Court File and Parties

Date: October 18, 2017

Court File No.: D53521/11

Ontario Court of Justice

Between:

J.J.G.

Applicant

- and -

J.D.S.

Respondent

Counsel:

• Davine D. Burton, for the Applicant
• Acting in Person, for the Respondent
• Karen Lindsay-Skynner, for the Office of the Children's Lawyer, for the child

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On August 28, 2017, the court released its reasons for decision arising out of a four-day trial about the parenting and child support arrangements for the parties' thirteen-year-old child (the child). See: J.J.G. v. J.D.S., 2017 ONCJ 586.

[2] The court gave the parties the opportunity to make written costs submissions. The applicant (the mother) seeks her costs of $34,224. The respondent (the father) seeks an order that he pay the mother costs fixed at $11,500, payable at the rate of $250 each month, starting on December 1, 2017.

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] Sub-rule 2(2) of the Family Law Rules (all references to rules in this endorsement are to 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. See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711.

[5] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. Costs can 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. See: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., supra, paragraph 25.

[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.

Determining Success

[7] 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.

Settlement Offers and Costs Consequences

[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] 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).

[10] Close is not good enough to attract the costs consequences of 18(14). The offer must be as good as or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in subrule 18(14), it may be considered under subrule 18(16). See: Gurley v. Gurley, 2013 ONCJ 482.

[11] The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order. See: Wilson v. Kovalev, 2016 ONSC 163.

Analysis of Settlement Offers

[12] The mother made three offers to settle, dated September 4, 2015, March 15, 2017 and May 22, 2017. The last two offers contained clauses withdrawing all previous offers. [1] Paragraph 3 of subrule 18(14) requires that an offer not be withdrawn in order for the cost consequences in the subrule to apply. Accordingly, only the mother's last offer remains eligible for subrule 18(14) costs consideration.

[13] The father made an offer to settle dated July 7, 2017 and an amended offer to settle dated July 10, 2017. The only change in the amended offer to settle was a proposal by the father to increase the amount he would pay towards his support arrears.

[14] The father also served a document dated July 17, 2017, where he accepted portions of the mother's last offer.

[15] This exchange of proposals led to a settlement of most of the support issues and some of the parenting issues at the outset of the trial.

[16] The mother's offer on May 22, 2017 was close to the final result, but was not more favourable to the father than the final order. The mother included a number of parenting clauses in her offer that were not ordered. The father was given longer mid-week visits than those proposed by the mother. The mother proposed that the father pay more support arrears than were ordered at trial.

[17] The mother's offer to settle dated March 15, 2017, was similar to her offer dated May 22, 2017. Her offer to settle dated September 4, 2015 proposed more restrictive parenting terms for the father.

[18] The father's offer to settle didn't come anywhere close to the final result. He proposed that he be granted custody of the child, with specified access to the mother. The mother was granted custody of the child. He asked for no ongoing child support to be paid and that he pay his support arrears, accumulated as of the date of his offer, at $100 each month. [2] The final decision requires the father to pay the table amount of child support, contribute towards special expenses and pay arrears in an amount in excess of what he proposed to pay.

[19] At trial, the parties essentially advanced the positions set out in their last offer to settle.

[20] The mother was clearly the successful party at trial based on the offers to settle and the positions taken at trial.

[21] The father did not rebut the presumption that the mother is entitled to costs. He conceded the mother's entitlement to costs in his submissions. His issue is the amount sought by her.

Factors in Determining Costs

[22] 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 Factors

Importance, Complexity and Difficulty

[23] The case was important for the parties. It became factually complex and difficult due to the volume of allegations the parties made against each other.

Reasonableness of Behaviour

[24] The court's reasons for decision set out unreasonable behaviour by the mother. She unilaterally moved with the child to Alliston, Ontario during the case without seeking the court's permission. She compounded this problem by often changing the father's mid-week access, usually with little notice and with disregard to his schedule. By doing so she exposed the child to additional parental conflict.

[25] The mother's litigation behaviour was reasonable.

[26] The mother asks the court to make a finding that the father acted in bad faith pursuant to subrule 24(8), based on the findings of facts made by the court at trial. 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.

[27] 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.), 38 R.F.L. (6th) 315 (Ont. SCJ). 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.

[28] While the court finds that the father acted unreasonably on many occasions, it does not find that his behaviour rose to the high threshold of egregious behaviour that is required for a finding of bad faith.

[29] The father's litigation behaviour was often unreasonable. He took an unrealistic position that he have custody of the child in closing argument, even though this relief was not pleaded or claimed until his closing argument. He did not provide timely financial disclosure. He did not provide his draft order at the outset of the trial as required. He did not pay child support in accordance with his income and waited until the outset of the trial to settle most of the support issues.

[30] The court made many findings of unreasonable and immature behaviour by the father in its reasons for decision. His behaviour escalated the conflict between the parties. The court made findings that the father often prioritizes his own needs ahead of the child, is insensitive to the child's wishes, is angry and controlling, shows a profound lack of insight into his role in the parental conflict, unnecessarily involves the police in parental disputes and has failed to pay adequate child support.

Lawyer's Rates

[31] The rates claimed by the mother's lawyer ($400 per hour) are reasonable for a lawyer with 17 years of experience.

[32] The father asked the court to fix the mother's costs at legal aid rates. The father cited the case of Onuselgou v. Okeke, 2011 ONCJ 431, where costs were fixed at a legal aid rate, when the costs claimant was in receipt of legal aid. However, this case is distinguishable as in Onuselgou, the payor's modest means was a significant consideration. Here, the father earns annual income of $58,000 and can afford the costs award that will be ordered.

[33] Further, in F.K. v. T.R., 2016 ONCJ 339, Justice Roselyn Zisman did not follow Onuselgou, observing that the case law which sets out that the receipt of legal aid is not a factor in determining costs was not referenced in that decision. See: Ramcharitar v. Ramcharitar, 62 O.R. (3d) 107 (S.C.J.); Alvarez v. Smith, [2008] O.J. No. 941 (SCJ); Holt v. Anderson, 2005 O.J. No. 5111 (Divisional Court); Loncar v. Pendlebury, 2015 ONSC 4673; S.G. v. A.S., 2015 ONSC 1882.

[34] It is clear that pursuant to subsection 46(1) of the Legal Aid Services Act, 1998, "the costs awarded in any order made in favour of an individual who has received legal aid services are recoverable in the same manner and to the same extent as though awarded to an individual who has not received legal aid services". A legally aided client "stands before the court in exactly the same position as any other litigant". See: Baksh v. Baksh, 2017 ONSC 3997, per Justice R.P. Kaufman.

[35] There will be no adjustment to the costs award because the mother is in receipt of legal aid.

Time Spent and Allocation of Costs

[36] The mother sought substantial indemnity costs from the time she served her first offer to settle on September 4, 2015.

[37] The mother claimed costs for several steps in the case where costs were not reserved. This included a scheduled summary judgment motion, case conferences and settlement conferences.

[38] 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, [2005] O.J. No. 5715 (OCJ). 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. The mother is not entitled to her costs for these conferences.

[39] 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.

[40] The mother is also entitled to claim time spent preparing for and attending at the Trial Management Conference and Assignment Court as they are related to the trial step.

Proportionality

[41] 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.

Ability to Pay

[42] The court considered the father's ability to pay the costs order. See: MacDonald v. Magel, 67 O.R. (3d) 181 (Ont. C.A.). 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. Snih v. Snih pars. 7-13. In the case of Takis v. Takis, [2003] O.J. No. 4059 (S.C.J.), the court found that the respondent's lack of income and assets, though a relevant consideration, could not be used as a shield in unnecessary litigation.

[43] The court adopts the comments of Justice Heather McGee in Mohr v. Sweeney, 2016 ONSC 3338, where she writes, "those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings."

[44] The father earns annual income of $58,000. He is required to pay ongoing table support of $511 per month, arrears of $100 per month and section 7 expenses of $66 per month, for a total of $677 per month. His assets are in the $1,000 range and he has significant debts. Although the father will face some financial challenges, the court finds that he has the ability to pay the costs that will be awarded if he is given a reasonable period of time to pay them.

[45] The costs payment will be spread out over 5 years – provided that the father maintains all his payments in good standing.

Costs Award

[46] Taking into account these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $18,000, inclusive of fees, disbursements and HST. The father may pay the costs at the rate of $300 each month, starting on November 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.

Payment to Legal Aid

[47] The mother asked that the costs be paid directly to legal aid in trust. As I set out in F.D.M. v. K.O.W., 2015 ONCJ 94, [2015] O.J. No. 903 (OCJ), and John v. Vincente, 2016 ONCJ 78, the court prefers not to become involved in retainer arrangements and make such orders.

[48] The mother can execute an irrevocable direction or assignment of costs and deliver it to the father. The court notes that subsection 46(4) of the Legal Aid Services Act states that all costs ordered by a court to be paid to an individual who has received legal aid services are the property of the Corporation and shall be paid to the Corporation.

Released: October 18, 2017

Justice S.B. Sherr

Footnotes

[1] In her costs submissions the mother states that all her offers remained open until after the start of the trial. However, the last two offers clearly withdrew prior offers. The mother also submitted that her offers were severable, although none of the offers indicate this.

[2] This increased to $200 each month in his offer to settle dated July 10, 2017.