ONTARIO COURT OF JUSTICE DATE: 2022 12 08 COURT FILE No.: Toronto DFO-21-015898
BETWEEN:
Franca Morsillo Applicant
— and —
Sebastiano Quartarone Respondent
Before Justice Sheilagh O’Connell In Chambers
Costs Endorsement
Counsel: Yunjae Kim, for the applicant K. Olando Vinton, for the respondent
O’CONNELL J.:
Introduction
[1] On May 31, 2022, the court released its reasons for decision after a hearing about whether to strike the father’s pleadings for failure to comply with an order for financial disclosure. See: Morsillo v. Quartarone, 2022 ONCJ 252.
[2] The court struck the father’s Answer/Claim pursuant to subrule 1(8) of the Family Law Rules and directed that the mother may proceed to an uncontested trial for a final order regarding ongoing and retroactive child support. The court also ordered that the father shall pay costs in the amount of $7,500.00 for two previous case conferences in this matter, the costs of which had been reserved.
[3] The court set timelines for the parties to make written submissions. The applicant mother seeks her full recovery of costs in the amount of $17,000.00. She further seeks that any costs ordered be enforceable by the Family Responsibility Office as a support order.
[4] The respondent father did not comply with the timelines for written submissions. He provided his submissions on August 10, 2022. He opposes an award of costs. He submits that the amount sought by the mother is excessive for what he describes as a simple case of retroactive and ongoing child support.
The Law and Governing Principles
[5] Costs in family law proceeding are governed by Rules 18 and 24 of the Family Law Rules, O. Reg. 114/99.
[6] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 also provides that subject to the provisions of an Act or Rules of the court, the costs of a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. R.S.O. 1990, c. C.43, s. 131 (1).
[7] Rule 24 (1) of the Rules provides that there is a presumption that a successful party is entitled to the costs of a motion, enforcement, case, or appeal. O. Reg. 114/99, r. 24 (1).
[8] In Mattina v. Mattina, 2018 ONCA 867, the Ontario Court of Appeal set out that modern costs rules are designed to foster four fundamental purposes:
- to partially indemnify successful litigants;
- to encourage settlement;
- to discourage and sanction in appropriate behaviour by litigants;
- to ensure that cases are dealt with justly under subrule 2(2) of the Family Law Rules.
[9] 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.
[10] As noted, costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.
[11] 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.
Determining Success
[12] Consideration of success is the starting point in determining costs. See: Sims-Howarth v. Bilcliffe.
[13] To determine whether a party has been successful, the court should examine the positions taken by the parties in the litigation. See: Lazare v. Heitner, 2018 ONSC 4861. This assessment includes the positions taken in the pleadings, and the specific relief sought at the hearing, if different. See: Kyriacou v. Zikos, 2022 ONSC 401.
[14] The court should also take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson; Todor v. Todor, 2021 ONSC 3463; Kyriacou v. Zikos, supra.
Offers to Settle
[15] Subrule 18 (4) sets out that an offer shall be signed personally by the party making it and also by the party’s lawyer, if any.
[16] Subrule 18 (14) sets out the cost 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:
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:
- If the offer relates to a motion, it is made at least one day before the motion date.
- 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.
- The offer does not expire and is not withdrawn before the hearing starts.
- The offer is not accepted.
- The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[17] 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)) or, in assessing the reasonableness of a party under sub-clause (iii) of subrule 24 (12) (a).
[18] 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 ONSC 4609.
[19] 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.
[20] 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.
[21] Subrule 24 (5) provides some criteria for determining the reasonableness of a party’s behaviour in a case and states the following:
(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.
Other factors affecting costs orders
[22] Subrule 24 (12) reads as follows:
(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.
[23] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003). Difficult financial circumstances are a factor but not are always a reason to deprive a successful party of costs or to reduce the amount of costs. See: Beaulieu v. Diotte, 2020 ONSC 6787. Ability to pay will be less of a mitigating factor when the impecunious party has acted unreasonably, or where their claim was illogical or without merit. See: Gobin v. Gobin, 2009 ONCJ 278; D.D. and F.D. v. H.G., 2020 ONSC 1919.
[24] 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.
[25] An adverse inference may be drawn against a party who does not provide their own bill of costs when challenging the rates and time of the party claiming costs. This is now required pursuant to subrule 24 (12.2). See: S. W.-S. v. R.S., 2022 ONCJ 11; M.H.S. v. M.R., 2022 ONCJ 28.
Application of the Law and Legal Principles to this Case
[26] The mother was clearly the successful party on this motion. The motion was brought by the mother. She requested that the court strike the father’s pleadings for failure to obey a court order and to provide financial disclosure. The court agreed with the mother that in the circumstances of this case, the only appropriate remedy was to strike the father’s Answer, and did so.
[27] The father did not rebut the presumption that the mother is entitled to her costs. However, for the reasons that follow, the mother is not entitled to the full recovery of her costs.
[28] This motion was important to the parties, especially the mother. The evidence showed that the father’s income had very significantly increased since the separation agreement was signed and that the father was not complying with his legal obligation to pay child support in accordance with his income. Further, the father was not providing timely or complete financial disclosure, making it difficult for the mother to determine the father’s income for child support purposes.
[29] The legal issues raised in the motion were somewhat complex. The striking of pleadings is a very serious and exceptional remedy. The motion did require legal submissions and a factum with respect to the appropriateness of this remedy in the circumstances of this case.
[30] Neither party served an Offer to Settle in accordance with Rule 18. The mother submits that given the relief sought, namely, to strike out the father’s Answer, this was not necessary. She argues that the numerous letters that the mother’s counsel wrote to the father’s counsel notifying him of the breach and requesting disclosure should be treated like a formal Offer to Settle, with the costs consequences of Rule 18 (14) triggered by the father’s failure to provide disclosure.
[31] The mother should have served a Rule 18 Offer to Settle. The court does not agree that the numerous letters that the mother’s counsel wrote to the father’s counsel meet the legal requirements of Rule 18(4) and 18(14) of the Rules, nor even under Rule 18(16) or sub-clause (iii) of Rule 24(12)(a). The letters do not attract the costs consequences of Rule 18(14) in order to trigger the full recovery of costs.
[32] Other than the failure to serve an Offer to Settle, the mother acted reasonably. She repeatedly notified the father through counsel of her request for financial disclosure. The mother’s counsel provided detailed and itemized lists of the financial disclosure outstanding. The mother provided the father with ample notice that she would be bringing a motion to strike his pleadings if he failed to comply with the order for financial disclosure. The mother served her motion materials well in advance of the time requirements for service under the Rules to give the father a reasonable opportunity to respond.
[33] The father did not act reasonably. He was warned by the court and through mother’s counsel about the consequences of failing to provide timely and complete financial disclosure. This made it extremely difficult for the mother to determine whether the father was paying adequate child support. Indeed, the father was not paying appropriate support.
[34] The father has not provided adequate financial disclosure for the past four years. In my written reasons setting out why the father’s pleadings would be struck, I found the following:
“The father has made no real efforts to disclose this information for the past four years. In fact, all of the evidence strongly suggests that that the father has made extensive efforts to delay and obfuscate. I am satisfied that the father is willfully refusing to provide the required financial disclosure.” [1]
[35] Further, in a previous endorsement at a case conference in the mother’s application, Justice Heather Katarynych wrote that the father’s attempt to set aside the separation agreement “..smacks of mischief as a means of trying to distract attention from his child support mismanagement.”
[36] The hourly rates claimed by the mother’s counsel were reasonable. However, the time claimed by the mother’s counsel and law clerk for the drafting, preparation and attendance on the motion (42.80 hours) was somewhat excessive for a motion of this nature.
[37] The father can afford to pay the costs that will be ordered. He will be given a reasonable period of time to pay the costs.
Costs Enforceable by the Family Responsibility Office as a Support Order
[38] The court agrees that the costs ordered should be enforceable by the Family Responsibility Office as a support order.
[39] Section 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, 1996 (“the Act) provides that a support order enforceable by the Family Responsibility Office includes “the payment of legal fees or other expenses arising in relation to support or maintenance.”
[40] Courts should interpret section 1(1)(g) of the Act broadly in relation to child support claims. See: Thompson v Drummond, 2018 ONSC 4762 at paragraph 45.
[41] The only claim made by the mother in this case is for retroactive and ongoing child support. All of the costs incurred in the mother’s motion to strike the father’s Answer were to advance the mother’s child support claims.
[42] In Writer v. Peroff, 2006 ONCA 769, the Ontario Court of Appeal upheld an order finding costs to be related to support where the costs related to a motion to strike an Answer to a child support claim. In that case, the Ontario Court of Appeal ordered the costs of the appeal to be enforceable as support by the Family Responsibility Office as well. See: Writer v. Peroff, CarswellOnt 6438 (S.C.J.); affirmed 2006 CarswellOnt 6218 (C.A.).
Conclusion and Order
[43] In considering all of the factors above, the court makes the following orders:
- The father shall pay the mother’s costs in the amount of $9,000.00, inclusive of fees, disbursements and HST, payable at a rate of $750.00 per month, commencing January 1, 2023.
- If the father is more than 30 days late in making any monthly payment towards costs, then the full amount of the costs owing shall immediately become due and payable.
- This costs award is a support order within the meaning of section 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, 1996, and as such, it is enforceable by the Director of the Family Responsibility Office.
Released: December 8, 2022 Signed: Justice Sheilagh O’Connell
[1] See: Morsillo v. Quartarone, 2022 ONCJ 252 at paragraph 75.
