Court File and Parties

COURT FILE NO.: FS-161-15

DATE: 2015/07/15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: A. Z., Applicant

AND:

C. Z., Respondent

BEFORE: The Honourable Justice D.A. Broad

COUNSEL:
Tara Lattanzio, for the Applicant

Louis Townsend, for the Respondent

costs ENDORSEMENT

Positions of the Parties

[1] The parties have been unable to agree on the question of costs and accordingly have delivered their written submissions on costs. The following is my disposition with respect to the costs of the respondent’s motion.

[2] The applicant seeks costs of the motion on a substantial indemnity basis in the sum of $7,500.00. Her Costs Outline indicates fees of $6,975, disbursements of $150, and HST on the fees and disbursements. In the alternative, she seeks partial indemnity costs, comprising fees of $5,425, disbursements of $150 and HST on the fees and disbursements.

[3] The applicant points to her Offer to Settle dated May 12, 2015 which mirrored the terms of my endorsement released June 3, 2015, namely that the child’s primary residence be with the applicant, with the respondent having access every second weekend and every Wednesday evening. The applicant argues that pursuant to sub-rule 18(14) of the Family Law Rules she is entitled, unless the court orders otherwise, to costs to the date that the offer was served and full recovery of costs from that date.

[4] The respondent submits that no costs should be awarded in respect of the motion. He states that citizens will be unduly hesitant to assert or defend their rights in court if an unsuccessful party is required to bear all the costs of a successful one, referring to Orkin, The Law of Costs (2nd ed.) p.23. In addition he argues that the applicant could have given a more complete and fulsome background of the facts and, as such, her ex parte material aroused suspicion and justified an inquiry. He relies upon the case of Bank of Montreal v. Stair [1918] O.J. No. 12 at para. 12 in this respect.

[5] The respondent argues that the Offer to Settle of the applicant did not meet the requirements of sub-rule 18(14) in that it stated that it was not open for acceptance after the initiation of the hearing of the motion. In any event, he argues that, on the authority of M. (A.C.) v. M.(D.) 2003 18880 (Ont. C.A.) at para. 40, the Court has an overriding discretion to not make an award of full recovery costs even where the successful party has met the conditions set out in subrule18(14). He points to conduct of the applicant which would justify the court in exercising discretion not to make an award of full recovery costs in her favour. This conduct included the applicant removing most of the valuable family property from the residence, damaging and vandalizing the family residence before vacating it and running up an excessive telephone bill.

[6] The respondent argues that, if costs are awarded, they should be awarded on a nominal recovery basis in the amount of $1,500 payable in instalments of $250 per month, in light of the respondent’s ability to pay. He points out that his main source of income is only $1,156 per month from his CPP disability benefit.

[7] Finally the respondent submits in the alternative that the issue of costs should be reserved to trial.

Guiding Principles

[8] Pursuant to sub-rule 24(1) of the Family Court Rules, the successful party is presumed to be entitled to recover costs. Sub-rule 24(11) requires the court, in setting the amount of costs, to consider a number of factors including the importance, complexity and difficulty of the issues, the reasonableness or unreasonableness of each party's behavior in the case, the lawyer's rates, the time properly spent on the case, expenses properly paid or payable, and any other relevant matter. These factors are to be applied flexibly (see M. (C.A.) v. M. (D.), 2003 18880, (2003), 67 O.R. (3d) 181 (Ont. C.A.) at para 42).

[9] Rule 18 deals with the impact of Offers to Settle which may have been served by the parties on the costs determination. Sub-rule 18(14) provides that a party who makes a written offer at least seven days before the trial, and obtains an order as favorable as or more favorable than the offer, is entitled, unless the Court orders otherwise, to costs to the date that the offer was served and full recovery costs from that date. Even if sub-rule (14) does not apply, the Court may, under sub-rule 18(16), take into account any written offer to settle served by a party, the date the offer was made and its terms.

[10] Consideration of the relative success of the parties on the issues in the case is the starting point in determining costs (see Butty v. Butty, 2009 23111 (ON SC), [2009] O.J. No. 1887 (Ont. S.C.J.) at para. 4, citing Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (Ont. S.C.J.)). In the case of Johanns v. Fulford, 2010 ONCJ 756 (Ont. C.J.) at para. 13, it was held that, for the purpose of Rule 24(1), "success" is assessed by comparing the terms of an order against the relief originally requested in the pleadings and against the terms of any offers to settle.

[11] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 3707 (Ont. C.A.) at para. 24).

[12] While the case law requires the Court to consider the means of the parties, the limited financial resources of a party do not necessarily afford immunity from a costs order, but may affect the scale or quantum of costs (see Parsons v. Parsons (2002), 2002 45521 (ON SC), 31 R.F.L. (5th) 373 (Ont. S.C.J.) at para. 12).

[13] Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).

Analysis

[14] In my view, there are no factors which would suggest that the presumption in sub-rule 24(1), that the successful party is to be entitled to recover costs, should not apply in this case. I would not give effect to the respondent’s submission that an award of costs against him would cause citizens to be unduly hesitant to assert or defend their rights in court. The principle of indemnity for a successful litigant applies as one of the fundamental purposes of the modern costs rules, as laid down by the Court of Appeal in Fong v. Chan.

[15] I would also not give effect to the respondent’s submission that the applicant’s Offer to Settle did not comply with sub-rule 18(14). I fail to follow the argument that the stipulation in the offer that it was not open for acceptance after the commencement of argument of the motion renders the offer non-compliant with para. 3 of sub-rule 18(14) which requires that the offer “does not expire and is not withdrawn before the hearing starts.” In this case, the offer did not expire and was not withdrawn prior to the commencement of the argument of the motion. Accordingly, since the Offer to Settle effectively mirrored the outcome of the motion, the applicant is entitled to costs to the date that the offer was served and full recovery costs from that date, unless the court orders otherwise. The application of sub-rule 18(14) is consistent with the second fundamental objective of modern costs rules, namely, to encourage settlement.

[16] Although the respondent points to conduct of the applicant which he says should justify the court in exercising discretion not to make an award of full recovery costs to her, in my view, the conduct of the respondent in failing to comply with the Order of Justice Taylor, requiring the police to become involved, should also be considered as a counterbalancing factor.

[17] Although sub-rule 18(14) has prima facie application, as indicated above, I am permitted to take into account the means of the respondent in determining the scale or quantum of costs. It is evident that the respondent’s sole source of income is his modest disability benefit. Although the applicant points out that the respondent’s property in Cambridge has sold and he has received the net proceeds, there is no information with respect to the magnitude of those proceeds. During argument it was indicated that the sale was a forced sale, occasioned by default under the mortgage on the property. Accordingly, it is expected that the net proceeds were modest.

Disposition

[18] In the exercise of my discretion in light of the respondent’s apparent limited means, I would fix the applicant’s costs in the sum of $5000.00, representing two-thirds of her substantial indemnity costs. The respondent shall pay to the applicant the sum of $5,000.00 in respect of costs within 30 days hereof.

D.A. Broad

Date: July 15, 2015