DATE: September 11, 2023 COURT FILE NO. D43276/22

ONTARIO COURT OF JUSTICE

B E T W E E N:

ANNA KOVALCHUK

HELEN KURGATNIKOV MILLER, for the APPLICANT

APPLICANT

- and -

SERGEII KOVALCHUK

ACTING IN PERSON

RESPONDENT

HEARD: In Chambers

JUSTICE S.B. SHERR

COSTS ENDORSEMENT

Part One – Introduction

[1] On August 9, 2023, the court released its reasons for decision arising from an uncontested trial regarding parenting and child support issues for the parties’ 10-year-old child. See: Kovalchuk v. Kovalchuk, 2023 ONCJ 355.

[2] The court provided the parties with the opportunity to make written costs submissions. The applicant seeks her full recovery costs of $23,362.75, or in the alternative costs of $17,522, payable forthwith.

[3] The respondent did not make costs submissions.

Part Two – Legal considerations

2.1 General principles

[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, 2003 S.C.C. 71, paragraph 25.

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

[7] 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 Success

[8] 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).

[9] To determine whether a party has been successful, the court should examine who was the successful party, based on the positions taken at the hearing. See: Lazare v. Heitner, 2018 ONSC 4861. The court may also take into account how the order compares to any settlement offers that were made. See: Lawson v. Lawson, [2008] O.J. No. 1978 (SCJ); Todor v. Todor, 2021 ONSC 3463.

2.3 Subrule 18 (14)

[10] 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.

[11] 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.

[12] 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).

[13] 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).

[14] 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.

2.4 Other factors affecting costs orders

[15] 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.

[16] The court should also take into consideration the ability of a party to pay costs. See: MacDonald v. Magel (2003), 67 O.R. (3d) 181 (Ont. C.A.).

[17] 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 (SCJ). 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.

[18] 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 – Success

[19] The applicant made an offer to settle the case. The respondent did not make an offer.

[20] The applicant’s offer to settle was not more favourable to the respondent than the final result. The applicant’s offer proposed to assess the respondent’s annual income at $70,000 – the court assessed it at $65,000.

[21] The applicant correctly submits that her parenting proposal was as good as the final result. However, her offer to settle was not severable. Accordingly, the offer needs to be examined in its entirety. The costs consequences set out in subrule 18 (14) do not apply to the offer.

[22] The court understands that the applicant’s ability to assess the respondent’s income was hampered by the respondent’s failure to provide financial disclosure. In these circumstances, her offer to settle was very reasonable and it has been given significant consideration under subrule 18 (16).

[23] The applicant was also substantially successful based on the position she took at trial.

[24] The presumption that the applicant is entitled to her costs was not rebutted by the respondent.

Part Four – Amount of costs

[25] This case was important to the parties. It was not complex or difficult.

[26] The applicant acted reasonably on the motion and complied with all court directions. She made a reasonable offer to settle.

[27] The respondent acted unreasonably. He attended twice at First Appearance Court and once at a case conference and was given three extensions to file his responding material. He did not comply with financial disclosure orders and did not pay a $500 costs order. He did not attend at the trial. He filed no material in this case.

[28] The hourly rate claimed by the applicant’s counsel of $400 per hour for a 1994 Call to the Bar is reasonable.

[29] The time claimed by the applicant for two attendances at First Appearance Court and at trial was reasonable. The applicant was already awarded costs for the May 12, 2023 attendance and appropriately, she did not claim costs for this.

[30] The time claimed for other matters such as drafting documents, client meetings and correspondence (approximately 44 hours) was excessive given that this was not a complex or difficult case.

[31] The court finds that the respondent should have reasonably expected to pay the costs that will be ordered if the applicant was successful at trial and further finds that he has the ability to pay them.

Part Five – The order

[32] An order shall go as follows:

a) The respondent shall pay the applicant’s costs of her motion in the amount of $12,000, inclusive of fees, disbursements and HST.

b) These costs are due and payable within 30 days.

Released: September 11, 2023 _____________________ Justice S.B. Sherr