Court File and Parties

Court File No.: 439/12 Date: 2014-03-31

Ontario Court of Justice

Re: Anu Lahar (Applicant) And: Manish Kumar Lahar (Respondent)

Before: Justice S. O'Connell

Counsel:

• Maria N. Sirivar, for the Applicant
• A. Saroha, for Mr. Lahar

Costs Endorsement

Introduction

[1] The respondent, Mr. Manish Kumar Lahar, brought a motion to set aside and/or change the final default order of the Honourable Justice Zisman dated December 5, 2012. He disputed, among other provisions in the order, that income should be imputed at $60,000 per year for support purposes and he disputed the orders of child and spousal support made.

[2] For written reasons released on January 9, 2014, I dismissed Mr. Lahar's motion.

[3] The applicant seeks her costs on a full recovery basis. She submits that Mr. Lahar's conduct constitutes bad faith and is sufficient to justify a cost award in the amount of $11,952.47 in her favour.

[4] Mr. Lahar submits that there should be no costs award and that his conduct in these proceedings did not amount to bad faith. He further submits costs in the amount of $11,952.47 or any other amount would pose serious undue hardship on him as he is currently unemployed and reliant on social assistance.

Background

[5] On December 5, 2012 Justice Zisman made an order granting the applicant mother custody of the child of the marriage and an order that Mr. Lahar father should have no access or contact to the child without the prior written consent of the applicant mother and on terms agreeable to the applicant mother without prejudice to Mr. Lahar's right to apply for access on notice to the applicant.

[6] Justice Zisman also ordered that Mr. Lahar shall pay child support for the child to Mrs. Lahar in the amount of $546.00 per month. This amount was based on Mr. Lahar's imputed income of $60,000 per annum from his employment as a truck driver. Further Justice Zisman ordered Mr. Lahar to pay spousal support in the amount of $1,189.00 per month commencing May 1, 2012.

[7] This final order was made on an uncontested basis after Mr. Lahar had been noted in default. According to the affidavit of service filed with the application and the form 23C affidavit for an uncontested trial, Mr. Lahar was personally served by a professional process server on November 4, 2012. Mr. Lahar did not file an answer or respond. The first appearance in court regarding the application was on December 5, 2012. Mr. Lahar did not attend court on that day or provide any explanation for his absence.

[8] The first appearance on Mr. Lahar's motion to set aside Justice Zisman's Order was on May 13, 2013. I noted that there were a number of deficiencies in Mr. Lahar's sworn financial statement. On consent, I ordered additional disclosure as well as an order for costs in the amount of $500 to be paid to the applicant in 30 days. Mr. Lahar has not paid those costs, almost eleven months later.

[9] On the return of the matter on July 18, 2013, Mr. Lahar advised that he had fired his counsel and that he had not understood anything that had transpired at the previous appearance because he required a Punjabi interpreter.

[10] It was noted in the January 9, 2014 endorsement that on the first appearance several questions were posed to Mr. Lahar in English and he appeared to understand the questions correctly. I further noted that there were three sworn affidavits and financial statements that were all prepared in English.

[11] On the third return of the motion, August 14, 2013, Mr. Lahar had still not provided all the disclosure ordered. He had, however, filed a new affidavit wherein he repeated that he only earns $20,000 per year. The motion was adjourned and costs in the amount of $250 (for each of the last two wasted appearances) were awarded to the applicant. These costs have not been paid.

[12] On the fourth return of the motion, October 1, 2013, Mr. Lahar's counsel stated that Mr. Lahar's income was not $20,000 but actually between $40,000 and $50,000 annually. He further admitted that Mr. Lahar owns a condominium that was not disclosed in the financial statement.

[13] At the return of the motion, Mr. Lahar had still not provided all the disclosure ordered. The parties made submissions. According to the incomplete financial disclosure provided by Mr. Lahar, his own incomplete banking records showed income, at a minimum, of $56,000.00.

The Law and Governing 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 should consider in dealing with costs:

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. O. Reg. 114/99, r. 24 (11).

[16] In Serra v. Serra, 2009 ONCA 395, at paragraph 8, 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.

[17] 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., at paragraph 40, 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.

[18] 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.

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

"… 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..."

Ability to Pay

[20] I must also consider clause 24 (11) (f) which requires the court to consider any other relevant matter, including the ability of the losing party to pay costs. Mr. Lahar is apparently now receiving social assistance, having left the trucking industry. There will be a trial of this issue and whether this is a new material change in circumstances that warrants changing Justice Zisman's Order.

[21] In C.A.M. v. D.M., Justice Rosenberg for the Ontario Court of Appeal states the following regarding the ability to pay costs:

"I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18. Thus, while subrule 24(11) enumerates a number of factors that must be taken into account, the person setting the amount of the costs is directed to take into account "any other relevant matter". I agree with Aston J. in Sims-Howarth at para. 4, that the "Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs". In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. See Biant v Sagoo at para. 17 and Brennan v. Brennan, [2002] O.J. No. 4743 (S.C.J.) at para. 11. In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child." [par. 42]

[22] Nevertheless, individuals of limited means should not be able to conduct litigation with impunity. The ability to pay costs is relevant to the quantum of costs but not to another party's entitlement to costs. A party's limited finances may not be used to shield liability particularly when the course of litigation was misguided or unreasonable. As Justice Spence stated in Peers v. Purpore, 2008 ONCJ 615, "in family law litigation, and particularly for parties of modest means, it behoves those parties to act reasonably and to avoid trial if at all possible."

Bad Faith

[23] I also consider the submissions of the applicant that I should find that Mr. Lahar acted in bad faith, thereby attracting liability to pay the full recovery of costs in this matter.

[24] "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."

Analysis

[25] The applicant is clearly the successful party and she is therefore presumptively entitled to costs. She has not acted unreasonably.

[26] Mr. Lahar has acted unreasonably throughout these proceedings. He stated in several sworn affidavits that his income was only $20,000 per year and then, after five months, stated that it was between $40,000 and $50,000. He insisted, in three financial statements and affidavits, that he only earned $20,000 a year. The disclosure he did provide, however, revealed that he earned significantly more, which his counsel conceded.

[27] Following each appearance the court made an order for disclosure and an order for costs that Mr. Lahar failed to obey. By the time the motion was heard on October 1, 2013 Mr. Lahar had still not provided all the disclosure and had not paid costs awarded in three previous appearances.

[28] Mr. Lahar brought the motion to change or set aside and bears the evidentiary burden. Despite three adjournments, costs awarded against him and four months, Mr. Lahar never provided all the disclosure necessary to ascertain his ability to pay support.

[29] I understand that despite my order, Mr. Lahar has yet to pay any child or spousal support and is currently in receipt of Ontario Works, having left the trucking industry to retrain as noted earlier.

[30] Counsel for the applicant submits that Mr. Lahar has deliberately intended to deceive the court and should be found to have acted in bad faith.

[31] Counsel for Mr. Lahar submits that while it is true that Mr. Lahar was late in providing complete disclosure to the court, his intention was never to deceive. Counsel submits that Mr. Lahar was merely overwhelmed with the court procedures and had to handle matters by himself initially without counsel or apt knowledge of the law and very limited communication skills. Hence, he was only confused about disclosure and certain other aspects of the proceedings but did not make any conscious efforts at inflicting harm on the applicant. Furthermore, he submits that as Justice Perkins states in paragraph 19 of C.S. v. M.S., "failing to provide prompt income disclosure, without intent to deceive or conceal" does not fall within the ambit of bad faith intended by sub-rule 24(8).

[32] While I am very concerned with Mr. Lahar's conduct and credibility in these proceedings, in my view, the evidence falls short of the standard required to establish bad faith at this time. However, it may very well be established after the trial of the issue of Mr. Lahar's income.

[33] I have also considered how the impact of a cost award would impair Mr. Lahar's ability to support his child and himself. However, in my view, these are appropriate circumstances to award costs in the applicant's favour.

[34] But for Mr. Lahar's apparently new financial circumstances, I would have been inclined to make a costs award in the range of $6,000.00 to $8,000.00. However, in considering all of the circumstances, costs will be fixed at $3,500.00, inclusive of fees, disbursements and taxes. I have taken into consideration the two other cost awards made in this case against Mr. Lahar.

[35] These costs shall be paid no later than 30 days from the date of this order, or to be paid at a rate of $150.00 per month, commencing June 1, 2014.

Justice Sheilagh O'Connell

Date: March 31, 2014