CITATION: Talbot v. Talbot, 2016 ONSC 1351
COURT FILE NO.: 03194-2004
DATE: 2016/02/24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Lori Talbot
E. Cohen, for the Applicant
Applicant
- and -
Kevin Talbot
E. Reid, for the Respondent
Respondent
HEARD: written submissions
Templeton J.
ENDORSEMENT RE: COSTS
[1] The parties have three children. Until 2012, all three children shared their residence equally with their parents. In 2012, the oldest child, Quinn, moved into her mother’s residence on a fulltime basis and saw her father on weekends and holidays. In 2014, the two younger children followed Quinn.
[2] The Applicant commenced a Motion to Change the final order and raised the issues of custody, access and support issues for judicial consideration. The Respondent also commenced a Motion to Change in which he addressed child support and s. 7 issues.
[3] On November 23 2015, the parties settled all outstanding issues on the eve of a trial that was set to commence before me and signed comprehensive Minutes of Settlement. Both parties were represented by counsel throughout the course of the litigation through to its conclusion.
[4] I have signed a final order to issue in accordance with the said Minutes.
[5] Paragraph 15 of the Minutes, however, provided as follows:
Costs of the parties’ respective Motions to Change and all steps therein are specifically preserved to be decided by the Judge hearing the Motions by written submission, cost outline and bill of costs. The length of the submissions shall be determined by the trial judge.
[6] The Applicant now seeks an order awarding her costs in the amount of $52,128.70. The Respondent is opposed to such an order and is of the view that there should be no costs payable by either party.
The Law
[7] A comprehensive review of the law regarding the issue of costs in family law proceedings was recently undertaken by Justice O’Connell in Davis v. Fell[^1],
An award of costs is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 24 of the Family Law Rules, O. Reg. 114/99.
Cost awards are exercises of judicial discretion1. The general source of judicial discretion to award costs is found under s. 131 of the Courts of Justice Act, However, that discretion must be exercised within the framework established by Rule 24 of the Family Law Rules.
Rule 24 of the Family Law Rules, O. Reg. 114/99, governs the determination of costs in family law proceedings. The sections relevant to the circumstances of this case are as follows:
24 (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party's own costs or ordered to pay all or part of the unsuccessful party's costs.
(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.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(7) If a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step, the court shall award costs against the party unless the court orders otherwise in the interests of justice.
(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) Promptly after each step in the case, the judge or other person who dealt with that step shall decide in a summary manner who, if anyone, is entitled to costs, and set the amount of costs."
Rule 24 (11) provides a further list of factors that a court must consider when setting the amount of costs:
(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. O. Reg. 114/99, r. 24 (11).
Rule 18(14) and 18(16) of the Family Law Rules, which address the cost consequences of offers to settle, provide the following:
18 (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.
(16) 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. O. Reg. 114/99, r. 18 (14) and (16).
Rule 24 created a new framework for determining costs in family law proceedings. The presumptive nature of Rule 24 significantly curtailed the court's discretion regarding costs in family law proceedings and absent compelling circumstances or the exceptions set out in the rule itself, costs are generally awarded to the successful party. The Ontario Court of Appeal in C.A.M. v. D.M. (2003) 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 held that while the Rules have not completely removed a judge's discretion, the rules nonetheless circumscribed the broad discretion previously granted to the courts in determining costs. Courts must not only decide liability for costs, but also the amount of those costs.
In Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, [2009] O.J. No. 1905, 2009 CarswellOnt 2475, at paragraph 8, the Ontario Court of Appeal confirmed that costs rules are designed to foster three important principles:
(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.
The court's role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As was pointed out in Boucher et al. v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579, 71 O.R. (3d) 291, 188 O.A.C. 201, 48 C.P.C. (5th) 56, [2004] O.J. No. 2634, 2004 CarswellOnt 2521 (Ont. C.A.), the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings rather than an exact measure of actual costs to the successful litigant.
Consideration of success is the starting point in determining costs. However, any attempt to determine a "winner" or "loser" in a settlement is, in most cases, complex if not impossible. Cases are resolved in whole or in part for many reasons. See Sims-Howarth v. Bilcliffe, 2000 CarswellOnt 299 (S.C.J.), para. 1. Thus, for good reason, judges are reluctant to make an order as to costs when the parties settle the merits to their dispute. Where parties make a settlement as between themselves, the court should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. See: Page v. Desabrais, supra, para. 28; Blank v. Micallef, 2009 CanLII 60668 (ON SC), 2009 CarswellOnt 6790, para. 11; Gurzi v. Elliot, 2011 CarswellOnt 2169 (O.C.J.) para. 16. ….
Further, if a successful party has behaved unreasonably "in relation to the issues from the time they arose (Rule 24(5)," then pursuant to Rule 24(4), they may be "deprived of all or part of the [their]costs or ordered to pay all or part of the unsuccessful party's costs." Behaviour under Rule 24(5) is not restricted to behaviour associated with offers to settle. See Family Law Rules, Rule 24(4), (5) and 11(b); Lawson v. Lawson, 2004 CarswellOnt 3154 (S.C.J.), para. 44.
Rule 24(10) of the Family Law Rules also provides that the judge who deals with a step in a case shall decide who, if anyone, is entitled to costs. It is well established that in order to obtain costs for prior steps, there must be an order reserving those costs to the trial judge, or to the motions judge. A trial judge or motions judge is not entitled to make an award for costs covering prior steps such as case conferences and settlement conferences. Those prior steps are not within the judge's discretion particularly where there was no order as to costs or the issue of costs was not address. See Family Law Rules, Rules 24(10); Islam v. Rahman, 2007 ONCA 622, 2007 CarswellOnt 5718 (Ont. C.A.) at paragraph 2; Jepson v. Cresnjovec, 2007 CarswellOnt 7255 (O.C.J.) at para. 8; MacIntosh v. MacIntosh, 2008 CarswellOnt 655 (S.C.J.) at paras. 22-23 and Debora v. Debora, 2005 CarswellOnt 676 (S.C.J.), para 20.
Finally, in deciding the amount of costs to be paid, I must also consider clause 24 (11) (f) which requires the court to consider any other relevant matter, including the ability to pay costs. See Biant v. Sagoo, 2001 CANLII 28137, 20 R.F.L. (5th) 284, [2001] O.J. No. 3693. In C.A.M v. D.P. supra, Justice Rosenberg for the Ontario Court of Appeal states the following:
I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18. Thus, while subrule 24(11) enumerates a number of factors that must be taken into account, the person setting the amount of the costs is directed to take into account "any other relevant matter". I agree with Aston J. in Sims-Howarth at para. 4, that the "Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs". In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. See Biant at para. 17 and Brennan v. Brennan, [2002] O.J. No. 4743 (S.C.J.) at para. 11. In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child. [par. 42]
Analysis
[8] The first significant factor in this case is that the parties settled all issues on a final basis after extensive negotiations prior to trial.
[9] Secondly, notwithstanding the deferment of the issue of costs by various judges in the course of hearing interim motions, one of those orders dismissed an interim motion brought by the Applicant; two of the interim orders were granted on the basis of a consent reached by the parties; and, costs were addressed and ordered to be paid by the Respondent on another.
[10] Finally, the parties exchanged Offers to Settle throughout the course of the litigation right up until it was settled.
[11] I shall deal firstly with the primary issues raised by the Applicant in the context of the Rules and the caselaw.
(a) The Respondent’s conduct
[12] According to the Applicant, a primary challenge in this case was the determination of the Respondent’s income which was required to establish the quantum of support payable in accordance with the Guidelines.
[13] The Respondent is the broker of record and owner of K.J. Talbot Realty and Huron Storage Inc. Both businesses operate in Goderich, Ontario.
[14] The Applicant submits that the enormous difficulties obtaining disclosure from the Respondent created a major impediment to settlement. The Respondent submits that the disclosure from his accountant was forwarded as it was prepared and became available. The report he had arranged to be produced by his accountant in 2015 was rejected by the Applicant on the basis that it was not from an expert.
[15] The issue of disclosure was addressed in the order of Morissette J. dated July 10 2013, in the order of Justice Haines on September 2 2015 and again in the order of Justice Howard on September 21 2015. I therefore tend to initially agree with the Applicant that it appears that full and complete financial disclosure from the Respondent was an issue that had to be addressed on more than one occasion by the Applicant.
[16] On the other hand, I also accept the Applicant’s written submission with respect to costs that the issue of the Respondent’s income was complex as a result of deductions and the operation of his business. Indeed, the nature of his income required the advice of an expert for the Applicant.
[17] The Applicant has indicated that the Respondent sought to rely solely on the information from his accountant but eventually conceded the necessity of hiring an expert just prior to the trial.
[18] Both parties ultimately retained experts to determine the Respondent’s income.
[19] When the Applicant’s expert delivered a report in September 2015, the Respondent retained an expert and delivered a responding report in October 2015. The Applicant’s expert then delivered a revised report in November 2015.
[20] It is clear from the nature and necessity of the order of Justice Morissette that the Applicant had difficulty obtaining the financial disclosure she required from the Respondent to verify his annual income.
[21] However, as I have indicated, it is also clear from the nature of the order that the issue concerning the Respondent’s income was complex. This was neither merely a matter of obtaining personal tax returns nor was it simply a matter of obtaining the financial information for one business. Further, this order was made on consent. The parties filed interim Minutes of Settlement. According to the submissions of the Respondent, no motion was argued and no objective findings were made by the Morissette J..
[22] I also note that the consent order addressed more than the single issue of disclosure from the Respondent.
[23] It is entirely unclear to me therefore, were costs to have been awarded at the conclusion of the hearing as required by Rule 24 (10), how much of those costs ought to have or would have related to the issue of disclosure. Indeed, the same concern or predicament for this Court applies to the balance of the interim orders filed by the Applicant in her submissions. Given the void in terms of what even the judge considering these issues might have ordered based on the factors outlined above, it is virtually impossible to discern what would be reasonable retrospectively in this regard.
[24] The Applicant has submitted that the Respondent resisted paying child support on an imputed income. Unfortunately, there is no evidence before me in support of this claim. I was the assigned trial judge and have had no familiarity whatsoever with either the evidence or the positions adopted by the parties throughout the course of the litigation and the reasons therefor.
[25] The Applicant complains that the orders of July 10 2013, September 2 2015 and September 21 2015 ought not to have been necessary. The Respondent disputes this claim. It is of note that the Respondent lost the argument with respect to production of his personal credit cards. But he was also ordered to pay costs at that time. He did so. The Applicant does not get the benefit of costs again in this regard.
(b) The “Offers to Settle”
[26] In this case, both parties made offers to settle the issues including child support during the litigation. In this regard, I agree with the submissions of the Respondent, however, that the offers do not “bear out either party as being the “successful” party” in the context of provisions ultimately agreed upon in the Final Minutes of Settlement.
[27] The Applicant submits that the Respondent ought to have accepted her Offer to Settle that was served in October 2013. But I find that it is difficult to evaluate a settlement ultimately reached by the parties two years later in terms of an Offer to Settle made in 2013. This is so particularly when the residency arrangements for the children were different at that time and the income sought to be imputed to the Respondent was higher, in retrospect, than the income he actually generated in 2012. Indeed, one could argue that the Applicant may well have been saved from further litigation by virtue of the fact that the Respondent did not settle at that time and waited until evidence of his actual income was available upon which a reasonable and accurate order could be based.
[28] It also appears from the offers that the parties were unable to agree with respect to the nature of the expenses that would be subject to proportionate contribution pursuant to s. 7 of the Guidelines. A refusal to settle for a blanket provision as drafted in the Applicant’s Offer dated October 2013, is not unreasonable.
[29] I further agree with the submissions of the Respondent that a refusal to accept an Offer that includes a requirement that he pay costs to the Applicant without specifying the amount of those costs, is not unreasonable.
[30] In reviewing all of the “Offers to Settle” that were exchanged by the parties and the final Minutes of Settlement, I am not satisfied that either party achieved a final order that matched or was better than their previous offers with respect to financial terms and provisions.
[31] I also note that none of the Applicant’s Offers to Settle on which she now relies, were severable as to their terms and conditions.[^2]
[32] In this regard, I entirely agree with the observations of my colleague Justice Grace in Page v. Desabrais[^3],
The offers to settle each party provided were available for acceptance as written. No paragraph was severable. It would be wrong of me to accept the invitation to confine my analysis to excerpts which the other party was not permitted to extract and accept.
(c) The costs provisions in the interim Orders
[33] Rule 24 (10), cited above, states that promptly after each step in the case, the judge or other person who dealt with that step shall decide in a summary manner who, if anyone, is entitled to costs, and set the amount of costs.
[34] Again, I endorse the observations and interpretation of Justice Grace in Page v. Desabrais[^4] with respect to this Rule and find his comments to be applicable to the case at bar,
Two things are apparent from the rule. First, it is mandatory. However tempting another disposition may be, the rule directs judges to deal with the issue of costs at the conclusion of each step. Second, entitlement and quantum are to be determined by the judge or other person "who dealt with that step"… If a judge does not order costs at the conclusion of an earlier step in a family proceeding, it is not, in my opinion, within the jurisdiction of the trial judge to do so: Islam v. Rahman, 2007 ONCA 622 at para. 2. Rule 24.10 aside, I find it impossible to determine entitlement to costs of motions I did not hear and in the absence of any reasons for the temporary orders that were granted.
[35] For some reason, the presiding judges in four of the five interim orders copies of which were filed by the Applicant in her submissions, all reserved the issue of costs of the motions to “the justice hearing the underlying Motion to Change”[^5]; to “the judge disposing of the Motion to Change and these motions”[^6]; to “the trial judge hearing the matter”[^7]; and/or, to “the judge hearing the trial”[^8]. I have already noted that some of these orders were obtained at the request and on the consent of the parties.
[36] The first difficulty this type of interim disposition creates for parties who enter into final Minutes of Settlement and yet continue to seek costs, is that there is no “trial judge” or “judge who hears the matter”. The parties are free to contract as they see fit provided the provisions do not contravene the law. Once the judge who reviews the Minutes of Settlement is satisfied that the provisions do not contravene the law or raise any other relevant concern, the judge is functus on the signing of the order. This judge does not ‘hear evidence” or assess the credibility and reliability of witnesses, draw inferences or make findings of fact.
[37] Secondly, it is impossible for a judge who is asked to do no more than sign a final order on the basis of Minutes of Settlement even after review of the circumstances concerning the form and substance of the Minutes, to determine which of the parties was “successful” on any prior motion or why any costs should be ordered to either party unless these issues are explicitly stated in the order dealing with the motion at the time the motion was heard.
[38] My observation above bears repeating in this context. When an order addresses more than one issue i.e. the issue of disclosure from the Respondent, it is extremely difficult, if at all possible, to determine the quantum of costs, if any, that ought to be ordered and/or who ought bear the liability for payment.
[39] Indeed, the same concern or predicament for this Court applies to the balance of the interim orders. It is impossible for a judge who has heard no evidence in this case to go back and, in a vacuum, attempt to create reasonable findings with respect to costs concerning prior steps in the proceeding. Indeed, in my view, to do so would be profoundly unfair to both parties.
[40] This is why the essential elements of Rule 24 (10) are so significant.
[41] It is the judge who deals with the “step” in the proceeding (and therefore has access to the relevant evidence) who is permitted to not only to deal with the issue of costs but may do so in a summary manner.
[42] It is therefore the judge who deals with the “step” in the proceeding who must deal with the issue of costs.
[43] This rule is not discretionary. Compliance cannot be waived on consent even by the parties. The reason is simple. The judge who deals with the “step” in the proceeding has heard or read the evidence in support of the order sought and is in a position to decide the issue of costs on the basis of the factors enunciated.
The award of costs following final settlement of all issues before trial
[44] This is not the first case in which parties have sought an order for costs after they have reached a final settlement with respect to all outstanding issues.
[45] Indeed the question, “Under what circumstances should a court award costs where the parties have settled all areas in dispute before trial but have been unable to decide the question of costs?” was the first statement in the decision Dhillon v. Dhillon Estate[^9].
[46] In Dhillon, McKenzie J. noted that s. 131 of the Courts of Justice Act and the factors in Rule 57.01(1) of the Rules of Civil Procedure that form the parameters for the exercise of discretion concerning costs under s. 131 require factual findings relating to the reasonableness or lack of reasonableness in the conduct of each of the litigants.
[47] I am of the view that the factors enunciated in Rule 24 of the Family Law Rules also require factual findings relating to the reasonableness or lack of reasonableness in the conduct of each of the litigants.
[48] I agree with McKenzie J. in Dhillon that
In the absence of such findings, it is problematic in the extreme for the court to exercise its discretion on a rational basis in making any costs award… In the present situation, the provisions of the minutes of settlement respecting the claims and defences of the claims of each of the parties are, on their face, insufficient to enable the court to be in a position to determine what was the motivation in the settlement of each of the litigants in either being successful in asserting a claim or resiling from a claim. An example of this difficulty can be found in the assertion of facts which have never been the subject of any judicial finding on issues of reasonableness or unreasonableness or even misconduct.”
[49] In this vein, I note that Rule 24 (10) allows for the issue of costs to be decided in a summary manner by the judge or other person who dealt with that step. In the ordinary course, this summary manner consists of submissions from counsel following a step in the litigation such as a motion or a trial.
[50] It seems to me that costs cannot or at least ought not to be dealt with in a summary manner by a judge who has not dealt with any step in the litigation.
[51] Throughout the course of litigation, a judge must hear relevant and admissible evidence to render a decision. That evidence is weighed and taken into consideration along with all of the other relevant evidence elicited by the parties. No judgment or order is based on submissions or opinion alone.
[52] In my view, a costs decision is no different. An order for costs has no less weight or force than any other order to which it pertains. If an order for costs is not satisfied, consequences can range from financial sanction to incarceration. Orders cannot and must not be made in the abstract. The prejudicial effect of any order, including costs, is simply too grave. Indeed, no order should be rendered unless it is founded on the basis of admissible and relevant evidence. To act otherwise would surely bring the administration of justice into disrepute.
[53] The practice of dealing with costs in a summary manner ought not therefore apply to a judge who has not received admissible evidence that is relevant to the factors set out in the law concerning costs.
[54] In other words, the practice of dealing with costs in the summary manner which these parties have endorsed to address the issue in this case, cannot apply to a judge who has not dealt “with the step” in the litigation to which the submissions apply.
[55] There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. In this regard, however, I adopt the opinion of Mr. Justice Perkins in Davis v. Davis[^10] who was of the view that
…in order for there to be a "successful" party, there must be a declared winner or loser on the issues. That declaration will ordinarily come from a judge, after argument. In this case, we have in effect minutes of settlement. I find that the "divided success" approach of r. 24 (6) is more appropriate here than the winner/loser approach of r. 24 (1).
[56] This perspective was recently reinforced in Witherspoon v. Witherspoon[^11]. In Witherspoon, counsel for the Respondent (who is counsel for the Applicant in the case at bar) and counsel for the Applicant settled all of the issues on a final basis on the eve of trial just as the parties have done in this case. They also agreed to preserve the issue of costs for resolution by the court.
[57] In his decision, Mr. Justice Leach wrote as follows:
Second, in my view, whether one is focused on pre-trial steps in the litigation or the other residual costs of the litigation, the attempt to argue cost entitlement and quantification through application of the normally applicable cost recovery rules, after the parties have reached a formal settlement of the substantive issues between them, without trial, is fundamentally misconceived and inappropriate. In that regard:
As noted above, the cost regime created for family law litigation in this province, through enactment of Rule 24 of the Family Law Rules, focuses in large measure on the criteria of "success", (which creates a presumption of entitlement), and "reasonable" or "unreasonable" behaviour.
However, in my view, those criteria, and the degree of relative "success" in particular, presuppose the existence of objective benchmarks from which the court in turn can draw appropriate and reliable conclusions; e.g., by comparison of party positions and with objectively determined outcomes that reveal the true relative merits of each party's position. Such objective benchmarks are lacking where the outcome against which parties attempt to argue their degree of "success" is not the product of judicial fact-finding and objective determination, but an agreed settlement.
For example, both parties in the case before me are now trying to argue that the agreed settlement has generated an outcome more in line with their pre-settlement desires, and more or less favourable than the outcome suggested by prior settlement offers. However, such arguments presuppose that the outcome achieved by settlement is a proper benchmark by which to assess relative success, and thereby the reasonableness of either party's behaviour, insofar as the negotiated outcome should be presumed to coincide with the objective determination and outcome at which a court would have arrived, had the matter been the subject of judicial fact-finding and determination.
In my view, those underlying assumptions are self-evidently fallacious. As our courts have recognized, "there are doubtless many motivating factors why parties enter into settlements and why a particular party may resile from claims or defences to claims either made or responded to", and "the reasonableness or unreasonableness of any party's position in either asserting a claim, abandoning a claim or abandoning a defence or answer to a claim can depend on a myriad of factors".7
In that regard, experience has shown that parties to matrimonial litigation frequently decide to compromise and accept a settlement, effectively abandoning certain pre-settlement claims and defences without pressing them to trial, not because the party concedes in any way that positions previously held in the litigation have no objective merit, but because the party is simply tired of the ongoing acrimony, and/or feels unable to incur the expense of litigating the matter through to a final conclusion after trial. Given such realities, it seems to me that permitting post-settlement claims for costs, in which negotiated settlements are used after the fact as supposed benchmarks by which the objective reasonableness of pre-settlement positions should be measured, runs counter to public policy. Endorsing such an approach would actively discourage parties from making any compromises in order to achieve settlement.
Moreover, attempts to address such cost issues in a post-settlement context are unlikely to promote judicial economy. Again, application of the cost rules presupposes that the court is in a position to rely on factual or other objective findings that either support or detract from the parties' respective submissions. However, that self-evidently will not be the case where the parties rely on matters and considerations that have never been the subject of any judicial fact finding, or corresponding judicial determination on issues or reasonableness, unreasonableness, or alleged misconduct.8 The parties in the case before me seem to have come to such a realization either consciously or instinctively, given their respective efforts to now revisit contentious issues and evidence, and belatedly have such matters resolved in their favour in order to justify their cost positions. However, an exercise that effectively encourages and requires the parties and the court to revisit and essentially litigate such issues, which supposedly have been resolved by a substantive settlement, seems entirely and inappropriately retrograde in nature.
For such reasons, our courts have held that, "where parties make a settlement as between themselves, the court ... should be very slow to make an award of costs against one of the parties", and "unless there are compelling reasons to do so, costs in the circumstances of a settlement between parties ought not to be awarded by the court".9
I agree with that approach, and am not persuaded that there are any compelling reasons to depart from it in the circumstances of this case.
[58] Any settlement must surely be presumed to have been the end result of negotiation and involve some element of compromise in the absence of any reference to the contrary or “clear capitulation”. As noted by Grace J., “cases are resolved in whole or in part for many reasons. Legal, economic, social, political, emotional, physical or other factors may be wholly or partly at play.”[^12]
[59] I have reviewed all of the material filed by the parties and can find no evidence that would allow me to find on a balance of probabilities that either party ‘capitulated’ to the other to the extent that there is a “successful party” in this litigation.
[60] I have reviewed the caselaw submitted by the Applicant and the Respondent. The caselaw submitted by the Applicant does not, in my view, necessarily support the position of the Applicant by virtue of the fact that all of the decisions but one appear to have concern the issue of costs after a hearing or a trial. That is not the case here. With respect to the case which had settled prior to the argument regarding costs, I am satisfied that the law regarding costs and the Rules have substantially evolved as reflected above since 1986 when the decision was rendered. Indeed, Rule 24 of the Family Law Rules was originally enacted in 1999 some thirteen years later.
The Respondent’s ability to pay
[61] Even if I were wrong with respect to all of the above, I would not order costs against the Respondent in this case. The Respondent has three children he is required to support. In addition, he has to contribute their section 7 expenses. I am not prepared to further exhaust the Respondent’s finances in favour of anyone other than the children.
[62] I find that the Applicant has failed to satisfy me on a balance of probabilities with any probative evidence that beyond the amounts agreed to in the Minutes of Settlement, the Respondent has the ability to pay the costs she seeks.
[63] Participation in the legal process is, unfortunately, a highly expensive undertaking. The commitment of financial resources to pursue a goal particularly with respect to child support must constantly be assessed in the context of the overriding financial obligation of both parties to their children. Neither of these parents could afford this litigation without substantial impact on the resources they are required to draw upon to benefit the children.
Conclusion
[64] For all of these reasons, the Applicant’s request for an order awarding her costs in this proceeding is dismissed. No costs are payable by either party to the other either with respect to this litigation.
[65] Further, for the same reasons enunciated by Leach J. in Witherspoon, I find that both parties committed, by mutual agreement in the Minutes of Settlement, to this inappropriate and abortive cost exercise. The Respondent indicates that he capitulated to the Applicant’s insistence that this provision reserving costs to the “Judge hearing the Motions” be included. Whether this is accurate or not, I do not know, because there is no evidence on this issue. A letter from counsel is not evidence. In the circumstances, I am not prepared and it would not be appropriate to go behind the agreement.
[66] As Justice Leach found in his decision, I also find in the case before me, that in the absence of evidence to the contrary, by agreement, both of these parties included this provision in the Minutes of Settlement and therefore behaved unreasonably, within the meaning of Rules 24(4) and 24(5) of the Family Law Rules. In these circumstances, I decline to award either party any costs relating to their cost submissions.
Justice L. Templeton
Templeton J.
Released: February 24 2016
[^1]: [2016] O.J. No. 749 [^2]: It is also of note that the Offers were, in any event, withdrawn and superseded by the Offer that followed. [^3]: 2012 ONSC 6875, [2012] O.J. No. 5790 [^4]: Page, supra [^5]: Interim order dated April 18 2012 [^6]: Interim order dated July 10 2013 [^7]: Interim order dated April 15 2015 [^8]: Interim order September 21 2015 [^9]: 2009 CanLII 58607 (ON SC), [2009] O.J. No. 4459 [^10]: [2004] O.J. No. 2256 [^11]: 2015 ONSC 6378 [^12]: Page (supra)