Court File and Parties

Date: 2019-07-10

Court File No.: Toronto D11317/17

Ontario Court of Justice

Between:

Sheri Davies Applicant

— And —

William Bridge Respondent

Before: Justice Curtis

Written submissions regarding Costs

Reasons for Decision released on 10 July 2019

Counsel:

• Kathryn Hendrikx, counsel for the Applicant
• Bernd Hahn, counsel for the Respondent

Index

1. Over-view
2. The Parties' Positions re Costs
3. Background
4. Litigation History – The Application
5. 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. Costs and Settlement
   • e. Offers to Settle
   • f. Quantum of Costs
6. Order

Over-view

1. This is the decision about costs of a contested application which resulted in a final settlement at a case conference.

The Parties' Positions re Costs

2. Both parents claimed costs of the application. Both parents presented themselves as the successful party in the application. The mother claimed full recovery costs of $16,585.50. The father claimed costs of $10,076.30.

Background

3. The Applicant is the mother, Sheri Davies, 49 years old (born 3 December 1969). The Respondent is the father, William Bridge, 49 years old (born 12 January 1970). The parents were not married to each other, but lived together from December 2001 to December 2014. There are three children of their relationship. The oldest child, Chloe, was not part of the litigation.

• Chloe Nadine, born 1 January 2000 (19 years old)
• Alexander William, born 11 June 2002 (17)
• Dillon Tristan, born 22 March 2010 (9)

Litigation History – The Application

4. The application was started on 11 August 2017. The mother claimed custody and access, child support (and other claims). The father also claimed custody and access, and child support (among other claims).

5. The litigation consisted of three case conferences (13 December 2017, 23 February 2018, and 28 May 2018). There were no motions, and there was no trial. Both parents were represented by lawyers throughout.

6. At each case conference, the parents and their lawyers negotiated a consent. These consents were detailed and lengthy (particularly the final consent). None of the court orders resulting from these consents has been issued and entered, despite the fact that both parents had lawyers, and had the same lawyers throughout the litigation.

7. The application concluded at the third case conference with a final settlement on 28 May 2018.

8. These are the terms of the consents that resulted from the three case conferences.

First Case Conference – 13 December 2017

9. On 13 December 2017, these are the terms of the consent order:

(a) Temporary without prejudice child support of $715 per month for two children on income of $48,000 (no start date is shown);

(b) Alexander (then 15) shall decide when he wants to spend time with the father;

(c) Access to Dillon (then 7):

• i. every second weekend 10 a.m. Saturday to 6 p.m. Sunday; and,
• ii. Wednesday from 6 to 8 p.m.; and,

(d) Mother to provide father with copies of specified identification documents for the children within 45 days;

(e) Both parents to provide annual financial disclosure;

(f) Both parents to provide specified disclosure within 45 days; and

(g) No costs of the case conference.

Second Case Conference – 23 February 2018

10. On 23 February 2018, orders were made by the court, and there were also consent orders made.

(a) These are the terms of the court order (not on consent):

(i) Child support for 2 children:

• a. $811 per month from 1 January 2015 on income of $54,629;
• b. $1251 per month from 1 January 2016 on income of $86,478;
• c. $744 per month from 1 January 2017 on income of $50,076;

(ii) Amounts for 2015 and 2016 are without prejudice to parent's rights to make different claims;

(iii) Credit to father for payments made;

(iv) Annual financial disclosure by father each year on 1 July starting in 2019;

(b) These are the terms of the consent order:

(i) Starting 24 February 2018 access to Dillon changed to:

• a. every second week-end on alternating schedule:
  • 1. week 1: from 10 a.m. to 8 p.m. Saturday, and from 10 a.m. to 6 p.m. Sunday;
  • 2. week 2: 10 a.m. Saturday to 6 p.m. Sunday;
• b. after two months, overnight visits every second week-end pursuant to week 2 schedule;

(ii) specific s. 7 expenses to be shared equally. Programs to be agreed to by parents in advance;

(iii) father shall add both children to his extended plan of care through employment; and,

(iv) mother shall re-instate father's e-mail account.

Third Case Conference – 28 May 2018

11. On 28 May 2018, these are the terms of the consent final order (among other terms):

(a) Sole custody to mother;

(i) Mother has full decision-making authority over all aspects of children's lives and welfare, Mother shall consult with father in advance regarding non-emergency decisions;

(ii) Mother shall not move children's residence outside the Greater Toronto area without father's written consent or court order;

(iii) Both parents entitled to information and communication regarding children's health, education, activities and welfare. Mother shall execute consents to this for all service–providers;

(iv) Father shall be identified as the emergency contact with all professionals dealing with the children;

(b) Father's access;

(i) 2 non-consecutive weeks in summer, with a schedule for choosing weeks;

(ii) In July and August, regular Wednesday access extended to 9 p.m.;

(iii) Week-end schedule extended to start 7 p.m. Friday;

(iv) Friday nights to be revisited in September 2018;

(v) Father to provide copy of his lease and address information to mother;

(c) Child support:

(i) Father shall pay s. 7 expenses owing for 2015, 2016 and 2017 within 120 days;

(ii) father shall file 2017 Income Tax Return within 45 days and provide copy to mother, with Notices of Assessment, when received;

(iii) Father to pay specified s. 7 expenses for 2018; and,

(d) Father shall serve and file amended Answer.

The Costs Analysis

The Law of Costs

Entitlement

12. 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.

13. 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.

14. 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.

15. 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.

16. 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

17. 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.

18. 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.

19. 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

20. The starting point in any costs analysis is the presumption that a successful party is entitled to costs. Rule 24(1).

21. Success must be measured not only against the parties' offers to settle, but also against the claims made by each.

22. 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.

Behaviour of the Parties

23. One of the purposes of costs is to change behaviour.

24. 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.

25. Family law litigants are responsible for and accountable for the positions they take in the litigation.

26. The decision respecting liability for costs 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.

27. 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.

28. Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.

29. Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in Rule 24(12)(a)(i)). 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.

30. The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.

31. 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.

32. When awarded on a full recovery scale, costs can serve to express the court's disapproval of unreasonable conduct during the litigation.

33. 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.

34. Parties have an obligation to begin to assess their respective cases at the outset of the litigation, even before the litigation commences, and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants, and it behooves neither party to simply sit back and to roll the dice while those fees continue to mount.

35. 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.

Costs and Settlement

36. If the parties have reached a negotiated resolution of the issues in their case, costs can nonetheless be ordered if the court determines that one party was more successful overall than the other party.

37. In considering the issue of costs in the context of a case that has settled, the most important factor in determining both entitlement and quantum of costs is the reasonableness and timeliness of the parties' respective offers to settle.

Offers to Settle

38. 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.

39. 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.

40. Neither party made an offer to settle this application. However, the mother served a comprehensive Separation Agreement dated 2 March 2017 (five months before the litigation was started, and a full year before the case was settled).

Quantum of Costs

41. 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.

42. 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.

43. 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.

44. In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery.

45. 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.

46. Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome.

47. 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.

48. The factors to consider in determining the amount of costs in family law matters are the following (Rule 24(12)):

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.

49. In determining the amount of costs in this matter, the court took into account these factors set out in R. 24(12):

(a) the reasonableness and proportionality of each party's behaviour, as it relates to the importance and complexity of the issues: A finding of unreasonableness is not necessary to the making of a costs order. The mother's behaviour on the application was reasonable (with the glaring exception of her behaviour in de-activating the father's long-standing e-mail account during the litigation (an account that contained his records and receipts regarding payment of support, and family photos), and refusing to re-instate it, until a court order was made). She made proposals for resolution at all court appearances, which were adopted into consent orders. The conduct of the father directly contributed to the time, effort required and the length of the case. The mother's costs were increased unnecessarily by certain of the father's behaviour (i.e., his refusal to provide appropriate financial disclosure and the need to seek an order for disclosure at each court appearance; his refusal, until a case conference addressed this, to pay retroactive s. 7 costs of $1,080; his refusal to acknowledge summer camp as a reasonable s. 7 expense);

(b) the reasonableness and proportionality of the time spent by each party, as it relates to the importance and complexity of the issues: The parent's lawyers spent similar amounts of time according to the summaries of time spent that were filed. As an order for no costs was made regarding the first case conference on 13 December 2017, the father did not show the time spent on this step in his summary of time spent, making a comparison more difficult. The father claimed costs for himself, did not respond to the claims of the mother, and raised no objection to the time spent claimed in her summary;

(c) the reasonableness and proportionality of any written offers to settle, including offers that do not meet the requirements of rule 18, as it relates to the importance and complexity of the issues: Neither party made an offer to settle this application. However, the mother served a comprehensive Separation Agreement dated 2 March 2017 (five months before the litigation was started, and a full year before the case was settled), which can be considered an offer to settle. The proposals in the mother's Separation Agreement were more generous to the father than the ultimate settlement reached, and were used as the basis for the settlement, and as a result, no motions were needed, and a trial was not needed;

(d) the reasonableness and proportionality of any legal fees, including the number of lawyers and their rates, as it relates to the importance and complexity of the issues: The rates claimed by the mother's lawyer (for her work, and for the work of a law clerk) were reasonable, and the involvement of a law clerk was reasonable, under these circumstances. The father claimed costs for himself, and did not respond to the claims of the mother, and raised no objection to the hourly rate of the mother's lawyer, the use of a law clerk (his lawyer had also used a law clerk), or to the time spent;

(e) the reasonableness and proportionality of any other expenses properly paid or payable, as it relates to the importance and complexity of the issues: The disbursements claimed by both parents were reasonable under the circumstances (by the mother $780.49, and by the father $442.08). Neither parent objected to the disbursements claimed by the other; and,

(f) the reasonableness and proportionality of any other relevant matter, as it relates to the importance and complexity of the issues: On consent, an order for no costs was made regarding the first case conference on 13 December 2017. No costs for this appearance and the work done for it should be awarded now.

50. The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of this case. This determination is not merely an arithmetical exercise of calculating time spent by a suitable hourly rate.

Order

51. The court makes the following findings regarding the application:

(a) the settlement reached resembled the terms of the mother's Separation Agreement;

(b) the mother was the more successful party in the application; and,

(c) with one glaring exception, the conduct of the mother was more reasonable than that of the father.

52. The father shall pay the mother's costs of the application (not to include the first case conference), fixed in the amount of $10,000 all included (fees + HST, disbursements + HST). This amount is a fair and reasonable costs order, and one that is proportionate to the issues involved, in all of the circumstances of this case.

53. The lawyers shall issue and enter the three orders in this case promptly.

Released: 10 July 2019

Justice Carole Curtis