Court File and Parties
Date: February 10, 2021 Court File No.: 45/20 Ontario Court of Justice at 7755 Hurontario Street, Brampton, Ontario
Applicant: Michel Shah Counsel: Dheeraj Sindwhani
Respondent: Reza Sayed Shah Counsel: Ruth Kalnitsky Roth
Endorsement Justice L.S. Parent
IN CHAMBERS – no one appearing
Issue Before the Court
[1] On December 7, 2020, I released an endorsement setting out procedural issues arising from the filing of a Motion to Change by Ms. Shah and the filing of a Response to the Motion to Change by Mr. Shah.
[2] These issues were as follows:
Whether or not each party has complied with paragraph 4.8 of their Separation Agreement dated August 23, 2013 which requires the party seeking a change to provide to the other, in writing, notice of the proposed change, evidence supporting the proposed change and any request for information necessary to determine the issue. Discussions occurred that the pathway for resolution contracted into by the parties should be respected;
The Separation Agreement was filed with the court, for enforcement purposes of child support, on January 10, 2020. Both parties appear to be seeking a change in the child support provisions; however, both the MTC and the Response lack specifics regarding the amount to be paid, the commencement date and income;
The Response filed by the R/F seeks an order of custody and access. These claims have been incorrectly plead given: (a) There is no existing order regarding these claims therefore they should be sought by Application and not through a Response to a Motion to Change; and (b) The child resides outside of the Region of Peel and therefore these claims should be brought, in accordance with Rule 5(1) of the FLR, in the jurisdiction where the child resides which in Hamilton, ON. This requirement also results in the Application being initiated in the Superior Court of Justice in that court location given that it is a Unified Family Court site;
The R/F seeks an order regarding life insurance coverage. Discussions occurred on the limitations of this court, given section 34(2) of the Family Law Act, to address this claim which is also not appropriately sought in the Response given that an existing order has not been granted on this issue.
[3] On January 6, 2021, I granted an order, on consent of the parties, withdrawing the Motion to Change filed January 22, 2020 and the Response to the Motion to Change filed February 21, 2020.
[4] My endorsement further provided for a timetable for the serving and filing of submissions on the issue of costs sought on behalf of Mr. Shah. These submissions were received on behalf of both parties in accordance with my order.
[5] Mr. Shah seeks an order that Ms. Shah pay costs to him, on a “full indemnity basis” in the amount of $37,575.72 or in the alternative, on a “substantial indemnity basis” in the amount of $28,181.79.
[6] Ms. Shah seeks an order dismissing Mr. Shah’s request for costs.
Legal Framework
[7] 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, O. Reg. 114/99 (“FLR”) (Mattina v. Mattina, 2018 ONCA 867).
[8] 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] 3 S.C.R. 371, 2003 SCC 71, at para. 25).
[9] Subrule 12(3) provides as follows:
“Costs Payable on Withdrawal – A party who withdraws all or part of an application, answer or reply shall pay the costs of every other party in relation to the withdrawn application, answer or reply or part, up to the date of the withdrawal, unless the court orders or the parties agree otherwise.”
[10] Counsel on behalf of each party has submitted caselaw supporting the principle that costs, even in cases of the withdrawal of pleadings, remains in the discretion of the Court.
[11] In exercising this discretion, the court must consider the factors listed in subrule 24(12) and also be mindful of the concepts reasonableness and proportionality (Beaver v. Hill, 2018 ONCA 840).
[12] Under the FLR, judges are not constrained to the normal scales of costs mentioned in the Rules of Civil Procedure, since no scales of costs are mentioned in them (Beaver).
[13] Family law litigants are also responsible for and accountable for the positions they take in the litigation (Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141).
Analysis
[14] Submissions received on behalf of both parties agree that each party’s behaviour throughout this litigation is a crucial factor the court must look at in exercising its discretion as it relates to costs. In fact, subrule 24(12)(a)(i) states that a factor is “each party’s behaviour”.
[15] Submissions made on behalf of Mr. Shah claim that Ms. Shah behaved unreasonably initially by disregarding the terms of the parties’ Separation Agreement regarding decision-making, access and dispute resolution and by commencing litigation without displaying any willingness to negotiate a resolution.
[16] Submissions made on behalf of Ms. Shah deny that she behaved unreasonably given that she engaged in discussions with Mr. Shah and only after the absence of a resolution, she proceeded to file her Motion to Change.
[17] A party’s unreasonable behaviour during the course of the litigation is a factor to consider in making an order of costs, pursuant to subrule 24(4), as is the factor of bad faith on the part of a party to the litigation (subrule 24(8)).
[18] Subrule 24(8) mandates that if a party is found to have acted in bad faith, the Court is to award “full recovery” costs on an immediate basis. Nonetheless, it is not disputed that ultimately this decision is also within the overall discretion of the Court depending on the individual circumstances of the case (Beaver).
[19] Case law supports the proposition that the finding of bad faith on the part of a litigant demands a high threshold. At paragraph 17 of His Honour’s decision in S.(C.) v. S.(M.). Perkins, J. states:
“In order to come within the meaning of bad faith in subrule 24(8), the behavior must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behavior to conceal information relevant to the issues at stake in the case or to deceive the other party or the court…The requisite intent to harm, conceal does not have to be the person’s sole or primary intent but rather only a significant part of the person’s intent. At some point a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behavior is causing the other party major financial harm without justification.”
[20] In substantial subsequent case law following S.(C.), the requisite intention to inflict harm on the other party must be present to meet the high threshold test of bad faith.
[21] After a review of the submissions, I do find that both parties were quick to become involved in litigation rather than focus on the dispute resolution mechanism agreed to in their Separation Agreement to explore the resolution of their dispute. However, I do not find that Ms. Shah engaged in unreasonable and/or bad faith behaviour as claimed by Mr. Shah in support of his submissions for costs.
[22] Furthermore, I find that the filing of pleadings, as drafted, further entrenched each party in their belief that they were acting reasonably, and the other party was not. This behaviour heightened the complexity and importance of this matter in the eyes of the parties. In reality, this matter was not complex.
[23] Many of the submissions on costs made on behalf of Mr. Shah relate to efforts he made to settle this matter, all of which were rejected by Ms. Shah.
[24] Subrule 24(5), in the context of assessing the reasonableness or unreasonableness of parties’ conduct, focuses consideration of any offers to settle made by the parties in the course of the litigation and their respective responses to those offers to settle.
[25] This is not a case where the court decided the substantive claims raised by each party in their respective pleadings. Rather, the court highlighted the procedural deficiencies which resulted in a withdrawal of their respective pleadings, on consent.
[26] I was not provided with the Offers to Settle referenced in the submissions made on behalf of Mr. Shah. The submissions are clear; however, that the offers related to the resolution of the claims sought by each party and not the withdrawal of the Motion to Change given the procedural deficiencies.
[27] I find therefore that the Offers to Settle do not trigger the costs consequences captured by subrule 18(14) FLR. For the reasons noted above, I further find that the offers do not impact the use of my discretion under subrule 18(16) FLR.
[28] Counsel on behalf of Mr. Shah has claimed 80.30 hours of work, completed by herself, senior counsel and clerks in her office. The Bill of Costs submitted separates this time under the following headings:
a) 17.1 hours – Negotiations and Cross Motion/Responding Materials; b) 16.1 hours – Negotiations preceding Respondent’s August 2020 Offer to Settle via Letter from Counsel; c) 20.5 hours – Negotiations and Settlement Discussions Between August 2020 and Service of 5 Offers to Settle on December 22, 2020 pursuant to R. 18; and d) 26.6 hours – Negotiations and Case Conference following Service of Respondent’s 5 Offers to Settle.
[29] I agree with counsel for Ms. Shah’s submission that the Response to the Motion to Change filed by Mr. Shah did not seek the dismissal of Ms. Shah’s Motion to Change on the basis of non-compliance with the dispute resolution terms of the parties’ Separation Agreement.
[30] My endorsement of December 7, 2020 also noted that Mr. Shah incorrectly sought in his Response to the Motion to Change:
a) an order for custody and access regarding the child of the relationship when no existing order had been previously granted and, in a jurisdiction, where the child did not reside, contrary to Rule 5(1) of the FLR; and b) an order seeking to vary the terms of the parties’ Separation Agreement relating to his obligation to provide life insurance coverage despite the absence of an existing order and the limitations of section 34(2) of the Family Law Act on this court.
[31] These findings are important in assessing whether or not the factor of subrule 24(12)(ii) namely, “the time spent by each party” is reasonable and proportionate.
[32] I take no issue with the hourly rate charged by the two lawyers and clerks assisting Mr. Shah. The rates are reasonable given counsel’s respective years of experience and these rates, in addition to the clerks’ rates, are in keeping with going rates within the greater Toronto area.
[33] I find that Mr. Shah did incur costs to respond to the Motion to Change filed by Ms. Shah. However, instructions provided to his counsel resulted in fees accruing for time spent drafting his Response to include claims beyond seeking the dismissal of the Motion to Change on the basis of non-compliance with the dispute resolution terms of the Separation Agreement. This time spent cannot be attributed to Ms. Shah.
[34] Unfortunately, the Bill of Costs and the docket entries provided, are not clear as to the precise number of hours spent on the drafting, reviewing and filing of Mr. Shah’s Response to the Motion to Change. I find, therefore, that it is impossible to assess the costs which could be attributed to the filing of a Response seeking only the dismissal of the Motion to Change on the basis of non-compliance with the dispute resolution clause of the parties’ Separation Agreement.
Order
[35] For all of these reasons, the request for costs as claimed on behalf of Mr. Shah is denied. An order will go that each party shall bear their own costs in the withdrawal of their respective pleadings.
[36] I have requested that my judicial assistant forward this endorsement to counsel at the e-mail addresses noted above.
Justice L.S. Parent