Court File and Parties
Date: 2019-10-09
Court File No.: Toronto D11641/17
Ontario Court of Justice
Between:
Julia Laura Jaglowitz Applicant
— And —
Phillip Robert Lindsay Respondent
Before: Justice Curtis
Written submissions regarding Costs
Reasons for Decision released on 9 October 2019
Counsel:
- A.J. Jakubowska . . . . . . . . . . . . . . . . . . . . . . . . . . . for the Applicant Mother
- Jane Mukongolo . . . . . . . . . . . . . . . . . . . . . . . . . . . for the Respondent Father
- And, later the Respondent Father 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) Costs and Ability to Pay
- e) Offers to Settle
- f) Quantum of Costs
- i. The Child Support and Spousal Support Motions
- ii. The Motion to Strike Father's Answer and seeking Final Unopposed Orders
- a) The Law of Costs
- Order
Over-view
1. Overview
This is the decision about costs of these steps in this case:
(a) the mother's motion for child support and the father's motion for spousal support, heard on 30 May 2018; and,
(b) the mother's motion to strike the father's Answer and her request for final orders on an unopposed basis, heard on 14 February 2019.
The Parties' Positions re Costs
2. The Parties' Positions re Costs
The mother claimed costs as follows:
(a) as the successful party on the motion for child support, and as the successful party on the father's motion for spousal support (which motion was stayed), costs on a full recovery basis of $15,461.06; and,
(b) as the successful party on the motion to strike the father's Answer and to seek final unopposed orders on a Form 23C Affidavit (which orders were granted), costs on a full recovery basis of $17,857.81.
The father made the following responses regarding the costs claims:
(a) regarding the mother's motion for child support and the father's motion for spousal support, he conceded that the mother was entitled to costs, but argued that he had no ability to pay any costs; and,
(b) regarding the mother's motion to strike the father's Answer and to seek final orders on an unopposed basis, he filed no material in response to her costs claims.
Background
3. Background
The applicant is the mother, Julie Jaglowitz, 50 years old (born 26 July 1969). The respondent is the father, Phillip Lindsay, 54 years old (born 11 May 1965). The parties were not married to each other. They lived together from February 2012 until the relationship ended on 31 March 2017, but they continued to live in the same home until October 2017. The mother asked the father to leave the home on many occasions but he refused to leave.
There is one child of the relationship, Kaden, 7 years old (born 15 February 2012). Kaden has Downs Syndrome and significant other medical needs. The mother's evidence described six additional medical conditions, all of which affect his quality of life and require monitoring and treatment. He has received extensive medical treatment to address these issues. He has extensive needs for services, which needs are expensive and non-discretionary.
Litigation History
4. Litigation History
This was a high conflict case. The litigation was started very soon after the parties' separation and continued on a consistently aggressive basis. There were many court appearances, for motions and case conferences. An enormous amount of material was filed by both parents. There were seven volumes in the Continuing Record for litigation that lasted about 17 months.
The mother brought an Application on 6 October 2017 claiming (among other things) custody, access, and support. On 20 October 2017 Sherr, J. made temporary orders and adjourned the motion on detailed terms so that the father could respond. The temporary orders included primary care of the child to the mother, specified day access to the father, a no contact order, and police enforcement.
The temporary custody and access motion was heard on 30 October 2017. Both parents were represented by lawyers and the parents filed a large amount of material. The temporary orders included sole custody to the mother, access to the father every other weekend, a no contact order, and police enforcement. The court made the following findings (among other findings):
a) the level of conflict between the parents is high, and is harmful to the child;
b) the child has extensive and significant special needs and medical needs. In particular, the child needs a calm, structured and stress-free environment, and needs stability and consistency, and assistance on daily basis. The mother is the parent who has historically provided the child with all of his special needs and medical assistance;
c) the father's refusal to leave the home coupled with the escalating conflict in the home and his refusal to deal with the mother's lawyer, or refer her lawyer to his lawyer caused the mother to start an application and to bring an emergency motion for custody and access;
d) the father's behaviour during this period was confrontational and not appropriate; and,
e) the court was influenced by the father's conduct and its relevance to his ability to parent (C.L.R.A. s. 24(3)) and by his abusive behaviour (C.L.R.A. s. 24(4)).
The father was ordered to pay $14,000 in costs for this motion in written reasons for decision, released on 18 June 2018.
On 16 January 2018 the court made a temporary without prejudice order for child support of $248 per month on imputed minimum wage income from 1 January 2018, with the usual annual financial disclosure. Although he was served on 10 October 2017, the father had not filed an Answer and was given an extension of time to do so.
The mother's motion for child support was heard on 30 May 2018. These are some of the findings made by the court in the decision on the motion:
(a) The cost of caring for this special needs child is quite high and is non-discretionary;
(b) The s. 7 expenses claimed by the mother, totalling $1,855 per month, were not disputed by the father;
(c) The father had been out of work for 15 months at the time of the motion;
(d) Father's claim for an order for 0 child support was not reasonable under the circumstances; and,
(e) the father was intentionally unemployed or under-employed.
On 30 May 2018, these orders were made:
(a) Without prejudice child support $556 per month on imputed income of $60,000 from 1 June 2018;
(b) s. 7 expenses of $705 per month from 1 June 2018;
(c) annual financial disclosure;
(d) father's proportionate share of s. 7 expenses is 38%; and,
(e) specified disclosure.
On 30 May 2018, the father's motion for spousal support was stayed as he had not paid a previous costs order of $750 made 16 January 2018 and had not produced the usual disclosure required. The motion was ordered stayed until the costs were paid in full. The motion was not returned to court after this date, and was not argued.
The Costs Analysis
5. 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 four fundamental purposes:
(a) to indemnify successful litigants for the cost of litigation;
(b) to encourage settlement;
(c) to discourage and sanction inappropriate behaviour by litigants; and,
(d) to ensure that cases are dealt with justly.
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 the court to deal with cases justly.
Rule 2(2) needs to be read in conjunction with Rule 24. Rule 2(4) of the rules states that counsel have a positive obligation to help the court to promote the primary objective under the Family Law Rules. Rules 2(3)(a) and (b) set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense.
Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality.
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, in 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 mother was the successful party on the child support and spousal motion, and she is entitled to costs.
The mother's claims for costs of the motion to strike the father's pleadings and the unopposed final orders were not opposed by the father, and she is entitled to costs of those steps.
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 determining quantum, Rule 24(12)). 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.
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 father's "behaviour in relation to the issues from the time they arose" was unreasonable. Here are some examples:
a) the home is owned by the mother and the parties were not married. She asked the father to move out of the home repeatedly, including her lawyer asking him to move out, even for a few days, and he refused to do so, and did not move out;
b) the father was domineering and controlling, and was emotionally and psychologically abusive to the mother and intimidating to her;
c) the mother's lawyer repeatedly contacted the father and asked to be referred to his lawyer so she could negotiate a suitable custody and access arrangement. He refused to provide his lawyer's name and refused to talk to or negotiate with the mother's lawyer;
d) the father remaining in the home, and not engaging with the legal issues, was making a bad situation worse, particularly for the child;
e) on the motion for child support the father's position was that there should be 0 child support ordered, as he was not working and was receiving benefits from Ontario Works;
f) on the motion, the father took the position that the decision to allow him to receive benefits from Ontario Works determined his income for the purposes of child support, and that a government body had determined that he was not capable of earning other income;
g) the father did not produce even the standard minimum disclosure (i.e., three years of Income Tax returns) required under the Family Law Act, the Family Law Rules, and the Child Support Guidelines, and he was represented by a lawyer throughout this period;
h) the father had not worked for 15 months prior to the child support motion, although in previous years he had earned over $60,000 per year;
i) the father took the position that he could not afford to contribute to the child's extensive and expensive s. 7 expenses, and therefore should not have to contribute; and,
j) the father did not pay the costs order $750 made 16 January 2018, although it was a modest amount.
The conduct of the father directly contributed to the time, effort required and the length of the case. The father's behaviour was unreasonable.
Costs and Ability to Pay
Success is given presumptive pre-eminence in Rule 24. While Rule 24(11)(f) does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success.
Ability to pay may be relevant to the issue of the quantum or scale of costs, but not to another party's entitlement to costs.
Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(11).
The (financial) means of the unsuccessful party may not be used to shield him from liability for costs, particularly when he has acted unreasonably.
A party's limited financial means will also be accorded less weight in quantifying costs if the court finds that the party acted unreasonably.
The father argued that he had no ability to pay costs. However the court imputed income of $60,000 to him on 30 May 2018 in the motion for child support, and on 14 February 2019 in the final order.
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.
Both parents made Offers to Settle the motion for child support and the father's motion for spousal support.
The mother made both offers on 10 May 2018, well before the date for the motions to be argued. The father made an offer on 29 May 2018, the day before the motion was to be argued. At this point, the mother had already prepared the material for her motion for child support and had responded to the father's motion for spousal support.
The mother's offers were reasonable and were more favourable to the father than the orders made. The father's offer regarding child support was unreasonable (he offered support based on imputed minimum wage of $29,120, and no contribution to s. 7 expenses).
The mother's Offers to Settle qualify as Offers under Rule 18(14). The father's offer expired before the hearing of the motion and so does not qualify under Rule 18(14) for consideration. However, the court can take the father's offer into account under Rule 18(16).
The mother is entitled to costs under Rule 18(14).
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 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.
Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award. These are the factors in Rule 24(12) to consider in determining the amount of costs in family law matters:
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.
The Child Support and Spousal Support Motions
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: While the issues were important to the parents involved, the case was not complex. A finding of unreasonableness is not necessary to the making of a costs order. The mother's behaviour on the motions was reasonable, as reflected in her Offer to Settle. The father's position at the motion was not reasonable, nor was his Offer to Settle;
(b) the reasonableness and proportionality of the time spent by each party, as it relates to the importance and complexity of the issues: The time spent by the mother's lawyer was reasonable under the circumstances, given the issues before the court, and the need to establish the details of the s. 7 expenses for the special needs child. The father did not respond in any detail 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: Both parents made Offers to Settle the motions. The mother's offer qualified under Rule 18(14) and the father's did not, but can be considered under Rule 18(16). The terms of the mother's offer were more favourable to the father than the outcome at the motions. He should have accepted her Offer to Settle;
(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 an associate junior lawyer) were reasonable, and the involvement of a junior lawyer was reasonable, under these circumstances. The father did not respond in any detail to the claims of the mother, and raised no objection to the hourly rate of the mother's lawyer, or to the use of a junior lawyer; and,
(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 the mother were reasonable under the circumstances ($604.38). The father did not respond in any detail to the claims of the mother and raised no objection to the disbursements claimed by the mother.
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.
The Motion to Strike the Father's Answer and seeking Final Unopposed Orders
The case was started by the mother in October 2017. The mother's motion to strike the father's Answer was first raised on 18 September 2018. The father was served with the motion to strike on 1 November 2018. He was granted two extensions of time to serve and file a response, and he did not. The motion was first brought for 6 December 2018, and was adjourned on terms to 14 February 2019, when it was argued and determined.
On 14 February 2019, the father was in breach of two costs orders (16 January 2018 for $750 and 18 June 2018 for $14,000), and a consent disclosure order made 30 May 2018. The father's Answer was struck. The court made the following findings:
(a) The father had been given repeated extensions to pay the costs orders, and no payments were made;
(b) he was given extensions to produce the disclosure and it was not produced;
(c) he had been given repeated extensions to respond to the motion to strike and did not;
(d) although he was then unrepresented, he was intelligent, educated and articulate, and could have prepared the motion material himself;
(e) he had repeatedly disregarded court orders, the requirements of the Family Law Rules, and the entire court process;
(f) his non-compliance was wilful and deliberate and took place over a significant period of time (more than one year);
(g) previous costs sanctions had no effect on him and had not changed his behaviour; and,
(h) no other remedy was appropriate or available.
The mother sought final orders at an unopposed hearing on a Form 23C affidavit. A significant amount of material was filed by the mother on both the motion to strike the father's Answer, and on the unopposed hearing.
Final orders were made on 14 February 2019 for (among other things):
(a) sole custody to the mother, with specified access to the father;
(b) child support of $556 per month on imputed income of $60,000 from 1 March 2019;
(c) father to pay 38% of s. 7 expenses from 1 March 2019, and currently to pay $426 per month for s. 7 expenses from 1 March 2019;
(d) table and s. 7 child support arrears fixed at $12,788 and $8,493.82, less a credit of $7,421.96;
(e) annual financial disclosure;
(f) child support obligation to be life-insured;
(g) non-removal order regarding the father;
(h) travel and passport orders for the mother;
(i) a restraining order;
(j) father's claim for spousal support was dismissed;
(k) father shall not bring a motion to change without leave. The payment of costs will be taken into account in determining leave.
The mother had made several Offers to Settle on a final basis, served on 9 August, 23 August and 28 November 2018. The father made no Offers to Settle.
The mother is entitled to costs of the motion to strike and of the unopposed hearing for final orders for these reasons:
(a) she was the successful party at the motion and at the hearing;
(b) she made reasonable Offers to Settle throughout the case, including three Offers to Settle on a final basis;
(c) the father did not make court-ordered disclosure or comply with other court orders (e.g., for costs) and this is unreasonable behaviour; and,
(d) he did not dispute the mother's claim for costs of these steps. Her costs claim is unopposed.
Order
6. Order
The court makes the following findings regarding the motions and the unopposed hearing:
a) the conduct of the father was unreasonable;
b) the mother was successful on the motions and the hearing; and,
c) the father shall pay the mother's costs of the motions and the hearing.
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 father shall pay the mother her costs as follows:
(a) on the motion for child support, and on the father's motion for spousal support, costs on a substantial recovery basis of $15,000 all in (fees plus HST, disbursements plus HST), enforceable as support;
(b) on the motion to strike the father's Answer and for the unopposed hearing, costs on a substantial recovery basis of $17,000 all in (fees plus HST, disbursements plus HST), enforceable as support.
There are now several outstanding costs orders against the father:
- 16 January 2018 $750
- 18 June 2018 $14,000
- 12 October 2019 $15,000
- 12 October 2019 $17,000
Released: 9 October 2019
Justice Carole Curtis