Court File and Parties

Court File No.: D72048/14 Date: 2016-03-22

Ontario Court of Justice

Between:

Annakim Ffrench Applicant

- and -

Dontay Williams Acting in Person Respondent

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On February 26, 2016, the court released its reasons for decision arising out of a trial about the respondent's (the father's) child support obligations for the parties' 8-year-old child. The court imputed income to the father and ordered him to pay child support starting on December 1, 2014.

[2] The court gave the parties the opportunity to make written costs submissions. The parties have both made these submissions.

[3] The applicant (the mother) seeks costs of $9,356.40 against the father, inclusive of fees, disbursements and HST.

[4] The father asks that no costs be awarded.

Legal Framework for Costs Awards

[5] 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.

[6] 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.

[7] Neither party made 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.

Success of the Parties

[9] The mother was the more successful party, based on the positions taken by the parties at trial. The mother asked to impute the father's income at $41,700 per annum and to start support payments as of December 1, 2014. The father claimed that he did not have the ability to pay any child support. The court imputed income to the father of $25,000 per annum as of December 1, 2014, increasing to $30,000 per annum as of January 1, 2016.

[10] The father did not rebut the presumption that the mother is entitled to costs.

Bad Faith vs. Unreasonable Behaviour

[11] The mother submitted that the father's behaviour amounted to bad faith and she should be awarded full recovery costs. The mother based this submission on the father's failure to provide complete financial disclosure in a timely manner, despite two court orders.

[12] Subrule 24(8) sets out that 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. Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith. See: DePace v. Michienzi; Kardaras v. Kardaras, 2008 ONCJ 616.

[13] There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. S.(C.) v. S. (M.).

[14] The court finds that the father's slow and incomplete financial disclosure was unreasonable behaviour, but did not amount to bad faith. He did not have complex financial affairs that he was trying to avoid disclosing. He was merely sloppy and inattentive.

[15] The mother submits, in the alternative, that the court does not have to find the father acted in bad faith to order full recovery costs, when there is unreasonable behaviour. See: Children's Aid Society of London v. Tammy A.N.B., 2010 ONSC 2902. This principle was recently reinforced by the Ontario Court of Appeal in Forrester v. Dennis, 2016 ONCA 214 where the court writes in paragraph 22:

[22] Second, there is no reason to disturb the motion judge's award of costs on a substantial indemnity basis. As this court affirmed in Berta, at para. 92, citing Biant v. Sagoo, at para 20, "[T]he preferable approach in family law cases is to have costs recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result." This award "is subject to the factors listed in r. 24(11) [of the Family Law Rules, O. Reg. 114/99], the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith) and r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party": Berta, at para. 94 (citation omitted). And as articulated in Sordi v. Sordi, 2011 ONCA 665, at para. 21, "In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial indemnity" (citation omitted). Therefore the award of substantial indemnity costs is not an improper exercise of discretion.

[16] This case is distinguishable from Forrester because the mother also acted unreasonably by failing to make an offer to settle. The message needs to get through to litigants that there will be adverse costs consequences if they fail to make a reasonable offer to settle a case.

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. It was not difficult or complex.

[19] The mother acted reasonably, except for her failure to make an offer to settle.

[20] The mother's counsel did not provide the court with a helpful Bill of Costs. She merely claimed the total amount of hours spent on the case without a breakdown for what work was done for various steps in the case. This case also involved issues of custody and access, that were resolved at an earlier stage. There was no breakdown in the Bill of Costs about what time was spent on the support issue.

Bill of Costs and Timing of Costs Awards

[21] 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 trial judge 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.

[22] A party is entitled to claim time spent for meetings with the client and reviewing and preparing pleadings and financial statements as this is time not attributable to any one step in the case. See: Czirjak v. Iskandar, 2010 ONSC 3778. Costs accrued from activity not specifically related to the step (not requiring judicial intervention) should be dealt with at the end and not by the motions judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98.

[23] The mother will be entitled to additional compensation for time spent trying to obtain the father's financial disclosure.

Counsel's Rates

[24] The court found counsel's rates ($450 per hour) to be high.

[25] 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.

Ability to Pay

[26] The court considered the father's ability to pay the costs order. 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. Any hardship to the father can be adequately addressed by a periodic repayment order of the costs award.

Order

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

a) The father shall pay the mother's costs fixed in the amount of $4,800 inclusive of fees, disbursements and H.S.T.

b) The father may pay these costs at the rate of $200 per month, starting on June 1, 2016. However, if he is more than 30 days late in making any of these payments, or any ongoing or arrears support payment, the entire amount of costs remaining owing, shall immediately become due and payable.

Released: March 22, 2016

Justice S.B. Sherr