Court File and Parties

Court File No.: D55950/12 Date: 2014-10-20

Ontario Court of Justice

Between:

P.M. Applicant

- and -

S.M. and S.O. Respondents

Counsel:

• Thora Espinet, for the Applicant
• The Respondent, S.M., acting in person
• The Respondent, S.O., not participating

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On September 23, 2014, the court released its endorsement dismissing the respondent, S.M.'s (the father) motion to set aside, or in the alternative (pursuant to subrule 25(19) of the Family Law Rules) to change the final order of Justice Carole Curtis, dated April 24, 2012 (the final order).

[2] The court provided the applicant (the paternal aunt) and the father with timelines to make written costs submissions. The paternal aunt made written submissions. The father did not.

[3] The paternal aunt seeks her full recovery costs of $9,458.10.

Legal Framework for Costs

[4] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395 confirmed 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) 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. Subrule 2(4) states that the parties and their lawyers have a positive obligation to help the court to promote the primary objective under the rules. Clauses 2(3)(a) and (b) 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) 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. The position each party took at the hearing of the motions should also be examined.

Offer to Settle and Subrule 18(14)

[7] Subrule 18(14) 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 only Offer to Settle on this motion was made by the paternal aunt, dated January 20, 2014. The offer to settle is ambiguous. Paragraphs 1 and 2 of the Offer to Settle read as follows:

1. The Respondent/Father, S.M. shall forthwith withdraw his Motion to set aside the Order of the Honourable Justice Curtis dated April 24, 2012.

2. The Respondent shall pay the Applicant's costs to date in the amount of $2,500.

[9] However, the Offer to Settle includes another section, with the heading "Terms of Offer to Settle". The relevant parts of this section read as follows:

a) If this Offer to Settle is accepted by the Respondent by 5:00 p.m. on or before January 21, 2014, each party shall pay his/her own costs.

b) If this Offer to Settle is accepted by the Respondent at any time after Tuesday, January 21, 2014, the Respondent shall pay the Applicant's costs to be fixed in the amount of $5,000 and her costs after Tuesday January 21, 2014, on a full recovery scale.

[10] It appears from clause (a) of the "Terms of Offer to Settle" above, that the paternal aunt's intention might have been to walk away from a costs award if the father withdrew his motion at that time. However, paragraph 2 of the Offer to Settle contradicts this clause – it states that the father must pay the paternal aunt $2,500, as well as withdraw his motion, to settle the matter.

Application of Contra Proferentem

[11] The principle of contra proferentem applies to Offers to Settle – where the rules of construction cannot resolve any ambiguity in an offer, that ambiguity should be construed against the party that drafted it. In paragraph 54 of Mendelson v. Work Wear Corp. of Canada, [1993] O.J. No. 367 (Ontario Court – General Division) the court discusses the principle of contra proferentem as follows:

In Hillis Oil & Sales Ltd. v. Wynn's Canada Ltd., 25 D.L.R. (4th) 649 (S.C.C.), the Court applied the contra proferentem rule where the discrepancy in wording created an ambiguity. At p. 657, LeDain, in discussing the rule, quoted a passage from Estey J.'s judgment in McClelland & Stewart Ltd. v. Mutual Life Assurance Co. of Canada, 125 D.L.R. (3d) 257 (S.C.C.):

That principle of interpretation applies to contracts and other documents on the simple theory that any ambiguity in a term of a contract must be resolved against the author if the choice is between him and the other party to the contract who did not participate in the drafting.

[12] Applying the principle of contra proferentem, the court will interpret the Offer to Settle to mean that the paternal aunt offered to settle the father's motion by having him withdraw it, together with paying her $2,500 for costs by 5:00 p.m. on January 21, 2014. For the paternal aunt, this is the less preferential interpretation of the two contradictory clauses in her Offer to Settle, for the purpose of determining if it meets the requirements of subrule 18(14).

[13] The court next needs to determine if the Offer to Settle was more favourable to the father than the final result. If the paternal aunt is entitled to costs of more than $2,500 up until the date of the offer (January 20, 2014), then the offer would have been more favourable to the father than the final result, and subrule 18(14) applies.

Procedural History and Costs Incurred

[14] The father first filed this motion on January 15, 2013. In addition to asking to set aside the final order, he also sought an order for temporary access to his child. The paternal aunt, in response, filed a cross-motion for a restraining order against the father.

[15] The motions came before the court on March 8, 2013, June 10, 2013 and July 25, 2013. Temporary access and restraining orders were made and the Office of the Children's Lawyer was appointed. The motion to set aside the final order was not dealt with on these court appearances. However, considerable affidavit material was filed by both the father and the paternal aunt with respect to the issue.

[16] The father issued a fresh motion to set aside the final order on November 28, 2013. Significant additional affidavit material with respect to this motion was filed by both the father and the paternal aunt.

[17] All of the issues were case conferenced on January 22, 2014. The case came before the case management judge on several other occasions in 2014. The court primarily dealt with issues pertaining to parenting and restraining orders. The hearing of the father's motion to set aside the final order was adjourned twice in 2014 at his request.

[18] The paternal aunt was represented by Peter Clyne until August 15, 2014. She subsequently retained her current counsel, Thora Espinet. The paternal aunt, in her costs submissions, itemized Mr. Clyne's time that was specifically spent on this motion. She claims $8,115 for this time.

[19] A review of the Bill of Costs indicates that the paternal aunt has restricted the time claimed for Mr. Clyne to the time he actually spent on this motion. She has not claimed time for his work on other aspects of the case or for the court appearances listed above.

[20] The court finds that the time claimed by the paternal aunt for Mr. Clyne up until the date of the Offer to Settle was very reasonable, if not modest. The father filed significant material, prior to January 20, 2014, that related to his motion to set aside the final order, including five affidavits from collateral witnesses and three of his own. He also prepared a factum. The father alleged that he wasn't served with the original custody application. The paternal aunt had to incur significant legal costs to prove that he was. She filed her own affidavits and several collateral affidavits prior to January 20, 2014.

[21] The paternal aunt's partial recovery costs for this motion, for the period up until January 20, 2014, easily exceeded the $2,500 requested in the Offer to Settle. The father should have accepted her offer.

[22] The court finds that the paternal aunt's Offer to Settle was more favourable to the father than the final result and that the costs consequences set out in subrule 18(14) apply. The presumption in favour of these costs consequences was not rebutted by the father.

Factors in Setting Costs

[23] In making this decision, the court considered the factors set out in subrule 24(11) 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 issues before the court were important for the parties. They were made more difficult due to the father's denial of being served with the original application. This meant that the paternal aunt had to obtain evidence from persons who had knowledge of the father being served in Jamaica. She also had to retain two experts to establish when her documentation was prepared.

[25] The paternal aunt acted reasonably on this motion. The father made unsubstantiated allegations of fraud. This was unreasonable behaviour. Family law litigants are responsible for and accountable for the positions they take in the litigation. See: Heuss v. Surkos, 2004 ONCJ 141. The father's position was unreasonable.

[26] Mr. Clyne has been a lawyer for forty years. Ms. Espinet has been a lawyer for thirty-one years. The hourly rates claimed by both of them are reasonable.

[27] The time claimed by both Mr. Clyne and Ms. Espinet was proportionate and reasonable. They both restricted their claims to the time spent on the father's motion to set aside or change the final order. Ms. Espinet did not claim time for two prior court attendances on this motion in 2014, as Justice Carolyn Jones had already awarded the paternal aunt $1,350 costs for these attendances. Ms. Espinet only claimed 3 hours for her preparation and attendance on this motion. No time was claimed for an excellent factum prepared on behalf of the paternal aunt.

[28] The expenses claimed by the paternal aunt were well-documented and reasonable.

[29] The court considered the respondent's ability to pay the costs order. See: MacDonald v. Magel, 67 O.R. (3d) 181 (Ont.C.A.). A party's limited financial circumstances will not be used as a shield against any liability for costs but will be taken into account regarding the quantum of costs, particularly when they have acted unreasonably and are the author of their own misfortune. See: Snih v. Snih pars. 7-13. In the case of Takis v. Takis, [2003] O.J. No. 4059 (S.C.J.) the court found that the respondent's lack of income and assets, though a relevant consideration, could not be used as a shield in unnecessary litigation.

[30] Here, the father's ability to pay the costs order is in dispute. He is in receipt of social assistance, however the paternal aunt alleges that the father owns his own business, drives a car, possesses significant land holdings in Jamaica and wears designer clothing. The father did not respond to these submissions by the paternal aunt or make submissions about his ability to pay costs.

[31] The father, by his unreasonable behaviour, created substantial unnecessary costs for the paternal aunt. A significant costs order is warranted.

[32] The court 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

[33] Taking into consideration all of these factors, the father shall pay the paternal aunt's costs of this motion in the sum of $8,800, inclusive of disbursements and HST. The father shall pay these costs to the paternal aunt within 30 days.

[34] In her submissions, the paternal aunt asked the court to make an order prohibiting the father from taking any further steps in the case until he pays outstanding costs of at least $2,000. It is more appropriate for this request to be heard, on notice to the father, by the case conference judge.

Justice S.B. Sherr

Released: October 20, 2014