Court File and Parties
Court File No.: 158/11 Date: March 28, 2012
Ontario Court of Justice
Re: Anne Marguerite Thomson – Applicant (Respondent on motion) And: Peter Andrew Thomson – Respondent (Applicant on motion)
Before: Justice R. Zisman
Counsel:
- Linda Joe, for the Applicant
- Annie Noa Kenet, for the Respondent
Decision on Costs
Introduction
[1] On January 12, 2012 I heard a motion brought by the Respondent to stay this proceeding on the basis that the parties' separation agreement dated October 6, 2005 required that the matters in dispute be resolved by means of the dispute resolution provisions of that agreement. On January 31, 2012 I released my reasons staying the proceeding on the condition that the mediation/arbitration before Mr. Philip Epstein was commenced. Counsel were invited to make written submissions on costs. I have reviewed those submissions and this is my decision.
[2] The Respondent ("father") seeks costs on a full indemnity basis for the entire proceedings in the amount of $20,135.61 or in the alternative costs of the motion to stay in the amount of $11,264.24 and that the remaining costs of these proceedings (being $8,871.37) be submitted for a determination by Mr. Epstein as part of the mediation/arbitration process.
Position of the Parties
[3] It is the father's position that he has been successful on the motion to stay and therefore he should be entitled to costs.
[4] It is submitted that the father served two Offers to Settle. The first Offer to Settle dated September 13, 2011 provided that the parties would attend mediation/arbitration and that the parties would pay for the mediation/arbitration in proportion to their incomes. The second Offer to Settle dated December 18, 2011 provided that the parties attend mediation/arbitration and that the father would initially pay for the cost of the mediation/arbitration subject to reapportionment by Mr. Epstein. It is therefore submitted that the father has achieved a result that was at least as good as both of his Offers to Settle in that Mr. Epstein may apportion cost of the mediation/arbitration in a manner that provides the father pay less that the percentage provided in his Offer to Settle.
[5] Counsel also points out that in addition to the Offer to Settle she attempted to canvass with counsel for the mother what terms would be acceptable to permit the matter to proceed to mediation/arbitration.
[6] It is the mother's position that there should be no order as to costs. It is submitted that the mother began this court application out of frustration caused by her futile attempts to deal with the father paying child support in accordance with Child Support Guidelines and his failure to provide financial disclosure as required by the terms of the separation agreement.
[7] It is submitted that it is undisputed that as of March 2008, when both children began to live with the mother full time, the father only paid child support of $339.00 per month up to August 2012 and then, when the eldest child began university, he reduced the amount further to $169.00 per month, despite the fact that his income has consistently been approximately $80,000.00.
[8] It is further submitted that it is undisputed that the father refused to provide financial disclosure on the basis that the issue of child support was to be mediated and that this financial disclosure would be provided at mediation.
[9] It is therefore submitted that based on the father's conduct and the financial hardship any cost award would cause the mother, the court has the discretion to not order costs even though he was the successful party.
Analysis
[10] Rule 24 of the Family Law Rules, O. Reg. 114/99 provides guidance on costs in a family law context. Rule 24 (1) sets out the basic assumption that a successful party is entitled to costs.
[11] Rule 24 (4) provides that a successful party that behaved unreasonably during a case may be deprived of his costs or required to pay the costs of the unsuccessful party. Although my reasons for judgment make it clear that I did not condone the father's behaviour I do not find that he acted unreasonably in this case. The father acted properly in pursuing his remedy to have this matter adjudicated through the mediation/arbitration process the parties had agreed to in their separation agreement just as the mother had the right to question the appropriateness of that process in view of the father's failure to abide by the other terms of that agreement.
[12] Rule 23 (11) provides a further list of factors a court should consider in dealing with costs: a person setting the amount of costs shall consider,
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness or unreasonableness of each party's behavior in the case;
(c) the lawyer's rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter.
[13] The court's role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As was pointed out in Boucher v. Public Counsel (Ontario), the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings.
[14] As the father served two Offer to Settle, the cost consequence of making an offer to settle is a relevant consideration in this case. Rule 18 (14) provides that:
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 from that date, if the following conditions are met:
[15] The subrule then sets out the five conditions. There is no issue that the father met those conditions. However I would point out that with respect to condition 5, obtaining an order as favourable as or more favourable than the offer he made, the only relevant provision in the offer is that he obtained an order to stay this proceeding and the parties are required to attend mediation/arbitration. The provisions in both Offers to Settle regarding payment were all subject to being reapportioned by Mr. Epstein at the mediation or subject to cost submissions at the arbitration which in any event would be within the mandate of the mediator/arbitrator.
[16] As the successful party, the father is presumed to be entitled to costs and as he has met the prerequisites of Rule 18 (14) and is presumed to be entitled to full recovery of his costs.
[17] The factors set out in rule 24(11) as they apply to this case are as follows:
(a) The issue of returning to mediation/arbitration was extremely important to both parties. The mother alleged that the father's attempt to now rely on the terms of the separation agreement was just a delay tactic by the father. The father alleged that it would be the most cost efficient manner to resolve the dispute especially in view of the fact that the parties had spent an enormous amount of legal fees in the initial court proceedings and had been then able to mediate a final settlement with Mr. Epstein in a half day session. While the issues were not complex, the availability of case law on the relevant issues, particularly in the area of family law, was difficult to obtain. A great deal of time was necessarily required to research the law and prepare the factum.
(b) Both parties acted reasonably in this proceeding. Neither party can be faulted in requesting the court determine whether or not their dispute was still governed by the mediation/arbitration provisions in the separation agreement due to the fact that neither party had complied with its terms or attempted to enforce those terms for a considerable length of time.
(c) The father originally retained Cheryl Goldhart who as senior counsel charged the rate of $575.00 per hour. However, the majority of the legal work was done by Ms. Goldhart's associate, Ms. Annie Noa Kenet who has four years of experience and her hourly rate is $275.00 that was increased to $295.00 as of January 2012. The hourly rates charged are reasonable.
(d) The time spent on the preparation and court attendance for the motion namely, about 32 hours, was not excessive in view of the complexity of the issue and the extensive research and detailed factum that was prepared and which was of great assistance to the court. The further time spent of about 22 hours to prepare the Answer, financial statement and the attendance at the case conference appears a bit excessive however, that time seems to also include discussions with other counsel and undoubtedly with the respondent regarding the procedural issue.
(e) The expenses are not in dispute and are reasonable.
(f) The other matters I consider relevant in this case are that:
(i) The father has not paid anything approximating the appropriate amount of child support since March 2008;
(ii) The father did not provide annual financial disclosure as required by the separation agreement;
(iii) The father ignored the mother's numerous requests for financial disclosure and then took the position that he would only comply once he was required by the mediator/arbitrator to do so;
(iv) The father did not pursue his remedies pursuant to the terms of the separation agreement in a timely manner; and
(v) The mother's financial circumstances and the financial hardship an order of costs would have on her and the children.
[18] Although the Family Law Rules have circumscribed the broad discretion of a court to award costs, as set out in section 131 (1) of the Court of Justice Act, they have not totally removed a judge's discretion. Therefore, the general provisions of Rule 24 (1) enacting a "presumption" that the successful party is entitled to costs of the case does not require that the successful party is always entitled to costs. See C.A.M. v. D.M. at para. 42.
[19] Similarly the court also has a discretion not to award a full recovery of costs even where the party has met all of the conditions in Rule 18(14). The Rule makes that clear since it provides that "unless the court orders otherwise" the party is entitled to full recovery. See C.A.M. v. D.M., supra, para. 43.
[20] There are circumstances aside from the unreasonableness of the successful party that rebut the presumption that a successful party may not obtain a cost award in his or her favour. See Ramsay v. Ramsay cited with approval in C.A.M. v. D.M., supra par. 41.
[21] As stated by Justice Aston in Sims-Howarth v. Bilcliffe at para. 4 the "Family Law Rules demand flexibility in examining the list of factors in subrule 24 (11) without any assumptions about categories of costs."
[22] In particular, courts have held that the financial situation of the parties, especially an unsuccessful custodial parent, may be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18.
[23] As stated by Justice Rosenberg in C.M. v. D.M., supra, at para. 42, "In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child." See also Murray v. Murray, 2005 Carswell Ont 7278 (C.A.)
[24] In this case, the conduct of the father cannot be condoned or rewarded by awarding him costs. As I noted in my reasons, the father's "diatribe" in response to requests for financial disclosure was an indication that he would not cooperate voluntarily and intended to re-open all aspects of the separation agreement and that his failure to provide disclosure was a breach of the separation agreement and nothing short of bad faith.
[25] In this case, for the above noted reasons, the presumption that the father is entitled to costs is rebutted. The financial hardship that an award of costs against the mother would cause on her ability to meet the children's needs overrides the cost claim the father might otherwise be entitled to. It would not be "fair or reasonable" to award him costs of this motion.
[26] I would also not refer the costs of the proceeding to be determined by Mr. Epstein in the mediation/arbitration. Subrule 24 (10) requires the judge dealing with each step in the case to promptly decide costs of that step. No order was made or requested at the case conference the parties attended.
[27] The remaining costs of the proceeding are related to the preparation of originating court documents, interviews with the father and correspondence. These costs could only properly be dealt with at the end of the proceeding based on the eventual outcome. In my view there is no jurisdiction for me to delegate the determination of those costs to a mediator or arbitrator. Some of legal costs incurred for this court proceeding can in any event be negotiated or claimed in the mediation/arbitration. For example, the time spent by counsel meeting with her client and familiarizing herself with the background and issues in the dispute and preparation of the financial statement.
[28] It is arguable that at the completion of the mediation/arbitration, the successful party could seek costs of this proceeding unrelated to a specific step in the proceeding. However, as the proceeding is stayed, neither party is at this time entitled to claim any costs for the prior steps in the proceeding.
[29] Accordingly, I decline to grant costs.
Zisman J.
Date: 28 March 2012