Court File and Parties

ONTARIO COURT OF JUSTICE DATE: 2021·07·26 COURT FILE No.: Woodstock D35/19

BETWEEN:

Katarzyna Krzewina Applicant

— AND —

Chad Beaumont Respondent

Before: Justice S. E. J. Paull In Chambers Reasons on Costs Released on July 26, 2021

Counsel: Grant E. Rayner.............................................................................. counsel for the applicant(s) Thomas M. MacKay .................................................................... counsel for the respondent(s)

PAULL J.:

[1] Before the court is the issue of costs following the motion brought by the applicant seeking various relief, and which was ultimately argued on the issues of security for costs and a claim for interim expenses. In written Reasons dated June 18, 2021 the motion was dismissed. I invited the parties to file written submissions on costs if they were unable to agree.

[2] Both parties seek costs. The respondent seeks $5000 (inclusive) primarily on the basis of his success on the motion and what he submits was the unreasonableness of the applicant in her approach to the motion.

[3] The applicant is seeking costs for the motion the amount of $9420.13 ($7573.26 plus $1846.87) on the basis that she was “successful in the aspect of the motion that mattered the most of all, that being her motion for disclosure”. Despite the dismissal of those portions of her motion which did ultimately proceed, the applicant submits that she was nonetheless more successful, and that the presumption of costs set out in Rule 24(1) of the Family Law Rules should apply.

Background and Evidence

[4] The parties are the parents of one child, M.B. born […], 2006. They are the subject of the final order of McSorley J. dated September 22, 2008 which included, among other things, an order that the respondent pay support for the child in the amount of $375 per month based on his income at the time of $29,000.

[5] The current proceeding is a Motion to Change served March 29, 2019 brought by the respondent seeking to vary the child support to $184 per month commencing January 1, 2018 and fixing arrears owing at $10,000 based on his current income of $23,000. The FRO Statement of Arrears indicated arrears totaling $27,044.94 as of January 1, 2020, which represents approximately 6 years of missed child support payments. He has two other children from separate prior relationships and acknowledged significant arrears owing to both which were the subject of separate enforcement and variation proceedings in another jurisdiction. The variation proceedings regarding his other children have been resolved by final orders fixing arrears.

[6] The applicant’s Response to the Motion to Change served May 21, 2019 seeks an increase in child support to $792 per month based on an income of $85,138 retroactive to January 1, 2015.

[7] The issue here relates to what, if any, costs should be payable between the parties a result of the applicant’s motion. Her motion sought 13 grounds of relief. In addition to seeking security for costs and interim disbursements the motion sought significant financial disclosure from the respondent, his business, and from his partner and her daughter. The motion also sought to add his partner and her daughter as parties to the proceeding.

[8] The motion was originally scheduled for argument on April 1, 2020. As a result of the pandemic and the suspension of regular court operations the motion did not proceed on that date and the matter was not back before the court with counsel present until November 4, 2020. The motion was scheduled to proceed on February 8, 2021 for ½ the day.

[9] Argument on the motion began February 8, 2021 but was not completed. The matter was adjourned for continuation and was completed on June 2, 2021.

[10] Much time was spent on February 8, 2021 going through the applicant’s Notice of Motion to confirm which terms of the extensive relief sought were being pursued. The 14C confirmations filed by the applicant which usually provide this information were of little assistance because they outlined relief that was not sought in the motion and left unaddressed virtually all the relief that was. The applicant’s factum was of little assistance because it also addressed relief not sought in the motion including a request to strike the respondent’s pleadings and to impute income on him for the years 2015 to 2017 and to fix arrears owing.

[11] Further, argument could not be completed on February 8, 2021 and the matter was also delayed when it became clear during the hearing that much of the voluminous financial disclosure sought in the motion was in fact listed in the respondent’s Certificate of Financial Disclosure. When queried by the court on this counsel for the applicant stated that he had not received these documents.

[12] It was unclear why counsel for the applicant would not of followed up on this issue since the respondent’s affidavit of February 26, 2020 points out that he had provided the disclosure requested, and attached the Certificate of Financial Disclosure and affidavit of service that it, along with three volumes of the listed documents, were delivered to counsel’s office on January 9, 2020.

[13] The result was that the matter had to be adjourned. On the return date of April 6, 2021, after receiving a copy of the Courier receipt, the applicant’s counsel acknowledged that he had received three large volumes of documents in January 2020 and that they had been misplaced in his office. With these issues sorted out the matter was once again scheduled for continuation of argument to June 2, 2021.

[14] The consequence of all these unfortunate events was that the time spent on this matter on February 8, 2021 was entirely wasted, and the appearance on April 6, 2021, albeit relatively brief, ought not to have been necessary.

[15] On June 2, 2021 the applicant conceded that there was no outstanding financial disclosure. The applicant chose to proceed with her claims for security of costs and for interim disbursements with both claims being dismissed by the court.

Law and Analysis

[16] 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). Mattina v. Mattina, 2018 ONCA 867.

[17] 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, 2003 SCC 71, paragraph 25.

[18] Subrule 24(1) of the Family Law Rules (the 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).

[19] Subrule 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.

[20] The court has a discretion to consider any written offer to settle, the date it was made and its terms, even if subrule 18(14) does not apply, when exercising its discretion over costs. (subrule 18(16)), or, in assessing the reasonableness of a party under sub-clause (iii) of subrule 24 (12) (a).

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

[22] Even if the terms of subrule 18(14) are followed, the court still has the discretion not to order full recovery costs. C.A.M. v. D.M.

[23] The Family Law Rules expressly provide that depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded, although there is no obligation to make an offer to settle. Beaver v. Hill, 2018 ONCA 840.

[24] 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. Berta v. Berta, 2015 ONCA 918 at para. 94.

[25] In making this decision the court has considered the factors set out in subrule 24 (12) of the rules which reads as follows:

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.

[26] Subrule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24(12)(a) (i) 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.

[27] The respondent submits a severable offer to settle dated January 6, 2021 which dealt with both the motion and the motion to change. Under Part A of the offer the respondent offered to pay the applicant $50 in costs with the applicant’s motion being dismissed in its entirety on a without prejudice basis.

[28] As I noted in the Reasons the significant financial disclosure requested in the motion by the applicant was not unreasonable in the circumstances. However, the respondent provided all the requested disclosure in a timely and relatively organized way following service of the motion. The respondent’s offer to settle was made after all the requested disclosure had been provided and reflected the order made by the court on the remaining relief sought.

[29] There was no evidence of an offer to settle by the applicant which would have been reasonable considering the position in her costs submissions that the financial disclosure was the most important issue for her. It would also have been reasonable for her to provide an offer because of the breadth of the relief sought in her motion, some of which she ultimately abandoned during argument of the motion on February 8, 2021. This included the request to add the respondent’s partner and her child as parties to the proceeding.

[30] Sub-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. Laing v. Mahmoud, 2011 ONSC 6737. The failure to serve an offer to settle will be an adverse factor when assessing costs.

[31] Based on an overall assessment of the parties’ positions on the motion, the offer of the respondent and the order made, the respondent was clearly the more successful party. While it was reasonable of the applicant to bring the motion for financial disclosure, to continue to pursue it along with the other relief after the disclosure had already been provided was not reasonable in the circumstances.

[32] The combination of the disclosure being misplaced in counsel’s office for over a year, and the confused approach taken to which relief was in fact being pursued by the applicant when the matter was up for argument on February 8, 2021, resulted in an unreasonable waste of time and resources.

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

[34] The costs determination must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred (for which reimbursement 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 cheque for their costs. O’Brien v. O’Brien, 2017 ONSC 402.

[35] The applicant and the respondent have each approached this matter in both a reasonable and unreasonable way at times.

[36] The applicant was reasonable in bringing the motion for disclosure given the confusing and tangled nature of the respondent’s personal and business finances, but was unreasonable in both pursuing the other relief and in the manner in which this relief was pursued on February 8, 2021.

[37] However, as I noted in the Reasons as of January 1, 2020 the respondent was in substantial arrears of child support in an amount that represented almost 6 years of missed payments. This covers years where, by his own evidence, he earned considerably more income than the current child support order is based on. In 2015 for example he earned $85,138, which is almost 3 times the income noted in the order. Further, the respondent acknowledged spending $400 a month on “gifts” while not meeting his basic child support obligation.

[38] For a significant period of time, and particularly during those years when his income was higher than in the order, the respondent appears not to have approached his obligation to support his child in a reasonable manner. However, he provided all the financial disclosure requested in the motion, even from his partner, in a timely and relatively organized way.

[39] Overall, while the applicant may have been required to bring the motion for disclosure, the motion did not need to proceed to argument because this disclosure was provided in its entirety shortly after the motion was served in early 2020.

[40] It should have ended there. The remaining relief in the motion was either abandoned or dismissed.

[41] The issues in this matter were not particularly complex, although the disclosure was voluminous given how the respondent chose to organize his finances. In these circumstances, and because the disclosure requested was reasonable, the respondent should bear his own costs resulting from the time and effort that he and his counsel put into responding to the motion which primarily involved providing that disclosure.

[42] Both counsel provided a Bill of Costs which outline the significant costs their clients have had to bear to date.

[43] Overall, while the respondent was the more successful party on the motion, costs awards are ultimately discretionary. In balancing all the considerations outlined herein, including the reasonable and unreasonable behaviour of both parties, I am not inclined to order costs to either party, except to the respondent for the time wasted for the court appearances on February 8 and April 6, 2021, and for a portion of the appearance on June 2, 2021 when the respondent was successful in having the applicant’s remaining claims dismissed. Counsel for the respondent’s hourly rate is $225 and approximately 4 hours is reasonable to cover these appearances. As such the respondent is entitled to costs of $1000 (inclusive). The parties shall bear the remainder of their own costs on the motion.

[44] I would repeat and rely on the sage comments of Justice S. Clark in Davis v. Kim, 2019 ONCJ 151, that, when appropriate, bearing one’s own costs should give both parties a “jolt” and a strong dose of “reality” that their decision to litigate rather than negotiate, going forward, should be soberly evaluated.

[45] On the basis of all these considerations an order shall issue that the applicant pay to the respondent costs in the amount of $1000 (inclusive) payable forthwith, with each party bearing the remainder of their own costs on the motion.

Released: July 26, 2021 Signed: “Justice S. E. J. Paull”