ONTARIO COURT OF JUSTICE
CITATION: Lowry v. Steinforth, 2019 ONCJ 160
DATE: 2019 03 18
COURT FILE No.: Toronto DFO-18-15652-03
BETWEEN:
Alison Kathleen Lowry
Applicant
— AND —
Thomas Heiner Steinforth
Respondent
Before Justice Sheilagh O’Connell
(In Chambers)
Ruling on Costs
Julia Tremaine................................................................................ counsel for the applicant
Steven Bookman/Maia Rabinovitch..................................... counsel for the respondent
O’CONNELL J.:
Introduction:
[1] On October 24, 2018, following the hearing of an urgent motion brought by the respondent father (“the father”) and a responding motion brought by the applicant mother (“the mother”), I released my decision and made the following orders:
The Ontario court has jurisdiction to address the matters of custody, access and child support in this matter.
The Order of Justice Schmidt of the 4th Senate for Family Matters of the Frankfurt Higher Regional Court in Germany dated September 22, 2017 is recognized by the Ontario Court of Justice and shall be deemed to be an Order of the Ontario court and enforceable as such.
The mother's request to stay the custody and access provisions of the German Order, dated September 22, 2017 is refused at this time, without prejudice to renew at a later date.
The mother is granted leave to amend her pleading to apply for an order superseding the custody and access provisions of the German Order pursuant to section 42(1) of the CLRA.
The father is granted an extension to serve and file an Answer/Claim to the mother's application or amended application.
[2] The court provided the parties with an opportunity to make written costs submissions regarding costs. Both parties filed written submissions and attached their bills of costs. The mother also attached her offer to settle.
[3] Both parties have claimed that they were the successful party. The father seeks his cost on a “substantial indemnity” basis in the amount of $16,699.99. The mother seeks her costs on a “full indemnity” basis in the amount of $13,000.15. She submits that she obtained an order that was more favourable than her offer to settle.
The Law and Governing Principles:
[4] The starting point in addressing the issue of costs is Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43. Section 131 gives the court discretion as to determination of costs. However, that discretion is structured by Rule 24 of the Family Law Rules, O. Reg. 114/99(all references to rules in this endorsement are to the Family Law Rules). Rule 24 governs the determination of costs in family law proceedings.
[5] The sections of Rule 24 relevant to the circumstances of this case are as follows:
SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. O. Reg. 114/99, r. 24 (1).
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. O. Reg. 114/99, r. 24 (4).
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. O. Reg. 114/99, r. 24 (5).
DIVIDED SUCCESS
(6) If success in a step in a case is divided, the court may apportion costs as appropriate. O. Reg. 114/99, r. 24 (6)...
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. O. Reg. 114/99, r. 24 (8).
DECIDING COSTS
(10) Promptly after dealing with a step in a 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. O. Reg. 298/18, s. 14.
(10.1) Revoked: O. Reg. 298/18, s. 14.
SAME
(11) 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. O. Reg. 298/18, s. 14.
SETTING COSTS AMOUNTS
(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. O. Reg. 298/18, s. 14.
SUPPORTING MATERIALS
(12.1) Any claim for costs respecting fees or expenses shall be supported by documentation satisfactory to the court. O. Reg. 298/18, s. 14.
[6] Recently, in Mattina v. Mattina, 2018 ONCA 867, the Ontario Court of Appeal expanded upon the Court’s well-known decision in Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905 (C.A.), and stated that modern costs rules are designed to foster four fundamental purposes:
to partially indemnify successful litigants for the cost of litigation;
to encourage settlement;
to discourage and sanction inappropriate behaviour by litigants bearing in mind that the award should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party;
to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules.
[7] 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, at paragraph 25.
[8] Costs awards are discretionary. In the recent decision of Beaver v. Hill, 2018 ONCA 840, the Court of Appeal also held that two important principles in exercising discretion regarding costs are reasonableness and proportionality.
[9] As is clear from subrule 24(1), the Family Law Rules create 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, 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.).
[10] When determining 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, 2008 CanLII 23496 (ON SC), [2008] O.J. No. 1978 (SCJ).
[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:
If the offer relates to a motion, it is made at least one day before the motion date.
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.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[12] The onus of proving that the offer is as or more favourable than the trial result is on the person making the offer. See: Neilipovitz v. Neilipovitz, [2014] O.J. No. 3842 (SCJ).
[13] The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order. See: Wilson v. Kovalev, 2016 ONSC 163.
[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 trial result. See: Gurley v. Gurley, 2013 ONCJ 482.
[15] The technical requirements of subrule 18 (4) must be met to attract the costs consequences in subrule 18 (14). See: Clancy v. Hansman, 2013 ONCJ 702; T.M.B.-P. v. B.P.G., 2018 ONCJ 517.
Application of the Law and Analysis:
[16] The mother was primarily the successful party, although she was not completely successful.
[17] The central issue on the motions before me was whether the Ontario Court of Justice or the Family Regional Court of Frankfurt, Germany had jurisdiction to address the custody, access and child support issues between the parties regarding their four year old son.
[18] The father sought an order declaring that this court lacked jurisdiction to hear the mother's application and for an order that the Frankfurt Higher Regional Court in Germany (the "German Court") was the forum conveniens for the determination of custody and access issues.
[19] In the alternative, the father sought an order that this court decline jurisdiction to deal with custody and access issues in favour of the German Court and an order that the court recognize and enforce the German Order in accordance with section 41 of the CLRA.
[20] It was the father’s position that this court should decline jurisdiction in order to deter the mother from breaching the German Order, and from attempting to re-litigate all of the same terms of custody and access that the parties finally agreed to after protracted court appearances in the German Court.
[21] The father further submitted that the German Order, made on consent of the parties, contains a jurisdictional provision which clearly mandates the parties to litigate any variations of custody and access in Germany.
[22] The mother sought an order granting this Court jurisdiction to decide matters of custody, access and child support. She further sought an order staying the access provisions of the order of Justice Schmidt of the 4th Senate for Family Matters of the Frankfurt Higher Regional Court in Germany, dated September 22, 2017 (the "German Order").
[23] It was the mother's position that this court did have jurisdiction to hear her variation application and should take jurisdiction, as the child is habitually resident in Ontario. She further submitted that she had no choice but to bring an application to a Canadian court requesting a variation of the German Order based on material change in circumstances.
[24] I clearly found that this court should assume jurisdiction in this matter, for the reasons set out in my decision. I further did not agree with the father that it would be appropriate in the circumstances of this case to stay the mother's application and decline jurisdiction pursuant to sections 25 and 42(2) of the CLRA, or based on the doctrine of forum non conveniens.
[25] However, the mother also asked me to stay the access provisions of the German Court Order while she amended her pleading and pending any further proceedings.
[26] I was not prepared to do so at that time. The mother and child's relocation to Ontario and the child's registration in school in Ontario were clearly contemplated in the German Order. Other than the mother's current financial circumstances, I was not certain what material change in circumstances the mother is claiming that warrant a review of the custody and access provisions in the German Order. I directed that there should be a further hearing on this issue.
[27] Pending that hearing, I ruled that the Order of Justice Schmidt of the 4th Senate for Family Matters of the Frankfurt Higher Regional Court in Germany dated September 22, 2017 is recognized by the Ontario Court of Justice and shall be deemed to be an Order of the Ontario court and enforceable as such.
[28] Only the mother made an Offer to Settle in this case. She offered to settle the motions on the following terms:
The parties agree that the Ontario Court of Justice shall have jurisdiction with respect to all issues.
The German Order shall be registered with the Ontario Court of Justice.
The parties shall adjourn the father’s motion to enforce the German Order pending an opportunity for the father to serve and file an answer and a case conference in the Ontario Court of Justice prior to the hearing of any motions.
The adjournment of the father’s motion is made without prejudice to the mother’s right to bring a motion to supersede the German Order.
Each party shall bear their own costs.
[29] It was served one day before the hearing, in accordance with Rule 18(14).1 regarding motions and it was signed by both the mother and her counsel. The technical requirements were met.
[30] The mother’s offer to settle was non-severable. It was very close to the result that she obtained from my ruling except that I did not adjourn the father’s motion to enforce the German Order. I ruled that the German Order was enforceable, in accordance with section 41(1) and 41(2) of the Children’s Law Reform Act, pending any further order of the court.
[31] However, as the mother’s offer was not severable, the mother would have to do as well or better than all the terms of the offer, in order to take advantage of the full recovery cost provisions of Rule 18(14). This was not the case here. The mother is therefore not entitled to full recovery of her costs.
[32] Notwithstanding this, the mother was still more successful than the father. Contrary to what the father appears to be arguing, “divided success does not equate with equal success”. It requires a comparative analysis. Most family cases have multiple issues. They are not equally important, time-consuming or expensive to determine. See: Jackson v. Mayerle, 2016 ONSC 1556, at paragraph 66.
[33] In the motions before me, the issue of jurisdiction was central and the majority of the time at the hearing was spent on that issue.
[34] In determining the issue of costs, I must also must consider the issue of reasonableness of both party’s behaviour. The father should have made an offer to settle. Rule 24(5) (a) provides that in deciding whether a party has behaved reasonably or unreasonably, the court shall examine whether the party made an offer to settle.
[35] Further, the mother’s initial application was incorrectly framed, leading to some confusion. She should have sought an order pursuant to section 42(1) of the CLRA, which permits this court to supersede the German order in respect to custody and access of a child where the court is satisfied that there has been a material change in circumstances that affects or is likely to affect the best interests of the child. The mother's counsel acknowledged this in her oral submission during argument. The mother was granted leave to amend her pleadings.
[36] I was also concerned in this case that the mother was attempting to re-litigate the custody and access provisions that the parties had negotiated extensively while the mother and child were living in Germany and which the German Court reviewed and approved in a thoughtful and comprehensive Final Order in accordance with the child's best interests.
[37] I also considered all of the factors under Rule 24(12). The time spent by counsel was reasonable, as were the lawyers’ rates. The issues were very important to both parties and the jurisdictional issue was somewhat complex.
[38] In considering all of the above, in my view the mother should be granted the partial recovery of her costs in the amount of $4,000.00.
[39] Accordingly, the father shall pay the mother’s costs of $4,000.00, inclusive of HST and disbursements.
[40] However, if the mother’s motion and application to supersede or change the German Order is unsuccessful, then the father is permitted to set off any costs owing to the mother against any potential costs owing to him.
Released: March 18, 2019
Signed: Justice Sheilagh O’Connell