Court File and Parties

CITATION: Jordan v. Stewart, 2013 ONSC 5037

COURT FILE NO.: FS-00-FA008868-FISA

DATE: 2013-08-15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Cheryl Ann Jordan, Applicant

AND:

James Rupert Stewart, Respondent

BEFORE: Czutrin J.

COUNSEL: Applicant – In Person and Sandra Meyrick on Costs

Patrick Schmidt, for the Respondent

HEARD: May 23, 2013

ENDORSEMENT

Introduction

[1] This endorsement deals with costs arising from my disposition of the Respondent/father’s motion to terminate child support released March 1, 2013: Jordan v. Stewart, 2013 ONSC 902, [2013] O.J. No. 903. This endorsement should be read in conjunction with my reasons.

[2] In a separate endorsement released on July 12, 2013, I fixed the amount owing by the father to the Applicant/mother based on my March 1, 2013 ruling at $33,654.13. This amount included costs that were deferred until the outcome of the hearing before me. It did not include costs thrown away when the original hearing date was adjourned at the mother’s request. Both parties claim costs and claim to be the successful party.

[3] For reasons that follow, I find that the Applicant/mother was the successful party. Even if I found the father was somehow technically successful, I would award the mother costs.

[4] This case is another example of courts struggling to determine entitlement and quantum of costs. The costs issue is made more complex by the father’s willingness to spend approximately $400,000 in legal and expert fees. This amount is significantly disproportionate to any amount that he advances as his best possible financial outcome. The father also knew that, if successful, he probably would not recover the costs in any significant way from the mother as she has limited financial resources and appeared in court without counsel. She had counsel until sometime after the hearing was originally adjourned in June 2012 to September. She also occasionally sought counsel for legal advice, help preparing material, conduct of the trial, and to appear on costs submissions.

[5] In 2008, the father agreed to a consent order without specifying his income. In the order, he accepted that the parties’ son Jesse would require more time to complete an undergraduate university degree; after Jesse’s first degree, the child support terminates without prejudice to the mother’s right to seek a review for further funding of additional post-secondary educational programs in accordance with the Child Support Guidelines, O. Reg. 391/97.

[6] This round of court involvement began in October 2010 with the father’s motion to terminate child support as “of July 2010 or earlier.” The father’s motion was initially linked to his discovery in June 2010 that Jesse planned to attend George Brown College in Toronto rather than the University of Western Ontario (“Western”) in London. He believed that Jesse would move to Toronto rather than continue to reside in London with his mother. Even after Jesse returned to Western, he pursued his motion.

[7] At a conference, Jarvis J. fixed a trial date for June for an oral hearing to determine the issues.

[8] On June 5, 2012, Penny J. adjourned the trial to September 4, 2012 on terms (paragraph 1.(i)):

On consent, the costs thrown away by either party as a result of the adjournment of the trial, including time spent from June 1, 2012 at 10:00 AM to June 4, 2012 at 11:00 AM, were reserved to the trial judge [me].

[9] Penny J. ordered the mother to pay forthwith costs of $7,500 for the motion that resulted in the adjournment. Penny J. also ordered additional disclosure by the mother.

[10] The $7,500 was paid.

[11] The adjourned hearing proceeded before me and resulted in my reasons of March 1, 2013. I did not terminate the father’s child support obligations as of July 2010, or earlier, as he originally requested when he commenced his motion in November 2010. I also did not grant the alternative remedies claimed in his amended motion to change on February 16, 2012. Instead, I ordered as follows:

[297] Therefore, for the reasons provided throughout this judgment, I dismiss the father’s claim to terminate support for any period prior to May 1, 2013.

[298] However, consistent with the consent order and with the father’s “worst case scenario” calculation (with termination as of April 30, 2013 and support based on income of $374,000) the support payable for the period from May 1, 2012 to and including April 30, 2013 is $2,921 per month and continued responsibility for the same school expenses as ordered. At that point child support terminates subject to the without prejudice right of the mother to seek a review for further funding of additional post-secondary educational programs in accordance with the Child Support Guidelines. [Emphasis added.]

[12] The mother’s response to the father’s motion was a request for dismissal.

[13] The father claims that he was the successful party because I did not grant the mother’s request to dismiss his motion.

[14] As will be reviewed, I find the father’s rationale for claiming success to significantly stretch the reality of the outcome. Even if I found him successful, I would award the mother costs using my discretion under the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131 and the Family Law Rules, O. Reg. 114/99, s. 24(4). To do otherwise would create an absurd result: if a parent successfully defends a motion to terminate child support and costs are awarded against her in an inadequate amount, the financial consequences would leave her in significant debt and to her and Jesse’s detriment although successfully having support continue in the full amount until May 2012 and a reduced amount to the end of April 2013. It would deny access to justice to a person unable to overcome the other party’s economic power. Sections 24(4) and 24(5) of the Family Law Rules provide as follows:

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.

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.

[15] The mother made multiple offers: an initial offer to mediate, then to dismiss the father’s motion when it first commenced, and finally an offer of reduced support with releases. The offers were all reasonable when made and worthy of the father’s consideration, and would have been far more financially beneficial to both parties than what transpired. His failure to consider and make serious settlement efforts I find unreasonable.

[16] In all of the circumstances, I find that the mother was the successful party and is entitled to costs.

The Father’s Claims for Costs

[17] The father’s counsel outlined the costs factors I was to consider, including a detailed calculation of the amount of professional fees incurred or billed to the father. Counsel referred to Family Law Rules 18 and 24, the exchanged offers to settle, and many cases.

[18] The father substantially reduced his actual requested costs, no doubt anticipating the very significant proportionality issue. He reduced his requested claim for costs from the total of Bills of Costs filed to support his costs claimed overall to $89,779.25. (The father’s Bill of Costs appears to have already reduced his Bill of Costs for costs thrown away.) The father asked that I order the mother to pay him approximately 25% of his remaining total of all Bills of Costs of $373,400.01. He does not seek to recover most of the significant fees he spent, a signal that the money was not a factor in his pursuit of the case or relevant to any resolution. He was prepared to spend more money than any financial benefit to him if he succeeded.

[19] If awarded, the $89,779.25 would eliminate the $33,654.13 the father owes to the mother for child support. The mother would then owe the father $56,125.12.

[20] In breaking down the father’s Bill of Costs, the father claims $74,550.46 (inclusive of Harmonized Sales Tax and disbursements) as costs thrown away for the period of May 18, 2012 to June 4, 2012. Conceding that some preparation was not rendered completely useless and had some value for the future trial, the father discounted his costs thrown away by 50%. Therefore, he sought $37,275.23 for costs thrown away.

[21] The father’s expert, who testified and provided an income report, submitted an account for $16,082.86 relating to costs thrown away in preparation for the adjourned trial. In support of that amount, the expert provided a letter dated September 7, 2012. It has no breakdown of time spent, hourly rates, or the nature of the work done. The expert’s letter provides little, if any, information how that fee was derived at and how the amount claimed is attributable to costs thrown away. It would be reasonable to conclude that some of the expert’s preparation was not rendered completely useless and was of some value preparing for the future trial; the expert testified and prepared a report. The lawyers concede this point about their work. I have no satisfactory evidence to conclude what, if any, amount should be considered as costs thrown away for the expert.

[22] The father’s counsel submits that the $7,500 paid as result of the motion heard by Penny J. on June 4, 2012 was not included in the Bill of Costs now submitted for my consideration as part of the costs thrown away.

[23] I agree and find that the father is entitled to costs thrown away. This shall be factored in as part of the overall costs consideration and thereby reduce the costs the mother might otherwise be entitled to.

[24] The father submits that his total Bill of Costs for the preparation and attendance at trial is $336,124.78, including disbursements and HST. The total Bill of Costs is $373,400.01, less costs thrown away and work where costs were already fixed at steps in this case.

[25] To terminate a consent order that never fixed his income, the father paid his financial expert $74,103.40 to provide an opinion on his income for 2010 and 2011 based on various scenarios from a high of $290,000 in 2010 to a low of $25,000 in 2011.

[26] The terms of the trial adjournment on June 5, 2012 dealt with the issue of child support pending trial. Penny J. endorsed as follows:

The [father] brought his motion to suspend child support in October 2010. The motion was for two alternative headings of relief:

1. The termination of his child support obligation on the basis that Jesse was not in full time attendance at a post-secondary school, educational institution; or alternatively,

2. An order reducing the amount of support payable on the basis of reduced income.

The [father] says that if he is successful on the first head, the [mother] will owe him in excess of $100,000 and if he is successful on the second head, the [mother] will owe him $56,000.

The [mother] admitted during questioning that she was in no position to repay these amounts if she was ordered to do so by the court.

[27] As a result, Penny J. ordered the father to pay the $5,000 support payments into the father’s counsel’s trust account pending further order.

[28] I now know, based on the Bills of Costs presented, that the father’s fees from July 1, 2010 (when the issue of terminating child support first began) to May 17, 2012 were $71,185.00. The description of work for this period includes the following: preparation of motion materials to terminate child support, client and expert communication, attendance on motion of December 14, 2010, questioning and follow-up, communication with the mother’s counsel, and trial record preparation.

[29] To put this in perspective, the father’s Bill of Costs on May 17, 2012 was $71,185 to at best receive approximately $100,000 from the mother. At the opening of the hearing, the amount claimed back by the father increased to $142,297.97.

[30] By the time the mother requested a trial adjournment on June 5, 2012, there was another Bill of Costs of $74,550 for the period from May 18, 2012 to June 4, 2012 (less costs).

[31] For the period of September 1, 2012 to September 9, 2012, the father’s Bill of Costs was $35,419.50.

[32] Therefore, the father’s Bill of Costs prior to the hearing before me was about $180,000 to terminate child support and to recover from the mother, as Penny J. noted, between $56,000 and $100,000, increased to $142,297.97 at the hearing.

[33] By the end of trial, the father had incurred nearly $400,000 in fees. Rather than recovering the $56,000 to $100,000 from the mother (as Penny J. suggested) or the $142,297.97 as he claimed at trial, he owes her $33,654.13 before costs are determined.

The Mother’s Claims for Costs

[34] The mother responded and defended the father’s motion to terminate the consent order for child support.

[35] Although initially represented by counsel until just before the hearing commenced in September, the mother appeared without counsel throughout the hearing before me. However, she occasionally consulted counsel outside of the hearing. For example, she sought legal assistance to prepare opening and closing arguments. She also had Ms. Sandra Meyrick’s assistance for costs submissions.

[36] Generally, the mother’s claims for costs include the fees of each lawyer she consulted, a lawyer Jesse consulted, her costs to appear without counsel (the equivalent of counsel fees for work she did instead of a counsel retained), travel from London, Ontario, her accommodation, loss of income, the fees of a proposed expert not qualified and compensation for a friend who helped her in court with files.

[37] The mother’s proposed expert Mr. John Rosenthal did not testify. He was disqualified as an expert for lack of independence, Mr. Rosenthal is the mother’s personal accountant and personally of great support to her and Jesse. He attended court, spoke to his independence, and conceded he could not testify as an expert. He was present in court, reviewed the father’s expert’s reports, and helped the mother prepare to cross-examine the father’s expert. The mother’s cost claim for Mr. Rosenthal’s fees was outlined in a letter from Mr. Rosenthal to Ms. Meyrick dated May 9, 2013. The letter includes copies of invoices dated November 22, 2011, January 24, 2012, January 15, 2013, and March 15, 2013. Mr. Rosenthal’s invoices total $54,494.22 with the largest two accounts relating to the trial of $34,370.98. As I did not allow Mr. Rosenthal to testify because he could not be considered independent. I do not consider it appropriate to include any of Mr. Rosenthal’s fees in the manner presented and in the circumstances.

[38] The mother retained Mr. John Legge, despite initially consulting Mr. Thomson MacLennan. Mr. Legge rendered his final account to the mother on August 24, 2012. He prepared a Bill of Costs dated April 16, 2013 for the costs issues now before me. His dockets and accounts are appended to the Bill of Costs. His accounts are dated December 14, 2010, June 1, 2011, May 10, 2012, and finally August 24, 2012.

[39] Mr. Legge’s Bill of Costs suggests, based on a substantial indemnity basis, the mother’s costs are $22,913.63 with $20,292.28 unpaid to date. The mother reduced her claim for Mr. Legge’s costs to $15,492.72.

[40] Mr. MacLennan also prepared a Bill of Costs for work he did for the mother from September 7, 2012 to April 3, 2013 totaling $15,520.56. The description of his services includes trial preparation, discussion of issues that arose during the hearing before me, and discussions with Jesse concerning “allegations of criminality raised by father’s counsel.”

[41] The mother’s claim for costs also includes an August 27, 2012 account from Brad Teplitsky. This account was sent to Jesse. I do not allow this claim. I have not included any of this amount in my cost award.

[42] Ms. Meyrick provided the final lawyer’s Bill of Costs. Ms. Meyrick discussed issues with Mr. Rosenthal, assisted the mother, and drafted her Offer to Settle dated September 6, 2012. Ms. Meyrick represented the mother on previous motions and attended before me on September 13, 2012. Ms. Meyrick’s account covers a period from August 14, 2012 to and including May 23, 2013 when she attended and made submissions before me on the costs issue. Her costs claim (I assume full indemnity) totals $34,493.25, inclusive of HST.

[43] The mother had a friend attend in court to support her, organize files, assist her in court, and assist her with boxes. She seeks $16 per hour for his time for a total of $1,037. I do not allow any of this claim in my cost award.

[44] The mother also seeks $20,000 for lost income. She claims the trial forced her to give up her employment. She seeks to recover $4,000 per month for this lost income. She also requests $48,000 for what she describes as counsel’s fees at the rate of $150 per hour, ten hours per day, an eight-day trial, and three days of preparation for each day of trial (24 days).

[45] I am not satisfied that she needed to give up her employment. While I have allowed her some time for preparation and work that might have otherwise been done by a lawyer, the mother correctly sought assistance from several counsel and had assistance in a variety of ways. In my costs award, I have largely compensated for these counsel as they submitted invoices and Bill of Costs. However, I find that absent satisfactory evidence from an in-person party, I have no fair, reasonable, and reliable method of quantifying the work she did instead of what a lawyer would have done for her. An in-person party is required to be in court and, if represented, would have to prepare with counsel and give instructions. She would not be compensated for this time in any costs award. I have no satisfactory evidence to quantify her claim for her time that would have otherwise been done by counsel or that she may have been charged for had she been represented in addition to the assistance she received outside of the Bills of Costs that I have considered and for which she will receive costs.

[46] Her disbursements include trial transcripts, accommodation in Toronto, train and gas expenses, parking, interest on money borrowed to finance litigation, and Jesse’s schooling. I have considered the trial transcripts but do not find that the other amounts would ordinarily be recoverable as costs.

[47] The mother claims in total $205,332.63 (this includes all the amounts that I have outlined above including amounts that I have stated that I will not consider.)

Background and History

[48] My March 1, 2013 endorsement reviews the history of the father’s motion in October 2010, seeking to terminate his child support obligations effective July 1, 2010.

[49] Although Paisley J.’s order required the father to continue payments, the father stopped paying child support before starting his motion (Paragraph 1(4) of the order.)

[50] My March 1, 2013 judgment sets out the start of this motion as follows:

[4] Except for temporary orders made, prior to 2004 (the first final order) the parties had resolved support issues on consent without a finding of the father’s income for child support guideline purposes.

[5] The father’s motion to terminate support was initially linked to his discovery in June 2010 that Jesse was planning to attend George Brown College in Toronto rather than the University of Western Ontario in London. He believed that Jesse would therefore be moving to Toronto rather than residing in London with his mother. He did not raise any change in circumstance related to his financial situation.

[6] The father’s lawyer (Mr. Schmidt) wrote to the mother’s then lawyer (Mr. MacLennan), apparently in response to a letter Mr. MacLennan had written to Mr. Schmidt on July 7, 2010. Mr. MacLennan (mother’s lawyer) inquired whether Mr. Schmidt’s office had instructions to accept service of a motion to enforce Paisley J.’s April 7, 2008 order. In response, the father sought disclosure about Jesse’s status at Western and his academic intentions for 2010/2011.

[7] By September 17, 2010, the mother had retained new counsel (Mr. Legge), who wrote to the father’s counsel to inform him that the father had not paid child support for September 2010.

[8] The mother’s letter proposed mediation and advised that “Jesse has been obliged by the University of Western Ontario (Western) to effectively step out of their program. He is now enrolled at George Brown College doing what is, in effect, a makeup year with the intent of re-enrolling at Ryerson in 2011.”

[9] The letter further stated that Jesse’s four year degree will take at least six years to complete. The parties knew prior to this letter that Jesse’s education would take longer than four years, due to his documented learning disability.

[10] The father’s counsel asked for documentation requested in earlier letters sent to Mr. MacLennan before responding to the proposals made by mother’s counsel.

[11] Not being satisfied by the disclosure, the father commenced the motion to terminate support.

[12] In the father’s October 2010 affidavit in support of his request to terminate child support, he sought a termination date as of July 2010 or earlier, “depending on Jesse’s academic status in the 2009/2010 school year”. He outlined the reasons he was seeking to terminate his child support obligations provided for by the April 7, 2008 order.

[51] I outlined the various alternatives presented by the father for my consideration:

[211] In Mr. Stewart’s first and preferred calculation, he based the calculation on termination of child support as of July 1, 2010, coinciding with when he discovered that his son was no longer attending Western and had moved to Toronto.

[212] Alternatively, he asked that support be terminated as of April 30, 2012, which would coincide with the five years of post-secondary studies contemplated to complete a four year degree, as provided by the order sought to be changed. He asks in this calculation (and the others) for a reduction in table support for the period Jesse was at George Brown College in Toronto and a reduction for the grants, loans and bursaries received by Jesse. He also seeks reduction for the tuition he paid for 2012/2013.

[213] Mr. Stewart also provided a calculation with support terminating as of April 30, 2013, when Jesse is expected to complete his first degree at Western.

[214] He also presented what was described as a worst case calculation, which applies a support termination date of April 30, 2013 and uses the highest income calculations provided by Mr. Freedman.

[215] In the first calculation (termination July 1, 2010), Mr. Stewart calculates that he has overpaid child support in the amount of $120,000 for the period July 1, 2010 to June 30, 2012; and in addition he asks that I find that he has overpaid on account of Jesse’s University expenses due to the grants, loans and bursaries received by Jesse totalling $17,398. He also seeks repayment or credit for the tuition deposit paid by him on account of Jesse’s 2012-2013 academic year in the amount of $4,899.97.

[216] Therefore he claims that he is owed $142,297.97.

[217] His second calculation is based on child support terminating as of April 30, 2012 and relies on Mr. Freedman’s scenario one calculation averaged for the period from July 1, 2010 resulting in his income of $202,000 per year. The resulting support order is $1,639 per month for a total of $3,278 for the period from July 1, 2010 to August 31, 2010.

[218] Continuing this calculation for the period September 1, 2010 to April 30, 2011, the father asks that he only be responsible for half the table amounts given that Jesse was residing in Toronto and not with the applicant during that period of time. Therefore he submits that the support should be $819.50 per month for a total $6,556.

[219] For the period September 1, 2011 to December 31, 2011 he asserts support should be $1,639 per month based on Jesse moving back to London and residing with the applicant. Therefore, the total amount for this period is $13,112.

[220] For the period from January 1, 2012 to April 30, 2012 the support should be $1,648 per month, reflecting the revised table amounts, for a total of $6,592.

[221] Section 7 arrears for the period from July 1, 2012 to June 1, 2012 are currently being held in trust and total $11,328.11.

[222] He calculates his total support obligation for this period to have been $40,866.11.

[223] He asks that the grants, loans and bursaries received by Jesse of $29,403 for this period should be credited against his support and section 7 payments and obligations.

[224] He therefore claims an overpayment so calculated of $113,436.86.

[225] For the same time period he provides alternative calculations based on the various scenarios calculated by Mr. Freedman.

[226] Using income of $91,700 instead, the overpayment calculates out at $128,360.86.

[227] Turning to scenario three, with an April 30, 2013 termination and calculations using income of $202,000 per year and $91,700 per year, the resulting overpayments are $94,261.35 and $119,181.35 respectively.

[228] In what the Respondent claims as his “worst case scenario”, termination is as of April 30, 2013, and the highest income calculations provided by Mr. Freedman, at $290,000 in 2010, $237,000 in 2011 and $374,000 for the period July 1, 2012 to April 30, 2013, are used. Calculation based on $374,000 for the period July 1, 2012 to April 2013 would require Mr. Stewart to pay monthly child support of $2,921 (a total of $29,210), section 7 arrears from July 1, 2010 to June 1, 2012 of $11,328.11, and university expenses of $5,124.51. The resulting total in this scenario is $86,812.62, with credits deducted for the support paid from July 1, 2010 to June 30, 2012 ($120,000), Jesse’s grants and bursaries (no loans) of $15,728, and the 2012-2013 tuition deposit. The result in an overpayment $53,815.25.

[229] A variety of alternative orders follow based on those conclusions and how money should be distributed from the funds being held in trust pursuant to my order of May 20, 2012, Penny J.’s June 5, 2012 order, and costs that were awarded in my order ($3,500).

[52] Offers to Settle were exchanged. When the father first raised issues with Jesse’s school change, the mother’s counsel asked in writing for the father to consider mediation.

[53] The father’s original motion as I outlined in my reasons at para. 2 was as follows: “[t]he motion served by the father in the fall of 2010 sought to terminate his child support obligations provided for in the consent order of Paisley J. dated April 7, 2008.”

[54] The father’s requested relief changed from the commencement of the motion to the time the motion was heard. It was likely prompted by the fact that Jesse returned to live full time in London and attend Western. The father pursued the request to terminate even though the initial reason prompting his request was no longer the situation (as Jesse returned to Western).

[55] The father amended his original motion as of February 16, 2012 to seek alternative relief in the event that a court found that the child support should continue after July 1, 2010: “given the current circumstances the child support arrangements (in the order sought to be changed) … given the child’s circumstances, my income and financial circumstances and a consideration of section 3(2) of the (Guidelines) the level of child support…is excessive and the amount of support must be reduced.”

[56] In his opening statement at the hearing, the father asked for an order requiring the mother pay him $142,297.97 for overpayment of child support and costs. This amount was then higher than the amounts referred to by Penny J.

[57] The mother requested dismissal of the father’s application and costs.

[58] Rather than order the mother to pay $142,297.97 (the father’s preferred alternative), I found the father must pay the mother $33,654.13; that is a difference of $175,952.10.

[59] The mother made an Offer to Settle on May 8, 2012, while represented by Mr. Legge and before the request for adjournment:

1. The father to pay her $10,878.11 on account of the post secondary costs and that his motion be dismissed without prejudice to his returning a fresh motion if and as grounds may accrue in the future.

[60] I was informed as part of these costs submissions made that just before the commencement of the hearing before me, and with Ms. Meyrick’s assistance, that the mother made another Offer to Settle dated September 6, 2012. The Offer included, “[b]ased on father’s income of $374,000 the father shall pay $2,921 per month child support commencing July 1, 2012 and ending August 31, 2013.”

[61] This compares to my decision that the father pay support for the period from May 1, 2012 to and including April 30, 2013 of $2,921 per month, with continued responsibility for school expenses as ordered and at that point child support terminates without prejudice to the mother’s right to seek a review for further funding of additional post-secondary educational programs in accordance with the Child Support Guidelines.

[62] The mother’s September 6, 2012 offer also requested that the father pay school expenses of $10,878.11, no retroactive claims, all previous cost awards be rescinded, and mutual releases.

[63] The mother’s offer is not identical to my order, as my order reduced the support two months earlier and ended it four months earlier. Nevertheless, the father should have seriously considered the offer; the mother certainly deserved at least a counter-offer. In the end, it would have been more economically advantageous for the father to accept the offer.

[64] After this last offer on September 6, 2012, the father’s Bill of Costs exceeded $150,000.

[65] My decision terminated child support without prejudice to the mother’s right to seek a review for further funding of additional post-secondary educational programs in accordance with the Child Support Guidelines. This was largely the same term as in the consent order. However, it can hardly be said that the father achieved anything close to his desired result, as outlined by the father’s October 2010 affidavit where he sought to terminate child support as of July 2010 or earlier, “depending on Jesse’s academic status in the 2009/2010 school year.”

[66] Had the father achieved that result, he would not have had to pay the $5,000 monthly support as he originally requested, or pay the reduced amount between May 1, 2012 and April 30, 2013.

[67] In the end, I extended the period of support for the first undergraduate degree that took longer to achieve than was originally contemplated, but at a reduced amount and maintained the without prejudice right of the mother to seek a review for further funding of additional post-secondary educational programs in accordance with the Child Support Guidelines.

[68] The result, I find, is more consistent with the mother’s request. The endorsement maintained the child’s dependency and support at the same amount until May 1, 2012, then changed not because of the alleged new incomes proposed by the father’s expert but by the use of the father’s last financial statement. The support was to continue until April 30, 2013, nearly three years later than the father’s requested termination date.

Law, Analysis, and Disposition

[69] I find that cases such as Hatcher v. Hatcher, [2009] O.J. No. 148 (S.C.) and MacKinnon v. MacKinnon (2004), 2004 CanLII 8945 (ON SC), 7 R.F.L. (6th) 121 (Ont. S.C.) are distinguishable on their facts. The father at his very best position was premature in bringing his motion to change. The mother was entitled to a dismissal until April 30, 2012 and the father, at best, did not succeed in termination (subject to review by the mother, a right that I maintained from the order the father sought to terminate).

[70] The various Offers to Settle provide insight into the parties’ positions at different points in time and help me determine who is entitled to costs and quantum of costs. The father’s refusal to consider mediation also speaks to his reasonableness.

[71] This case is an extreme example of a person who was prepared, as he has been in the past, to spend significant sums of money without concern for costs or outcome.

[72] Fees and costs clearly did not impede or motivate the father to look for a resolution. The fact that the child support is for a child who appears extremely motivated and achieving, yet faces acknowledged educational challenges, makes me pause and consider the effect, if any, of costs to encourage resolution.

[73] I am puzzled by the father’s approach to this case, as I was puzzled in a previous motion where the father was prepared to spend considerable amounts to defend the payment of $2,000 in fees for the child’s psycho-educational assessment. In Jordan v. Stewart (2007), 156 A.C.W.S. (3d) 870 (Ont. S.C.), I state the following:

[39] The father was prepared to put the mother through a very expensive process. Neither party backed down, compromised or resolved the issue in spite of the D.R.O. or conference judge interventions.

[40] The father knew even before this motion began what the mother was seeking. I am satisfied that the assessment is necessary for the child at this time even had it not been previously ordered and agreed to. If the assessment had not been previously ordered and agreed to (including payment), I would have required full disclosure and financial statements from both parties.

[41] The Family Rules encourage as a primary objective, a just determination of issues to deal with cases justly, to ensure procedures fair to all parties, saving expense and time. It is the court, the parties and lawyers obligation to promote the rules’ primary objectives.

[42] This case did not proceed in that fashion or meet those objectives.

[43] The father had the ability and resources and the child had the need. He obviously had the resources to put the mother through a very expensive process over an issue that called out for early resolution.

[44] The father shall in all the circumstances pay to the Applicant $2,000 forthwith, being the cost of the assessment.

[45] The more difficult issue is costs.

[46] The mother is entitled by Rule 24 her costs as the successful party.

[47] Father’s counsel suggested that costs should be $1,000 either way. If father was successful he should be awarded $1,000 and if he was unsuccessful he should pay $1,000.

[48] Both parties must have incurred more than $1,000 in legal fees to defend a $2,000 claim. Unless both counsel acted pro bono basis on this case, the time and legal fees did not act as a deterrent or promote settlement.

[74] It is apparent from the review of the case law below that the preponderance of modern authority supports the position that self-represented lay litigants may be awarded costs and that such costs may include allowance for counsel fees.

[75] I would also add the following from Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.), at para. 26:

o Self-represented litigants, be they legally trained or not, are not entitled to costs calculated on the same basis as those of the litigant who retains counsel.

o As the Chorley case [London Scottish Benefit Society v. Chorley, Crawford, and Chester (1884), 13 Q.B.D. 872] recognized, all litigants suffer a loss of time through their involvement in the legal process.

o The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case.

o Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by foregoing remunerative activity.

o As the early Chancery rule recognized, a self-represented lay litigant should receive only a “moderate” or “reasonable” allowance for the loss of time devoted to preparing and presenting the case.

o This excludes routine awards on a per diem basis to litigants who would ordinarily be in attendance at court in any event. [Emphasis and bullet points added.]

[76] In Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440 (Ont. C.A.), released November 16, 2004, Borins J.A. writing for the court addresses the issue of costs in a civil, non-family law case. At issue was the size of amount claimed in the Bill of Costs of $149,457.63 and whether the Bill of Costs was justifiable based on the hours set by lawyers and staff “for a recognized remedy based on established legal principles” that “could not be said to be complex”: Moon, at para. 10. Based on submissions, the unsuccessful party sought to significantly reduce the costs claimed.

[77] While the Court of Appeal’s decision in Moon has received recognition and acceptance in the family law context, the court was considering the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

[24] Since the costs grid came into effect on January 1, 2002, it has resulted in a significant change to the manner in which the amount of costs payable by an unsuccessful party to the successful party to a proceeding is determined. The costs grid established hourly rates on either a partial indemnity or a substantial indemnity scale for lawyers of differing experience, as well as counsel fees on each scale for appearing on different types of proceedings based on the length of the proceeding. Under rule 57.01(3), when a court awards costs, “it shall fix them in accordance with subrule (1) and the Tariffs”, although under rule 57.01(3.1) the court may refer costs for assessment in an “exceptional case”. Rule 57.01(1) contains a number of factors that the court may consider in “exercising its discretion under section 131 of the Courts of Justice Act to award costs”. Tariff A, that applies to solicitor’s fees and disbursements is in two parts: Part I contains the costs grid and Part II contains the disbursements that a party may recover.

[78] The Court of Appeal concludes that the successful party claimed excessive time:

[33] If a lawyer wants to spend four weeks in preparing for a motion when one week would be reasonable, this may be an issue between the client and his or her lawyer. However, the client, in whose favour a costs award is made, should not expect the court in fixing costs to require the losing party to pay for over-preparation, nor should the losing party reasonably expect to have to do so.

[79] The Court of Appeal also concludes that the motion was not complex and was becoming common place.

[80] The Court of Appeal then observes the following:

[35] For counsel to spend almost 270 hours, or nearly seven full weeks, on this motion, and for his law clerk and articling student to spend almost the same amount of time, must surely exceed the losing party’s reasonable expectations. This expenditure of time, in my view, bears no relationship to the amount of time that reasonably would have been contemplated by the parties, or would reasonably be required to deal with all aspects of the motion. It could not have been the reasonable expectation of Moon that if he were to be the losing party that he would be liable in costs of $141,000 to the GLOI and the Piersons. I say this mindful of the fact that Moon could have reduced his costs exposure had he not rejected the twin offers to settle the motions by consenting to an order to stay the action without costs. However, Moon’s rejection of the offers to settle does not justify an unreasonable and excessive bill of costs. [Emphasis added.]

[81] The Court of Appeal also speaks to the amounts actually charged to a client:

[42] There is another factor that has an effect on fixing costs that it appears the motion judge was not asked to consider and which I mention to underscore its significance in the cost-fixing exercise. I refer to the rate that was, or will be, charged to the client for the services of the lawyers, law students and law clerks who worked on the case.As this court has held, to avoid a windfall it is not appropriate for a party to seek or receive an award of costs in excess of the fees and disbursements actually charged to it. Therefore, the hourly billing rates actually charged and the fees actually billed to the successful litigant are relevant considerations: TransCanada Pipelines Ltd. v. Potter Station Power Limited Partnership (2003), 2003 CanLII 32897 (ON CA), 172 O.A.C. 379, 226 D.L.R. (4th) 262 (C.A.), at para. 3; Stellarbridge Management Inc. v. Magna International (Canada) Inc., 2004 CanLII 9852 (ON CA), [2004] O.J. No. 2102 (QL), 71 O.R. (3d) 263 (C.A.), at paras. 93‑100.

[82] Ultimately the court concludes the following:

[43] Although the motion judge referred to a number of the guiding principles, he fixed the costs in an amount that was not fair and reasonable. In my view, had he given more weight to the submissions of Moon’s counsel, particularly in respect to excessive preparation, the result would have been more in keeping with the reasonable expectation of the parties. In the end, the amount fixed by the motion judge was driven far too much by the hours actually spent by counsel and the rates provided by the grid rather than the need to reach a fair and reasonable result. Appellate intervention is therefore required.

[44] I would grant leave to appeal costs and vary the quantum of the motion judge’s costs award to allow the GLOI costs of $40,000 for fees and disbursements, plus G.S.T., and to allow the Piersons costs of $27,500 for fees and disbursements, plus G.S.T. This total amount of $67,500 is much more in keeping with what a losing party would reasonably expect to pay the winning party in this type of proceeding. [Emphasis added.]

[83] In Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, the Court of Appeal, again in a non-family civil case and after the costs grid was removed from the Rules of Civil Procedure, concludes that the general point is clear; the result of a costs award formula must be scrutinized for fairness and reasonableness.

[84] Epstein J.A. writing for the court identifies the issue:

[1] The primary issue in this appeal involves the limits of the court’s discretion to award costs on either a substantial indemnity or full indemnity scale. This court is asked to consider a costs award in the amount of $509,452.18 [plus disbursements of $26,276.77], payable by a number of defendants in this action to a defendant against which the action was dismissed. The award is notable not only for its considerable quantum, but also for the trial judge’s decision to fix a large portion of the costs on a full indemnity basis absent a finding of sanction-worthy conduct on the part of the party against which the cost order was made. Specifically, full indemnity costs were ordered for the period following the delivery of an offer to settle the claims of the plaintiff and other defendants on a without-costs basis.

[85] In the result, the Court of Appeal reduces the costs awarded to $300,000 plus disbursements and Goods and Services Tax.

[86] Davies is lengthy, complex, and has many parties.

[87] While referring to the Rules of Civil Procedure, the court observes the following:

[10] The award of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and by rules 49 and 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[11] The general source of judicial discretion to award costs is found under section 131 of the Courts of Justice Act, as expanded by rule 57.01.

[12] section 131 of the Courts of Justice Act says:

131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[13] Rule 57.01 reads as follows:

57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(c) the complexity of the proceeding;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding.

[14] Rule 57.01(4) allow for elevated levels of costs:

57.01(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,

(c) to award all or part of the costs on a substantial indemnity basis;

(d) to award costs in an amount that represents full indemnity.

[15] “Substantial indemnity costs” is defined in rule 1.03 as “costs awarded in an amount that is 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A”. This part of Tariff A was once the prescribed grid for “partial indemnity costs”, but is no longer in effect. “Full indemnity costs” is not a defined term but is generally considered to be complete reimbursement of all amounts a client has had to pay to his or her lawyer in relation to the litigation: see M. Orkin, The Law of Costs, 2nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 1993) at para. 219.05.

[16] Rule 49 deals with a specific aspect of costs: it is a self-contained scheme that addresses the manner in which offers to settle are brought into play. Its objective is to promote an offer of compromise and visit a cost consequence upon an offeree who rejects an offer that turns out to be as favourable as or more favourable than the judgment awarded to a plaintiff at trial. The parts of rule 49 relevant to this analysis are:

49.02(1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims in the proceeding on the terms specified in the offer to settle

COSTS CONSEQUENCES OF FAILURE TO ACCEPT

Plaintiff’s Offer

49.10(1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

Defendant’s Offer

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

49.13 Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

[88] Again by referencing the Rules of Civil Procedure and several civil cases, Epstein J.A. concludes the following:

[52] As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”

[53] Here, while the trial judge identified the importance of a reasonableness assessment, with respect, in arriving at a costs award of $509,452.18 her reasons do not indicate that she conducted an assessment, or at least a sufficient one, in accordance the requirements set out in Boucher. Furthermore, although the trial judge did find that the parties would have reasonably expected Blue Circle to have claimed costs of this magnitude, she was, according to Boucher, at para. 38, obliged to consider the expectations of the parties concerning the quantum of the costs award.

[54] It is difficult to accept that the settling defendants would have expected that they would be faced with an award against them of this magnitude particularly in the light of Blue Circle’s limited involvement in the proceedings. Blue Circle did not participate in the examination or cross-examination of any witnesses. In Blue Circle’s own costs submissions, it is acknowledged that their case took two hours in total to put in. The parties could not have expected that the trial judge would treat the costs incurred after the February 2005 offer in the manner she did. They could not have expected that, through an elevated costs award, the trial judge would effectively reward Blue Circle for the assistance its counsel provided during the settlement discussions. Further, in considering the expectations of the parties, it is appropriate to compare the costs claimed by and awarded to the various parties. The trial judge awarded Blue Circle an amount in legal fees that was almost double those that were received by the plaintiffs. The settling defendants could not have anticipated a disparity of this nature.

[55] The results of this “fair and reasonable” analysis demonstrate that appellate intervention is warranted.

[89] I conclude the review of cases with three decisions that provide insight into how both trial and appellate courts approach costs where there is a self-represented party in a family case: Izyuk v. Bilousov, 2011 ONSC 7476, 7 R.F.L. (7th) 358; Warsh v. Warsh, 2013 ONSC 1886, [2013] O.J. No. 1474; and Stevens v. Stevens, 2013 ONCA 267, 114 O.R. (3d) 721.

[90] I prefer the description of an in-person party rather than self-represented.

[91] In this case, the costs analysis is somewhat more complicated by the fact that at trial the mother appeared without counsel, but had counsel from time to time and until sometime after she requested the trial adjournment in June 2012. By that time, she had incurred approximately $20,000 in legal fees, had costs awarded against her, faced costs thrown away, and had support payments held in trust. It would seem reasonable to conclude that her financial situation became an impediment to maintaining legal representation for and throughout the trial. As such she sought and received what has become known as “unbundled legal services” or engaged lawyers by way of a “limited scope retainer.”

[92] Izyuk is an excellent and comprehensive review of family cost issues where there is a lawyer for the unsuccessful party and a successful party without counsel.

[93] In Izyuk, Pazaratz J. reviews the law of costs in family cases where the successful party appears without counsel. Within the decision, he cites the Family Law Rules, ss. 18, 24, and 24(1) and the following cases: 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 CanLII 35819 (ON CA), 82 O.R. (3d) 757 (C.A.); Beckett v. Beckett, 2010 ONSC 2706, [2010] O.J. No. 1957; Biddle v. Biddle (2005), 2005 CanLII 7660 (ON SC), 137 A.C.W.S. (3d) 1164 (Ont. S.C.); Blustein v. Kronby, 2010 ONSC 1718, [2010] O.J. No. 1342; M. (A.C.) v. M. (D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (C.A.); C.S. v. M.S., 2010 ONCA 196, 76 R.F.L. (6th) 14; Chadha v. Chadha, 2006 ONCJ 345, 172 A.C.W.S. (3d) 863; Harrington v. Harrington, 2009 ONCA 190, 63 R.F.L. (6th) 274; McDonald v. Goary, 2010 ONSC 3008, [2010] O.J. No. 3538; Panny v. Gifford (1997), 1997 CanLII 9579 (ON CJ), 31 R.F.L. (4th) 440 (Ont. C.J.); Parsons v. Parsons (No. 2) (2002), 2002 CanLII 45505 (ON SC), 29 R.F.L. (5th) 137 (Ont. S.C.); C.S. v. M.S. (2007), 2007 CanLII 20279 (ON SC), 38 R.F.L. (6th) 315 (Ont. S.C.) aff’d 2010 ONCA 196, 76 R.F.L. (6th) 14; Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40; Singh v. Singh, 2006 ONCJ 217, 171 A.C.W.S. (3d) 653; and Spears v. Spears, 2010 ONSC 4882, 94 R.F.L. (6th) 229.

[94] Pazaratz J. refers to Perkins J.’s decision in C.S. v. M.S. when considering s. 24(8) of the Family Law Rules, which provides as follows:

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.

[95] In Izyuk, Pazaratz J. writes the following:

[23] Justice Perkins provided a frequently quoted analysis of what constitutes bad faith …

16 … “Bad faith” has been explained as “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.” See Biddle v. Biddle (2005), 137 A.C.W.S. (3d) 1164, [2005] W.D.F.L. 2089, 2005 CanLII 7660, [2005] O.J. No. 1056, 2005 CarswellOnt 1053 (Ont. Fam. Ct.), at para. [14]. The definition of “bad faith” in The Concise Oxford Dictionary of Current English (5th ed., 1964, ed. by H.W. Fowler and F.G. Fowler) is simply “intent to deceive”. The essence of bad faith is the representation that one’s actions are directed toward a particular goal while one’s secret, actual goal is something else, something that is harmful to other persons affected or at least something they would not willingly have supported or tolerated if they had known. However, not all bad faith involves an intent to deceive. It is rare, but not unknown in family law cases, for bad faith to be overt -- an action carried out with an intent to inflict harm on another party or a person affected by the case without an attempt to conceal the intent.

17 In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other 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. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

18 In construing subrule 24(8), I think there is an implication from the context of the provision that the bad faith must relate to the issues at stake in the case or to the conduct of the case -- not behaviour outside the issues in the case or in a separate (even if related) case -- in order to justify a costs penalty in the case. [Emphasis added.]

[96] While I cannot conclude that the father in this case deceived the court in any manner, his willingness to spend money on legal and expert fees so out of proportion to any economic benefit defies logic. The reasonable conclusion is that the father was prepared to cause financial harm to the mother and his son even at incredible expense to himself. He certainly never expected to recover his costs.

[97] Pazaratz J. concludes his reference to Perkins J.’s decision at para. 23 by quoting:

20 I have not found that the father crossed the threshold of bad faith in the behaviour listed above, even in light of the enormous costs of this case, because I think he had a genuine belief in the rightness of his actions and in the correctness of the result he was seeking in the case. He knew, because he was paying major amounts of costs to his own lawyers along the way, that the mother’s costs were significant to the point of being ruinous. But on the central contested issue of access to the youngest child, as well as on the financial issues, I do not find the requisite intent to harm.

[98] Pazaratz J. then focuses on the Family Law Rules, s. 24(11) factor on costs at para. 34: “[t]he real challenge in this case relates to Rules 24(11)(c) and (d) – the lawyer’s rates, and time spent on the case.”

[99] Pazaratz J. then reviews cases about costs for in-person parties. In his case, the successful party submitted a Bill of Costs totaling $29,432.00, including $1,945.47 in disbursements. Pazaratz J. writes the following:

[35] This included more than $6,000.00 in fees he paid to a lawyer during the early stages of this action, before he elected to represent himself. At the commencement of his submissions, however, the Respondent deleted almost $8,000 from his bill of costs, acknowledging that pursuant to the Ontario Court of Appeal decision in Islam v. Rahman (2007), 2007 ONCA 622, 41 R.F.L. (6th) 10 (Ont. C.A.) (which he cited), costs had not been reserved or addressed during various motions and conferences when he had counsel, and accordingly they were no longer recoverable. Ultimately he requested costs in the range of $15,000 (inclusive of disbursements) in relation to the 17 day trial (and a single motion which was adjourned to the trial).

[36] I agree ... that some of the claimed disbursements are inappropriate (such as $100.00 for “driving, parking, serving materials”; and $200.00 in costs awarded against the Respondent at a March 15, 2011 motion). However, most of the Respondent’s disbursements relate to photocopies, medical reports, translations, and preparation for trial. Given the complexity and volume of materials, I find that $1,500.00 in disbursements is reasonable (Rule 24(11)(e)).

[37] The biggest challenge relates to the self-represented Respondent’s claim for costs for the time and work he expended on his own file, in addition to his out of pocket disbursements. …

[38] The emerging issue of costs claimed by self-represented litigants has been dealt with extensively in recent years, perhaps most comprehensively by Justice D. G. Price in Jahn-Cartwright v. Cartwright (2010), 2010 ONSC 2263, 91 R.F.L. (6th) 301 (Ont. S.C.J.) and Cassidy v. Cassidy (2011), 2011 ONSC 791, 92 R.F.L. (6th) 120 (Ont. S.C.J.).

[39] Justice Price made the following observations of the Ontario Court of Appeal decision in Fong v. Chan 1999 CanLII 2052 (ON CA), [1999] O.J. No. 4600 (Ont. C.A.):

a. The Court of Appeal confirmed a self-represented litigant’s entitlement to costs.

b. The Court gave some guidance on the method of quantifying those costs, but did not elaborate as to the methodology to be used.

c. Self-represented litigants are not entitled to costs calculated on the same basis as litigants who retain counsel.

d. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case.

e. Costs should only be awarded to those lay litigants who can demonstrate they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation.

f. The trial judge is particularly well-placed to assess the appropriate allowance, if any, for a self-represented litigant.

[40] In Jahn-Cartwright and Cassidy, Justice Price expanded the analysis:

a. The entitlement to costs and the appropriate amount to be paid is within the court’s discretion.

b. Rule 24(1) of the Family Law Rules creates a presumption of costs in favour of the successful party.

c. In setting the amount of costs, the court must try to indemnify the successful party while avoiding an overly onerous costs burden for the unsuccessful party which would jeopardize access to justice.

d. For many years indemnification of a successful party was considered the only objective, and this was held to preclude an award of costs to a successful self-represented litigant who had not paid fees for which they needed to be indemnified. But while indemnification remains a paramount consideration in awarding costs, it is not the only one.

e. In both Fong v. Chan and more recently in Serra v. Serra,2009 ONCA 395, the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:

1. To partially indemnify successful litigants for the cost of litigation;

2. To encourage settlement; and

3. To discourage and sanction inappropriate behaviour by litigants.

f. Access to justice has been recognized as a further objective that the court should seek to achieve when awarding costs. (1465778 Ontario Inc. v. 1122077 Ontario Ltd., 2006 CanLII 35819, (2006), 82 O.R. (3d) 757 (Ont. C.A.)).

g. A party with counsel, opposite an unrepresented litigant, should not perceive that they are immune from a costs award merely because such opposite party is unrepresented. They should be discouraged from presuming they will face only nominal costs.

h. The right of a self-represented litigant to recover costs is not automatic. Quantification of those costs may be difficult. But without the option of awarding meaningful costs to self-represented litigants, the court’s ability to encourage settlements and discourage inappropriate behaviour will be greatly diminished.

i. Determination of costs for self-represented litigants should take into account all of the objectives which costs orders should promote. Rules 18 and 24 of the Family Law Rules apply. Otherwise the resulting amount can render the entitlement to costs illusory; undermine access to justice by self-represented litigants; and frustrate the administration of justice.

j. If a self-represented litigant, in performing the tasks that would normally have been performed by a lawyer, lost the opportunity to earn income elsewhere, this may be a relevant factor. But costs for self-represented parties are not the same as damages for lost income. Remunerative loss is not a “condition precedent” to an award of costs. To require proof of lost income would disqualify litigants who are homemakers, retirees, students, unemployed, unemployable, and disabled; and deprive courts of a tool required re administration of justice.

k. Lost income may be one measure. But even if no income was lost, the self-represented party’s allocation of time spent working on the case may still represent value.

l. The fact that a self-represented litigant is not a lawyer who charges a standard and commonly accepted hourly rate makes it more difficult – but not impossible – to assess their costs. However, the difficulty in valuing the time and effort of the lay litigant is not a good reason to decline to value it.

m. An “applicable hourly rate” should be taken into account when quantifying even a self-represented lay litigant’s costs. But the appropriate hourly rate, once determined, is only one of several factors to be considered.

n. In considering the appropriate hourly rate, the court should consider what the lay litigant’s reasonable expectations were as to the costs he would pay if unsuccessful. (Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.)).

o. Where one party is represented by a lawyer and the other is not, the hourly rate that the represented litigant’s lawyer is entitled to claim on an assessment of costs should inform the reasonable expectations of both parties as to the costs that they will likely be required to pay if unsuccessful. Otherwise, litigants represented by lawyers would be less circumspect with regard to their conduct and their response to the opposing party’s efforts to settle because that party is a self-represented litigant.

p. The hourly rate of the lawyer representing the unsuccessful party is only one of several factors to be considered. It does not necessarily entitle the successful self-represented party to claim the same rate for time spent. However, if the self-represented party was required to contend with a highly experienced lawyer whose years at the Bar would have entitled a higher hourly rate, that may be relevant in considering the calibre of the work the self-represented party had to do to effectively participate in the adversarial process.

q. As with counsel, the appropriate hourly rate may be affected by the level of indemnification or recovery deemed to be appropriate, given all of the Rule 18 and 24 considerations.

r. There are no automatic calculations. We should not simply use the hourly rate for the opposing lawyer, or the hourly rate the self-represented litigant earns outside of court. Fixing costs is not a mechanical exercise. (Boucher)

s. The quality of the self-represented litigant’s work and documentation must be considered, and its impact on hearing time and trial results. The emphasis must be on the value of the work done. This encompasses both the value of the work to the Court and the value of the time spent to the litigant who performed the work, or who hired a lawyer to perform it.

t. Calculating the amount of time the self-represented litigant should be compensated for can be a complex endeavour. All litigants suffer a loss of time through their involvement in the legal process. A self-represented litigant should not recover costs for the time and effort any litigant would have to devote to the case, including attendances in court where the party would ordinarily attend.

u. But if the self-represented litigant demonstrates he/she did the work ordinarily done by a lawyer, then they will have justified receiving an award of costs – including time spent on communications, drafting documents and correspondence, preparation and compensation for time spent arguing their case.

v. Self-represented litigants may be held to the standards of civility expected of lawyers and a proper reprimand for failure to do so is an award of costs on a substantial indemnity basis. Where either a litigant or his/her lawyer acts unreasonably, by incivility or otherwise, it is a factor that may result in discounting the costs that should otherwise be awarded. This discounting is a necessary part of quantifying costs and is consistent with the overall purpose of costs awards in improving the efficiency of the administration of justice.

w. Ultimately, the overriding principle in fixing costs is “reasonableness.” [Emphasis added.]

[41] In Jahn-Cartwright the successful self-represented mother was awarded fees of $9,038.00 (plus HST) together with disbursements totaling $616.56. An hourly rate of $200.00 was applied, which was approximately two-thirds of what the husband’s lawyer would have been entitled to claim, even on a partial indemnity scale.

[42] In Cassidy Justice Price attributed an hourly rate of $150.00 to the successful self-represented wife. The hourly rate for the husband’s lawyer would have been $225.00 on a substantial indemnity scale and $200.00 on a partial indemnity scale. The Court explained the final calculation:

52 I have concluded that the fairest way to deal with this time is to allow Ms. Cassidy costs for the time she spent in court arguing her case, at the hourly rate that would reasonably be charged by a lawyer for this work, while deducting the same amount of time at the hourly rate she would have earned elsewhere and which she would have lost in any event by attending court as a litigant. After deducting the time she would have spent at the conference on June 10, 2009, which is not recoverable, I consider the $2,500.00 which Ms. Cassidy has claimed for her time to be a very modest award.

[43] The Jahn-Cartwright analysis was accepted by Wildman, J. in Rashid v. Shaher, 2011 ONSC 852, 2011 CarswellOnt 738, 97 R.F.L. (6th) 213 (Ont. S.C.J.) in which a successful self-represented party was awarded $10,000.00 in costs for an 11 day trial. Justice Wildman commented:

12 The caselaw ... establishes that “indemnification” is not the sole purpose of costs, and it is appropriate to award a self-represented litigant something for the considerable efforts she has had to put into defending this matter on her own behalf. However, the $163,643.86 claimed by Ms. Shaher, who works as a waitress in a coffee shop for $12 per hour, is excessive. Indemnification, while not the sole purpose of costs, is still a guiding principle. Winning a trial is not meant to be the same as winning a lottery.

13 The presiding judge is given considerable discretion in deciding costs, to fashion an award that is reasonable and fair in the circumstances. I am satisfied that $10,000 is a reasonable amount for Ms. Shaher to receive for her costs of preparing for and presenting her own case at trial. This amount considers the divided success, the lack of reasonable settlement offers and some of Ms. Shaher’s “unreasonable” conduct in this litigation, such as withdrawing certain claims on the first day of trial. I am also prepared to reimburse her $8000 for money she paid to her previous lawyers. The $18,000 awarded as costs is to be set off against the amount that Ms. Shaher owes the estate, and paid once the claims against her in the other lawsuit are resolved. The claim that a portion of those costs should be paid by Mr. Jagtoo will be dealt with in a separate oral hearing, if it is still being pursued.

16 Traditionally, costs have been considered to be a reimbursement for money spent in the lawsuit. This meant that self-represented litigants, such as Ms. Shaher, might be compensated for their time or lost wages, but the costs awards were relatively modest because they were not paying a lawyer. However, the law of costs is developing so that self-represented litigants may now, in appropriate circumstances, receive a “counsel fee” to provide more adequate compensation for their time spent on the lawsuit.

78 The law of costs has developed from the initial goal of indemnifying a successful party for all or part of his or her legal costs, to now incorporate other objectives. Self-represented parties can, in appropriate cases, be awarded a counsel fee to ensure that the goal of access to justice is met. Parties who litigate against a self-represented person should not be able to ignore the potential for costs. The court retains the discretion to fashion an award of costs that is fair and reasonable in the circumstances of the case before it.

[44] In Blustein v. Kronby, 2010 CarswellOnt 1985, 2010 ONSC 1718 (Ont. S.C.J.) Belobaba J. referred to the “now-accepted rate of $60 per hour for self-represented litigants.” The same hourly rate was allowed by Wean J. in Goary v. McDonald, 2010 CarswellOnt 6079, 2010 ONSC 3008 (Ont. S.C.J.). In Rashid (supra), Wildman J. used “broad brush” calculations to estimate the self-represented litigant’s time as worth about $20.00 per hour.

[53] The above noted Rule 18 and 24 analysis makes it clear that, at least presumptively, the Respondent should be entitled to a substantial level of indemnification for costs. As it happens, his status as a self-represented litigant already works in the Applicant’s favour, reducing the scope of costs being claimed.

[54] In arriving at an overall award of costs which is fair and reasonable, the court must take into account the Applicant’s limited resources – as one of the relevant factors. But I return to the three primary objectives of costs orders:

1. To partially indemnify successful litigants for the cost of litigation;

2. To encourage settlement; and

3. To discourage and sanction inappropriate behaviour by litigants.

[These objectives are repeatedly quoted by many cases.]

[55] It is counter intuitive to suggest that these objectives are less applicable to litigants of modest (or no) means. To the contrary, those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings. As Glithero J. noted in Balaban v. Balaban 2007 CanLII 7990 (ON SC), 2007 CarswellOnt 1518 (Ont. S.C.J.), at paragraph 7: “... when a person’s financial position is such that they cannot really afford the cost of litigation, then there is all the more reason to attempt compromise of a meaningful nature.

[58] The dynamics on this file are all too common, and cry out for judicial awareness. In a troubled economy we are seeing more self-represented parties in Family Court, and certainly more people with limited finances. Inevitably, these ingredients create greater strains on the administration of justice. Combined with limited judicial resources, the need to encourage settlement and discourage inappropriate behaviour by litigants has never been more pressing.

[59] With Legal Aid tightening eligibility rules, it is likely that just about any litigant retaining counsel on a certificate will have trouble paying costs if they lose. But combining a “free lawyer” with a perceived immunity from costs is a dangerous mix. Dangerous for opposing litigants. Dangerous for children like Maxeem, whose lives are needlessly disrupted by bitter and unnecessary litigation. And dangerous for a Family Court system whose resources are already strained.

[61] Encouraging settlement and discouraging inappropriate behaviour by litigants is important in all litigation – but particularly in family law, and most particularly in custody cases. No litigant should perceive they have “wings” – the ability to say or do anything they want in court, without consequences.

[100] In the end, Pazaratz J., in spite of the unsuccessful party’s financial hardship, orders costs against her using a $100 per hour rate for the in-person party.

[101] In Warsh, Lauwers J. sitting as a trial judge considers the costs claim of a successful, in-person party in a family case where the unsuccessful party had counsel. He starts by reference to the applicable rules and then reviews several cases, commencing with Davies. In Davies at para. 51, Epstein J.A. writes, “consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case.”

[102] At para. 5 in Warsh, the represented party’s counsel submits that his “primary objective” is to have the court recognize the parties’ eldest child as a legal “child of the marriage” to ensure that the payments for medical school expenses would be shared between the parties, but he is not successful. He also fails to convince the court that the parties’ daughter “had unilaterally repudiated the father-daughter relationship”: Warsh, at para. 5.

[103] While Lauwers J. finds some mixed success in the other issues, he finds that the in-person party is the clear victor and is therefore entitled to the trial costs, “although some offset may be due under Rule 24(6) and 24(7)”: Warsh, at para. 6.

[104] Lauwers J. then considers the elements of the in-person’s $100,000 claim for costs, including more than $36,000 for her own time based not on dockets or records but on a calculation at a rate of $150 per hour. Like most cases dealing with this issue, Warsh refers to Izyuk, Fong, and Jahn-Cartwright v. Cartwright, 2010 ONSC 2263, 91 R.F.L. (6th) 301.

[105] When considering using hourly rates as a measure to fix an in-person party’s costs, Lauwers J. agrees with Aston J.’s observation in Delellis v. Delellis and Delellis (2005), 2005 CanLII 36447 (ON SC), 143 A.C.W.S. (3d) 235 (Ont. S.C.), at para. 9:

However, recent cases under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, have begun to de-emphasize the traditional reliance upon “hours spent times hourly rates” when fixing costs.... Costs must be proportional to the amount in issue and the outcome. 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, rather than an amount fixed by the actual costs incurred by the successful litigant.

[106] While acknowledging that courts use a wide range of hourly rates when calculating per hour costs for an in-person party, Lauwers J. concludes:

[22] The other element of the valuation is the time spent. The time that Hedy Warsh seeks to bill is excessive although understandably so given her perseverant tendencies. Taking Mr. Greenstein’s daily time estimate of 9 hours for each trial day and doubling by the rule of thumb that one hour of trial time necessitates one hour of preparation time, the number of hours to be billed amounts to 144 for the trial. The calculation comes to $4,320 which I round up to $5,000 to cover the post-trial work.

[107] Lauwers J. looks at the in-person’s claims for the in-person litigant’s past legal accounts and reduces them for being “out of line”; the time the in-person claims she spent on pleadings and financial statements are “excessive”: Warsh, at para. 25. Lauwers J. fixes recovery on a partial indemnity basis and emphasizes that costs should be dealt with at each step.

[108] Lauwers J. rejects the claim for interest on loans borrowed to pay legal fees, but says that “the discretion of the court under section 130 of the Courts of Justice Act is also quite broad”: Warsh, at para. 27.

[109] In Warsh, the represented party submits that, under Family Law Rule 24(7), the court may order costs if a party is not prepared to deal with issues at that step of the case. He submits that the in-person’s conduct unduly prolonged the trial. Lauwers J. responds as follows:

[38] I do not agree that four trial days were wasted by Hedy Warsh alone. The length of the trial reflected in part Hedy’s awareness that she was fighting for her financial life in the face of Ian Warsh’s unreasonable demand for a contribution to Joel’s education expenses. Much time was spent extracting Ian’s balky memories. All in all Hedy Warsh conducted herself reasonably well as a self-represented litigant.

[39] That said, in my view some apportionment is appropriate under Rule 24(6). I also note that without Mr. Greenstein’s able assistance the trial might well have been longer and the issues even more difficult to resolve.

[40] I therefore fix costs payable to Hedy Warsh in the amount of $12,500 inclusive of disbursements and taxes. I consider this amount to be reasonable, proportional and within the losing party’s reasonable expectation.

[110] Finally, Stevens is about money and many lawyers. The trial judge awards costs in the following amounts: $950,624.47 - $26,566.77 = $924,057.70, prejudgment interest in the amount of $55,189.04, and costs to the Added Party of $403,693.03. The Court of Appeal states:

[15] While the costs awarded by the trial judge are certainly very high, we are not persuaded that the appellant has demonstrated grounds for appellate intervention. It is well-established that appellate courts are reluctant to interfere with a trial judge’s exercise of discretion concerning costs and, for the following reasons, we decline to intervene in this case.

[16] First, there can be no doubt that the high costs are largely attributable to the appellant’s behaviour in this litigation. The trial judge was clearly entitled to consider the appellant’s behaviour before and at trial with regard to disclosure and requests to admit and the fact that the appellant had refused a very reasonable offer of settlement.

[17] Second, neither before this court not before the trial judge was there any serious challenge to the hours spent and the rates claimed by counsel for the respondent and the added party.

[18] While this costs award pushes reasonableness and proportionality to their limits, in the end, we see no error in the trial judge’s careful analysis and disposition of costs that would justify intervention.

[111] What I take from all this is that costs remain significantly discretionary, in spite of the Family Law Rules, ss. 2, 18, and 24 attempting to use the costs rules as incentive for parties to resolve issues and act reasonably.

[112] Ironically, the Family Law Rules first came into use in 1999, the same year that Fong was released and spoke to the objectives of costs awards, spoke to the emerging issues of the in-person party, and confirmed that an in-person party may recover costs.

[113] The 14-year review of cases, particularly Jahn-Cartwright and Izyuk, demonstrates that judges face significant challenges calculating reasonable and proportionally fair costs when an in-person party is the successful party.

[114] We ask lawyers to provide to us a Bill of Costs and a breakdown of hours spent and hourly rates that, while varying widely, is based on experience and to some degree reputation, market place. They are officers of the court when submitting Bills of Costs and costs outlines. In this case, the father’s counsel presented the hourly rates of three lawyers and a law clerk. The lawyers assisting the mother also presented Bills of Costs.

[115] As I commented, I did not have a method of assessing the fees provided by the one expert who testified and the other who assisted the mother but was not permitted to give expert evidence. I do not allow and have not considered any time of experts in this case. The experts do not generally provide an equivalent to a Bill of Costs.

[116] It is near impossible to come up with an objective way of fixing an in-person party’s hourly rate or the amount of time they spent, not at the court, doing what we might otherwise consider lawyer’s work. We have yet to require in-person parties to somehow docket their time and provide satisfactory and reliable evidence as to what work they did equivalent to counsel work.

[117] While different lawyers possess a wide range of skills, efficiency, and ability to focus, the range is far wider for in-person parties dealing with their own case. There are also many reasons for why they are without counsel. The costs must exclude the usual hours that any party might spend doing personal research, instructing counsel, and speaking with counsel. I am not sure how we can use hourly rates to measure a costs claim for the in-person’s time absent some requirement that in-person litigants keep dockets and certify their work on the case. Even then, it is a questionable method as there are various skill levels and the in-person may be too close to the issues to focus on what is relevant and necessary for the court to assist in resolution or adjudication.

[118] The mother acted civilly and sought counsel’s assistance from time to time. Yet, there is little doubt that the process was sometimes delayed as she struggled to solve her expert issues, address her evidentiary issues, and decide whether to adjourn the case once again when it was called for trial. She sought to minimize her legal fees and appropriately used counsel for advice and guidance.

[119] The nature of the issues is I find an important consideration in determining costs. This was a very expensive, long, drawn-out process. The father sought to terminate the consent order that did not specify his income and was intended to allow Jesse to complete an undergraduate university degree, while recognizing his learning challenges. The consent order was also meant to address the father’s unilateral stopping of payments by requiring him to pay until the court determined any future support issue.

[120] The mother did not invite this new round of litigation and sought to maintain the child support. While Jesse’s school and educational plans changed, he was in school and scheduled to graduate one year later than the original anticipated date. The mother and child needed the money. The father’s willingness to spend far more on fees and experts than the amount in issue demonstrates, at minimum, unreasonableness and a willingness to create economic hardship for mother and child. The father had choices; the mother did not and rather than give up acted in person and sought counsel as she determined her needs.

[121] As often repeated here, Fong has been cited in over 200 cases addressing various aspects of costs, including costs where there is an in-person party The following paragraph is applicable here:

[22] Quite apart from authority and as a matter of principle, it seems to me to be difficult to justify a categorical rule denying recovery of costs by self-represented litigants. As noted in the Fellowes McNeil, supra, and in Skidmore, supra, modern cost rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour by litigants.

[122] All three purposes are fostered by allowing a trial judge discretion to award costs to in-person litigants.

[123] Fong pre-dates the 1999 Family Law Rules. However, the case compliments and is consistent with the objectives of the Family Law Rules.

[124] As I began, courts struggle with litigation costs and their impact on access to justice, particularly in cases dealing with family law, parties with modest means, and in-person parties.

[125] The mother necessarily and appropriately sought counsel from time to time and minimized her fees. She sought legal and professional advice to prepare for the hearing, prepare offers while the hearing was in progress, for final submissions, and for costs submissions. She was fortunate that counsel assisted her in spite of the risk of not recovering fees. I allow her those fees; to do otherwise would diminish the child support benefit to her and her son.

[126] Lawyers and the Law Society of Upper Canada now recognize limited scope retainers or unbundled legal fees as one way to attempt to address access to justice and legal representation. Consistent with this need, courts addressing costs should consider Bills of Costs certified by lawyers who have provided assistance, even if not on the record throughout the case.

[127] It is consistent with the objectives of the Family Law Rules, the overall notions of fairness, reasonableness, access to justice, and proportionality that the starting point must be full indemnity for the mother’s legal fees. As I have stated, I am not satisfied that, to determine the mother’s time as an element of costs, using any calculation method proposed by her would be fair, reasonable, or supported by her material. Nevertheless, it is reasonable to consider that any unrecovered provable expense (as in lawyer’s Bill of Costs and invoices) undercuts the benefit of the child support that was maintained.

[128] The mother should recover sufficient costs to pay the lawyers she retained and a portion of her own expenses less a reduction for costs thrown away.

[129] I used the father’s final claimed amount and the mother’s counsels’ total Bills of Costs (not for Jesse) as a measuring stick for reasonable and fair compensation. The maintenance of child support is not only a moral victory but also maintains a significant portion of the benefit of the child support.

[130] For the above reasons, including a reduction for costs thrown away, costs previously awarded against the mother, and some nominal amount for her own time, I find and order that the father must pay her costs fixed at $90,000 all payable forthwith, in addition to the amount the father otherwise owes her ($33,654.13).

Czutrin J.

Released: August 15, 2013