Court File and Parties

Court File No.: Woodstock D69/18 Date: 2019-11-19 Ontario Court of Justice

Between: G.H.F., Applicant

— AND —

M.D.E., Respondent

Before: Justice S. E. J. Paull In Chambers

Reasons on Costs Released on: November 19, 2019

Counsel:

• G.H.F. on his own behalf
• Michellene Beauchamp, counsel for M.D.E.

PAULL J.:

Introduction

[1] Before the court is the issue of costs following the trial in this matter which proceeded over 2 days on September 18-19, 2019. Reasons for Judgment were released on October 2, 2019. In the reasons the court invited written submissions on the issue of costs if the parties were not in agreement.

[2] The respondent seeks full recovery of costs in the amount of $14,252.13 inclusive based on her success at trial. The applicant submits that given his precarious financial circumstances and the financial obligations imposed upon him following trial, that a costs order would be a hardship for him.

Background

[3] M.D.E. (mother) and G.H.F. (father) are the parents of L.F. born March 9, 2012. They lived together from November 2010 to in or about November 30, 2017.

[4] G.H.F. brought an application on May 2, 2018 seeking joint custody and a shared residential arrangement on a week about basis, or alternatively joint custody with liberal access. He later amended the application to seek additional relief related to transportation and child support.

[5] M.D.E. filed an answer dated May 8, 2018 seeking sole custody and child support retroactive to November 30, 2017.

[6] At the commencement of trial the parties agreed on various terms of relief. They agreed to an order for joint custody, however, M.D.E. sought final decision-making authority in the event of a disagreement.

[7] They further agreed that G.H.F.'s parenting time would include the following:

1. Alternate weekends from Friday after school to Monday morning. He drops L.F. off at his mother's home to catch the bus for school.

2. On alternate Mondays after school overnight to Tuesday morning to accord with M.D.E.'s work schedule.

3. An equitable sharing of holidays as agreed between the parties, to include two weeks of summer access for each parent.

4. G.H.F. has agreed to be responsible for the transportation for the regular access schedule, with M.D.E. agreeing to be responsible for any transportation for any additional time L.F. spends with G.H.F. to accommodate any additional shifts and commitments she has at work.

5. They have also agreed to a proportional sharing of section 7 expenses going forward.

[8] The areas the parties disagreed on related to child support and whether there had been and should be going forward a shared residential arrangement in place for L.F.

[9] G.H.F. sought an order, in addition to the alternate weekends noted above, that he have two additional overnights per week. He took the position that this would amount to a shared custody arrangement which would justify no order for child support. He also opposed any claim for arrears in child support on the basis that the arrangements up to trial amounted to a shared custodial arrangement.

[10] M.D.E. sought an order for primary residence of L.F. with access, in addition to the alternate weekend access noted above, of one overnight per week, with one of those overnights being the alternate Monday night already agreed to which accommodates her work schedule. She took the position that child support should be payable from the date of separation and that arrangements up to trial did not amount to a shared residential arrangement. She also sought to impute income on G.H.F. for the purposes of calculating child support.

[11] As such, the main issues determined at trial related to what residential arrangement best served L.F.'s needs, and whether child support was payable based on the parties' incomes and the arrangements in place since separation.

[12] Resolving these issues involved a determination of what arrangement going forward was in L.F.'s best interests, including whether it should be a shared parenting arrangement. The court was required to determine the appropriate amount and commencement date of child support, if any, which should be payable based on the parenting arrangements. This included a determination of both parties' incomes and whether income should be imputed to G.H.F., and whether there had been a shared parenting arrangement in place for any or all the time since separation.

[13] Following trial the court ordered, among other things, that the respondent have primary residence and final decision-making authority, and that there be one additional overnight per week of access for the applicant. The court found that the arrangements in place up to trial did not amount to a shared parenting arrangement, and that child support was payable by the applicant on an imputed income of $35,000 retroactive to the date of separation.

Law and Analysis

[14] 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.

[15] 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.

[16] 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.

[17] 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.

[18] 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)).

[19] The respondent claims costs on a full recovery basis from commencement of the proceeding to the conclusion of trial in the amount of $14,252.13 inclusive.

[20] The respondent submits an offer to settle dated September 10, 2019, and served September 11, 2019, which included joint custody, alternate weekends, one overnight per week, shared holidays, and other times as agreed. It also included child-support of $304 per month commencing December 1, 2017 on an income of $35,000, and a proportional sharing of section 7 expenses.

[21] 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).

[22] 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.

[23] 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. Wilson v. Kovalev, 2016 ONSC 163.

[24] Overall, when the offer and order are reviewed in their entirety the respondent has achieved an order as favourable as her offer. The final order made very closely mirrors what she proposed in her offer.

[25] The respondent further submits an earlier offer to settle by each party which was outlined in their settlement conference briefs.

[26] 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.

[27] As such, the offers to settle in settlement conference briefs do not constitute offers for consideration under Rule 18.

[28] Failure to make an offer to settle by either party can be seen as unreasonable behaviour. Subrule 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(3)). Offers to settle play an important role in saving time and expense by promoting settlement, focusing parties and often narrowing the issues in the dispute. Laing v. Mahmoud, 2011 ONSC 6737. Failure to serve an offer to settle may be an adverse factor when assessing costs.

[29] There is no evidence of an offer to settle served on behalf of the applicant. There is no obligation on a party to serve an offer to settle. In the circumstances of how long this matter was before the court, his failure to provide a resolution position by way of offers to settle is an adverse factor in assessing costs in my view. However, it should be noted that the parties did agree at the beginning of trial on several issues, and the offer to settle of the respondent was served one week before trial.

[30] The next issue is to consider if there was divided success. Rule 24 (6) states that if success in the case is divided, the court may apportion costs as appropriate. 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.

[31] 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.

[32] As previously noted, when the positions of the parties is compared to the order made it is clear the respondent was largely successful. The most important issues were whether there had been and should be a shared residential arrangement, and whether income should be imputed on the applicant. The respondent was entirely successful on these primary issues. The applicant did achieve joint custody, however, which the respondent consented to at the beginning of trial.

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

[34] 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.

[35] 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.

[36] 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.

[37] The applicant has not behaved reasonably with respect to the level of financial disclosure he provided. As noted in the Reasons for Judgment the financial disclosure he provided was woefully inadequate related to his self-employment income. He also did not provide any of his Notices of Assessments. Further, he offered little evidence at trial to establish the reasonableness of his employment and business choices, and virtually no evidence of any job search efforts.

[38] The applicant simply offered the very limited income he earned, without sufficient particulars to support it, and sought to pay no child support as a result. He paid no child support and did not contribute to any section 7 expenses since separation. He has not behaved reasonably with respect to his approach to his child support or his disclosure obligations.

[39] However, I also note that the respondent's financial disclosure was less than complete and the court imputed income on her for the purposes of calculating the proportional share of section 7 expenses.

[40] Counsel for the respondent included several itemized Bills of Costs which outline the particulars of the costs claimed, including for the trial which took place over two days. The hourly rate of counsel for the respondent pursuant to the Bill of Costs is $250 per hour which is not unreasonable given her level of experience, and the time claimed for preparing and conducting the trial was reasonable given the number of issues to be determined.

[41] The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which disbursement is sought) and the importance or monetary value of the issues at stake. The Rules do not require the court to allow the successful party to demand a blank check for their costs. O'Brien v. O'Brien, 2017 ONSC 2017.

[42] I have also considered the cases of Boucher et al. v. Public Accountants Counsel for the Province of Ontario, [2004] O.J. No. 2624 (O.C.A.) and Delellis v. Delellis and Delellis, [2005] O.J. No. 4345. Both these cases point out that when assessing costs it is "not simply a mechanical exercise." In Delellis, Ashton J. wrote at paragraph nine:

"However, recent cases under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended have begun to de-emphasize the traditional reliance upon "hours spent times hourly rates" when fixing costs…. Costs must be proportional to the amount in issue and the outcome. 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, rather than an amount fixed by the actual costs incurred by the successful litigant".

[43] The issues in this matter related entirely to the residential arrangements and child support (including imputing income) and were not particularly complex but were important to both parties in the context of this family.

[44] The respondent was clearly the successful party, and the final order granted was as favourable as her offer to settle dated September 10, 2019. Further, the applicant's failure to provide an offer to settle under rule 18, even when he was represented by counsel, is an adverse factor in assessing costs.

[45] Most importantly the applicant behaved unreasonably since this matter began in the position he took with respect to shared custody and child support, and with respect to his failure to satisfy his financial disclosure obligations. As noted in the Reasons for Judgment his motivation regarding shared custody appeared based more so on financial considerations, and a desire to avoid child support payments, than a child focused assessment of L.F.'s best interests. As noted however there were also concerns with the respondent's financial disclosure which led the court to impute income on her for the purpose of section 7 expenses.

[46] The applicant takes the position that given the order this court made which included significant arrears, that an order of costs would be a hardship. He also stated his employment was likely to end in December 2019 and not restart until April 2020. This issue was raised at trial and considered by the court when the quantum of $35,000 was imputed. It was his own ill-advised approach to child support since this matter commenced that resulted in the substantial arrears he now faces.

[47] However, I have considered the respondent's ability to pay a costs order. A party's limited financial circumstances will not be used as a shield against any liability for costs but will be taken into account regarding the quantum of costs, particularly when they have acted unreasonably and are the author of their own misfortune. Snih v. Snih pars. 7-13. In the case of Takis v. Takis, [2003] O.J. No. 4059 (S.C.J.), the court found that the respondent's lack of income and assets, though a relevant consideration, could not be used as a shield in unnecessary litigation.

[48] In other words, although they are not specified in Rule 24(11) as factors in determining costs, the financial means of the parties, their ability to pay a costs order and the effect of any costs ruling on the parties and the children of the family are also relevant considerations in reaching a determination on the issue of costs. Fyfe v. Jouppien, 2012 ONSC 97.

[49] I am mindful of the applicant's relatively modest means and that L.F. spends significant time in his care during which he is required to provide for his needs. However, family law litigants are responsible for and accountable for the positions they take in the litigation. Heuss v. Surkos, 2004 ONCJ 141.

[50] I also note that the parties were able to resolve the number of issues at the beginning of trial which narrowed the matter somewhat.

[51] Overall, it is appropriate to award costs to the respondent based on her success at trial and her offer to settle, and the applicant's unreasonable behaviour. The respondent's offer was, however, provided only one week before the trial in spite of the matter being outstanding since May 2018.

[52] Having considered all these issues partial recovery for the respondent is appropriate. On the basis of the foregoing, I find that a fair and reasonable quantum in the particular circumstances of this case to be $7,500.00 (inclusive), payable by the applicant to the respondent forthwith.

[53] A final order shall issue as follows:

Order

1. Costs in the amount of $7,500.00 (inclusive) shall be payable by the applicant to the respondent forthwith.

Released: November 19, 2019

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