ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: D703/12
DATE: 2015-09-16
B E T W E E N:
DAVID COTTON
David Cotton, Self-Represented
Applicant
Applicant
- and -
TRACEY COTTON
Tracey Cotton, Self-Represented
Respondent
Respondent
HEARD: April 20, 21, 22, 23 & 24, 2015
The Honourable Justice C.D. Braid
COSTS JUDGMENT
I. OVERVIEW
[1] A trial in this matter was held to determine the issues of child support, equalization of net family property and spousal support. At the outset of trial, minutes of settlement were filed that dealt with custody, access and primary residence. I released my Reasons for Judgment on May 19, 2015, and invited both parties to file written submissions on the issue of costs. I have received those submissions.
[2] The respondent wife requests her costs of the proceeding on a substantial indemnity basis in the amount of $8,000, inclusive of disbursements and HST. She submits that she is entitled to costs in this amount based on her success on all issues in the proceeding that she was prepared to settle before trial. The respondent’s offer to settle was dated approximately four months prior to the trial.
[3] The applicant husband argues that he is entitled to his own costs of the proceeding on a substantial indemnity basis in the amount of $8,000, inclusive of disbursements and HST. He submits that he is entitled to costs in this amount based on the divided success of the parties and what he submits was unreasonable behaviour by the respondent. The applicant did not provide proof of any formal offer to settle being made.
[4] For the reasons that follow, I have concluded that the respondent is entitled to her costs of this proceeding, and that the sum of $3,144.00, inclusive of disbursements and HST, is an appropriate quantum for costs.
II. THE LAW
A. General Principles
[5] Section 131 of the Courts of Justice Act states that, subject to the provisions of an Act or rules of court, costs are in the discretion of the court, which may determine by whom and to what extent the costs shall be paid. Section 131 grants broad discretion to the court in regard to costs (see M.(C.A.) v. M.(D.), 2003 18880 (ON CA), [2003] O.J. No. 3707 (C.A.)).
[6] The Ontario Court of Appeal established in Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905 that modern rules respecting costs have the goal of fostering three fundamental purposes:
to partially indemnify successful litigants for the cost of litigation;
to encourage settlement; and
to discourage and sanction inappropriate behaviour by litigants.
[7] The court must balance the goal of indemnifying the successful litigant for the costs of enforcing their rights with the importance of not unduly deterring potential litigants from pursuing legitimate claims out of fear of overly burdensome cost consequences (see Cassidy v. Cassidy, 2011 CarswellOnt 1541 (S.C.J.)).
[8] In Fong v. Chan, 1999 2052 (ON CA), 46 O.R. (3d) 330, the Ontario Court of Appeal recognized that awarding costs to self-represented litigants is appropriate in specific circumstances:
[22]…modern cost 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 behaviour by litigants. It seems to me that all three purposes are fostered by allowing the trial judge a discretion to award costs to self-represented litigants.
[25] I would add that nothing in these reasons is meant to suggest that a self-represented litigant has an automatic right to recover costs. The matter remains fully within the discretion of the trial judge.
[26] …all litigants suffer a loss of time through their involvement in the legal process. The self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Costs should only be awarded to those lay litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by forgoing remunerative activity.
B. Liability for Costs
[9] Liability for costs must be assessed taking into consideration all of the circumstances and dynamics of the case. In deciding this issue, the overall reasonableness of each party’s conduct and the positions which they have taken in the litigation are important considerations.
[10] Rule 24 of the Family Law Rules sets out a number of principles to guide the court in the exercise of its discretion in assessing liability for costs. Rule 24(1) establishes a presumption that a successful party to a case is entitled to costs. That presumption does not apply where the successful party has acted unreasonably, in which case that party may be deprived of all or part of their costs or may be ordered to pay the unsuccessful party’s costs.
[11] Rule 24(8) provides that 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. Perkins, J. described the concept of “bad faith” in S.(C.) v. S. (M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.), aff’d 2010 ONCA 196, [2010] O.J. No. 1064 (C.A.):
The essence of bad faith is the representation that one's actions are directed toward a particular goal while one's secret, actual goal is something else, something that is harmful to other persons affected or at least something they would not willingly have supported or tolerated if they had known…
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 other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court.
[12] Another important consideration in determining costs is whether any party has served an offer to settle. Rule 18(14) states that 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, so long as the following conditions are met: the offer is made at least seven days before the trial date; it does not expire and is not withdrawn before the trial starts; the offer is not accepted; and the party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[13] The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms (see Sepiashvili v. Sepiashvili, 2001 CarswellOnt 3316 and 3459 (Ont. S.C.J.)). A party’s failure to serve an offer to settle may also be viewed as an adverse factor in determining the issue of costs (see M. (J.V.) v. P. (F.D.), 2011 CarswellOnt 13510 (O.C.J.)).
C. Quantum of Costs
[14] Once liability for costs has been established, the court must determine the appropriate quantum of costs. In Serra v. Serra, supra, Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), [2004] O.J. No. 2634 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 1042 (ON CA), 2005 CarswellOnt 189, the Ontario Court of Appeal set out general principles relating to the quantum of costs:
Costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.
Costs need to be proportional to the issues and amounts in question and the outcome of the case.
Amounts actually incurred by the successful litigant are not determinative.
In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.
[15] Rule 24(11) prescribes some of the factors which the court should consider in deciding the appropriate quantum of costs. These factors include:
i) the importance, complexity or difficulty of the issues;
ii) the reasonableness or unreasonableness of each party’s behaviour in the case;
iii) 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;
iv) expenses properly paid or payable; and
v) any other relevant matter.
[16] As Curtis, J. stated in Mooney v. Fast, 2013 CarswellOnt 15659 (O.C.J.), “it must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered by the requirement that the parties take a clear-headed look at their case before insisting on their day in court.”
[17] In Paranavitana v. Nanayakkara, 2010 CarswellOnt 2298 (S.C.J.), Wildman, J. set out the following useful eight step process for determining the issue of costs, and the applicable Rules to consider under the Family Law Rules:
Rule 18 - Are there any offers that would entitle a party to full recovery costs?
Rule 24(1) - Who is the successful party?
Rule 18(6) and Rules 24(4), (5) and (11) (b) – Reasonableness: Has either party's behaviour had an impact on the costs that should be ordered? This includes a discussion of all the offers that were made and rejected, and whether other offers should have been made. Viewed in the context of the result at trial, were the parties behaving reasonably, both in their settlement efforts and their overall approach to this litigation?
Rule 24(6) - Has success been divided, so that there should be a reduction or offsetting of the costs that will be awarded to the otherwise successful party?
Rule 24(8) - Has anyone acted in bad faith, so that full recovery costs should be awarded to the other side?
Rule 24(11) - What other factors have an impact on costs?
The Award - What is the proper amount of costs payable?
III. ANALYSIS
[18] I am satisfied that the respondent has established entitlement to costs in this case. Although the applicant says that there was divided success, I find that the respondent was completely successful on all issues advanced at trial that were addressed in the offer to settle. The only argument that the respondent advanced at trial that was not accepted by the court was a claim for reimbursement of interest on the applicant’s pension since the date of separation. Even though the applicant had agreed that the payment of the interest was appropriate, the court found that it did not have jurisdiction to order the interest to be paid since the interest claimed would have accumulated after the valuation date for purposes of division of Net Family Property. The respondent was therefore unsuccessful on this point, but it could not be said that her position was unreasonable.
[19] In his costs submissions, the applicant states that that the respondent was unreasonable and demonstrated bad faith. I have considered the conduct of the respondent both prior to and during the litigation. I find that the respondent acted reasonably throughout the proceedings. She took a fair and reasonable approach to the issues at stake in this proceeding. I am satisfied that she attempted in good faith to resolve the issues before proceeding to trial. She was well prepared and organized, and took reasonable steps to streamline the process as much as possible. The respondent took reasonable positions in the litigation, as evidenced by her complete success in the case.
[20] In fact, I find that it is the applicant husband who acted unreasonably in the proceedings. As I stated in my original reasons, the applicant’s evidence was exaggerated, self-serving and overstated at times. He initially claimed $73,000 in s.7 expenses, most of which were completely unreasonable.
[21] There is absolutely no evidence that the respondent acted in bad faith at any point in these proceedings. Although the applicant states that the respondent made unfounded claims that triggered police and CAS involvement, the respondent withdrew any claims related to those investigations at the trial. I heard no evidence on these points. I decline to make any findings with respect to the propriety of these investigations as I have not heard evidence about them.
[22] The applicant also states that the respondent forced the trial. In fact, it was the applicant husband who forced the trial. The respondent settled custody and access prior to trial. Had the applicant accepted the respondent’s offer to settle for the remaining issues, there would have been no need for a trial.
[23] The respondent seeks costs on a substantial indemnity basis of $8,000. Although she has provided a breakdown of the costs incurred, the breakdown does not explain how the respondent justifies the cost of $500 per day and does not provide a breakdown for the costs claimed for preparation. It is also not clear how many times the respondent attended court after the offer to settle was served.
[24] I have determined that the following is an appropriate assessment of her costs:
i) Lost wages for court attendance: The respondent’s income is $78,000 per year, which translates to $300 per day in lost wages for each of the 5 days that she attended court for trial, for a total of $1,500 lost wages. The offer to settle was served four months prior to trial. Given her success and the offer to settle, I am prepared to assess these costs at 90% of her lost wages, namely $1,350.
ii) Compensation for preparation time: The respondent was well-organized at trial and it was clear that she spent a significant amount of preparation for trial. I am prepared to assess these costs at $500.
iii) Disbursements: The respondent provided a detailed breakdown of her disbursements, which are reasonable. Disbursements will be reimbursed as claimed for a total of $1,294.
[25] I therefore conclude that the sum of $3,144.00, inclusive of disbursements and HST, is an appropriate amount for costs, payable by the applicant to the respondent. I have considered the factors outlined above in reaching this figure.
[26] The applicant has claimed $8,000 of his own costs. I find that he is not entitled to costs in this matter. However, his costs calculation demonstrates that the costs claimed by the respondent are fair, reasonable, and are within the range that the applicant would have expected to pay.
[27] Having regard for the applicant’s requirement to pay ongoing spousal and child support, I am giving him until June 1, 2016 to pay the costs in full, and I am setting deadlines by which he must pay minimum instalments towards the costs award.
IV. CONCLUSION
[28] Based on the foregoing, an order shall issue as follows:
The applicant shall pay the respondent costs of these proceedings in the amount of $3,144.00, inclusive of disbursements and HST.
The costs award shall be payable in full by June 1, 2016, provided that the applicant shall, at minimum, make the following instalments towards the costs award:
a. The applicant shall pay $1,000.00 to the respondent no later than December 1, 2015;
b. The applicant shall pay $1,000.00 to the respondent no later than March 1, 2016; and
c. The applicant shall pay $1,144.00 to the respondent no later than June 1, 2016.
- In the event that the applicant defaults on any of the instalment payments referred to in paragraph 2 herein, the outstanding balance of the costs award shall be payable in full within fourteen days of the default.
Braid J.
Released: September 16, 2015
COURT FILE NO.: D703/12
DATE: 2015-09-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DAVID COTTON
Applicant
- and –
TRACEY COTTON
Respondent
COSTS JUDGMENT
JUSTICE C.D. BRAID
DATE: September 16th, 2015