Court File and Parties

Date: August 27, 2018

Court File No.: D48590/09

Ontario Court of Justice

Between:

E.H.

ANNETTE DI NARDO, for the APPLICANT

APPLICANT

- and -

O.K.

LISA A. JOHNSON, for the RESPONDENT

RESPONDENT

MARY KODRIC, on behalf of the OFFICE OF THE CHILDREN'S LAWYER, for the child.

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Background

[1] On June 18, 2018, the court released its reasons for decision arising out of the hearing of motions to change the parenting terms for the parties' 12-year-old child (the child), that were contained in the court's order dated June 30, 2010 (the existing order). See: E.H. v. O.K., 2018 ONCJ 412.

[2] The motions to change were heard over four half-days – April 12, May 14, May 17 and June 11, 2018.

[3] The court changed the existing order by granting the respondent (the mother) sole custody of the child and permitting her to obtain government documentation for the child and travel with her outside of Canada without the applicant's (the father's) consent. It ordered that the father have no access to the child and set out terms that would provide him with some information about her.

[4] The court also ordered, pursuant to section 28 of the Children's Law Reform Act, that the father was to not denigrate the mother, make any commentary or post any video about this case, the mother or the child, or post a picture of the child on any public forum, including on any social media forum that the child could possibly have access to. He was also required to remove any such commentary, videos or pictures of the child immediately, to the extent that it was within his control to do so.

[5] The mother and the Office of the Children's Lawyer, on behalf of the child (the OCL), were given the right to make costs submissions. The mother did not serve her costs submissions within the ordered timeline. She brought a motion to extend the timeline, which the father opposed. The court granted the extension order. See: E.H. v. O.K., 2018 ONCJ 531. The father was given the opportunity to file costs submissions in addition to those that he had already filed, but did not do so.

[6] The mother seeks her costs of $33,948.47. The OCL did not seek costs. The father submits that costs, if ordered, should not exceed $18,672 – being 55% of the amount requested by the mother.

Legal Framework for Costs

Fundamental Purposes of Costs

[7] 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.

[8] 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.

[9] 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, 2003 SCC 71, paragraph 25.

Presumption of Costs and Success

[10] 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

Subrule 18(14) – Costs Consequences of Failure to Accept Offer

[11] 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.

[12] 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)).

Burden of Proof and Requirements

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

[14] 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 motion result. See: Gurley v. Gurley, 2013 ONCJ 482.

[15] The technical requirements of subrule 18(14) must be met to attract its costs consequences. See: T.M.B.-P. v. B.P.G., 2018 ONCJ 517; Reid v. Thomas, 2017 ONCJ 122.

Analysis of the Parties' Offers

[16] The mother and the father both made offers to settle.

[17] The father's offer to settle is dated April 11, 2018 – one day before the first day of the hearing of the motions to change. It was open for acceptance until one minute after the commencement of the hearing on April 12, 2018. The offer only dealt with the issue of access. The father proposed that he have supervised access with the child.

[18] The mother's offer to settle is dated April 10, 2018, but was not served until 6:15 p.m. that day, meaning that service was effective on April 11, 2018 – one day before the first day of the hearing of the motions to change. This offer also remained open until one minute after the commencement of the hearing on April 12, 2018.

[19] The mother's offer to settle was more comprehensive than the father's and was severable. Many elements of the offer to settle were contained in the final order including orders for: custody of the child to the mother, no access for the father, the mother being able to obtain government documentation for the child and to travel with her outside of Canada without the father's consent and restricting the father from making social media postings about the case.

[20] The access portion of the mother's offer to settle contained requirements for her to obtain counseling for the child (to be paid for by the father) and for the father to engage in individual counseling. These terms weren't part of the final order.

[21] The court also added a term in its final order that the father was to use his best efforts to remove the offensive social media postings, but only to the extent that it was within his control to do so.

[22] Accordingly, some parts of the mother's severable offer to settle met the requirements to trigger the costs consequences set out in subrule 18(14), and others – particularly the access part, did not.

Timing Concerns with Settlement Offers

[23] Subrule 18(14) sets out that the costs consequences apply unless (my emphasis) the court orders otherwise.

[24] This leads to a significant concern – the timing of the mother's offer to settle.

[25] While the technical requirement of subrule 18(14) regarding service of the offer to settle was met (the offer was served at least one day prior to the hearing of the motions), it was barely met.

[26] Parties require a reasonable period of time to process and make an informed decision about whether to accept an offer. See: Oduwole v. Moses, 2016 ONCJ 653. What constitutes a reasonable period of time will depend on the complexity of the case.

[27] These were complex motions. The mother's offer to settle should have been served much earlier (closer to the 7 day time requirement for a trial) – particularly since the hearing of the motions had been scheduled in January, 2018.

[28] Rule 2 (dealing with cases justly) applies when a court is determining whether to "order otherwise" with respect to a subrule 18(14) offer. Making an offer to settle that is only open for one day before a complex motion is to be heard may have some value for parties as a litigation tactic, but will have little probative value for this court when determining whether to apply subrule 18(14). The court finds that it would not be just for it to fully apply the costs consequences of subrule 18(14) in these circumstances.

[29] This criticism extends to the father's offer to settle which was also made one day before the first hearing date of the motions. However, he is not the party asking the court to apply subrule 18(14).

[30] The offers were also given consideration under subrule 18(16).

[31] The positions taken by the parties at the hearing mirrored their offers to settle. In addition, the father opposed the mother's requests concerning custody, incidents of custody and the social media postings.

Success and Presumption of Costs

[32] The mother was the successful party on the motions. The presumption that she is entitled to costs was not rebutted.

Applicability of Civil Procedure Costs Standards

[33] The father submits that the court should limit the mother to "partial indemnity" costs of 55%. He submits that the Ontario Court of Appeal has set this as the standard in Bain v. UBS Securities Canada Inc., 2018 ONCA 190, and in Inter-Leasing Inc. v. Ontario (Minister of Revenue), 2014 ONCA 683, where the court writes at paragraph 5:

I agree with the appellant that the costs rate set out in the Information for the Profession set out in the preamble to Rule 57 of the Rules of Civil Procedure are now out of date, and that amounts calculated at 55-60% of a reasonable actual rate might more appropriately reflect partial indemnity, particularly in the context of two sophisticated well aware of the stakes.

[34] This jurisprudence is distinguishable from this case. Costs decisions in family law cases are governed by the Family Law Rules and the jurisprudence interpreting them, not the Rules of Civil Procedure and the jurisprudence interpreting them. In Frick v. Frick, 2016 ONCA 5, at paragraph 11, the court sets out the distinction between family law and civil cases as follows:

The Family Law Rules were enacted to reflect the fact that litigation in family law matters is different from civil litigation. The family rules provide for active judicial case management, early, complete and ongoing financial disclosure, and an emphasis on resolution, mediation and ways to save time and expense in proportion to the complexity of the issues. They embody a philosophy peculiar to a lawsuit that involves a family.

[35] The court in Frick went on to say in paragraph 12 that only in the rare instance when a matter is not adequately covered by the Family Law Rules should a court decide the issue with respect to the civil rules. This approach was followed by the Court of Appeal in Gray v. Gray, 2017 ONCA 100.

[36] The Family Law Rules do not contain civil rules costs concepts such as "substantial indemnity", "partial indemnity" and "partial recovery". There are only references to "full recovery costs" in subrules 18(14), 24(8) (bad faith provision) and 15(13) (where an assignee is not properly served with a motion to change and changes an order as a result).

[37] Rule 24 provides the court with a comprehensive model to determine costs in family law cases and the court will determine costs in accordance with this rule and the jurisprudence interpreting it.

Factors in Determining Costs

[38] In making this decision, the court considered the factors set out in subrule 24(12), which reads as follows:

24(12) In setting the amount of costs, the court shall consider,

a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

(i) each party's behaviour,

(ii) the time spent by each party,

(iii) any written offers to settle including offers that do not meet the requirements of rule 18,

(iv) any legal fees, including the number of lawyers and their rates,

(v) any expert witness fees, including the number of experts and their rates,

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter.

Importance and Complexity

[39] This case was very important to the parties. It was complex as evidenced by the length of the submissions at the hearing. It involved a full day of out-of-court questioning of the mother and a clinical investigator from the OCL.

Behaviour of the Parties

[40] The mother should have made an offer to settle earlier. She should have also served her costs submissions on time. Otherwise, she acted reasonably.

[41] The court does not fault the father for trying to maintain his relationship with the child. However, his positions at the hearing to maintain a joint custody order and to oppose the removal of the offensive social media content were unreasonable.

[42] The hearing was extended and became more costly because the father did not provide accurate information about his criminal conviction. The court required production of the father's sentencing transcript. This transcript revealed that the facts concerning the father's criminal conviction were much different than those described by him.

[43] The father also inappropriately made allegations about the mother and posted pictures of the child on social media as described in the reasons for decision.

Bad Faith Analysis

[44] The mother asked for full recovery costs on the basis that the father acted in bad faith. Subrule 24(8) states that 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.

[45] 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.).

[46] The court finds that the father came very close to the "bad faith line", due to his inaccurate depiction of the criminal court findings, but did not cross it. This behaviour however, is found to be very unreasonable and will have an adverse costs impact on him.

Legal Fees and Expenses

[47] The mother provided a bill of costs, but it provided little detail – just summaries of time spent. This made it much more difficult to determine if the time she claimed on the case was reasonable. There also appear to be mathematical errors in the bill of costs. Under the section titled "Court" the mother claims 30.1 hours, but to arrive at that number she lists preparation time of 12.4 hours and attendance at court at 11.7 hours for a total of 24.1 hours. In the section "Questioning", she lists time of 5.5 hours, although she lists 2 hours of preparation and 4 hours of attendance for a total of 6 hours.

[48] The legal fees of counsel ($450 per hour) are reasonable for a lawyer of her experience in family law.

[49] The expenses claimed by the mother are also reasonable.

Proportionality and Fairness

[50] 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

[51] The father did not raise inability to pay costs in his costs submissions but the court still took into consideration that the father will have difficulty paying the costs sought by the mother. See: MacDonald v. Magel. However, 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 act unreasonably. See: Snih v. Snih.

[52] 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."

Costs Order

[53] 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 $25,000, inclusive of fees, disbursements and HST.

Released: August 27, 2018

Justice S.B. Sherr