Court File and Parties
Ontario Court of Justice
Date: 2017-07-11 Court File No.: Halton 128/15
Between:
Robin Safraaz Anthony Applicant
- And -
Maria Zajaczkowska Respondent
Before: Justice Marvin Kurz Heard in Chambers on: July 10, 2017 Reasons for Judgment released on: July 11, 2017
Counsel:
- Robin Safraaz Anthony ....................................................................... on his own behalf
- Nicholas Slinko .................................................................... counsel for the respondent
Reasons for Judgment
KURZ J.:
Background
[1] On May 8, 2017 I struck the Applicant's pleadings for breaches of various orders. On June 8, 2017 I granted a final order in this matter. In both proceedings, I reserved on the issue of costs. I offered the parties the opportunity to make written submissions on costs. The Respondent offered her submissions on both the motion and the application (that had not been otherwise determined) but the respondent failed to do so. The time for the filing of his submissions has now passed.
[2] As I set out in my endorsement of June 8, 2017:
(1) The hearing occurred because I ordered that the pleadings of the applicant, Robin Safraaz Anthony ("the father" or "Mr. Anthony") be struck because of his breaches of various court orders.
(2) I accepted Ms. Zajaczkowska's evidence and arguments that income of $67,300.00 per annum be imputed to Mr. Anthony for the period from 2010 onward.
(3) I fixed prospective and table support and retroactive support figures. I ordered that he pay table support of $1,000.00 per month and 50% of all special and extraordinary expenses, including university expenses for the children.
(4) I ordered that Mr. Anthony pay to Ms. Zajaczkowska $36,627.02 in retroactive child support, paid at the rate of $500.00 per month.
Costs Sought
[3] Ms. Zajaczkowska seeks full indemnity costs of $4,689.50 for the motion and $10,841.11 for the previously undetermined costs of the application, including the uncontested trial, as well as to a settlement conference in July 2016 in which costs were reserved. Costs of other steps in the proceeding have already been determined.
[4] Ms. Zajaczkowska argues that:
(1) She was substantially successful in this proceeding;
(2) She made offers to settle throughout this proceeding. She exceeded the contours of her last offer to settle if I grant her the costs she requests;
(3) On the other hand, Mr. Anthony failed to make any offers to settle. Accordingly, his behaviour was unreasonable;
(4) Mr. Anthony's failure to make full disclosure and pay support as ordered together constitute bad faith. They led me to strike his pleadings. That alone should be enough to support an order of full indemnity costs.
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:
(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
(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:
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
[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 Ballman 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 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.
[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:
- If the offer relates to a motion, it is made at least one day before the motion date.
- 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.
- The offer does not expire and is not withdrawn before the hearing starts.
- The offer is not accepted.
- 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 behooves 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. 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.
[20] The failure to serve an offer to settle will be an adverse factor when assessing costs.
Party Status Does Not Grant a License to Litigate Oblivious to the Consequences
[21] The right to bring or respond to a 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:
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
[22] 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.
[23] 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."
[24] 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
[25] The first consideration is success. Ms. Zajaczkowska was substantially successful in both the motion to strike and the proceeding as a whole in obtaining the relief that she sought.
[26] Second, Ms. Zajaczkowska made an offer to settle in which she was willing to accept far less than I ordered. She did seek $15,000.00 in total costs of the proceeding, of which $5,500.00 had already been ordered. She would only need to obtain $9,500.00 in further costs to meet or exceed that figure. She is entitled to at least as much, if not more, even on a partial indemnity basis. The costs consequence of FLR 18(14) apply.
[27] On the other hand, Mr. Anthony has engaged in unreasonable behavior by failing to make an offer to settle and being unprepared for some court appearances.
[28] Mr. Anthony has exhibited bad faith in engaging in the behavior that led me to strike his pleadings. That behavior included a failure to make certain payments of support and costs as well as full financial disclosure. That behavior in itself should lead to an order of full indemnity costs.
[29] In reviewing the amounts claimed and considering whether it is reasonable to require Mr. Anthony to pay them, I find that:
(1) Mr. Slinko's hourly charge is reasonable.
(2) So too is the amount that he had claimed for fees and disbursements for a matter such as this;
(3) The amounts that he has claimed are "fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case."
[30] Accordingly, order to go that the Applicant pay to the Respondent costs fixed at $15,530.61, inclusive of disbursements and HST, determined as follows:
(1) Costs of the motion to strike of $4,689.50;
(2) Costs of the remainder of the proceeding not already determined of $10,841.11.
Released: July 11, 2017
Signed: Justice Marvin Kurz