Court File and Parties
Court File No.: 102/11 Date: 2012-04-18
Ontario Court of Justice
Re: Suzanne Vujic-Lakatos – Applicant
and
David Agoston Lakatos - Respondent
Before: S. O'Connell
Counsel:
- Catherine Haber, for the Applicant
- Daniel Hall, for the Respondent
Costs Endorsement
Introduction
[1] On December 19, 2011, for oral reasons, I made the following temporary order regarding the parties' motions, which were argued before me on November 8, 2011:
The parties' separation agreement dated August 18, 2009 shall be varied on a temporary basis as follows:
The applicant mother shall have temporary sole custody of the children and the children's primary residence shall remain with the applicant pursuant to the parties' separation agreement dated August 18, 2009. This means that the applicant mother shall have interim decision making authority with respect to the children's religion, education, health and extracurricular activities pending a final determination of this matter.
The respondent father's access time shall be as follows:
a) The respondent's five hour visit on the Sundays of the applicant's weekend with the children is vacated;
b) The respondent's mid-week access shall occur on Tuesdays and Thursdays and from after school until 7:30 p.m.
c) The respondent shall pick up the children at the commencement of his access times and then deliver the children back to the applicant at the end of his access times.
d) The respondent shall ensure that both children shall attend all of their extra-curricular activities during the respondent's access times.
The respondent shall pay temporary child support and section 7 expenses to the applicant for the children named above in accordance with the Child Support Guidelines of Ontario, and based on the respondent's gross annual income. If the parties cannot agree upon the respondent's income or section 7 expenses, then either may return to court for a determination of same.
The respondent shall produce copies of his 2008, 2009, 2010 Income Tax Returns and Notices of Assessment.
[2] Both parties made written submissions on costs, the applicant mother on January 12, 2012, and the respondent father on January 25, 2012. The applicant replied to the respondent's submissions on January 26, 2012.
[3] Overall, it is not disputed that the applicant mother was the successful party and she is seeking her costs of the motions returnable before me on November 9, 2011 and before Justice Murray of the Superior Court of Justice on October 5, 2011 on a full indemnity basis in the amount of $21,136.65. Alternatively, she seeks her costs of both motions on a partial indemnity basis in the amount of $17,046.05.
[4] The applicant submits that she should be awarded costs on a full indemnity basis because she was essentially fully successful with respect to all of the claims made in her motion. She further submits that with respect to the costs of the motion heard by Justice Murray on October 5, 2011, although the order obtained at that motion was made ultimately on consent of the parties, the consent was only achieved after the applicant was forced to incur the expense of bringing her motion on October 5, 2011 and was only executed on the day of the motion. She further submits that the respondent's conduct in this case was unreasonable and that the children were detrimentally affected by the respondent's conduct.
[5] The respondent submits that while the applicant is entitled to some costs, given her success on the issues that were argued, the applicant should have her costs substantially reduced and fixed at $5,000.00 for the following reasons:
a) The applicant mother acted unreasonably as she never tendered an offer to settle in these proceedings;
b) The respondent father's conduct from the start of the proceedings was reasonable and many of the issues were resolved on consent. Further, the respondent made a bona fide attempt to resolve the issues very early on the proceedings by proposing a parenting coordinator, which was rejected by the applicant.
The Law
[6] Rule 24 of the Family Law Rules, O. Reg. 114/99, governs the determination of costs in family law proceedings and the sections relevant to the circumstances of this case are as follows:
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party's own costs or ordered to pay all or part of the unsuccessful party's costs.
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
a) the party's behaviour 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.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(7) If a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step, the court shall award costs against the party unless the court orders otherwise in the interests of justice.
(8) If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.
(10) Promptly after each step in the case, the judge or other person who dealt with that step shall decide in a summary manner who, if anyone, is entitled to costs, and set the amount of costs.
[7] Rule 24(11) provides a further list of factors that 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 behaviour in the case;
(c) the lawyer's rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, 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. O. Reg. 114/99, r. 24(11).
[8] Rule 18(14) and 18(16) of the Family Law Rules, which address the cost consequences of offers to settle, provide the following:
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. O. Reg. 114/99, r. 18(14).
18(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply. O. Reg. 114/99, r. 18(16).
[9] Subrule 18(16) permits the court to go beyond the strict conditions set out in subrule (14) and award partial or full recovery costs even though subrule (14) does not apply.
[10] In Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at paragraph 8, the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:
(1) to partially indemnify successful litigants for the cost of litigation;
(2) to encourage settlement; and
(3) to discourage and sanction inappropriate behaviour by litigants.
[11] Rule 24 created a new framework for determining costs in family law proceedings. The presumptive nature of Rule 24 has significantly curtailed the court's discretion regarding costs in family law proceedings and absent compelling circumstances or the exceptions set out in the rule itself, costs are generally awarded to the successful party. The Ontario Court of Appeal in C.A.M. v. D.M., 67 O.R. (3d) 181 held that while the Rules have not completely removed a judge's discretion, the Rules nonetheless circumscribed the broad discretion previously granted to the courts in determining costs (paragraph 40). Courts must not only decide liability for costs, but also the amount of those costs.
[12] 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 et al. v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291, 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 rather than an exact measure of actual costs to the successful litigant.
[13] In Delellis v. Delellis and Delellis, [2005] O.J. No. 4345, at paragraph 9, Justice David R. Aston states the following:
"… recent cases under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, have begun to de-emphasize the traditional reliance upon "hours spent times hourly rates" when fixing costs...Costs must be proportional to the amount in issue and the outcome. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant..."
Analysis
[14] Ms. Haber is a family law practitioner who was called to the bar in 1978 and has approximately 33 years of family law experience. In the bill of costs submitted, her hourly rate is set at $500.00 per hour on a full indemnity scale and $400.00 per hour on a partial indemnity scale. While the hourly rate is high, it is not unreasonable or excessive for someone of Ms. Haber's skill and experience.
[15] However, I am not prepared to grant costs on a full indemnity basis. Neither party served an offer to settle in these proceedings. I agree with the respondent's submission that the failure to serve an offer to settle is an important factor that I should take into consideration on assessing costs, particularly given the requirements of Rule 18 of the Family Law Rules and the overall objectives of Rule 24(5) of the Family Law Rules, which provides that the failure to make an offer to settle is a factor that the court must consider in determining whether a party acted reasonably.
[16] Justice Stanley Sherr states the following in J.V.M. v. F.D.P., 2011 ONCJ 616, [2011] O.J. No. 5441, and I adopt this reasoning in assessing the costs in these proceedings:
"I was not provided with an offer to settle by either party…The failure to make an offer to settle much earlier by either party is unreasonable behaviour. Subrule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (subrule 2(2)). This includes taking appropriate steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute. See Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134. The failure to serve an offer to settle will be an adverse factor when assessing costs."
[17] It is surprising how many litigants in family law proceedings fail to serve comprehensive offers to settle pursuant to the conditions set out under Rule 18(14). In Brazeau, Justice Polowin cited with approval the remarks of Justice Mackinnon in Neill v. Egan, 2000 CarswellOnt 1516, when the latter stated (at paragraph 11 in Brazeau):
"Both parties should make an offer covering in detail all aspects of the case. Even where the case appears intractable, an offer can serve to settle some issues or narrow the issues, with a saving to time and effort for all concerned."
[18] Further, although the bill of costs submitted by Ms. Haber was comprehensive and detailed, the time claimed was excessive. Ms. Haber claimed almost 36 hours for the preparation of the two motions and the costs submissions. As well, in my view, the time claimed for the motion before Justice Murray should be reduced given that the applicant brought the motion in the wrong court and it was necessary to transfer the motion for argument to the Ontario Court of Justice. Whether or not both parties agreed to traverse the motion to the Ontario Court of Justice, the fact is that the motion had to be traversed. Although the motion materials did not need to be duplicated, the parties had to attend two motion dates and prepare for two hearings.
[19] I agree with the applicant's submissions that the respondent's behaviour was unreasonable in this case. I do not agree with the respondent's submission that his proposal for a parenting coordinator would have necessarily resolved the many outstanding issues between the parties. By August 2010, the children were already detrimentally affected by the respondent's conduct. It may have taken the parties several more months to agree upon a parenting coordinator. Further, even the most effective parenting coordinator would have had difficulty facilitating any agreement between the parties. The litigation was necessary given the respondent's behaviour, in particular, the following examples:
a) his absolute refusal to co-parent with the applicant and to comply with the parties' separation agreement in any meaningful way;
b) his unreasonable conduct in refusing to communicate with the applicant regarding the children;
c) his refusal to consent to counseling for the children;
d) his refusal to consent to the children's continued participation in extra-curricular activities that he did not approve or that interfered with "his time" despite the children's obvious enjoyment and success in these activities, over a number of years;
e) his initial refusal to permit the parties' daughter to attend an awards banquet where she was to receive an award or to attend other school functions during the time that the children were with him.
[20] The Court of Appeal in Serra v. Serra, supra, has made it clear that one of the objectives of a cost award is to discourage and sanction inappropriate behaviour by litigants. The overall objective of a cost award is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant.
The Order
[21] Taking into account all of these factors, the respondent shall be required to pay the applicant's costs fixed at $10,000.00 inclusive of fees, disbursements and HST.
[22] The respondent may repay these costs in the sum of $250 per month on the first day of each and every month, commencing on 1 May 2012. However, if he is more than 30 days late in making any of these payments or the ongoing support payments set out in my temporary order, then the entire amount of arrears shall immediately become due and payable.
Justice Sheilagh O'Connell
Date: April 18, 2012