Court File and Parties

Court File No.: Halton F314/05 Date: 2012-10-11 Ontario Court of Justice

Between: Elizabeth Sharleen Stewart (Sedlezky) Applicant

— And —

Shawn Blair McKeown Respondent

And

Karen Bernice White Third Party (Respondent)

Before: Justice S. O'Connell

Costs Endorsement

Counsel:

• Richard A. Wellenreiter, for the Applicant Elizabeth Stewart and Third Party Karen White
• Katheleen Anne Laverick, for the Respondent Shawn McKeown

O'CONNELL J.:

INTRODUCTION

[1] On April 20, 2010, the respondent Shawn McKeown commenced this proceeding by way of a motion to change the final order of Justice Wolder dated July 19, 2006. Mr. McKeown sought custody of the child, Jeffrey Andrew William Stewart-McKeown, born […], 2005 ("Jeffrey"), primary residency of Jeffrey and a court order that the third party, Karen Bernice White ("Karen"), the maternal grandmother of Jeffrey not be permitted to care for Jeffrey without supervision. The final order of Justice Wolder provided that the parties have joint custody of Jeffrey with his primary residence and final decision making power with the applicant mother, Ms Stewart, if the parties are unable to reach an agreement.

[2] On May 2, 2012, the issues of custody and access were settled pursuant to minutes of settlement based upon the recommendations from the Children's Lawyer's Social Work Investigation and Report of Ms Susan Peacey, dated February 28, 2012. The settlement occurred on May 2, 2012 at a settlement conference in this matter.

[3] The parties sought to make written submissions regarding costs. Mr. Wellenreiter, counsel for Ms Stewart (Sedlezky) and Ms White filed written submissions on June 22, 2012. Ms Laverick, counsel for Mr. McKeown filed written submissions on August 7, 2012. Apparently, however, Ms Laverick had filed her client's costs submissions in early June, but for some reason, the submissions were not located in the court file.

[4] Both counsel submitted a bill of costs. Mr. Wellenreiter is an experienced family lawyer who was called to the bar in 1995. His hourly rate on a substantial indemnity basis is $350.00 per hour, which is not unreasonable for someone of Mr. Wellenreiter's skill and experience. According to the detailed bill of costs submitted, he spent approximately 55 hours on the issues of custody and access in this proceeding, from May 19, 2010 to June 20, 2012.

[5] Ms. Laverick is also an experienced family lawyer who was called to the bar in 2002. Her hourly rate on a substantial indemnity basis is $200.00 per hour, which is very reasonable for someone of Ms Laverick's skill and experience. According to her bill of costs, she spent approximately 32 hours on the custody and access issues in these proceedings, although the bill did not contain detailed entries regarding dates and times.

RESPONDENT SHAWN McKEOWN'S POSITION

[6] Although Mr. McKeown did not make a formal offer to settle, he is seeking costs on a full indemnity basis in the amount of $8,500.00. He submits that Ms. Sedlezky and her mother, Karen White began making several unfounded allegations against Mr. McKeown that he was abusing Jeffrey and restricted his access. The allegations were very serious and extreme. Mr. McKeown cooperated fully with all police investigations as well as the children's aid society investigations. These allegations were later proven to be unfounded.

[7] Mr. McKeown submits that he needed to bring an emergency motion as Ms. Sedlezky was refusing access due to the allegations made by her and her mother against Mr. McKeown. Further, he submits that Ms. White, Ms. Sedlezky's mother, was harassing Mr. McKeown's neighbours and repeating the unfounded allegations of abuse at Jeffrey's school and at Mr. McKeown's place of employment.

[8] Mr. McKeown submits that the report of the Office of the Children's Lawyer confirms that the allegations are unfounded and that there was evidence that Jeffrey had been coached. In fact, the Office of the Children's Lawyer recommended expanded access. He further submits that he has always been willing to settle the custody and access issues on a reasonable basis including attendance at mediation, but he had no choice to commence this proceeding to reinstate his access and to combat the false allegations made against him.

APPLICANT AND THIRD PARTY'S POSITION

[9] Ms Stewart and Ms White submit that Mr. McKeown is not entitled to any costs and that he should be required to pay costs to them on a substantial indemnity basis in the amount of $25,623.98. They submit that Mr. McKeown unnecessarily brought a motion to change requesting relief of the most serious type, namely to change Jeffrey's residency. Ms Stewart and Ms White submit that they were successful in this proceeding or alternatively, more successful than Mr. McKeown. He was not successful in changing Jeffrey's residence and the final minutes of settlement that the parties entered into are very similar to the terms set out in the final order of Justice Wolder dated July 19, 2006.

[10] Ms Stewart and Ms White submit that Mr. McKeown's conduct was unreasonable, delayed and lengthened proceedings, was not in good faith and increased their legal costs. In particular:

a) Mr. McKeown commenced the motion to change in defiance of the final order which required the parties to mediate disputes;

b) Mr. McKeown proceeded with his motion to change on the false premise that Elizabeth was denying access, which was not the case. In fact, Elizabeth had demonstrated prior to the commencement of the motion to change and subsequently that she was in support of increased access for Mr. McKeown.

c) On June 4, 2010, Mr. McKeown brought his ex-parte motion without notice to seek an improper advantage. There was no basis or merit in commencing this motion. There was no history of denying access by Elizabeth.

d) Mr. McKeown's refusal to obtain confirmation from a psychiatrist unnecessarily delayed matters and frustrated attempts at mediation. Such refusal was unwarranted. It was a term of the final order and impediment to successful negotiations. Mr. McKeown's conduct in this respect unduly lengthened the proceedings and thwarted any possibility of resolving the issue of access at a much earlier point in the proceeding.

e) Mr. McKeown's request for custody and permanent residency was not in the best interests of Jeffrey and was without merit.

f) Mr. McKeown did not submit a formal offer to settle.

BACKGROUND

[11] The parties had a brief and troubled relationship. They separated in December of 2004 when Ms Stewart was pregnant with Jeffrey. They reconciled briefly but did not resume cohabitation, however shortly after Jeffrey was born, the mother commenced an application for custody. The parties resolved the original family law proceedings concerning custody and access pursuant to Minutes of Settlement, which were incorporated into a final court order of Justice Wolder, dated July 19, 2006. The final order of Justice Wolder provided that:

a) Ms Stewart and Mr. McKeown would have joint custody of Jeffrey;

b) Ms Stewart was to have primary residency of Jeffrey and final decision making was Ms Stewart's if they were unable to reach agreement;

c) Mr. McKeown was to have weekday access every Tuesday and Thursday evening from 6:00 p.m. until 7:45 p.m.;

d) Mr. McKeown's weekend access with Jeffrey was to increase on a gradual basis, culminating to every other weekend from Saturday 9:00 a.m. until Sunday 5:00 p.m.

e) Mr. McKeown was to seek the immediate assistance of a psychiatrist to assist him regarding medication and the management of his moods;

f) Mr. McKeown was to provide confirmation from his psychiatrist that he is capable of managing parenting of Jeffrey independently; and

g) Ms Stewart and Mr. McKeown were to employ a parent mediator to resolve future differences and commit to participating in good faith.

[12] According to both parties, the access arrangements agreed to by both parties under Justice Wolder's order were working reasonably well although Mr. McKeown wanted further time with Jeffrey. However in 2009 and 2010, Ms White, and Ms Stewart, involved the children's aid society and the police on a number of occasions regarding very serious allegations of physical, emotional and sexual abuse by Mr. McKeown against Jeffrey, resulting in the denial of Mr. McKeown's access to Jeffrey.

[13] Mr. McKeown brought this motion to change in April of 2010 after he was denied access. The Office of the Children's Lawyer became re-involved and prepared an updated investigation and report. The parties entered into final minutes of settlement in accordance with the recommendations of the Office of the Children's Lawyer. The current settlement increases Mr. McKeown's access to Jeffrey significantly. None of the allegations of abuse were verified by any of the professionals involved, nor did the Children's Lawyer raise concerns regarding Mr. McKeown's access.

THE LAW AND GENERAL PRINCIPLES

[14] 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:

24. (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.

[15] Rule 24 (11) provides a further list of factors that a court must consider when setting the amount of costs:

(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).

[16] 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:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. 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.

3. The offer does not expire and is not withdrawn before the hearing starts.

4. The offer is not accepted.

5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

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 (14) and (16).

[17] In Serra v. Serra, 2009 ONCA 395, 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.

[18] 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. 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. Courts must not only decide liability for costs, but also the amount of those costs.

[19] 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, 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.

[20] In Delellis v. Delellis and Delellis, Justice David R. Aston states the following at paragraph 9:

"… 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

[21] In my view, the success in this case was divided. Under sub-rule 24(6), if success in a case is divided, the court may apportion costs as appropriate.

[22] Mr. McKeown was not successful in changing custody and Jeffrey's primary residence. The minutes of settlement signed by the parties on May 2, 2012 essentially confirmed the status quo set by the final order of Justice Wolder in July of 2006, although with expanded access to Mr. McKeown. Mr. McKeown and Ms Stewart continue to have joint custody. Primary residence and decision making authority remains with Ms Stewart. Mr. McKeown's claim to deny Ms White access to Jeffrey without supervision was also not successful.

[23] Nevertheless, Mr. McKeown was successful in reinstating his access and significantly expanding his access to Jeffrey. He was also successful in refuting the very serious allegations of abuse that were made against him by Ms Stewart and Ms White. This became the primary issue in dispute between the parties.

[24] In this case, neither party exchanged offers to settle to trigger full recovery of costs. Mr. McKeown did not serve any formal offer to settle and the offer to settle served by Ms Stewart did not comply with Rule 18, nor was it as favourable to her as the final minutes of settlement filed. Having said that, under subrule 18(16), the court has a discretion to take into account any written offer to settle, the date it was made and its terms, even if subrule 18(14) does not apply, when exercising its discretion over costs. Further, in deciding whether a party has acted reasonably or unreasonably in a case, the court shall examine the reasonableness of any offer the party made (subrule 24 (5)(b) of the Rules). By contrast, a party's failure to serve an offer to settle may be viewed as an adverse factor in determining the issue of costs. See M. (J.V.) v. P. (F.D.), 2011 CarswellOnt 13510.

[25] Both sides submit that the other acted in bad faith, thereby triggering full recovery of costs in their favour. "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. 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."

[26] 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. See S.(C.) v. S. (M.).

[27] I do not believe that Mr. McKeown was acting in bad faith in starting these proceedings, and in particular, I do not believe that he commenced his motion to change to gain the upper hand. He commenced this motion to change because he was being denied access after very serious allegations of physical and sexual abuse were made against him by Ms White, Ms Stewart's mother, which later proved to be unfounded. Nevertheless, I do find that Mr. McKeown's resistance initially to provide updated information regarding his mental health to be unreasonable, particularly given the Order of Justice Wolder, however, once he provided it, I was satisfied with the medical information provided, as was the assigned mediator.

[28] In considering whether I should find Ms Stewart and/or White to have acted in bad faith in this matter, I turn to the findings made by Ms Susan Peacey, the OCL clinical investigator appointed by the Court, to conduct an updated investigation and report in this matter. In her report dated she makes the following observations:

"Ms. Stewart and Mr. McKeown had a fairly short and troubled relationship culminating in the birth of Jeffrey. According to them both, although they had some issues, and Mr. McKeown wanted more time with Jeffrey, the access arrangements agreed to after the last involvement of this agency worked fairly well. However, everything changed in 2009-2010, when Ms. White, and to a less extent Ms. Stewart, began involving the child welfare authorities and the police on a regular basis regarding very extreme accusations of abuse that Mr. McKeown was purported to have perpetrated on Jeffrey, as told to them by Jeffrey. None of these accusations was validated by any of the professionals who interviewed Jeffrey. Jeffrey consistently told everyone that nobody hurt him and that he enjoyed going to visit his father.

It was indicated by the police that Ms. White and Ms. Stewart asked Jeffrey very leading questions, and Dr. Feldman, the family doctor, questioned whether Jeffrey had been coached because his story did not make sense. The Children's Aid Society cautioned Ms. Stewart and Ms. White not to involve Jeffrey in adult matters.

Ms. White indicates that everything she has reported has been true. However, the truth is a variable quantity here. When a young child has been asked the kind of questions that Jeffrey has, very often that child will simply say "yes" or "daddy" because he knows that that will stop the questioning and/or that is what the questioner wants to hear. Children's Aid workers and the police who are involved in interviewing children, are specially trained to ask the kind of open ended questions that will allow children to say what has actually happened, or their "truth".

Ms. White believes that Jeffrey has not revealed any of these abuses because he is afraid of the repercussions. However, Jeffrey doesn't report or exhibit any fear towards his father and in fact, it was observed that his face lit up when he talked about or to him. He expressed the wish that he had more overnights with his dad.

Dr. Brown has expressed the view that in the past, Ms. White's very significant anxiety would cause her to see more danger in the world than was in fact the case. Ms. White has referred to her own guilt in not protecting her daughters from abuse by their father, and in fact, reports that due to her drinking, she would also yell and hit them. Ms. White has been sober for a number of years, holds down a responsible job, and owns her own house. However, she has not indicated that she has gone for the kind of extensive therapy that would help her to eradicate those significant feelings. There is no doubt that she loves Jeffrey and is able to be caring towards him. However, her anxiety over losing him or over the possibility that he might be hurt may have been colouring what she has heard or how she has asked the questions.

Ms. White presents as lacking in appropriate boundaries, given that she went to interview Mr. McKeown's neighbours, and people at his work place, looking for evidence of bad parenting....

Ms. White reports that she was the person with Jeffrey when he reported all his concerns, and that they are real. However, based on all of the evidence available at this time, there does not appear to be any reasons for Jeffrey not to enjoy more time with his father, particularly now when Ms. Stewart has her hands relatively full with 2 younger children, and a return to her job in September, as well as her own mental health challenges...

For Jeffrey's sake, it is to be hoped that all the adults here will get help to use their very best parenting techniques so as not to put Jeffrey in the impossible position of being pulled amongst the adults that he loves."

[29] I do not find that Ms White and Ms Stewart deliberately made false allegations of abuse against Mr. McKeown with the intention to inflict harm or to intentionally obstruct access, which is necessary to make a bad faith finding in this case. However, I find their conduct, and in particular, Ms White's conduct, to be unreasonable in these proceedings. There is evidence that Ms White was coaching Jeffrey, as a result of her own mental health issues and her deep anxiety over her failure to protect her own daughters from their father in the past. Notwithstanding the investigation by numerous professionals, Ms White still appears to believe that Mr. McKeown is abusing Jeffrey.

[30] I do not believe Ms Stewart's claim that she has always encouraged and facilitated Mr. McKeown's access to Jeffrey. It was my impression throughout these proceedings that Ms Stewart was very resistant to expanding Mr. McKeown's access to Jeffrey. Her abrupt change in position during mediation and the failure of the mediation as a result is but one example. I do not know how much of Ms Stewart's conduct was influenced by her mother although no doubt there was some pressure and influence. I do believe that Ms Stewart's intentions were sincere, albeit misguided and unreasonable.

[31] Although I have found success to be divided, I would apportion some costs in Mr. McKeown's favour, given that the majority of time was spent on the access issue and Mr. McKeown was successful on this issue. Further, but for the denial of access, Mr. McKeown would not have commenced these proceedings. The proceedings resulted in the successful reinstatement and increase of his access.

ORDER

[32] In my view, in considering all of the above factors, Ms Stewart and Ms White shall pay Mr. McKeown's costs fixed at $3,000.00, inclusive of fees, disbursements and taxes no later than 30 days from the date of this Order, or at a rate of $150.00 per month, commencing December 1, 2012.

Released: October 11, 2012

Signed: "Justice Sheilagh O'Connell"