SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FC-11-038492-00
DATE: 20131125

RE: ROSA MARIA COLIVAS, Applicant

AND:

STIVIN COLIVAS, Respondent

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

COUNSEL:
H. Niman and D. Bernstein, for the Applicant

J.D. Singer, for the Respondent

HEARD: By written submissions

ENDORSEMENT

[1] On September 11, 2013, I heard a motion to strike pleadings brought by the Applicant, Rosa Maria Colivas. The motion resulted from the Respondent’s failure to pay spousal and child support as ordered by Boswell J. on January 11, 2013 as well as to pay private school fees for the parties’ children under an earlier order made by Kaufman J. on September 13, 2012. The motion was originally returnable on March 27, 2013. Although it was apparent at that time that the two orders had been breached, Mr. Colivas had brought a motion for leave to appeal the Boswell J. order, by far the greater obligation, and I adjourned the motion to strike to allow that issue to be determined. Leave to appeal was denied and the matter returned before me in Barrie on August 29, 2013. I adjourned the matter to September 11, 2013 as Mr. Colivas was in Greece; the matter was argued on that date.

[2] On September 18, 2013, I issued my endorsement in this matter. I determined that spousal and child support arrears totalled $143,335.42 and that the Respondent also owed $4,076.08 to the Country Day School, where the children attend elementary school. Future costs for the Country Day School and the Linda Chodos assessment were to be equally divided between the parties. I gave the Respondent 20 days to bring the arrears into good standing failing which his pleadings were struck. Apparently, the arrears were paid soon after my decision, and Mr. Colivas remains involved in the litigation.

[3] Mr. Niman requests costs on behalf of his client. He states that there was an offer to settle sent, which, under Rule 18(14) of the Family Law Rules[^1] attracts full indemnity costs. He also says that Mr. Colivas acted in bad faith, and that this further attracts full indemnity costs of the motion under Rule 24(8). He claims costs of $29,335.93 inclusive of disbursements and HST as set out in the Bill of Costs, filed.

[4] Mr. Singer on behalf of Mr. Colivas acknowledges that Ms. Colivas enjoyed success at the motion and as such is entitled to costs. He suggests, however, that costs should be on a partial indemnity basis; he states that the order did not exceed the offer to settle and that it does not result in full indemnity costs. He denies bad faith conduct, and suggests that the Bill of Costs is excessive considering what was in issue. It is to be noted that the Respondent did not make any offer to settle on the motion.

Offer to Settle

[5] On September 10, 2013, Mr. Niman’s office served Respondent’s counsel with an offer to settle this motion. That offer provided that the Respondent would, within 7 days of acceptance of the offer, pay $5,932.50 to Linda Chodos as well as the ongoing costs of the assessment, $9,076.08 to the Country Day School plus 50% of ongoing fees for that school, as well as support arrears of $156,115.55. If those amounts were not paid within the time limited, Mr. Colivas’ pleadings would then be struck.

[6] Mr. Colivas did not make an offer to settle the motion.

[7] Under Rule 18(14), in the event that a party makes an offer better than or equal to the result at the hearing of the matter, full indemnity costs become mandatory from the date the offer is made, “unless the court orders otherwise”. Because this involves, to some extent, some loss of discretion to the justice hearing the matter, the offer must be examined carefully in order to determine whether it fits within the provisions of the rule; if it does not, Rule 18(14) is not engaged.

[8] In the present case, the order made by me was not, in the wording of the rule, “as favourable or more favourable than the offer to settle.” Although I ordered that the Applicant pay the support arrears failing which his pleadings would be struck, I fixed the arrears at just under $13,000 less than that offered, at $143,335.42; this was because I accepted the Respondent’s position that the car loan payments on the Range Rover be deducted from support. I also ordered that the Linda Chodos assessment costs be borne on a divided basis, rather than by the Respondent only. The amount payable to Country Day School was found to be only $4,076.08 rather than the amount set out in the offer, although the offer suggested ongoing fees for private school be borne the parties on an equal basis as ordered by me.

[9] As such, the offer to settle does not attract full indemnity costs as submitted by Mr. Niman. I note as well that the Bill of Costs filed by the Applicant is for full indemnity costs for the entire matter; were I to accept that full indemnity costs were payable under Rule 18(14), that would only apply to costs incurred after the date that the offer was made, being September 10, 2013.

[10] However, I note as well that the Applicant made an offer which was close to the result and could very well have been a basis for negotiation and settlement of the motion. The differences between the amount ordered and the amount in the offer are largely, if not wholly, subsumed by the costs of preparation and argument of the motion to both parties. The failure of the Respondent to make an offer may go to unreasonable or bad faith conduct as will be discussed below. However, in light of my findings below, I need not consider the Applicant’s offer in determining costs pursuant to Rule 18(16) of the Family Law Rules.

Conduct of the Respondent

[11] Mr. Niman argues that the Respondent acted in bad faith in his conduct concerning this motion. As such, he states that his client is entitled to full indemnity costs under Rule 24(8) of the Family Law Rules which states 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 [emphasis mine].

[12] Bad faith conduct is different from a party’s alleged unreasonable conduct, which is also to be considered in setting costs under Rule 24(11). Unlike Rule 24(11), which lists a number of factors, including unreasonable conduct, once a finding is made of bad faith conduct, the court is bound to order full indemnity costs and immediate payment of those costs. As such, care must be taken in making that type of finding as there is even a greater loss of discretion than with the issue of an offer to settle discussed above.

[13] There are a number of cases considering where the line is crossed between unreasonable conduct to bad faith. It appears that there has to be a finding of at least some element of malice or subterfuge prior to a finding of bad faith. Perkins J. considered the line which may be crossed between the two in S.(C.) v. S.(C.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (Ont.S.C.J.) at paragraph 17:

In order to come within the meaning of bad faith in Rule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent.

[14] McGee J. put this another way in Lee v. Belperio, 2012 ONSC 6389 when she stated at paragraph 16 that, “[b]ad faith generally implies conscious doing of a wrong such as intimidating an opposing party, purporting falsehoods and deliberate breaches of orders.”

[15] In the present case, there are a number of factors which make it unquestioned that there was unreasonable conduct on the part of Mr. Colivas and which, considered as a whole, also cross the line into the realm of bad faith conduct. They are as follows:

a. Mr. Colivas purposefully breached the orders in question. Although he stated that he was not able to pay the support because his mother controlled the funds, he then immediately paid the support arrears and the monies owing to Country Day School once my order was issued. Apart from the fact this behaviour belied Mr. Colivas’ position that he had no control over the funds, it also makes it apparent that this motion was completely unnecessary, and the default was occasioned, not by inability to comply, but by a conscious decision to do so.

b. There may have been some excuse for doing not paying (and I do not find this; I am only looking at Mr. Colivas’ state of mind) while the order of Boswell J. was under appeal, but that excuse was lost once Mullins J. dismissed the motion for leave to appeal on July 13, 2013. Notwithstanding the fact that the support was then clearly payable, and he could have avoided the continuation of the motion by paying the arrears, Mr. Colivas appears not only to have not paid the support owing, but actually reduced the amount and refused to pay the utility payments on the home. This resulted in Ms. Colivas and the children having to move to an alternate address, creating unreasonable hardship for both the Applicant and the children.

c. In arguing this matter, Mr. Colivas’ counsel relied upon several issues already decided on previous occasions. Mr. Colivas attempted to argue that the children need not be in Country Day School when that exact issue was before Kaufman J. and decided by him on a previous occasion. He failed to update his materials or provide evidence of a change in circumstances on this subject. He further argued that he had already paid a large amount of support prior to the Boswell J. order which should be deducted from the support arrears in the present case; however this exact issue was before Boswell J. who decided that those payments should be dealt with and accounted for at trial. These were issues which were not only without merit, but which had already been, at least to some extent, decided in these proceedings.

d. Mr. Colivas failed to serve an offer to settle, and this is important to consider when Ms. Colivas attempted to avoid this motion by doing so, and also by serving an offer which was extremely close to the result. The failure to serve an offer to settle may be, on its own, unreasonable conduct: see Rule 24(5)(a), Clark v. Collymore, 2013 ONCJ 501 and Bunce v. Peacock, 2013 ONCJ 498. It is apparent to me that the party who at least provided some evidence of attempts to settle these issues was the Applicant.

[16] It appears to me that Mr. Colivas was intent upon frustrating the support order made by Boswell J., an order that he did not agree with and disagreed strongly with. In the result, the behaviour of the Respondent in this motion crosses the line from unreasonable conduct to bad faith. His actions resulted in this motion, and his stated inability to pay the support and school costs were contradicted by his immediate payment of the support and costs once my endorsement was issued. He imposed unreasonable hardship on the Respondent and the children in failing to pay utility expenses while indulging himself with a trip to Greece. He chose to pay his wife exactly what he chose to pay without regard to the orders of Boswell J. and Kaufman J. His arguments on the motion were largely without merit, and he raised issues previously decided by both Boswell J. and Kaufman J. More importantly, his actions and omissions largely resulted in this motion and had he complied with the court orders that he was subject to, either before or after the leave to appeal motion was dismissed, the Applicant would not have had to pay all or part of her legal costs for representation for this motion. As such, it appears to me to be only fair that she be fully indemnified for those costs.

[17] Mr. Singer argues that his client is not the only one guilty of unreasonable or bad faith conduct. He notes that Ms. Colivas filed a false statement of arrears, attempting to collect more than she was due. He says that this action should militate against an award of full indemnity costs as requested by Mr. Niman.

[18] Two wrongs do not make a right. And it is acknowledged that, as the unsuccessful party, Mr. Colivas is liable for the costs of this motion. It is his conduct, not Ms. Colivas’ which is in issue. And Mr. Colivas did not provide any evidence of hardship resulting to him from the filing of the inaccurate statement of arrears. In fact, throughout this motion, Mr. Niman and his client acknowledged that the payments actually made subsequent to the order would be credited against the support arrears; the only difference between Mr. Niman and the court was the issue of the payments for the Range Rover, respecting which I found in Mr. Colivas’ favour.

[19] Accordingly, I find that Mr. Colivas is guilty of bad faith conduct and as such is liable under Rule 24(8) to forthwith pay full indemnity costs of this motion.

Quantum of Costs

[20] As noted above, Mr. Niman has filed a bill of costs claiming full indemnity costs of $29,335.93 inclusive of HST and disbursements. The Bill of Costs includes work done by two lawyers, Mr. Niman who has an hourly rate of $755 and Mr. Bernstein, whose hourly rate is substantially less at $265 per hour.

[21] Mr. Singer argues that the Bill of Costs filed by Applicant’s counsel was unreasonable and that Ms. Colivas could have utilized the services of Mr. Niman’s junior associate, whose hourly rate is 35% less than that of Mr. Niman. Even if full indemnity costs are awarded, Mr. Singer states that the issues were simple and did not require senior counsel.

[22] The issues on this motion were of moderate complexity, and they were important as the potential result would have been to remove Mr. Colivas from the litigation. Moreover, Mr. Colivas used senior counsel in his argument of the motion; Ms. Colivas can hardly be deprived of that benefit as well. The amounts in issue were large as indicated by my endorsement and the findings in that endorsement. Three attendances were necessary; the last two were a distance away from the parties’ home court, and this was necessitated by Mr. Colivas’ unsuccessful leave to appeal motion which prevented resolution on the initial return date.

[23] I am conscious of the admonishment of Wildman J. when she states in Murphy v. Murphy, 2010 ONSC 6204, 2010 CarswellOnt 8616 (S.C.J.) at paragraph. 20:

I am assuming that the decision to spend so much money preparing for this motion was Mr. Sapir's rather than his counsel's. Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term "full recovery costs", there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner.

[24] However, when I review the Bill of Costs, I note that effective use was made of Mr. Bernstein, who appears to have completed most of the materials, which were then reviewed by Mr. Niman who was to argue the motion, and who obviously would need to have input into those materials. The only criticism that I have is that I do not believe that both Mr. Niman and Mr. Bernstein needed to be present at the argument of the motion. As stated, the motion was of moderate complexity, and I believe that it could have been argued by Mr. Niman without the necessity of co-counsel. Accordingly, I am adjusting the fees portion to remove Mr. Bernstein’s hourly rate for attendance at the various steps in this motion. I am reducing the fees claimed by the Applicant by $3,500[^2] which is my estimate of the time spent by Mr. Bernstein accompanying Mr. Niman to the three steps of the motion. Taking into account HST, the costs claimed by Ms. Colivas are accordingly reduced by $4,000.[^3]

[25] The Applicant shall have her costs of the motion in the amount of $25,335.93. Costs shall be payable forthwith and, as the motion was respecting collection of spousal and child support, the costs are also collectable as support.

McDERMOT, J.

Date: November 25, 2013

[^1]: O.Reg. 114/99

[^2]: There were three attendances on the motion. Taking away the preparation time claimed by Mr. Bernstein, and using Mr. Niman’s time spent as in the bill of costs, Mr. Bernstein would have spent five hours at court on March 27, 2013 and four hours in court and travelling on each of August 29 and September 11, 2013. That is a total of 13 hours, which at $265 per hour totals $3,445. I have rounded this up to $3,500.

[^3]: HST on $3,500 is $455, which gives a total of $3,955. I have rounded this figure up to $4,000.