Court File and Parties

Court File No.: Toronto D1360/00 Date: 2017-04-28 Ontario Court of Justice

Between:

G.S. Applicant (Moving Party)

— AND —

S.S. Respondent (Responding Party)

Before: Justice Curtis

Written submissions regarding Costs

Endorsement released on 28 April 2017

Counsel:

• Janet Preston, for the Applicant
• Respondent unrepresented

Index

1. Over-view
2. The Parties' Positions re Costs
3. Litigation History
4. The Costs Analysis
5. Order

Over-view

[1] This is the decision regarding costs of a three day hearing of the mother's motion to change child support. The decision on the motion was released on 10 March 2017.

The Parties' Positions re Costs

[2] The mother claims costs of the motion under Rule 24 of the Family Law Rules, in the amount of $13,143.88 all in (fees plus disbursements), on a full recovery basis.

[3] Only the mother claimed costs of the motion. The decision, released on 10 March 2017, gave the parents a timetable for written submissions regarding costs. Only the mother filed costs submissions. The time for the father to file written submissions ended on 14 April 2017. The mother's costs request is therefore unopposed.

Litigation History

[4] The mother started this motion to change on 22 June 2015 asking to re-instate child support for two children (from 1 January 2004). An order dated 11 February 2003 had suspended child support as of 31 October 2001, as the father was not then working. The mother also claimed s. 7 expenses for the children, from 1 January 2004. The father asked to change the table amount of child support to the proper amount based on his actual income, adjusted as of November 2014 only, and to pay s. 7 expenses for only one of the children, to be paid only when he earned sufficient income in future.

[5] The issues for decision at the motion were:

a) Should child support be reinstated, and if so, for which child?

b) What is the proper income of the father for child support purposes?

c) Should there be a retroactive adjustment of the child support table amount in accordance with the father's income, and if so, for which child, and what is the proper start date?

d) Should there be a retroactive adjustment of child support for special expenses in accordance with the father's income and the special expenses incurred, and if so, for which child, for which expenses, and what is the proper start date?

[6] The orders made at the hearing (among other things) changed the support order of 11 February 2003; imputed income to the father for the intervening years; ordered the table amount for those years, starting on 1 January 2004; set the amount of retroactive s. 7 expenses owing; ordered the payment of s. 7 expenses on an on-going basis; and, ordered annual financial disclosure.

The Costs Analysis

The Law of Costs

Entitlement

[7] The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, s. 131(1), which sets out three specific principles:

a) the costs of a case are in the discretion of the court;

b) the court may determine by whom costs shall be paid; and,

c) the court may determine to what extent the costs shall be paid.

[8] Modern costs rules are designed to foster three fundamental purposes: Fong v. Chan, 46 O.R. (3d) 330, 181 D.L.R. (4th) 614, para. 24:

(a) to indemnify successful litigants for the cost of litigation;

(b) to encourage settlement; and

(c) to discourage and sanction inappropriate behaviour by litigants.

[9] Rule 2(2) of the Family Law Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the rules is met – that cases are dealt with justly. This provision needs to be read in conjunction with Rule 24 of the rules: Sambasivam v. Pulendrarajah, 2012 ONCJ 711.

The Evolution of Costs as an Instrument of Social Policy

[10] The traditional purpose of an award of costs was to indemnify the successful party in respect of the expenses sustained. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called "outdated" since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps. This change in the common law was an incremental one when viewed in the larger context of the trend towards awarding costs to encourage or deter certain types of conduct, and not merely to indemnify the successful litigant: British Columbia (Minister of Forests) v. Okanagan Indian Band, [2002] S.C.R. 371, paras. 21-24.

[11] The traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser, rather than leaving each party's expenses where they fall, they act as a disincentive to those who might be tempted to harass others with meritless claims. In addition, because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., para. 26.

[12] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., para. 25.

Offers to Settle

[13] Offers to settle are a significant part of the landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.

[14] Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (Rule 2(2)). This includes taking appropriate steps to save time and expense (Rule 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: Laing v. Mahmoud, 2011 ONSC 6737, para. 7.

[15] Offers to settle are important and can be the yardstick by which to measure success. They are significant in determining both liability for costs and quantum: Osmar v. Osmar, para. 7.

[16] In deciding whether a party has acted reasonably or unreasonably in a case, the court shall examine the reasonableness of any offer the party made (Rule 24(5)(b)): M. (J.V.) v. P. (F.D.), 2011 CarswellOnt 13510, ONCJ 616.

[17] 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: Lawson v. Lawson. The position each party took at the motion should also be examined.

[18] The costs consequences of offers to settle are set out in Rule 18(14) 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.

[19] Neither party made an Offer to Settle. The mother says that she did not have adequate disclosure from the father to make an offer, and that her position at the hearing was that his income should be imputed.

[20] The failure to make an offer to settle should not result in adverse costs consequences for a party who did not receive meaningful disclosure upon which to base an offer: Oduwole v. Moses, 2016 CarswellOnt 17232, 2016 ONCJ 653, para. 19.

[21] Pursuant to Rule 24(1) of the Family Law Rules, the mother is presumed to be entitled to costs because she was successful at the motion.

Behaviour of the Parties

[22] One of the purposes of costs is to change behaviour.

[23] Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Sarkos, 2004 CarswellOnt 3317, 2004 ONCJ 141, and Peers v. Poupore, 2008 ONCJ 615, para. 62.

[24] 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: Heuss v. Sarkos, 2004, Ont. Ct., para. 20.

[25] Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour: Heuss v. Sarkos, 2004, Ont. Ct., para. 20.

[26] Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in Rule 24(11)(b)). It reads as follows:

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.

[27] A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules: Osmar v. Osmar, 2000 (Ont. Sup. Ct.), para. 11.

[28] Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith: DePace v. Michienzi; Kardaras v. Kardaras, 2008 ONCJ 616; Jones v. Hugo, [2012] ONCJ 381.

[29] The father was not credible or reliable with respect to what his income was. His catch-me-if-you-can approach to his income is to be condemned. This conduct alone warrants full-recovery costs. Deliberate non-disclosure is not merely unreasonable conduct, it is an example of bad faith: Hatcher v. Hatcher, [2009] O.J. No. 148 (Ont. Sup. Ct.), para. 77.

[30] One of the most significant contributors to lengthy and costly litigation is untimely and inaccurate disclosure. All too often, one party makes every effort to thrust economic havoc on the other when this game of litigation hide and seek forms a part of their litigation strategy. This cannot be permitted by the court. Stevens v. Stevens, 2012 CarswellOnt 15385 (Ont. Sup. Ct.), paras. 22 and 23, aff'd, 2013 O.J. No. 1912 (Ont. C.A.).

[31] There are many instances of unreasonable behaviour by the father, both prior to and during the litigation (details are set out in the Reasons for Decision for the motion). Here are some of them:

a) he did not make the annual financial disclosure ordered in the order made 11 February 2003;

b) he did not notify the mother when he obtained work, as required in the order of 11 February 2003;

c) he paid no support for many years, and even when a court order was made for support on 4 February 2016, he did not comply with that order;

d) he made inadequate disclosure in the motion to change, including incomplete and confusing disclosure of his own income;

e) he never disclosed the income of his wife, a doctor working in the U.S.;

f) the delay by the mother in starting the motion to change was found to be entirely justifiable, based on the father's egregious, long-standing, violent and abusive treatment of the mother and the two children; and,

g) he attempted to re-open the issue of C.'s eligibility for support, long after consent orders for her support had been made in 2001.

Quantum of Costs

[32] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome: Boucher et al. v. Public Accountants Council for the Province of Ontario.

[33] Costs awards should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties, rather than any exact measure of the actual costs to the successful litigant. It is not appropriate to simply take the number of hours spent by counsel on a particular matter and multiply those hours by a determined hourly or per diem rate: Zesta Engineering Ltd. v. Cloutier.

[34] The over-riding principle is reasonableness. 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: Boucher et al. v. Public Accountants Council for the Province of Ontario, 2004, Ont. C.A..

[35] The factors to consider in determining the amount of costs in family law matters are (Rule 24(11)):

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.

[36] In determining the amount of costs on this motion, the court took into account these factors set out in R. 24(11), as follows:

a) The importance, complexity or difficulty of the issues: the motion was important to the mother and the two children. They had gone through many years of no support, and there was evidence of significant hardship to them during these years, including a diminished lifestyle, and for C. an inability to complete her education as planned. There was a substantial amount of material filed by the parties. The argument took place over 1½ days. The legal issues were multiple and complex (as set out in the Reasons for Decision). They were made even more complex due to the inadequate disclosure, and unreasonable behavior on the part of the father;

b) The reasonableness or unreasonableness of each party's behaviour in the case: a finding of unreasonableness is not necessary to the making of a costs order. The mother's behaviour in the motion was reasonable. Details about the father's behaviour in the motion to change and before the motion are set out in the Reasons for Decision, and earlier in this endorsement. The father's behaviour in the motion was unreasonable;

c) The lawyer's rates: the rate claimed for the mother's lawyer was well below the market rate for a lawyer at her level of experience and expertise;

d) The time properly spent on the case: The time spent by the mother's lawyer was reasonable, under these circumstances, given the issues at stake, the claims made by the father, the large amount of material filed, and the lack of disclosure by him; and,

e) Expenses properly paid or payable: the disbursements claimed by the mother (total $703.71) were very modest.

The Hourly Rate Issue

[37] The mother's lawyer charged her a dramatically reduced rate for her work ($100 per hour, rather than her usual hourly rate of $295 per hour). Given the lawyer's experience and expertise, the usual hourly rate of $295 is reasonable.

[38] Lawyers should be encouraged to provide legal services at reduced rates, or even pro bono, where appropriate. In order for there to be an incentive to do so, and protection for those lawyers who do so, the court should be able to award costs for those litigants at the usual hourly rate for the lawyer who did that work.

[39] The mother is entitled to claim costs based on the usual hourly rate her lawyer would charge. As in cases where the party claiming costs was assisted by a lawyer being paid by the Ontario Legal Aid Plan, the court is not restricted to ordering costs at the lower, reduced rate. To hold otherwise would grant an inadvertent windfall to the party fortunate enough to only have to pay costs to an opposing party based on the reduced fees charged by that party's lawyer: Ramcharitar v. Ramcharitar.

Order

[40] The father shall pay the mother's costs of the motion. The mother is entitled to her costs of the motion to change on a full recovery basis. A fair and reasonable costs order, and one that is proportionate to the issues involved, in all of these circumstances, is $37,400 all in (fees plus HST, and disbursements plus HST).

[41] The costs order is payable as support and shall be enforced as support by the Family Responsibility Office.

[42] The father shall not bring a motion to change without leave obtained in advance, requested on a Form 14B motion, two pages maximum in support, not to be served on the other side, unless the court orders. The payment of costs shall be a factor for the court in determining any request for leave.

Released: 28 April 2017

Justice Carole Curtis