Court File and Parties

Court File No.: Halton 9/99 Date: 2012-08-28 Ontario Court of Justice

Between: Elizabeth Ann Paan Applicant

— And —

Robert Paan Respondent

Before: Justice Sheilagh O'Connell

Endorsement regarding Costs, dated August 28, 2012 For the Motion heard on August 27, 2012

Parties and Representation:

• Robert Paan — on his own behalf
• Elizabeth Paan (Sisak) — on her own behalf
• Robert Brooks — for the Ministry of Community and Social Services

O'CONNELL J.:

1: INTRODUCTION

[1] The Ministry of Community and Social Services brought a motion to set aside an Order dated April 2, 2012, in which I ordered both the Ministry and the Region of Halton to reimburse the Respondent overpaid child support in the amount of $10,607.16 forthwith.

[2] It was clear after reviewing the motion materials prepared by the Ministry that the Ministry was never served with Mr. Paan's November 2011 Motion to Change nor with a copy of my endorsement dated January 23, 2012. I ordered Mr. Paan to serve the Ministry with a copy of that endorsement forthwith so that I could hear from the Ministry at the next return date regarding the orders sought by Mr. Paan.

[3] Although an Affidavit of Service was filed by Mr. Paan and I questioned him about service on the Ministry at the April 2nd hearing date, Mr. Paan incorrectly served the Ministry of Community and Social Services at the offices of the Region of Halton. The Ministry's head office for service is located on Wellesley Street in Toronto, Ontario. As such, the documents never came to the Ministry's attention.

[4] Mr. Paan acknowledged his error at the motion returnable on August 27, 2012 and he did not object to the order being set aside against the Ministry. He stated that he was advised that this was the correct address for service on the Ministry and he was under the impression that the documents would come to the Ministry's attention at that address. According to Mr. Paan, his brother personally attended at the Halton Region office for Ontario Works and handed the documents to the receptionist.

[5] It is also clear from reviewing the Ministry's materials that the Ministry was not even an assignee of the child support order and has never had a financial interest in this matter, so it did not receive any of the child support that was determined to be overpaid.

[6] Accordingly, I set aside the order against the Ministry on yesterday's date. Mr. Brooks, on behalf of the Ministry, now seeks his costs on substantial indemnity basis in the amount of $2,841.93. Alternatively, he seeks costs on a partial indemnity basis in the amount of $1,293.68. Mr. Brooks prepared two detailed bills of costs. He is an experienced family lawyer who often acts for the Ministry in these cases. According to the bill of costs submitted, the time involved in preparing for the motion, including court time, was approximately 10.7 hours.

[7] Mr. Brooks is seeking his full recovery of costs on the basis that Mr. Paan acted in bad faith by intentionally not serving the Ministry with his motion materials and the January 23, 2012 endorsement. He submits that Mr. Paan was well aware of the proper address for service for the Ministry and that he chose not to serve the Ministry properly, thus costing tax payers a significant amount of money in setting aside the court order. He points out that Mr. Paan had no trouble faxing my April 2, 2012 endorsement to the Ministry after he obtained the order, unopposed and without notice. He further points out that Mr. Paan did not serve the recipient, Ms. Sisak either, a claim which Mr. Paan vigorously denies, and I will hear further submissions on this issue at the next hearing date.

[8] Mr. Paan submits that the incorrect service was an error and entirely inadvertent. He further submits that after the April 2, 2012 hearing, he was advised to fax my endorsement to the Ministry, something he was not aware that he could do prior to the hearing when he arranged for special service of the documents. He submits that he was confused by the two levels of government and thought that they were one and the same, which is why he served the documents at the address for both the Region and the Ministry.

2: THE LAW

[9] Rule 24 of the Family Law Rules, O. Reg. 114/99, governs the determination of costs in family law proceedings. The relevant subrules to the circumstances of this case are as follows:

Rule 24:

(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

(2) The presumption does not apply in a child protection case or to a party that is a government agency.

(3) The court has discretion to award costs to or against a party that is a government agency, whether it is successful or unsuccessful.

(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.

[10] 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.

[11] 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.

[12] Although rule 24 created a new framework for determining costs, the presumptive nature of this rule does not apply to a party that is a government agency, even if that party is successful. Subrules 24(2) and 24(3) provide that courts still have a considerable amount of discretion in determining whether costs should be awarded for or against a government agency.

[13] "Bad faith" is not defined under subrule 24(8). The case law is clear that bad faith is something significantly more than unreasonable litigation behaviour. The person alleging bad faith must meet a very high test. In one of the leading cases, C.S. v. M.S., Justice Craig Perkins explained that bad faith means the following:

"In order to come within the meaning of bad faith in subrule 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."

3: CONCLUSION

[14] I do not find that Mr. Paan acted in bad faith with the intent to cause harm, conceal information, or deceive the Ministry of Community and Social Services. I find that the failure to properly serve the Ministry was inadvertent, given the confusion that many self-represented parties have regarding service of documents on the two levels of governments in cases where child support has been assigned. Further, Mr. Paan did not contest the motion once it was brought by the Ministry and he rightly conceded that the order against the Ministry should be set aside.

[15] Mr. Paan has very limited financial circumstances unlike the resources available to the Ministry of Community and Social Services. Even a costs award of $1,293.68 would restrict his ability to continue to advance his claims in this proceeding.

[16] In my view, although unfortunate, in light of all of the above circumstances, there should be no order for costs payable to the Ministry.

Released: August 28, 2012

Signed: Justice Sheilagh O'Connell