Court File and Parties
Date: February 1, 2017
Court File No.: D80960-15
Ontario Court of Justice
Between:
Aillen Perada Barrera
Adela Crossley, for the Applicant
Applicant
- and -
Juan Barrera
Theodore Nemetz, for the Respondent
Respondent
Heard: In Chambers
Before: Justice S.B. Sherr
Costs Endorsement
Background
[1] On December 19, 2016, the court released its reasons for decision arising out of a trial about parenting arrangements for the parties' two children, child support and spousal support.
[2] The court gave the parties the opportunity to make written costs submissions. The applicant (the mother) seeks her partial recovery costs of $9,040. The respondent (the father) asks for his partial recovery costs of $4,221.
Legal Framework for Costs
[3] 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.
[4] 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.
[5] Subrule 24(6) sets out that if success in a step in a case is divided, the court may apportion costs as appropriate.
[6] 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:
- If the offer relates to a motion, it is made at least one day before the motion date.
- 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.
- The offer does not expire and is not withdrawn before the hearing starts.
- The offer is not accepted.
- The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[7] Even if subrule 18(14) does not apply, the court may take into account any written offer to settle, the date it was made and its terms when exercising its discretion over costs (subrule 18(16)).
Analysis of Offers to Settle
[8] The parties both made offers to settle. Neither offer to settle attracted the costs consequences set out in subrule 18(14).
[9] The mother's offer to settle is dated November 3, 2016. She offered that:
a) She have custody of the children.
b) The father have access on alternate weekends, one evening each week and on holidays.
c) The father's income be imputed at $85,000 per annum.
d) The father pay child support of $1,232 each month, starting on December 1, 2016.
e) The father pay spousal support of $506 each month for a period of three years, starting on December 1, 2016.
[10] The father's offer to settle is dated November 16, 2016. The father offered that:
a) The mother have custody of the children.
b) Both parties are entitled to travel outside of Canada with the children.
c) He would have access on alternate weekends, one evening each week and on holidays.
d) His income would be set at $45,000 per annum.
e) He would pay child support of $664 each month and receive a credit of $3,000, arising from an amount taken by the mother from a joint line of credit.
f) The mother's claim for spousal support be dismissed.
[11] The result at trial was:
a) The mother has custody of the children.
b) The father has access on alternate weekends, holidays and one evening a week, extending to two evenings each week when the father is laid off each winter.
c) Both parties are able to travel with the children outside of Canada.
d) The father's income was assessed at $67,652 per annum.
e) The father shall pay child support of $1,005 per month, starting on May 1, 2015.
f) The father shall pay spousal support of $200 per month, starting on December 1, 2016.
Severability of Offers
[12] The mother submitted that she offered to accept the father's custody proposal prior to trial. She notified the father by correspondence on December 3 and 8, 2016, that the terms of her November 3, 2016 offer were severable. The father responded that his offer was not severable.
[13] Subrule 18(4) indicates that an offer to settle must be signed by both the client and counsel. Correspondence from a lawyer varying the nature of a signed offer is insufficient – the mother would have needed to sign the amendment to her offer to attract the costs consequences set out in subrule 18(14).
[14] This does not preclude the court from considering the amendment under subrule 18(16). The father should have settled the custody issue. The court, in its reasons for decision, expressed its surprise that this issue was contested. The mother acted reasonably by proposing to sever this issue.
[15] It is surprising that the parties could not resolve the remaining parenting issues. Their offers to settle were very close. It is unfortunate that the father tied resolution into the mother accepting his offer on the support terms.
[16] This court recently commented on the value of severable offers in paragraphs 36-39 of J.C.M. v. K.C.M., 2016 ONCJ 551, as follows:
36 Several courts have discussed the value of severable offers.
37 In Lawson v. Lawson, Quinn J., wrote at paragraphs 25 and 26:
25 The wife's offer to settle of 28 April 2004 was a non-severable, all-or-nothing offer. This is apparent from the manner in which it was to be accepted. As such, I do not think much is to be gained by examining its provisions paragraph by paragraph except, perhaps, to gauge its general, overall reasonableness. It is difficult to prove that an order made is more favourable to a party than, or equal to, a non-severable offer.
26 I would discourage the making of all-or-nothing offers. The severable variety allows for the prospect that some of the outstanding issues might be settled, thereby reducing the length and expense of the motion or trial, as the case may be. All-or-nothing offers sometimes have a heavy-handed air about them and certainly they possess a much lower chance of being accepted than severable offers.
38 In Paranavitana v. Nanayakkara, 2010 ONSC 2257, Wildman J. writes at paragraphs 13 and 14 as follows:
13 Unfortunately, this offer was not severable. There would have been no disadvantage to the wife in making the custody offer, in particular, severable from the financial and property terms. Severable offers are an underused tool that can confer considerable settlement and cost advantages. Because of the full recovery provisions of Rule 18(14), they can provide much more flexibility to the court to award full recovery for at least a portion of the overall costs, if the party is successful on only some of the issues. Had the custody terms of the wife's offer been severable from the other terms, I would have been prepared to consider ordering full recovery costs on the custody issue from the date of the offer forward. As this was the majority of the trial time, that would have been a significant cost advantage to the wife.
14 However, as the offer was not severable, the wife would have to do as well or better than all the terms of the offer, in order to take advantage of the full recovery cost provisions of Rule 18(14). Since the husband got an additional week of access, as well as an order that spousal support would reduce from $1000 in three years, Ms. Nanayakkara did not do as well as or better than her offer in its totality. Rule 18(14) does not apply but I can take this offer into account in determining costs under Rule 24, along with any other offers that have been made (Rule 18(16)).
39 In Paragraph 35 of Jackson v. Mayerle, 2016 ONSC 1556, Pazaratz J. writes:
Offers to settle are to be encouraged, and severable offers (or offers on specific issues) are particularly helpful to the settlement process.
Trial Claims
At trial, both parties sought custody of the children and child support. The mother asked to impute the father's income at $100,000 per annum and sought spousal support of $950 each month, for 3 years. She asked that support be ordered retroactive to April 15, 2015.
Success on Individual Issues
[17] The court finds that the mother was more successful on the custody issue. The father should have settled it.
[18] The father was slightly more successful on the access issue. He was granted travel rights and an additional evening each week with the children in the winter months.
[19] The mother was more successful on the child support issue as she was able to impute a significant amount of additional income to the father. The mother also obtained an order for retroactive child support. The father did not obtain the support credit he sought relating to their joint line of credit.
[20] The mother was slightly more successful on the spousal support issue, although the support ordered was much lower than the amount she offered and was not close to the amount she sought at trial. The court did not time limit the spousal support order.
[21] Overall, the mother was the more successful party.
[22] The father did not rebut the presumption that the mother is entitled to costs.
Factors in Determining Costs
[23] 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.
[24] The case was important for the parties. The assessment of the father's income was made more difficult due to his failure to provide complete or timely financial disclosure.
[25] The mother acted reasonably, except for her and her counsel coming late to the trial. Counsel for the mother apologized for mixing up the start time and very reasonably discounted her costs claim for this factor.
[26] The father did not act reasonably by failing to provide complete or timely financial disclosure. At one point he blamed this on his lawyer and the court did not find this credible. This added to the cost of the litigation and made it very difficult for the mother to assess the case and perhaps make a better offer to settle.
[27] The father also acted unreasonably by not agreeing to sever the custody issue.
[28] The father's unreasonable behaviour was a significant factor in making this decision. This type of behaviour must be discouraged.
[29] Although this was only a one day trial, considerable trial time was saved because the parties prepared their direct evidence by affidavit. The time claimed by the mother to prepare for the trial was reasonable.
[30] The mother did not break down the disbursements claimed. This would have been helpful.
Costs Assessment Principles
[31] 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.
[32] The court considered the father's ability to pay the costs order. See: MacDonald v. Magel. The father has the ability to pay the costs that will be ordered.
Costs Order
[33] 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 $6,500 inclusive of fees, disbursements and HST.
b) The father may pay these costs at the rate of $500 per month, starting on March 1, 2017.
c) The father's claim for costs is dismissed.
Released: February 1, 2017
Justice S.B. Sherr