ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: D10-498

DATE: 2014/06/06

BETWEEN:

SHELLEY LORI SULLIVAN

Applicant

– and –

PETER COLE SULLIVAN

Respondent

Ronald G. McClelland, counsel for the Applicant

Edward C. Castle, counsel for the Respondent

HEARD: By Written Submissions

RULING ON ISSUE OF COSTS

LALIBERTE, J.

INTRODUCTION

[1] On March 17^th, 2014, the Court released its judgment in this matter. This motion to vary brought by the Respondent father raised a number of issues but revolved mainly around his retroactive and prospective child support obligations. Having been provided by both parties with written submissions and their respective bill of costs, the Court must now decide the issue of costs.

[2] The Respondent father’s position is that he should receive costs in the amount of $6,525.75 which is half of his bill of costs. In the alternative, he argues that neither party should be awarded costs and that each party should bear their own costs.

[3] The Applicant mother claims costs in the amount of $27,559.30. She also seeks an order providing that these costs be included in the amount of the lien which was ordered by the Court in its judgment as security for child support under section 12 of the Child Support Guidelines. Furthermore, she requests that same be enforced by the Family Law Responsibility Office as such costs arose from a dispute pertaining to child support and resulted from that dispute.

[4] In the end, these proceedings have collectively generated legal expenses in the amount of $40,609.80. The issues for the Court are:

1. Who is liable for these costs?

2. What is the quantum of liability, if any?

THE LAW

[5] A proper determination of costs in family law proceedings requires the Court to reflect on a myriad of factors. It is more than a simple mathematical or mechanical exercise. (Boucher et al v. Public Accountants Council for the Province of Ontario 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ontario Court of Appeal). As stated by the Ontario Court of Appeal in Somers v. Fournier 2002 45001 (ON CA), [2002] O.J. No. 2543 at paragraph 17:

“Thus, costs are both a discretionary indemnification device and a mechanism by which abuses of the Court’s processes may be deterred and penalized. Costs are routinely used by Ontario Courts to reward or sanction the conduct of parties prior to and during the litigation process…”

[6] The fundamental purposes of costs rules have been identified as follows:

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

2. To encourage settlement;

3. To discourage and sanction inappropriate behaviour by litigants.

Serra v. Serra 2009 ONCA 395, [2009] O.J. No. 1905 (Ontario Court of Appeal)

[7] The Court is bound to consider the framework set out in the Family Law Rules. While our Court of Appeal in C.A.M. v. D.M. 2003 18880 (ON CA), [2003] O.J. No. 3707 confirms a degree of discretion, “…It is apparent that the Family Law Rules have circumscribed the broad discretion…” which is granted to Judge’s under section 131(1) of the Courts of Justice Act.

[8] The Family Law Rules which are relevant to this matter are as follows:

Rule 2:

• Court is required to apply rules to promote the primary objective which is to deal with cases justly

• Parties and lawyers are required to help the Court promote this objective

Rule 18:

• The ramification of offers to settle made by a party

Rule 24:

• 24(1): The successful party is presumed entitled to costs.

• 24(2): The presumption of entitlement based on success may be rebutted if successful party acted unreasonably.

• 24(3): In deciding if a party acted unreasonably, Court considers:

➢ Behaviour in relation to issues from the time arose, including whether an offer to settle was made;

➢ Reasonableness of offer made;

➢ Any offer party withdrew or refused.

• 24(6): Costs may be apportioned in accordance with success.

• 24(8): Consequences of a party acting in bad faith.

• 24(11): In setting the amount of costs to be paid by the party who is found to be liable, the Court must consider:

➢ The importance, complexity or difficulty of the issues;

➢ The reasonableness or unreasonableness of party’s behaviour;

➢ The lawyers’ rates;

➢ The time properly spent on the case;

➢ Expenses properly paid or payable;

➢ Any other relevant matter.

DISCUSSION

A) Which party is liable for costs?

[9] The presumption is that the successful party is entitled to indemnification for the costs incurred by reason of the litigation. Success is to be measured, in part, by comparing what is claimed by the litigants to the Court’s decision. In cases where a number of claims are made, success can be divided and the Rules provide for allocation of costs according to the respective success of the parties.

[10] Through his Motion to Change of October 31, 2012, the Respondent requested termination and/or suspension of his obligation to pay $400.00 per month for the support of his two children. He also sought relief for his $100.00 monthly payments for retroactive child support. His claim was based on a material change in circumstances, namely a motor vehicle collision which aggravated a pre-existing medical condition.

[11] At the hearing of this Motion, counsel for the Respondent argued that there should be no child support payment from July, 2012 to September, 2014.

[12] The Applicant’s response was that the Respondent was capable of being gainfully employed and that he was intentionally under-employed and/or unemployed. Therefore, she sought imputation of income. She also requested that the Respondent’s home be used as security for outstanding and future child support and expenses relating to post-secondary education for the children. Finally, she asked for an order compelling the Respondent to obtain the Court’s permission before making any other Motions.

[13] In the end, the Court found as follows:

− The Respondent established that the motor vehicle collision resulted in a material change in circumstances giving rise to the making of a variation order;

− The Respondent was relieved from paying child support for six (6) months, namely from July to December, 2012;

− The Respondent was imputed on annual income of $26,800.00 as found by Justice Lafrance-Cardinal in her September 29^th, 2011 order;

− Total arrears for child support were found to be $7,200.00;

− The Respondent is to pay monthly child support in the amount of $394.00 staring April 1^st, 2014;

− The Respondent is to pay $100.00 per month towards arrears;

− A lien in the amount of arrears in child support may be registered against the Respondent’s real property located at 604 James Street in Cornwall, Ontario; lien will accrue in proportion to the arrears as of March 1^st, 2014; there is no power of sale nor any vesting attached to this lien; it becomes payable and has priority against the Respondent’s interest if and when it is sold; it doesn’t restrict any other means of enforcement;

− The request compelling the Respondent to seek the Court’s permission before making any other motions was dismissed.

[14] Undeniably, both litigants in these proceedings had a measure of success. However, it would seem to the Court that the Respondent’s success in being relieved of his child support obligations for a period of six (6) months while claiming relief for a period of 26 months (July, 2012 to September, 2014) is pared down when looked at in light of the terms granted by the Court to favour the children’s financial wellbeing. While the Court rejected the Applicant’s request for a “vesting order” in regards to the Respondent’s residence, the Court did grant security under section 12 of the Child Support Guidelines through a lien on said property. The Court’s decision should be seen as being more favourable to the Applicant.

[15] In deciding entitlement and liability for costs, the Court must also consider the appropriateness of the litigants’ behaviour. Quite simply, proper conduct will attract entitlement while improper conduct will attract liability.

[16] The Respondent suggests that his motion was a simple one without complexity. He states that the Applicant’s requests for relief made this Motion more complex and that the time spent by her counsel in this matter results from her claims. He qualifies the Applicant’s claims as “ill-advised and non-productive adventures”.

[17] Counsel for the Applicant urges the Court to find that the Respondent ought not to be allowed to avoid payment of costs that result from his ill-conceived Motion to vary the final Order. He should be required to pay the legal expenses that he has caused. Reference is made to the need for questioning, obtaining further evidence of employability, requesting further disclosure, ordering transcripts…etc.

[18] The Court does not share the Respondent’s view that this was a simple Motion to vary based on a material change in circumstances stemming from a motor vehicle collision. The Court came to a number of conclusions based on the questioning of witnesses, additional disclosure, updated report of employability, transcripts and affidavits. These materials were significant on the issues of imputation of income and the length of the “grace period” sought by the Respondent. It is based in good part on this evidence that the Court concluded as follows:

“45. For the reasons already articulated, the Court comes to the conclusion that the Respondent was intentionally under-employed for a portion of the period following the motor vehicle. In light of his long standing medical issues, it should have been clear to the Respondent that pursuing physical or handyman work was not realistic. His duty was to seek out reasonable employment that would have maximized his income potential so as to meet the needs of his children. Pursuing the same type of physical work coupled with very little effort, if any, to find work suitable to his physical condition was unrealistic. He was required to search outside of the area of his usual type of work in order to satisfy his obligations towards his children.

46. The Court is left with the sense that the Respondent does not grasp the significance of his obligations towards his children to provide them with financial support… This lack of insight as to the children’s right to support is consistent with the lack of effort displayed by the Respondent to find more realistic employment…”

[19] Entitlement to child support is not the right of the recipient parent. It is the right of the child. However, it is the responsibility of the recipient parent to enforce the child’s right to financial support from the payor parent. In July 2012, the Respondent stopped paying child support. The Applicant was duty bound to advocate as she did in response to the Respondent’s claims in order to protect the children’s right. Not to have done so, would have amounted to a failure to fulfil her obligation towards her children. The Supreme Court of Canada in D.B.S. v. S.R.G. 2006 SCC 37, [2006] S.C.J. No. 37 explained that there is a duty on a recipient parent to preserve a child’s right to support from the other parent. At paragraph 103, the Court states the following:

“The second important concern is that the recipient parents not be encouraged to delay in seeking the appropriate amount of support for their children. Recipient parents must act promptly and responsibly in monitoring the amount of child support paid… Absent a reasonable excuse, uncorrected deficiencies on the part of the payor parent that are known to the recipient parent represent the failure of both parents to fulfill their obligations to their children.”

[20] It would seem to the Court that the purpose and the way this litigation was carried by the parties, favours the Applicant in terms of entitlement to costs.

[21] Offers to settle play a significant role on the issue of costs. Offers are used to measure the reasonableness of a litigant’s conduct. An offer to settle is in keeping with one of the fundamental purposes of why costs are imposed, namely to encourage settlement.

[22] The Respondent did not make any offers to settle in these proceedings. While the Applicant did serve an offer dated January 21, 2014, it is not seen by the Court as conducive of a settlement. The terms were such that it would tend to fuel litigation as oppose to resolution. It was not realistic when one considers the Respondent’s ability to pay. It also meant the likely loss of his residence. The end result is the lack of an offer by the Respondent is offset by the terms of the offer made by the Applicant on the issue of entitlement or liability for costs.

[23] The Court’s conclusion is that, on balance, the Applicant is entitled to partial indemnification for costs incurred from having to litigate the children’s right to financial support from the Respondent father.

B) How much should the Respondent pay?

[24] The Ontario Court of Appeal in Serra v. Serra op. cit., has stated that an award for costs should reflect what the Court views is a fair and reasonable amount to be paid by the unsuccessful party. In setting a fair and reasonable amount, the Court must consider the factors set out in Family Law Rule 24(11). Applying these factors to the present case, the Court makes the following observations:

a) The issue of child support is significant to the well being of children;

b) It is a right which belongs to the child and must be diligently enforced by the recipient parent;

c) The factual and legal issues raised in these proceedings went beyond the question of whether the motor vehicle collision amounted to a material change in circumstances; it involved the assessment of reliability and credibility; the weighing of medical and expert evidence; the imputation of income in the context of litigation which has been ongoing since April 29, 2010;

d) The Respondent consented to his questioning and the questioning of two medical doctors who were supportive of his position; this consent is significant in that Rule 20 of the Family Law Rules provides that the Court may order such questioning if the following three conditions are met:

i) It would be unfair to the party who wants the questioning to carry on the case without it;

ii) The information is not easily available by any other method;

iii) The questioning will not cause unacceptable delay or undue expense.

e) The Respondent is not to be faulted for bringing this motion to vary; the Court did find that there was a material change in circumstances; as already discussed, the unreasonableness rests in failing to seek out reasonable and realistic employment that would have maximized his income potential so as to meet the financial needs of his children;

f) The Court finds that the Applicant acted reasonably in these proceedings and in keeping with her duty to advocate the children’s right to financial support from their father;

g) Both counsel in this matter are very experienced family law litigators and their hourly rate is not challenged;

h) The Court is not questioning the hours and expenses set out by counsel in their respective bill of costs;

i) The Court must be mindful that the setting of an amount for costs is not a purely mathematical exercise; as stated by Justice Aston in Delellis v. Delellis 2005 36447 (ON SC), [2005] O.J. No. 4345 at paragraph 9:

“9. However, recent cases under the Rules of Civil Procedure…have begun to de-emphasize the traditional reliance upon “hours spent time hourly rates: when fixing costs. In Boucher v. Public Accountants Counsel for the Province of Ontario…the Court of Appeal stated that “fixing costs does not begin or end with the calculation of hours times rate.” 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. In that vein, the reasonable expectation of the losing party concerning the quantum of costs is a relevant factor to consider.”

The Court notes that the Applicant’s counsel has claimed 60% of his hourly rate.

j) The ability to pay costs plays a significant role in deciding the amount to be awarded (Tauber v. Tauber op. cit.); the reality is that both parties in this matter have limited means;

k) The Court must weigh the effect of the award on the ability of the party liable to pay costs to meet the obligations imposed by the judgment; the Court is cognizant of the fact that the Respondent is a person of modest means and that a cost order will impact on his ability to meet his financial obligations towards his children; the reality is that the Applicant is also of limited means and the costs incurred by her in these proceedings impact on her ability to support the children which she did on her own, from July, 2012 to April, 2014.

CONCLUSION

[25] Having considered the circumstances in this matter and the relevant principles, the Court is of the view that the following costs award in favour of the Applicant is fair and reasonable:

1. The Respondent shall pay the Applicant costs in the amount of $12,500.00 (all inclusive);

2. This amount shall be paid within a period of two (2) years of this order which is set as June 6, 2016 and shall bear an annual interest rate of 3%;

3. If this amount is not paid on or before June 6, 2016, it will be deemed to be a support order and enforceable as such by the Director of the Family Responsibility Office;

4. This amount may immediately be added to the lien and be subjected to the same terms provided for in paragraph 60.4 of this Court judgment dated March 17, 2014.

Justice Ronald M. Laliberte Jr.

Released: June 6, 2014

COURT FILE NO.: D10-498

DATE: 2014/06/06

ONTARIO

SUPERIOR COURT OF JUSTICE

SHELLEY LORI SULLIVAN

– and –

PETER COLE SULLIVAN

RULING ON ISSUE OF COSTS

Justice Ronald M. Laliberte Jr.

Released: June 6, 2014