Court File and Parties

COURT FILE NO.: FC-09-1622
DATE: 2012031 5
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LAURA JOHNSTONE, Applicant

AND

GARY LOCKE,

and

SARAH SHERRINGTON, Respondents

BEFORE: Madam Justice J. Mackinnon

COUNSEL:
Sean Jones, Counsel, for the Applicant

John Summers, Counsel, for the Respondent, Gary Locke

and

Ms. Sherrington, in person

HEARD: By Written Submissions

ENDORSEMENT

Madam Justice J. Mackinnon

[ 1 ] The Respondents seek costs for this nine day custody trial. The Applicant submits that there should be no order of costs except for a modest award in her favour with respect to the finding of contempt made against Mr. Locke.

[ 2 ] In her application, the Applicant sought custody of McKayla subject to access to both Respondents. In the alternative, she sought joint legal custody with equal parenting time divided amongst the three adults. At the outset of trial, the Applicant’s stated position was to seek joint legal custody to be shared by her with both Respondents and for access to the child two days per week. The trial outcome was to dismiss her claim for custody or joint custody. After an initial four community visits, she was awarded access of one Saturday overnight one Sunday afternoon for three hours in each month. In comparison to her pleading and the position taken in her opening statement the Applicant was not successful. The Applicant submits that success was divided because she did obtain a judgment in her favour for access.

[ 3 ] Both Respondents delivered answers which denied the Applicant’s entitlement to custody or access to McKayla. At the outset of trial, both Respondents maintained that the joint legal custody shared between the two of them should not be altered. This is the effect of the trial judgment. The Respondents proposed that the Applicant have two activity based visits with the child each month. Leaving aside the contempt finding made against Mr. Locke which will be dealt with separately, their position at trial was much closer to the judgment than was that of the Applicant.

[ 4 ] The Office of the Children’s Lawyer conducted a clinical investigation and made recommendations in a detailed report dated March 29, 2010. In my Reasons, I commented with regret that the parties had not implemented the OCL recommendations at the time they were made. Mr. Locke and Ms. Sherrington submit that they did make verbal offers immediately following the disclosure meeting with the clinical investigator to settle in accordance with her recommendations. This is denied by Ms. Johnstone. I am unable to resolve this dispute and proceed on the basis that verbal offers were not proven. Ms. Sherrington submits that she made a written offer dated March 29, 2010 which approached the recommendations of the OCL by offering alternate Fridays overnight and evening visits on the other Fridays. The only copy of this offer presented to the court is unsigned. Ms. Johnstone denies that it was ever served upon her and no proof of service has been provided. Ms. Sherrington has not established that she made that offer. Mr. Locke did make a written offer on that date proposing to settle on the basis of two Friday overnight visits and two Friday evening visits each month. His offer as it related to McKayla was more generous to Ms. Johnstone than the access order made after trial.

[ 5 ] I was referred to an email string between counsel wherein it appeared that Ms. Johnstone was prepared to act on the OCL recommendations on an interim basis and Ms. Sherrington was proposing the terms referred to above. Neither party was offering to settle the case in these emails. I find they have no bearing on the award of costs.

[ 6 ] As I noted in my Reasons, the child’s relationship with Mr. Johnstone suffered immensely during the intervening time between the OCL recommendations and the trial. McKayla would have been better off and Ms. Johnstone would have had more access to her had Ms. Johnstone accepted Mr. Locke’s offer made in late March 2010. This offer was not withdrawn and remained open until after the commencement of trial. It was, however, packaged with terms of an offer related to their younger child, Adrian.

[ 7 ] Mr. Locke and Ms. Sherrington both included offers in their costs submissions that had been made in their settlement conference briefs at various points during the litigation. I agree with Ms. Johnstone's submission that such offers are not properly before me having regard to the provisions of Family Law Rule 17(23).

[ 8 ] The parties all made offers shortly before trial. Ms. Johnstone required consultation and input on important decisions being made for McKayla by her parents, and one twenty-four hour overnight visit each week. Mr. Locke offered access on alternate Fridays overnight until noon on Saturday. He also included a term that access would be suspended or resumed based on recommendations from McKayla’s counselor. Ms. Sherrington also offered one overnight in alternate weeks. Ms. Johnstone says that negotiations broke down because Ms. Sherrington refused to make a formal admission that access between her and McKayla was in the child’s best interests. I see it differently. Seeking this type of admission served no useful purpose. In my view, Ms. Johnstone imposed an unreasonable stumbling block to the negotiations by making this demand especially coming as it did so late in the day.

[ 9 ] The trial award was not as favourable to Ms. Johnstone as was Ms. Sherrington’s trial offer. The inclusion by Mr. Locke of the provision that McKayla’s counselor could decide to suspend and/or resume Ms. Johnstone’s access was an unreasonable term. Not only could he not expect that it would be accepted; it was essentially not capable of being accepted in the sense of resulting in an enforceable court order for access because of its delegation of authority to the counselor.

[ 10 ] Ms. Johnstone cannot be regarded as successful in relation to her offer to settle. Both of the Respondents can be regarded as successful in relation to one offer, the March 29, 2010 offer for Mr. Locke and the November 21, 2011 offer for Ms. Sherrington. The weight to be given to Mr. Locke’s “success” in this regard is diminished by the fact that his offer was with respect to both of the children and the part referable to McKayla was not severable. Having said that, the parties did settle the case with respect to Adrian shortly before trial, and having done so, Ms. Johnstone could then have accepted the March 29, 1010 offer as it related to McKayla.

[ 11 ] Ms. Johnstone submits that the court should not consider pleadings or positions taken at trial in relation to the issue of success or divided success. She relies on Green v. Green (2008), 2008 48811 (ON SC) , 61 R.F.L. (6th) 319 ( Ont. S.C.) , in this regard. In that case the court stated at paras.30 – 32:

30 In my opinion a party who obtains a judgment, subject to consideration of offers to settle, is generally considered to be successful. I appreciate there may be exceptions to the general rule such as a claim that should have been made in Small Claims Court or by a simplified procedure; a nominal award; or a case in which a party unnecessarily advances numerous causes of action most of which lack merit.

31 Mr. Green's approach of judging success on the basis of arguments advanced and positions taken, as opposed to the result achieved compared to any offer made, would tend to undercut the purpose of encouraging settlement.

32 This is not a debating society in which the loser should, in effect, be awarded points for artistic merit. Put differently it would turn the cost rules upside down to find that a person such as Ms. Green who is offered $156,000, and proceeds to trial and obtains a judgment for $300,000, is required to pay costs.

[ 12 ] If the court intended by those paragraphs to rule that success ought not to be measured in relation to the relief claimed by party in its pleadings, or in relation to the relief claimed at trial if different from the pleadings, then I respectfully disagree. The pleadings define the issues in the case. Quite often the specifics of the relief claimed changes by the time of trial and the parties advise the court accordingly in their opening statements. In my view, the initial assessment of success should be made in relation to the pleadings and specific relief claimed at trial, if it is different.

[ 13 ] Nor do I agree with Ms. Johnstone’s submission that in a family law case simply obtaining a judgment equates with success. It is an unusual family law case where the applicant does not obtain a judgment for something. In the context of this area of law, that does not necessarily denote success. The case at bar provides a good example. Ms. Johnstone did obtain an order for access which will consist of one overnight and one afternoon visit per month. This judgment can hardly be viewed as success in relation to her pleading, to her opening position at trial or to her offer to settle.

[ 14 ] Nor can it be regarded as success for Ms. Johnstone having regard to the offers of the Respondents noted above. To hold that success was divided in this case simply because Ms. Johnstone obtained an order for access without regard to the terms of the access in relation to pleadings, opening positions and offers would, in my view, dilute the term “divided success” to the point that it would not be helpful in the context of determining costs in family law cases.

[ 15 ] For these reasons, I find that success was not divided and that the Respondents were the successful parties.

[ 16 ] Ms. Johnstone refers the court to the Rules with respect to unreasonable behaviour and bad faith.

[ 17 ] Rule 24(4) of the Family Law Rules , O. Reg. 114/99 deals with unreasonable behavior.

24(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. O. Reg. 114/99, r. 24 (4) .

[ 18 ] Some of the conduct of each party has been unreasonable. As it pertains to McKayla, the conduct of each party has been described in detail in my Reasons and need not be repeated here. I will consider those findings in relation to the claims for costs. Ms.Johnstone also pointed to the fact that Mr. Locke had not made full financial disclosure until very close to trial such that the property issues were not finalized until the last minute. He withdrew his claim for child support for McKayla at the opening of trial and his claim to pay less than the table amount of support for Adrian on the second day of trial. I agree that these aspects of his litigation conduct have a bearing on costs.

[ 19 ] The Family Law Rules do not define bad faith but it is generally accepted to include deception, duplicity, and intent to inflict harm or to conceal relevant information. There are various findings in my Reasons in particular in paragraphs 20, 36, 85, 109 and 119 that approach the level of bad faith on the part of the Respondents. This was especially so during the summer of 2009 when they restricted the Applicant’s access to McKayla in retaliation for her lawsuit. However, they did settle down and extend reasonable access commencing in the fall of 2009. Overall the Respondents were not acting in bad faith.

[ 20 ] Ms. Johnstone relies upon S(C) v S (M) 2007 20279 (S.C.J.). In that case, the court stated at paras. 21 and 24:

21 There are, however, some aspects of the father's behaviour in this case, as found in my reasons of 27 February 2007, that do fall within "bad faith" as intended by the rule. He deliberately did not obey court orders in the case, including orders to which he consented. He made complaints against lawyers and other professionals, when he was unhappy with the way they performed their duties, not merely to report what he believed to be negligence or misconduct, but also as his form of punishment and vengeance. Most significantly, though, the father waged a campaign against the mother, both through and with the children, to alienate the children from her, a form of emotional harm to the children and to her, and to cause her emotional distress. This was done in the guise of forging closer ties with the children. It is true that the mother was not blameless in dealing with the children but, as between the two parents, I found his motives were to cause harm to the existing bond between the children and the mother, whereas the mother was trying to hang on to her relationship with her children rather than to harm the father's relationship with them.

24 The wording of the rule (for which I must take some responsibility, I acknowledge) is brief and leaves some unanswered questions. If a party has acted in bad faith on one occasion, are the costs of the whole case to be awarded against the party on a full recovery basis? What if it was a small act of bad faith? What if it was only in relation to one issue, and on the other issues the party behaved properly? Are the costs to be a full recovery only in respect of the consequences of the bad faith? What impact do the factors and the discretion in subrule 24(11) have on the full recovery mandated by subrule 24(8)? My tentative conclusion is that full recovery costs should be awarded in relation to the issues affected by the bad faith and then the whole picture should be looked at again in light of the considerations in subrule 24(11) and the discretion in that provision should be used as necessary to produce the correct overall result.

[ 21 ] I agree with this approach. Ms. Johnstone is clearly entitled to substantial costs with respect to the portion of the trial devoted to the allegations of contempt by Mr. Locke. He should be deprived of any consideration of that time in his own claim for costs. The findings at trial do amount to a finding of bad faith against the Respondents during the retaliatory period of time in the summer of 2009 and should attract substantial costs against them in relation to that aspect of the case.

[ 22 ] Overall both Respondents made better efforts to settle the case than did Ms. Johnstone. Ms. Johnstone rejected the recommendations of the OLC except as an interim award. She sought sole custody of the child and made a last minute demand for the acknowledgement that access was in the child’s best interests. These are key examples of unreasonable litigation behavior on her part.

[ 23 ] Ms. Sherrington asks for costs of $27,460.00 which is the actual total amount of legal fees she incurred for her lawyer’s preparation for and attendance at settlement conferences on her behalf. The problem with this claim is that none of the presiding justices made any rulings on or reservation of costs for those conferences. The decision of the Court of Appeal in Islam v. Rahman 2007 ONCA 622 () , 2007 CarswellOnt 5718 means that those costs cannot now be dealt with by me.

[ 24 ] Ms. Sherrington did not include any claim for her own costs of preparing for or attending the trial. In the absence of such a claim, I will simply rule that there are no costs payable by her to Ms. Johnstone arising from the finding of “time limited” bad faith made against Ms. Sherrington.

[ 25 ] Costs are awarded to Ms. Johnstone against Mr. Locke with respect to the contempt finding. The amount claimed is reasonable having regards to the number of allegations and the time spent at trial. It is $5,085.00 inclusive of fees, disbursements and HST.

[ 26 ] Mr. Locke seeks substantial indemnity costs of approximately $85,000.00. He provided a very brief Bill of Costs indicating counsel fee was charged at the rate of $2,000.00 per day of trial and stating the total number of hours expended by counsel and student-at-law multiplied by the applicable hourly rate. There is a note on the Bill of Costs which states that it includes all time spent on the file including the interim motion where costs of $12,000.00 were already awarded.

[ 27 ] The material provided on behalf of Mr. Locke is inadequate to allow me to do any meaningful review of the services provided and the amounts charged. I accept that $2,000.00 per day of trial is a reasonable counsel fee on a partial indemnity basis. In my view, his success at trial and his March 2010 offer with respect to McKayla, which was available to be accepted shortly before trial as a “stand alone offer”, entitle him to partial recovery costs for the trial and proximate trial preparation.

[ 28 ] Rather than penalize Mr. Locke for the quality of the Bill of Costs, I have taken the approach of doubling counsel fee to represent an estimate for proximate trial preparation i.e. $2,000.00 preparation time per day of trial. This amount of $36,000.00 is reduced by $4,000.00 so that Mr. Locke does not receive any costs on account of the contempt portion of the case. A further deduction of $4,000.00 is made in order to reflect time spent in relation to the facts giving rise to the bad faith finding. The disbursements claimed totaled $3,400.00. Together with HST, this amounts to $35,482.00. From this should be deducted the costs awarded to Ms. Johnstone leaving a net award to Mr. Locke of $30,397.00 all inclusive.

[ 29 ] Accordingly, an order will go requiring Ms. Johnstone to pay Mr. Locke the sum of $30,397.00 for costs.

J. Mackinnon J.

Date: March 15, 2012

COURT FILE NO.: FC-09-1622
DATE: 20120314

ONTARIO SUPERIOR COURT OF JUSTICE
RE: LAURA JOHNSTONE, Applicant
AND GARY LOCKE and SARAH SHERRINTON, Respondents

BEFORE: Madam Justice Mackinnon

COUNSEL: Sean Jones, Counsel, for the Applicant
John Summers, Counsel, for the Respondent, Gary Locke
and Sarah Sherrington, in Person, Respondent

ENDORSEMENT
Madam Justice Mackinnon

Released: March 15, 2012