Court File and Parties

Court File No.: D80453/15 Date: 2015-05-28

Ontario Court of Justice

Between:

I.K.

JARET MOLDAVER, for the APPLICANT

APPLICANT

- and -

A.K.

RESPONDENT

LAUREN ISRAEL, for the RESPONDENT

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

[1] On April 29, 2015, the court released its endorsement regarding the applicant's (the mother) motion for temporary spousal support. The court ordered the respondent (the father) to pay temporary spousal support to the mother in the amount of $900 per month, starting on January 1, 2015. This order was made subject to adjustment to both quantum and start date by the trial judge.

[2] The court gave the parties the opportunity to make written costs submissions. The mother made submissions and seeks costs of $15,000. The father made written submissions and asks that no costs be ordered.

Legal Framework for Costs

[4] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395 stated 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 24(1) of the Family Law Rules (all references to rules in this endorsement are the Family Law Rules) 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.

Settlement Offers

[6] The mother made an offer to settle. She proposed that the father pay her temporary spousal support of $1,634 per month, starting on March 1, 2015.

[7] The father did not make an offer to settle.

[8] This court has often written that it will usually be unreasonable behaviour to fail to make an offer to settle. The court wrote in paragraphs 4-5 of Klinkhammer v. Dolan and Tulk, 2009 ONCJ 774:

4 It was surprising that there were no formal offers to settle in this case. It is reflective of the polarity of the parties. It should be a fundamental step in any family law case to serve at least one offer to settle. Parties and their counsel now have a mandate under subrule 2(4) of the rules, to promote the primary objective of the rules; to deal with cases justly (subrule 2(2)). Dealing with a case justly includes taking steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense in a case. They are an important vehicle in promoting settlements, focus the parties and often narrow the issues in dispute.

5 There are consequences in the rules for not making or accepting reasonable offers to settle. Subrule 18(14) sets out the costs consequences of not accepting an offer to settle that is as good as or better than the final result. When determining the reasonableness of a party's behaviour in the case, clauses 24(5)(b) and (c) of the rules direct the court to examine the reasonableness of any offer made, withdrawn or not accepted. This does not preclude the court from examining the failure of a party to make an offer to settle.

[9] These comments apply equally to making offers to settle on contested motions. See: H.F. v. M.H., 2014 ONCA 86.

Costs Consequences of Failure to Accept Offer

[10] 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.

[11] The mother's offer was not more favourable to the father than the final result. The costs consequences set out in subrule 18(14) do not apply.

[12] Subrule 18(16) provides the court with a discretion to take into account any written offer to settle, the date it was made and its terms, even if subrule 18(14) does not apply.

Divided Success

[13] Subrule 24(6) provides that where success in a step in a case is divided, the court may apportion costs as appropriate.

[14] There was divided success on this motion. The mother was successful in obtaining a temporary spousal support order, effective January 1, 2015. However, she was unsuccessful in her attempt to impute additional income to the father. This is why the support ordered was much lower than the amount she sought.

[15] The father took the position that he could not afford to pay the mother any spousal support. It was not a reasonable position to take.

[16] The court finds that the mother was more successful than the father. She had to bring this motion to obtain any support from him.

Factors in Determining Costs

[17] 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.

[18] The case was important for the parties. There was some complexity to the case. The parties had to address the interplay between payment orders under section 60 of the Child and Family Services Act and temporary spousal support. They also had to address the impact of the family's significant therapeutic costs (arising from the child protection case) on temporary spousal support. The case was made more difficult and costly due to the father's delay in providing financial disclosure. His delay in providing disclosure also elevated the mother's distrust of the disclosure he did provide. This increased the mother's costs on this motion.

[19] The mother's behaviour was reasonable on this motion. The father's behaviour was not reasonable. He failed to make an offer to settle. He delayed in providing financial disclosure. He did not provide his 2014 T4 statement on the motion. He had failed to pay any spousal support to the mother.

Prior Steps in the Case

[20] Subrule 24(10) sets out that costs are to be determined in a summary manner after each step in the case by the presiding judge. A "step" in the case is one of the discrete stages recognized by the rules such as a case conference, settlement conference and the like. See: Husein v. Chatoor, 2005 ONCJ 487. The court should not deal with requests for costs that were addressed or should have been addressed at these prior steps in the case. See: Islam v. Rahman, 2007 ONCA 622.

[21] The mother claims costs for previous steps in the case. This case started in the Superior Court of Justice. The mother initially brought this motion in that court. The mother improperly included information in her motion material from the parallel child protection case that is before this court (disclosure of such information being prohibited under the Child and Family Services Act). The parties consented to have both cases heard in this court. The father should not have to pay any costs towards these procedural steps.

Proportionality of Costs

[22] The court 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.

[23] The costs claimed by the mother were not proportionate. They were excessive for a motion of this nature.

[24] The mother claimed costs arising out of her unsuccessful attempt to impute additional income to the father. The father should not have to pay for these costs.

Ability to Pay

[25] The court considered the father's ability to pay costs. See: MacDonald v. Magel. 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.

[26] The father has a limited ability to pay costs. He earns $75,000 per year, but is subject to a payment order of $644 per month for the children in the child protection case and must pay the mother spousal support of $900 per month. He has no capital. He has considerable debt, much of it arising out of therapeutic costs in the child protection case.

[27] The mother is also in financial straits and has relied on her community for charity.

Costs Order

[28] Taking into account all of these considerations, an order shall go as follows:

a) The father shall pay the mother's costs of this motion fixed in the amount of $5,000, inclusive of fees, disbursements and H.S.T.

b) The father may repay these costs at the rate of $250 per month, starting on July 1, 2015. However, if he is more than 30 days late in making any support or costs payment, the entire amount of costs remaining owing shall immediately become due and payable.

Justice S.B. Sherr

Released: May 28, 2015