SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FC-11-2055
DATE: 2015-09-17

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

DAWN HILLMAN

Dawn Hillman, Self-Represented
Applicant

Applicant

• and -

IAN LETCHFORD

Ian Letchford, Self-Represented
Respondent

Respondent

HEARD: May 11, 12, 13, 14, 15, 19, 20, 21, 25, 26, 27, 28, 29, 2015

The Honourable Justice C.D. Braid

COSTS JUDGMENT

I. OVERVIEW

[1] A trial in this matter was held to determine whether an agreement entered into by the parties in 2006 should be set aside. For reasons set out in my judgment dated June 30, 2015, the application was dismissed. I invited both parties to file written submissions on the issue of costs. I have received those submissions.

[2] The respondent husband requests his costs of the proceeding in the amount of $72,206.60, inclusive of disbursements. He submits that he is entitled to costs in this amount based on his success on all issues in the proceeding and that he was prepared to settle before trial. The husband’s offer to settle was dated approximately two years prior to the trial.

[3] The applicant wife argues that the husband’s bill of costs is outrageously high. She argues that the husband was not entirely successful at trial because the court found that the husband had made material misrepresentations regarding the Spanish property and that he had not properly disclosed his stock options and shares. The wife did not provide proof of any formal offer to settle being made.

[4] For the reasons that follow, I have concluded that the husband is entitled to costs of this proceeding, and that the sum of $7,500, 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:

1. to partially indemnify successful litigants for the cost of litigation;
2. to encourage settlement; and
3. 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] Evidence that a party has failed to make complete, frank and early disclosure, has put roadblocks in the way of the other party’s disclosure requests, and has been evasive generally in providing the information required to determine the issues in the case may fall within the definition of “bad faith” (see Reisman v. Reisman, [2007] O.J. No. 5538 (S.C.J.); K.C. v. S.B., [2008] O.J. No. 523 (S.C.J.); and DePace v. Michienzi, 2000 CarswellOnt 4475 (S.C.J.)).

[13] 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.

[14] 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.)).

[15] The costs consequences set out in Rule 18(14) do not automatically apply when the requirements set out in the Rule are satisfied. The Rule simply establishes a rebuttable presumption regarding costs, and the court ultimately maintains the discretion to determine whether the costs consequences are appropriate having regard for all of the circumstances of the case (see M.(C.A.). v. M. (D.), supra).

C. Quantum of Costs

[16] 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:

1. Costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.
2. Costs need to be proportional to the issues and amounts in question and the outcome of the case.
3. Amounts actually incurred by the successful litigant are not determinative.
4. In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

[17] 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.

[18] Although not specified in Rule 24(11) as factors in determining costs, the financial means of the parties, their ability to pay a costs order and the effect of any costs ruling on the parties are also relevant considerations in reaching a determination on the issue of costs, both under Rule 24 and Rule 18(14) (see Tauber v. Tauber, 2000 5747 (ON CA), [2000] O.J. No. 2133; additional reasons at 2000 22280 (ON CA), [2000] O.J. No. 3355 (C.A.); M.(C.A.) v. M. (D.), supra; Murray v. Murray, 2005 46626 (ON CA), [2005] O.J. No. 5379 (C.A.); Clark v. Clark, 2014 ONCA 175 (C.A.)). However, ability to pay is only relevant to the issue of quantum of costs and how payment should be effected, and not to the question of liability for costs (see Izyuk v. Bilousov, 2011 ONSC 7476, 2011 CarswellOnt 14392 (S.C.J.)).

[19] 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.”

[20] In Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J), the court held that scales of costs in the civil context is not the appropriate way to quantify costs under the Family Law Rules. Rather, the court must fix the amount at some figure between a nominal sum and full recovery. The Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs. The Ontario Court of Appeal supported this approach in M.(C.A.) v. M. (D.), supra.

[21] 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:

1. Rule 18 - Are there any offers that would entitle a party to full recovery costs?
2. Rule 24(1) - Who is the successful party?
3. 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?
4. 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?
5. Rule 24(8) - Has anyone acted in bad faith, so that full recovery costs should be awarded to the other side?
6. Rule 24(11) - What other factors have an impact on costs?
7. The Award - What is the proper amount of costs payable?

III. ANALYSIS

[22] I am satisfied that the husband has established entitlement to costs in this case. I find that the husband was successful on all issues advanced at trial that were addressed in the offer to settle. Had the wife accepted the offer to settle, there would have been no need for a trial.

[23] However, I previously found that the husband lied during prior questioning and deliberately withheld information in the prior proceedings. The husband’s non-disclosure fed the wife’s suspicions about all of the husband’s income. The husband could have diffused the wife’s mistrust and perhaps avoided this trial if he had been forthright about the stock options and shares during the earlier litigation.

[24] Much of the non-disclosure was only revealed after the wife obtained disclosure pursuant to court order during the course of this matter in 2014. Although his conduct in this trial did not rise to the level of bad faith, I find that the husband did not behave reasonably. Both parties share some responsibility for this matter going to trial.

[25] The husband seeks costs of $72,206.60. This includes a portion of legal fees that the husband paid when he had counsel; fees for his own preparation time; and out-of pocket expenses.

[26] Although the husband provided a breakdown of the $94,282.55 in his actual legal costs, a formal bill of costs from counsel was not provided to justify the fees. It is clear that counsel was involved extensively at the early stages of this litigation, but it is impossible to determine whether the amount claimed is appropriate for the work that was completed.

[27] The husband has not made the submission (nor provided evidence) that he suffered a lost opportunity to earn income during the time that he expended in preparation for trial. In fact, it was his evidence at trial that he was earning a pension and had little prospects of other employment. I am not prepared to award any compensation for the husband’s personal preparation time.

[28] The husband provided a detailed breakdown of his disbursements. The requests to be reimbursed for flights and car rental are reasonable and appropriate. Although receipts and supporting documentation have not been provided to establish photocopying and paper costs, a partial reimbursement for photocopying costs is also appropriate.

[29] The wife is of limited means, earning approximately $35,000-40,000 per year.

[30] I have reviewed the submissions of both parties and considered the factors set out above. I am mindful of the husband’s success on the application and the fact that he did not behave reasonably. I have also taken into account Ms. Hillman’s limited resources. I conclude that the sum of $7,500.00, inclusive of disbursements and HST, is an appropriate amount for costs, payable by the wife to the husband.

[31] Having regard for the wife’s limited financial means, I am giving her until September 1, 2016 to pay the costs in full, and I am setting deadlines by which she must pay minimum instalments towards the costs award.

[32] I note that, in the applicant wife’s submissions regarding costs, she asks that the court “direct the respondent to compensate the applicant for the $68,400 outstanding in child support.” Having determined that the settlement cannot be set aside, this court does not have jurisdiction to make this order.

IV. CONCLUSION

[33] Based on the foregoing, an order shall issue as follows:

1. The applicant wife shall pay the respondent husband costs of these proceedings in the amount of $7,500.00, inclusive of disbursements and HST.

2. The costs award shall be payable in full by September 1, 2016, provided that the wife shall, at minimum, make the following instalments towards the costs award:

a. The wife shall pay $1,875 to the husband no later than December 1, 2015;

b. The wife shall pay $1,875 to the husband no later than March 1, 2016;

c. The wife shall pay $1,875 to the husband no later than June 1, 2016; and

d. The wife shall pay $1,875 to the husband no later than September 1, 2016.

3. In the event that the wife 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 17, 2015

COURT FILE NO.: FC-11-2055
DATE: 2015-09-17

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

DAWN HILLMAN

Applicant

• and -

IAN LETCHFORD

Respondent

COSTS JUDGMENT

Released: September 17, 2015