Court Information

Court: Ontario Court of Justice Location: 491 Steeles Avenue East, Milton, ON L9T 1Y7 Date: January 24, 2018

Parties

Applicant: Milkos Antonio Barran Counsel: Brian Ludmer

Respondent: Jennifer M. Schanck Counsel: Self-represented

Costs Endorsement

Background

[1] On October 24, 2017 I granted relief in a motion brought by the applicant father. He sought specified access to the parties' two children, Zackary Connor Barran, born August 17, 2004 ("Zackary") and Zoe Allegra Brooke Barran, born October 5, 2006 ("Zoe") and the imposition of "parental covenants" drafted by his counsel on the parties. He also sought an order that the parties equally pay the costs of therapeutic access services, the right to question the respondent, and disclosure.

[2] As I stated at the time, the motion was not entirely opposed by the respondent mother. The end result was a detailed order that followed in many ways the recommendations of reunification therapist, Lourdes Geraldo. That order represented mixed success for each of the parties. The father seeks his "partial indemnity costs" of the motion of $27,794.71 while the mother seeks an order of no costs. While the father's figure is described as partial indemnity, it is based on 80% of full indemnity, which would make it far closer to substantial indemnity. He alleges bad faith and unreasonable behaviour. The mother says that no costs should be awarded because success was divided.

[3] At the time that I granted the October 24, 2017 order, I was a judge of this court. Since then I have been appointed to the Superior Court of Justice. I make this ruling in accord with s. 123(2) of the Courts of Justice Act.

[4] For the reasons that follow I find that success was divided and thus there will be no order of 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:

131. (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

24. (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.

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 the recent decision of Shute v. Shute, Justice Victoria Starr of the Ontario Court of Justice identifies a fourth purpose of costs in family law proceedings, ensuring that the primary objective of the FLR, dealing with cases justly, is met. Starr J. wrote:

29 Subrule 2(2) of the 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. Subrule 2(4) of the Rules states that parties have a positive obligation to help the court to promote the primary objective under the Rules. Clauses 2(3)(a) and (b) of the Rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. [See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711].

[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 the Ontario Court of Justice stated that "[c]onsideration of success is the starting point in determining costs."

[13] In Mantella v. Mantella, Justice Deena Baltman 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. It states:

Offer to be Signed by Party and Lawyer

(4) An offer shall be signed personally by the party making it and also by the party's 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:

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.

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 behoves 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., Sherr J. 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."

Scale of Costs

[19] 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:

44 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

De-Emphasis on Reliance on Time Spent to Determine Costs

[20] 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.

Party Status Does Not Grant a License to Litigate Oblivious to the Consequences

[21] The right to bring or respond to 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:

38 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 misbehaviour 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] This was a motion in a difficult and complicated case. The father had historically used unnecessary corporal punishment on Zoe, which had a powerful effect on the child. When things seemed to be getting back on track in February 2017, he made an inappropriate and unnecessary joke to the child about driving off a pier, which helped set back the process.

[26] The mother could have assisted the child to deal with this conduct. To be fair, she was willing to allow access to continue after the first instance of corporal punishment but not the second. She gave the child the message that she felt that the father was unsafe and did not take the necessary steps to assist the child to get back into her access relationship with the father. In my decision I apportion blame for the state of affairs that led to the motion somewhat evenly between the parties.

[27] I found that each of the parties engaged in behaviour that can be characterized as unreasonable in the period leading up to the motion. After the father's unnecessary joke upset Zoe, and then the mother did not allow access until Ms. Geraldo and the court intervened, the father chose on his own to withdraw from the therapeutic reunification process. As a result he exercised no access for a significant period of time. While this proceeding remained pending he chose to sue the mother in small claims court, knowing (or he should have known) that it would exacerbate tensions in this case.

[28] For her part, the mother did not allow access after the father's joke so upset Zoe that it ruined the access visit. Although the child was upset, the mother should have enlisted Ms. Geraldo to get things back on track. Once they got on track following the June 28, 2017 court attendance, the mother was inflexible with regard to summer access. She also unreasonably took umbrage with the father's sister, who played a helpful intermediary role. Of some concern, she may have exposed the children to the father's very negative court materials. If I had actually found that she had done so I would likely be making a different costs decision.

[29] I found that "… both parents are responsible for the children's present state of affairs. While I cannot say at a temporary motion stage the exact level of each parent's responsibility, I can say that each should bear equal financial responsibility for Ms. Geraldo's services to date."

[30] While the father claims bad faith on the part of the mother, her unreasonable behaviour does not rise to the "conscious wrongdoing" standard of bad faith. Further I have to consider the mother's unreasonable behaviour in the context of the father's own behaviour.

[31] While I granted the father increased access based on a plan recommended by Ms. Geraldo, the mother did not strongly object to the recommendations. Her position had evolved from one resisting most contact and placing all of the blame on the father to one in which she exhibited more flexibility. While this past summer she was unwilling to allow Mr. Barran to do access driving (requiring him to find third parties), she brought a motion whose relief included him doing the driving (something he wanted to do).

[32] The access order that I made was not as aggressive in restoring the status quo as the father had requested. It was a step in a process recommended by the therapist. Further, while I included some standard parenting terms in the order, I did not grant the parenting covenants that the father insisted upon. I did order the mother to equally pay the costs of Ms. Geraldo, something that she had resisted.

[33] The father wishes to rely on an offer to settle. But his offer did not meet the terms r. 18(14)(5): It is not "… as favourable as or more favourable than the offer." However he did make an offer and the mother did not, which as Sherr J. stated amounts to unreasonable behaviour. But rather than make an offer, she did offer concessions as the case progressed. She was ultimately willing to concede to much of the substantive relief being sought by the father as it was supported by Ms. Geraldo.

[34] At the end of the day, as the success and the responsibility for the events that bring the parties before the courts are somewhat evenly divided, I find that it is fair and reasonable in the circumstances to order no costs. Each must absorb their own costs and accept that if they had behaved otherwise, the result of this decision may have also been otherwise.

January 24, 2018

Justice Marvin Kurz