SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FC-12-520
DATE: 20130308
RE: Alfredo Ciarlariello, Applicant
AND:
Annina Iuele-Ciarlariello, Respondent
BEFORE: McDermot J.
COUNSEL:
Russell I. Alexander, for the Applicant
Michael J. Stangarone, for the Respondent
HEARD: By written submissions
COSTS ENDORSEMENT
[1] This motion was argued before me in Oshawa on November 15, 2012. The matter essentially arose out of the Applicant’s cancellation of utility accounts respecting the matrimonial home occupied by the Respondent and the children as well as his refusal to pay for a business valuation contrary to previous consent orders. At the motion, Mr. Ciarlariello requested the variation of those orders in order to relieve him of those payment obligations; Ms. Iuele-Ciarlariello requested that the orders to be enforced through the striking of the Applicant’s pleadings. Certain other issues were not argued or were dealt with on consent; access issues and issues concerning the disbursement of funds from the matrimonial home were adjourned because they could not be argued in the hour allotted for the motion on a regular motions day and/or because they were premature.
[2] I issued my endorsement on November 22, 2012. On the essential issue argued, being the payment of the utility accounts and valuation, as well as variation of the earlier interim orders, I dismissed the Applicant’s motion to vary those orders. I did not strike Mr. Ciarlariello’s pleadings; however I ordered that if he failed to reinstate the utility accounts and pay for the assessor, his pleadings would be struck. The Respondent was given the right of reimbursement for any of these costs incurred from the Applicant’s share of the home. Although I did not order interim disbursements and costs as requested by Ms. Iuele-Ciarlariello, I did provide a remedy in the event that she had to incur the cost of the business valuation herself. I dismissed both parties’ motions for conduct of the sale of the home although I did impose terms respecting the sale of the home as urged by both counsel during argument of the motion.
[3] Both the Applicant and the Respondent now request costs. Costs submissions were filed with the court on November 30 and December 10, 2012; unfortunately, they were only recently transmitted to me for consideration. The Applicant states that success was divided and based upon the rule that costs are to be apportioned, he is entitled to costs of $1,956.67 payable forthwith. The Respondent states on the other hand that she had substantial success at the motion, and that based upon the Applicant’s bad faith or unreasonable conduct, she should have an award of costs on a full indemnity basis in the amount of $17,265. Both parties request that costs be payable forthwith. As can be seen, the major issues raised in the costs submissions were success on the motion as well as unreasonable conduct or bad faith.
[4] In considering costs under Rule 24(1) of the Family Law Rules,[^1] costs follow the event, and a successful party is presumed to be entitled to costs. I may take into account unreasonable conduct of either party (Rule 24(4)) and if success is divided, I may apportion costs as appropriate: (Rule 24(6)). Under Rule 24(11), in fixing the amount of costs, I may take into account the “importance, complexity or difficulty of the issues” as well as “the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order”.
[5] I may also take into account the conduct of the parties to this proceeding: see Rule 24(8) of the Family Law Rules. Under that rule, I am obliged to order full indemnity costs payable forthwith if a party has acted in “bad faith.” Moreover, I may generally take into account under Rule 24(11) “the reasonableness or unreasonableness of a client’s behaviour” in assessing the amount of costs.
[6] In the event that a party is more successful than his or her offer, I am bound to order costs on a full indemnity basis: see Rule 18(14). Under Rule 18(16), when I am ordering costs, I may further take into account any offers to settle, even if they do not comply with Rule 18(14) as noted above.
Success on the Motion
[7] Mr. Alexander on behalf of Mr. Ciarlariello argues that of all of the issues raised in her motion, the Respondent was only successful on the second issue, being the issue of enforcement of the order, failing which the Applicant’s pleadings would be struck. He submits that of seven issues before the court, the Applicant was successful in one of those issues and accordingly he should be paid costs of $1,956.67 being 1/7th of the his Bill of Costs of $13,696.74.[^2] Alternatively, Mr. Alexander submits that as success was divided, there should be no order as to costs.
[8] As noted above, this motion was precipitated by the Applicant’s decision that he was not going to obey court orders requiring him to pay the household expenses as well as for a valuation of his business. Although there were a number of issues, most were peripheral to the central issue of payment of those household accounts and valuation expenses; the adjournment of several other issues was indicative of this. Although the sale of the home was argued, success on that issue alone was divided; on the matter which resulted in this matter being before the court, Ms. Iuele-Ciarlariello was wholly successful. Although she did not obtain an order immediately striking the pleadings of Mr. Ciarlariello, she did obtain an order that the pleadings would be struck if Mr. Ciarlariello did not comply with the various interim orders in place for payment of the expenses. Mr. Ciarlariello’s motion to vary those orders was dismissed.
[9] In determining the issue of success on a motion, it is not simply an issue of dividing up the issues before the court on the basis that each had equal importance to the parties or the court. Because of the time constraints of arguing a matter on an open motions list, both parties agreed that the issues to be argued would be the sale of the home and payment of the expenses as previously ordered. Those were the issues that were both urgent and important to the parties and success on those central issues is the measure of whether costs should be awarded on the motion.
[10] On the issue of sale of the home, I was not willing to give either party conduct of the sale. The Respondent had failed to enter into a reasonable offer to purchase the home on grounds which were, in my view, unreasonable. On the other hand, Mr. Ciarlariello’s intentional disregard of the previous orders of this court meant that he could not be trusted with conduct of the sale as he could not be trusted to follow through and obey directions of the court. Success was divided on that issue.
[11] On the other major issue, Ms. Iuele-Ciarlariello was entirely successful in obtaining enforcement of the previous court orders. She was also successful in obtaining an order dismissing her husband’s claim for a variation of the order. As this was the issue which resulted in the motion being brought I further see this as being the primary issue argued in this motion. As such, I find that Ms. Iuele-Ciarlariello had success on the motion, and pursuant to Rule 24(1) is presumed to be awarded her costs in this matter.
[12] Mr. Alexander argues that the Respondent should be disallowed her costs because she did not file or serve an offer to settle: see Scott v. Scott, [2002] O.J. No. 1418 (S.C.J.) at para. 53. I would firstly note that there is a distinction between serving an offer to settle to avoid a trial as opposed to a motion; it is arguable that to proceed to trial without an offer to settle is a “hardball tactic” in the words of Quinn J.; a motion is different as it is an interim stage in the proceeding. Moreover, the Applicant also did not serve an offer to settle. Finally, I agree with Mr. Stangarone when he notes that his correspondence requesting the Applicant to comply with the orders were, effectively offers to settle in this matter; to make such a demand in the face of a deliberate failure to obey a court order without a change in circumstances was a reasonable position for the Respondent to take.
[13] Accordingly, based upon the Respondent’s success in this matter, I find that she is entitled to her costs of this motion.
Conduct of the Parties
[14] In my view, Mr. Ciarlariello’s conduct was unreasonable. He purposefully breached a court order by failing to pay both the household expenses and the cost of the business valuation. His financial statement did not disclose a significant change in circumstances warranting a change in the interim order. He changed the utility accounts with the children living in the home, and without their mother having a visible means of support. I find his conduct to be unreasonable within the meaning of Rule 24(11).
[15] Mr. Stangarone on behalf of Ms. Iuele-Ciarlariello, urges me to find bad faith conduct; pursuant to Rule 24(8), this would require me to order full indemnity costs for the motion. It is obvious that for me to find bad faith, there has to be something more than unreasonable conduct; the conduct must be egregious as in the present case, but there must be something more. I must find intent to inflict harm apart from the particular actions themselves.
[16] Campbell J., in Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.), looked at the issue of what constituted bad faith. In doing so, he adopted the definition of “bad faith” from Black’s Law Dictionary, 6th ed. (1990):
Bad faith is not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity ... it contemplates a state of mind affirmatively operating with furtive design or ill will.
[17] He later states at para. 9 that bad faith “can be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive or, an intentional breach of court order (sic.) with a view to achieving another purpose.” See also Nairn v. Lukowski, 2002 CarswellOnt 2319 (S.C.J.) where bad faith also was said to include “[c]onduct that is intended to deceive or mislead”.
[18] A useful evaluation of the distinction between bad faith and unreasonable behaviour can be found in S.(C.) v. S.(C.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (Ont.S.C.J.) where Perkins J. states:
In order to come within the meaning of bad faith in Rule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent.
[19] I cannot find evidence that Mr. Ciarlariello maliciously intended to inflict harm on Ms. Iuele-Ciarlariello as defined above. We have to firstly remember that Ms. Iuele-Ciarlariello was not wholly blameless in this matter; she refused to accept a reasonable offer to purchase the matrimonial home for reasons which I found to be weak at best. Mr. Ciarlariello reacted to this in an inappropriate manner by ceasing to make payments that he had been ordered to make. As well, his protests that he is unable to make the payments agreed to, while not justified by the facts, may have been sincerely felt. I do not find there to be bad faith conduct in this case by Mr. Ciarlariello.
[20] Taking into account Ms. Iuele-Ciarlariello’s conduct in refusing to accept the offer to purchase the property, I find that her costs should be recoverable on a scale closer to a partial indemnity than a substantial indemnity basis. Costs would be further reduced by the fact that success was divided on the issue of the sale of the home. As such, I find that Ms. Iuele-Ciarlariello is entitled to her costs of this motion in the amount of $8,000.
[21] In light of the Applicant’s financial obligations I decline to find that costs are payable forthwith. As there is a sale of the home pending, those costs shall be payable upon a sale of the home from the Applicant’s share of the proceeds of the sale of the home.
McDERMOT J.
Date: March 8, 2013
[^1]: O. Reg 144/99
[^2]: I was confused by this argument; even using the “success chart” attached to the Applicant’s costs submissions, the one unqualified success was the Respondent’s success on item #2 in her motion as all of the Applicant’s claims were dismissed. As such even on Mr. Alexander’s theory of dividing up the matters before the court, the Respondent should have 1/7th of the costs claimed by her.