Court File and Parties

Date: March 14, 2024 Court File No.: D42864/22 Ontario Court of Justice

Between: Nicole Thomas, Applicant Akash Saha, for the Applicant

- and –

Deshorn Kevin Charles, Respondent Acting in Person

Heard: In Chambers Justice S.B. Sherr

Costs Endorsement

Part One – Introduction

[1] On February 13, 2024, the court released its reasons for decision following a focused one-day trial determining the amount of child support arrears owing by the respondent to the applicant for the parties’ daughter (the child). The court also determined how the arrears are to be paid. See: Thomas v. Charles, 2024 ONCJ 87.

[2] The court found the respondent owed $16,613 to the applicant. It permitted him to pay the arrears at $350 each month.

[3] The court determined that the applicant was the successful party and gave her permission to make written costs submissions.

[4] The applicant seeks her full recovery costs of $31,899. She asks for the costs to be enforceable as support by the Director of the Family Responsibility Office.

[5] The respondent did not make costs submissions.

Part Two – Legal considerations - General principles

[6] 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:

a) to partially indemnify successful litigants; b) to encourage settlement; c) to discourage and sanction inappropriate behaviour by litigants and; d) 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).

[7] 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.

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

[9] 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.

Part Three – Success

[10] Subrule 24 (1) creates a presumption of costs in favour of the successful party.

[11] The applicant was the successful party in this case. The respondent did not rebut the presumption that she is entitled to her costs.

Part Four – Bad faith

[12] The applicant seeks a finding that the respondent acted in bad faith as a basis for ordering her full recovery costs.

[13] Subrule 24 (8) of the rules states that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.

[14] Subrule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See: Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Del Sordo, 2015 CarswellOnt 14971 (Ont. SCJ).

[15] There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. See: S.(C.) v. S. (M.) (2007), 38 R.F.L. (6th) 315 (Ont. SCJ).

[16] Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation. See: Scipione, supra.

[17] The applicant submits the respondent acted in bad faith by failing to attend First Appearance Court, failing to file his Answer/Claim until the first case conference, not making an offer to settle, providing inconsistent evidence at trial about the parties’ date of separation and by not providing evidence of direct support payments made to the applicant despite a court order to do so. She claims he acted in bad faith by delaying the case and increasing her costs.

[18] The court finds this was unreasonable behaviour but did not rise to the high threshold required to make a finding of bad faith.

Part Five – Offer to settle

[19] The applicant submits the full recovery consequences set out in subrule 18 (14) apply to her offer to settle dated October 18, 2023.

[20] 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.

[21] The onus of proving that the offer is as or more favourable than the motion result is on the person making the offer. See: Neilipovitz v. Neilipovitz [2014] O.J. No. 3842 (SCJ).

[22] 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.

[23] The court finds that the applicant’s offer to settle was not more favourable to the respondent than the trial result. She offered the respondent two options. One was to pay arrears of $39,605 at $200 each month. The second was to pay arrears of $17,477 within 30 days. The court ordered arrears of $16,613, payable at $350 each month. The costs consequences set out in subrule 18 (14) do not apply here.

[24] Even if the costs consequences set out in subrule 18 (14) are not applied, 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). The court considered this was a reasonable effort by the applicant to resolve the case.

Part Six – Amount of costs

5.1 Legal considerations

[25] 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: b) each party’s behaviour, c) the time spent by each party, d) any written offers to settle including offers that do not meet the requirements of rule 18, e) any legal fees, including the number of lawyers and their rates, f) any expert witness fees, including the number of experts and their rates, g) any other expenses properly paid or payable; and h) any other relevant matter.

[26] Conduct which unduly complicates or unduly lengthens and increases the cost of a proceeding constitutes unreasonable conduct under subrule 24 (4). See: Goldstein v. Walsh, 2019 ONSC 3174 (SCJ); Hutchinson v. Peever, 2021 ONSC 4587 (SCJ); Jackson v. Mayerle, 2016 ONSC 1556 (SCJ).

[27] A high or full recovery costs award may be justified where a party persists in advancing unreasonable claims or arguments. See: Lawrence v. Lawrence, 2017 ONCJ 431; M.A.B. v. M.G.C., 2023 ONSC 3748.

[28] 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.). 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.

[29] 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.

[30] 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.

[31] Subrule 24 (11) provides that the failure of the court to order costs in relation to a step in a case does not prevent it from awarding costs in relation to the step at a later stage in the case.

[32] However, courts continue to be cautious about awarding costs at the trial stage where costs were not awarded at earlier steps in a case. See: Baezner v. Brunnenmeir, 2018 ONCJ 956; Nabwangu v. Williams, 2019 ONCJ 171.

[33] In Laidman v. Pasalic and Laidman, 2020 ONSC 7068 the court set out that the presumption remains that costs should be determined at each stage, and there are good reasons for this. Parties should have an ongoing awareness of the cost consequences of litigation decisions they make. Reserving costs may impede final resolution by needlessly inflating and complicating the list of future issues still to be dealt with. A judge who has just completed a step in a case will usually be in the best position to evaluate all of the relevant Rule 18 and 24 considerations. Reserving costs to a future event – often to a different judge – can result in later confusion and controversy about what really happened at the earlier step.

[34] In Berge v. Soerensen, 2020 ONCJ 265 Justice Roselyn Zisman set out the following circumstances where costs of a prior step should be awarded:

a) Costs have been reserved to the trial judge. b) When, considering subsequent events, the trial judge is better situated to determine the costs of the prior step than the judge presiding over the step or c) In exceptional circumstances.

5.2 Analysis

[35] This case was important to the parties. It was not complex or difficult. The parties had resolved the parenting issues and the issue of ongoing child support on August 1, 2023.

[36] The applicant made an offer to settle and acted reasonably.

[37] The respondent acted reasonably in resolving every issue but the payment of support for the period prior to June 1, 2023.

[38] The respondent did not make an offer to settle. He increased the costs of this case by delaying in providing disclosure and by taking the position he should not be required to pay child support prior to June 1, 2023.

[39] The applicant claimed considerable time for prior steps in the case.

[40] Costs will be ordered for the applicant’s 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; N.M. v. S.M., 2023 ONCJ 23.

[41] On May 5, 2023, the court ordered costs of $1,000 against the respondent arising out of that attendance. The court will not order further costs associated with that step.

[42] Costs were reserved to the trial judge for the settlement conference held on August 1, 2023. This was a very productive conference. Almost everything was settled. The court lacks information to go behind the settlement to award additional costs to the applicant. The court will not order any costs for that step in the case.

[43] The applicant is entitled to costs for the trial management conference held on October 23, 2023. The trial judge is in the best position to assess costs for such conferences and the applicant will receive her costs for that step.

[44] Costs were not reserved for any other appearance by the case management judges. Those judges were in a much better position to determine the costs of the prior steps. The court finds no exceptional or compelling circumstances exist to order costs for those appearances.

[45] However, this does not preclude the court from awarding costs accrued from activity not specifically related to any 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.

[46] The court will order some costs for these steps, to the extent they relate to the support issue that was tried.

[47] The court reviewed the applicant’s bill of costs. The time claimed was excessive and disproportionate.

[48] The applicant claimed costs for four lawyers and a clerk who worked on the case from the same law firm. Except for senior counsel, the rates claimed were high. In particular, the rates claimed for the law clerk ($300 each hour) were very high. See: Ahluwalia v. Ahluwalia, 2022 ONSC 2169; Shirley v. Wellington, 2024 ONCJ 128.

[49] The respondent should have reasonably expected to pay the level of costs that will be ordered if he was unsuccessful.

[50] The court considered the respondent’s financial circumstances. He earns a modest annual income of $51,600. The court will address any hardship to him by permitting him to pay the order in instalments.

[51] The court will order the respondent to pay $9,000 for the applicant’s costs, inclusive of fees, disbursements and HST.

Part Seven – Request for enforcement by the Director of the Family Responsibility Office

[52] The applicant asks that the entire amount of costs, and the May 5, 2023 costs order be payable as support and enforced as an incident of support by the Director of the Family Responsibility Office pursuant to clause 1(1) (g) of the Family Responsibility and Support Arrears Enforcement Act.

[53] The court has the discretion to allocate what portion of the costs are attributable to support, particularly when there are multiple issues being litigated. See: Sordi v. Sordi, 2011 ONCA 665.

[54] The costs being ordered all relate to the support issue. The applicant’s request is granted.

Part Eight – Conclusion

[55] A final costs order shall go as follows:

a. The respondent shall pay the applicant her costs fixed at $9,000, inclusive of fees, disbursements and HST. b. The respondent may pay the arrears at the rate of $250 each month, starting on April 1, 2024. However, if he is more than 30 days late in making any child support or costs payment, the full amount then owing, shall immediately become due and payable. c. Pursuant to clause 1(1) (g) of the Family Responsibility and Support Arrears Enforcement Act, the entire amount of this costs award, together with the $1,000 costs order made on May 5, 2023, shall be payable as support and enforced as an incident of support by the Director of the Family Responsibility Office.

Released: March 14, 2024

Justice Stanley B. Sherr