Court File and Parties

Ontario Court of Justice

Date: 2015-07-03

Court File No.: Toronto DFO 13-10382

Between:

A.C. Applicant

— And —

G.K. Respondent

Before: Justice Ellen Murray

Costs decision released on July 03, 2015

Counsel:

• Ms. Olena Brusentsova, counsel for the applicant
• Ms. Anthony Martin, counsel for the respondent

Decision

MURRAY, E. J.:

[1] This is my decision on a claim for costs made by the applicant mother A.C. with respect to a motion to change the child support order of October 1, 2013 initiated by the respondent Father G.K.. The parties settled this motion on March 31, 2015, without resolving costs.

The Facts

[2] A.C. and G.K. are the parents of a 15-year old daughter, J. J. was born as the result of an affair which took place while A.C. was employed in G.K.'s business. A.C. and G.K. never cohabited, and G.K. has no relationship with J.

[3] For some years G.K. made voluntary payments to A.C. for J.'s support. He then unilaterally reduced those payments. A.C. eventually began an action in 2013 claiming support pursuant to the Guidelines, retroactive to 2010. The parties settled the action on consent. The minutes of settlement, drafted by A.C.'s lawyer, were incorporated into an order October 1, 2013, and provided as follows:

• G.K. shall pay table support in an amount of $872 monthly, based on the income set out in his 2012 tax return of $98,983, retroactive to January 1, 2013.
• G.K. shall pay 65% of J.'s agreed upon special expenses.
• The parties shall exchange tax returns and Notices of Assessment each year, commencing May 1, 2014. Based on the line 150 incomes in those returns, they will determine the appropriate amount of table support and payment towards special expenses, and adjust retroactive to January 1st of that year.
• G.K. shall pay $2500 in costs.

[4] In early 2014 G.K. filed his tax return for 2013; his 150 income was $70,389. In May 2014 G.K. sent A.C. a copy of the return, with a request to reduce the payments retroactive to January 1, 2014. After two weeks passed without response, G.K. initiated his motion to change, requesting this relief.

[5] A.C. asked that the motion be dismissed, with costs to her. She said that in agreeing to the October 1, 2013 order she had given G.K. valuable concessions, "trusting that he would pay child support in the amount of $872 per month". A.C. cross-claimed for payment of specific s. 7 expenses she had incurred after the order. Her evidence did not establish whether she had previously requested that G.K. agree to those expenses.

[6] I was the case management judge for the motion to change.

[7] A.C. was represented by counsel throughout the case. G.K. represented himself until sometime prior to the settlement conference scheduled for March 31, 2015, at which time he retained counsel.

[8] The two conferences prior to the March 31, 2015 date dealt primarily with requests for disclosure from G.K., and two disclosure orders were made. A.C.'s lawyer questioned G.K. with respect to his income.

[9] At the March 31, 2015 settlement conference the parties settled the matter by agreeing as follows:

• G.K. shall pay support in an unreduced amount ($872 monthly) until J. ceases to be a full-time secondary school student or until August 1, 2018. Upon the happening of either event, there will be a review of G.K.'s support obligation, and any decrease of his income at that time will constitute a material change in circumstances.
• G.K. shall pay 50% of certain go-forward s. 7 expenses (tutoring costs and uninsured orthodontic costs).

[10] There was no provision that G.K. pay the past s. 7 expenses requested by A.C.. The provision in the October 2013 order for annual income disclosure was eliminated; the parties apparently wished to have payments continue in an unchanged amount for the 3 years, when it was anticipated that J. would complete her secondary school education.

[11] The minutes did not deal with the issue of costs, which was adjourned for written submissions.

Parties' Positions

[12] A.C. seeks full recovery of her costs in an amount of $8, 344.99. She says that G.K.'s motion was entirely without merit, and that G.K. was unreasonable in not settling earlier. She says that it was only when "it became clear (at the settlement conference of March 31, 2015) that he would not be successful" that G.K. agreed to settle.

[13] G.K. says that when the parties have settled the issues in a case, costs should be ordered only in "compelling" circumstances, and that this is not a case which calls for costs. He says that he is confident that he would have been successful if the matter proceeded, and that his agreement to continue paying support in an unreduced amount was simply the result of a cost/benefit analysis. G.K. says further that "success" in the case was divided, in that A.C. did not obtain an order that he pay for the past s. 7 expenses claimed. G.K. asks that the Applicant pay him the costs he incurred in dealing with her claim for costs, which total $1,388.21.

The Law

[14] Rule 24 of the Family Law Rules governs determination of costs in family law cases. The relevant sections of the Rule are set out below.

Successful Party Presumed Entitled to Costs

24.(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

No Presumption in Child Protection Case or If Party is Government Agency

(2) The presumption does not apply in a child protection case or to a party that is a government agency.

Successful Party Who Has Behaved Unreasonably

(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.

Decision on Reasonableness

(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.

Divided Success

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

Absent or Unprepared Party

(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.

Bad Faith

(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.

Costs to Be Decided at Each Step

(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.

Factors in Costs

(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.

[15] Section 131 of the Courts of Justice Act gives the court the jurisdiction to determine "costs of and incidental to a proceeding or a step in a proceeding" subject to the provisions of an Act or the rules of court. The Family Law Rules make no specific reference to the determination of costs in a case settled before trial. However, Rule 1(7) directs that in cases not covered by those Rules that the court may reason by analogy to the Rules of Civil Procedure, Rule 57.04, which provides for the determination of costs after a settlement.

[16] Thus, there is no question that a court may determine the costs of a case that has been settled prior to trial. The question is, when will a court take that step? My review of the caselaw does not suggest that it is only in "compelling" circumstances that costs will be awarded when a case is resolved by a settlement.

[17] The Family Law Rules start with the presumption that a successful party is entitled to costs. "Success" is assessed by comparing the terms of the order made against the relief requested in the pleadings and, where applicable, against the terms of an offer to settle.

[18] When a case is determined by a settlement rather than a judicial decision, a court often does not have the information and evidence required to assess who was "successful" or the degree of success. Sometimes the issues are so numerous and the results so different from either party's offer that "success" cannot be measured. For example, in Page v. Desabrais, a multi-issue case, the court compared the offers of the parties throughout the proceeding and found it "simply impossible …to declare one party more successful that the other". Sometimes the judge asked to determine costs has had no prior involvement with the case. For example, in Blank v. Micaleff, Justice L. Richetti was asked to award costs for a prior attendance before another judge who had reserved costs pending the hearing of a motion. That motion was then settled prior to any involvement in the case by Justice Richetti. Justice Richetti was asked by the parties to assess costs; she declined.

[19] Sometimes, however, a court is able to assess what represents "success" after a settlement is reached. In Kearley v. Renfro, 2012 ONSC 5391, the only issue before the court on a motion was the residency of three children; the mother agreed on the day scheduled for the motion and settlement conference that the children would go into their father's care immediately. The court found that the father was substantially successful, and awarded him costs.

[20] Johanns v. Fulford, 2011 ONSC 5268, is a motion for leave to appeal a costs decision made by me after the parties had settled all issues in a case except costs. I awarded costs to the applicant, finding that there was divided success, but that the applicant enjoyed more success than the respondent. The appellant argued that the court could not reasonably determine "success" in a case resolved by minutes of settlement. Justice David Aston refused leave, observing that the court determining costs had "a very extensive record with supporting documentation on the positions taken by the parties, their claims in the litigation and the ultimate result, as well as the terms of Offers to Settle and the dates such Offers were made".

[21] The decision of Justice Craig Perkins in Davis v. Davis (2004) O.J. 2256 (S.C.), makes clear that a court is not restricted in awarding costs to a determination of who was the "successful" party. Justice Perkins observed:

"I think that in order for there to be a "successful" party, there must be a declared winner or loser on the issues. That declaration will ordinarily come from a judge, after argument. In this case, we have in effect minutes of settlement. I find that the 'divided success' approach of r. 24(6) is more appropriate here than the winner/loser approach of r. 24(1)."

[22] R. 24(6) directs that the court should apportion costs "as appropriate". In determining what was appropriate, Justice Perkins considered the factors set out in R. 24(11), such as the reasonableness or unreasonableness of either party's behaviour, and the parties' respective incomes. Ultimately, he awarded the wife about an amount representing about 40% of her full recovery costs.

Application to This Case

[23] I observe at the outset that Rule 17(23) does not allow me to take into account the information in each party's settlement conference brief or what was said at the settlement conference, although I presided at that conference.

[24] Despite this, I find that I am able to determine the relative success of each party on the motion to change. This was a simple case. There were two issues raised in the motion to change and response: whether G.K.'s table child support obligation would be reduced based on his line 150 income, and whether G.K. would be liable to pay for certain past s. 7 expenses incurred by A.C. in 2013 and 2014.

[25] There is no evidence that either party made an offer to settle, as defined by Rule 18.

[26] Considering the positions taken by the parties, success was divided but A.C. was more successful than G.K. The consent order provided that G.K.'s table support would not be reduced. This was the position of A.C. at the commencement of the litigation. In effect, the table amount of support was fixed for a little over 3 years, until J. finishes her secondary school education. Taking into account the reduction sought by G.K. ($230 in the monthly table support), this provision was worth approximately $11,000.

[27] G.K. was not required to pay the past s. 7 expenses claimed by A.C. In addition, he succeeded in having his obligation to contribute to s. 7 expenses reduced from a pro rata amount to equal sharing and limited to two specific expenses. Those issues were worth approximately $6,000.

[28] A.C. is thus entitled to some costs.

[29] In determining the quantum of costs, I turn to the factors set out in R. 24(11).

• The issues in the motion were important to the parties, but not complex.
• Neither party engaged in unreasonable litigation behaviour. Two disclosure orders were made, and G.K. complied with those orders.
• No objection was made to the rates charged by A.C.'s solicitor of $260 hourly.
• My review of the bill of costs prepared by A.C.'s lawyer does not indicate that it contains work attributable to prior steps in the case for which costs are not available under R. 24(10). However, work done to review pleadings, prepare a response, and review disclosure is all work which may be considered in determining costs after trial or settlement.
• I am unable from the record to determine whether the substantial time devoted by A.C.'s lawyer to questioning and review of financial documents provided by G.K. was reasonable. A.C.'s position from the outset was that G.K's income exceeded his line 150 income. There is no evidence before me that this was the case.
• With respect to each party's ability to bear the costs of this proceeding, I note that G.K.'s income is significantly more than that of A.C. G.K. has no dependants (other than J.), while A.C. is a single parent, and J. is only 15 years old.

[30] In the final analysis, the determination of costs is not just a mathematical exercise involving of time and hourly rate. In my view, the appropriate amount for G.K. to pay to A.C. for the costs of this proceeding is $3,000, and I so order.

Released: July 03, 2015.

Justice Ellen Murray