Court File and Parties

Date: January 7, 2020

Court File No.: D21760/18

Ontario Court of Justice

Between:

T.L. APPLICANT

-and-

D.S. RESPONDENT

Heard: In Chambers

Justice: S.B. Sherr

Costs Endorsement

Part One – Introduction

[1] On November 8, 2019 the court released its trial decision regarding the parenting and support arrangements for the parties' two children. See: T.L. v. D.S., 2019 ONCJ 809.

[2] The court granted sole custody of the children to the applicant (the mother). It made a specified parenting time order for the respondent (the father). It imputed minimum-wage income to the father and started child support on October 1, 2018.

[3] The parties were given the opportunity to make written costs submissions. The mother seeks costs of $18,330.57. The father did not make costs submissions.

Part Two – Legal Considerations

2.1 Purposes

[4] 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).

[5] 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. See: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, paragraph 25.

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 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.

[8] 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)).

[9] 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).

[10] 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. See: Wilson v. Kovalev, 2016 ONSC 163.

[11] 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. See: Gurley v. Gurley, 2013 ONCJ 482.

2.3 Determination of the Amount of Costs

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

[13] 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.

[14] 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.

[15] Prior to July 1, 2018, pursuant to subrule 24(10), costs for any step in the proceeding were required to be determined at the time or expressly reserved. In Islam v. Rahman, 2007 ONCA 622, the Ontario Court of Appeal set out that the trial judge should not deal with requests for costs that were addressed or should have been addressed at prior steps in the case. However, this did not preclude courts from awarding costs accrued from activity not specifically related to the step. Activity not requiring judicial intervention is often better dealt with at the end of the case and not by the motions judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98. This activity includes time spent for meetings with the client and reviewing and preparing pleadings and financial statements. See: Czirjak v. Iskandar, 2010 ONSC 3778.

[16] Subrule 24(11) came into force on July 1, 2018 and now provides that the failure of the court to order costs in relation to a step in a case does not prevent it from awarding costs in relation to the step at a later stage in the case.

[17] However, courts continue to be cautious about awarding costs at the trial stage where costs were not awarded at earlier steps in a case. See: Baezner v. Brunnenmeir, 2018 ONCJ 956; Nabwangu v. Williams, 2019 ONCJ 171.

[18] In Saunders v. Vargas, 2018 ONSJ 4531, Justice Robert Charney set out the challenges faced by a trial judge in determining costs incurred at previous steps in a case, writing at paragraphs 23 and 24:

[23] While the amendment to Rule 24(11) confirms that the court is not precluded from awarding costs at a later stage in the case, this should not be seen as an open invitation to counsel to ask a judge to review the conduct of the opposing party at previous conferences or hearings before a different judge. There is a risk that cases will no longer be about the issues that brought the parties to court in the first place, but turn into conflicts about what happened in previous court appearances and conferences. Trying to reconstruct the conduct of previous hearings and conferences that took place before a different judge is not an efficient use of judicial resources.

[24] While there may be circumstances in which the significance and unreasonableness of some actions may only become clear after the trial or settlement, the judge who deals with a step in the case generally remains best placed to decide and assess costs in relation to that step. In my view, it is incumbent on a party that requests the court to award costs in relation to an earlier step heard by a different judge, to explain why the later judge is in a better position than the judge who actually dealt with the particular step to assess the significance or unreasonableness of any steps taken.

[19] In Cameron v. Cameron, 2018 ONSC 6823, Justice Marvin Kurz interpreted the changes to the costs rules regarding prior steps in a case as creating a rebuttable presumption against ordering costs for these steps if they were not addressed or reserved by the judge hearing the step. He wrote at paragraphs 83 to 88:

[83] In sum, a trial judge has the jurisdiction under R. 24(11) to determine the costs of earlier steps in the proceeding. However, in light of the continued application of R. 24(10), it should be presumed that a judge who does not determine or reserve the costs of a step before her or him does not find that the conduct of the parties during the course of that step merits an award of costs.

[84] That presumed finding should be entitled to deference by subsequent judges. It should be accorded even greater deference when, as here, the previous step was conducted before R. 24(11) was formally amended on April 23, 2018.

[85] If the judge of a step prior to trial does not wish the presumption to apply, I suggest that he or she should say so. The judge can then expressly reserve the costs of the step to a later date, such as the trial. If that occurs, brief reasons would be helpful. I know that many judges are reluctant to award costs of a conference or even reserve them for fear that such a decision may adversely affect the potential for settlement. However, with the increasingly onerous costs of family litigation, it is always salutary for the parties to be reminded at every stage of the proceeding of the potential costs consequences of their litigation.

[86] In light of the presumption, a judge hearing a trial should only grant the costs of a previous step in one of the following circumstances:

a. when they have been reserved to the trial judge; or

b. when, in light of subsequent events, the trial judge is better situated to determine the costs of the prior step than the judge presiding over that step. In that case, the process of determining costs will involve a broad consideration of the prior step within the context of the case as a whole; or

c. in exceptional circumstances.

[87] If a party seeks the previously undetermined and unreserved costs of a previous step, the onus rests on him or her to set out why those costs should now be awarded in their favour. To meet that onus, the party should offer a detailed summary of each prior step for which he or she is seeking costs. The party should add an explanation of why he or she should now be granted the costs of that step. That summary should include:

a. the positions that each party took at that step;

b. the manner in which the party's participation in that step advanced the case or contributed towards the ultimate result;

c. an explanation of why the later judge is in a better position than the judge who actually dealt with the particular step to assess the significance or reasonableness of the conduct of the parties during that step;

d. a comparison of any relevant offers to settle, particularly as they may impact on the prior step; and

e. any other consideration that the party relies upon to claim the costs of that step.

[88] The principles set out above also apply, with any necessary adjustments (considering their more summary nature), to motions and any other proceedings in which a judge is asked to award the undetermined costs of prior steps. Those principles can apply, for example when a motions judge is asked to determine the costs of a previous case conference or when the balance of a partially completed conference is adjourned to another date, without costs being reserved.

[20] This court agrees with the approach taken by Justice Kurz.

2.4 Ability to Pay Costs

[21] The court should take into consideration the ability of a party to pay costs. See: MacDonald v. Magel, 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. Those who can least afford litigation should be the most motivated to avoid unnecessary proceedings. See: Mohr v. Sweeney, 2016 ONSC 3238.

Part Three – Analysis

[22] The mother made an offer to settle dated October 24, 2019. The father did not make an offer to settle.

[23] The mother's offer met all the pre-conditions for the costs consequences in subrule 18(14) to apply. It was more favourable to the father than the trial result. He should have accepted this offer.

[24] The mother was the successful party in this case.

[25] The father did not rebut the presumptive costs consequences contained in subrule 18(14).

[26] The case was important to the parties. It was not complex or difficult.

[27] The mother acted reasonably.

[28] The father did not act reasonably. In particular:

a) He took the unreasonable position that he would not exercise access to the children if he was not granted custody and primary residence by the court.

b) He quit his job the day after Justice Curtis' temporary support order in an attempt to avoid his child support obligations.

c) He didn't comply with the court's financial disclosure orders.

d) He has not paid the $1,000 costs order made by Justice Curtis on June 27, 2019.

e) He didn't comply with the directions given by Justice Carolyn Jones at the trial management conference.

f) He dragged this case out. He did not respond to the application and only responded after the mother had to attend at First Appearance Court twice and filed a Form 23C affidavit for a default order.

g) He made no effort to settle this case and caused unnecessary costs.

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

[30] The mother sought her costs for all of the time her counsel spent on this case (except for her time on the father's motion where costs were ordered by Justice Curtis). The court is prepared to order costs for most of this time, but not for the early case conferences where costs were not reserved. The mother is entitled to her costs for all legal work not related to a step in the case (drafting pleadings, correspondence, meetings with client, attendances at First Appearance court and her preparation of her Form 23C). She is also entitled to her costs for her preparation for and attendance at two settlement conferences, assignment court and the trial management conference (where costs were reserved).

[31] The expenses claimed by the mother are reasonable.

[32] The court considered that the father is of modest means. However, he is the author of his own misfortune and he acted totally unreasonably throughout this case. There will be consequences for that.

[33] Taking into account all of these factors the court orders that the father pay the mother her costs of $14,000, inclusive of fees, disbursements and HST. Costs are payable forthwith.

Released: January 7, 2020

Justice S.B. Sherr