DATE: May 3, 2023 COURT FILE NO. D41467/21
ONTARIO COURT OF JUSTICE
B E T W E E N:
DIANA MALGORZATA MULIK
MONIKA CURYK, for the APPLICANT
APPLICANT
- and -
MICHAEL WESLEY MCFARLANE
ACTING IN PERSON
RESPONDENT
HEARD: In Chambers
JUSTICE S.B. SHERR
COSTS ENDORSEMENT
Part One – Introduction
[1] On April 3, 2023, the court released its reasons for decision after the trial of the parenting and support issues regarding the parties’ six-year-old child. See: Mulik v. McFarlane, 2023 ONCJ 148.
[2] The court found that the applicant (the mother) was the successful party and provided her with the opportunity to make written costs submissions. The mother seeks her costs of $13,500. The respondent (the father) did not make costs submissions.
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 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.
[5] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See: Beaver v. Hill, 2018 ONCA 840.
[6] 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 Subrule 18 (14)
[7] 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.
[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:
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.
[9] 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).
[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 ONSC 4490.
[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 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] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel.
[14] The rules do not require the court to allow the successful party to demand a blank cheque for their costs. See: Slongo v Slongo, 2015 ONSC 3327. The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. See: Jackson v. Mayerle, 2016 ONSC 1556.
[15] In determining the appropriate quantum, the court should consider the amount that the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation. See: Arthur v. Arthur, 2019 ONSC 938.
Part Three – Subrule 18 (14) and severable offers to settle.
[16] The mother made an offer to settle the case that was dated August 12, 2022. The father did not make an offer.
[17] The mother’s offer to settle was reasonable. However, it was not more favourable to the father than the final result and did not attract the costs consequences set out in subrule 18 (14).
[18] This court has often written about the benefits of making severable offers to settle. See for example: M.J.L. v. C.L.F., 2023 ONCJ 354; P.I. v. R.O., 2022 ONCJ 184; M.A. v. M.E., 2021 ONCJ 619.
[19] This case was a good example of why a severable offer to settle should have been made. The mother’s offer to settle the parenting issues was more favourable to the father than the trial result. Her offer to settle the child support issues was as favourable to the father as the trial result. However, her offer to settle the spousal support issue was not as favourable to the father as the trial result. The mother proposed that the father pay her indefinite spousal support of $2,400 each month. The final order time-limited spousal support to seven years. The court started the spousal support payments at $2,400 each month, but gradually reduced them until they terminated.
[20] If the mother had severed the spousal support issue from the rest of her offer, she would have met the pre-conditions for the costs consequences set out in subrule 18 (14) to apply regarding the parenting and child support issues.
Part Four – Amount of costs
[21] This trial was scheduled for a half-day. The court had previously struck the father’s Answer/Claim and had given him the ability to restore it if he met specified conditions. See: Mulik v. McFarlane, 2022 ONCJ 555. He did not meet any of these conditions. The court provided the father with limited rights of participation at the trial.
[22] The case was important to the parties. It was not complex. The father made the case more difficult due to his non-compliance with court orders, including his failure to make timely and complete financial disclosure.
[23] The mother acted reasonably in this case. She made a reasonable offer to settle.
[24] The father did not act reasonably in this case. The court found that his non-compliance with orders was deliberate and abysmal. It found that he deliberately caused the mother to incur significant legal fees while he has delayed the case, refused to pay costs orders, did not comply with disclosure orders and placed her and the child in difficult financial circumstances by refusing to pay the support ordered.
[25] The rates claimed by the mother’s counsel are reasonable given her experience. She was called to the Bar in 2009 and her rate is $350 each hour.
[26] The mother claimed time for prior case conferences where costs were not sought or reserved. No exceptional circumstances apply that warrant ordering costs for those appearances. See: Berge v. Soerensen, 2020 ONCJ 265.
[27] However, this does 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 case management judge. See: Houston v. Houston, 2012 ONSC 233; Walts v. Walts, 2014 ONSC 98; F.S. v. M.B.T., 2023 ONCJ 144. This includes time for the drafting of pleadings, meetings with the client, seeking and reviewing financial disclosure, preparation of the offer to settle, and the preparation for a settlement conference that did not take place, as the mother instead proceeded with the motion to strike the father’s Answer/Claim.
[28] The court will also order costs for the mother’s preparation for and attendance at First Appearance Court. These are appearances before a court clerk to ensure that the case is ready to send to a judge for a case conference. There should be no expectation that costs will be addressed at this step of a case. See: Thomas v. Saunchez, 2022 ONCJ 532.
[29] The court finds that the father should have reasonably expected to pay the costs that will be ordered if the applicant was successful at trial. He was ordered to pay costs of $5,085 when he was unsuccessful on the temporary support motion. See: Mulik v. McFarlane, 2022 ONCJ 180. He was also ordered to pay costs of $5,424 on the motion to strike his Answer/Claim. See: Mulik v. McFarlane, 2023 ONCJ 7.
[30] The court finds that it is reasonable and proportionate to order the father to pay the mother $8,500 for costs. This is in addition to costs of $11,609 that have already been ordered against him.
[31] The court further finds that the father has the ability to pay the costs that will be ordered. His support payments are based on an annual income of $129,000.
Part Five – The order
[32] An order shall go as follows:
a) The father shall pay the mother’s costs fixed in the amount of $8,500, inclusive of fees, disbursements and HST.
b) These costs are due and payable within 30 days.
Released: May 3, 2023
_____________________ Justice S.B. Sherr
