(12), which direct the court to consider, among any other relevant matter, the reasonableness and proportionality of each party’s behaviour, settlement offers, time spent, legal fees (including the number of counsel and their rates), experts, and other expenses in relation to the importance and complexity of the issues.
b. Modern cost rules not only indemnify litigants and encourage settlements, they sanction behaviour that increases the duration and expense of litigation or that is otherwise unreasonable or vexatious: Fong v. Chan, 46 O.R. (3d) 330 (C.A.), at para. 22; Serra v. Serra, 2009 ONCA 395, at para. 8; Blanchard v. Walker, 2012 ONCJ 799, at paras. 15 and 21.
c. In Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at paras. 9 – 13, the Ontario Court of Appeal comprehensively laid out the principles to be applied with respect to costs in family law matters. The relevant rules are as follows:
i. In family law matters, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure;
ii. The Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded;
iii. There is no provision in the Family Law Rules that provides for a general approach of “close to full recovery” costs;
iv. Rule 24(12) sets out the appropriate considerations in fixing the quantum of costs in a family law matter;
v. Proportionality and reasonableness are the touchtone considerations to be applied in fixing the amount of costs.
See also Mattina v. Mattina, 2018 ONCA 867, at paras. 9 – 18.
[13] The behaviour of the parties is an important consideration in deciding costs, which is reflected in r. 24(12)(a)(i), as well as rr. 24(4) and (5) of the Family Law Rules.
[14] Rule 24(8) of the Family Law Rules requires the court to award full indemnity costs payable by any party found to have acted in bad faith. Where a party’s conduct falls short of a finding of bad faith, there may still be costs consequences if they are found to have acted unreasonably. Those consequences may include an award under r. 24(4), which provides that a successful party who has behaved unreasonably may be deprived of all or part of their own costs or ordered to pay all or part of the unsuccessful party’s costs. Costs may be awarded on a higher scale to express the court’s disapproval of unreasonable conduct. See Mooney v. Fast, 2013 ONCJ 584, at paras. 30, 32, 34. The amount of costs ordered may be higher where a party has had to incur unnecessary added expense due to the other party’s unreasonable conduct. See Habibi, at para. 34 (a), citing John v. John, 2020 ONSC 6437, at para. 41.
[15] The parties were asked in this case to specifically address in their costs submissions r. 24(6) of the Family Law Rules, which allows the court to apportion costs as considered appropriate if success is divided but one party is markedly more successful than the other: see Boland v. Boland, 2012 ONCJ 239, at para. 2. Habibi at paras. 30 – 32 contains a summary of relevant principles regarding divided success, including:
a. It involves a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues that required adjudication.
b. There is a presumption that each party is entitled to costs on the issues where they succeeded, but the court may also in those circumstances “award costs to the party who was more successful on an overall global basis or on the primary issue, subject to adjustments that the court may consider appropriate having regard for the lack of success on secondary issues and any other factors relating to the litigation history of the case.” See E.L. v. N.R., 2017 ONSC 5406, at paras. 13 – 14; Beckett v. Beckett, 2010 ONSC 2706, at para. 22; Boland.
c. Divided success may require a comparative analysis. Almost all family cases have multiple issues. However, not all issues are equally important, time-consuming, or costly to determine. The court may need to drill down to determine the relative importance, complexity, and cost of the various issues.
d. Settlement offers may be a relevant consideration in the assessment of relative success.
Entitlement to Costs
[16] The determination of entitlement to costs of this appeal is largely dependent on the assessment of who, if anyone, was the more or less “successful” party on the two main issues on appeal and an `assessment of the conduct of the parties, in particular, in relation to the Forest Hill property expense accounting issue.
[17] Of the two issues arbitrated (and appealed), each party was successful on one issue. The appellant was successful in having the Arbitral Award dealing with the Forest Hill property expense accounting set aside on jurisdictional grounds. The respondent was successful in upholding the Arbitral Award dealing with the children’s expenses. In that sense, there was divided success.
[18] Both issues were important. The value of the Forest Hill property accounting issues was $90,981 (the value of the withheld sale proceeds). The value of the children’s expense issue was variable as the appellant was seeking to have a much higher net amount of expenses paid to her than what was ultimately ordered. Thus, it is not fair to say that the value of this issue was simply the net amount ordered payable by the respondent of $34,654.96, which he did not challenge and was upheld on appeal (e.g., he was not ordered to pay more, nor was the arbitrator’s award on the children’s expense issue set aside).
[19] The parties’ attempts in their cost submissions to compare the outcome of this appeal to their respective settlement offers as a measure of their “success” may, in theory, be a relevant consideration. However, those comparisons fall short on both sides because both offers involved future contingencies outside of the issues on the appeal.
[20] In the appellant’s case, both issues would have to be re-litigated or settled and the ultimate outcome was entirely uncertain. In my view, to compare the “holding” position pending those future determinations to the outcome of the appeal as a measure of success is meaningless.
[21] In the respondent’s case, there was certainty in his offers that could be readily compared to the outcome of the issues on the appeal, but his proposal to settle all other past, current, and future expenses paid for or on behalf of the children cannot be valued. Even if his justification for proposing it (having regard to the stages of life of the parties’ children) might be considered to have been reasonable, it was not what the parties’ separation agreement provided for.
[22] Neither party provided a breakdown in their Bills of Costs as between the costs attributed to each of these issues on the appeal, so it is open to me to infer, and I do so infer, that their costs were roughly equal as between the two issues. If the analysis ended here, then the costs would be a “wash”.
[23] However, a more contextual analysis is warranted in this case. The appellant’s “success” on the Forest Hill property expense accounting issue is not equal to the respondent’s “success” on the children’s expense issue. The appellant succeeded in having the Arbitral Award dealing with the Forest Hill property expense accounting set aside on jurisdictional grounds raised on the appeal that she did not pursue before the arbitrator.
[24] To the contrary, despite adverting to the possibility of jurisdictional concerns regarding the arbitrator’s ability to deal with this issue, the appellant tendered sworn testimony in which she stated that she had agreed to arbitrate this issue and did not challenge the arbitrator’s jurisdiction to decide it. This testimony was revisited after the arbitrator specifically raised a concern about his ability to decide after the motion had been fully briefed and argued. Instead of retracting this testimony or asserting a different position at that time, the appellant stayed silent on the jurisdictional point when the arbitrator’s attention was drawn to her testimony about it by the respondent, and allowed the arbitrator to decide the issue. She only spoke up to challenge his jurisdiction to do so on this appeal, after learning of the arbitrator’s decision that was unfavourable to her.
[25] While the court found on appeal that the arbitrator did not have jurisdiction to decide the Forest Hill property expense accounting issue because the parties had not attended to the formalities required to give him jurisdiction, that does not excuse the appellant’s conduct. The fact that she succeeded because of a technical failure is a relevant consideration in assessing the relative “success” of the parties on this appeal. It is also a relevant consideration in assessing the reasonableness of the appellant’s conduct throughout this proceeding when the scale and quantum of costs is considered.
[26] I do not consider that the appellant’s conduct rises to the level of bad faith. It has not been demonstrated to have been the type of intentional or deceptive conduct at the time that is required for such a finding. See Fearon v. Fearon, 2021 ONSC 2305, at paras. 45 – 47; Batte v. Batte, 2021 ONSC 4504, at paras. 44 – 45. I view the appellant’s conduct to be more in the nature of trying to take advantage of a technicality after the fact, than in the nature of an intentional deception at the time that she swore in her affidavit that she had agreed to have the arbitrator decide the Forest Hill property issue or at the time that she failed to retract that testimony or assert a different position when the arbitrator was later referred to her testimony.
[27] In the circumstances of this case, I do not consider the appellant to have acted in bad faith by raising a valid jurisdictional argument on appeal, even if it should have been argued earlier. Thus, it is not mandatory under r. 24(8) for me to award costs against her on that issue.
[28] However, I do find that the appellant acted unreasonably when she failed to make the jurisdictional arguments that she made on this appeal back when the very question of jurisdiction was raised by the arbitrator and her prior testimony affirming that he could decide this issue was drawn to his attention without any objection from her. It thus remains open to the court to exercise its discretion to award costs against the appellant on the Forest Hill property expense accounting issue that she succeeded on, based on my finding that she acted unreasonably (see r. 24(12)(a)(i), as well as rr. 24(4) and (5) of the Family Law Rules and Mooney).
[29] The appellant’s unreasonable conduct builds upon what began as the parties’ joint failure to identify and deal with the jurisdictional problem at the arbitration. This was exacerbated by the appellant’s assurances that the matter could proceed. These assurances created a false sense that the Arbitration Award would not be challenged on jurisdictional grounds, but then the appellant did precisely that. This also caused the parties to incur additional costs in having to address the issue on appeal that ought to have been raised and addressed before the arbitrator.
[30] Having considered the rules, principles, and factors outlined above, and the submissions of the parties, in the exercise of my discretion, while I am not going to go so far as to award costs against the appellant in relation to the issue regarding the Forest Hill property accounting expenses that she was successful on, I find that she is not entitled to an award of costs in respect of that issue. Conversely, I find that the respondent is entitled to his costs of the appeal in relation to the issue regarding the children’s expenses that he was successful on.
[31] This determination on entitlement means that the costs of the two issues on appeal are not a “wash.” The result is that the respondent is entitled to be awarded some costs in respect of the half of the appeal that he was successful on, and the appellant is not entitled to any costs of the appeal.
Quantum and Scale of Costs
[32] I have found the respondent to be entitled to costs of half the appeal, which on a full indemnity basis would have been $13,625.50 (50% of the all-inclusive costs claimed by him of $27,251). The quantum of costs certified in the Bills of Costs presented has not been challenged by either party. This is not surprising since the amounts they each claimed in costs was virtually identical.
[33] I have already determined that this is not a case for full indemnity costs, either under r. 18(14) or 24(8) of the Family Law Rules.
[34] The appellant has been found to have acted unreasonably in connection with the issue that she succeeded on in the appeal, and she has been deprived of any entitlement to costs on that issue.
[35] The reasonableness of the parties’ conduct, including their respective settlement positions, is not only relevant to the question of entitlement but remains a relevant consideration to the scale and quantum of costs. The appellant’s offer to settle was not meaningful. Its implication was that the parties would just start over on all issues that had already been arbitrated. The inefficiency, cost, and uncertainty of that approach would not meaningfully advance the resolution of the issues and was essentially no offer of compromise on the appeal at all, except to forego a claim for costs. While the respondent’s offer did draw in other matters not before the court, it did reflect a compromise position more consistent with the objectives of encouraging parties to try to settle disputes rather than litigate (or in this case, re-litigate) them.
[36] In the exercise of my discretion under s. 131 of the Courts of Justice Act and r. 24 of the Family Law Rules, I find that the appropriate quantum of costs to award the respondent in the circumstances of this appeal is $10,000.00. That is approximately 75% of his costs of the half of the appeal that he succeeded on. He behaved reasonably in the conduct of the appeal and made reasonable efforts to settle it, whereas the appellant did not.
[37] This amount strikes the appropriate balance. It also takes into account the concerns noted in the appeal reasons, not only about the appellant having backtracked on her oral agreement about allowing the arbitrator to hear the Forest Hill property expense accounting issue, but also her attempt on the appeal to challenge the entirety of the arbitrator’s originating jurisdiction in respect of each and every one of the sixteen arbitration memoranda and five arbitral awards (including the two Awards under appeal) that the arbitrator had rendered over a span of seven years. She did not succeed in that argument, which fundamentally undermined the parties’ agreement and conduct over a lengthy period. As noted in my reasons on the appeal at para. 65:
Here, the appellant, with the benefit of experienced legal counsel, not only willingly participated in the arbitration process but invoked it to her benefit over the course of many years, during which the arbitrator issued 5 Awards and 16 Arbitration Memoranda with directions. The court does not condone a party seeking to turn a prolonged arbitration process on its head after-the-fact simply because she does not like the outcome of the last decision. That is not in keeping with the primary objective under r. 2(2), (3), and (4) of the Family Law Rules, O. Reg. 114/99, and the need to ensure that the court’s process is invoked in a manner that is fair to all parties and that saves expense and time. What the appellant seeks to do in this case is antithetical to that objective, which the court is required to promote.
[38] The court and the parties need to have confidence in the out of court processes that parties regularly agree to engage in when they settle. These are a fundamental aspect of the family law litigation regime in this Province, and the appellant’s collateral attack on the entirety of the out of court arbitration process that the parties agreed to and engaged in for many years undermines the administration of justice. This alone warrants some recognition in costs, which is also reflected in the quantum and scale of costs awarded to the respondent herein.
[39] Modern family law cost rules are based on four broad objectives: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage improper behaviour by litigants; and (4) to ensure cases are dealt with justly under r. 2(2) of the Family Law Rules. The costs awarded to the respondent in this case seek to balance these objectives. I have determined this to be the amount of costs that is just to award in all the circumstances. See Mattina, at para. 10; Fong; Serra; Blanchard, at para. 16.
Final Costs Award
[40] The respondent is awarded costs of this appeal fixed in the all-inclusive amount of $10,000 payable by the appellant forthwith.
[41] This endorsement shall have the immediate effect of a court order without the necessity of formal entry.
Kimmel J. Date: February 17, 2022