CITATION: Di Bratto v. Sebastiao, 2015 ONSC 3979

NEWMARKET COURT FILE NO.: FC-13-043020

DATE: 20150622

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Salvatore Di Bratto, Applicant

AND:

Sandy Sebastiao, Respondent

BEFORE: McDermot J.

COUNSEL: Isaura Medeiros, for the Applicant

Respondent unrepresented

HEARD: By written submissions

ENDORSEMENT

Introduction

[1] In this matter, I heard a seven day custody and child support trial during the November, 2014 sittings. My endorsement was issued on March 26, 2015.

[2] The trial largely involved custody of a three year old child, Pierce Di Bratto. Since birth, Pierce had been in the care of his mother, the Respondent, Sandy Sebastiao. The Applicant, Mr. Di Bratto had access to the child and paid child support to Ms. Sebastiao. An assessment was completed by Howard Hurwitz and recommended joint custody, parallel parenting and an eventual sharing of custody.

[3] I determined that, due to the high level of conflict between the parties, and Ms. Sebastiao’s attempts to marginalize Mr. Di Bratto from Pierce’s life, that Mr. Di Bratto should have custody of Pierce, subject to access in favour of Ms. Sebastiao. I ordered a change of primary residence. I quantified child support arrears and ordered child support to be payable to Mr. Di Bratto based upon income imputed to Ms. Sebastiao.

[4] I gave the parties an opportunity to file costs submissions in this matter. Mr. Di Bratto’s lawyer, Ms. Medieiros, filed her client’s costs submissions within the time limits set out in my final order. Ms. Sebastiao did not file any costs submissions.

[5] Ms. Medieros requests costs of $134,613.86 inclusive of disbursements, including the costs of the assessment report prepared by Mr. Hurwitz. These costs include the costs of the case conferences and motions prior to trial, less the costs previously awarded on an interim basis. As well, these include a $1,500 costs award of Rogers J. made on November 17, 2014 in respect of a motion brought by the Respondent to adjourn the trial, which was dismissed. Rogers J. ordered costs of $1,500 against the Respondent if the Applicant achieved at least 50% success at trial. Ms. Medieros submits that the Applicant has met that threshold.

Analysis

[6] Ms. Medieros requests costs on a substantial or full recovery basis. She asks for this, not only because of her client’s success at trial, but also based upon the offers to settle made by Mr. Di Bratto and the conduct of the Respondent. She says that the Applicant obtained a better result at trial than any of his offers; she also submits that the Respondent was guilty of unreasonable and bad faith conduct before and during trial, warranting a full recovery award of costs.

Offers to Settle

[7] Offers to settle may be considered regarding a party’s success at trial, as well as in respect of the measure of costs as a result of an offer.

[8] In considering costs, under Rule 24(1) of the Family Law Rules,[^1] costs follow the event, and a successful party is presumed to be entitled to costs. In determining success, I may take into account the offers to settle submitted by each of the parties: see Sims-Howarth v. Bilcliffe, 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.) at paragraph 9 and Lawson v. Lawson, 2008 CanLII 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.) at paragraph 7. Finally, where there are a number of issues before the court, I can have regard to the dominant issue at trial in light of those offers to settle: see Firth v. Allerton, [2013] O.J. No. 3992 (S.C.J.).

[9] In addition, in the event that a party is more successful than his or her offer I am bound to order costs on a full recovery basis: see Rule 18(14) of the Family Law Rules. Under Rule 18(16), when I am ordering costs, I may take into account any offers to settle in determining costs, even if they do not fully comply with Rule 18(14) as noted above.

[10] The Applicant served four offers to settle. These offers were dated February 20, 2014, September 24, 2014, September 30, 2014 and November 12, 2014.

[11] The offers of February 20, 2014 and September 24, 2014 offered to settle custody by way of an order for joint custody, with primary residence of Pierce to remain with Ms. Sebastiao. There are extensive provisions as to how decisions will be made between the parties and as to how information would be shared between the parties.

[12] The offers made September 30 and November 12, 2014 deal with child support. Both of these offers were for payment of child support by Mr. Di Bratto to Ms. Sebastiao.

[13] I have to assume that Ms. Sebastiao did not make an offer to settle this matter. Certainly, no such offer was provided to me.

[14] There is no issue that Mr. Di Bratto obtained an order more successful than any of his offers. On the major issue at trial, custody, Mr. Di Bratto received an order for full custody of Pierce and he had offered joint custody with primary residence remaining with Ms. Sebastiao, graduating to a shared custody regime. On child support, Mr. Di Bratto offered to pay child support; in the end, Ms. Sebastiao has now been ordered to pay child support based upon income imputed to her in the amount of $60,000 per annum.

[15] As noted, the only place where Mr. Di Bratto did not enjoy success was regarding the use of the Family Wizard Program for communication, which was a minor issue. It is also not a factor as Ms. Sebastiao made no formal offer to settle.

[16] The offer of February 20, 2014 did not, however, comply with Rule 18(14). It expired prior to trial contrary to Rule 18(14) which requires an offer not expire or be withdrawn prior to the commencement of the hearing. Although it therefore does not attract full recovery costs, it can be taken into account in determining costs under Rule 18(16).

[17] The remaining offers do meet the requirements set out in Rule 18(14). Mr. Di Bratto achieved a result at trial better than his offers to settle. This means that, as there are no special circumstances, such as unreasonable behaviour on Mr. Di Bratto’s part, he is entitled to full recovery costs under Rule 18(14) from September 30, 2014, the date that the first offer respecting child support was served.

[18] For costs prior to that date, I must take into account the February 20, 2014 offer, as well as the issue of Ms. Sebastiao’s conduct under Rule 24(8) and 24(11)(b).

Unreasonable Conduct

[19] Ms. Medeiros requests a finding that Ms. Sebastiao acted in bad faith within the meaning of Rule 24(8) of the Family Law Rules. Alternatively she requests a finding that Ms. Sebastiao is guilty of unreasonable conduct within the meaning of Rule 24(11)(b). As I have already determined that Mr. Di Bratto is entitled to full recovery costs after September 30, 2014, this only affects the scale of costs prior to that date.

[20] There is a difference between the two. Under rule 24(8), I am obliged to order full indemnity costs payable forthwith if a party has acted in “bad faith.” However, absent bad faith, I may generally take into account under Rule 24(11) “the reasonableness or unreasonableness of a client’s behaviour” in assessing the amount of costs. Importantly, in determining the reasonableness of a party’s behaviour, I can assess the reasonableness of the offers made by the parties as well as an offer that a party failed to accept: see Rule 24(5)(b) and (c).

[21] There is no issue in my mind that Ms. Sebastiao is guilty of unreasonable conduct both before and after trial. Some of the things that she did which would attract this finding include the following:

1. She unfairly restricted Mr. Di Bratto’s access rights throughout. She interpreted the various orders in the most restrictive fashion possible to minimize Mr. Di Bratto’s time with Pierce including refusing access to Mr. Di Bratto on Mondays when access fell on a long weekend;

2. She called the police when Pierce had a mild illness when visiting his father.

3. She unfairly and unreasonably reported Mr. Di Bratto to the local Children’s Aid Society over unproven and unfounded allegations of drug use and weapons possession;

4. She was blatantly untruthful about certain matters at trial. She refused to admit, for example, that Mr. Di Bratto had paid a $20,000 trial retainer to her lawyer until confronted with the written evidence during cross examination. She was less than forthcoming about her financial situation and failed to adequately explain how she was paying her living expenses and actually refused to answer questions put to her in cross examination;

5. She lied to the court and to Mr. Di Bratto about a wedding that she said that she was supposed to attend in London.

6. She took Pierce out of a day care centre contrary to a court order requiring her to consult with Mr. Di Bratto on that very issue.

7. She took Pierce to the doctor after each access visit. Mr. Hurwitz expressed his concern about this, saying that this was evidence of mental health issues for Ms. Sebastiao.

8. She did not provide disclosure as ordered at the trial management conference and only provided her income tax returns when giving her testimony at trial. Apparently, she made Ms. Medeiros wait until 7:00 in the evening prior to her cross-examination when providing her income tax returns.

9. She failed to provide an offer to settle this matter. She also did not make a counter-offer to the extremely reasonable offers to settle made by Mr. Di Bratto, which would have resulted in her retaining primary residence of Pierce and ongoing child support. Instead, she rejected them out of hand, which resulted in this trial proceeding.

[22] The assessor confirmed that Ms. Sebastiao acted “unreasonably” on many matters concerning her dealings with Mr. Di Bratto. In fact, had Ms. Sebastiao acted with even a modicum of good sense, it is probable that this trial would not have occurred. My impression is that this case began as an access and joint custody issue for Mr. Di Bratto and that he was only pushed into claiming custody of Pierce because of Ms. Sebastiao’s unreasonable behaviour.

[23] The real issue is whether Ms. Sebastiao’s behaviour crossed the line into bad faith conduct. For there to be a finding of bad faith, something more is required than unreasonable conduct. And the consequences are serious. Bad faith is not just a factor in assessment of costs, but will result in full indemnity costs being ordered once the finding is made. Moreover, once bad faith is found, the justice hearing the matter loses discretion in setting a costs amount; Rule 24(8) states that if a party acts in bad faith, the court “shall decide costs on a full indemnity basis and shall order the party to pay them immediately.” (emphasis mine).

[24] The issue of bad faith was canvassed extensively by Blishen J. in Piskor v. Piskor, 2004 CanLII 5023 (ON SC), [2004] O.J. No. 796 (S.C.J.) where a support payor failed to pay his support and failed to provide disclosure in the proceeding. The failure to pay the support left the recipient “destitute.” Blishen J. found that the paying spouse was had the ability to pay the support but “unilaterally and intentionally refused to pay”. At para. 13, the court found as follows:

Mr. Piskor's failure to provide full and timely disclosure and to abide by the disclosure orders made by the Court, along with his unreasonable and unilateral refusal to make support payments pending the hearing of his application, in my view, amount to bad faith. Therefore, Ms. Piskor is entitled to full recovery costs pursuant to R. 24(8).

[25] At para. 8 of the report, Blishen J. cites Campbell J. who, in Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.), adopted the definition of “bad faith” from Black’s Law Dictionary, 6^th ed. (1990):

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.

[26] She later states at para. 9 that 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 (sic.) with a view to achieving another purpose.”

[27] A useful evaluation of the distinction between bad faith and unreasonable behaviour can be found in S.(C.) v. S.(C.), 2007 CanLII 20279 (ON SC), [2007] O.J. No. 2164 (Ont. S.C.J.) where Perkins J. states:

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.

[28] As pointed out by Ms. Medeiros, failure to disclose may be a basis for full recovery costs: see K.C. v. S.B., [2008] O.J. No. 523 (Div’n’l Ct.). However, the major issue in this trial was custody and access and a better measure, in my view, is set out in Fard v. Fard, 2002 CanLII 61493 (ON SC), [2002] O.J. No. 2511 (S.C.J.): did the unreasonable or malicious actions of the Respondent make the trial of that issue inevitable? In my view, they did.

[29] In my view, Ms. Sebastiao is guilty of bad faith conduct. She acted maliciously, in my view, in reporting Mr. Di Bratto to the Children’s Aid Society on specious grounds. She attempted to deceive the court on several occasions. She furthermore, through her actions, pushed Mr. Di Bratto into a corner wherein he saw no choice but to proceed to trial. She breached orders on several occasions. Finally, she rejected out of hand several offers to settle all of which were reasonable, and did not make an offer to settle herself. All of these actions made the trial necessary, and as such it is only fair that she bear the costs of that trial and the preceding litigation.

[30] Accordingly, and subject to my review of the Bill of Costs submitted by Ms. Medeiros, Mr. Di Bratto shall have his costs on a full recovery basis throughout.

Quantum of Costs

[31] The Bill of Costs submitted by the Applicant includes costs of a number of pre-trial appearances for both conferences and motions.

[32] Under Rule 24(10), costs are to be set promptly at various stages of the proceeding. Costs were awarded to the Applicant for all of the motions heard in this proceeding, of which there were four.

[33] I am not going to award Mr. Di Bratto the costs of motions where costs were already ordered in his favour. To give the Applicant costs for events at which costs were already ordered, even if not paid by the Respondent, would result in double compensation. This would also result in revisiting a costs award already assessed and granted. In effect, by reason of Rule 24(10), where costs are previously awarded for a step in the proceeding, that issue is now res judicata.

[34] I note that the Applicant has taken the approach of deducting the costs already ordered from the global amount claimed for his costs of this proceeding. Again, this appears to be an attempt to have me reconsider those costs, which have already been adjudicated. This is, in my view, an incorrect approach as, again, previously awarded costs should not be revisited in considering costs after trial, even where the Applicant takes the step of deducting the amounts awarded at various motions from the claim for costs at trial.

[35] Accordingly, I am not including in the costs award the costs of the access motion heard June 5, 2013,[^2] the motion for the assessment and Christmas access heard on October 16, 2013[^3] or the motion regarding access and support heard on July 23, 2014.[^4] On all of these motions, costs were fixed and awarded to the Applicant and accordingly, the Applicant cannot claim costs for these motions again.

[36] Regarding the motion for the adjournment of the trial heard on November 17, 2014, Rogers J. awarded costs of $1,500 to be paid by the Respondent to the Applicant if the Applicant enjoyed at least 50% success at trial. The Applicant obtained complete success at trial and he shall therefore have costs of that motion as fixed by Rogers J. in the amount of $1,500. Again, for the reasons noted above, I am not revisiting that costs order beyond what was previously awarded by Rogers J.

[37] The Applicant also requests costs for the various conferences held in this matter in his Bill of Costs. Specifically, he claims costs for the urgent case conference held on April 11, 2013, the case conference held on September 16, 2013 and the trial management conference held on October 24, 2014.

[38] Costs of the September 16, 2013 case conference were reserved by Ferguson J. Costs of the remaining two conferences were not. If costs of a conference are not reserved, they cannot be claimed later: see Islam v. Rahman, 2007 ONCA 622, [2007] O.J. No. 3416 (C.A.). This is again based upon Rule 24(10) which requires costs to be set at each stage of the proceeding, failing which they cannot be claimed at another time.

[39] Ms. Medeiros cites Kaverimanian v. Kaverimanian, 2013 ONSC 5265, [2013] O.J. No. 3671 (S.C.J.) as authority for the proposition that costs ought to be awarded for a case conference even where costs were not reserved. In fact, that case considered the costs of a motion only; although Islam v. Rahman was referred to in Kaverimanian, D.G. Price J. confirmed [at para. 40] that he was only deciding the issue of the costs of a case conference where it was a necessary step to proceed with the motion for which the costs were claimed:

It is important, at least, to limit the application of Islam v. Rahman to the costs determination made by a trial judge, and not to apply it more broadly to costs determinations made by motions judges. A case conference is a procedural prerequisite to a motion, just as a Settlement Conference and Trial Management Conference are procedural prerequisites to a trial. Rule 14(4) is unequivocal that no notice of motion or supporting evidence may be served and no motion may be heard before a case conference dealing with the substantive issues has been completed.

[40] Ms. Medeiros also cited Green v. Green, [2008] O.J. No. 3778 (S.C.J.) as authority for the granting of costs for case conferences where costs were not reserved. That case, in fact, followed Islam in excluding the costs of conferences from the assessment of the costs after trial: see para. 23 of the report.

[41] Accordingly, there is no claim for costs for the April 11, 2013 and October 24, 2014 conferences. The costs of the September 16, 2013 case conference were, however, reserved and shall be included in the total costs award to the Applicant.

[42] The costs for preparation of pleadings, for the assessment, C.A.S. and day care issues, for the September 16, 2013 conference and for trial and post-trial matters may therefore be included in the Applicant’s costs award. The time spent by counsel as well as her law clerk on the allowable matters in the Bill of Costs are reasonable, considering the actions of the Respondent and the fact that this was litigation which had to be fought at every step along the way on every issue. Considering Ms. Medeiros’ 18 years of experience, her hourly rate of $280 per hour is more than reasonable.

[43] Lawyer’s time on a full recovery basis for the allowable matters noted above total $56,336.[^5] Ms. Medeiros has also properly charged for her law clerk’s time on the file; her time spent on allowable matters totals $4,596.[^6] Together, fees properly chargeable by Ms. Medeiros on a full recovery basis are therefore $60,932. HST on this amount is $7,921 for an aggregate of $68,853.

[44] Regarding disbursements, I am satisfied that the amounts claimed reasonably relate to the trial in this matter. These include costs for photocopying of extensive exhibit books used at trial and the costs of the assessor as well as the private investigator who also testified. Inclusive of HST, disbursements are assessed in the amount of $25,011.19.

[45] Accordingly, the Applicant shall have his full recovery costs of this proceeding, inclusive of disbursements and HST, payable by the Respondent in the amount of $93,864.90. Based upon my finding of bad faith conduct, those costs are payable forthwith.

[46] In addition, the Applicant shall have his costs of the motion for the adjournment of the trial in the amount of $1,500. Total costs therefore payable (not including previous costs awards) are $95,364.90.

McDERMOT J.

Date: June 22, 2015

[^1]: O. Reg. 114/99 [^2]: Costs of $2,000 were awarded for this motion by Kaufman J. [^3]: Costs of $750 were awarded for this motion by Nelson J. [^4]: Kaufman J. ordered $500 in costs for the 14B motion adjourned to that date and $1,500 for the motion itself. [^5]: $2,968 + $4,788 + $3,220 + $43,400 + $1,960 [^6]: $312 + $312 + $ $3,756 + $216