NEWMARKET

COURT FILE NO.: FC-08-60-01

DATE: 20140918

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: William Clifford Benoit, Applicant

and

Pamela Ann Kerr, Respondent

BEFORE: The Honourable Madam Justice H.A. McGee

COUNSEL: Beth Kibur and Sara L. Hahn, for the Applicant

Michael Anne MacDonald, for the Respondent

HEARD: In Writing

COSTS ENDORSEMENT

[1] This trial was heard from Monday, May 26, 2014 to Thursday, May 29, 2014. The application before the court initially resulted from the father’s efforts to enforce the terms of a final order, dated January 22, 2013.

[2] Prior to that final order, the mother had attempted to unilaterally move their daughters’ residence from Bracebridge to Toronto, Ontario. Their daughters are currently six and nine years of age and have resided in Bracebridge throughout. Following a lengthy process, the parties agreed that both would move to the mid-location of Newmarket in separate residences and that they would continue joint custody. Each is an involved and committed parent.

[3] The father was a secondary school teacher in Bracebridge. To comply with his obligations under the final order he gave notice to his school board, secured a transfer to a Bradford school and began residing in Midhurst with his new partner pending a move to Newmarket. The mother took no steps to comply with her obligations within the final order. She refused to sell her home in Bracebridge[^1].

[4] As the 2013/2014 school year approached, the father pressed the mother to proceed with the terms of the final order. The mother took no steps, prompting the father to initiate this application. Ultimately, the mother never moved and within her response renewed her claim for an order that the children’s residence be transferred to Toronto. At the time of trial she continued to reside in her home in Bracebridge, while spending weekends in Toronto.

[5] The father moved back to Bracebridge to be close to the girls. However, his former position was no longer available and it is highly unlikely that he will again be able to secure a teaching position within his former board. Since September 2013, he has been suffering a daily commute from Bracebridge to Bradford.

[6] The mother’s case at trial ought to have addressed the criteria necessary to establish a material change in circumstances and then, if successful, the merits of her mobility claim. Instead, her case was absorbed by a gratuitous denigration of the father and the re-characterization of events from the time that they met.

[7] Midway through the day on Thursday, May 29, 2014, the parties agreed to attend a mid-trial settlement conference at the Barrie Court. The conference continued through Friday, May 30, 2014. The parties returned to trial on Monday, June 2, 2014, at which time it was learned that mother’s counsel had served a motion over the weekend.

[8] There were further discussions. Final minutes of settlement were filed with the court late in the morning on Monday, June 2, 2014.

[9] The minutes provide for the parents to continue to share joint custody of the children and for the girls’ residence to remain in Bracebridge. A term of the minutes is that costs are to be decided by the court.

[10] Two relevant offers to settle were served by the father. The first was served at or about the time of the application, and the second on April 29, 2014. Each contains terms as favourable, or more favourable to the father than the June 2, 2014 minutes of settlement.

[11] The father seeks his costs of $58,099.50; being 90% of his fees, disbursements of $972.51 and HST for a total of $66,751.37.

[12] The mother resists any payment of costs. She argues that it cannot be found that the father was successful at trial, as the issues were resolved. Alternatively, she suggests that success was divided.

[13] The mother further argues that the court should not exercise its discretion to award costs for reasons that can be summarized as follows:

(a) The mother’s conduct was reasonable and the father’s was not;

(b) Awarding costs would discourage mid-trial settlements;

(c) The mother lacks the means to pay costs as she has:

(i) made a post-trial consumer proposal,

(ii) her income potential is reduced as she is required to remain in Bracebridge,

(iii) she has additional costs as her new partner lives in Toronto; and,

(iv) she believes that the father has cash income on which he does not pay child support[^2].

(d) The mother has an equal role in caring and providing for the children.

[14] Each counsel has provided a helpful list of authorities.

[15] I agree with the mother’s submission that I exclude the exit pretrial settlement conference brief included in the applicant’s materials from any considerations in this claim for costs.

The Law

[16] Rule 18(14) of the Family Law Rules provides that when a party achieves an order with terms as favourable, or more favourable than those within an offer to settle previously served, he or she is entitled to a full recovery of costs.

[17] Importantly, rule 18(14) of the Family Law Rules does not specify that the order must result from adjudication. It is well established that an order resulting from terms of settlement fits within the operation of rule 18(14) which reads as follows:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

18(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.

3. The offer does not expire and is not withdrawn before the hearing starts.

4. The offer is not accepted.

5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer. O. Reg. 114/99, r. 18 (14).

[18] Rule 24(1) of the Family Law Rules sets out the basic assumption that a successful party is entitled to costs. Success can be most easily measured by comparing the result obtained (final order) with the result sought (pleadings) and the offer to settle. When a party has obtained an order as contemplated in rule 18(14) the presumption in rule 24(1) is inherently satisfied.

[19] Rule 24(11) provides a list of factors for the court to consider when setting an amount of costs:

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party’s behavior in the case;

(c) the lawyer’s rates;

(d) the time properly spent on the case, including conversations between the lawyer and the party, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(e) expenses properly paid or payable; and

(f) any other relevant matter.

[20] The court’s role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As was pointed out in Boucher et al. v. Public Accountants Council for the Province of Ontario, 2004 14579, 71 O.R. (3d) 291, 188 O.A.C. 201, 48 C.P.C. (5th) 56, [2004] O.J. No. 2634, 2004 Cars­well­Ont 2521 (Ont. C.A.), the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings.

[21] In considering the issue of costs in the specific context of a case that has settled, the most important factor in determining both entitlement and quantum of costs is the reasonableness and timeliness of the parties’ respective offers to settle. It is not appropriate to go behind the freely negotiated terms of settlement and engage in an exercise of determining which party’s position on each issue would have been accepted by the trial judge if the matter had proceeded to trial. (See: O’Brien v. O’Brien, 2009 CarswellOnt 7194 (Ont. S.C.))

Analysis

[22] In this claim for costs, the primary analysis is the relationship between the father’s offers to settle and the final order resulting from the minutes of settlement.

[23] The father made three offers to settle: August 27, 2013, April 29, 2014 and June 2, 2014. The latter offer falls outside the scope of rule 18(14)(2)[^3] of the Family Court Rules. It is not contested by the mother that the offers of August 27, 2013 and April 29, 2014 were as or more favourable to the father than the final result.

[24] The mother made two offers: May 23, 2014 and May 30, 2014. Neither was as favourable as the final order and each lie outside rule 18(14)(2).

[25] The operation of rule 18(14) would thus provide for a full recovery of the father’s costs from August 27, 2013.

[26] In determining the amount of a full recovery, I have considered the following factors to be applicable to this case.

Importance, Complexity or Difficulty of the Issues

[27] The issues to be determined were important to the parties and to the children, and had the issues been organized around the relevant legal criteria, they would have indeed been complex. Mobility cases are some of the most difficult cases before the courts.

[28] Ironically, this case became complex and exceedingly difficult in the absence of such legal criteria. The mother’s case was presented in a manner so tangential to the issues that by the third day it had become unclear what order she was seeking. Within her evidence and the examination of the father’s evidence, she minimized and denigrated the father to an extent so extreme the court questioned whether she was seeking to terminate access.

Reasonableness or Unreasonableness of Each Party’s Behaviour

[29] Much of each counsel’s costs submissions speak to the reasonableness of the opposing parties’ respective conduct during the five years prior to trial and during the trial. As per O’Brien, supra, a court is not able to determine which position would have succeeded at trial when a matter is settled prior to adjudication. In the absence of such findings, it is my view that rule 24(11)(b) has limited application in determining costs arising from a settlement.

Might there be a Chilling Effect on Mid-Trial Settlements?

[30] I do not accept that there is a chilling effect on settling a matter mid-trial. There are significant advantages to a pre-adjudication resolution. Costs are capped, there is immediate certainty and, most importantly, it removes the risk of prejudicial findings. But for cases in which there has been a rule 18(14) offer, a party’s risk of paying costs might also be mitigated in the absence of findings of reasonableness – or of bad faith.

Time Properly Spent on Case, Lawyer’s Rates and Expenses

[31] I have reviewed the applicant’s bill of costs and find that the time spent was reasonable, including the times for prior and mentoring counsel. The father took considerable steps to narrow the issues, reduce necessary witnesses and limit cross-examination. His counsel prepared a statement of agreed facts, scheduled an exit pretrial and initiated settlement discussions.

[32] In contrast, the mother’s case appeared wholly unfocussed. The cross-examination of the father lacked any discernable child focus and attempted to reinterpret the parties’ entire familiar relationship. Little, if any, evidence was tendered in relation to a mobility claim. The mother’s witnesses proved largely unhelpful.

[33] On the fourth day of trial, the mother’s counsel sought to advance a motion for a mistrial, removal of applicant’s counsel[^4], a midtrial assessment and appointment of the Office of the Children’s Lawyer (“OCL”). A motion was served on Saturday, May 31, 2014 for a mistrial, appointment of the OCL and a section 30 assessment. A good portion of the father’s bill of costs results from his necessary preparation and response to the motion, which was only withdrawn on the Monday, June 2, 2014, when minutes were signed.

[34] It is submitted by mother’s counsel that the time spent was excessive, but much of the time incurred was the result of her own conduct. The mother’s bill of costs for the limited period of trial and the two to four weeks preceding trial was $43,998.75[^5].

Lack of Means

[35] The mother’s submissions regarding a lack of means have been expressed through a wide lens. She cites the unfairness of being required to remain in Bracebridge, the inability to secure employment by moving, a general lack of means to pay an award of costs, the financial hardship of being married to a spouse who resides in the City of Toronto, and her reliance on child support.

[36] At the time of trial the mother was on long term disability benefits, a situation that had been longstanding and continues to this day. She retains ownership and continues to reside in the former matrimonial home in Bracebridge, which was transferred to her as part of the original settlement. For a period of time, she had been on a list of supply teachers for the Toronto school district in which her spouse rents accommodation – but at the time of trial had never been called.

[37] The mother also states that it would not be in the children’s best interests for her to pay an award of costs. Such a submission might be relevant were the father not also a custodial parent and also fully charged with their health and welfare.

[38] It has long been held that a claim for costs must be considered in light of a party’s ability to pay those costs: M.(A.C.) v. M.(D.) (2003), OCA 2003 18880 (ON CA), 67 O.R. (3d) 181. At the same time, a Court must be mindful of the purposes of an award for costs, succinctly set out in the case of Serra v. Serra, 2009 ONCA 395:

(a) to partially indemnify successful litigants for the cost of litigation;

(b) to encourage settlement; and

(c) to discourage and sanction inappropriate behavior by litigants[^6].

[39] In the recent case of Martin v Czarniecki, [2013] ONSC 2029, a respondent mother on social assistance argued that she could not afford to pay substantial costs. Despite her reduced circumstances, Justice Timms exercised his discretion to award $105,000 in costs. He reviewed the case law on this point, and I concur with his conclusion that a party’s ability to pay costs is relevant to the quantum of costs but not to entitlement.

[40] In this case, I accept that the mother has a limited income. Does this lack of income act as a protective factor in considering a reduced quantum of costs that would otherwise qualify for a full recovery per rule 18(14)?

[41] Individuals of limited means do not engage in litigation without risk. As Justice Robert J. Spence stated in Peers v. Purpore, 2008 ONCJ 615, “in family law litigation, and particularly for parties of modest means, it behooves those parties to act reasonably and to avoid trial if at all possible.”

[42] Much, if not all of the parent’s equity has been unnecessarily depleted throughout this lengthy proceeding. Whatever means remained with the parties after consenting to the final order of January 22, 2013 were exhausted in the litigation that arose eight months later.

[43] It is my view that both parents’ financial circumstances ought to be considered when answering the question of whether a lack of means to pay an award of costs should reduce an award. Every parent bears a financial responsibility for his or her children. Engaging in reckless litigation depletes not only one’s own ability to provide for dependent children, but also the other parent’s ability to do so, ultimately depriving the children of financial security.

[44] Throughout this proceeding the father has conducted himself in an admirable manner. He sought to resolve the litigation at every stage. He limited his case at trial to that which was necessary to the issue. His testimony was neutral, calm and child focused. He rents his accommodation in Bracebridge while the mother resides in a home that she owns. The father commutes to Bradford and bears those additional costs as a result of having taken steps to comply with an order that the mother ignored.

[45] In this case I find that the purposes of an award of costs cannot be met were there to be a significant reduction in the quantum. The father has been wholly successful per rule 18(14) of the Family Law Rules, he conducted himself appropriately and he sought to settle at every stage.

[46] The mother’s litigation conduct has been expansive and reckless. It is unlikely that either parent, even with the assistance of new partners will be able to recover any meaningful level of financial security during the period of their daughters’ childhood.

Award of Costs

[47] Courts strive to achieve a just result in the determination of costs. I will exercise some modest discretion to recognize that the mother did enter into terms of settlement. Otherwise, I am satisfied that a full recovery of costs for the father is the appropriate remedy. I therefore fix costs in the amount of $55,000 inclusive of disbursements and HST.

Payment of Costs

[48] The father’s counsel seeks an order that the costs be set off against some or all of the monthly child support. Since the conclusion of trial, he has been given notice that the mother has made a proposal to creditors.

[49] I do not have a sufficient record before me to consider the relief sought. The parties may schedule a hearing through the trial coordinator to make submissions on this limited issue. Twenty days prior to the hearing each is to serve on the other:

(a) a Form 13.1 Financial Statement;

(b) a recent employment or benefits statement; and,

(c) a copy of any documents relevant to a proposal for consumer relief or assignment.

[50] Should either party seek to conduct written or oral questioning on the materials provided prior to the hearing and, as necessary, reschedule the hearing to allow for completion, they may so request by 14B motion to my attention.

McGee J.

Released: September 18, 2014

[^1]: The former matrimonial home, transferred to the mother following on their separation in 2008. There was an initial delay in her ability to sell the home due to financing restrictions. However, these were removed and she did not sell the home.

[^2]: No evidence was lead to support this belief. In any event, as it is not relevant to a determination of costs I will not address it further in these reasons.

[^3]: Service seven days before commencement of trial.

[^4]: Raised for the first time on the 4th day of trial.

[^5]: Ms. MacDonald does not specify within her bill of costs when services were rendered, but she made frequent mention during the trial that she had only been retained in the prior month. Her recent retainer is consistent with the filing of her notice of change in representation.

[^6]: See also Parsons v. Parsons, 2002 45521, and Panny v. Gifford and Gifford, 1997 9579, 31 R.F.L.