Ontario Court of Justice

Date: 2018-11-29

Court File No.: Kitchener 419/17

Between:

Tobias Baezner Applicant

— AND —

Carina Brunnenmeir Respondent

Before: Justice B. C. Oldham

Reasons for Judgment on Costs Submissions released on November 29, 2018

Counsel:

• Ms. H. Caron, counsel for the applicant (Tobias Baezner)
• Mr. C. Morrison, counsel for the respondent (Carina Brunnenmeir)

OLDHAM J.:

Background

[1] On January 25, 2018, I heard submissions by both parties in respect of three separate motions. My reasons for decision in respect of the motions was released on March 15, 2018 (the "Decision"). The parties were unable to resolve the issue of cost and both filed costs submissions. Specifically, the Respondent (the "Mother") filed Cost Submissions dated June 18, 2018; the Applicant (the "Father") responded with his Cost Submissions dated July 6, 2018; the Mother filed a Reply dated July 10, 2018; and the Father filed a final Reply dated July 17, 2018.

Position of the Parties

[2] Both parties acknowledged that there were multiple motions, divided success and each claims costs against the other.

[3] The Mother's counsel includes a Bill of Costs totalling $50,076.47 on a full indemnity basis and $35,195.26 on a partial indemnity basis. The supporting dockets appear to include all work on the file from July 7, 2017 to June 15, 2018 (five months after the hearing of the motion on January 25, 2018). Costs incurred between July 7, 2017 and September 27, 2017 are discounted by 50% on the basis that the Father brought a cross motion returnable on September 27, 2017 which was disposed of on that date. Specifically, an order was made for access to the Father including details of exchanges, contact information and location of access. Costs in favour of the Father were fixed at $500.

[4] The Mother's Bill of costs includes $2,835 for the preparation of the cost submissions and $500 for the preparation of the Bill of Costs. Counsel for the Mother reminds the court of the need to consider proportionality in any cost award.

[5] The Father's response to the Mother's Cost submissions notes that counsel does not agree with the approach of providing detailed costs from the date the motion was filed, but includes her entire invoice for comparative consideration. The Father's Bill of Costs is also separated into four periods which include the time to the first motion (September 27, 2017); the second motion (Dec 14, 2017); the third motion (January 25, 2018); and billings thereafter. The Bill of Costs includes $1,365 for the preparation of cost submissions. The full indemnity costs invoiced total $45,919.96

[6] Both parties have filed Offers to Settle which are dated January 15, 2018 (the Mother's) and January 24, 2018 (the Father's).

[7] Both allege that the other acted unreasonably in the positions taken.

The Legal Framework

[8] Cost awards are exercises of judicial discretion found under section 131 of the Courts of Justice Act. That discretion must be exercised within the framework established by Rule 24 of the Family Law Rules ("FLR").

[9] Rule 24(1) is the presumptive rule – the presumption is that the successful party will be entitled to their costs.

[10] Rule 24(4) deals with successful parties who have acted unreasonably and provides that:

"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.

Rule 24(5) Decisions on Reasonableness - In deciding whether a party has behaved reasonably or unreasonably the court shall examine,

• the party's behaviour in relation to the issues from the time they arose including whether the party made an offer to settle;
• the reasonableness of any offer the party made; and
• any offer the other party withdrew or failed to accept."

[11] Rule 24(6) addresses cases where success is divided.

"Rule 24(6) Divided Success - If success in a step in a case is divided, the court may apportion costs as appropriate."

[12] Rule 24(8) deals with cases where a party has acted in bad faith and provides as follows:

"Bad Faith – 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."

[13] Rules 24(10), (11) and (12) and (12.1) address the orders, timing and factors to be considered by the court in making a decision in respect of costs. Specifically, the Rules state:

"(10) Deciding Costs – Promptly after dealing with a step in the case, the court shall, in a summary manner,

(a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or

(b) expressly reserve the decision on costs for determination at a later stage in the case.

(11) Same - The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case."

[14] Rule 24(12), states:

"(12) Factors in Costs – 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

(vii) any other relevant matter.

(12.1) Supporting Materials - Any claim for costs respecting fees or expenses shall be supported by documentation satisfactory to the court."

[15] Rule 18(14) of the FLRA addresses the issues of cost consequences for the failure to access offers to settle. Specifically it provides as follows:

"(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."

[16] The Court of Appeal in Serra v. Serra, 2009 ONCA 395, confirmed that family law cost rules are designed to foster three important principles:

1. to partially indemnify successful litigants;
2. to encourage settlement; and
3. to discourage and sanction inappropriate behavior by litigants.

[17] The Court of Appeal in Boucher v. Public Accountants, confirmed that "while it is appropriate to do the costs grid calculation, it is also necessary to step back and consider the result produced and question whether, in all of the circumstances, the result is fair and reasonable."

Issue and Analysis

[18] This matter is unique in that there were a number of motions, with a number of concessions being made both prior to and during submissions and with mixed results. Accordingly, in considering any cost order, the court must consider:

1. Where there is divided success, is a cost order appropriate?
2. Are costs appropriate where the parties have come to a consent resolution?
3. Are there any relevant Offers to Settle?
4. Did either party act unreasonably or in bad faith?
5. Do the amendments to the Rules which came into effect as of July 1, 2018 have any impact on the costs which can be awarded?
6. What is the appropriate cost order taking into consideration the Bill of Costs filed?

Where there is divided success, is a cost order appropriate?

[19] Justice Pazaratz in Scipione v. Scipione, 2015 ONSC 5989, at paragraph 68 made the following comments about divided success:

[68] "'Divided success' does not necessarily mean 'equal success'. And 'some success' may not be enough to impact on costs.

a. Rule 24(6) requires a contextual analysis.

b. Most family court cases involve multiple issues.

c. Not all issues are equally important, equally time-consuming or equally expensive to determine.

d. Comparative success can be assessed in relation to specific issues:

i. Did a mid-point number prevail on a financial issue? ii. Did a compromise result on a parenting issue?

e. Comparative success can also be assessed globally in relation to the whole of the case:

i. How many issues were there? ii. How did the issues compare in terms of importance, complexity and time expended? iii. Was either party predominantly successful on more of the issues? iv. Was either party more responsible for unnecessary legal costs being incurred?"

[20] Both counsel have made submissions in respect of which party was successful on the issues addressed in the Decision. The following is a summary of the issues and the results:

1. Interim Custody – At the motion, the parties focused their submissions on an extension of the December 14, 2017 Order in which they consented to a term granting the Mother with primary residence and the Father with secondary residence of the child while in Canada. I declined to make an order for a secondary residence with the Father, but confirmed that the real issue, being custody, was a live issue for trial where a determination could be made based on a full hearing of the evidence. I do not agree with the submission by the Mother that the resolution on the issue of primary residency is akin to success on this issue. Neither party was successful in their position in respect of custody.

2. Section 7 Expenses – This issue was withdrawn by the Mother for the purposes of the motion. The Mother had taken a leave of absence and was not incurring day care costs. It was agreed that this issue could be dealt with at trial, if necessary.

3. Request for the Appointment of the OCL – This request was declined. While the Father did not want to oppose the request, he was concerned about the delays that an appointment may cause in terms of access. I do not agree with the Mother's submission that the agreement to attend mediation was akin to success on this issue. I deemed the appointment of an OCL for a two year old child to be inappropriate in these circumstances and the Father was successful on this issue.

4. Disclosure of the Mother's Work Hours – The Father acknowledged receipt of some disclosure and conceded that clarification would be more appropriately dealt with through questioning rather than a further disclosure order. No order was sought on this issue.

5. Leave for Questioning – Leave was granted. Although it was granted on a mutual basis, the Mother opposed this request and the Father was successful on this issue.

6. Leave to Amend the Father's Application – The Father's request for leave was granted. This relief was opposed by the Mother and a significant amount of time was spent in argument reviewing case law on this point.

7. Production of the Returns of the Mother's Common-Law Spouse, Trevor Eaton – This request was granted. Counsel criticized the Decision on this issue on the basis that Mr. Eaton was not served with the motion and did not have an opportunity to respond. It is noteworthy that Mr. Eaton has filed affidavits and has attended, and did attend for the hearing of this motion.

8. Consent for the Removal of the Child From Canada by the Mother – The Mother did not offer to provide an itinerary of her travel plans as suggested in her cost submissions. She opposed any obligation on her ability to travel with the child internationally. The Father was successful on this issue.

9. The Request for Unsupervised Access by the Father in Germany – The Father was granted unsupervised and overnight access in Germany, both of which were opposed by the Mother. The Father was successful on this issue.

[21] With the exception of the issues which were withdrawn at the motion and the issue of custody, the Father was the successful party. Accordingly, there is a presumption of a cost order in favor of the Father.

Are costs appropriate where the parties have come to a consent resolution?

[22] The court does have jurisdiction to award costs where a claim is withdrawn or resolved. The comments by Justice O'Connell in Davis v. Fell, [2016] ONCJ 84, at para 74 are instructive:

"[74] Consideration of success is the starting point in determining costs. However, any attempt to determine a "winner" or "loser" in a settlement is, in most cases, complex if not impossible. Cases are resolved in whole or in part for many reasons. See Sims-Howarth v. Bilcliffe, 2000 CarswellOnt 299 (S.C.J.), para. 1. Thus, for good reason, judges are reluctant to make an order as to costs when the parties settle the merits to their dispute. Where parties make a settlement as between themselves, the court should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. See: Page v. Desabrais, supra, para. 28; Blank v. Micallef, 2009 CarswellOnt 6790, para. 11; Gurzi v. Elliot, 2011 CarswellOnt 2169 (O.C.J.) para. 16."

[23] The significant issue that was resolved prior to the hearing on January 25, 2018 is the issue of access during the period of January 2018 and March 2018. In this respect, I agree with the submissions by the Father that but for the motion, he could not confidently know that he would obtain reasonable access while in Canada. The Mother claims that she acted reasonably and was prepared to accommodate access throughout. Her actions, however, did not support that claim. The Father was forced to push for access at each stage.

[24] The Mother claims that her resistance was justified by the fact that the Father was a 'complete stranger' to the child and the unique circumstances required a cautious approach. The difficulty is that the Mother is at least in part responsible for the lack of contact between the Father and the child. The Father took a six month leave from work around the birth of his daughter in March 2016. The Mother opposed any unsupervised access and it is clear that his access was limited.

[25] In 2017, he tried to secure a commitment to access prior to travelling to Canada. He was unsuccessful and decided to attend in hopes of seeing his daughter. Notwithstanding the fact that he had incurred significant costs to travel to Canada; was in the country for 10 days; and it was his daughter's first birthday, he was denied any access. He had to bring the issue of access before the courts to secure a schedule.

[26] Similarly, when the Mother traveled to Germany, notwithstanding the fact that she was there for 11 days; and notwithstanding the fact that the Father had reconnected with his daughter, he was only granted 2 hours of access. Consequently, this issue of access while in Germany had to be addressed by court order.

[27] In these circumstances, notwithstanding the consent order, it is appropriate that the costs of the motion for access be considered in the ultimate cost award.

[28] The other issue that was addressed on consent at the motion is child support. The Father had agreed to pay $452 per month as of the September 27, 2017 court attendance. The parties ultimately agreed upon $611 per month after additional financial disclosure. The Mother's costs on this issue should also be taken into consideration.

Are there any relevant Offers to Settle?

[29] The Mother's Offer to Settle dated January 15, 2018, was not better than the results of the motion, with the exception of child support. The Mother's offer included a monthly amount of $556 based on an annual income of $60,000. However, the offer also included a monthly contribution towards day care costs which was ultimately withdrawn at the motion. The access provisions were vague and did not address the Father's need for a confirmed schedule.

[30] The Father attached a copy of his Offer to Settle dated January 24, 2018. Counsel for the Mother submits that the Offer to Settle is not in compliance with the rules as it was served on January 24, 2018. Counsel for the Father claims that it was served one day prior to the motion. The affidavit of service was not attached. Rule 3(1) provides that "… the number of days between two events is counted as follows:

1. The first day is the day after the first event.
2. The last day is the day of the second event."

[31] In order to be served "at least one day before the motion", the Offer to Settle must be served on January 23, 2018. Service on January 24, 2018 means that the first event and the second event occur on the same day.

[32] That said, the Offer to Settle while better than the order in some respects, was not as good on others (for example, the monthly child support offered was $600 per month and the amount agreed to was $611 per month). In total, the Offer to Settle is not sufficient to attract full recovery costs, but does not detract from the Father's entitlement to costs. In fact, Rule 24(12)(a)(iii) supports a positive consideration of the efforts to resolve the matter as reflected in the Offer to Settle.

[33] The Offers to settle post-dating the hearing of the motion are irrelevant for the purposes of this cost order.

Did either party act unreasonably or in bad faith?

[34] Given the presumption that the successful party is entitled to costs, the question of whether there was bad faith by either party is relevant for the determination of the scale of costs to be awarded. Rule 24(5) deals with considerations as to whether a party has acted reasonably or unreasonably. Rule 24(8) obliges the court to award costs on a full recovery basis where a party has acted in bad faith.

[35] Counsel for the Father invited the court to find that the Mother acted in bad faith in her proceedings in this case, because she was disingenuous in terms of her position on access. I do not agree that her conduct rises to the level of bad faith.

[36] As noted, the circumstances of this case are difficult at best. The parties reside in different countries and the Father had not had access to the child for a year prior to the commencement of these proceedings. As a result, a cautious and progressive approach was necessary. That being said, the Father recognized that necessity, and put forward reasonable proposals with respect to access from the commencement of these proceedings. There is no question that he faced resistance by the Mother at every stage and that he would not have been able to achieve the access ordered had he not proceeded with his motions. Accordingly, while the Mother's actions did not constitute bad faith, they certainly resulted in the significantly increased costs of these proceedings and that is a factor to be considered in the determination of the amount of a cost order.

Do the amendments to the Rules which came into effect as of July 1, 2018 have any impact on the costs which can be awarded?

[37] On July 1, 2018, Rule 24(10.1) which provides as follows:

"(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."

was revoked and Rule 24(11) which provides as follows was added:

"(11) Same - The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case."

[38] Justice Bloom in Tsinokas v. Kucerak, 2018 ONSC 4154, addressed the issue of retrospective application of the amendments to the rules. At paragraph 28 Justice Bloom refers to a Court of Appeal decision, Trustee of C.B.C. Pension Plan v. BF Reality Holdings Ltd., [2002] O.J. 4313, and cites paragraphs 13 and 14 as follows:

"13 The consequences of a retrospective application of the new costs grid can be serious and, in some cases, highly prejudicial to the affected parties. In those circumstances, justice between the parties may require a court, in the exercise of its discretion concerning costs, to deviate from the strict requirements of the costs regime envisaged by O. Reg. 284/01. In our view, however, those cases will be rare and will normally depend on evidence of actual prejudice beyond the fact that the legal services at issue were rendered prior to January 1, 2002.

14 In this case, no demonstration of such prejudice has been advanced or established. There is no basis, therefore, to depart from the traditional approach of retrospective application of enactments in the nature of O. Reg. 284/01. This court's award of costs was made after O. Reg. 284/01 came into force. Accordingly, the scale of costs applicable to the costs award made in favour of the respondents is governed by O. Reg. 284/01. Thus, costs are to be calculated on a partial indemnity, rather than a party and party, basis."

[39] Justice Bloom, declined to apply the retrospective application in the case before him on the basis that all of the issues and submissions pre-dated the change. The only application was that the reasons for decision on the costs were not made until after the provisions had come into force. In those circumstances it was noted that "the application would be manifestly unfair to the Respondent. It would expose him to costs consequences not based on policy or logic, but on happenstance."

[40] The situation before me is similar in that respect, except that cost submissions were made following the change in the legislation. Neither party specifically addressed this issue although both included their full invoices. In my view, given that I am only considering expenses incurred to the date of the motion, it is not appropriate to make cost orders for discrete steps in the case outside of the motion (such as a case conference, for example) unless there was a specific order indicating that the cost issue was to be dealt with at a later stage.

[41] Upon review of the Bill of Cost submitted, it does not appear that there would be any costs that would be relevant for the purposes of Rule 23(11) in any event.

What is the appropriate cost order taking into consideration the Bill of Costs filed?

[42] The Bill of Costs submitted by counsel for the Father separates the fees by time period between each motion. I ordered $500 in costs following the motion on September 24, 2017. This order set out an access schedule for the Father's first visit. While materials were prepared and filed in respect of the Mother's motion for custody and the appointment of the OCL, neither of these issues were addressed in any substantive manner on September 24, 2017. In fact, the materials that were prepared following September 24, 2017 dealt with both of these issues in a more comprehensive manner. Accordingly, the relevant time frame for the purposes of costs of this motion commences on September 25, 2017 and continues to the hearing of the motion on January 25, 2018.

[43] The total costs incurred by the Father, inclusive of fees, disbursements, and HST is $22,551.10. After adjustments for fees associated with mediation, review of day care records (an issue which was withdrawn), paystub calculations (in support of the resolved child support issue) and the motion on December 14, 2017 (which resulted in a consent order), the outstanding fees are approximately $14,000. It is difficult to isolate the work specifically associated with the issues that proceeded to hearing and, accordingly, I am satisfied that a further adjustment is reasonable to account for these adjustments and to factor in considerations of proportionality.

[44] As noted, a significant amount of time was spent addressing the issue of access. The cost award of September 24, 2017 was nominal with the hope that further motions on this issue would not be required. That was not to be the case. That said, for the reasons set out above, a full recovery award is not justified. The final costs order should reflect a partial indemnity scale.

[45] In all of the circumstances, it is my view that a cost order in the amount of $7,500 plus HST is appropriate. The Respondent will have 90 days to pay.

Order

1. The Mother shall pay the Father costs in the amount of $7,500 plus HST within 90 days of this Order.

Released: November 29, 2018

Justice B. C. Oldham