Court File and Parties

Date: December 1, 2017

Court File No.: D91299/15

Ontario Court of Justice

Between:

L.W.-A.

PAULA M. McGIRR, for the APPLICANT

APPLICANT

- and -

J.C. and D.W.A.

NATALIA DENCHIK, for the RESPONDENT, J.C. THE RESPONDENT, D.W.A., acting in person

RESPONDENTS

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On November 7, 2017, the court released its reasons for decision arising out of a one-day trial about the respondent, J.C.'s (the father) access to his three-year-old son (the child). See: L.W.-A. v. J.C., 2017 ONCJ 741.

[2] The court gave the applicant L.W.-A. (the mother) the opportunity to make written costs submissions. The mother seeks her costs of $21,843 from the father. The father submitted that the costs claimed by the mother are excessive. He did not make a submission about what costs order the court should make.

Principles of 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., paragraph 25. When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation. See: Sabo v. Sabo, 2013 ONCJ 545, per Justice Carole Curtis.

[6] Subrule 24(1) 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.

Settlement Offers and Draft Orders

[7] Neither party made an offer to settle. The mother submits that she was under the impression that the draft order the court had ordered the parties to present at the outset of the trial was her offer to settle.

[8] There is a significant difference between a formal offer to settle and a draft order. They have different purposes. The court ordered that draft orders be exchanged and filed at the outset of the trial pursuant to clause 1(7.2)(m) of the rules. This order was made to promote the primary objective of the rules – to deal with cases justly. A draft order specifically sets out a party's trial position – not their settlement position. It forces the party to clearly consider the relief he or she is seeking. It provides clarity about what relief is being sought and the court with context in assessing the evidence. The draft order helps to avoid a common problem where a party will fail to clearly articulate his or her position at the outset of the case and shifts his or her position during the trial.

[9] The offer to settle, on the other hand, is a settlement position and is confidential between the parties. It is not to be disclosed to the trial judge until after he or she has dealt with all the issues in dispute except costs. See: Subrule 18(8). An offer to settle, unlike a draft order, will attract costs consequences pursuant to subrules 18(14) and (16).

[10] The court wrote about the importance of making offers to settle in paragraphs 4-5 of Klinkhammer v. Dolan and Tulk, 2009 ONCJ 774 as follows:

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 at Trial and Success

[11] The court must next look at the positions taken by the parties at trial. The father sought an order for unsupervised access on alternate weekends, from Friday evening to Sunday evening. The mother sought an order for supervised access, by Brayden Supervision Services (Brayden) on alternate Sundays for 4 hours.

[12] The court ordered the father to have access for up to 7 hours on alternate Sundays supervised by Brayden. The court rejected the father's parents as access supervisors. The father was required to pay the access costs for using Brayden.

[13] The mother was the successful party based on the positions taken by the parties at trial.

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

Factors in Determining Costs

[15] 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

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

Reasonableness of Behaviour

[17] The father's exhibited unreasonable behaviour as follows:

a) He failed to follow the court's timetable to provide a draft order. The start of the trial was delayed so that he could prepare this.

b) The father delayed in providing disclosure of his criminal records.

c) The father and his parents breached the temporary court order requiring that the father's access be fully supervised and then initially attempted to represent to the court that they had been fully compliant with this term. They only admitted their breaches when presented with clear proof of them.

d) He failed to make an offer to settle.

Bad Faith Analysis

[18] The mother asks the court to make a finding that the father acted in bad faith pursuant to subrule 24(8). 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.

[19] 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.

[20] 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.

[21] With the exception of failing to make a formal offer to settle, the mother acted reasonably.

Lawyer's Rates

[22] The mother's counsel set out both her legal aid and private rates.

[23] The receipt of legal aid is not a factor in determining costs. The mother is able to claim private counsel rates. See: Ramcharitar v. Ramcharitar; Alvarez v. Smith; Holt v. Anderson; Loncar v. Pendlebury, 2015 ONSC 4673; S.G. v. A.S., 2015 ONSC 1882.

[24] The private rates claimed by the mother's counsel are fair for senior counsel ($410 per hour).

Time Spent

[25] The Bill of Costs submitted by the mother clearly detailed the time spent on the case by her counsel and her law clerk.

[26] The court recognizes that when a focused trial is ordered, more pre-trial work will usually be required by counsel. For instance, court time that used to be spent on direct examinations is reduced when parties are required to provide most of their direct evidence by affidavit. There may be other pre-trial work that the court requires from counsel, pursuant to subrule 1(7.2), to make the best use of court time. This work may involve the preparation of joint document briefs, witness will-say statements, statements of agreed facts, draft orders and a summary of argument. Costs orders should reflect this reality. The number of days of trial is not always the most reliable indicator of the preparation time required for a focused trial.

[27] The mother had to spend additional time in this case because of the father's delayed and incremental disclosure of his police records. She also had to spend considerable time establishing the father's breaches of the temporary court order.

[28] The mother included time spent on an emergency motion she brought in September 2017. Costs were not ordered for this step and costs will not be awarded for the mother's appearance on that motion. See: Subrule 24(10) and Islam v. Rahman, 2007 ONCA 622. However, much of the work done preparing for the motion was also necessary for the trial. The court will attribute most of this work to the trial step, as the mother's position on the motion was ultimately vindicated.

Proportionality

[29] 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

[30] The court considered the father's ability to pay the costs order. See: MacDonald v. Magel. The father is not working at this time.

[31] 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, paragraphs 7-13.

[32] 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."

[33] These words resonate in this case where the parties were clearly warned about the costs consequences of a trial.

Costs Order

[34] Taking into account these considerations, an order shall go that the father shall pay the mother's costs fixed in the amount of $15,000, inclusive of fees, disbursements and HST.

Released: December 1, 2017

Justice S.B. Sherr