Court File and Parties

Ontario Court of Justice

Date: 2019-05-21

Court File No.: Woodstock D133/16

Between:

Dustin Clarence Lavallee Applicant

— AND —

Carolyn Pauline Moggy Respondent

Before: Justice S. E. J. Paull

Costs Argument Heard: May 13, 2019

Reasons Released: May 21, 2019

Representation:

• Dustin Lavallee — on his own behalf
• James Battin — counsel for the respondent

Costs Endorsement

PAULL J.:

Introduction

[1] Before the court is the issue of costs brought by the respondent following the trial in this matter which proceeded over seven days between June 18, 2018 and August 24, 2018. Reasons for Judgment were released on October 9, 2018. In the reasons the court stated that if the parties are not in agreement on the issue of costs a return date could be arranged with the trial coordinator for submissions on that issue.

[2] Ms. Moggy has brought a motion seeking costs.

Background and Positions of the Parties

[3] The parties in this matter are the parents of two children, B. born […], 2004 and E. born […], 2006. There were two main issues to be determined at trial. The first related to what, if any, access the children should have with their father and on what terms and conditions. The children were residing with Ms. Moggy at that time and were estranged from Mr. Lavallee since sometime in mid-2016.

[4] Ms. Moggy did not oppose an order for access but took the position that any access be at the discretion of the children and subject to their wishes.

[5] Mr. Lavallee took the position that there should be a structured access schedule and, more importantly, that there should be counselling for him and the children. He was not seeking an enforcement of access but sought counselling in order to be provided the opportunity to rebuild his relationship with the children. Counselling was opposed by Ms. Moggy and the OCL.

[6] Both parties blamed the other for the fractured state of the relationship between Mr. Lavallee and the children, with Ms. Moggy claiming it was the result of Mr. Lavallee's insensitive, rigid and demanding behaviour around them spending time with his new partner, and Mr. Lavallee arguing that his relationship with the children was undermined and negatively influenced by Ms. Moggy's actions since he began a relationship with his current wife in the spring of 2016.

[7] The second main issue at trial dealt with child support and section 7 expenses.

[8] With respect to support Ms. Moggy claimed arrears in child support and section 7 expenses retroactively to 2015.

[9] Mr. Lavallee disputed that there were any arrears in child support or section 7 expenses owing.

[10] The final order made following trial included a term for ongoing child support based on Mr. Lavallee's income at the time of trial which was less than he had been paying. I note that the parties are now consenting to vary that order slightly as he did return to work.

[11] Ms. Moggy's retroactive claim for child support was permitted back to 2016 only and based on Mr. Lavallee's incomes for 2016, 2017, and 2018 a recalculation of child support resulted in Mr. Lavallee having an overpayment of $136 up to July 31, 2018.

[12] Ms. Moggy's claim for section 7 expenses was granted with the total section 7 expenses owed by Mr. Lavallee of $2590.87 which left a total of $2454.87 owing when the overpayment of $136 in child support was deducted.

[13] The parties agreed going forward that section 7 expenses shall be shared proportionally to their incomes and based on the agreement of the parties in advance.

[14] With respect to access, structured times for access on alternate weekends and during the week was granted however subject to the wishes of the children. It also included a term that Ms. Moggy shall actively encourage and facilitate communication between the children and the applicant.

[15] Mr. Lavallee's request for counselling was granted and the court also ordered the parties to work together to develop a counselling plan to support the children reestablishing a relationship with their father.

[16] At this time the respondent seeks costs, inclusive of fees disbursements and HST, in the amount of $26,266.74.

[17] The applicant opposes the costs claim and is essentially arguing that the parties bear their own costs.

[18] The parties filed written submissions. OCL counsel was involved in the trial and has not participated or taken a position on the costs issue.

The Law and Analysis

Principles of Costs Awards

[19] Modern costs rules are designed to foster four fundamental purposes (1) to partially indemnify successful litigants; (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under Rule 2 (2) of the Family Law Rules. Mattina v. Mattina, 2018 ONCA 867.

[20] 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. British Columbia (Minister of Forests) v. Okanagan Indian Band, 2002, S.C.C., paragraph 25.

[21] Rule 24(1) of the Family Law Rules creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ-Family Court). 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. Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ). The position each party took at trial should also be examined.

Offers to Settle

[22] Rule 18 (14) of the Family Law Rules 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.

[23] The court has a discretion to take into account any written offer to settle, the date it was made and its terms, even if Rule 18(14) does not apply, when exercising its discretion over costs. (Rule 18(16)).

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

[25] 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. However, even if the offer does not attract the costs consequences set out in Rule 18 (14), it may be considered under Rule 18 (16). Gurley v. Gurley, 2013 ONCJ 482.

[26] The respondent claims partial indemnity costs from the commencement of the proceeding until May 14, 2018 (the date of the trial management conference) and substantial indemnity costs following that in part because her trial management conference brief set out the order that she was seeking and a draft was attached to the trial management conference brief. She submits that the order she sought was "in close proximity to the final order granted."

[27] Outlining in a trial management conference brief the order the party is seeking or attaching a draft order is not a properly constituted offer under Rule 18 (4). Not only was the trial management conference brief not executed by the respondent, it simply outlined the order she was seeking.

[28] There is a significant difference between a formal offer to settle and a draft order. They have different purposes. A draft order specifically sets out a party's trial position – not their settlement position. It forces the party to clearly consider the relief he or she is seeking and provides clarity about what relief is being sought. The draft order helps to avoid a common problem where a party will fail to clearly articulate his or her position at the outset of the case and shifts his or her position during the trial.

[29] The offer to settle, on the other hand, is a settlement position and is confidential between the parties. It is not to be disclosed to the trial judge until after he or she has dealt with all the issues in dispute except costs. See: Subrule 18 (8). An offer to settle, unlike a draft order, will attract costs consequences pursuant to subrules 18 (14) and (16).

[30] The respondent further submits an earlier offer to settle outlined in a settlement conference brief from February 3, 2018.

[31] The applicant in his responding materials also includes offers to settle from various settlement conference briefs.

[32] However, with respect to offers in settlement conference briefs Rule 17 (23) of the Family Law Rules is clear that no brief, evidence or statement made at a settlement conference is to be disclosed unless an agreement is reached at a settlement conference or by order. The court in the case of Entwistle v. MacArthur, (2007) 17375, 157 (SCJ-Ont. Fam. Ct.), and the court in Farook v. Majeed, 2011 ONCJ 827, make clear that there is no exception in Rule 17 (23) for the offers to settle in settlement conference briefs to be disclosed in submissions for costs.

[33] Therefore while it is clear the parties were making efforts to provide options for resolution, the offers to settle in settlement conference briefs do not constitute offers for consideration under Rule 18.

[34] Even were these to have been proper offers to settle they would not be of assistance to either party given that the offers were not met or exceeded by the order made. Neither were the offers severable, which would have required them to do as well or better on all issues, which was not the case.

[35] Further, the order sought by the respondent as outlined in the trial management conference brief included sole custody which had not been pled and was not before the court in any event.

[36] As a result there is no evidence of any properly constituted offers to settle for the court's consideration of costs under Rule 18 (14).

Divided Success

[37] The next issue is to consider if there was divided success under Rule 24 (6).

[38] Where there are a number of issues before the court, it can have regard to the dominant issue at trial in light of those offers to settle. Firth v. Allerton, [2013] O.J. No. 3992 (S.C.J.); Mondino v. Mondino, 2014 ONSC 1102.

[39] 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. Jackson v. Mayerle, 2016 ONSC 1556, paragraph 66, per Justice Alex Pazaratz.

[40] While the financial issues were important to both parties the access and related issues were clearly the most important and consumed the majority of time at trial.

[41] With respect to the positions taken and the final order made following trial there was clearly divided success on both the issues of access and child support.

[42] Ms. Moggy was successful on her section 7 claims, except that the court imputed a significantly higher income on her than she claimed for the calculation of the proportional share for 2017, 2018 and ongoing.

[43] She was not successful on the retroactive child support claim and no arrears were granted as Mr. Lavallee was determined to have modestly overpaid Guideline support over the period of time from 2016 onward.

[44] She was successful on her primary claim that access to the children be subject to their wishes.

[45] Mr. Lavallee was successful on his position regarding child support arrears, and successful with respect to an order that Ms. Moggy facilitate communication between him and the children, and on his primary claim that counselling be put in place to assist him in reestablishing a relationship with the children.

[46] On balance, the parties achieved roughly equal success.

Reasonableness and Proportionality

[47] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. Beaver v. Hill, 2018 ONCA 840.

[48] An award of costs is subject to: the factors listed in Rule 24(12), Rule 24(4) pertaining to unreasonable conduct of a successful party, Rule 24(8) pertaining to bad faith, Rule 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party. Berta v. Berta, 2015 ONCA 918 at para. 94.

[49] In making this decision the court has considered the factors set out in Rule 24 (12) of the rules 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.

[50] Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in clause 24(12)(a) (1) above). 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.

[51] Family law litigants are responsible for and accountable for the positions they take in the litigation. Heuss v. Surkos, 2004 ONCJ 141.

Analysis of Parties' Behaviour

[52] The respondent makes various arguments in her written costs submissions in support of her position.

[53] She claims that the applicant behaved unreasonably by failing to provide timely and accurate financial information.

[54] In terms of the history of this matter, at the first case conference on November 7, 2016 both parties were ordered to serve financial statements which they did.

[55] Mr. Lavallee's financial statement served November 28, 2016 included notices of assessment from 2009 to 2015.

[56] An order from a settlement conference on October 25, 2017 ordered the applicant to provide his 2016 tax return and notices of assessment along with information related to his WSIB claim.

[57] At the trial management conference on May 14, 2018 both parties were ordered to provide updated financial disclosure for 2017 and up to that date in 2018.

[58] As previously noted trial started on June 18, 2018.

[59] No motions were brought for questioning or to compel the disclosure that had been ordered or for further disclosure.

[60] In the Reasons I noted that neither party filed updated financial statements, and further noted that little evidence of current income for either party was provided or sought at trial.

[61] As I noted in paragraph 166 of the judgment:

Unfortunately, little evidence of current income for either party was provided or sought. With respect ongoing support the applicant stated he was receiving WSIB benefits of $2187.77 biweekly. This totals $56,880.72, and grossed up by 20% is the equivalent of $68,256.86 of income for child support purposes. This produces child support payments for two children of $1040 per month. It was left unclear in the evidence when or if he would be returning to work. However when making his closing submissions on August 24, 2018 Mr. Lavallee indicated he had just gotten off the night shift which suggests he is back at work. No other information was provided and this comment was not followed up on by counsel. The only evidence this court has is the WSIB income, however, the child support should be adjusted accordingly to when he returned to work.

[62] Further the court found that Ms. Moggy had not provided sufficient disclosure of her income from her businesses which led the court to impute income on her for the purposes of calculating section 7 expenses.

[63] Overall, both parties provided less than fulsome information at trial of their current incomes, and in the circumstances on this issue both parties behaviour was equally unreasonable.

[64] Ms. Moggy states in her written submissions that a further factor that supports costs in her favour is that the applicant should have admitted that joint custody was not appropriate and that sole custody in her favour was in the children's best interests. This, she submits, represents a denial of or refusal to admit something that should have been admitted. She states that the applicant unreasonably maintained his position for joint custody throughout this lengthy matter.

[65] This is not a relevant consideration and did not lengthen the trial as custody was not sought or pled by the respondent or the applicant, and was thus not an issue that was determined at trial. The parties agreed in a previous separation agreement to joint custody and neither party sought any relief on this issue.

[66] The respondent further submits that the applicant's excessive use of emails and text messages in his evidence also lengthened the trial unnecessarily.

[67] The applicant's reliance on text messages and emails at trial was neither excessive nor unreasonable in the circumstances. As noted in the Reasons they provided probative and compelling evidence that the respondent had unduly influenced the children. The court was critical of the OCL for appearing not to have reviewed this important evidence before taking a position.

[68] Overall I am not persuaded by the respondent's arguments in her written submissions, most of which I find to be unreasonable in the full context of this matter and the Reasons for Judgment.

The Central Issue: Parental Conduct

[69] In my view, the most important consideration in the determination of costs relates to the unreasonableness of both parties with respect to the central issue of the terms of access, which included counselling.

[70] The court was very critical of both parties, particularly with respect to how they had each significantly and materially contributed to the children's estrangement from their father. The Reasons for Judgment were clear that both parties behaved equally unreasonably on this issue and they each lacked insight into the impact of their own inappropriate behaviours on the children.

[71] Overall, based on the parties' divided success and neither party having offers to settle for consideration under Rule 18(14), and most importantly the court's findings at trial that each had behaved inappropriately and unreasonably in a way that had resulted in the unfortunate circumstances of the children's complete estrangement from one of their parents, I am not convinced that either party is entitled to costs.

Decision

[72] There will be no order as to costs.

[73] As previously noted the Reasons for Judgment indicated that the child support payable should be adjusted to when Mr. Lavallee returned to work.

[74] Accordingly part of the current motion included a request to change child support pursuant to that direction to the amount of $1082 based on Mr. Lavallee's total 2018 income of $71,906.12 with payments commencing August 1, 2018.

[75] Mr. Lavallee consents to this adjustment but did advise that he has very recently been off work again as a result of a further injury to his back. This issue is not before the court and would require a motion to change to be brought if he seeks to change child support further. As such, the order on consent to amend the child support in the final order of October 9, 2018 shall not limit either parties' ability to bring a variation proceeding resulting from a change in circumstances subsequent to that date.

[76] A final order shall issue as follows:

Final Order

1. There shall be no order as to costs.

2. The final order of October 9, 2018 shall be amended with Mr. Lavallee paying child support for two children in the amount of $1082 based on his total 2018 income of $71,906.12, with payments commencing August 1, 2018. This order shall not limit either parties' ability to bring a variation proceeding resulting from a change in circumstances subsequent to October 9, 2018.

Released: May 21, 2019

Signed: "Justice S. E. J. Paull"