NEWMARKET

COURT FILE NO.: FC-09-032864-00

DATE: 20131004

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Alina Polak, Applicant

AND:

Stanislav Polak, Respondent

BEFORE: THE HON. MR. JUSTICE J.P.L. McDERMOT

COUNSEL:
Carla Adams, for the Applicant

Colin Brown, for the Respondent

HEARD: By written submissions

ENDORSEMENT

[1] On May 31, 2013, the parties completed a six day trial regarding custody of their two children, Anthony and Michael, as well as child and spousal support issues. A number of witnesses testified, including the social worker who completed two investigatory reports for the Office of the Children’s Lawyer, Alana Presement. The primary issue was custody and primary residence of the children, but this litigation was largely driven, initially at least, by the Applicant’s decision to adopt orthodox Judaism for the children, resulting in their circumcision without the consent or involvement of the Respondent.

[2] On July 9, 2013, I issued my endorsement. The Respondent was undeniably successful in the result, as he received an order granting him custody of the children which, as noted, was the major issue before me. Although Applicant’s counsel submitted that success was divided based upon the support awards made by me, that was a minor factor and the Respondent never denied his obligation to pay spousal support. I gave the parties leave to file submissions as to costs, and those submissions have now been filed.

[3] The Applicant brought a motion after trial for an order permitting her to travel with the children to Florida during her time with the children during the summer of 2013. That motion was dismissed by Nelson J. on July 12, 2013. I have also been asked to determine the costs of that motion.

Analysis

[4] Apart from the Respondent’s success in this proceeding, the parties have raised a number of issues concerning costs, including the following:

a. Was the Applicant’s conduct unreasonable within the meaning of Rule 24(11) of the Family Law Rules?[1]

b. What are the effects of the respective offers to settle made by each of the parties prior to trial?

c. Should I take into account the Applicant’s economic circumstances in quantifying costs in this matter?

[5] I will consider each of those issues in turn.

(a) Was the Applicant’s conduct unreasonable within the meaning of Rule 24(11) of the Family Law Rules?

[6] In his costs submissions, Respondent’s counsel, Mr. Brown submitted that Ms. Polak had been guilty of unreasonable conduct on several fronts. He relied upon my finding that Ms. Polak had “sabotaged” the children’s public school education; he also noted that she was unreasonable in not following the recommendations of the Alana Presement and in opposing the change in primary residence. Finally, he submits that Ms. Polak was also unreasonable in bringing a motion subsequent to trial for a travel consent, which motion was dismissed by Nelson J.

[7] In awarding costs, I may 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.

[8] There is no contention by Mr. Brown that Ms. Polak acted in bad faith: that is an issue which requires a fairly high threshold of behaviour, and as such a finding of bad faith is rarely made: see S.(C.) v. S.(C.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (Ont.S.C.J.) and Piskor v. Piskor, 2004 5023 (ON SC), [2004] O.J. No. 796 (S.C.J.). As such, the only issue is whether there was, on behalf of the Applicant, unreasonable conduct such that would result in an increase in the costs award in favour of the Respondent.

[9] In litigation, one can often see where a case went off the rails and became such that a trial was inevitable. In the present case, there were two key incidents which resulted in the claim of the husband graduating from an access claim to a full custody claim. Those incidents were firstly the circumcision of the children without Mr. Polak’s knowledge or consent; secondly, there was the incident when Ms. Polak purposefully obtained the husband’s signature to a travel consent which she knew did not accurately reflect the children’s travel plans, after which she did not return the children according to the consent signed, or even according to an order of the court for the return of the children. After those incidents, Mr. Polak felt that he had little choice but to request custody of the children and he eventually amended his pleadings to make that request.

[10] It was undoubtedly the responsibility of the Applicant that any trust or goodwill that might have existed between the parties quickly eroded to almost nothing. The incidents noted above were largely responsible for this deterioration, but even afterwards, the behaviour of the Applicant became increasingly corrosive. The Applicant arbitrarily changed access visits when convenient to her; she objected to and argued a motion against increased summer access to the Respondent without good reason; she failed to ensure that the children consistently attended their public school as ordered by this court, and when they did, she failed to ensure their cleanliness or that they were properly dressed and prepared for school.

[11] The Applicant states, in response, that she was merely protecting the children’s religion and that she was entitled as the custodial parent to allow the children to practice the religion that she had chosen for them. There is no issue that both parents have a right to influence their children’s religion; the difficulty I have with the Applicant’s contention is that she felt that she could encourage the children’s involvement in the Jewish faith to the exclusion of Mr. Polak. Throughout the lengthy period preceding trial, Ms. Polak treated Mr. Polak with casual contempt, deciding that the provision of makeup access entitled her to dictate access times with the children. As well, she also treated the court with contempt, especially when she refused to return the children to Ontario contrary to Gilmore J.’s order made April 3, 2012. It is little wonder that Mr. Polak objected to the summer travel proposed by the Applicant after trial.

[12] Accordingly, I have no difficulty in making a finding of unreasonable conduct on the part of the Applicant such that it would affect the costs of this litigation. Indeed, this makes complete sense; the Applicant’s conduct largely resulted in this trial and in the Respondent incurring serious costs in protecting his own custodial rights and in prosecuting his claim for custody.

(b) What are the effects of the respective offers to settle made by each of the parties prior to trial?

[13] I note that both parties made comprehensive offers to settle the trial. 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.

[14] The Applicant’s offer to settle dated May 27, 2013 was in direct opposition to the result regarding the child related issues. It provided for custody, or alternatively primary residence, to be placed with Ms. Polak; the opposite occurred at trial. That option (for either custody to the Applicant or alternatively joint custody with primary residence to the Applicant) made the offer both equivocal and difficult to accept as it gave choices, and was not severable. Notably, the Applicant’s offer did not address the schooling issues, presumably leaving that issue to be decided by the Applicant were the offer to be accepted.

[15] In any event, other than the issue of spousal support, the Applicant’s offer was clearly not bettered at trial. And having been served on May 27, 2013, days after the commencement of trial, the offer did not comply with paragraph 2 of Rule 18(14), which requires service of an offer to settle a trial at least seven days before the trial.

[16] The situation is somewhat confused in respect of the offers served by the Respondent. He served an offer to settle all outstanding issues on October 12, 2012; that offer provided for joint custody with primary residence to Mr. Polak. It gave Ms. Polak access every second weekend plus two evenings per week and a divided summer. That offer did not address the support issues raised by Ms. Polak.

[17] That offer was withdrawn by e-mail to Ms. Adams dated May 14, 2013. A second offer to settle the custody and access issues was served the following day; that offer proposed that Mr. Polak have sole custody of the children; it also suggested access every second weekend with only one evening per week and a shared summer school vacation.

[18] Again that offer did not address support issues. A support offer was served on May 22, 2013 which offered that neither party would pay child support and the Respondent would pay spousal support of $400 per month to and including May 31, 2015 when support would come to an end. As with the Applicant, that offer was served outside the minimum seven day period prior to trial as required by Rule 18(14). However, by virtue of it being a separate offer, it was also severable from the custody and access offer.

[19] The offers made by the Respondent, although closer to the result than the offer made by Ms. Polak, also do not attract full indemnity costs under Rule 18(14). Although I gave Mr. Polak full custody of the children, the access offered by the Respondent to Ms. Polak was less generous than as ordered by me; I ordered access three weekends out of four notwithstanding the submissions made by Mr. Polak on the witness stand. I allowed the Applicant to remove the children from school for up to four Jewish holidays and dealt with travel issues which were not addressed by the offer. As well, although the support offer allowed the Applicant to pay no child support, it was more modest than was my order on spousal support both on quantum and on duration. And that support offer was not served in time in any event.

[20] In assessing costs, however, and pursuant to Rule 18(16), I take into account the fact that the offer made by the Respondent respecting custody and access was much closer to the result than was that of the Applicant.

(c) Should I take into account the Applicant’s economic circumstances in quantifying costs in this matter?

[21] Under Rule 24(11)(f) of the Family Law Rules, I am entitled to take into account “any other relevant matter” in determining costs.

[22] Ms. Adams says that this includes the economic circumstances of the unsuccessful party. She acknowledges on behalf of Ms. Polak that a costs award should go, but that her client’s financial situation is dire, and that this should mitigate any costs award. She notes that although Ms. Polak received an equalization payment of some $115,000 in February, 2011, those funds are now exhausted. Ms. Polak no longer receives her limited income of some $12,000 per annum as she was recently laid off. Ms. Adams submits that any significant award of costs is unaffordable by the Applicant, and that Ms. Polak’s limited financial circumstances be taken into account in determining the costs of this proceeding.

[23] Mr. Polak disagrees. His counsel notes that the Applicant has never explained what happened to that equalization payment. Moreover, he says that it is unlikely that the funds were expended on legal fees: Mr. Brown notes that many of the motions were made without legal representation or costs. He finally states that Ms. Polak resides in her mother’s home and as such, her living expenses may very well be understated.

[24] There have been a number of cases which indicate that a party’s financial circumstances may be taken into account in determining costs. These cases include cases decided at the appellate level: see C.A.M. v. D.M., 2003 18880 (ON CA), [2003] O.J. No. 3707 (C.A.) at paragraph 45 and Harrington v. Harrington, [2009] O.J. No. 827 (C.A.) at paragraph 8. However, it appears that this principle is primarily applicable where either a costs award or the costs of trial affect the ability of a party to bear the expenses of a child.

[25] In Beckett v. Beckett, 2010 ONSC 2706, [2010] O.J. No. 1957 (S.C.J.), Pazaratz J. considered the issue of the affordability of a costs award at the end of a five day equalization trial. The parties had shared custody of the children. In determining costs, he confirmed that “any other matter” in Rule 24(11)(f) included the “affordability and enforceability of a costs order” [paragraph 33]. However, he also confirmed that the real issue is the effect of the costs award on the financial ability of the parties to care for the children. He noted that, although a costs award would “jeopardize [the Respondent’s] ability to provide for her children”, that “we must not lose sight of the fact that unrecovered legal fees also interfere with the Applicant’s ability to provide for his children during the significant periods of time they are with him” [paragraphs 37 and 38]. Because both parties had almost equal care of the children, he decided that costs would follow the event.

[26] This was confirmed by the Court of Appeal in C.A.M., where Rosenberg J.A. stated at paragraph 45 that the costs claimed by the Respondent “was money he had to pay to defend this litigation that would otherwise have been available, at least in part, for the care of the child.”

[27] Accordingly, although the affordability of a costs award is a factor in the awarding of costs, this can work both ways, particularly where the needs of a child or children are in issue. While costs payable by a custodial parent may be mitigated by the needs of the child in that party’s care, the opposite may apply where a successful party, as in the present case, has custody of the child. The legal expenses paid by Mr. Polak for his representation at this trial will affect the financial means with which he can bear the costs of the children in his care. This is particularly so where the child support payable by the Applicant is set at a minimal amount based upon income imputed to the Applicant as in the judgment.

[28] Therefore, even though Mr. Polak may be financially better off than is the Applicant, he also has the burden of financially meeting the children’s needs with little assistance from the Applicant. He is also obliged to pay spousal support to the Applicant. Any reduction of costs payable to him would also directly affect his financial ability to meet the children’s needs.

[29] Finally, it must be noted that the means of the unsuccessful party may not be used to shield his or her liability for costs where that party has acted unreasonably: see Parsons v. Parsons, 2002 45521 (ON SC), [2002] O.J. No. 3034 (S.C.J.) at paragraph 12.

[30] In view of my finding of unreasonable behaviour made above, and based upon the fact that the Respondent will be responsible for meeting the children’s financial needs, I find the Applicant’s present financial circumstances to be of minimal consequence in quantifying costs in this proceeding.

Costs Award

[31] Based on his success at trial, the Respondent is entitled to his costs. He claims costs of $37,849.86 for the costs of the trial based upon his bill of costs filed with his costs submissions; that is a full indemnity amount. Mr. Brown also submits that Ms. Polak should pay the costs of her unsuccessful post-trial motion for a travel consent in the amount of $3,060.94, again a full indemnity amount. The costs claimed by the Respondent accordingly total $40,910.80.

[32] I note that a portion of the costs claimed by the Respondent include time spent at case and trial management conferences to a total of $2,800 (discounted to approximately $1,900 based upon the EAP discount noted in the bill of costs). These are fees which cannot be claimed unless the justice hearing the conferences reserved the issue of costs: Islam v. Rahman, 2007 ONCA 622, [2007] O.J. No. 3416 (C.A.). Moreover, the bill of costs for the motion did not appear to mirror the EAP discount as in the bill of costs for trial. Taking both of these factors into account, full indemnity costs would be reduced somewhat to $36,000, more or less, in total.

[33] The Respondent claims full indemnity costs of the trial. This is rarely granted other than in exceptional circumstances: see Boucher v. Public Accountants Counsel (Ontario) 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.). The object of costs is not to fully indemnify a successful party, but to fix a fair and reasonable amount payable by the unsuccessful party.

[34] Although the basics of the Respondent’s offer to settle were met at trial, insofar as he received full custody of the children, I have found above that the offers that he filed do not attract the mandatory consequences of full indemnity costs as provided for in Rule 18(4). The results on access were less favorable than the offers in question; as well the offer to settle support was not served on time, and again the result at trial was less favorable regarding spousal support than the offer.

[35] Although not overly complex, it is undoubted that the issues were important; the custody of the children was at stake, and the Respondent succeeded in obtaining a change in custody from a lengthy status quo. There were allegations of mistreatment and neglect of the children, and two reports from the Office of the Children’s Lawyer were reviewed, and testimony was received from the investigating social worker as well as the involved C.A.S. workers. I note, however, that the children’s teachers were not called, and this would have been helpful in a final determination in these proceedings.

[36] I have also made a finding of unreasonable conduct on the part of the Applicant. This goes to increase the amount of costs payable by the Applicant in this matter. Based upon my reasons above, I am also discounting the Applicant’s financial situation as a factor in reducing costs, especially as the Respondent will have the financial burden of raising the children with minimal contribution from the Applicant.

[37] Partial indemnity costs in this matter would normally be in the range of about $24,000, taking into account the costs of the motion. Based upon the offers made, and as well the Applicant’s unreasonable conduct, I find, however, that the Applicant should pay the Respondent substantial indemnity costs which I find to be in the amount of $30,000.

[38] There will be an order for costs payable by the Applicant to the Respondent for these proceedings, the trial and the post-trial motion in the amount of $30,000 inclusive of disbursements and HST.

McDERMOT J.

Date: October 4, 2013

[1] O. Reg. 114/99