Court File and Parties

Court File No.: FC-18-102 Date: 2023-07-06 Superior Court of Justice - Ontario

Re: Vladimirs Hockis, Applicant And: Elena Smirnova, Respondent

Before: The Honourable Mr. Justice J.P.L. McDermot

Counsel: Alla Koren, for the Applicant Evigny Osipov, for the Respondent

Heard: By written submissions

Costs Endorsement

[1] This was a high conflict matter arising from a short marriage. This costs issue arose from a settlement of parenting issues arrived at during the May, 2023 sittings when the Applicant had set down a long motion. By this time, they had previously settled their property and support issues on September 1, 2022. This left only the parenting issues outstanding concerning the parties’ child, Natan Hockis (7). When the parties attended before me on May 15, 2023 on the Respondent’s motion to adjourn the long motion, they settled these parenting issues on a final basis subject to submitting the question of costs to me.

[2] This began when the Applicant made an offer to settle the parenting issues on July 28, 2022. It was non-severable and was a final offer for shared parenting of their child including shared decision making with the assistance of a parenting coordinator. It was open for acceptance on a without costs basis until August 2, 2022. The offer was silent on what would occur if it was accepted after August 2, 2022. The offer also provided that it remained “open for acceptance until 1 minute prior to the hearing of any motion on any parenting issue, or unless it is otherwise withdrawn.” Although Ms. Koren advised Fraser J. at the settlement conference on April 14, 2023 that the offer may have been withdrawn, there was no evidence that the offer had ever been withdrawn.

[3] A combined settlement conference / trial scheduling conference was set for April 14, 2023 at 2:15 p.m. The Applicant brought a motion returnable at the combined conference: he requested an order that the Respondent’s pleadings be struck as a result of breaches of several court orders made in the proceeding; that she submit to a psychological assessment and that the Applicant have sole decision making authority over the child’s health care, even if it involved an emergency situation.

[4] Before the motion could be heard, the Respondent accepted the Applicant’s offer to settle at 12:24 p.m. on April 14, 2023. According to the endorsement of Justice Fraser from that date, the Applicant refused to accept the Respondent’s acceptance of his offer to settle, claiming it had been withdrawn at an earlier date. Justice Fraser did not hear the motion and both parties were given leave to argue a motion and counter motion by way of a long motion during the May, 2023 sittings. According to Fraser J.’s endorsement, one of the issues to be addressed at the long motion was whether the offer had been validly accepted. The Applicant served an amended Notice of Motion (which was only different from the motion brought at the conference insofar as it raised the issue of converting the motion to a contempt motion). The Respondent did not serve a motion other than a 14B motion requesting an adjournment.

[5] The adjournment motion came before me during the May, 2023 sittings but it did not go ahead. Instead, the parties agreed to a final order in accordance with the accepted offer to settle. Although the Applicant had made two other offers for his long motion (which were really the original offer with additional conditions attached) the order did not incorporate any of the terms of the two later offers: it was on its terms nearly identical to the offer to settle made by the Applicant on July 28, 2022. It appears the long motion brought by the Applicant was unnecessary.

[6] The only difference between the final consent order and the offer was the term regarding costs. The consent order states that the parties may each make submissions as to “costs related to the within Order” on a 14 day turnaround. As well, there were the costs of the adjournment motion brought by the Respondent. The Applicant requests costs of $29,086.20 for the proceeding based upon the offer as well as the Respondent’s “bad faith” behaviour. The Respondent says that if anyone should be paid costs, it should be her considering the settlement was in accordance with the offer that was accepted by her on April 14, 2023. Alternatively, the Respondent suggests no costs be payable by either party.

[7] The costs provision was inserted because the parties could not come to an agreement on costs and this issue was getting in the way of settlement. I agreed that the parties could put that issue before me if the other issues could be settled.

[8] However, a major criterion for costs in any litigation is success in the litigation: see r. 24(1) of the Family Law Rules. That is difficult to ascertain if a matter is settled as settlement involves compromise. It was even more so in this case as I had not case managed this matter and had not heard a trial or motion. As a result, I am at a disadvantage in determining costs in this matter because I have no idea as to who was successful in the litigation as it was ultimately settled and I did not make findings in the litigation or follow its progress since 2018 when I considered an urgent motion.

[9] Because of this, if I am going to find a party liable for costs, I have to make that finding on some other grounds, such as an offer to settle or unreasonable behaviour, if that again can be determined by me. But requesting a judge to determine costs where there is a settlement in a case that he or she has not case managed or otherwise heard is problematic as he or she does not know the parties or the original positions of the parties in the litigation.

Offer to Settle

[10] As mentioned above, the Applicant had made an offer to settle on July 28, 2022 in respect of parenting. That offer was only to expire upon the commencement of a hearing of any motion regarding a parenting issue; otherwise it remained open for acceptance throughout.

[11] Mr. Hockis brought a parenting motion at the conference scheduled for April 14, 2023. Considering that the date was scheduled for a conference or for trial scheduling which was the primary purpose of the event, it was unlikely that this motion was going to be heard. That is especially so as Justice Fraser determined that this motion was going to be a long motion to be addressed during the May sittings.

[12] The offer was only accepted by the Respondent at 12:24 p.m. on the day of the Settlement Conference / Trial Scheduling Conference, eight months after the offer was made. Ms. Koren says that this late acceptance was bad faith behaviour but I cannot see how that can be. The offer remained open at that time and had not been withdrawn. It was open for acceptance anytime prior to a parenting motion being heard and the Respondent was free to accept the offer prior to that occurring.

[13] Ms. Koren says that because of the vetting which was to take place at 9:30 a.m. the hearing of the motion had already been commenced when the offer was accepted. Too late, she says. However, according to Justice Fraser’s endorsement, Ms. Koren was not present at the vetting and it is hard to see how the hearing had begun when she was not present at 9:30 a.m. that day. A hearing can only begin once both parties are present and the argument begins. This motion, had it gone ahead (and it did not), was scheduled for 2:15 p.m. and that is the earliest that the motion could have been heard considering the Applicant’s counsel did not attend earlier. Moreover, there is real doubt as to whether this motion could have proceeded at the conference. The acceptance of the offer was on time and the offer remained in force and capable of acceptance when it was accepted by the Respondent at 12:24 p.m. that day.

[14] The Applicant’s actions after April 14, 2023 are mystifying to me. Instead of determining whether the offer was validly accepted and proceeding with the final order which would result from the Respondent’s acceptance of the offer, Mr. Hockis doubled down. He brought the same motion he brought at the conference (adding in contempt) returnable during the sittings. According to her endorsement, Justice Fraser had set down a long motion because she was told by Ms. Koren that she thought the offer might have been previously withdrawn, which was an issue for the long motion. In fact, it was not withdrawn. Then when it was before the court during the sittings (with Mr. Osipov having requested an adjournment of the motion by 14B), the parties settled on the exact same terms as the offer to settle as previously accepted by Ms. Smirnova.

[15] Therefore, all of the work done between the conference and the sittings was a waste of everyone’s time. The offer had been validly accepted and had not expired.

[16] As Ms. Koren requests substantial costs in this matter, the court must keep in mind the four fundamental purposes of costs: (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). See: Mattina v. Mattina, 2018 ONCA 867.

[17] Offers to settle fit into the second purpose, which is primarily to encourage settlement. The Court of Appeal in the case of Beaver v. Hill, 2015 ONCA 840 confirms this by stating that an offer need only be made where there is a possibility of settlement and compromise: see para. 15. In other words, offers should not be primarily for the purpose of obtaining costs; otherwise, they become weaponized for that purpose and are not being made in order to obtain settlement. I assume, therefore, that the offer should have succeeded in ending the parenting litigation rather than encouraging further motions. That, unfortunately, was not the case but largely because of the position taken by the Applicant who brought a motion returnable during the sittings which did not proceed.

[18] In the present case, the offer did not provide that costs would be payable if accepted after August 2, 2022; the offer was silent on what the effect of acceptance after that date was. And neither should it have: offers which contain costs consequences prejudge the costs consequences of acceptance and cannot attract the costs consequences of r. 18(14): See: Chomos v. Hamilton, 2016 ONSC 6232; [Hall v. Hall, 2029 ONSC 4198].

[19] I am hesitant to order costs where a party has accepted an offer to settle. That would cast a pall on parties accepting offers where there was potential that a party would then be asked to pay costs precisely because they had accepted the offer. As stated, an offer should be primarily focused on settlement and to then impose costs consequences when a party has accepted that offer would be contrary to the purpose of costs awards as encouraging settlement of a proceeding.

[20] Finally, if the offer is to attract costs consequences under r. 18(14), it must fit within the provisions of the rule. And if an offer has been accepted, it does not attract costs consequences under r. 18(14): see the fourth subparagraph of the rule which requires that, in order to support an order for costs, the offer cannot have been accepted. This offer was accepted and properly so.

[21] Therefore, I find that there are no cost consequences to the Applicant of having accepted the offer to settle. I agree with the Respondent’s counsel when he says that if costs are to be ordered, they should be ordered against the Applicant who, instead of settling the matter pursuant to the acceptance of his own offer, embarked on filing a long motion for the sittings yet eventually agreed to a final order according to the accepted offer. Everything done after April 14, 2023 was needless and a waste of time and was at the behest of the Applicant who seemed to want to prove a point rather than settle the litigation.

Bad Faith / Unreasonable Behaviour

[22] This was hard fought and high conflict litigation. It is not surprising that the Applicant perceives the Respondent to be guilty of bad faith or unreasonable behaviour. However, to his credit and to the credit of the Respondent, the parties agreed to settle their litigation with shared care and shared decision making, albeit with the assistance of a parenting coordinator.

[23] The Applicant urges me to review his affidavits to make findings of unreasonable or bad faith behaviour on the part of the Respondent. I am not willing, as part of this costs decision, to hear arguments on the motion brought by the Applicant. That ship has sailed as the matter has been settled. I have not been involved in this litigation, and I have not made findings against a party during a motion or a trial. Those findings made by the court in the hearing itself also allow the court to make a finding of unreasonable conduct and I am not willing to make those findings on the basis of costs submissions alone.

[24] I am also not willing to review motion materials filed by one of the parties to make those findings. If I was willing to do so, the Respondent would be at a disadvantage as she did not file any materials in opposition to the Applicant’s motion and had requested an adjournment. I do not find it to be a productive exercise to have parties file affidavits as part of costs submissions (which according to the order and my endorsement were to be limited to six pages) to prove bad faith or unreasonable behaviour and the Applicant by requesting a review of his affidavits goes well beyond the six page limit on costs submissions. Moreover, as stated above, I am not willing to make a finding of unreasonable behaviour or bad faith behaviour on the basis of costs submissions only where there are credibility issues and conflicting evidence.

[25] The Applicant suggests that I make a finding of bad faith behaviour because of the Respondent’s last minute acceptance of the Applicant’s offer. I do not find this to be bad faith behaviour which is defined by Pazaratz J. in [Scipione v. Del Sordo, 2015 CarswellOnt 14971 (S.C.J.)] [at para. 96] as follows:

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. (I.J.), 2009 ONCJ 252, [2009] O.J. No. 2348; Biddle v. Biddle, [2005] O.J. No. 1056 (S.C.J.); Leonardo v. Meloche, [2003] O.J. No. 1969 (S.C.J.); [Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.)].

[26] A last minute acceptance of an offer is not necessarily bad faith behaviour. Many matters are settled at the last minute on the courthouse steps based on an offer; that appears to have been the case here. The offer remained open and capable of acceptance. I do not find this to be a matter of “duplicity, obstruction or obfuscation” as above.

[27] I do not find on the balance of probabilities that the Respondent is guilty of bad faith behaviour or, for that matter, unreasonable behaviour.

Result

[28] As noted above, if there was any issue as to costs, it was because of the Applicant’s needless bringing of a motion during the sittings when he made an offer which had been validly accepted by the Respondent. Moreover, the end result was dictated by that offer, the acceptance of which had been unreasonably rejected by the Applicant. If there was a party who clearly had success, it was the Respondent who suggested that the litigation was at an end because of her acceptance of the Applicant’s offer; that was borne out by the terms of the settlement itself.

[29] However, when we look at the costs incurred after the conference date, most of these were the Applicant’s costs. The Respondent had asked for an adjournment of the motion because she was not ready to go largely because Mr. Osipov was overbooked during the sittings with other trials and motions. As far as I know, the Respondent submitted no materials on the Applicant’s motion returnable during the sittings.

[30] Moreover, Mr. Osipov was unreasonable when he brought the 14B adjournment motion when Ms. Koren was away from the office and expecting it to proceed on almost no notice whatsoever: see my endorsement of May 9, 2023.

[31] Finally, I take into account that it was the Applicant who made the offer which resulted in settlement and there was no evidence of any offers made by the Respondent, which may, in itself, constitute unreasonable behaviour: see Klinkhammer v. Dolan and Tulk, 2009 ONCJ 774.

[32] Therefore, there shall be no order as to costs.

McDermot J. Date: July 6, 2023