Court Information

Date: February 27, 2017

File No.: D80490/15

Ontario Court of Justice 47 Sheppard Avenue East Toronto, Ontario M2N 5N1

Parties

Between: Jodene Reid, Applicant (mother)

- and - Robert Thomas, Respondent (father)

Judicial Officer and Counsel

Before: Justice Robert J. Spence

Counsel:

• Ms. Lauren Israel, for the applicant, mother
• Mr. Paul Mazzeo, for the respondent, father

Costs submissions received in Chambers

Reasons released on 27 February 2017

Introduction

[1] On December 21, 2016 I released my reasons for judgment following a trial. At the court appearance prior to trial, the parties had agreed that the following were to be the issues for adjudication at trial:

1. Access by the father to the parties' child;
2. Determining the father's income for the purposes of calculating child support; and
3. Date of commencement of the father's child support obligations.

[2] However, immediately before the commencement of trial the father advised that he was consenting to the mother's proposed access schedule.

[3] He also advised that he was agreeing to the mother's proposed commencement date for support, namely, August 1, 2014.

[4] Accordingly, the only contested issue at trial was the determination of father's income for child support purposes.

[5] At the conclusion of my reasons for judgment I invited the parties, should they so wish, to make submissions on costs.

[6] The mother now seeks costs in the amount of $11,208, inclusive of disbursements and H.S.T.

[7] The father's response to this costs request is to submit that there should be no order for costs.

Costs Rules

[8] Costs in family law cases are governed by Rules 18 and 24 of the Family Law Rules.

[9] The relevant portions of Rule 18 provide [my emphasis]:

APPLICATION

(2) This rule applies to an offer made at any time, even before the case is started. O. Reg. 114/99, r. 18 (2).

WITHDRAWING AN OFFER

(5) A party who made an offer may withdraw it by serving a notice of withdrawal, at any time before the offer is accepted. O. Reg. 114/99, r. 18 (5).

TIME-LIMITED OFFER

(6) An offer that is not accepted within the time set out in the offer is considered to have been withdrawn. O. Reg. 114/99, r. 18 (6).

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

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

COSTS CONSEQUENCES — BURDEN OF PROOF

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14). O. Reg. 114/99, r. 18 (15).

COSTS — DISCRETION OF COURT

(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 (16).

[10] The relevant portions of Rule 24 provide [my emphasis]:

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. O. Reg. 114/99, r. 24 (1).

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. O. Reg. 114/99, r. 24 (4).

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. O. Reg. 114/99, r. 24 (5).

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. O. Reg. 114/99, r. 24 (11).

[11] The starting point in this decision must take into account three undisputed facts. First, the mother was the successful party. Accordingly, subrule 24(1) presumptively entitles her to her costs of the trial. Sims-Howarth v. Bilcliffe.

[12] Second, the mother did serve an Offer to Settle ("Offer"). The Offer was served six days prior to trial. That Offer remained open for acceptance until the start of trial.

[13] And third, the mother obtained an order at trial which was more favourable than the Offer.

[14] However, the costs consequences for non-acceptance of an Offer, pursuant to subrule 18(14), are engaged in this case only if the Offer was made at least seven days prior to the start of trial. As I noted above, the Offer was served six days prior to the start of trial.

[15] I will have more to say about the seven-day rule later in these reasons.

[16] I turn first to consider the applicability of the factors under subrule 24(11).

Applicability of the Factors in Subrule 24(11)

a. Complexity or Difficulty

[17] While this case was not complex or difficult, it was important to both parties. There was a significant difference in the parties' respective positions.

[18] The father asserted that child support should be based on an income which he argued was about $70,000 per year. The mother's Offer sought an order for child support based on imputed income to the father in the amount of $90,000 per year.

[19] The court ordered support to be based on income for:

• 2014 in the amount of $93,682; and
• 2015 in the amount of $117,159.

b. The Reasonableness of the Parties' Positions

[20] The father failed to provide complete disclosure at trial. He led evidence which, on its face, was not credible.

[21] Of significance, the father alleged that the restaurant in which he worked was owned by his mother, rather than himself. He had advised the court prior to trial that he intended to call his mother as a witness. His mother would have been a very important witness in the determination of this issue. He failed to call the mother at trial. He gave no explanation for this failure.

[22] He also failed to make an offer to settle the issues.

[23] Furthermore, he did not advise the mother's counsel that he was agreeing to the mother's requested access and the mother's requested commencement date for support until just prior to the start of trial.

[24] This last-minute positioning by father forced the mother's counsel to prepare for trial on all issues, rather than just the child support issue.

[25] In almost all respects, the father's position and his behaviour as outlined above was unreasonable.

[26] On the other hand, the mother's conduct and her position throughout was reasonable and beyond reproach.

c. The Lawyer's Rates

[27] Mother's counsel is a 23 year lawyer. She charges $360 per hour for her time. I find this rate to be modest.[1] The father did not suggest otherwise.

d. The Time Properly Spent

[28] The mother seeks $10,000 in costs, inclusive of H.S.T. At an hourly rate of $360, this equates to less than 25 hours of time.[2] Given the amount of paperwork which had to be prepared, the preparation for trial, and attendance at trial, I consider this time spent to be reasonable.

[29] The father took no issue with the time spent by mother's counsel.

e. Expenses Properly Paid

[30] The mother seeks $1,208 in disbursements, inclusive of H.S.T. While the mother did not provide a breakdown of these disbursements, the father took no issue with the amount.

f. Any Other Relevant Matter

[31] Under this heading, the courts will often consider the ability of a party to pay costs in the amount being requested. M. (A.C.) v. M. (D.).

[32] In this case, the father's costs submissions are in fact directed to, what he alleges, is an inability to pay costs. However, those submissions are based on a reiteration of the position he took at trial with respect to his income and assets.

[33] In other words, he is attempting, in his cost submissions, to re-litigate the very issues which he litigated at trial.

[34] The court considered his evidence and his arguments at trial and found the father to be lacking in credibility. The court made certain findings of fact and concluded that his income was well above what the father asserted it to be (as I noted at the outset of these reasons).

[35] Accordingly, the combination of the father's income together with the amount of costs requested by the mother does not, in my view, engage subrule 24(11)(f) in respect of the father's ability to pay costs.

[36] There are no other relevant matters raised by father that would be subsumed by subrule 24(11)(f).

[37] Based on the foregoing, the court concludes that all of the factors under subrule 24(11) would support the mother's request for costs in an amount very close to what she is requesting, subject to the court's consideration of Rule 18.

[38] Accordingly, I turn next to the applicability of Rule 18.

Applicability of Rule 18

[39] The court must take into account how the order made at trial compares to any settlement offers that were made. Lawson v. Lawson.

[40] As I noted earlier, the mother achieved a better result at trial than the Offer which she served on the father. The father neither accepted the Offer, nor any part of the Offer.

[41] However, the Offer was served six days prior to trial, not seven days. In Clancy v. Hansman, 2013 ONCJ 702, Justice Stanley Sherr had the following to say, at paragraph 11:

The seven-day requirement in paragraph 2 of subrule 18(14) is an important one. It emphasizes the importance of making timely offers to avoid the significant legal costs that are incurred in the week before a trial. It also reflects the reality that emotions often run high prior to the start of a trial and it might be more difficult for a party to accept an offer when they are in full trial preparation mode.

[42] Nevertheless, despite this one-day shortfall, the court retains a discretion under subrule 18(16) to take into account any written Offer to Settle, the date it was made, and its terms, even if subrule (14) does not apply.

[43] 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. See also Fong v. Chan.

[44] Bearing this in mind, the father ought to have accepted the mother's Offer.

[45] However, he compounded his problems by not only not accepting that Offer but, as well, failing to make his own offer to settle.

[46] The three "fundamental purposes" referred to by the Court of Appeal in Serra and in Fong, supra, were something which father did not direct his attention to, something which he apparently did not even consider.

[47] Instead, he dug in his heels and plowed ahead without giving any consideration to resolving issues.[3] He was focused purely on trying to ensure that his own position prevailed.

What Costs Should Be Awarded

[48] The father's overall conduct is to be criticized for the following reasons:

1. He refused to respond to the mother's reasonable Offer;
2. He failed to make his own offer to settle;
3. He took an unreasonable position at trial;
4. His failure to make full and complete financial disclosure at trial served to undermine his own credibility at trial;
5. He was focused on winning at all costs rather than searching for a reasonable way to settle the litigation; and
6. The mother prevailed entirely at trial despite (or perhaps because of) the father's unreasonable conduct and the position which he took at trial on the substantive issues.

[49] But for the mother's Offer, as I stated earlier, I would have been inclined to award mother her costs at very close to what she was requesting.

[50] However, the mother's Offer and her subsequent success at trial in comparison to the contents of that Offer, takes mother's costs entitlement to the next level.

[51] Despite the mother's failure to comply strictly with the seven-day rule for serving her Offer, I have concluded that it is fair and reasonable to award her the full amount of costs she has requested.

Conclusion

[52] Father shall pay the mother her costs of this proceeding in the amount of $11,208, inclusive of disbursements and H.S.T.

[53] He shall pay these costs in full within 60 days.

[54] The father is prohibited from bringing a motion to change without complying with the Rules and, additionally, without having paid these costs in full.

Justice Robert J. Spence

February 27, 2017

Footnotes

[1] While a middle, or even upper-middle, income earner might not agree that $360 is a "modest" hourly rate, the court must place this hourly rate in context. I do so, having regard to numerous cost submissions from lawyers who have been called to the bar for less than 10 years and who are charging the same, or even much higher rates than mother's counsel in this case.

[2] Mother's counsel did not do the math in her submissions; however, 25 hours x $360 = $9,000 + H.S.T. (13%) = $10,170.

[3] I recognize that the father did agree to the access issue and the start date for child support. However, he only did so as the trial was about to begin. Furthermore, the most contentious issue between the parties was the quantification of father's income.