COURT FILE No.: Toronto D70798/14 DATE: 2023 03 16
ONTARIO COURT OF JUSTICE
BETWEEN:
O’NEIL ORLANDO NELSON Applicant (Moving Party)
— AND —
CAMELIA DACIANNE DAVIDSON Respondent (Responding Party)
Before: Justice Curtis
Written submissions regarding Costs
Reasons for Decision released on 16 March 2023
Counsel: Katy Gaboury, for the Applicant Father (the Moving Party) Kenneth Snider, for the Respondent Mother (the Responding Party)
CURTIS, J.
INDEX
- Over-view
- The Costs Analysis (a) The Law of Costs i. Entitlement ii. The Evolution of Costs as an Instrument of Social Policy (b) Success (c) Behaviour of the Parties (d) Costs and Ability to Pay (e) Offers to Settle (f) Quantum of Costs
- Order
Over-view
[1] This is a decision regarding the amount of costs in the trial of the father’s motion to change the order of Sherr, J. made 21 July 2016, heard on 22 October 2021. The trial was conducted as a Rule 1 focused hearing, with affidavits for the evidence-in-chief, and cross-examinations.
[2] The issues at the trial were these: (a) The father’s parenting time; (b) incidents of parenting: i. police enforcement; ii. obtaining information about the child; and, iii. the child’s exposure to pets.
[3] The central issue at the trial was that the mother did not comply with court orders for parenting time.
[4] The father was largely successful at the trial and was awarded costs.
The Costs Analysis
The Law of Costs
Entitlement
[5] Under the Family Law Rules, O. Reg. 114/99, rule 2(2), the court is required to deal with cases justly. This is the primary objective of the Family Law Rules. Parties and their lawyers are required to deal with their cases in ways which promote the primary objective of the Rules (Rule 2(4)). Costs are an important component in any decisions made by parties about continuing with a court case.
[6] The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, R.S.O. 1990, c. C. 43, s. 131(1), which sets out three specific principles: (a) the costs of a case are in the discretion of the court; (b) the court may determine by whom costs shall be paid; and, (c) the court may determine to what extent the costs shall be paid.
[7] Modern costs rules are designed to foster four fundamental purposes: (a) to indemnify successful litigants for the cost of litigation; (b) to encourage settlement; (c) to discourage and sanction inappropriate behaviour by litigants; and, (d) to ensure that cases are dealt with justly.
[8] In addressing the issue of costs, the court must ultimately be guided by the primary objective of the Family Law Rules as set out in Rule 2(2), which is to enable the court to deal with cases justly.
[9] Rule 2(2) needs to be read in conjunction with Rule 24. Rule 2(4) of the rules states that counsel have a positive obligation to help the court to promote the primary objective under the Family Law Rules. Rules 2(3)(a) and (b) set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense.
[10] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality.
The Evolution of Costs as an Instrument of Social Policy
[11] The traditional purpose of an award of costs was to indemnify the successful party in respect of the expenses sustained. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called "outdated" since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps. This change in the common law was an incremental one when viewed in the larger context of the trend towards awarding costs to encourage or deter certain types of conduct, and not merely to indemnify the successful litigant.
[12] The traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser, rather than leaving each party's expenses where they fall, they act as a disincentive to those who might be tempted to harass others with meritless claims. In addition, because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs.
[13] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also 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.
Success
[14] The father was the successful party on the motion to change, and costs were ordered in his favour. The starting point in any costs analysis is the presumption that a successful party is entitled to costs, in Rule 24(1).
[15] Success must be measured not only against the parties’ offers to settle, but also against the claims made by each.
[16] An award of costs, however, is subject to the factors listed in rule 24(11), the directions set out under rule 24(4) (unreasonable conduct), rule 24(8) (bad faith) and rule 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party.
Behaviour of the Parties
[17] One of the purposes of costs is to change behaviour.
[18] The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2.
[19] Family law litigants are responsible for and accountable for the positions they take in the litigation.
[20] The decision respecting liability is ultimately a discretionary one that must be informed by the overall conduct of the parties and all of the circumstances and dynamics of the case. One of the most important functions of costs is to ensure that litigants conduct themselves in a manner that upholds the integrity of our justice system as a whole. A careful consideration of the conduct of the parties is therefore a key component to the costs analysis. The court has an obligation to ensure that litigation is not utilized as a tool to harass parties, and that the resources of the justice system are not unduly drained by unmeritorious claims.
[21] Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly, for the purposes of this case, oblivious to the mounting costs of the litigation.
[22] Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.
[23] Rule 24 (5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in determining quantum, Rule 24 (12)). It reads as follows:
DECISION ON REASONABLENESS
i. (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.
[24] A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules. The court need not find that bad faith or other special circumstances exist to make a costs award approaching substantial or full recovery.
[25] When awarded on a full recovery scale, costs can serve to express the court’s disapproval of unreasonable conduct during the litigation.
[26] The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.
[27] It must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered with the requirement that the parties take a clear-headed look at their case before insisting on their day in court. The court must sanction this behaviour clearly, or it will invite more of this behaviour.
Costs and Ability to Pay
[28] Success is given presumptive pre-eminence in Rule 24. While Rule 24(11)(f) does permit the consideration of ability to pay (under the umbrella of “any other relevant matter”), it is given significantly less prominence than the presumption that costs will follow success.
[29] Ability to pay may be relevant to the issue of the quantum or scale of costs, but not to another party’s entitlement to costs.
[30] Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(11).
[31] The (financial) means of the unsuccessful party may not be used to shield him from liability for costs, particularly when he has acted unreasonably.
[32] A party’s limited financial means will also be accorded less weight in quantifying costs if the court finds that the party acted unreasonably.
Offers to Settle
[33] Offers to settle are a significant part of the landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.
[34] Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). 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.
[35] The mother did not make an Offer to Settle in this matter, and she should have.
[36] The father made repeated Offers to Settle, and his Offers replicated the terms ordered at trial.
Quantum of Costs
[37] Once liability for costs has been established, the court must determine the appropriate quantum of costs. These are general principles relating to the quantum issue: (a) ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay; (b) costs need to be proportional to the issues and amounts in question and the outcome of the case; (c) amounts actually incurred by the successful litigant are not determinative; and, (d) in assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.
[38] The court’s decision on the appropriate quantum of costs must also be informed by the principle of proportionality. Timeliness, affordability and proportionality are essential components of a legal system that ensures true access to justice. In the context of the costs analysis, these factors require the court to ensure that expenses claimed make sense having regard for the importance and complexity of the issues that were litigated.
[39] The over-riding principle is reasonableness. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case.
[40] In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery.
[41] In considering the quantum of costs, the court should also consider Rule 1(8), which provides that the court may respond to a failure to follow the Rules or abide by an order by making an order for costs, and Rule 2(2), which provides that one of the primary objectives of the Rules is to ensure that cases are dealt with justly.
[42] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome.
[43] Costs awards should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties, rather than any exact measure of the actual costs to the successful litigant. It is not appropriate to simply take the number of hours spent by counsel on a particular matter and multiply those hours by a determined hourly or per diem rate.
[44] Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award. These are the factors in Rule 24(12) to consider in determining the amount of costs in family law matters:
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 vii. any other relevant matter. O. Reg. 298/18, s. 14.
[45] In determining the amount of costs in this matter, the court took into account these factors set out in R. 24 (12): (a) the reasonableness and proportionality of each party’s behaviour, as it relates to the importance and complexity of the issues: While the issues were important to the parents involved, the case was not complex. The claims at trial were regarding the father’s parenting time only. His position on the motion to change was very reasonable; (b) the reasonableness and proportionality of the time spent by each party, as it relates to the importance and complexity of the issues: The time spent by the father’s lawyer was reasonable, given the issues at stake and their importance to the parents. And no objection was raised to the time spent; (c) the reasonableness and proportionality of any written offers to settle, including offers that do not meet the requirements of rule 18, as it relates to the importance and complexity of the issues: The terms of the father’s Offer replicated the terms ordered at the trial. The mother made no offers to settle; (d) the reasonableness and proportionality of any legal fees, including the number of lawyers and their rates, as it relates to the importance and complexity of the issues: The rates claimed by the father’s lawyer were reasonable. The mother conceded that the amount sought by the father was not unreasonable; and, (e) the reasonableness and proportionality of any other expenses properly paid or payable, as it relates to the importance and complexity of the issues: No disbursements were claimed by the father.
[46] Sherr, J. fixed costs of the settlement conference held 22 September 2021 at $1,000 and ordered those costs to be costs in the cause. The father is entitled to those costs in that amount.
[47] The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of this case. This determination is not merely an arithmetical exercise of calculating time spent by a suitable hourly rate.
Order
[48] The court already determined that the mother shall pay the father’s costs of the motion to change. A fair and reasonable costs order, and one that is proportionate to the issues involved, in all of these circumstances, is an order for costs as claimed, fixed at $4,458.37 all inclusive (fees plus HST).
[49] There are also previous costs orders in this matter. On 8 February 2021 Sherr, J. ordered the mother to pay the father costs of $1,800, to be paid at $50 per month from 1 March 2021, and ordered that if the court finds that the mother has breached court orders (which the court has found), the father may ask the court to accelerate payment of costs. No accommodation for the mother should be continued regarding these costs. The order of Sherr, J. is changed, and the repayment scheme is terminated. The full amount of the costs owing is due now.
[50] The mother shall not bring a motion to change without leave obtained in advance, with a Form 14B, maximum two pages in support, not to be served on the other side unless the court orders. The court shall take into account the payment of outstanding costs, including costs of this motion to change, in determining whether leave should be granted.
Released: 2023.03.16
Justice Carole Curtis