Court File and Parties
Date: 2018-06-14
Court File No.: Toronto D80619/15
Ontario Court of Justice
Between:
Patricia Ersilia Antonietta Bianchi Applicant (responding party)
— And —
Sebastian Riccardo Bianchi Respondent (moving party)
Before: Justice Curtis
Written submissions regarding Costs
Endorsement released on 14 June 2018
Counsel:
- Irina Nastase Davis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . for the Applicant
- The Respondent was unrepresented
Index
- Over-view
- The Parties' Positions re Costs
- Background
- Litigation History
- The Costs Analysis
- a. The Law of Costs
- i. Entitlement
- ii. The Evolution of Costs as an Instrument of Social Policy
- b. Success
- c. Behaviour of the Parties
- d. Offers to Settle
- e. Quantum of Costs
- a. The Law of Costs
- Future Motions
- Order
Over-view
- This is the decision about costs of the husband's motion to change spousal support. The wife also made claims regarding spousal support.
The Parties' Positions re Costs
The wife claimed costs on the motion and asked for full recovery costs of $16,649.83.
The husband filed no material in response to the wife's costs claims, although he was served with her submissions. The wife's costs claim is essentially unopposed.
Background
The moving party is the husband (the respondent), born 3 April 1964 (now 54 years old). The responding party is the wife (the applicant) born 4 February 1962 (now 56 years old). The parties were married on 11 June 1988 and separated on 24 July 2011. There were two children of the marriage, who are 27 and 25, and were not part of this court case.
The parties signed a separation agreement on 29 and 30 January 2015, which provided, among other things, for spousal support for the wife of $2,300 per month.
Litigation History
The litigation was a motion to change brought by the husband. Both parties were represented by lawyers throughout.
The wife registered the separation agreement with the court on 14 April 2015.
The husband brought a motion to change the separation agreement on 19 April 2017. He asked to reduce spousal support from $2,300 per month to $530 per month, starting 1 June 2016, and to reduce arrears in support owing to an unspecified amount, as of 1 June 2016.
The spousal support provisions in the separation agreement were detailed and specific. The separation agreement did not specify an income for the husband on which the spousal support was based, but the wife said the spousal support was based on an imputed income to the husband of $120,000, and income to the wife of $55,000. The agreement provided that the amount of spousal support would be reviewed five years from the date of the agreement (i.e., 29 or 30 January 2020), and the parties were to follow the Dispute Resolution provisions of the agreement to do so. The agreement set out examples of what events would and would not qualify as material changes in circumstances for the purposes of changing or terminating spousal support. There was a provision regarding interest owing on any arrears, and a provision regarding the tax treatment of any lump sum payments made towards arrears.
Arrears in spousal support were $31,105 as of 22 February 2017.
The wife's response to the motion to change (filed on 20 June 2017) asked (among other things) for an order:
a) dismissing the husband's motion to change in its entirety;
b) that the judgment be binding on the husband's estate;
c) that the husband obtain life insurance to secure the spousal support obligation;
d) imputing income to the husband of $120,000 per year for spousal support purposes; and,
e) full financial disclosure.
The motions, affidavits and financial statements were exchanged by 20 June 2017. On 9 August 2017 at the first case conference, the husband did not serve or file any materials, did not attend, and his lawyer served a Notice of Withdrawal on the wife and advised the court that he was withdrawing his motion to change, and the court made an endorsement on this. The endorsement also provided that the parties were negotiating several issues (i.e., life insurance regarding the support obligation, costs of the withdrawn motion, costs of that day (9 August 2017), a framework for any further motions to change).
The next case conference on 16 August 2017 was adjourned, on consent as "the parties are currently engaging in settlement discussions".
On 23 November 2017, the husband's lawyer filed a Notice of Withdrawal of the motion to change (a Notice of Withdrawal that had been signed on 9 August 2017), and a Notice of Change in Representation (that had been signed on 17 November 2017), and the husband was now unrepresented. The husband was paged at 11.03 a.m. and at 3.02 p.m. and was not present. The following orders were made:
a) the judgment shall be binding on the husband's estate, under the Family Law Act, s. 34(4);
b) the husband shall irrevocably designate the wife as the beneficiary on his life insurance under the F.L.A., s. 34(1)(i);
c) as long as the husband is obligated to pay spousal support he shall:
i. keep the policy in force;
ii. shall not borrow against it and shall ensure that the policy remains unencumbered; and,
iii. shall irrevocably designate and maintain the wife as the beneficiary of the proceeds of the policy as security for his spousal support obligations outstanding as of the date of his death;
d) the husband shall provide the wife with a copy of the policy and the irrevocable beneficiary designation; and,
e) within 14 days of the anniversary date of the policy, the husband shall give the wife proof that he has paid the premium.
- The court also set a schedule for written submissions regarding costs.
The Costs Analysis
The Law of Costs
Entitlement
- The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, s. 131(1), which sets out three specific principles:
a) the costs of a case are in the discretion of the court;
b) the court may determine by whom costs shall be paid; and,
c) the court may determine to what extent the costs shall be paid.
- Modern costs rules are designed to foster three fundamental purposes:
(a) to indemnify successful litigants for the cost of litigation;
(b) to encourage settlement; and
(c) to discourage and sanction inappropriate behaviour by litigants.
Rule 2(2) of 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 of the rules.
In addressing the issue of costs, the court must ultimately be guided by the primary objective of the Family Law Rules as set out in Rule 2(2), which is to enable to the court to deal with cases justly.
The exercise of discretion in a costs issue is subject to the overriding principles of fairness and "reasonableness." The important inquiry is to ascertain the reasonable expectations of the parties as to costs.
The Evolution of Costs as an Instrument of Social Policy
The traditional purpose of an award of costs was to indemnify the successful party in respect of the expenses sustained. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called "outdated" since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps. This change in the common law was an incremental one when viewed in the larger context of the trend towards awarding costs to encourage or deter certain types of conduct, and not merely to indemnify the successful litigant.
The traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser, rather than leaving each party's expenses where they fall, they act as a disincentive to those who might be tempted to harass others with meritless claims. In addition, because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs.
Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also 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.
Success
The starting point in any costs analysis is the presumption that a successful party is entitled to costs. Rule 24(1).
Success must be measured not only against the parties' offers to settle, but also against the claims made by each.
An award of costs, however, is subject to the factors listed in rule 24(11), the directions set out under rule 24(4) (unreasonable conduct), rule 24(8) (bad faith) and rule 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party.
The husband withdrew his motion to change after the wife responded to it. The wife was successful regarding her claims, which dealt with obtaining security for spousal support through life insurance, an obligation contained in the separation agreement which the husband had not complied with. The wife is entitled to costs.
Behaviour of the Parties
One of the purposes of costs is to change behaviour.
The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2.
Family law litigants are responsible for and accountable for the positions they take in the litigation.
The decision respecting liability is ultimately a discretionary one that must be informed by the overall conduct of the parties and all of the circumstances and dynamics of the case. One of the most important functions of costs is to ensure that litigants conduct themselves in a manner that upholds the integrity of our justice system as a whole. A careful consideration of the conduct of the parties is therefore a key component to the costs analysis. The court has an obligation to ensure that litigation is not utilized as a tool to harass parties, and that the resources of the justice system are not unduly drained by unmeritorious claims.
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.
Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.
Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in Rule 24(11)(b)). It reads as follows:
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.
A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules. The court need not find that bad faith or other special circumstances exist to make a costs award approaching substantial or full recovery.
When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation.
The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.
The dynamics on this case are all too common, and cry out for judicial response. In a troubled economy there are more unrepresented parties in family court, and certainly more people with limited finances. Inevitably, these ingredients create greater strains on the administration of justice. Combined with limited judicial resources, the need to encourage settlement and discourage inappropriate behaviour by litigants has never been more pressing.
It must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered with the requirement that the parties take a clear-headed look at their case before insisting on their day in court. The court must sanction this behaviour clearly, or it will invite more of this behaviour.
The husband's "behaviour in relation to the issues from the time they arose" was unreasonable. Here are some examples:
a) the husband started the motion to change about two years after the parties signed the separation agreement, despite a clause providing for a review of the amount of spousal support after five years;
b) the husband withdrew his motion to change four months after starting it, and after the wife had responded to it;
c) the husband did not attend any of the three court dates (30 June, 9 August and 23 November 2017). There were two case conferences after all the materials were served and filed by the parties (on 9 August 2017 and 23 November 2017). The husband did not attend either conference court date, and filed no materials for these court dates;
d) the husband was aware that there was a costs claim by the wife, as the issue was addressed at the case conference on 9 August 2017, and was specifically mentioned in the endorsement that day. As well, costs was referred to in the endorsement of 23 November 2017; and,
e) the husband was served with the wife's costs submissions and did not respond.
- The conduct of the husband directly contributed to the time, effort required and the length of the case. The husband's behaviour was unreasonable. The wife is entitled to costs.
Offers to Settle
Offers to settle are a significant part of the landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.
Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (Rule 2(2)). This includes taking appropriate steps to save time and expense (Rule 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.
Neither party made an offer to settle this motion. The wife should not be deprived of her costs, as her position on the motion was clear, and she qualifies for costs as the successful party and the party who was reasonable.
Quantum of Costs
- Once liability for costs has been established, the court must determine the appropriate quantum of costs. These are general principles relating to the quantum issue:
a) ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay;
b) costs need to be proportional to the issues and amounts in question and the outcome of the case;
c) amounts actually incurred by the successful litigant are not determinative; and,
d) in assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.
The court's decision on the appropriate quantum of costs must also be informed by the principle of proportionality. Timeliness, affordability and proportionality are essential components of a legal system that ensures true access to justice. In the context of the costs analysis, these factors require the court to ensure that expenses claimed make sense having regard for the importance and complexity of the issues that were litigated.
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 result.
The over-riding principle is reasonableness. 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.
In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery.
In considering the quantum of costs, the court should also consider Rule 1(8), which provides that the court may respond to a failure to follow the Rules or abide by an order by making an order for costs, and Rule 2(2), which provides that one of the primary objectives of the Rules is to ensure that cases are dealt with justly.
Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome.
Costs awards should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties, rather than any exact measure of the actual costs to the successful litigant. It is not appropriate to simply take the number of hours spent by counsel on a particular matter and multiply those hours by a determined hourly or per diem rate.
The factors to consider in determining the amount of costs in family law matters are (Rule 24(11)):
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.
- In determining the amount of costs in this matter, the court took into account these factors set out in R. 24(11), as follows:
a) The importance, complexity or difficulty of the issues: The case was important to the husband and the wife. However, it was neither legally complex nor difficult;
b) The reasonableness or unreasonableness of each party's behaviour in the case: A finding of unreasonableness is not necessary to the making of a costs order. The wife's behaviour on the motion was reasonable. The husband's behaviour was not reasonable (details are provided above);
c) The lawyer's rates: The rates claimed by the wife's lawyer (for her work, and for the work of law clerks) were reasonable;
d) The time properly spent on the case: The time spent by the wife's lawyer was reasonable, under these circumstances, given the issues at stake, the claims made by the husband, and the material filed; and,
e) Expenses properly paid or payable: The disbursements claimed by the wife (total $1,197.42) were appropriate, under these circumstances.
The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of this case.
In determining the amount of costs, the court must also take into account the fact that the husband was on notice about this claim and chose not to respond. The wife's claim for costs is unopposed.
Future Motions
- The husband brought a motion to change the separation agreement about two years after it was signed, and well before the five year period agreed to for a review of the amount of spousal support. As well, he did not comply with the requirement in the separation agreement to follow the dispute resolution method agreed to (essentially, mandatory negotiations before a court case is started, using a mediator). He abandoned the motion to change entirely, after the wife had hired a lawyer and prepared her responding materials. He did not come to any of the court dates. He withdrew his motion to change and then simply walked away from the court case, even though the wife had made claims. The issue of restrictions on the husband's right to bring future motions to change was raised at the case conference on 9 August 2017 and was part of the endorsement. The wife's request that his right to bring future motions to change be limited is a reasonable one.
Order
- The court makes the following findings regarding the motion:
a) The conduct of the husband was unreasonable;
b) The wife was successful on the motion; and,
c) The husband shall pay the wife's costs of the motion.
A fair and reasonable costs order, and one that is proportionate to the issues involved, in all of these circumstances, is an order for costs based on substantial recovery. The husband shall pay the wife her costs of $16,000, all included (fees + HST, disbursements + HST).
The costs order is a support order under s. 1(1) of the Family Responsibility and Support Arrears Enforcement Act, and shall be enforced by the Family Responsibility Office.
The husband shall not bring any further motions to change without leave obtained in advance, requested on a Form 14B motion, not to exceed two pages, and not to be served on the other side unless the court orders.
The order of 23 November 2017 has not been issued and entered, despite an endorsement on that date that the wife shall prepare the formal order for issue and entry promptly. The wife shall prepare this order and have it issued and entered by 13 July 2018.
Released: 14 June 2018
Justice Carole Curtis