Court File and Parties
COURT FILE NO.: FS-19-0026-00 DATE: 2023-06-05 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
D.F. A. Khan, for the Applicant Applicant
- and -
T.F. S. Filipovic, for the Respondent Respondent
HEARD: Via Written Submissions Madam Justice T. Nieckarz
Reasons on Costs
[1] In my Reasons for Decision after an eight-day trial (two of which were partial days) I invited submissions from the parties regarding the issue of costs. The facts and issues for the trial, along with the reasons for my decision may be found at D.F. v. T.F., 2023 ONSC 115.
[2] The Respondent (Mother) seeks costs of the proceeding from the date of an offer on December 14, 2020, on a full recovery basis in the amount of $120,410.57 inclusive of fees, disbursements, and HST. She seeks to have those costs made enforceable by the Family Responsibility Office (FRO). She argues that:
a. The decision at trial was more favourable to the Mother than offers to settle made by her prior to the trial.
b. The Mother was put to considerable expense and forced to defend herself against the vexatious actions of the Applicant (Father). His inappropriate and unreasonable behaviour continued at trial as he and his former counsel were not prepared, which delayed the trial process and unnecessarily increased the financial cost and emotional toll on the Mother.
c. Given his actions and that he entered into a consumer proposal that significantly alleviated the financial burden of the marriage and this proceeding for him, it would be unconscionable to consider any argument by the Father with respect to his ability to pay.
d. The Father acted in bad faith, engaging in a pattern of behaviour throughout the litigation that only served to increase the duration and expense of the proceeding. He did not make genuine efforts to resolve the proceeding, but rather engaged in conduct that delayed and overcomplicated an otherwise straightforward process. The Father breached and disrespected court orders, made unilateral decisions without authority to do so, involved the children in adult issues, undermined important relationships for the children, made spurious allegations against the Mother’s partner and his child, interfered with the Mother’s parenting time, manipulated facts, demonstrated a toxic attitude towards the Mother and unnecessarily increased conflict, refused to communicate through Our Family Wizard and generally placed his own interests ahead of the children. He did this knowing he was causing harm.
e. He delayed and overcomplicated the simple issue of the Mother’s share of the net sale proceeds, resulting in this issue having to be dealt with at trial when it should have easily been capable of resolution.
[3] The Father does not dispute that the Mother was the successful party at trial and is entitled to costs. The Father disputes the quantum of costs on the basis that full recovery costs are not warranted. His submissions do not address whether the Mother’s offer qualifies for the costs consequences of Rule 18 of the Family Law Rules. He denies he acted in bad faith. He argues he made offers and attempted to resolve the case. He acknowledges that there were some delays caused by his former counsel’s lack of preparedness, but argues they were not his fault. He disputes the reasonableness of the amount sought given the importance and complexity of the issues and the ability of the Respondent to pay. His submissions do not suggest an amount he considers appropriate, nor has he filed his own bill of costs as an indication of what may reasonably be contemplated by him.
[4] I have considered the submissions of the parties. For the following reasons, the Applicant shall pay to the Respondent costs in the amount of $70,000 inclusive of fees, disbursements and HST.
General Principles of Costs Applicable to this Case
[5] An award of costs is a matter in the discretion of the Court by virtue of s. 131(1) of the Courts of Justice Act, which provides:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in the proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.
[6] Modern family cost 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 r. 2(2) of the Family Law Rules, O. Reg. 114/99
Mattina v. Mattina, 2018 ONCA 867, at para. 10.
[7] There are a number of specific rules from the Family Law Rules that have been cited by counsel as applicable to my exercise of discretion in determining the costs of this case.
[8] Rule 18 (14) of the Family Court Rules is as follows:
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.
[9] The burden of proving that an offer is as favourable or more favourable than the offer to settle is on the party claiming the benefit of it: Rule 18(5).
[10] Even if the court determines that 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.
[11] Rule 24(1) of the Family Law Rules provides that there is a presumption that a successful party is entitled to their costs.
[12] Rule 24(7) states that a court shall award costs against a party that is not properly prepared to deal with the issues at that step unless the court concludes that the interests of justice render such an order inappropriate.
[13] Rule 24(8) requires the court to award costs on a full recovery basis if a party is determined to have acted in bad faith.
[14] In addition to any matter deemed relevant by the court in considering the question of costs, Rule 24(12) requires the court to consider the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
(a) each party’s behaviour;
(b) the time spent by each party;
(c) any written offers to settle, including offers that do not meet the requirements of rule 18;
(d) any legal fees, including the number of lawyers and their rates;
(e) any expert witness fees, including the number of experts and their rates; and
(f) any other expenses property paid or payable.
[15] Full recovery costs refers to the full amount claimed by a party, subject to any adjustments that the court considers appropriate based on the reasonableness and proportionality of the costs claimed. It means the total reasonable and proportional amount that a court determines the party should have spent in dealing with the case: Beaver v. Hill, [2018] O.J. No. 2845, 2018 ONSC 3352 (Ont. S.C.J.).
[16] In determining the amount of costs the court must also keep in mind that a costs award should represent a “fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs of the successful litigant”: Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (Ont. C.A.); Kamboh v. Majeed, [2021] O.J. No. 1067, 2021 ONSC 1465 (Ont. S.C.J.). It is not simply a matter of adding up counsel’s dockets. A “fair and reasonable amount” is that which the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation: Lupien v. Carmichael, 2017 ONSC 2929, at para. 9.
Rule 18 Offers to Settle
[17] The Mother made formal offers to settle dated December 14, 2020, November 1, 2021, and December 31, 2021 (signed January 3, 2022). She argues that these offers were never withdrawn by her and warrant full recovery costs. A review of the offers suggests they meet the formal requirements of Rule 18 with respect to timing of the offers, remaining open for acceptance, and having been signed by counsel and the Mother. The question is whether the Mother has demonstrated that the offers are as favourable or more favourable than the result at trial.
[18] In determining this issue, Pazaratz J., in Chomos v. Hamilton, 2016 ONSC 6232, 82 R.F.L. (7th) 395, at para. 19, noted that:
a. To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer);
b. 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; and
c. What is required is a general assessment of the overall comparability of the offer as contrasted with the order.
[19] A review of the December 2020 and December 2021 offers makes it clear that the result at trial was more favourable to the Mother than the substance of the parenting provisions. The Mother offered shared time with the children and the result at trial was to award her primary care.
[20] Despite this, I find that Rule 18 does not trigger full recovery costs. There were numerous other provisions in the offers, including financial provisions. Overall, it can be said that the result to the Mother was more favourable, but there are many provisions that were somewhat different from what was ordered and some of which were issues that appeared important to the Father based on my recollection of the evidence at trial. For example, the December 2020 offer had a different Christmas parenting time rotation than I ordered. Both the December 2020 and 2021 offers had different provisions with respect to telephone calls with the children when in the care of the other parent. Other differing provisions that could have impacted the Father’s decision to accept the offers included different overall holiday parenting schedules and equalization of net family property releases. While such provisions may seem insignificant in the context of the overall case, there is no indication they are severable. The November offer dealt only with financial issues, including equalization of net family property that was not an issue determined by me given the Father’s consumer proposal. I find that the Mother’s offers are best dealt with as a factor under Rule 24(12).
Bad Faith
[21] Pazaratz J. in Chomos v. Hamilton, at paras. 42-49, reviewed the case law pertaining to “bad faith” in the context of costs considerations, which is summarized as follows:
Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made: S.(C.) v. S.(C.), 38 R.F.L. (6th) 315; Piskor v. Piskor, and Cozzi v. Smith, 2015 ONSC 3626.
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: Children’s Aid Society of the Region of Peel v. F.(K.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (Ont. C.J.); Biddle v. Biddle, 13 R.F.L. (6th) 63; Leonardo v. Meloche; and Hendry v. Martins, [2001] O.J. No. 1098 (Ont. S.C.).
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. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated: Stewart v. McKeown, 2012 ONCJ 644; F.D.M. v. K.O.W., 2015 ONCJ 94.
To establish bad faith the court must find some element of malice or intent to harm: Harrison v. Harrison, 2015 ONSC 2002.
In S.(C.) v. S.(C.), Perkins J. defined bad faith as follows:
In order to come within the meaning of bad faith in sub rule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.
[22] While the Father engaged in conduct that warrants a higher amount of costs payable than may otherwise be awarded for a trial of this length, and while certain actions by him were intentional, I am inclined to agree with counsel for the Father that they amounted more to bad judgment and being misguided than bad faith. While I concluded that the Father engaged in certain conduct intentionally to harm the Mother, for the most part I was left with the impression that he was unable to appreciate just how destructive his behaviour was. The OCL clinical investigator queried whether his lack of insight was the result of an undiagnosed mental health disorder. For these reasons I do not award full recovery costs throughout the proceeding based on Rule 24(8).
Other Factors Related to Costs
[23] Even though I am not prepared to award full recovery costs throughout the proceeding, I am inclined to make a sizable costs award that is greater than I would otherwise order for a trial of this length for the following reasons:
a. The Mother’s offers to settle were very reasonable in the circumstances. On the more substantive issues, the Father would have fared better by accepting the offers.
Contrary to the position of the Mother, I find that earlier in the case the Father did make efforts to settle. While ultimately his position was not accepted by the court, his earlier offers to settle were not so unreasonable as to allow me to conclude he made no effort.
b. While not amounting to bad faith, the Father engaged in unreasonable conduct. The Reasons for Judgment contain numerous examples of conduct throughout this proceeding that was of concern to the court. In particular, the Father disobeyed court orders (particularly with respect to decision-making authority for the children), defiantly made unilateral decisions that he had no authority to make, made unfounded allegations against the Mother that he may have believed, but that lacked an evidentiary basis (such as the Mother acting selfishly and contrary to the interests of the children), and made unfounded allegations against the Mother’s partner and his child. In addition, he engaged the children in his campaign of hatred against the Mother, their siblings and her partner. He did this without insight as to the effect on the children, and in the process, significantly increased the cost of this proceeding as these issues required the intervention of counsel and took up trial time.
c. During the proceeding, the Father engaged multiple different lawyers. This delayed matters, including the conclusion of trial, and increased costs. His conduct, and that of his counsel during the trial unnecessarily caused delay and increased costs.
[24] The question becomes what is an amount of costs that is proportional to the issues and result, and that is fair and reasonable in the circumstances of this case. My job in assessing costs is not to do a line-by-line analysis of the fees or individual disbursements incurred by the Mother’s lawyer. I certainly do not have sufficient evidence or submissions to do so.
[25] The issues in dispute were of considerable importance to the parties, particularly the parenting of the children and the restraining order. I found that the mental health of the children was suffering, and the Mother’s psychological well-being necessitated the granting of the restraining order. This was a direct result of the conduct of the Father. The Father unnecessarily caused more issues than there needed to be, and more delay. The Mother’s counsel is experienced, and the rate claimed is reasonable. It is not my role to second guess the amount of time spent by counsel. I do note the following:
a. There is time and a rate claimed by a law clerk that may be payable pursuant to the Mother’s retainer with her counsel, but should not all be recoverable against an opposing party. Some of it is administrative. Some of it is duplicative of the lawyer. For example, the law clerk attended the trial daily. I appreciate it was helpful for her to assist with screen sharing for Caselines, and some of it was necessitated by the Father’s counsel not having access to his documents and not being familiar with being able to find documents on Caselines himself, but this is a function that most counsel attend to themselves at trial. I appreciate why the Mother’s counsel would want an assistant present to assist in such matters and allow counsel to focus on the trial, but this is not a cost that should be visited on the other party.
b. There are some disbursements that are difficult for me to ascertain whether they are recoverable or not. For example, $530 in photocopies.
d. There are fees claimed for motions in which costs were awarded already (December 2020) or agreed that each party would bear their own (December 2021).
e. There are items in the Bill of Costs that make it impossible for me to ascertain reasonableness (i.e. multiple references to emails and fees associated with dealing with equalization issues, which were only touched on at trial, and not disposed of at trial given the Father’s consumer proposal).
f. There were some issues raised by the Mother at trial in cross-examination of the Father or in her examination that were not significant to my decision and somewhat lengthened the trial, although this was relatively minor in comparison to the conduct of the Father.
[26] In light of the foregoing, while I have no doubt that it cost the Mother in excess of $120,000 to litigate this case, I find that a fair, reasonable and proportionate amount for the other party to pay given the factors discussed is $70,000.
[27] With respect to ability to pay, while it may bear some consideration in determining proportionality, I agree with the Mother’s counsel that the Father’s ability to pay cannot shield him from the consequences of his behaviour throughout this litigation.
[28] Finally with respect to the enforceability of the costs award, the parties have their previous order to rely on with respect to enforcement of costs awarded at trial. I have had no authority provided to me with respect to my ability to make the order sought given that the primary issues in the trial were parenting. If need be, counsel may take out a brief appointment to address this issue.
Order
[29] The Father shall pay the Mother the sum of $70,000 on account of costs, inclusive of fees, disbursements, and HST.
“Original signed by” The Honourable Madam Justice T.J. Nieckarz