Dostie v. Poapst, 2015 ONSC 1532

COURT FILE NO.: FC-10-1258

DATE: 20150306

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Scott Gregory Dwight Dostie, Applicant

AND

Sarah Leah Poapst, Respondent

BEFORE: Mr. Justice Timothy Minnema

COUNSEL: Emily Comor “Friend of the Court”, for the Applicant

Katherine A. Cooligan, for the Respondent

HEARD: In Chambers (Written Submissions)

COSTS ENDORSEMENT

MINNEMA J.

[1] Following a nine day trial, almost double the time originally requested, I delivered my Reasons for Judgment found at 2014 ONSC 6959. I have now received written submissions on costs.

Positions

[2] Mr. Dostie is seeking full indemnification costs of $34,021.39. This is comprised of legal fees of $18,211.39, inclusive of taxes and disbursements, plus, as he conducted the trial himself without counsel, his lost income and disbursements of $15,810. While he is not claiming costs prior to February 10, 2014, Mr. Dostie noted that since the start of these proceedings his total legal costs were $117,819.80. That included fees to three different counsel as well as his own lost income claim.

[3] Although making alternative arguments for lesser amounts, Ms. Poapst, who had counsel throughout, is seeking full recovery costs in the amount of $204,008.51, inclusive of HST and disbursements.

Law

[4] Pursuant to subsection 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, costs are discretionary. I am to assess the costs guided by Rule 24 of the Family Court Rules, O. Reg. 114/99. There is a presumption that the successful party is entitled to costs (subrule 24(1)). If success is divided, the court may apportion costs (subrule 24(6)). Factors such as offers to settle, reasonableness (including a consideration of all offers to settle), preparedness, and bad faith may also effect entitlement: subrules 24(4), (7), (8), and 18(14).

[5] The overriding principle is that costs are to be fixed in a way that is fair to the parties and reasonable in the circumstances (Murray v. Murray, 2005 46626 (ON CA), 79 O.R. (3d) 147 (C.A.)). This includes considering the reasonable expectations of the losing litigant regarding costs (Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40; Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.)). It also includes a consideration of the impact that the cost award will have on the party ordered to pay (see Murray above), and, where applicable, a consideration of its effect on the care, maintenance or interests of children (M.(A.C.) v. M.(D.), 2003 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.), Quinn v. Nicholson, 2013 ONSC 1125.

[6] As costs are to be decided promptly after each step in the case (subrule 24(10)), they are not awarded for preliminary steps (conferences and motions) that have been addressed by another judicial officer where the costs have not been reserved: see Islam v. Rahman, 2007 ONCA 622, 41 R.F.L. (6th) 10. This does not mean, however, that the costs order should only relate to matters concerning the hearing. As clarified in Houston v. Houston, 2012 ONSC 233, 12 R.F.L. (7th) 115 (Div. Ct.), steps not requiring any form of judicial intervention, such as the preparation of pleadings, are not covered by this rule.

Analysis

Success

[7] Regarding subrule 24(1), Ms. Poapst was completely successful on the main issue of custody. There was an agreement at trial on access. Of the minor issues, payment of the previous daycare/Montessori expenses was substantially resolved in Ms. Poapst’s favour, given that Mr. Dostie’s position was that he should not have to contribute. It was not an unmitigated win, however, as the tax considerations resulted in a lower amount than claimed. The issue of the extent to which Mr. Dostie’s business expenses should reduce his income for child support purposes was also resolved substantially in Ms. Poapst’s favour. Lastly, the smallest of the minor issues - whether there should be a fractional assessment of Mr. Dostie’s 2010 income for child support purposes - was resolved completely in his favour, although it took up almost no court time.

[8] In my view, considering the results overall, Ms. Poapst was substantially successful at trial and is presumptively entitled to costs. Mr. Dostie’s successes were marginal such that apportionment is not warranted.

Offers

[9] The requirements for an Offer to Settle that has cost consequences are set out in Rule 18, including that it must be signed by the party and his or her lawyer (subrule 18(4)) and meet the five conditions set out in subrule 18(14). To trigger full recovery costs a party must do as well or better than all the terms of any offer (Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (S.C.J.) at para. 14) and the offer must be such that, if accepted, it is capable of being enforced (Riss v. Greenough, 2003 2224 (ON SC), [2003] O.J. No. 1574 (S.C.J.) at para. 23).

[10] I have reviewed the Offers to Settle submitted. None were severable. Mr. Dostie made four offers. On February 10, 2014, he made a partial offer to settle custody and access based on joint custody, which I did not order. Also on February 10, 2014, he made a separate partial offer on child support. It sought the Child Support Guideline table amount for ongoing support, which was never in dispute, but did not address the income figures to be used in the calculation, which was the actual issue. It was low on the child support arrears. Further, it did not provide a figure for the retroactive section 7 expenses, rather proposing that a “mediator/arbitrator” resolve disputes over “any retroactive amount owing.” While he offered to pay his proportionate share of “agreed upon” section 7 expenses, the issue was which expenses to include.

[11] Mr. Dostie’s third offer, signed April 3, 2014, was a partial offer on “the outstanding issue of Day Care/Support”. It had the same “mediator/arbitrator” proposal as above to deal with child support arrears, and it offered to pay less for day care arrears than ordered. If not accepted within seven days it provided that Ms. Poapst would have to pay costs. His fourth and final offer was dated May 12, 2014. It had two proposals for access, and included the April 3 offer regarding Day Care/Support with minor adjustments.

[12] In my view, none of these offers met the Rule 18 tests. The Judgment was not as favourable as, or more favourable than, all the terms of any of those offers. A term deferring support and section 7 issues to a third party is not an offer capable of enforcement, and would not end the dispute over those issues. Offering to pay child support and section 7 expenses per the Child Support Guidelines, but not setting out the income and expense figures on which those are to be calculated, offers nothing, as the Guidelines themselves are mandatory.

[13] Ms. Poapst made a number of offers to settle. The first one was signed on September 7, 2011, and was contained in her Settlement Conference Brief. The offer on custody was essentially as ordered. While her proposal regarding Mr. Dostie’s access was reasonable given the child’s age at the time, it was less favourable than the final order/agreement which followed Dr. Leonoff’s subsequent recommendations and included expanding access. As such, the Judgment is not as favourable on all the terms. It also contained the following clause:

The Applicant will pay Guideline child support and will contribute his proportionate share to Aidan’s section 7 expenses. The Applicant will pay any retroactive support owing based upon his financial disclosure yet to be provided.

For the reasons noted above regarding Mr. Dostie’s offers, in my view this provision was not capable of enforcement and would not end the dispute over those issues. It did not address how the 2010 income for Mr. Dostie would be assessed, which section 7 expenses would be included, or which, if any, of his business deductions would be considered.

[14] Ms. Poapst’s next offer was signed on February 13, 2014. Regarding custody and access it came close to what was ordered. However, it sought an amount for outstanding child support and section 7 expenses that was too high. As such, the Judgment is not as favourable on all the terms. Further it did not meet the condition that offers not expire, as it was only open for acceptance up to the commencement of the Settlement Conference.

[15] Ms. Poapst’s next offer was signed February 24, 2014, and, without belabouring it, was high on the ongoing daycare expense and expired a few days later.

[16] Her next offer had a date of May 9, 2014. Although it was attached to her signed Trial Management Conference Brief, the Offer to Settle itself was not signed. Without addressing whether it met the formal requirements, I note that while it was comprehensive and again very close to the Judgment on the custody and access issues, it was too high on child support and section 7 arrears, and in any event expired at the start of the conference.

[17] Ms. Poapst sent Mr. Dostie an email on May 12, 2014, in a good faith attempt to settle all the issues directly without counsel. She basically accepted Dr. Leonoff’s report on custody and access without change, making my Judgment more favourable to her, but she was still too high on the proposed arrears of child support and section 7 expenses. Her proposal did not meet the formal requirements of an Offer to Settle under Rule 18. In fairness, Mr. Dostie also made offers in this email exchange that were not mentioned above, but they fell well short of what I ordered.

[18] The last offer by Ms. Poapst was signed May 24, 2014, and related only to access. It did not expire. However, it did not meet the condition of being served at least seven days before trial. The offer mirrored what the parties agreed to during the trial.

[19] In summary then, none of the Offers to Settle from either party met the tests under Rule 18 such that they that would entitle a party to full recovery costs. However, I have still considered them in assessing reasonableness in these deliberations, pursuant to subrules 18(16) and 24(5).

Bad Faith

[20] Ms. Poapst sought full recovery costs based on bad faith per subrule 24(8). As set out in S.(C.) v. S.(M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.) affirmed 2010 ONCA 196, [2010] O.J. No. 1064 (C.A.), bad faith behavior includes concealing information relevant to the issues or deceiving the other party or the court.

[21] In the trial Mr. Dostie submitted incomplete email exchanges as exhibits, and tried to pass them off as something they were not. This was exposed by Ms. Poapst’s counsel, although it required considerable additional court time, not only in cross-examination but also in having Ms. Poapst address the evidence and introduce the full versions. Another disturbing aspect of Mr. Dostie’s case related to one of his main exhibits, a chart that he created which purported to list numerous times when Ms. Poapst had denied him access. Ms. Poapst’s counsel effectively decimated his evidence and that exhibit, but it was a long and laborious process that added significantly to the trial time. In the end there was no evidence to support Mr. Dostie’s alienation theory, and I found that Ms. Poapst had “from day one, overall, always provided him with regular consistent access to the child.”

[22] Mr. Dostie was certainly entitled to present a vigorous case and to be heard. However, there can be no excuse for his tampering with the evidence to align it with his deeply held although irrational conviction that Ms. Poapst was trying to keep him out of the child’s life. This was not inadvertent or accidental. Per his costs submissions, Mr. Dostie was assisted by legal counsel in his trial preparation, and the evidence established that he was knowledgeable about computers and digital communications. In my view, he knowingly provided the evidence out of context, intending to mislead. This meets the bad faith test, and warrants full recovery costs to the respondent for much of the trial.

Factors in Costs: Subrule 24(11)

Importance, Complexity or Difficulty of the Issues

[23] The issues in this case were not particularly complex. They were important, as the best interests of a child were involved. They were made more difficult by Mr. Dostie’s mistrust of Ms. Poapst, impeding any kind of working relationship, and by the behavior noted above.

Reasonableness

[24] In between the two trial sittings Ms. Poapst moved her residence further away from Mr. Dostie even though he had already raised concerns about the travel distance in the earlier sittings. Mr. Dostie cannot be blamed for the added questions and trial time related to this event. Ms. Poapst suggested to the assessor possible abuse of Aidan by Mr. Dostie when there was no evidence to support it.

[25] Those examples, however, pale in comparison to Mr. Dostie’s unreasonable behaviors in this case. Along with what is noted above, I provided an example in the Judgment of his directly and wrongly accusing Ms. Poapst of purposively making Aidan suffer (para. 19), and several examples of his attempting to leverage more access for himself by refusing reasonable requests to adjust the access schedule in Aidan’s best interests (paragraphs 18, 26 and 30). As set out in paragraphs 27 and 28 of the Judgment, there was particular malice in Mr. Dostie’s attempt to disrupt Ms. Poapst’s vacation in January of 2014. That example also meets the test of bad faith; he misled his own lawyer to write a letter intended to cause harm.

Applicant’s Lawyer’s Rates, Time Properly Spent, Expenses Incurred (Subrules 24(11)(c), (d), and (e)

[26] Mr. Dostie’s reply submissions took issue with Ms. Poapst’s lawyer’s Costs Outline on two bases, asserting that: (1) the amount of time spent and the number of lawyers acting on the case was not a reflection of the complexity or significance of the case; and (2) the trial was lengthened unnecessarily by exhaustive cross-examination that was not necessary or helpful. I note that there was no dispute over the lawyer’s rates or the disbursements.

[27] I agree, as found above, that the time spent was not a reflection of the complexity or significance of the case. However, it was reflective of the difficulty of the case. I certainly had questions about the length of the cross-examination of Mr. Dostie as it was occurring. However, I came to appreciate that it was unavoidable as the trial progressed. Had he submitted complete exhibits in context and fairly presented the access history, days of trial would have been saved.

[28] The “number of lawyers” argument was anticipated by Ms. Poapst’s counsel in her initial costs submissions and she addressed it directly, indicating that she “properly relied on associates and law clerks to prepare the materials and carry the file over the past four and a half years ... [t]his helped reduce the Respondent’s legal costs with a lower hourly rate.” Upon review of her Costs Outline, I have no reason to doubt that statement.

[29] I was initially surprised at the amount of costs sought by Ms. Poapst. What is telling, however, is that those costs actually line up with Mr. Dostie’s. He indicated that his total costs were $117,819.88. When I deduct what he claimed as his own direct costs at trial and the fees he paid counsel to assist him in preparing for trial, the remaining amount is similar to the Costs Outline of Ms. Poapst when trial preparation and trial fees are removed. A very important consideration in assessing costs, per Serra and Boucher above, is the reasonable expectations of the losing litigant. Having had the assistance of several lawyers, Mr. Dostie had to have known that he would be facing a very significant costs claim if he were unsuccessful.

[30] In my weighing of costs I have included the fees related to pleadings, offers, and questioning, as they are trial preparation and not addressed previously by a judge. As was done in Prokopchuk v. Borowski, 2010 ONSC 4554, I have also included the trial management conference, as I consider it to be part of the trial proceeding. The cost of the May 6, 2014 motion was adjourned to the judge disposing of the matter, and is also before me. However, per the principles from Islam and Houston above, I have not included fees for settlement and case conferences, and for a 2012 motion. I am not awarding costs associated with the mediation; it was not court ordered and I adopt the reasoning in Saltsov v. Rolnick, [2010] O.J. No. 5606 (Div. Ct.). I have also not included fees for the preparation of submissions on costs. I was not directed to any authority for this novel request. Further, as noted below, Ms. Poapst is not recovering the full amount she seeks, and in that sense success on this costs hearing is divided.

[31] By way of a rough calculation, these adjustments reduce the full recovery costs claimed to about $169,000 all inclusive.

Any Other Relevant Matter

[32] As noted above, the financial situation of the parties is to be considered. Both earn good incomes but neither party can afford to absorb these costs. As the award will go against Mr. Dostie, I note that his most recent sworn financial statement indicates that he has a net worth of $262,750. At trial his expected income for 2014 was $76,850. Other than child support for Aidan, he has no other dependents.

Analysis/Summary

[33] In the end this trial was about Mr. Dostie attempting unsuccessfully to vilify Ms. Poapst, which was inconsistent with his main legal position of joint custody. He sought to establish “parental alienation”, “sabotage” and “malice” on her part, notwithstanding that joint custody requires some relationship or level of trust, and some evidence of the parents being able to communicate.

[34] The fundamental purposes of the costs rules, as restated in Serra v. Serra, 2009 ONCA 395 at para. 8, are: “(1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behavior by litigants.” Ms. Poapst was the successful party here, her offers of settlement were the most reasonable, and Mr. Dostie’s behaviour, both prior to and during the trial, not only needs to be discouraged, but, particularly regarding the latter, is worthy of sanction.

[35] To address the principle of proportionality and the overall reasonableness of her substantial cost claim, Ms. Poapst cited several cases where high costs awards were made following family law trials. I found two of assistance. In Sheikh v. Sheikh, [2005] O.J. No. 4391 (S.C.J.), there was a nine day family law trial that ran almost double the time originally requested. While the issues were different, the respondent’s total full recovery costs claimed were $200,163.76. She obtained a more favourable order than her offer, and was awarded full recovery costs, although not for all stages of the litigation. There was a reduction made for previous motions of about $10,000. The court ordered $150,000 in costs, all inclusive, which I calculate to be about 79 percent of the full recovery costs once adjusted. The party paying the costs had an income of $250,000 per year and a net worth of about 1 million dollars (see the trial decision at 2005 14151 (ON SC), [2005] O.J. No. 1712). In Martin v. Czarniecki, 2013 ONSC 2029 (S.C.J), the applicant sought full indemnity costs of about $161,637.94, following a ten day trial. The main issue was custody and access, the applicant was successful, and he had made an Offer to Settle on those issues that met the subrule 18(14) conditions. Further, the respondent was found to have behaved unreasonably. However, she had a very limited ability to pay costs. She had no substantial assets, and was expected to earn only 1,500 Euros per month, which I calculate to be about $24,000 Canadian per year. Still, the costs award was $105,000, inclusive of disbursements and HST, or about 65 percent of the full recovery request.

[36] The elevated costs resulting from the bad faith finding in this case would have an impact similar to the successful offers to settle in both Shiekh and Martin. Although Mr. Dostie is not as well off as the payor in the former case, he is much better off than the payor in the second. I find that a fair and reasonable amount here is somewhere between the two percentages noted, applied to the Costs Outline after adjustments.

Decision

[37] Having regard to all the relevant factors and considerations outlined above, the applicant shall pay $122,000 to the respondent for her costs. This amount is inclusive of HST and disbursements.

Mr. Justice Timothy Minnema

Date: March 6, 2015

CITATION: Dostie v. Poapst, 2015 ONSC 1532

COURT FILE NO.: FC-10-1258

DATE: 20150306

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Scott Gregory Dwight Dostie

Applicant

– and –

Sarah Leah Poapst

Respondent

BEFORE: Mr. Justice Timothy Minnema

COUNSEL: Emily Comor “Friend of the Court”, for the Applicant

Katherine A. Cooligan, for the Respondent

COSTS ENDORSEMENT

Mr. Justice Timothy Minnema

Released: March 6, 2015