CITATION: C.M.M. v. D.G.C., 2015 ONSC 3582
COURT FILE NO.: FS-13-18928
DATE: 20150603
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: C.M.M., Applicant
AND:
D.G.C., Respondent
BEFORE: C. Horkins J.
COUNSEL: Jeffrey Wilson and Jessica Braude, for the Applicant
Valois P. Ambrosino, for the Respondent
HEARD at Toronto: In Writing
COSTS ENDORSEMENT
[1] The applicant is a 15 year old child and the respondent is her father. The applicant was successful on her motion for interim relief (C.M.M. v D.C.G. 2015 ONSC 1815). I made numerous orders in favour of the child and issued lengthy reasons. While I will make reference to these reasons, this costs decision should be read together with those reasons.
[2] An earlier order of Wilson J. (“the Wilson order”) denied some of the interim relief that I allowed. The applicant demonstrated that since the Wilson order, several material changes in circumstances had occurred. As a result, the applicant was entitled to seek a variation of the Wilson order.
[3] I granted extensive relief. In summary, I found that DCG is the child’s father and issued a declaration of parentage. I imputed $200,000 of income to the respondent and ordered him to pay child support of $1,633 a month as of April 1 2014. Terms for payment of child support were set. I ordered the respondent to pay the applicant $50,000 for interim disbursements to cover legal and expert fees. The restraining order against the applicant was removed and replaced with an undertaking that the applicant not contact the respondent and his family. The respondent was ordered to comply with all outstanding disclosure by April 30, 2015 failing which I ordered that the child’s motion to strike his Answer could be brought back on.
[4] The parties have not been able to agree on costs. Written submissions have been exchanged.
[5] The applicant seeks costs on a full recovery basis in the amount of $40,388.52. This consists of fees of $34,537 plus HST and disbursements of $1,361.71 plus HST. In support of her costs, she makes the following arguments:
(i) Family Law Rule 18(14) applies: the relief that this court ordered was more favourable than the applicant’s offer to settle.
(ii) The respondent’s behaviour was unreasonable and constitutes bad faith
(iii) The time incurred was reasonable and necessary to secure access to justice.
[6] The respondent argues that there should be no costs because the applicant’s motion involved “significant and novel issues and matters of public interest”. He denies that he acted unreasonably or in bad faith. He also states that rule 18(14) is not triggered. If costs are ordered he says that no more than $7,500 should be allowed. Further, he argues that the amount of costs requested is unreasonable and not proportional to the motion in question.
The Family Law Rules
[7] Rule 24 deals with costs. Rule 24(1) states that the successful party is presumed entitled to costs.
[8] Rule 24(11) states that in setting the amount of costs the court shall consider the following factors:
(11) A person setting the amount of costs shall consider;
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness or unreasonableness of each party’s behaviour in the case;
(c) the lawyer’s rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, 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.
[9] Unreasonable and bad faith conduct is addressed in rule 24 (5) and (8) as follows:
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
(8) 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.
[10] Rule 18 deals with offers to settle. The relevant part of this rule is as follows:
(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:
If the offer relates to a motion, it is made at least one day before the motion date.
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.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14).
- When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.
analysis
No Novel, Unusual or Public Interest Issues
[11] I will start with the respondent’s position that no costs should be ordered because the applicant’s motion raised what he calls “novel” “unusual” and/or “public interest” issues.
[12] A summary of his position follows:
(i) As stated in his factum: “…there were significant and novel issues before the court in this matter including but not limited to what effect an agreement should have on an application for interim support made by a child”.
(ii) There are no cases where a child has requested child support without the participation and support of the custodial parent.
(iii) The applicant previously argued that the issues were novel and this was recognized by Wilson J.
(iv) The unusual nature of the Application was noted by Justices D. Wilson and A. Harvison Young (when she granted leave to appeal).
[13] I recognize that Justices Wilson and Harvison Young both noted that this is an unusual application. This characterization of the case did not lead either judge to order that no costs be paid. Wilson J. awarded the respondent his costs fixed at $7,500. On the leave to appeal motion, no costs were ordered because success was divided. The fact that an application raises an unusual issue does not justify ordering no costs. There is no case that supports this approach to costs.
[14] Where a novel issue of law is raised, the court has the discretion to order no costs. The respondent relies on Frank v. Farlie Turner & Co., LLC, 2012 ONSC 6715. At para 9, Perell J. explained when a novel issue would justify making no costs order against the unsuccessful party:
9 For an issue to be novel in a legally significant way that would justify the court in ordering no costs against the party who unsuccessful advanced the issue, it is not enough that the issue is unprecedented or that the issue has not been decided before. The legally significant novelty of a legal issue is found in the circumstance that the existing case law is inadequate to resolve the issue and there would be no proper reason for the party advancing the issue to expect to fail: Baldwin v. Daubney, 2006 33317 (ON SC), [2006] O.J. No. 3919 (S.C.J.) at paras. 19-22; Fisher v. IG Investment Management Ltd., [2010] O.J. No. 2036 (S.C.J.).
[15] The applicant’s motion did not raise novel issues. The motion raised issues that are regularly advanced in Family Court: i.e. material change in circumstances to allow the variation of an order, the right to child support, determination of the respondent’s income to fix child support, a claim for interim disbursements, failure to comply with court ordered disclosure. The existing case law was sufficient to resolve all of these issues.
[16] The respondent’s paternity was another legal issue. While a paternity dispute may not occur as often in family court, it is hardly a novel issue. The law that I reviewed in my decision was more than adequate to resolve the paternity issue. The applicant had every reason to expect that she would succeed, since the respondent’s own undisputed evidence proved that he is the child’s father.
[17] The respondent also says that this motion was novel because there are no cases where a child has requested child support without the participation and support of the custodial parent. If true, this is not relevant. This was not an issue on the child’s motion. Further, Perell J. stated it is “not enough that the issue is unprecedented or that the issue has not been decided before”. In any event, two panels of the Divisional Court have now ruled that the child does not require a litigation guardian to pursue her application.
[18] The respondent also argues that the motion raised “significant and novel issues … including but not limited to what effect an agreement should have on an application for interim support made by a child”. This is not a novel issue. As I stated at para. 90 of my reasons, “child support is the right of the child” and “no contract or agreement can oust the court's jurisdiction in respect of child support. Parents cannot barter away a child’s right to support. Finally, the court is always free to intervene and determine the appropriate level of support for a child. (see Richardson v Richardson, 1987 58 (SCC), [1987] S.C.J. No. 30 at paras 13-16; Willick v Willick, 1994 28 (SCC), [1994] S.C.J. No. 94 at para. 16; Deiter v. Sampson, 2004 12841 (ON CA), [2004] O.J. No. 904, 184 O.A.C. 198 (C.A.) at para. 4.).” The respondent knew this when the Agreement was signed. Para. 18 of the Agreement states:
[C] and [M] acknowledge that the law does not permit a child's rights to financial support to be released. Nevertheless, the parties undertake this agreement in good faith and with determination to abide by the Agreement and in the belief that it is in the child's best interests.
[19] The applicant’s motion did not raise any matters of public interest. A case involves a matter of public interest only if the action has some significance or interest to the community beyond the parties: see Williams v. Mutual Life Assurance Co. of Canada, 2001 62796 (ON SC), [2001] O.J. No. 445 at paras. 24-26 (S.C.J.); Gariepy v. Shell Oil Co., [2002] O.J. No. 3495 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 at para. 36 (S.C.J.); Pearson v. Inco Ltd. (2006), 2006 7666 (ON CA), 79 O.R. (3d) 427 (C.A.); Smith v. Inco Ltd., 2012 ONSC 5094. As Perell J. observed in Fischer v. IG Investment Management Ltd., 2010 ONSC 296 at para. 14 there is a distinction between an action that is of interest to the public and true public interest litigation. This private dispute between the child and her father has no significance or interest to the community beyond the parties.
Unreasonable Behaviour or Bad Faith
[20] The respondent’s behaviour on this motion was unreasonable. It does not equate to bad faith.
[21] In Piskor v. Piskor, 2004 5023 (ON SC), [2004] O.J. No. 796, the court described bad faith at para. 8:
Rule 24(8) indicates that if a party has acted in bad faith, the Court shall decide costs on a full recovery basis, payable immediately. Costs may be awarded on a full recovery basis, payable forthwith, even in the absence of bad faith. See. Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.). As noted in Leonardo et. al. v. Meloche et. al., 2003 74500 (ON SC), [2003] O.J. No. 1969 (S.C.J.), conduct that is intended to deceive or mislead can establish bad faith. In Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.), Justice Campbell relies on Black's Law Dictionary, 6th ed. (St. Paul Minnesota: West Publishing Company, 1990) in stating:
Bad faith is not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity ... it contemplates a state of mind affirmatively operating with furtive design or ill will.
9 Bad faith can be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive or, an intentional breach of court order with a view to achieving another purpose. See Erikson v. Erikson, 2000 29675 (ON SC), [2000] O.J. No. 1569 (S.C.J.) and Hunt v. Hunt, [2001] O.J. No. 5111 (S.C.J.). In Van Westerop v. Van Westerop, 2000 29674 (ON SC), [2000] O.J. No. 4346 (S.C.J.), the Court held that noncompliance with an order, combined with failure to take available legal steps to stay that order was sufficient to attract an award of full recovery costs.
[22] The respondent failed to comply with the disclosure directed in the Wilson order. He was ordered to make "best efforts ... as soon as possible" and did not do so. The respondent’s excuse for not complying revealed his attitude toward the court order that I explained in paras. 49-53 of the reasons. In his view, the applicant had the critical information that she needed to assess his income. However, significant court ordered disclosure was still missing at the time of the motion. It was also readily apparent that he owed disclosure beyond what was ordered.
[23] In paras. 218-229, I described the extent of the respondent’s failure to disclose as “significant”. I found that the non-compliance was serious and the respondent had “no reasonable excuse”.
[24] He agreed to the imputed income of $200,000, but only when the applicant’s analysis showed that he had no choice. As I explained at paras 83-84, the respondent’s litigation strategy was a game of “catch me if you can”.
[25] While the respondent’s conduct as set out above was unreasonable, I cannot say that he intended to deceive or mislead the applicant.
The Child’s Offer to Settle
[26] The applicant’s March 9, 2015 Offer to Settle meets the conditions set out in rule 18(14).
[27] The offer related to the applicant’s pending motion heard on March 11 and 12. The offer was made at least one day before the motion. It was not withdrawn before the motion and it was never accepted.
[28] The orders made on the motion were more favourable than the terms of this offer. The offer asked for child support as of March 1, 2015 at $1,000 a month. The respondent is ordered to pay child support of $1,633 a month payable as of April 1, 2014.
[29] The offer asked the respondent to admit that he is the child’s biological father or, alternatively, undergo DNA testing and pay for same. I found the respondent to be her father and issued a declaration of parentage.
[30] The offer asked for $3,500 for interim disbursements. I ordered the respondent to pay $50,000.
[31] The offer asked for all outstanding disclosure to be produced by April 9, 2015. The applicant obtained this order for disclosure. I ordered that the respondent provide the disclosure by April 30, 2015. Much of this disclosure had been ordered by Wilson J. and was not produced. The respondent’s unreasonable attitude toward compliance with this disclosure order meant that he had significant work to do to comply. He assured the court that he could comply by April 30.
[32] The respondent says that that because the April 30 deadline is later than April 9, that the offer is not as favourable as the order. Therefore he says that the offer does not meet the test under rule 18(14). I disagree. The applicant was successful in securing an order for disclosure (this covered disclosure in the Wilson order and new requests). This was the focus of this particular relief. The fact that the deadline was 21 days later should not deprive the applicant of the operation of rule 14(18). This would unreasonably reward the respondent for his non-compliance with a court order and disclosure obligations. I observe that the respondent’s offers dated March 9 and 10 used the April 9 deadline for disclosure and his third offer used April 15 as a deadline. In my view, this reinforces that the relief sought and order made were about compliance with a court order and disclosure obligations.
[33] The respondent served three offers: March 9, 2015, March 10, 2015, and March 13, 2015 (received at 5:29 p.m.). These offers do not meet the conditions of rule 18(14). The respondent’s offers are signed by a lawyer as required by the Family Law Rules. They do not appear to be "signed personally" by the respondent as also required under rule 18(4). Someone signed on his behalf.
[34] None of the respondent’s offers comply with rule 18(14)1, 2, and 3. The first offer was made on March 9, 2015 at 6:50 p.m. and withdrawn on March 9, 2015 at 10:00 p.m. The second offer was made on March 10, 2015 at 6:32 p.m. and not served one day before the hearing. The 3rd offer was received at 5:29 p.m. on Friday, March 13, 2015, after the motion was heard. Lastly, the orders made are more favourable than any of the respondent’s offers
[35] Since the applicant made an offer that complied with the conditions of rule 18(14), this rule states that she is entitled to costs to the date the offer was served (March 9, 2015) and full recovery of her costs from that date forward, unless the court orders otherwise.
Costs Awarded
[36] This two day motion raised numerous legal issues that were very important to the child. Overall, the motion raised issues of moderate complexity. Some issues were more complex than others. The applicant’s counsel prepared supporting affidavits, a detailed factum and brief of authorities.
[37] The amount of work involved was proportionate to the number of issues. The applicant’s counsel were well organized and thoroughly prepared. They utilized the court time efficiently. The time they spent leading up to the motion was reasonable. In fact counsel’s preparation is the reason why this court was able to manage such an extensive motion over a two day period.
[38] The respondent does not identify any specific billing activity that he says was excessive. He simply claims that overall too many hours were recorded.
[39] The work was also proportionate to the respondent’s reaction to this motion. The respondent vigorously disputed the relief sought. While a party is entitled to do so, that party is exposed to costs resulting from his strategy when the motion succeeds.
[40] In this case, the respondent continued to resist the claim for child support and he relied on the Agreement even though he acknowledged in the Agreement that “the law does not permit a child’s right’s to financial support to be released”.
[41] The respondent’s serious lack of financial disclosure necessitated additional work for applicant’s counsel, to support the request to impute income. The respondent only agreed to an imputed income of $200,000 when he had no choice and after Mr. Wilson had finished his submissions. I noted in para. 83 of my reasons as follows:
I pause to note that the respondent's decision to agree with the fact that his income is $200,000 was made after Mr. J. Wilson presented a detailed analysis of the respondent's current disclosure and some evidence about property that the respondent's professional corporation owns. This compelling analysis demonstrates that at a minimum, the court should impute $200,000 to the respondent for the purpose of determining child support.
[42] Similarly the respondent’s approach to the DNA and parentage issue necessitated the applicant’ motion for relief. This alone was a significant issue that required extensive work to review the evidence and law as detailed in paras. 145-183 of my reasons. The entire issue could have been resolved promptly and without a motion, if the respondent had agreed to undergo DNA testing at the start of the Application. He chose another route and this added to the costs that the child’s counsel incurred.
[43] The work was reasonably shared between senior counsel, Jeffrey Wilson (a 1978 call) and his associate Jessica Braude (a 2013 call). Some minimal work (3.6 hours) was done by two law clerks. The total number of hours that counsel docketed for this two day motion is fair: 34.8 hours for Mr. Wilson and 37.9 for Ms. Braude.
[44] The respondent says that an hourly rate of $195 for a law clerk is excessive. I disagree and, in any event, their involvement in the motion was minimal. The respondent does not dispute Ms. Braude’s hourly rate and I find it to be reasonable.
[45] Mr. Wilson is an experienced senior family lawyer. The respondent says that Mr. Wilson’s hourly rate is “unreasonable and excessive in the circumstances”. He does not offer a rate that he says is reasonable. Instead, he relies on J.K.L. v. N.C.S., [2009] O.J. No. 804 (S.C.), a costs decision post-trial where Mr. Wilson’s $500 hourly rate (full indemnity) was reduced to $450. As the court stated at para. 34, “Mr. Wilson is an experienced trial lawyer with 30 years of practice in the field of family law since his call to the Bar in 1978. This was a difficult and important case. It required imagination and significant preparation.”
[46] I infer from the respondent’s reliance on this case that as of 2009 he is saying that $450 was a reasonable hourly rate. Six years later one would expect that this rate would increase to at least $500 and likely more. Like the trial in J.K.L. v. N.C.S , the child’s motion against her father was also a difficult and important case that required imagination and significant preparation.
[47] After application of rules 18(4) and 24, the costs awarded should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties": Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, at para. 24 and Serra v. Serra, 2009 ONCA 395 at para. 12.
[48] The reasonable expectation of the unsuccessful party can assist in determining an amount that is fair and reasonable. In this case, the respondent unreasonably expects that no costs will be ordered or alternatively that costs will be fixed at no more than $7,500.
[49] A comparison of the costs incurred can aid in the determination of what is within the reasonable expectation of the unsuccessful party and thus, what is an appropriate award. In Hague v. Liberty Mutual Insurance Co. 2005 13782 (ON SC), [2005] O.J. No. 1660 at para. 15 (Ont. S.C.), Nordheimer J. held that "… it would appear that the expectation of the parties will fall to be determined in one of two ways. It may be determined by the unsuccessful party revealing what his/her/its costs were on the same matter as some measure of what was to be expected."
[50] The respondent has not revealed the costs that he incurred on this motion. He did reveal past legal expenses. Before the motion started, the respondent had spent in excess of $100,000 in legal fees. In his most recent financial statement, he reveals that he budgets $5,000 a month for legal fees.
[51] Based on the all of the above considerations, I conclude that the following is a fair and reasonable approach to costs.
[52] I have reduced Mr. Wilson’s hourly rate from $700 to $500 for all of his time. The rates for Ms. Braude and the law clerks are not reduced as they are reasonable.
[53] For the work done before the offer, I reduced all of the fees by 30%. For the period after the offer to settle, I allow full recovery (using the rate of $500 for Mr. Wilson).
[54] The fees, disbursements and HST are as follows:
Before the offer
$12,291.01
(inclusive of HST)
After the offer
$18,871.00
(inclusive of HST)
Total Fees and HST
$31,162.01
Disbursements and HST
$1,361.71
Final Total
$32,523.72
[55] I order the respondent to pay the applicant her costs of the motion fixed at $32,523.72 all inclusive. This amount shall be paid in three installments of $10,841.24 due on August 1, 2015, September 1, 2015 and October 1 2015.
C. Horkins J.
Date: June 3, 2015