Court File and Parties

Date: June 24, 2020

Court File No.: D21130/18

Ontario Court of Justice

Between:

A.T.

AYESHA HUSSAIN, for the APPLICANT

APPLICANT

- and -

M.H.

RYAN MANILLA, for the RESPONDENT

RESPONDENT

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Part One – Introduction

[1] This is the costs decision on motions brought by the parties regarding the temporary parenting arrangements for their three children (the children). The court ordered on June 5, 2020 that the applicant (the mother) have temporary custody of the children with defined parenting time for the respondent (the father). See: A.T. v. M.H., 2020 ONCJ 277.

[2] The court gave the parties the opportunity to make written costs submissions. The mother seeks costs of $3,390. The father asks that the court limit the mother's costs to $1,200.

Part Two – Legal Considerations

2.1 General Principles

[3] The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 set out that 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 subrule 2(2) of the Family Law Rules (all references to the rules in this decision are to the Family Law Rules).

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

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

2.2 Success

[6] Subrule 24(1) creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe, [2000] 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. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ).

[7] Subrule 24(6) sets out that if success in a step in a case is divided, the court may apportion costs as appropriate.

2.3 Offers to Settle

[8] Subrule 18(14) sets out the consequences of a party's failure to accept an offer to settle that is as good as or better than the trial result of the person making the offer. It 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.

[9] The technical requirements of subrule 18(4) must be met to attract the costs consequences in subrule 18(14). See: Ajiboye v. Ajiboye, 2019 ONCJ 894. In Clancy v. Hansman, 2013 ONCJ 702, this court found that an offer to settle did not meet the technical requirements of subrule 18(14) writing at paragraph 12:

A secondary deficiency in the offer to settle is that it was withdrawn 5 minutes before the commencement of the hearing. Paragraph 3 of subrule 18(14) requires that the offer must not have expired or been withdrawn before the hearing starts. This offer had expired before the hearing started. If counsel wish to put expiry clauses in their offers that will comply with the condition in paragraph 3 of subrule 18(14), the expiry date should be after the start of the hearing.

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

[11] Even if subrule 18(14) does not apply, the court may take into account any written offer to settle, the date it was made and its terms when exercising its discretion over costs (subrule 18(16)).

2.4 Other Factors Affecting Costs Orders

[12] Subrule 24(12) 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.

[13] Subrule 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.

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

[15] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.). However, 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. See: Snih v. Snih pars. 7-13.

[16] Those who can least afford to litigate should be most motivated to seriously pursue settlement and avoid unnecessary proceedings. See: Mohr v. Sweeney, 2016 ONSC 3338; Balsmeier v. Balsmeier, 2016 ONSC 3485.

Part Three – Analysis

3.1 Offers to Settle and Success

[17] The mother made an offer to settle dated June 2, 2020. It was more favourable to the father than the final result.

[18] However, the mother's offer did not meet the technical requirements of subrule 18(14).

[19] The mother's offer to settle expired at 9:59 a.m. on June 3, 2020 – before the start of the hearing of the motion. Paragraph 3 of subrule 18(14) is very clear that for the costs consequences in subrule 18(14) to apply, the offer must still be alive at the start of the hearing. Here, the offer had expired prior to the hearing starting.

[20] Counsel should be careful to draft their offers to settle so that the expiry of the offer takes place after the hearing starts.

[21] The father also submitted that the mother's offer to settle did not meet the technical requirements of Paragraph 1 of subrule 18(14) as it was served at 12:43 p.m. on June 2, 2020. The motions were heard at 10:00 a.m. on June 3, 2020. He submits that the offer was served less than one day before the hearing.

[22] The court does not agree with this submission. The requirement in Paragraph 1 of subrule 18(14) is that the offer be served at least one day before the motion date – it does not say at least 24 hours before the motion date. Here, the offer was served on the court day prior to the motion date and meets the requirement in Paragraph 1 of subrule 18(14).

However, the analysis doesn't stop there. An important element of subrule 18(14) is that the costs consequences do not apply if the court orders otherwise.

[23] Service of an offer to settle less than 24 hours before the hearing of a contested motion may be a reason that the court will order otherwise.

[24] In E.H. v. O.K., 2018 ONCJ, this court "ordered otherwise" and did not apply the costs consequences set out in subrule 18(14) when the offer was made the day prior to the motion, writing at paragraphs 23 to 28:

[23] Subrule 18(14) sets out that the costs consequences apply unless (my emphasis) the court orders otherwise.

[24] This leads to a significant concern – the timing of the mother's offer to settle.

[25] While the technical requirement of subrule 18(14) regarding service of the offer to settle was met (the offer was served at least one day prior to the hearing of the motions), it was barely met.

[26] Parties require a reasonable period of time to process and make an informed decision about whether to accept an offer. See: Oduwole v. Moses, 2016 ONCJ 653. What constitutes a reasonable period of time will depend on the complexity of the case.

[27] These were complex motions. The mother's offer to settle should have been served much earlier (closer to the 7 day time requirement for a trial) – particularly since the hearing of the motions had been scheduled in January, 2018.

[28] Rule 2 (dealing with cases justly) applies when a court is determining whether to "order otherwise" with respect to a subrule 18(14) offer. Making an offer to settle that is only open for one day before a complex motion is to be heard may have some value for parties as a litigation tactic, but will have little probative value for this court when determining whether to apply subrule 18(14). The court finds that it would not be just for it to fully apply the costs consequences of subrule 18(14) in these circumstances.

[25] In this case, even if the mother's offer had been alive at the start of the hearing the court would not have applied the costs consequences in subrule 18(14) as it left very little time for the father to process the offer with his lawyer – particularly given the additional communication hurdles created by the COVID-19 pandemic. The offer should have been made earlier.

[26] The court did consider the mother's offer pursuant to subrule 18(16).

[27] The father concedes that the mother was the successful party on the motions. The court ordered that the children be returned to her and granted her a temporary custody order. The court ordered less parenting time to the father than the mother was prepared to agree to. The mother did not obtain the police enforcement order she sought, but she was willing to forego this in her offer to settle. Further, the court indicated that it was prepared to make the requested order in the future if the father breached its order.

[28] The presumption that the mother is entitled to costs was not rebutted or contested by the father.

3.2 Amount of Costs

[29] The father submits that the mother should be limited to costs of $1,200 since this was the specific amount that she sought in her amended Form 14B motion. He says that it is a reasonable expectation of the father that the costs would be limited to that amount if the mother succeeded on her motion.

[30] The court took this submission into account. However, the mother was not just successful on her motion. She was also successful in resisting the father's notice of motion and is entitled to costs for this as well.

[31] Further, the mother sought $1,200 costs on the basis that her Form 14B motion would be determined based on the original written materials. Instead, the court set up a hearing and permitted the parties to provide more detailed affidavits. This required additional time and expense for which the mother is entitled to costs.

[32] The mother acted reasonably in this case. She attempted to negotiate a resolution to the matter. She made a very reasonable offer to settle, albeit later than it should have been made.

[33] The father did not act reasonably. He did not make an offer to settle. The court found in its decision that the father:

a) Unjustifiably overheld the children.

b) Took advantage of the absence of a written agreement to obtain a litigation advantage.

c) Attempted to coerce the mother into signing an unfavourable separation agreement in exchange for seeing the children.

d) Blocked her telephone number and did not let her speak to the children.

[34] Submissions that are made by a party to limit costs to the amount claimed in a notice of motion weaken as the level of that party's unreasonable behaviour increases. Unreasonable litigants cannot expect the courts to limit costs when their behaviour increases the costs of the proceeding.

[35] The rates claimed by the mother's counsel are reasonable.

[36] The mother claimed two hours for preparation of the application in her bill of costs. This is not part of the motion step. Otherwise her bill of costs was reasonable and proportionate.

[37] The court also considered the economic circumstances of the father. He states that his 2019 income was under $15,000. The court will take into account his economic circumstances by giving him time to pay the costs order.

[38] Taking into account all of these factors, the court orders that the father pay the mother the amount of $2,500 for costs, inclusive of fees, disbursements and HST for these motions. The father may pay the costs at the rate of $250 each month starting on July 1, 2020. However, if he is more than 30 days late in making any payments the entire amount of the costs then owing shall immediately become due and payable.

Released: June 24, 2020

Justice S.B. Sherr