Court File and Parties

Milton Registry No.: 12/419-01 Date: 2015-02-25

Ontario Court of Justice

Re: Bruno Ruggieri — Applicant And: Sabrina Caruso — Respondent

Before: Justice Sheilagh M. O'Connell

Counsel:

• William H. Abbott, for the Applicant
• Steven D.J. Kogon, for the Respondent

Heard: By way of written submissions

Costs Endorsement

1: Introduction

[1] The respondent mother ("the mother") brought a motion to change the child support provisions in a final order. At the first case conference in this matter on 23 September 2014, the parties entered into final minutes of settlement, settling all issues.

[2] The mother seeks her costs of the motion to change on a full-recovery basis in the amount of $11,365.01.

[3] The applicant father ("the father") also seeks his costs on a full-recovery basis in the amount of $13,486.02.

2: Background

[4] The parties share custody of their child, Maurizio. On 23 May 2012, the parties executed a separation agreement. On 4 October 2012, the terms of the separation agreement were incorporated into the final order of this court, made on consent of the parties, ("the Consent Order"). The relevant provisions of the Consent Order provided:

(a) Given the shared custody arrangement of their son, Maurizio, no table child support is payable to either party;

(b) The parties are to proceed by way of mediation/arbitration to settle any disputes.

[5] The Consent Order also confirms that the father's annual income was $69,000 and the mother's self-employment income was imputed at $45,000 annually at the time the agreement was reached. Nevertheless, the parties agreed that no child support would be payable.

[6] The Consent Order sets out a process for dispute resolution between the parties. Paragraph 42 of the Order provides that a request for financial disclosure by either party shall be answered within fourteen days. Paragraph 44 of the Order provides that, if the father and the mother cannot agree within fourteen days of the request for review or variation, then they shall try mediation, or mediation first and then arbitration.

[7] On 4 February 2014, the mother's counsel sent a letter to the father's counsel requesting that the father provide financial disclosure in accordance with section 21 of the Child Support Guidelines. The letter also stated that, if there was no response from the father, then the mother would be forced to proceed to court.

[8] It is not disputed that the request for financial disclosure by the mother was made within the context of the father's request for a travel consent document from the mother to permit him to travel on vacation with Maurizio, to which she had not previously provided. It is further not disputed that there was no response within fourteen days by the father to the request for financial disclosure by the mother.

[9] In May of 2014, the mother lost her employment at a bakery as a result of the company's being restructured. As a result of the loss of employment, the mother could no longer afford the mortgage payments on her home, and she moved in with her parents in Caledon, Ontario. The mother then rented out her home in order to cover the mortgage payments owed.

[10] The mother states that, as a result of the loss of her employment, the issue of child support became urgent. On 22 May 2014, shortly after the mother lost her job, the mother's counsel served a motion to change child support on father's counsel.

[11] It is not disputed that the father and his counsel had not received any further request for disclosure or to appoint a mediator pursuant to paragraphs 41 and 44 of the Consent Order after the correspondence received from mother's counsel on 4 February 2014. The next correspondence that the father and his counsel received was the motion to change, served on counsel approximately three months later.

[12] Shortly thereafter, the father's counsel informed the mother's counsel that the motion to change was improper and that pursuant to the Consent Order, the parties were first directed to proceed by way of mediation/arbitration to settle any disputes between them. According to the correspondence filed, the father's counsel tried to redirect the matter to mediation/arbitration on a number of occasions. Father's counsel listed three proposed mediators to mother's counsel, prior to any court attendances, but these proposals went unanswered.

[13] Father's counsel then brought a motion for summary judgment, seeking the dismissal of the motion to change with costs and directing the parties to proceed with the dispute resolution process that was set out in the Consent Order. Father's counsel requested that the matter be set down for a summary judgment hearing forthwith. The court directed that a case conference be scheduled prior to the hearing of the summary judgment.

[14] The first case conference was heard on 23 September 2014. At that time, after some discussions, the parties entered into final minutes of settlement providing that the father pay the mother child support in the amount of $224 per month, which was an offset of the parties' incomes as set out and determined in the Consent Order. Although the mother had lost her salaried employment, she was apparently self-employed as a personal trainer and receiving some rental income from her property. The parties also consented to a provision that hockey expenses for Maurizio would qualify as a section 7 expense.

3: The Mother's Position

[15] The mother submits that she was the successful party and is therefore presumed to be entitled to costs. She states that she was successful in varying the net offset periodic child support payable by the father from zero to $224.00 per month. She further submits that she was successful in obtaining an order that the hockey expenses for Maurizio would qualify as a section 7 expense.

[16] The mother acknowledges that while it may have been in contravention of the Consent Order to bring a motion to change prior to pursuing mediation/arbitration, the father never responded to her initial correspondence within the required 14 day period or even at all and that, after she was terminated from her salaried position in May 2014, the issue of child support became urgent. She took the position that the father was frustrating the dispute resolution process set out in the Consent Order and that she had no alternative but to proceed with her motion to change.

[17] The mother further submits that this was a relatively straightforward matter in which a simple calculation would have determined what, if any, net offset periodic child support would be payable after the parties' respective incomes had been established. However, the parties spent a disproportionate amount of time arguing procedural issues that subverted the parties from addressing the substantive issues before the court. This unnecessarily drove up the parties' costs on an issue that could have been resolved quite easily when a first attempt had been made by the mother to ascertain the applicant father's financial circumstances in February of 2014.

[18] At the end of the day, the mother submits that she was successful in varying the child support provisions of the Consent Order.

4: The Father's Position

[19] The father submits that the motion to change should never have been brought before the court in the first place. Although he agreed to settle the matter at the first case conference, the father asserts that he would have been successful on his motion for summary judgment. However, he recognized that the money used to bring the summary judgment motion would be better spent on his son and agreed to pay child support based on the parties' incomes as set out in the final minutes of settlement reached at the first case conference.

[20] The father further submits that, when the parties reached minutes of settlement at the case conference, there had been no material change in circumstances established for either party's income. According to the father, the minutes simply reflected a settlement based on the parties' respective incomes as set out in their separation agreement and the Consent Order. The father further states that he never refused to pay Maurizio's hockey expenses and that the hockey provision set out in the minutes of settlement was put in there at his request. However, he disputed the arrears of the expense noted in the mother's motion to change materials.

5: The Law and Governing Principles

[21] 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. Successful party presumed entitled to costs. — (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

(4) Successful party who has behaved unreasonably. — 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) Decision on reasonableness. — 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) Divided success. — If success in a step in a case is divided, the court may apportion costs as appropriate.

(7) Absent or unprepared party. — 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) Bad faith. — 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) Costs to be decided at each step. — 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.

[22] Subrule 24(11) provides a further list of factors that a court must consider when setting the amount of costs:

(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.

[23] In Serra v. Serra, 2009 ONCA 395, 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.

[24] 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 MacDonald v. Magel, 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.

[25] 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.

[26] Consideration of success is the starting point in determining costs. However, any attempt to determine a "winner" or "loser" in a settlement is, in most cases, complex if not impossible. Cases are resolved in whole or in part for many reasons. See Sims-Howarth v. Bilcliffe, at paragraph [1]. Thus, for good reason, judges are reluctant to make an order as to costs when the parties settle the merits to their dispute. Where parties make a settlement as between themselves, the court should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. See: Page v. Desabrais, 2012 ONSC 6875, at paragraph [28]; Blank v. Micallef, at paragraph [11]; Gurzi v. Elliot, 2011 ONCJ 158, at paragraph [16].

[27] If the court is able to determine which party is successful based on minutes of settlement, than the "divided success" approach under subrule 24(6) is appropriate, and a consideration of the parties' reasonable or unreasonable behaviour must be made. See Davis v. Davis, at paragraphs [3] and [7].

[28] Further, if a successful party has behaved unreasonably "in relation to the issues from the time they arose (subrule 24(5)," then pursuant to subrule 24(4), they may be "deprived of all or part of the [their] costs or ordered to pay all or part of the unsuccessful party's costs." Behaviour under subrule 24(5) is not restricted to behaviour associated with offers to settle. See Family Law Rules, subrules 24(4), (5) and 11(b); Lawson v. Lawson, at paragraph [44].

[29] Finally, in deciding the amount of costs to be paid, I must also consider clause 24(11)(f) which requires the court to consider any other relevant matter, including the ability to pay costs. See Biant v. Sagoo. In MacDonald v. Magel, supra, Appeal Justice Marc Rosenberg for the Ontario Court of Appeal stated the following:

[42] 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 sub rule 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 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.

6: Analysis

[30] While it is true that the mother was able to secure child support at the first case conference and the parties reached final minutes of settlement, I agree with father's counsel that mother's counsel should not have commenced the motion to change. It is clear that the first step the mother should have taken was to proceed by way of the dispute resolution process set out in the Consent Order. Despite the fact that the father did not respond to the letter dated 4 February 2014 for financial disclosure, to then proceed three months later with a motion to change without any further discussions or any attempt to trigger the mediation/arbitration provisions set out in the parties' Consent Order was unreasonable behaviour.

[31] Notwithstanding the above, the father's insistence on focusing on procedural issues, and the amount of time spent on the motion for summary judgment, compelling the return to the mediation/arbitration process, rather than simply focusing on the merits of the case and providing the financial disclosure requested, also inordinately delayed this matter and significantly increased the costs of both parties. I agree with the mother's submission that this was a relatively straightforward calculation and determination. Having said that, I commend the applicant father for reaching final minutes of settlement at the first case conference notwithstanding the mother's refusal to comply with the procedure in the Consent Order.

[32] At the end of the day, had the parties followed a mediation/arbitration procedure instead of the motion to change, it is clear that the father would have been required to pay child support. Although the father submits that the mother did not establish a material change in circumstances, it is not in dispute that the mother was able to secure child support from the father, which he had not paid before she commenced her proceedings.

[33] In my view, after carefully considering all of the circumstances, I have determined that success in this matter was divided and costs should be apportioned in accordance with subrules 24(1)-(6). I was initially inclined to make some cost award against the mother for improperly bringing the motion to change. However, I considered that the parties, to their credit, reached a settlement at the first case conference and the legal principles that I must apply in those circumstances. As previously noted, where parties make a settlement as between themselves, the court should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. I also considered the mother's very limited financial resources, having lost her job, and forced to move into her parents' home and to rent out her own home.

[34] Accordingly, there will be no costs awarded to either party.

[35] This case illustrates the importance for counsel when negotiating separation agreements to think carefully about how they draft the dispute resolution provisions that are set out in separation agreements and that are later incorporated into consent orders.

[36] I thank counsel for their helpful submissions.

Justice Sheilagh M. O'Connell

Date: 25 February 2015

Footnotes

[1] I also considered the mother's conduct with respect to the urgent motion without notice that she brought on 29 August 2014, regarding Maurizio's school. That motion should have been served on the father's counsel or his office. The court was advised that the father's counsel was unavailable, nevertheless, when telephoned at their office by the court, the father's lawyers were available immediately and the motion proceeded by way of a telephone conference. The court was also concerned that the mother relied on an e-mail thread in support of her allegation that the father refused to discuss Maurizio's schooling, but one of the e-mails from the father was not in the e-mails attached to her ex parte motion. At the end of the day, Maurizio was not permitted by the school board to remain at his current school given that he was no longer living in the catchment area so he was relocated to a school in the mother's catchment area. It is unfortunate that the parties and counsel could not simply have discussed and agreed upon this prior to the mother's bringing the urgent motion.

[2] See: Page v. Desabrais, supra, at paragraph [28]; Blank v. Micallef, supra, at paragraph [11]; and Gurzi v. Elliot, supra, at paragraph [16].