Court File and Parties

Date: April 28, 2017

Court File No.: D90015/16

Ontario Court of Justice

Between:

F.K.

Paula McGirr, for the APPLICANT

APPLICANT

- and -

M.C.

Barry Nussbaum, for the RESPONDENT

RESPONDENT

Heard: March 16, 2017

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On March 20, 2017, the court released its reasons for decision arising out of a focused trial about child support and the applicant's (the mother's) request for a restraining order against the respondent (the father). See: F.K. v. M.C., 2017 ONCJ 181.

[2] The court gave the parties the opportunity to make written costs submissions. The mother seeks her costs of $15,000. The father proposed that costs be fixed against him in the amount of $3,000.

Principles Governing Costs Awards

[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.

Failure to Make Settlement Offers

[5] Neither party made an offer to settle. 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.

Positions Taken at Trial

[6] The court must next look at the positions taken by the parties at trial. The mother sought a restraining order against the father. She also asked the court to impute the father's annual income at $53,473, for the purpose of calculating child support. She asked that child support start on May 1, 2016. The father opposed the mother's request for a restraining order. He submitted that no child support be ordered for six months, after which time he would pay child support of $300 each month.

[7] The court granted the restraining order sought by the mother. The mother was completely successful on this issue.

[8] The court imputed the father's annual income at $30,000 and adjusted child support on this basis starting on May 1, 2016. The mother was more successful than the father on this issue.

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

Factors in Determining Costs

[10] 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.

Importance, Complexity and Difficulty

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

Reasonableness of Behaviour

[12] The failure of either party to make an offer to settle was unreasonable behaviour.

Bad Faith

[13] The mother asked the court to make a finding of bad faith against the father pursuant to subrule 24(8), due to the adverse credibility findings made against him at trial and his slow and incomplete financial disclosure. Subrule 24(8) reads as follows:

BAD FAITH

24(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.

[14] Subrule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See: Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Del Sordo, 2015 CarswellOnt 14971 (Ont. SCJ). 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. See: S.(C.) v. S. (M.). 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. See: Scipione, supra.

[15] The court finds that the father's behaviour was unreasonable but did not rise to the level of bad faith set out in the case law. He did provide financial disclosure, albeit slowly and not completely. The court also accepted his evidence that he is not earning significant income although it did not believe his evidence that he was not earning, or capable of earning any income.

Lawyer's Rates

[16] The rates claimed by counsel for the mother were reasonable.

Time Spent

[17] The mother claimed considerable time not attributable to this step in this case. The parties had resolved all other issues in this case by December 20, 2016. This step in the case was limited to the support and restraining order issues. 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.

[18] However, 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.

Expenses

[19] The expenses claimed by the mother are reasonable.

Proportionality of Costs

[20] 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.

[21] Costs also need to be proportional to the issues and amounts in question and the outcome of the case. Amounts actually incurred by the successful litigant may therefore not be determinative. See: Hackett v. Leung.

Ability to Pay

[22] The court considered the father's ability to pay the costs order. See: MacDonald v. Magel. The court has determined that the father is earning or is capable of earning annual income of $30,000. This is a modest income. However, litigants are responsible for the positions that they take. See: Heuss v. Surkos, 2004 ONCJ 141. While ability to pay costs is a factor to consider, it does not insulate the father from costs liability – particularly when he has acted unreasonably. See: Snih v. Snih.

[23] The father will be given a period of time to pay this costs award.

Costs Order

[24] Taking into account these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $6,000, inclusive of fees, disbursements and HST. The father may pay the costs at the rate of $200 each month, starting on May 1, 2017. However, if he is more than 30 days late in making any payment, the entire amount of costs shall immediately become due and payable.

Released: April 28, 2017

Justice Stanley Sherr