Court File and Parties
Court File No.: Toronto D44665/08 Date: 2013-09-04 Ontario Court of Justice
Between: Kenneth Mooney, Applicant
— And —
Anita Fast, Respondent
Before: Justice Curtis
On written submissions for costs
Endorsement released on 04 September 2013
Counsel:
- Taragh Bracken . . . . . . . . . . . . . . . . . counsel for the Applicant Father
- Kathryn Hendrikx . . . . . . . . . . . . . . . . counsel for the Respondent Mother
CURTIS, J.:
INDEX
- Overview
- The Parties' Claims re Costs
- Litigation History
- The Costs Analysis
- a. The Law of Costs
- i. Entitlement
- ii. The Evolution of Costs as an Instrument of Social Policy
- b. Offers to Settle
- c. Analysis
- i. Costs and Reasonable Behaviour
- ii. Behaviour of the Parties
- iii. Costs and Ability to Pay
- iv. Quantum of Costs
- a. The Law of Costs
- Order
Overview
This is the costs decision in the mother's motion to change the consent order of Brownstone, J. made 23 July 2009, providing sole custody of Oran (born 29 June 2007, and now six years old) to the mother, with reasonable access on reasonable notice to the father, and with a detailed six week rotation schedule.
There is a long history of conflict and litigation between the parents over many years (despite the fact that the child is only now six years old). The original consent order was made following contested litigation over a significant period, with several motions. At the original settlement, both parents were represented by lawyers.
On this motion to change, the mother was seeking supervised access for the father (and other claims), and the father was seeking joint custody (and other claims). The litigation surrounding the motion to change was also acrimonious.
The Parties' Claims re Costs
Both parents were represented on the motion to change. Both parents claimed their costs of the motion to change. The mother claims full recovery costs of $11,914.95. The father claims costs of $7,330.88.
Both parents sought costs on the basis that the other parent acted unreasonably in the litigation.
The father says that he should not be ordered to pay the mother's costs, as he has no ability to pay.
Litigation History
The mother started the motion to change unrepresented, then hired counsel. The father was represented by two lawyers during the motion to change. Neither parent was represented by the lawyers who acted for them on the original consent order of 23 July 2009.
An unusually large amount of material was filed on the motion to change, including many affidavits, and many exhibits.
The motion to change resulted in a settlement, after many court appearances, and several contested motion appearances, over a period of about sixteen months. The detailed settlement provided for sole custody to the mother, with specified access to the father and some other changes to the original consent order (the original six week rotation schedule was preserved, but altered).
The Costs Analysis
The Law of Costs
Entitlement
- These are the findings that are relevant on the issue of costs:
a) The mother was successful in her requests for a fixed access schedule and a fixed exchange location, and to maintain the existing restraining order, but was unsuccessful in her claims for supervised access or a supervised exchange;
b) The father was successful in achieving additional access time, additional time at holidays, and the exchange location he preferred, but was unsuccessful in his claim for joint custody;
c) The father pursued his claim for joint custody until a meeting between counsel on 14 May 2013;
d) The father acknowledged in his costs submissions that there was no material change in circumstances since the original consent order sufficient to support a claim for joint custody;
e) The mother served a proposed parenting agreement on 16 October 2012, and two further Offers to Settle on 22 February 2013 and 5 May 2013.
f) The father served an Offer to Settle on 28 June 2013, more than a year after the motion to change was started;
g) The mother's Offers to Settle and the father's Offer to Settle comply with Rule 18 of the Family Law Rules; and,
h) Both parents allege that their proposal was the basis for the settlement. Both parents allege that they were successful on the motion to change. Success was divided.
- 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 specific principles regarding costs:
(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, and Serra v. Serra, 2009 ONCA 395:
(a) to indemnify successful litigants for the cost of litigation;
(b) to encourage settlement; and
(c) to discourage and sanction inappropriate behaviour by litigants.
Rule 2 (2) of the Family Law Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the rules is met – that cases are dealt with justly. This provision needs to be read in conjunction with rule 24 of the rules: Sambasivam v. Pulendrarajah, 2012 ONCJ 711, para. 37.
As success was divided, there is no presumption under Rule 24(1) that either parent is entitled to costs in this case. The other criteria for determining costs must be taken into consideration, that is, the need to encourage settlement, and the need to discourage and sanction inappropriate behaviour by litigants, and the need to ensure that the prime directive of the rules is met.
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, 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.
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.
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 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:
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.
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.
The mother made three proposals to settle the matter, including an early proposal in October 2012. The father made only one Offer to Settle in June 2013, made more than one year after the motion to change was started.
Analysis
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 ONCJ 141, and Peers v. Poupore, 2008 ONCJ 615, para. 62.
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 her claims, and should send the message that the successful party should have redress by awarding costs on a full recovery basis.
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.
One of the purposes of costs is to change behaviour. The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2.
This case should not have come to court at all. These parents have been litigating for most of their son's short life. They are educated, intelligent people. There are alternatives to litigation (mediation, a parenting co-ordinator, negotiations by lawyers) that ought to have been considered to resolve these disputed issues. Courts must have control over the time and resources allocated to one family. This family has had more than its fair share of those resources.
Both parents made claims that were unreasonable in the circumstances and in which they were unsuccessful. Courts must discourage this behaviour. Unless courts discourage this behaviour, it will continue and increase. Orders for costs are one way to discourage this behaviour. On that basis, and on an analysis of the behaviour of the parents during the litigation (and with particular attention to the timing and content of the Offers to Settle, and the claims of the parents), the mother is entitled to costs in this matter.
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 ONSC 7476, para. 51.
Success is given presumptive pre-eminence in Rule 24. While Rule 24(11)(f) does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success: Biant v. Sagoo.
Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(11): Peers v. Poupore, 2008, (Ont. Ct.), para. 42.
The (financial) means of the unsuccessful party may not be used to shield her from liability for costs, particularly when she has acted unreasonably: Gobin v. Gobin, 2009 ONCJ 278, para. 24.
The father is a professional person with a substantial income. He is not able to rely on an inability to pay costs. That argument is designed for litigants in a very different position than his.
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. This case should not have come to court, or, once it did, it should have settled much sooner than it did. It should not have resulted in sixteen months of litigation;
b) The reasonableness or unreasonableness of each party's behaviour in the case: Both parents acted unreasonably in the claims that they made;
c) The lawyer's rates: The rates claimed by the mother's lawyer were reasonable for her level of experience, and the expertise required to prepare for and conduct this motion to change;
d) The time properly spent on the case: The time claimed by the mother's lawyer for work on the motion to change was reasonable, in all the circumstances; and,
e) Any other relevant matter: The father did not make an Offer to Settle until over a year had passed in the litigation. He made a claim for joint custody under circumstances where it was unlikely to succeed, and he continued to pursue that claim until May 2013.
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.
It must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered with the requirement that the parties take a clear-headed look at their case before insisting on their day in court. The court must sanction this behaviour clearly, or it will invite more of this behaviour.
Order
The court must determine an amount that is fair and reasonable for the 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 over-riding principle in determining the amount of costs is reasonableness. A fair and reasonable costs award, in all of these circumstances, is $8,000 all inclusive (fees + HST, disbursements + HST). The father shall pay the mother's costs in the amount of $8,000.
Neither of the parents shall bring a motion to change without permission from the court obtained in advance, with a Form 14B motion and no more than two pages in support. The Form 14B shall not be served on the other side, unless the court orders. The payment of the costs ordered shall be a factor for the court in determining whether permission should be granted.
Released: 04 September 2013
Justice Carole Curtis