Court File and Parties

Date: June 13, 2017

Court File No.: D61682/15

Ontario Court of Justice

Between:

Colline Reece

Applicant

- and -

Nicholas Thomas

Respondent

Counsel:

• Renata Kirszbaum, for the Applicant
• Hugh Evans, for the Respondent
• Cynthia Bayers, Agent, for the Assignee, City of Toronto

Heard: In Chambers

Before: Justice S.B. Sherr

Costs Endorsement

Background

[1] On May 15, 2017, the court released its reasons for decision arising out of a trial about the parties' motions to change the child support obligations contained in this court's order dated October 23, 2013. See: Reece v. Thomas, 2017 ONCJ 311.

[2] The court invited written costs submissions from the parties and the City of Toronto (the assignee), who had an interest in the support arrears accumulated until January 31, 2017.

[3] The applicant (the mother) seeks costs of $3,786.63 from the father. The father submits that no costs should be paid.

[4] The assignee did not make costs submissions.

Legal Framework for Costs Awards

[5] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, [2009] O.J. 1905 (Ont. C.A.) 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.

[6] 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, [2000] O.J. No. 330 (SCJ- Family Court). 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, [2008] O.J. No. 1978 (SCJ).

[7] Subrule 24(6) states that if success in a step in a case is divided, the court may apportion costs as appropriate.

Offers to Settle and Rule 18(14)

[8] 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.

[9] 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)).

[10] The onus of proving that the offer is as or more favourable than the trial result is on the person making the offer. See: Neilipovitz v. Neilipovitz, [2014] O.J. No. 3842 (SCJ).

[11] Close is not good enough to attract the costs consequences of 18(14). The offer must be as good or more favourable than the trial result. See my comments in: Gurley v. Gurley, 2013 ONCJ 482.

[12] Both parties made offers to settle. Neither offer met the requisite criteria for sub-rule 18(14) to apply.

Non-Severable Offers and "Poison Pill" Clauses

[13] This trial was only about child support. However, both parties decided to include access terms as part of their offers to settle. The father sought alternate weekend access – the mother sought an order that the father's access take place at the Toronto Supervised Access Centre, for two hours each week.

[14] The parties' offers were not severable. The court cannot conclude that the trial result was more favourable to either party than their offers when they included material terms (final access) that were not adjudicated.

[15] The parties should have made severable offers. Several courts have discussed the value of such offers.

[16] In Lawson v. Lawson, 2004 O.J. No. 3206 (SCJ), 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.

[17] In Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (SCJ), 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)).

[18] 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.

[19] The inclusion of the access terms in the respective offers amounted to "poison pill" clauses. These terms made the balance of each party's offer unpalatable to the other and unlikely to be accepted. See my comments in J.C.M. v. K.C.M., 2016 ONCJ 551.

[20] The court can still consider the offers under subrule 18(16).

Analysis of the Parties' Offers

[21] The mother was prepared to rescind all arrears accumulated until April 30, 2017 (over $7,000). She asked for ongoing child support of $400 each month, starting on May 1, 2017.

[22] The father sought to rescind arrears accumulated until June 30, 2016 and offered to pay support of $120 each month, starting on July 1, 2016.

[23] The mother's offer was much closer to the final result. The court rescinded support by $2,372. This was far less than the amount the mother offered to rescind and much more than the father offered. The court ordered child support of $259 each month starting on June 1, 2016, increasing it to $433 each month by October, 2017. This was in the same range as the $400 each month offered by the mother (starting on May 1, 2017) and far more than the $120 each month offered by the father.

[24] If not for the inclusion of the access term, the costs consequences of subrule 18(14) would have applied to the mother's offer.

Trial Positions and Success

[25] The court also needs to examine the position of the parties taken at trial.

[26] The mother asked that no arrears be rescinded and that the father's income be imputed at $80,000 annually for support purposes. The father asked to rescind all arrears up until June 30, 2016 and that his support from July 1, 2017 be calculated based on an annual income of between $15,000 and $15,400.

[27] There was divided success based on the trial positions taken.

[28] The court finds that the mother was the more successful party.

[29] The presumption that the mother is entitled to costs was not rebutted.

Factors in Determining Costs

[30] 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.

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

[32] The mother acted reasonably in this case.

[33] The father did not act reasonably as he failed to pay any child support until just before the trial. The court also found that he actively avoided his child support obligations, was deliberately unemployed and did not report cash income – all unreasonable behaviour.

[34] The rates claimed by the mother's lawyer are reasonable.

[35] The time claimed by the mother are reasonable. She restricted her claim to the trial step.

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

Proportionality and Ability to Pay

[37] The court considered both Boucher et al. v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (Ont. C.A.) and Delellis v. Delellis and Delellis, [2005] O.J. No. 4345. 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.

[38] The court considered the father's ability to pay the costs order (see: MacDonald v. Magel, 67 O.R. (3d) 181 (Ont. C.A.)). He has another child to support. He has support arrears and a previous costs order to pay. The court will delay the commencement of payment of this costs order to give the father time to stabilize his financial situation. It will then permit him to pay this costs order over three years. However, the father will only receive this consideration if he makes all his support, arrears and costs payments when ordered.

Costs Order

[39] Taking into account all of these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $2,700, inclusive of fees, disbursements and HST. The father may pay these costs at $75 each month, starting on January 1, 2018. However, if he is more than 30 days late in making any ongoing or arrears support payments, or costs payments, the entire amount of costs then owing, shall immediately become due and payable.

Released: June 13, 2017

Justice S.B. Sherr