Court File and Parties

Court File No.: Toronto D42271/06 Date: 2012-09-10 Ontario Court of Justice

Between: Myriam Rodriguez, Applicant (Responding Party)

— And —

Jaswinder Singh, Respondent (Moving Party)

Before: Justice Curtis

Heard on: 18 April 2012

Endorsement released on: 10 September 2012

Counsel:

• Applicant: Nilufa Husain
• Respondent: Unrepresented

CURTIS, J.:

INDEX

1. Overview
2. The Parties' Claims re Costs
3. Litigation History
4. The Costs Analysis
   • a. The Law of Costs
     • i. Entitlement
     • ii. The Evolution of Costs as an Instrument of Social Policy
     • iii. Costs and Ability to Pay
     • iv. Offers to Settle
   • b. Analysis
     • i. Costs and Reasonable Behaviour
     • ii. The Mother was Unrepresented at Trial
     • iii. Behaviour of the Parties
   • c. Quantum of Costs
5. Order

1. Overview

This is the costs decision of the four day trial regarding child support for seven year old Alyiah.

The trial was the result of two motions to change brought by the father, separately, regarding child support and custody. The father brought a motion to change sole custody to joint custody, and the custody and access issues were settled on the first day of the trial. The only issue at trial was child support.

2. The Parties' Claims re Costs

The mother (who was unrepresented at the trial) claims costs of the trial, on a full recovery basis, under Rules 24(1), 24(8), 24(11) and 18(16) of the Family Law Rules, O. Reg. 114/99, as amended, and s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, as amended, based on her position that the father acted in bad faith. She claims $20,000 all in (fees + HST, disbursements + HST).

The father (who was represented at the trial) says the mother is not entitled to costs, but that if she is, that the amount she has claimed is excessive and disproportionate.

3. Litigation History

The litigation surrounding the two motions to change was acrimonious. There is a long history of conflict and litigation between the parents over many years.

The original litigation concluded with a final consent order by Karswick, J. on 12 December 2005 for joint custody, with primary residence with the mother and a detailed access arrangement. Joint custody was changed by the order of Zuker, J. made 5 March 2009, which provided sole custody to the mother, no access to the father, and a restraining order.

The father brought several motions regarding custody of the child, and the original custody and access order has been changed several times. There were many court orders (in 2005, 2006, 2009, and 2010), mostly surrounding custody and access.

In the father's motion to change child support, the father asked to reduce child support to reflect his reduced income and to rescind arrears, to reflect both changes in his income, and to reflect payments he says were made directly to the mother. The mother did not accept the father's claims about his income, and made a claim for the child support to be adjusted to reflect increases in the father's income, for income to be imputed to the father, and for adjustments to the on-going support in accordance with the father's current income. The mother wanted no reduction in arrears owing.

In April 2010, the father brought a second motion to change the order of Zuker, J. made 5 March 2009, for sole custody to the mother. The father asked for joint custody of the child with primary residence with him, and to change the child's school to Brampton. At that time, the father had not seen the child for a year, since February 2009. On the first day of the trial 14 June 2011, the parents settled the custody and access issues with two final consents. The father's claim for joint custody was withdrawn, and the parents agreed to specific access terms.

The trial decision, released 7 November 2011 (Rodriguez v. Singh, 2011 CarswellOnt 14811, 2011 ONCJ 728, 210 A.C.W.S. (3d) 727, [2011] O.J. No. 5691 (Ont. Ct.)), made specific findings regarding the father's income, and ordered, among other things, income imputed to the father, adjustments to child support starting in June 2005, the appropriate table amount of child support, 50% of the s. 7 special expenses, fixed arrears of s. 7 expenses, set a repayment schedule for arrears of support, and ordered annual financial disclosure.

4. The Costs Analysis

a. The Law of Costs

i. Entitlement

The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, s. 131(1), which sets out three specific principles:

(a) the costs of a case are in the discretion of the court;

(b) the court may determine by whom costs shall be paid; and,

(c) the court may determine to what extent the costs shall be paid.

Modern costs rules are designed to foster three fundamental purposes: Fong v. Chan, 46 O.R. (3d) 330, 181 D.L.R. (4th) 614, para. 24:

(a) to indemnify successful litigants for the cost of litigation;

(b) to encourage settlement; and

(c) to discourage and sanction inappropriate behaviour by litigants.

Pursuant to Rule 24(1) of the Family Law Rules, the mother is presumed to be entitled to costs because she was successful at the trial.

ii. The Evolution of Costs as an Instrument of Social Policy

The traditional purpose of an award of costs was to indemnify the successful party in respect of the expenses sustained. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called "outdated" since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps. This change in the common law was an incremental one when viewed in the larger context of the trend towards awarding costs to encourage or deter certain types of conduct, and not merely to indemnify the successful litigant: British Columbia (Minister of Forests) v. Okanagan Indian Band, [2002] S.C.R. 371 (S.C.C.), paras. 21-24.

The traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser, rather than leaving each party's expenses where they fall, they act as a disincentive to those who might be tempted to harass others with meritless claims. In addition, because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., para. 26.

When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation: Prinzo v. Baycrest Centre for Geriatric Care, 2002 CarswellOnt 2263, para 76.

Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., para. 25.

iii. Costs and Ability to Pay

Ability to pay may be relevant to the issue of the quantum or scale of costs, but not to another party's entitlement to costs: Izyuk v. Bilousov, 2011 CarswellOnt 14392, 2011 ONSC 7476, para. 51.

iv. Offers to Settle

Offers to settle are a significant part of the costs landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.

Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (Rule 2(2)). This includes taking appropriate steps to save time and expense (Rule 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: Laing v. Mahmoud, 2011 ONSC 6737, para. 7.

To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made: Lawson v. Lawson. The position each party took at trial should also be examined.

The costs consequences of offers to settle are set out in Rule 18(14) as follows:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

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.

The court has a discretion to take into account any written offer to settle, the date it was made and its terms, even if Rule 18(14) does not apply to the offer to settle, when exercising its discretion over costs (Rule 18(16)).

COSTS — DISCRETION OF COURT

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.

Rule 18(16) invites consideration of any and all offers to settle: Osmar v. Osmar, para. 7.

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 (Rule 24(5)(b)): M. (J.V.) v. P. (F.D.), 2011 CarswellOnt 13510, ONCJ 616.

Offers to settle are important and can be the yardstick by which to measure success. They are significant in determining both liability for costs and quantum: Osmar v. Osmar, 2000, Ont. Sup. Ct., para. 7.

Both parents made offers to settle. However, those offers were not in a formal format, rather they were contained in e-mails, back and forth, between the father's lawyer and the mother. The offers produced do not qualify as offers under Rule 18(14), but they are offers that the court can consider under Rule 18(16).

The father failed, from early on in the case, to provide proper or adequate disclosure. This made it difficult for the mother to make a reasonable offer to settle, and made it difficult for her to evaluate the proposals made by the father. He failed to produce critical information which could have resulted in a settlement much earlier on.

The father's offers to settle were considerably lower than what was ordered at trial (he offered arrears of $5,000 and on-going support based on income of $21,120, starting 1 May 2011). The mother's offer to settle was also much lower than what was ordered at trial (she offered arrears of $11,200 (reduced in a later offer to $10,000), on-going support based on imputed income of $32,000, and special expenses to be shared proportionately for the years 2009-2011 and on-going). The mother's offer to settle specifically said she would seek costs if the case had to proceed to trial. The trial decision resulted in child support adjusted from July 2005 onwards on imputed income, arrears of more than $26,000 (the correct amount of arrears will be determined by the Family Responsibility Office), and on-going child support and s. 7 expenses on imputed income of $40,000. The father should have accepted the mother's offer to settle.

b. Analysis

i. Costs and Reasonable Behaviour

[Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in Rule 24(11)(b)). It reads as follows:

DECISION ON REASONABLENESS

(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.

Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Sarkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.

The unreasonable conduct of an unsuccessful litigant is a factor in both the awarding of costs and in fixing the amount of costs. The court should express disapproval of a litigant who proceeds to trial without adequate evidence to prove his claims, and should send the message that the successful party should have redress by awarding costs on a full recovery basis.

A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules: Osmar v. Osmar, 2000 (Ont. Sup. Ct.), para. 11.

ii. The Mother was Unrepresented at Trial

Unrepresented litigants may be awarded costs and such costs may include allowances for counsel fees: Fong v. Chan, 1999, Ont. C.A., para. 23.

Costs for unrepresented litigants is a matter fully within the discretion of the trial judge, who is particularly well-placed to assess the appropriate allowance for an unrepresented litigant: Fong v. Chan, 1999, Ont. C.A., paras. 27, 28.

The right of a unrepresented litigant to recover costs is not automatic. Quantification of those costs may be difficult. But without the option of awarding meaningful costs to unrepresented litigants, the court's ability to encourage settlements and discourage inappropriate behaviour will be greatly diminished: Izyuk v. Bilousov, 2011, Ont. Sup. Ct., para. 40.

Determination of costs for unrepresented litigants should take into account all of the objectives which costs orders should promote. Rules 18 and 24 of the Family Law Rules apply. Otherwise the resulting amount can render the entitlement to costs illusory, undermine access to justice by unrepresented litigants, and frustrate the administration of justice: Izyuk v. Bilousov, 2011, Ont. Sup. Ct., para. 40.

A party with counsel, opposite an unrepresented litigant, should be deterred from the notion that it is immune from a costs award merely because the opposite party is unrepresented. A party with counsel, opposite a unrepresented litigant, should also be deterred from the notion that he will face only nominal costs because the opposing party is not represented by a lawyer: Jahn-Cartwright v. Cartwright, 2010 CarswellOnt 5657, 2010 ONSC 2263, para. 72.

The difficulty in the valuing of the time and effort of the unrepresented litigant is not a good reason to decline to value it: Jahn-Cartwright v. Cartwright, 2010, Ont. Sup. Ct., para. 63.

The quality of the unrepresented litigant's work and documentation must be considered, and its impact on hearing time and trial results. The emphasis must be on the value of the work done. This encompasses both the value of the work to the court and the value of the time spent to the litigant who performed the work: Izyuk v. Bilousov, 2011, Ont. Sup. Ct., para. 40.

iii. Behaviour of the Parties

Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation: Heuss v. Sarkos, 2004, Ont. Ct., para. 20.

Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour: Heuss v. Sarkos, 2004, Ont. Ct., para. 20. The mother conducted herself in the former manner, but the father acted in the latter manner.

One of the purposes of costs is to change behaviour. The disclosure requirements currently in place in family law are detailed, specific, and clear. Disclosure is the cornerstone of child support litigation. Paying parents are required to make disclosure when requested. This father did not do so. Courts must discourage this behaviour, as it adds litigation and cost. Orders for costs are one way to discourage this behaviour.

c. Quantum of Costs

Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome: Boucher et al. v. Public Accountants Council for the Province of Ontario.

The over-riding principle is reasonableness. 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: Boucher et al. v. Public Accountants Council for the Province of Ontario, 2004, Ont. C.A..

The factors to consider in determining the amount of costs in family law matters are (Rule 24(11)):

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.

In determining the amount of costs, the court took into account the factors set out in R. 24(11) as follows:

a) The importance, complexity or difficulty of the issues: Although the case was important to the parents, it was neither complicated nor difficult. The trial was made more difficult and longer by the positions taken at trial by the father and by the father's unreasonable behaviour. This case should have been relatively straight forward. It should have settled. It should neither have required nor resulted in a four day trial.

b) The reasonableness or unreasonableness of each party's behaviour in the case: The two parents conducted themselves quite differently during the course of this litigation and during this trial. This is set out in detail in trial decision. These are the findings at trial of unreasonable behaviour by the father:

i. The father did not provide full financial disclosure;

ii. The father did not provide timely financial disclosure;

iii. The father's evidence about his income was inconsistent, conflicted with earlier evidence, unsupported by documentation, and misleading;

iv. The father did not produce medical evidence to support his claim that he was unable to work;

v. The father manipulated his financial affairs to show a reduced income for child support purposes;

vi. The father was found to be underemployed, and income was imputed to him;

vii. The father refused to accept a very reasonable offer and instead went to trial; and,

viii. The father was not successful on any of his claims.

The mother acted reasonably and appropriately throughout the trial. The father's behaviour throughout the litigation and during the trial was unreasonable. He brought repeated motions regarding custody and access, some of which had no merit. These issues were settled on the first day of the trial. As a result, the mother had to prepare for those issues as though those issues were proceeding to trial. These motions added considerably to the cost of the litigation. Despite the fact that he was represented by a lawyer, his positions at trial on almost every issue were unrealistic. He demonstrated considerable inflexibility and unreasonableness. His behaviour added time and effort to the litigation and to the trial.

In this case, the scale of compensation that is made to the mother should properly reflect the degree to which the father's unreasonable conduct precipitated needless steps in the case, and resulted in additional work for the mother.

The dynamics on this case are all too common, and cry out for judicial response. In a troubled economy there are more unrepresented parties in family court, and certainly more people with limited finances. Inevitably, these ingredients create greater strains on the administration of justice. Combined with limited judicial resources, the need to encourage settlement and discourage inappropriate behaviour by litigants has never been more pressing: Izyuk v. Bilousov, 2011, Ont. Sup. Ct., para. 58.

This is a clear case for costs on a full recovery basis. It must be made clear to family law litigants that financial disclosure, full disclosure and timely disclosure, is so essential to the integrity of family law cases that failure to do so shall always be taken into account and shall result in adverse findings regarding costs. Failure to make financial disclosure alone would support both a finding of bad faith and a determination of unreasonable behaviour, such that full recovery of costs is the appropriate outcome. The court must sanction this behaviour clearly, or it will invite more of this behaviour.

There is ample evidence for a finding of bad faith. However, no such finding is required to support full recovery of costs, as the same behaviour which supports a finding of bad faith by the father (as set out in the findings in the trial decision, including lack of financial disclosure, evidence which was misleading and not believable, manipulating his financial affairs to reduce his income), also supports findings that his behaviour was unreasonable (under Rule 24(11)(b) and Rule 24(5)), such that full recovery of costs is the appropriate remedy here.

The mother appeared for every court date. She took time off work for the court appearances, and to prepare, serve, and file the material required to respond to the several motions to change. As an unrepresented litigant, she prepared for and participated in a four day trial, and she reviewed documents, read cases, read the Family Law Rules and the relevant legislation, and prepared for direct examination and for cross-examination. She retained and consulted with two lawyers to help her with this work (total fees + HST was $2,461). She used her vacation time to do this work. In addition, she incurred disbursements for faxing, photocopying, filing, courier, postage, and parking.

The father withdrew his claim for joint custody on the first day of the trial. The mother spent time preparing for trial for this claim.

The mother was well-prepared, efficient and effective at trial, and was very capable in the presentation of her case, organized and appropriate.

The mother presented these details to support her claim for costs:

Category	Amount
Mother's time (100 hrs. x $200 per hour) (court appearances; prepared, served, and filed material required; prepared for and participated in a four day trial, reviewed documents, read cases, read the Family Law Rules and relevant legislation, prepared for direct examination and for cross-examination; met with duty counsel and FLIC counsel)	$20,000
Barbara Schlifer Clinic consultations (regarding advice, preparing trial record, preparing documents brief for trial, costs brief and argument) (16 hrs. x $300 per hour)	$4,800
Fees paid to two lawyers ($1,461 + $1,000)	$2,461
Disbursements + HST (photocopying, faxing, courier, process server, postage, parking)	$904
Total	$28,165

The mother's claim was for a total of $20,000 all inclusive (fees + HST, disbursements + HST).

5. Order

The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case. This determination is not merely an arithmetical exercise of calculating time spent by a suitable hourly rate.

The costs award in this case should take into account and reflect the amount of work necessary for the mother to respond to the father's claims, and the impact of the father's behaviour on this work.

The time spent by the mother and the rate she proposes in her costs claim are on the generous side, but are not unreasonable.

The over-riding principle in determining the amount of costs is reasonableness. A fair and reasonable costs award, in all of these circumstances, is $20,000 all inclusive (fees + HST, disbursements + HST, and including the legal fees paid by the mother to the lawyers she consulted to assist her). This amount allows for the full recovery of the hard costs claimed (Schlifer Clinic $4,800 + fees to two lawyers $2,461 + disbursements $904 = $8,165), and an amount for the mother's time and work of about $11,900 (a reasonable amount under all these circumstances). The father shall pay the mother's costs in the amount of $20,000.

The majority of costs relate to the mother's efforts to claim child support. $18,000 of the costs award shall be enforced by the Family Responsibility Office as child support. The Family Responsibility Office should be advised that the father will soon be receiving a large payment (about $17,500) as settlement in a property dispute.

Released: 10 September 2012 Justice Carole Curtis