Court File and Parties

Court File No.: D60791-13 Date: 2013-12-12

Ontario Court of Justice

Toronto North Family Court

Between:

David Gordon Clancy Acting in Person Applicant

- and -

Elizabeth Lynne Hansman Respondent

Counsel: Douglas J. Green, for the Respondent

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On November 15, 2013, I released my reasons for decision after hearing the trial of Motions to Change brought by both parties regarding child support issues. I terminated the applicant's (the father) child support obligation for two of his three children. I ordered him to pay ongoing child support of $855 per month for his third child (Johnathan). After adjusting for the parties' respective claims,[1] I fixed the father's child support arrears at $6,357 and found that he is not required to contribute any further to Johnathan's 2013/14 post-secondary educational expenses. I ordered him to continue to pay two-thirds of Johnathan's section 7 expenses and to resume paying two-thirds of his post-secondary educational expenses, starting in September of 2014.

[2] The parties were given permission to make costs submissions. Both claimed to be the successful party. The respondent (the mother) seeks her costs of $16,835. The father, who acted in person, seeks his costs of $12,521 plus HST.

[3] The trial was completed in one day.

Legal Framework for Costs

[4] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395 stated that modern costs rules are designed to foster three fundamental purposes, namely to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants bearing in mind that the awards should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party.

[5] Subrule 2 (2) of the Family Law Rules (the 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. Subrule 2 (4) of the rules states that counsel have a positive obligation to help the court to promote the primary objective under the family law rules. Clauses 2 (3) (a) and (b) of the rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711.

[6] Subrule 24 (1) of the rules creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe. 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. See: Lawson v. Lawson.

Settlement Offer Requirements

[7] Subrule 18 (14) of the rules reads 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.

[8] The mother made a written offer to settle the case. The issue is whether it was an offer that attracts the costs consequences set out in subrule 18 (14).

[9] The father did not make an offer to settle.

Analysis of the Mother's Settlement Offer

[10] The mother's offer to settle was dated November 7, 2013. She mailed and emailed the offer to settle to the father the same day.[2] She submits that such service was effective at least seven days before the trial, as required by paragraph 2 of subrule 18 (14). I disagree. The rules do not provide for service of documents by email on a person.[3] The offer to settle was served by ordinary mail.[4] The effective date of service was five days later – November 12, 2013. This is less than the seven days required by paragraph 2 of subrule 18 (14).

[11] The seven-day requirement in paragraph 2 of subrule 18 (14) is an important one. It emphasizes the importance of making timely offers to avoid the significant legal costs that are incurred in the week before a trial. It also reflects the reality that emotions often run high prior to the start of a trial and it might be more difficult for a party to accept an offer when they are in full trial preparation mode.

[12] A secondary deficiency in the offer to settle is that it was withdrawn 5 minutes before the commencement of the hearing. Paragraph 3 of subrule 18 (14) requires that the offer must not have expired or been withdrawn before the hearing starts. This offer had expired before the hearing started. If counsel wish to put expiry clauses in their offers that will comply with the condition in paragraph 3 of subrule 18 (14), the expiry date should be after the start of the hearing.

[13] The costs presumption in subrule 18 (14) can have significant repercussions – full recovery costs from the date of the offer. Full technical compliance with the subrule is required for it to be applied by the court. The mother's offer to settle did not meet the conditions set out in subrule 18 (14) and the presumptive cost consequences in the subrule were not triggered.

Discretionary Consideration of Settlement Offer

[14] However, the mother's offer to settle is a very relevant consideration pursuant to subrule 18 (16) of the rules. This subrule reads as follows:

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.

[15] The mother offered to settle the case as follows:

a) The respective claims of the parties for payment of arrears of child support and extraordinary expenses shall be dismissed.

b) The father pay the mother the table amount of child support during the four summer months of $483 per month for Johnathan.

c) The father continue to pay two-thirds of Johnathan's special expenses.

d) The father not be required to contribute towards Johnathan's 2013/14 post-secondary educational expenses and be required to resume his obligation to pay two-thirds of these expenses in any school term after the spring 2014 term.

e) Each party would bear their own costs.

[16] The mother obtained a better result at trial than the terms contained in her offer to settle. I ordered an arrears payment of $6,537 after making all adjustments based on the parties' respective claims. The mother was prepared to accept that arrears be fixed at zero.

[17] The mother offered to settle the issue of ongoing support by having the father pay the child support guideline table amount for the four summer months, when Johnathan is out of school, based on an income to the father of $175,000 per annum. The trial decision was that the father should pay the child support guideline table amount over five months, based on an annual income to the father of $200,000, as well as a residual amount of $300 per month for the seven months that Johnathan will be in residence. This averaged out to $855 per month. The mother received a better result at trial than in her offer.

[18] The mother's proposal to forego a contribution from the father towards Johnathan's post-secondary educational expenses for 2013/14 was consistent with the trial result, as was her proposal that the father continue to pay two-thirds of Johnathan's special expenses, as set out in the separation agreement.

[19] While the court appreciates that the father was likely focused on trial preparation, he still should have accepted the mother's offer to settle. He had notice of the offer by November 12, 2013, at the latest. The mother will be awarded costs from that date. She was the successful party after November 12, 2013. The father did not rebut the presumption of her entitlement to costs.

Apportionment of Costs

[20] Subrule 24 (6) of the rules provides that if success in a step in a case is divided, the court may apportion costs as appropriate.

[21] I find that it is appropriate not to award either party costs prior to the mother's offer to settle, as success was divided. Both parties took unreasonable positions until the mother made her offer to settle. The father sought $254,893 from the mother in his Motion to Change. The mother sought $146,018 from the father in her Response to Motion to Change.

[22] The mother was unsuccessful at trial in attempting to revive child support for the parties' eldest child from January of 2009 to August of 2010. The father was unsuccessful in attempting to terminate child support for Johnathan and to terminate child support for the parties' middle child as of September 1, 2008. [5] The mother did not notify the Family Responsibility Office of terminating events in a timely manner. The father failed to pay many appropriate section 7 expenses for the children, while the mother made excessive claims for purported section 7 expenses that the court denied. The father made claims for section 7 expenses predating the parties' 2006 separation agreement and retroactive child support for an older child who was ineligible for support. There was absolutely no merit to these claims and they were dismissed. The mother then made her own claim for section 7 expenses predating the separation agreement. This was also dismissed.

Factors in Setting Costs

[23] In making this decision, I considered the factors set out in subrule 24 (11) of the rules, which reads as follows:

24 (11) 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.

[24] The case was important for the parties. It had some complexity and difficulty as it required a reevaluation of support obligations since 2006.

[25] The failure of the father to submit an offer to settle was unreasonable behaviour. See: Laing v. Mahmoud, 2011 ONSC 6737, as was his failure to accept the mother's reasonable offer to settle.

[26] Many of the claims made by the parties were unreasonable, as set out above. They did act reasonably in agreeing to a summary process to expedite the trial and save costs.

[27] The rates claimed by the mother's lawyer ($275 per hour) were very reasonable for a lawyer with his skill and experience.

[28] The bill of costs submitted by the mother's lawyer just provided a global amount of time spent by him, two articling students and a law clerk. It did not itemize the time spent by each, or when the time was spent. The mother's lawyer claimed that he spent 14.1 hours between November 7, 2013 and the completion of the trial.

[29] The disbursements claimed by the mother relate to a period where costs are not being awarded, and will not be allowed.

[30] The father has the financial ability to pay this costs order.

Proportionality Principle

[31] I have also considered both Boucher et al. v. Public Accountants Council for the Province of Ontario and Delellis v. Delellis and Delellis. Both these cases point out that when assessing costs it is "not simply a mechanical exercise." In Delellis, Aston J. wrote at paragraph 9:

However, 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.

Costs Award

[32] An order shall go that the father shall pay the mother's costs fixed in the amount of $4,000, inclusive of fees, disbursements and HST. This sum shall be paid in 30 days.

Justice S.B. Sherr

Released: December 12, 2013

Footnotes

[1] The father sought a reduction of child support arrears, reimbursement for overpayment of child support and a contribution for section 7 expenses. The mother sought a contribution for section 7 expenses incurred since the parties executed their separation agreement in 2006.

[2] Subrule 6 (1) of the rules states that service of a document under the rules may be carried out by regular service or special service in accordance with rule 6, unless an Act, rule or order provides otherwise. Clause 6 (2) (a) of the rules permits regular service of a document on a person, by mailing a copy of the document to the person.

[3] The difficulty of email service is evident from the father's supplementary submissions. He claims that the email from mother's counsel went into his junk mail folder and he did not retrieve it until November 12th or 13th.

[4] Subrule 6 (9) of the rules sets out that service of a document by mail is effective on the fifth day after it was mailed.

[5] Support for this child was terminated as of December 31, 2012.