Court File and Parties

Date: January 24, 2017

Court File No.: D61608/13

Ontario Court of Justice

Between:

Vernelle Olivia Duntin

Pamila Bhardwaj, for the Applicant

Applicant

- and -

Richard Beckles

Anthony V.R. Martin, for the Respondent

Respondent

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On December 1, 2016, the court orally released its reasons for decision arising out of a trial about the respondent's (the father) child support obligations towards the parties' 15-year old child.

[2] The court gave the parties the opportunity to make written costs submissions. The applicant (the mother) seeks her full recovery costs of $17,868.13. The father asks that no costs be ordered.

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:

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 The offer does not expire and is not withdrawn before the hearing starts.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.

[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)).

Settlement Offers

[8] The mother made an offer to settle dated August 4, 2016. The father did not make an offer to settle.

[9] The mother's offer did not attract the costs consequences set out in subrule 18(14), as it was not more favourable to the father than the result at trial.

[10] The mother proposed that the father pay ongoing child support of $187 each month, based on an annual imputed minimum wage income of $23,400. The court imputed annual income of $14,000 to the father, which resulted in a monthly child support payment of $78 each month. The mother's offer would have resulted in support arrears of over $12,000. The court ordered support arrears of $8,818. The mother's offer proposed that the arrears be paid at $100 each month. The court ordered the arrears to be paid at $72 each month.

[11] The mother's offer to settle represented a serious attempt to settle the case.

Trial Positions and Divided Success

[12] At trial, the mother asked the court to impute a minimum wage income to the father and to fix arrears at $14,700. The father asked that he not be required to pay any child support and that any support arrears be rescinded.

[13] There was divided success on some of the issues that led to the final decision. The father was able to establish that he could not work full-time due to his medical conditions. However, the court found that he could work part-time. There was divided success on the amount of arrears ordered.

[14] The mother alleged that the father was earning additional business income. She was unable to substantiate this allegation and no additional income was imputed to him.

[15] The father alleged that he had paid $4,000 in additional support to the mother. The court did not accept his evidence and made a finding that the mother was a much more credible witness than him.

[16] The court finds that the mother was more successful than the father, based on their positions taken at trial, and in particular, based on her position taken in her offer to settle.

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

Factors in Determining Costs

[18] 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.

Application of Costs Factors

[19] The case was important for the parties. It was not difficult or complex.

[20] The mother acted reasonably.

[21] The father did not act reasonably. He failed to make an offer to settle, delayed in complying with court orders for disclosure and did not comply with multiple court orders to provide evidence of airfare, details of a motor vehicle settlement and documents from his disability application. At trial, the father claimed to have the evidence, "I just didn't present it".

[22] The father's failure to provide timely disclosure added to the cost of the litigation. His late disclosure of relevant information made it very difficult for the mother to assess the case and perhaps make a better offer to settle.

[23] The trial took one and a half days. The length of the trial was reduced because the parties provided their own direct evidence by affidavit.

[24] The time claimed by the mother to prepare for the trial was excessive given the amounts in dispute.

[25] The hourly rate claimed for the work done by a paralegal employed by the mother's lawyer ($225 per hour), was also too high.

[26] The expenses claimed by the mother were reasonable.

Proportionality Principle

[27] 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.

[28] The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which reimbursement is sought) and the importance or monetary value of the issues at stake. The rules do not require the court to allow the successful party to demand a blank cheque for their costs. See: O'Brien v. O'Brien, 2017 ONSC 402. Here, the amounts in dispute did not justify the time expended on the case.

Respondent's Ability to Pay

[29] 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.

[30] The father has a very limited ability to pay costs. This should have been an incentive for him to try and negotiate a reasonable settlement. However, he made no offer to settle and caused additional and needless costs with his late and incomplete disclosure.

[31] The court recognizes that it will take many years for the father to pay this costs order, with the monthly payments it will order. That is the reality of the father's financial position. However, the size of the costs award sends the message that even litigants of modest means must act reasonably or bear the consequences of their actions.

Costs Order

[32] 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 $5,000 inclusive of fees, disbursements and HST.

b) The father may pay these costs at the rate of $50 per month, starting on March 1, 2017.

c) The mother may move to expedite payment of any outstanding costs if the father earns more than the amount imputed to him at trial, or if he comes into additional funds.

Released: January 24, 2017

Justice S.B. Sherr