Court File and Parties
COURT FILE No.: D332/03 DATE: 2014-04-02 Citation: Winton v. Schweyer, 2014 ONCJ 173
ONTARIO COURT OF JUSTICE
BETWEEN:
AMBER WINTON Applicant
— AND —
BRANDON SCHWEYER Respondent
Before: Justice M.A. McSorley Written Submissions on Costs last filed: March 14, 2014 Reasons for Judgment released on: April 2, 2014
Counsel: Amber Winton ............................................................................................................ Mr. R. Stewart Brandon Schweyer ........................................................................................... Ms. C. Martin-Hrycak
McSorley J.:
Introduction:
[1] The matter before the court involved a motion to change brought by the respondent father to terminate the child support provisions of the order dated March 6, 2006 and rescind all arrears. After almost four years of litigation, the parties resolved the issues between them with minutes of settlement, but agreed that the issue of costs would be determined by the court. Submissions were made in writing by both parties.
[2] The applicant mother sought costs on a full indemnity basis due to what she claimed was bad faith conduct of the respondent father during the litigation, including the following:
a) the father did not disclose the income replacement benefits that he received from the insurance company following his car accident; b) the father failed to comply with the order of February 16, 2010 for almost 2 years and did not provide full disclosure; c) the father failed to set the matter down for trial or argument on the motion to change; and d) the father failed to disclose that he had returned to work.
[3] The respondent father noted that while the initial motion to change had not provided complete details as to the income replacement benefits he received, he filed an amended motion to change in January 2010 (before the order of February 2010) setting out all income replacement benefits he had received from the insurance company. He noted that the applicant mother also never disclosed that she was in reciept of benefits from the insurance company as a result of his accident.
[4] The respondent father also submitted that on February 16, 2010 a consent order was made reducing the amount of support payable by the respondent to the applicant. However, that order was never issued by either party until April 2013, resulting in information from the Family Responsibility Office being incorrect. According to the father, the parties were unable to discuss meaningful settlement until they had the correct information regarding arrears. When the changes were made to the FRO records, the parties were able to negotiate a settlement.
[5] The applicant mother sought costs in the amount of $12,440.84 inclusive of HST and disbursements. This amount represented full indemnity of all legal costs incurred by her during the litigation. No costs were awareded at any time during the litigation for motions or other court appearances.
[6] The respondent father argued that neither party should receive costs, but that if the court was inclined to order costs, he should be awarded costs in the amount of $15,635.95, inclusive of HST and disbursements. This amount also represents full indemnity for all legal costs incurred by the respondent father from the time Ms. Martin-Hrycak became involved.
Issues:
[7] The issues for determination are as follows:
a) Is the Applicant or the Respondent entitled to costs; b) What should the quantum of costs be, if any; and c) Is either the Applicant or Respondent entitled to full indemnity costs?
The Law and Analysis:
[8] With respect to costs, the two elements for determination of costs are entitlement and quantum. Rule 24 sets out the framework for determining whether costs should be awarded in a family law matter. The purposes of an order for costs can be summarized in the following way:
a) indemnify successful litigants for the cost of litigation; b) encourage settlement; and c) discourage and sanction inappropriate behaviour.
[9] According to Rule 24 (1) there is a presumption that a successful party is entitled to costs of a motion, enforcement, case or appeal. Although Rule 24(1) enacts a presumption, it does not require that the successful party always be awarded costs and any award of costs remains in the discretion of the court. Once entitlement is found, the court then determines the quantum of costs.
[10] Under Rule 24(8), costs are to be ordered on a full recovery basis, and the payor of those costs ordered to make payment immediately, if the court finds that a party has acted in bad faith. It is under this rule that the mother seeks full indemnity costs.
[11] Rule 24(10) requires that costs be determined following each step in the litigation. Costs should never be reserved to a future date, but should always be dealt with at the time of each step.
[12] Rule 18(14) also provides for full recovery costs in cases where an offer to settle is made during the litigation. An offer to settle must be signed. An offer may be withdrawn at any time prior to acceptance and a time limited offer that is not accepted within the time set out is considered to have been withdrawn.
[13] While Rule 24 deals generally with the issue of costs, Rule 18(14) sets out the cost consequences of the failure by a party to accept an offer. Where an offer to settle is made, the party who makes the offer is entitled to costs to the date the offer was served and full recovery costs from that date, unless the court orders otherwise, if the following conditions are met:
a) 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. b) The offer does not expire and is not withdrawn before the hearing starts. c) The offer is not accepted. d) The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[14] The material filed by the parties on the issue of costs included only one offer to settle, made by the father and faxed to the applicant mother’s solicitor on May 2, 2013. If the order made was equal to or better than the offer made, the father would be entitled to his costs on a partial basis up to May 2, 2013 and on a full indemnity basis from that date forward.
[15] However, the offer sought to terminate support of approximately $500 per month, including contribution to s. 7 expenses and replace it with support in the amount of $500 each month commencing May 1, 2013 and sought to rescind all arrears, which according to the FRO statement of arrears, at the time, totalled $27,663.58. Although this amount was later adjusted and reduced, it never amounted to zero ($0.)
[16] There were no offers made by the mother that were included in the costs submissions. According, to the father’s submissions, the mother’s response to his offer was that she wanted payment of arrears in the amount of $30,000.00. The statement of arrears from FRO did not equal $30,000 after adjustments were calculated based on the new reduced child support order made in February 2010.
[17] It is clear that the mother made no offer that would engage Rule 18(14)and the father’s offer was not equal to or better than the final order made. Therefore, neither party is entitled to full indemnity costs under Rule 18(14).
[18] In determining if either party is entitled to costs on a partial basis, the court must look to the issue of success. In this case, the father’s motion was to terminate child support and rescind all arrears. He was not successful in terminating child support, but was succesful in reducing the arrears. The child support continued at approximately the same rate that had been ordered in 2006 (with the inclusion of s. 7 contribution) and arrears were fixed at $11,000.00 to be paid by the father each month until paid in full. While the mother did not obtain an order for arrears in the amount of $30,000, she successfully defended the motion against a termination of child support and the arrears were fixed. As such, the applicant mother was more successful on the issue of ongoing support and the respondent father was more successful on the issue of arrears. Pursuant to Rule 24(6), the court may apportion the costs between the parties due to the divided success.
[19] In addition to being entitled to partial indemnity costs, the mother argued that the father should pay full indemnity costs pursuant to Rule 24(8) for his bad faith conduct during the litigation, as set out in paragraph 2 above. The applicant provided examples of what she considered to be the father’s bad faith conduct. However, no case law was provided on the subject, which would have been helpful. Case law provides the court with examples of bad faith against which the father’s conduct could be compared and assessed.
[20] In Leonardo v. Meloche 2003 74500 (ON SC), [2003] O.J. No. 1969 the Respondent argued that the Applicants had acted in bad faith in not providing timely disclosure as had been previously ordered. The court held that conduct that is intended to deceive or mislead can establish bad faith or that bad faith can be established through an intentional failure to fulfill an agreement or an intentional breach of a court order. In that case, the court held there was not sufficient evidence to find that the Applicants had attempted to mislead or deceive or intentionally breach the disclosure order in order to achieve an ulterior goal and therefore their behaviour was not sufficient to support a finding of bad faith. Although the court did not make a finding of bad faith, it held that the unreasonableness of the Applicants’ behaviour was sufficient to warrant an order for costs on a full recovery basis.
[21] In this case, although the father did not disclose his income replacement benefits at the beginning of the litigation, he did so in his amended motion to change, before any order was made regarding disclosure. By early 2010 the applicant was not misled or deceived about the insurance replacement income benefits received by the respondent.
[22] In Parsons v. Parsons 2002 45521 (ON SC), [2002] O.J. No 3034, Campbell J. dealt with the issue of bad faith and unreasonableness. Little detail is provided, but Campbell J. held that the following actions, while not “quite reaching bad faith” did amount to unreasonableness:
a) there were no offers to settle made; b) the parents unilaterally obstructed and prevented any contact between the child and her grandparents, to the child’s detriment, for punitive and antagonistic motives; c) the parents escalated and inflamed the issued by involving many of the extended family to “take sides” and file outrageous affidavits dredging up and detailing longstanding grievances; d) the parents chose to use ill-advised and inflammatory descriptive language in the marginally relevant affidavits filed supporting their position; and e) the parents made no effort to reasonably consider the child’s emotions, long standing attachment to her grandparents or confusion that she must have experienced when deprived of seeing or even talking to her grandparents by phone.
[23] The difficulty with the decision is that there is no indication whether the unreasonable behaviour was sufficient to warrant full recovery costs.
[24] In McCulloch v. Williams, an unreported decision dated December 4, 2003, Caspers J. dealt with the issue of bad faith following a motion for interim custody. In that case, the mother left the jurisdiction of Ontario with the children of the marriage while the father was at work and without any notice to him. The father was required to take a number of steps to locate her in Alberta and even after an interim order for custody was made in the father’s favour, the mother refused to return the children to Ontario choosing instead to start a custody proceeding in Alberta.
[25] Caspers J. found that the mother had exercised self-help measures in a way that was unreasonable and demonstrated her bad faith. Caspers J. found that the mother’s conduct in leaving the home on September 15, 2003 and going to Alberta without the father’s knowledge or consent, and with the intention of keeping the children there and starting custody proceedings in Alberta, fell within the description of bad faith. In addition to fleeing the jurisdiction, the mother ignored the court order to return the children to Ontario, would not give telephone access to the father and would not comply with an order to return the children’s birth certificates even though she agreed to do so. Justice Caspers’ awarded the father full recovery costs of the motion.
[26] The case above sets a very high bar for a finding of bad faith. Bad faith requires more than just unreasonable behaviour or bad judgment. In this case, although the father did disclose his income replacement benefits in February 2010, he was not diligent in complying with the court order for disclosure made on February 16, 2010.
[27] The court was surprised that the mother did not take steps to deal with issue of non disclosure in a timely way. The mother could have brought a motion for contempt for the father’s failure to comply with the disclosure order asking that a deadline by set for completion of the disclosure; for costs; and/or for a dismissal of the father’s motion to change. This in no way excuses the father’s failure to comply with the disclosure order , but is meant to illustrate that there are remedies to such issues that can be taken in a timely fashion.
[28] Although the father did not disclose that he had returned to work in September 2012, this information was provided within 2 months of his returning to work, by Ms. Martin-Hrycak.
[29] Finally, the mother argued that the father failed to set the matter down for trial or argument in a timely way. There is nothing in the Rules of Family Law or legislation regarding child support that restricts the setting down of a matter for hearing to the applicant or moving party. The mother was represented throughout the proceedings and could have insisted at any time, that the matter be set down for hearing. The onus was on the father to prove a material change in circumstances. The evidence of his income replacement benefits was available in February 2010. The court could have drawn an adverse inference against the father for his non-compliance with the disclosure order and dismissed his motion to change. The fact that the father did not set the matter down for hearing is not a factor in determining bad faith behaviour.
[30] The court finds that the father acted unreasonably in not providing timely disclosure as ordered in February 2010, but finds that the mother had much of the information and could have proceeded to a hearing, asking that the father’s motion be dismissed for his failure to comply with the order. The court finds that while the father’s behaviour was unreasonable, it was not sufficient to amount to bad faith.
[31] In reviewing the factors set out in rule 24(11) I make the following findings:
a) The case was not complex or difficult, although unnecessarily drawn out by the father’s failure to provide timely disclosure. b) I find that the father acted unreasonably with regard to disclosure as ordered in February 2010. c) Mr. Stewart’s rates are reasonable having regard to his years at the bar and his certification as a family law specialist. d) The time spent of the case was reasonable in all the circumstances. e) The disbursements incurred in the amount of $969.00 is reasonable. f) The parties raised no other factors for consideration.
[32] The mother was partially successful and is entitled to costs. Those costs, however, should be reduced to take into account the father’s partial success on the issue of child support arrears. The court is not prepared to order full indemnity costs in this matter for the reasons set out above.
[33] The full amount of Mr. Stewart’s fees, including fees for preparation of the costs submissions, taxes, and disbursements totalled $12,940,84. Having regard to all of the factors and the father’s unreasonable behaviour with respect to disclosure, the court finds that a reasonable costs order would be 70% of the full amount set out in the bill of costs prepared by Mr. Stewart, inclusive of taxes and disbursements. Taking into account the father’s success on the issue of arrears, those costs will be reduced to 50% of the total, or $6,470.40, inclusive of taxes and disbursements.
[34] These costs were incurred entirely for the purpose of obtaining child support and arrears of child support and are therefore enforceable by the Family Responsibility Office.
[35] For the reasons given above, a final order will issue that the respondent father pay to the applicant mother her costs in these proceedings in the amount of $6,470.40, which will be enforceable through the Family Responsibility Office.
Released: April 2, 2014 Signed: “Justice M.A. McSorley”