Court File and Parties

Ontario Court of Justice

Date: February 25, 2015

Court File No.: Halton 408/11

Between:

Teresa Scott Applicant

— And —

Brian Lloyd Respondent

Before: Justice S. O'Connell

Heard by: Written Submissions

Costs Endorsement released on: February 25, 2015

Counsel:

• Steven D. Kogon, counsel for the applicant
• Brian Lloyd, on his own behalf

O'Connell J.:

Introduction

[1] Both parties seek their costs of a six day trial before me. The main issues in this trial were custody and access of the child, the determination of child support, and whether the spousal support that the parties had agreed to in a final separation agreement should be terminated and the determination of support arrears, if any.

[2] Following the trial, I delivered lengthy written reasons.[1] Briefly, I granted the mother, Teresa Scott, sole custody of the child and the father, Brian Lloyd, supervised access to the child in the presence of a family reunification therapist for six separate sessions, followed by a graduated access schedule leading to a regularized access arrangement. I further ordered that the father pay child support in the amount of $982 per month, in accordance with the Child Support Guidelines, and that the spousal support terms of the parties' separation agreement continue to be in full force and effect. I also ordered that the father pay arrears of child support and spousal support totalling $36,678.[2]

Brief Background

[3] The mother brought a motion to change the terms of the parties' separation agreement seeking the establish the proper quantum of child support and any arrears or retroactive amount, and also seeking to enforce the terms of the parties' separation agreement with respect to spousal support and affixing any arrears owing.

[4] The father brought a cross-motion seeking sole custody of Anieca or alternatively specified access. He also sought to have his child support reduced, that the spousal support that the parties had agreed to in their separation agreement be terminated effectively immediately, and that all arrears of support be rescinded. The father sought the termination and rescission of spousal support arrears for what he described as the mother's deliberate campaign of complete parental alienation of the child from him.

The Positions of the Parties

[5] The mother seeks her costs of the trial on a full recovery basis in the amount of $40,218.78. The mother served three offers to settle all of the issues in this matter. She submits that she was the successful party, achieving a result at trial that was either equal or more favourable than the offers to settle that she served before trial in accordance with the Family Law Rules.

[6] The father seeks his costs payable in the amount of $22,694.23. He served one offer to settle and it is his position that the order made at trial was equal to or more favourable than his offer to settle all of the issues. The father was self-represented at trial, however, he provided a bill of costs for legal fees incurred prior to trial, his costs for time off work for trial preparation and attendance, and his payment of the custody and access assessor's fees to attend and testify at trial.

The Law and Governing Principles

[7] 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.

24. (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.

24. (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.

24. (6) If success in a step in a case is divided, the court may apportion costs as appropriate.

[8] 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).

[9] Rule 18(14) and 18(16) of the Family Law Rules, addressed the cost consequences of offers to settle, and provide the following:

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.

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. O. Reg. 114/99, r. 18(14) and (16).

[10] In Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, [2009] O.J. No. 1905, 2009 CarswellOnt 2475, 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.

[11] 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., 67 O.R. (3d) 181 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.

[12] 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, 71 O.R. (3d) 291, 188 O.A.C. 201, 48 C.P.C. (5th) 56, [2004] O.J. No. 2634, 2004 CarswellOnt 2521 (Ont. C.A.), 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.

[13] 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.

The Mother's Offers to Settle

[14] The mother made three offers to settle all of the issues in this matter. The first offer to settle was made on June 24, 2013, after receiving the recommendations of Ms. Andrea Barclay, the custody and access assessor who testified at trial. The mother made two further offers to settle on August 13, 2013. The offers to settle dated August 13, 2013 separated the financial and custody and access issues. One of the offers was in respect to the spousal support and child support issues, and the other offer dealt only with the custody and access issues. The offers could be accepted independent of each other. All three of the mother's offers to settle expired after the commencement of trial and were never withdrawn.

[15] The first offer to settle dated June 24, 2013 adopted the recommendations of Ms. Barclay regarding the custody and access issues and was similar to the order obtained at trial. The only exception was with respect to the provisions of access. In the offer to settle dated June 24, 2013 access between Anieca and the father shall occur with the support of a therapist and at the discretion of the therapist. In my judgment, I set out a very specified and detailed access scheduled, leading to a graduated and regularized access arrangement between Anieca and her father.

[16] The June 24, 2013 offer also set ongoing spousal support at $1,090 per month, and offered to fix spousal support arrears in the amount of $17,440. It further offered to set child support in the amount of $750 per month and to set child support arrears in the amount of $6,872.

[17] At trial, the spousal support arrears were fixed at $36,678 less any payments made for 2014, and child support was fixed at $2,280 for a total of $38,958. In addition, the spousal support continued as per the parties' separation agreement in the amount of $1,098.00 per month, including any cost of living increase, until August 31, 2019.

[18] This offer to settle the financial issues is as favourable as or more favourable than the results achieved at trial.

[19] The August 13, 2013 offers to settle by the mother were acceptable independent of one another, as indicated. It was clear that the intention of the mother was to hopefully either settle the custody and access issues in one of the offers and to settle the financial issues in the second offer, thereby bifurcating the financial and parenting issues and, if one of the offers were acceptable, considerably reduce the length of the trial.

[20] It is important to note that the two new offers of August 13, 2013 did not revoke the offer of June 24, 2013. That offer also continued to remain open until the commencement of trial.

[21] With respect to the financial issues, the August 13, 2013 offer proposed a lump sum for spousal support in the amount of $60,000. No further spousal support would be paid. The lump sum included arrears, as well as the prospective spousal support, which under the parties' separation agreement continues until August 31, 2019, another 4.5 years. In the event that the father could not afford or did not wish to do a lump-sum buyout of the spousal support, then the offer proposed that the spousal support would continue pursuant to the terms of the agreement.

[22] With respect to the child support, the offer reduced the amount of child support arrears to $2,776 and that the child support would continue at the rate of $754 per month. At trial, I ordered that the child support would continue at a rate of $982 per month and arrears of child support at $2,280.

[23] The orders obtained at trial regarding child and spousal support were more favourable to the mother than her offer to settle the financial issues.

[24] The custody and access offer dated August 13, 2013 provided that the mother shall have sole custody of Anieca and that the father shall enjoy liberal and general access to Anieca, subject to Anieca's sole discretion. Neither party shall be obligated to attend counselling and Anieca shall not be obligated to attend counselling.

[25] This offer to settle the custody and access issues was equally favourable regarding the issue of custody but less favourable regarding the issue of access than the result achieved at trial.

The Father's Offer to Settle

[26] The father's offer to settle dated July 23, 2013 provided the following, among other provisions:

1. The father shall have open and unabated access to Anieca in accordance with the reunification therapy findings. Failing to agree to this offer would mean the respondent father will be seeking full and open access through the amendment of the separation agreement or a complete re-drafting of the separation agreement in its entirety. Whereby the terms and conditions with respect to custody will be subject to judicial discretion requiring an order for same;

2. The requirement for counselling for the mother would be rescinded;

3. The requirement for Anieca to obtain counselling as per the custody and access assessor's recommendations would be rescinded;

4. Access between Anieca and the father shall occur in accordance with the "Rules of Family Law". Anieca will have discretion as to when she will see or visit her father;

5. The father shall pay child support in the amount of $754 per month based on an annual income of $84,000 for 2013;

6. The respondent shall pay $40,000 in RSPs to settle any and all present and future spousal support, arrears, thereby terminating all obligation upon the father for spousal support in any form. This is to be supplemented by a further $10,000 one-time cash payment with a view to establishing full and final settlement;

7. Failing to respond or agree to the aforementioned terms, this offer will expire and be rescinded null and void automatically in 48 hours' time;

[27] The father's offer, as indicated, expired in 48 hours and, therefore, did not fall within the criteria outlined in s. 18(14) of the Family Law Rules.

[28] The father's offer to settle the custody and access issues did not appear to address the issue of custody, unless the father meant that "custody would be subject to judicial discretion" was his offer. Further, the offer to settle the access issues was somewhat unclear, as paragraphs 1, 3, and 4 appear to contradict one another and it is not understood what access in accordance with the Family Law Rules means. I cannot conclude that the father's offer to settle the custody and access issues was equally favourable or more favourable than the order at trial.

[29] The father's offer to settle the financial issues was less favourable than the results ordered at trial. The father offered a buy-out of the mother's entire spousal support entitlement in the amount of $40,000 by way of an RRSP transfer. It is uncertain how that would have occurred and certainly the RRSPs would have been assigned a notional tax rate of at least 25 per cent, making the amount considerably less. There was also an additional cash payment of $10,000.00, however I ordered the father to pay $36,678 in arrears and payment of $1,098, plus cost of living adjustments, to be paid monthly until August 31, 2019. In addition to the arrears ordered, this represents a further 59 pay periods of approximately $65,000, for a total of $101,678 in spousal support.

Conclusion Regarding Offers to Settle

[30] Having reviewed all the offers to settle, the father's offer to settle was less favourable than the result obtained at trial. The father's offer to settle expired also after 48 hours. The Court considered the father's position that even though the offer to settle was not in compliance with Rule 18, the Court could exercise its discretion over costs and take into account any other written offers to settle, the date it was made and the terms even if Rule 18(14) does not apply. The father did not provide any further written offers to settle other than the offer dated July 23, 2013, so it is unclear how 18(16) would apply.

[31] The mother's offer to settle the custody and the financial issues was equally favourable as or more favourable than the results achieved at trial. In my view, the mother's offer to settle the issue of access was somewhat less favourable than the result obtained at trial for the father.

Analysis Regarding Determination of Costs

[32] The father's position advanced at trial that all spousal support should be terminated and the arrears of spousal support should be terminated as a result of parental alienation was rejected. The Court did not make a finding of parental alienation, notwithstanding the inordinate amount of trial time spent on this issue.

[33] The mother was more successful than the father at trial on the issues of custody, child support and spousal support. Her offers to settle those issues were equally favourable or more favourable than the results achieved at trial.

[34] Having said that, in my view, the mother should not be provided a full recovery of costs as the offers to settle the access issue did not meet the Rule 18 requirements to obtain full recovery. The issue of access was central to this trial. I also am guided by the factors set out under Rule 24 of the Family Law Rules in determining what an appropriate amount of costs should be awarded to the mother. I have considered carefully the bill of costs and the hourly rate of both Mr. Kogon and Mr. Ashbee.

[35] In determining the amount of costs, I have considered the following:

(a) The Importance, Complexity or Difficulty of the Issues

The issues before the Court were complex and the factual issues were complicated. This case was very important to the parties as it related to the future parenting arrangements of their child, the father raised the issue of parental alienation, a very serious allegation, and the issues of support were important. Although the issues individually were not complex or difficult, the number of issues, the time span involved and the amount of documentary evidence and the dispute between the parties made the issues more complex factually and legally.

(b) The Reasonableness or Unreasonableness of Each Party's Behaviour in the Case and the Time Properly Spent

I found that both parties acted unreasonably in this case. I am mindful that the father refused to accept three very reasonable offers by the mother, including the offers to bifurcate the issues. I also find it unreasonable that the father's offer to settle was only open for 48 hours. I am also mindful that although I did not make a finding of parental alienation, I found that the mother's conduct concerning in that she did little to encourage the relationship between the father and child. Nevertheless, I also found that the father's conduct to be very concerning, particularly his absolute refusal to accept any responsibility for the breakdown in his relationship with his daughter.

(c) The Lawyers' Rates

Mr. Ashbee, who was involved in this matter, did not participate in the trial, charges an hourly rate of $325. He has 30 years' experience and 18.7 hours of the proceedings were attributed to him in the amount of $6,077.50. This was a reasonable expense of time. Mr. Kogon has been practicing family law for 2 years. His hourly rate was $225 per hour and his hours billed for the trial preparation and attendance at trial were 127 hours.

In my view, this is a reasonable hourly rate and a somewhat reasonable amount of time for a trial that spanned over 6 days, partially lengthened as a result of the father's decision to represent himself at trial.

However, I also take into consideration that the father obtained and paid for the custody and access assessor's attendance at trial, and he has attached a copy of her invoice totaling $2,600. The attendance of Ms. Barclay at trial was extremely helpful to this Court in determining the issues between the parties.

[36] I further take into consideration the father's obligations to his second family in determining what an appropriate amount of costs should be. In my view, in consideration of all of the factors that I am guided by and in the circumstances of this case, I find that the mother is entitled to partial recovery of all of her costs and I award the mother $25,000 in costs, inclusive of taxes and disbursements.

[37] Mother's counsel made submissions with respect to the issue of the enforcement of the costs award by the Family Responsibility Office. The Family Responsibility Office can only enforce costs related to financial issues. In this case, the trial regarded both financial and parenting issues and it is impossible with any precise ability to delineate the time spent regarding these issues. However, I find that it is fair to attribute half the costs to the financial issues. Accordingly, I am prepared to order that the Family Responsibility Office enforce $12,500 of the costs ordered at a rate of no less than $500 per month. The remainder to be paid within 60 days to permit the father the time to arrange any necessary financing.

The Order is as Follows

1. The respondent father shall pay to the applicant mother the costs fixed at $25,000, inclusive of disbursements and applicable taxes;

2. The Family Responsibility Office shall enforce $12,500 of the $25,000 owing at the rate of no less than $500 per month as of April 1, 2015 as a support order. The remainder of $12,500 shall be payable within 60 days of the date of this order;

3. A Support Deduction Order shall issue.

Released: February 25, 2015

Signed: "Justice Sheilagh O'Connell"

[1] Scott v. Lloyd, 2014 ONCJ 639, [2014] O.J. No. 5775

[2] Arrears of child support and spousal support totalling $36,678.