COURT FILE AND PARTIES

COURT FILE NO.: FS-11-17582
DATE: October 17, 2012
SUPERIOR COURT OF JUSTICE – ONTARIO

APPLICANT: Peter Benson
RESPONDENT: Ann Crawford

BEFORE: Mr. Justice Perkins

LAWYERS:
Sarah Boulby, for the applicant father

Bryan R.G. Smith, for the respondent mother

HEARD: October 4, 2012

ENDORSEMENT

[ 1 ] This is a decision about the costs of a case that never proceeded very far. It began in this court but went off to mediation/arbitration after the answer was withdrawn. The father wants costs of $22,698 for the work his lawyer did while the case was in this court. He invokes rules 12 (3), 18 (14) and 24 of the Family Law Rules. The mother concedes some costs liability, because of rule 12 (3), but submits only a modest sum, less than $5,000, would be reasonable.

[ 2 ] The parties were married in 1988, separated in 2003 and were divorced in 2006. They have three children. They signed a separation agreement in 2007, which they amended in 2009 because the children did not all reside with the mother anymore. The agreement dealt comprehensively with their rights and obligations (custody, access, child support, spousal support, property) arising from their separation. It contained a clause requiring negotiation of any proposal to change the parenting or child support arrangements, and if the parties could not agree, it mandated mediation and ultimately arbitration by a named arbitrator. Spousal support under the agreement has now terminated.

[ 3 ] In late 2010, the father sought to have the mother agree to a change in child support arrangements. The parties did not agree, so the father asked the mother to go to mediation and arbitration with the named arbitrator. The mother contended at the time that the separation agreement was no longer valid, so the arbitrator declined to proceed without a court ruling on that issue, which was not an issue the parties had agreed to arbitrate. The father filed an application in this court on September 2, 2011 in which he asked for a declaration the agreement was valid and an order requiring the parties to proceed to mediation/arbitration on the support issues. The mother filed an answer, again disputing the continuing validity of the separation agreement, and the father filed a reply. The parties had two case conferences in November, 2011.

[ 4 ] On January 12, 2012, the mother withdrew her answer. Because the case was then undefended, and because the mother had for some time been asserting he could not rely on the agreement and the father said he feared she might do so again, the father proceeded to obtain a final order, uncontested, from me declaring the agreement valid and ordering the parties to proceed with mediation/arbitration. The order did not deal with any other issue.

[ 5 ] During the short time the application was defended, the father served two offers to settle for a withdrawal of the case from the court at no cost to the mother and a referral of the issues to mediation/arbitration under the parties’ agreement, but the offer also included terms respecting the support arrangements. The father tried to persuade me that in the final default order he did better than the terms of his offer, so as to be entitled to costs under rule 18 (14) or at least to be entitled to a costs premium for having made a very reasonable offer. However, since the merits of support are, as the father has pointed out, an arbitrable matter and have not been settled by the arbitrator, he is not able to show he meets the rule 18 (14) threshold. Further, I am in no position to decide just how reasonable (or not) his offer was in the absence of a determination of the support issues. Both parties filed considerable affidavit evidence and submissions on the reasonableness issue, but they mostly turn on the merits of their positions on the support issues. I do note, though, that the mother offered in December, 2011 to confirm the validity of the agreement and have the support entitlements go to mediation/arbitration, which was all that the father had claimed in his application.

[ 6 ] The father claims that, under rule 12 (3), he is entitled to costs on a full recovery basis. The rule does not say so expressly. It says only:

COSTS PAYABLE ON WITHDRAWAL

(3) A party who withdraws all or part of an application, answer or reply shall pay the costs of every other party in relation to the withdrawn application, answer, reply or part, up to the date of the withdrawal, unless the court orders or the parties agree otherwise.

[ 7 ] The principle of the rule is that the costs of the pleadings in this case – the application, answer and reply – are costs thrown away by reason of the respondent’s withdrawal of her answer. There do not appear to be any reported cases under the Family Law Rules on the scale of recovery in this situation, but there are many cases under the civil rules where “costs thrown away” are awarded, generally on the substantial indemnity scale used in civil cases, which is almost but not quite full recovery.

[ 8 ] Rule 12 (3) does not interfere with the operation of rule 24 (10), which requires the costs of each step to be dealt with by the presiding judge. In this case, since the costs of the two case conferences were not awarded, they are not available to be claimed now. See Islam v. Rahman . All that is available under this rule is the costs “in relation to the withdrawn … answer”. This would fairly be taken as including costs of preparing, issuing, serving and filing the application, a financial statement the applicant has to serve with the application (none was required in this case), and a reply.

[ 9 ] The father is also entitled to costs of his application and the uncontested final hearing on affidavit evidence that resulted in the final default order. He achieved complete success on his application, albeit by default. There is nothing in the rules speaking directly to the scale of costs recovery in uncontested final hearings, but the practice in this court is not different from that in family cases generally. The factors in rule 24 apply, as do the cases interpreting the rule and adding factors such as ability to pay, the proportionality of the costs claimed to the issues in question and what it would be reasonable to expect a losing party (in this case, the mother “lost” the case by default) to pay in all the circumstances.

[ 10 ] The father’s bill of costs records a considerable amount of lawyer time on a relatively simple exchange of pleadings and the obtaining of an order in default. Some of the bill relates to the two case conferences. The merits of the parties’ positions on support are not before me and I do not comment on them or consider their reasonableness (or not). The mother’s offer made in December reflected exactly what the father had claimed in his application, absent an appropriate (to him) resolution of costs. In all the circumstances, a costs award of even $10,000 seems unreasonable, given the issues and the work done. It does not appear from the record that the mother should be penalized for unreasonable behaviour. This does not appear to be a case to take the scale above the normal amount in family law cases.

[ 11 ] In consideration of all the above, the costs of the application are set, under rule 12 (3) to the date the answer was withdrawn, and under rule 24 generally for the subsequent steps of obtaining the final default order and the costs submissions and hearing, in the all inclusive amount of $7,500. Because the issues between the parties are really those relating to child support, which are being dealt with by the mediator/arbitrator, the costs are payable on the earliest of the following dates: June 30, 2013; the date the parties reach a final agreement resolving the child support issues referred to the mediator/arbitrator in 2012; the date the mediator/arbitrator releases a final award disposing of the child support issues referred to the mediator/arbitrator in 2012.

Perkins J.

Date: October 17, 2012