CITATION: Garnet v. Garnet et al, 2016 ONSC 1505
NEWMARKET COURT FILE NO.: FC-12-41430-00
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Matthew David Alexander Garnet
Applicant
– and –
Christine Denise Garnet
Respondent
Additional Respondents
Pasquale Lamanna
2293273 Ontario Inc.
Renaissance Fine Homes Inc.
Evelyn Rayson, Counsel for the Applicant
Julie Stanchieri, Counsel for the Respondent
Mark Klaiman, Counsel for the additional Respondents
HEARD: February 3, 2016
RULING ON COSTS
1This Ruling deals with costs of a disclosure Motion heard February 3, 2016 involving a third party. The wife (who was the moving party) was successful. She served an Offer to Settle dated January 25, 2016 on the husband and the third party, the proposed terms of which were ordered. No Offer to Settle was made by the husband or the third party (for the purpose of this Ruling the reference to “third party” shall mean the “Additional Respondents” noted in the style of cause).
2The wife seeks full recovery costs of $25,279.80 comprising $21,580.50 (fees), $791 (disbursements) and $2,908.30 (HST). The husband submits that no costs should be awarded against him or, if they are, that following an earlier Ruling in this case by Olah J. involving a third party disclosure Motion by the wife against the husband’s parents, any costs should only be payable if the impact of the disclosure ordered significantly enhances the husband’s net family property. Unlike that Ruling though the disclosure sought in the Motion before me arose from an interim disclosure award made by the arbitrator, and the third party unreasonably withdrew his earlier agreement to facilitate that disclosure. Despite initially taking the position that he would be neutral with respect to the relief sought by the wife against the third party, the husband took a more active role during argument supporting the third party’s position.
3The only issues to be decided, in my view, are the amount of costs to be awarded to the wife and whether, if so, how much should be allocated between the husband and third party.
4The third party submitted that if any costs should be awarded they be $3,000.
Law
5As observed by the Court of Appeal in Serra v. Serra, 2009 ONCA 395, modern costs rules are designed to foster 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.
6The overall objective in determining costs is fixing an amount that the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 201, [2004] O.J. No. 2634, 2004 CarswellOnt 521 (Ont.C.A.). Since the primary objective of the Family Law Rules is to enable the court to deal with cases justly, it is incumbent on parties who, by choice or necessity, litigate to act reasonably and in a cost effective manner. This means that family law litigants are responsible, and accountable, for the positions they take in their litigation: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317, and Peers v. Poupore, 2008 ONCJ 615, 2008 O.N.C.J. 615 (Ont. Ct.).
7Rules 24 and 18 dealing, respectively, with costs and Offers to Settle govern litigation conduct and outcomes.
8Rule 24 (1), (5) and (11) are relevant, and provide as follows,
(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(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.
- (11) A person setting the amount of costs shall consider,
(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.
9The provisions of Rule 18 (14), (15) and (16) are also relevant,
(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. O. Reg. 114/99, r. 18 (14).
(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14).
(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. .
10In arguing for full recovery costs the wife submits that the husband, and by extension the third party, have acted in bad faith. In Colivas v. Colivas, 2013 ONSC 7276, 2013 CarswellOnt 17370, [2014] W.D.F.L. 953 McDermot J. awarded full indemnity costs after finding that a party had acted in bad faith, and drew a distinction between the court’s exercise of discretion in awarding costs under the Rules generally and the more narrow discretion afforded after finding bad faith conduct.
- Bad faith conduct is different from a party’s alleged unreasonable conduct, which is also to be considered in setting costs under Rule 24 (11). Unlike Rule 24 (11), which lists a number of factors, including unreasonable conduct, once a finding is made of bad faith conduct, the court is bound to order full indemnity costs and immediate payment of those costs. As such, care must be taken in making that type of finding as there is even a greater loss of discretion than with the issue of an offer to settle discussed above.
11In Scipione v. Del Sordo, 2015 CarswellOnt 14971 (Ont. S.C.) Pazaratz J. reviewed the law of bad faith,
Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children’s Aid Society of the Region of Peel v. F. (I.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (OCJ); Biddle v. Biddle, 2005 7660 (ON SC), 2005 7660, [2005] O.J. No. 1056 (SCJ); Leonardo v. Meloche, 2003 74500 (ON SC), [2003] O.J. No. 1969 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ).
There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W. 2015 ONCJ 94 (OCJ).
To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison 2015 ONSC 2002.
Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. S.(C.) v. S.(C.) (supra); Piskor v. Piskor, 2004 5023 (ON SC), [2004] O.J. No. 796 (SCJ); Cozzi v. Smith 2015 ONSC 3626 (SCJ).
12While the conduct of the third party was, in my view, unreasonable and that of the husband tepid neutrality, at best, neither amounted to bad faith.
13A number of facts inform the amount of costs;
(a) the issues involved are important, and there is a history of repeated efforts to obtain meaningful disclosure, although those have been in the arbitration proceedings;
(b) the wife’s material in support of the relief sought was voluminous. I agree with the responding parties that this amounted to “overkill” but, by the same token, the responding parties could have avoided having to appear in court, and any costs exposure, had they accepted the Offer. I am mindful that the Offer gave less than 24 hours for acceptance but the actual motion was adjourned for at least two weeks so that, if the responding parties had wanted, they could have at least negotiated the issue of costs. There is no evidence of any such effort;
(c) the third party argued that the allegations made by the wife were tantamount to alleging fraud or a conspiracy or agreement to obstruct justice, and consequently in the absence of any such finding she should be denied costs or they should be significantly reduced. Strong words: but hyperbole. The wife’s material did question how and why so close to a scheduled arbitration hearing, for which the husband was pressing, his business partner should change his mind. The reasons given by the partner were superficially credible only;
(d) the third party also argued that, as a consequence of the Order made, it is being compelled to incur considerable (but not quantified) costs because the wife’s expert has requested additional disclosure underpinning the disclosure ordered. That issue, and whether the further request is proportional, is not before me and, it seems to me, is something more properly addressed by the arbitrator; and
(e) the wife’s Bill of Costs docketed 68.3 hours being expended, of which 33.9 related to a junior lawyer who appeared with her when the motion was argued. 19.6 hours were docketed by the wife’s solicitor of record. In my view the time expended was excessive, the issue not complex (quite “straightforward” as Ms. Stanchieri prefaced her submissions) and did not require the attendance of two counsel: Sepiashivili v. Shepiashivili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (SCJ).
14In my view, and mindful of Boucher, the wife’s Offer, the absence of any Offer by either of the respondents, and the excessive time spent, the responding parties shall pay costs to the wife, as follows:
(a) the husband shall pay to the wife the sum of $3,500 inclusive of disbursements and HST on the earliest of the Award of the arbitrator or September 1, 2016; and
(b) the third party shall pay to the wife the sum of $8,500 inclusive of disbursements and HST.
15The costs awarded are not joint and severable.
16Counsel for the wife delivered costs submissions in response to those delivered by the respondent. I did not invite Reply submissions - had they been intended the direction for costs would have said so. They have not been read.
Justice D.A. Jarvis
Date: March 3, 2016