Court File and Parties

Ontario Court of Justice

Date: April 26, 2017

Court File No.: Halton 297/16

Between:

O.G. Applicant

— And —

R.K.G. Respondent

Before: Justice Marvin Kurz

Reasons for Costs released on: April 26, 2017

Counsel:

• Jesse Mark, counsel for the applicant
• Gary S. Joseph and Ryan M. Kniznik, counsel for the respondent

KURZ J.:

OVERVIEW

[1] On March 1, 2017 I released my reasons in R.G.'s motion for summary judgment and O.G.'s motion for temporary child support. I did not grant R.G. the relief he sought in the summary judgment motion. Instead I granted partial summary judgment to O.G. regarding her entitlement to child support. I went on to grant her both retroactive and prospective temporary child support.

[2] O.G. seeks her full indemnity costs of these two motions, fixed at $17,789.72. She claims that level and quantum of costs for the four following reasons:

1. She was successful.
2. She made offers to settle that called for temporary child support, while R.G. ignored those offers and made none of his own.
3. R.G.'s litigation behavior was so unreasonable that it merits an award of full indemnity costs.
4. R.G. conduct of this motion merits a finding of bad faith.

[3] R.G. argues that there should be no costs in that both parties achieved success in their motions. In the alternative he argues that if costs are to be ordered they should be limited to $5,336.92, one half of O.G.'s partial indemnity costs because of what he claims to be divided success.

[4] For the reasons that follow, I grant O.G. her costs, fixed at $17,789.72.

LAW REGARDING COSTS

Jurisdiction to Award Costs

[5] The jurisdiction of this court to grant costs arises from s. 131 of the Courts of Justice Act. That provision gives the court broad discretion to determine costs. It states:

131. (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[6] Family Law Rule 24 sets out the factors that the court must consider in the exercise of its discretion regarding costs. Relevant provisions of Rule 24 read as follows:

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.

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.

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 or otherwise contributes to that step being unproductive, 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.

DECIDING COSTS

(10) Promptly after dealing with a step in the case, the court shall,

(a) make a decision on costs in relation to that step; or

(b) reserve the decision on costs for determination at a later stage in the case.

Same

(10.1) In making a decision on costs in relation to a step in a case, the court shall decide in a summary manner whether anyone is entitled to costs and, if so, determine who is entitled and set the amount of the costs.

FACTORS IN COSTS

(11) In setting the amount of costs, the court 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.

General Costs Principles

[7] As the Ontario Court of Appeal noted in Serra v. Serra:

Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330, at para. 22.

[8] The same court stated in Boucher v. Public Accountants Council for the Province of Ontario that costs awards should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties".

[9] In MacDonald-Sauer v. Sauer, Justice James Turnbull of the Superior Court of Justice cited an earlier decision of Justice Craig Perkins of that court when he spoke of costs in family law cases approaching full recovery. He stated:

44 It has been held that the 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 results. Where the Rules leave a discretion to the trial justice on how much to award, it is reasonable to look at the full amount claimed, the reasonableness of a party's behaviour, the extent to which there is divided success, test the amount against the factors listed in Rule 24 (11) and then look at factors such as ability to pay in deciding whether the costs awarded should be substantial (about 80%) or full recovery or somewhere in between. Biant v. Sagoo, [2001] O.J. No. 3693 (S.C.J.)

[10] That principle was affirmed by the Ontario Court of Appeal in the 2015 case of Berta v. Berta and again in the 2016 case of Forrester v. Dennis.

[11] In Sordi v. Sordi, the Ontario Court of Appeal stated that:

In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial indemnity.

Success

[12] In H.A. v. M.M., Justice Stanley Sherr of this court stated that "[c]onsideration of success is the starting point in determining costs."

[13] In Mantella v. Mantella, Justice Deena Baltman of the Superior Court of Justice wrote:

Rule 24 of the Family Law Rules presumes that the successful party will, barring unusual circumstances, recover at least substantial indemnity of their costs. There remains, however, significant discretion to award the amount of costs that appear just in all the circumstances, particularly after taking into account the various factors set out in Rule 24(11).

[14] In Lawson v. Lawson, Justice J. Wilma Scott of the Superior Court of Justice stated that the any determination of success "…must take into account how that order compares to any settlement offers made."

Offers to Settle

[15] Family Law Rule 18 deals with offers to settle. Sub-rule 18 (4) requires an offer to be signed by both the offering party and his or her lawyer, if any. It states:

OFFER TO BE SIGNED BY PARTY AND LAWYER

(4) An offer shall be signed personally by the party making it and also by the party's lawyer, if any.

[16] Sub-rules 18 (14) - (16) deal with the cost consequences of offers to settle. They state:

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.

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).

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.

[17] In Serra, the Ontario Court of Appeal emphasized the obligation to attempt to settle that arises from the very beginning of a family law case. In doing so, it adopted the following statement by Spence J. in Husein v. Chatoor:

[P]arties have an obligation to begin to assess their respective cases at the outset of the litigation – even before the litigation commences – and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it behoves neither party simply to sit back and to roll the dice while those fees continue to mount. [Emphasis added by Ontario Court of Appeal]

[18] In J.V.M. v. F.D.P., Justice Stanley Sherr of this court equated the failure to make an offer to settle to unreasonable behaviour under Rule 24. He stated:

"…The failure to make an offer to settle much earlier by either party is unreasonable behaviour. Subrule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (subrule 2(2)). This includes taking appropriate steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute. See Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134, 2011 CarswellOnt 12972 (Ont. Fam. Ct.). The failure to serve an offer to settle will be an adverse factor when assessing costs."

De-Emphasis on Reliance on Time Spent to Determine Costs

[19] As Justice David Aston of the Superior Court of Justice stated in Delellis v. Delellis and Delellis, the Ontario Court of Appeal's emphasis on setting costs that are "fair and reasonable" has led to a de-emphasis on time spent by counsel as the key factor in fixing costs. He wrote:

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.

Party Status does not Grant a License to Litigate Oblivious to the Consequences

[20] The right to bring or respond to case does not grant a party the license to litigate in a manner that ignores the consequence of that litigation. Justice Carole Curtis emphasized this point in Sabo v. Sabo as follows:

38 Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation…

Bad Faith

[21] In order to meet the requirement of bad faith in sub-Rule 24(8), a litigant's conduct must fall far below standard expected of parties to a proceeding. The misbehavior must be deliberate and intended to harm, conceal or deceive. In S.(C) v. S.(C), Perkins, J. offered a thorough description of the behaviour required to meet the definition of the term, bad faith, as follows:

In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

[22] That is why, as Justice Alex Pazaratz of the Superior Court of Justice recently wrote in Jackson v. Mayerle, "… Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made."

[23] Pazaratz J. was careful to distinguish bad faith from bad judgment, negligence, or unreasonable behaviour. Bad faith requires some element of conscious wrongdoing. As Pazaratz J. put it:

58 Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation…

59 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. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated.

ANALYSIS

[24] The first consideration is success. The father denies that O.G. was successful. He argues that O.G. failed to exceed the terms of her offers to settle in regard to all of the relief requested. My order for temporary support of $6,500.00 per month effective July 1, 2016 was less than she offered to accept in her most recent offer. He argues that at best, there was mixed success (and hence entitlement to only half of the partial indemnity costs claimed).

[25] I find that O.G. was substantially successful in this motion. She fended off the father's motion for summary judgment and in fact received partial summary judgment herself on the issue of her entitlement to support. She also succeeded in obtaining temporary child support and in obtaining a retroactive order.

[26] O.G. did not receive the quantum of support nor did the retroactivity begin quite as far back as she had offered to accept. But the result remains favourable to her. It is closer to her offer than any offer made by the father because failed to make one. That left O.G. with no choice but to move if she were to obtain any temporary child support.

[27] I must add that O.G. was successful in five of six procedural motions brought by R.G. before the hearing of this motion. Those procedural motions were argued in writing or by conference call. In four of them, the costs were reserved to the hearing of this motion. Those motions were for:

1. a stay of proceedings until the hearing of the appeal of the orders of Justices Kiteley and Gibson in the Ontario Court of Appeal. That motion was dismissed with costs reserved to the hearing of this motion;

2. leave to bring a summary judgment motion before serving and filing an answer and financial statement. That motion was dismissed with costs reserved to the hearing of this motion;

3. leave to adjourn the motions and to question O.G. in Florida prior to the hearing of the motions. That relief was granted on consent. However many of the terms of the adjournment and questioning were not on consent. One term of the adjournment, the payment of O.G.'s second term tuition, was very favourable to her. No costs were ordered or reserved;

4. leave to question O.G.'s mother and require her to produce certain disclosure prior to the hearing of the motion. That motion was dismissed at the same time that I determined the terms of the adjournment for the questioning of O.G., again with no order as to costs.

5. leave to question a third party, Hazel Flores. That motion was dismissed and costs reserved to the hearing of this motion;

6. an order to file evidence of the court ordered receivership of a company in which R.G. has an interest, after the argument of the motion was completed. The motion was dismissed and costs reserved to the hearing of this motion;

Offers to Settle

[28] O.G. made three offers to settle. The first was made before this proceeding commenced. O.G. offered to forgo bringing this proceeding in exchange for child support of $14,586.00 per month plus full university expenses. She based this figure on the R.G.'s support payments to O.G.'s mother. O.G.'s second offer, of October 12, 2016, called for a stay of these proceedings until the Ontario Court of Appeal released its decision. It called for payments of $4,500.00 per month. But that was for the period until the release of the decision only and was without prejudice to either party's right to argue for a different figure prospectively or retrospectively. The third offer also called for a stay and support payments of $9,945 per month, also without prejudice.

[29] O.G. argues, without contradiction that R.G. never responded to these offers and never made one of his own.

[30] Under r. 18(16) I am entitled to consider O.G.'s three offers and R.G.'s failure to make an offer in the setting of costs when assessing costs. I am also entitled to consider these facts in the context of reasonable or unreasonable behavior.

Unreasonable Behaviour and Procedural Complexity

[31] O.G. argues that R.G.'s litigation behavior was unreasonable and merits a higher award of costs. She cites two factors: the fact that she made three offers while R.G. failure or refused to make any, and the numerous procedural steps set out above. She argues that those steps were unnecessary and significantly added to the time, complexity and costs of this proceeding.

[32] Dealing first with offers, the fact that O.G. made three offers and that they indicated a willingness to negotiate, indicates reasonable behavior. R.G.'s refusal to respond to those offers and failure to make any of his own are both manifestations of unreasonable behavior. The unreasonableness of that behavior is aggravated by the message that Kiteley J. imparted to R.G. Kiteley J. held that a similar refusal or failure to respond to O.G.'s offers and to make any offer his own is a form of unreasonable behavior. R.G. should have taken this as a warning as to the manner in which the court deals with such conduct.

[33] That fact that the numerous procedural steps that R.G. took were unnecessary and significantly added to the time, complexity and costs of this proceeding is self-evident. Other than the request to question O.G., which in itself was on consent, they were unsuccessful and ultimately a waste of time. As Curtis J. pointed out in Sabo, party status is not a license to litigate without concern for the financial consequences. By litigating in the manner that he has, R.G. must accept the financial consequences of his approach.

Bad Faith

[34] Finally O.G. argues bad faith. She makes that claim for two reasons:

1. R.G.'s attempts to rely on "distasteful, irresponsible and unnecessarily hurtful" evidence and arguments rejected by Kiteley J., Gibson J. and Benotto J.A.

2. The procedural complexity described above was "designed to exhaust the resources and resolve of [O.G.]"

[35] Both Gibson J. and Kiteley J. found that R.G.'s materials and claims regarding O.G., such as her alleged "Stockholm Syndrome" victimhood, were unreasonable. Kiteley J. stated in her costs endorsement that "…the tone and contents of [R.G.'s] affidavits was unnecessarily accusatory" and "ill-considered". They both found that R.G.'s behavior in the motions before them was unreasonable. Kiteley J. ordered full indemnity costs, while costs were not raised before Gibson J. Those findings were upheld by the Ontario Court of Appeal.

[36] O.G. argues that the father acted in bad faith by raising those discredited arguments again in this proceeding; knowing full well the treatment that they were accorded in the other ones.

[37] O.G. also points to the financial disparity between them. She cites R.G.'s litigation budget of $40,000.00 per month and her own reliance upon a Legal Aid clinic. She then asks me to infer that all of the procedural steps taken in the context of that disparity demonstrate bad faith; that is an intention to inflict financial harm on her.

[38] While strong arguments are made for bad faith, and frankly it is a close call, I do not find bad faith. Instead I find highly unreasonable behavior. I say this for the reasons that follow.

[39] While I cannot infer R.G.'s subjective motivations, I have already found that he sincerely loves his daughter. While his arguments are most ill-considered, they emanate from deep emotion rather than an intention to inflict harm on O.G. I understand the argument that he should know better. There is real justice to that claim. If R.G. continues to raise them in this proceeding, the bad faith argument will likely become appropriate. But at this stage I cannot find that R.G.'s litigation behaviour is intended to harm, conceal or deceive.

[40] With regard to the complexity of this proceeding, it is clear that R.G. is expending his considerable financial resources in fighting his daughter every inch of the way. In doing so he has raised numerous procedural arguments and objections. Again I find that most of the procedural steps, particularly the refusal to file an answer and financial statement, attempts to question third parties, attempt to file new evidence, when looked at as a whole, were unreasonable. They should attract considerable costs.

[41] But the David and Goliath scenario does not fully apply here, despite R.G.'s litigation war chest. O.G.'s Legal Aid counsel has been able to respond fully and effectively to R.G., as her success in this motion demonstrates.

Quantum of Costs

[42] R.G. takes issue with the amount claimed by O.G.'s counsel but fails to provide his own counsel's bill of costs. I suspect that this omission arises because his actual costs are many times that of O.G.'s counsel. The greatest reason for this disparity is likely that Mr. Mark bills himself at an extraordinary low rate of $109.27 per hour. Mr. Joseph and Mr. Kniznik undoubtedly bill at a rate many times higher than that figure.

[43] I have reviewed Mr. Mark's bill of costs. In the absence of a responding bill of costs from R.G.'s counsel, it appears more than reasonable and proportionate to the amounts in question. I note that Mr. Mark, a relatively junior lawyer, faced two lawyers, one of whom is a very senior family law practitioner.

[44] In her costs decision involving O.G. and R.G., Kiteley J. considered the same factors that I consider here, with two exceptions. First R.G. was aware of Kiteley J.'s findings before he brought this motion. Second he took the numerous and unreasonable procedural steps, which I have described above.

[45] Kiteley J. cited the decision of Perkins J. in Biant v. Sagoo to find that

"… the 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 result."

[46] In the result, Kiteley J. granted O.G. her full indemnity costs of the motion before her. I see no reason to depart from her approach here.

CONCLUSION

[47] In conclusion I find that it would be fair and reasonable in the circumstances to grant O.G. costs of $17,789.72. That amount shall be payable forthwith to Justice for Children and Youth, the legal clinic that represents O.G.

Released: April 26, 2017

Marvin Kurz J.