Court File and Parties

DATE: January 3, 2024 D40761/20 ONTARIO COURT OF JUSTICE

BETWEEN Vitakova v Dajko

Endorsement

Applicant did not file any material regarding costs Barbara Puckering for the respondent

[1] The applicant brought an application claiming spousal support on 23 October 2020.

[2] The respondent’s position was that the applicant was not entitled to spousal support, as the parties were not spouses and were not in a spousal relationship. The applicant and respondent lived together from 2015 to 22 March 2020, and were not married. At the time of the trial, the Applicant was 69 years old, and the respondent was 82 years old.

[3] The applicant was unrepresented in the court case. She was repeatedly cautioned that she should get a lawyer and that her claim was complex. The respondent was represented by a lawyer throughout the court case, from the first endorsement made 8 December 2020.

[4] There were two costs orders made against the applicant during the case:

• 10 September 2021, by Spence, J. for $1,200; and,
• 15 February 2022, by Jones, J. for $1,770.

[5] The respondent is not now seeking costs of the two court appearances for which those costs were ordered (10 September 2021 and 15 February 2022).

[6] The case was set for trial at least four times. There were nine court appearances in the case. All but the last appearance were by remote video (during the health emergency). There were multiple case conferences, and several settlement conferences. As well, there were motions brought by the applicant. There were two detailed Focused Trial Endorsement Forms completed. The second such endorsement gave the applicant extensions to serve and file the necessary court documents for trial.

[7] The applicant did not appear on the last two court dates (15 February and 21 March 2022) and did not appear at the trial (13 September 2022).

[8] The applicant did not withdraw her application but abandoned the court case. She stopped coming to court in January 2022. She did not respond to e-mails from the respondent’s lawyer after 9 March 2022. She did not file any material for the trial (no Trial Record, no documents, no affidavits for evidence-in-chief).

[9] The respondent prepared for trial, as he should have. It was and continued to be a contested matter right up until the trial date. He prepared the Trial Record, a factum, a motion for summary judgment, and other material for trial.

[10] At trial, the case was dismissed, as abandoned, and also was dismissed under Rule 1 (8)(b). The respondent was awarded costs of the case. The respondent filed written submissions as to costs. The applicant did not respond. The respondent’s claim for costs is unopposed.

The Costs Analysis

The Law of Costs

Entitlement

[11] 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.

[12] The courts have a broad discretion to award costs. Mattina v. Mattina, 2018 ONCA 867 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.

[13] Modern costs rules are designed to foster four fundamental purposes: Mattina v. Mattina, 2018 ONCA 867 (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.

[14] 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. Darling v. Booth, 2017 ONSC 6261; Lawrence v. Lawrence, 2017 ONCJ 431; Kukyz v. Simeoni, 2017 ONSC 6732.

[15] 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. Sambasivam v. Pulendrarajah, 2012 ONCJ 711.

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

The Evolution of Costs as an Instrument of Social Policy

[17] 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. British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71.

[18] 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. British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71.

[19] 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. British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71.

Success

[20] The respondent was the successful party on the application 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). Sims-Howarth v. Bilcliffe; Jackson v. Mayerle, 2016 ONSC 1556.

[21] 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. M. (C.A.) v. M. (D.) (2003); Berta v. Berta, 2015 ONCA 918.

Behaviour of the Parties

[22] One of the purposes of costs is to change behaviour.

[23] 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.

[24] Family law litigants are responsible for and accountable for the positions they take in the litigation. Heuss v. Sarkos, 2004 ONCJ 141; Peers v. Poupore, 2008 ONCJ 615.

[25] 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. Beaver v. Hill, 2018 ONSC 3352.

[26] 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. Heuss v. Sarkos, 2004 ONCJ 141.

[27] Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour. Heuss v. Sarkos, 2004 ONCJ 141.

[28] 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 (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.

[29] A finding of bad faith is not a condition precedent to full recovery of costs by the other side under the Family Law Rules. Osmar v. Osmar The court need not find that bad faith or other special circumstances exist to make a costs award approaching substantial or full recovery. Sordi v. Sordi, 2011 ONCA 665; Beaver v. Hill, 2018 ONSC 3352.

[30] When awarded on a full recovery scale, costs can serve to express the court’s disapproval of unreasonable conduct during the litigation. Prinzo v. Baycrest Centre for Geriatric Care.

[31] The unreasonable conduct of a litigant is a factor in both the awarding of costs and in fixing the amount of costs.

[32] 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.

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. Laing v. Mahmoud, 2011 ONSC 6737.

[35] It is unclear if the applicant made any Offers to Settle. She should have.

[36] The respondent made six Offers to Settle. In particular, the respondent made a final Offer to Settle on 22 August 2022 (less than one month before trial), an Offer that was quite remarkable in its reasonableness. He offered to discharge the applicant from the $65,000 debt she borrowed from him in 2017, there would be no spousal support, there would be an acknowledgement that the parties had not been spouses, the spousal support claim would be dismissed, and there would be no costs (including the two costs orders already made in the case, for $1,200 and $1,770). She should have accepted this offer.

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. Serra, Boucher v. Public Accountants Council (Ontario); Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC; Beaver v. Hill, 2018 ONSC 3352.

[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. Hryniak v. Mauldin, [2014] 1 S.C.R. 87, 2014 SCC 7; Jackson v. Mayerle, 2016 ONSC 1556; Beaver v. Hill, 2018 ONSC 3352.

[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. Serra, Boucher v. Public Accountants Council (Ontario); Farjad-Tehrani v. Karimpour, 2010 ONCA 326.

[40] In the context of family law disputes, a court need not find special circumstances to make a costs award approaching substantial recovery. Sordi v. Sordi, 2011 ONCA 665.

[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. Mooney v. Fast, 2013 ONCJ 600; Beaver v. Hill, 2018 ONSC 3352.

[42] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome. Serra, Boucher v. Public Accountants Council (Ontario).

[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. Zesta Engineering Ltd. v. Cloutier (2002).

[44] Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award. Mattina v. Mattina, 2018 ONCA 867. 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) (all emphasis is added): (a) the reasonableness and proportionality of each party’s behaviour, as it relates to the importance and complexity of the issues: While the issue was perhaps important to the parties involved, the case was involved only one issue. The respondent’s position on the application 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 respondent’s lawyer was reasonable, given the general behaviour and the repeated lack of participation by the applicant; (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 applicant’s Offers were reasonable, and even generous, in all of the circumstances. It is unclear if the applicant made any offers; (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; 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 respondent.

[46] The applicant was an unrepresented litigant, who was encouraged by the court repeatedly to get legal advice, who was allowed to file materials not in accordance with the rules, and who was given repeated opportunities to address her failures to comply with court orders.

[47] The applicant behaved unreasonably in the court case. She started and pursued a case of questionable merit, and refused, when repeatedly prompted to do so, to get legal advice about that. She stopped pursuing the case and participating in the case, but did not withdraw the case. This caused the respondent to continue to incur legal costs to prepare for trial and ultimately to have the case dismissed. This behaviour by the applicant is not only unreasonable, but it also squarely falls within bad faith behaviour. The respondent is entitled to full recovery costs.

Order

[48] The court already determined that the applicant shall pay the respondent’s costs of the application. 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 $53,000 all inclusive (fees plus HST).

[49] There are also previous costs orders in this matter. There were orders made permitting those costs to be paid in installments, if the court case proceeded and the applicant complied with court orders. She did not pay any amounts towards the costs orders. No accommodation for the applicant should be continued regarding these costs. The earlier costs orders are changed, and the repayment schemes are terminated. The full amount of the costs owing under these orders is due now.

[50] The applicant shall not bring a motion to change, or a fresh application for spousal support, 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 determining leave or dealing with a fresh application for spousal support shall take into account the payment of outstanding costs, including all costs of this application, in determining whether leave should be granted, or an application should be allowed to proceed.

Released: 2024.01.03 Justice Carole Curtis