Court File and Parties

NEWMARKET COURT FILE NO.: FC-15-48753-00 DATE: 20160428 ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT

BETWEEN:

MICHELLE UPTON Applicant – and – RANDOLPH HARRIS Respondent

Counsel: Julie A. Layne, for the Applicant Shelly Kalra, for the Respondent

HEARD: March 30, 2016

REASONS FOR DECISION

CHARNEY J.:

Introduction

[1] This motion relates to a family law proceeding. The father brought a motion in October 2015 about where the parties’ 14 year old daughter should live and attend high school. Until September 2015 she lived primarily with him and her two older brothers in Markham where she attended school. She was enrolled to attend a Catholic secondary school near his home in September 2015. In September 2015 the daughter began living primarily with her mother and attending a public secondary school in Oshawa. The father wanted the daughter to be returned to his home in Markham and to attend school there. He alleged that the mother had “engaged in a campaign to alienate the children”.

[2] The motion was originally returnable on January 13, 2016. An amended notice of motion was served on December 23, 2015, and the mother filed her responding material on January 8, 2016. The motion was adjourned to March 9, 2016. At the father’s request a case conference was scheduled for March 7, 2016, and the motion was adjourned again to March 30, 2015.

[3] On March 10, 2015 the parties reached a settlement on every issue except for costs. In the result, the daughter continued to live primarily with her mother and continued to attend school in Oshawa.

[4] The purpose of this motion is to determine whether either party should be entitled to the costs of the settled motion.

Position of the Parties

[5] The mother takes the position that she is entitled to her costs on a full indemnity basis. She was put to considerable expense in responding to the father’s motions, and the settlement was substantially the same as her early offers to settle, and mirrors the status quo that existed when the motion was brought. She argues that the father’s settlement offer of March 8, 2016 was effectively the complete abandonment of the father’s motion.

[6] The father takes the position that his motion was necessary because the mother engaged in “self-help” by transferring the daughter from the Catholic school system in Markham to the public school system in Oshawa without his agreement. He claims that he was successful on the motion as the parties settled the substantive issue on the basis of his offers to settle on February 18, 2016 and March 8, 2016. He points out that the mother’s offers to settle were withdrawn before the motion date. He also points out that his amended notice of motion sought an order that their 15 year old son would continue to live with him and continue to attend school in Markham, and the mother acceded to this order as part of the settlement agreement.

[7] The mother’s position on this last point is that the 15 year old son was already living with the father and attending school in Markham and that she never disputed nor sought to change his residence or school. She opposed this addition to the order because it is redundant. She eventually acceded to the provision because it was a deal breaker for the father and made no difference to the status quo.

[8] The mother seeks $21,205.42 costs on a full recovery basis plus expert witness report fees of $1,412.50

[9] The father seeks costs of the motion on a partial recovery basis in the amount of $6,557.42

Applicable Law

[10] Pursuant to Rule 24 of the Family Law Rules there is a presumption that a successful party is entitled to costs of a motion, and the court may apportion costs where success is divided. Generally “success” is measured by comparing the decision of the court to the orders the parties sought from the court.

[11] Where offers to settle have been made, Rule 24(14) sets out the costs consequences of failure to accept an offer. If the party who made the offer obtains an order that is as favourable or more favourable than the offer made, then the party making the offer is generally entitled to full recovery of costs from the date of the offer. This assumes (pursuant to Rule 24 (14) 3), that the offer does not expire before the hearing starts.

[12] For Rule 24 to operate as intended, the court must start with the position taken by the parties at the hearing, then consider the resulting order, and only then consider the respective offers to settle as compared to the order obtained. Where the parties settle the motion between themselves, the first factor – the position of the parties at the hearing – is removed from the equation.

[13] In these circumstances some courts have declined to make a costs award when the parties settle the case before it gets to court. In the case of Blank v. Micallef, 2009 ONSC 60668, Richetti J. quotes Mackenzie J. in the case of Dhillon v. Dhillon, FS-08-62289-00, September 28, 2009, at paragraphs 15-17:

There appears to be some authority to support the proposition made by Orkin, M., in his Law of Costs to the effect that “the view has been expressed that when parties reach a settlement as between themselves, the court should be very slow to make an award of costs against one of them” – see page 2-86.

The basis for this proposition appears to be the case of Anishinaabe Child and Family Services Inc. v. CBC, 1997 MBKB 22764, [1997] M.J. No. 181 (Q.B.).

In declining to make a costs award in the face of the parties’ settlement, the court (Oliphant, J.) made the following observations:

Where parties make a settlement as between themselves, the court in my view 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. [para. 37]

[14] Clearly a court that hears a case is in a much better position to decide what is fair and reasonable for costs than a court confronted with a settlement agreement.

[15] The difficulties in determining the successful party when a case is settled was discussed by Grace J. in Page v. Desabrais, 2012 ONSC 6875 at paras. 27-30:

My point is simply this: 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.

For good reason, judges are reluctant, if not loath, to make an order as to costs when the parties settle the merits of their dispute: Blank v. Micallef, 2009 ONSC 60668 at para. 11. Any attempt to determine a “winner” or “loser” in a settlement is, in most cases, complex if not impossible.

In Davis v. Davis, 2004 ONSC 19156 Perkins J. observed that a party is only successful within the meaning of rule 24 of the Family Law Rules, if “declared” such by “a judge, after argument.” (para. 3)

Perkins J. was not stating an inviolate rule. There may be instances where settlement is a clear capitulation by one party in favour of another. However, that is not the case here.

[16] This position was reiterated by Heeney R.S.J. in Murillo v Turnbull, 2016 ONSC 1906, at para. 19:

Where matters are settled, the court has not declared a “winner” or a “loser”. For that reason, the court is placed in a difficult position when asked to award costs to one side or the other. In such cases, the court should be very slow to make an award of costs against either party to a settlement: see Talbot v. Talbot, 2016 ONSC 1351 per Templeton J. The default position on a settlement would be an order that there be no costs.

[17] See also Ball v. Ball, 2014 ONSC 5754 at para. 12:

I accept the following summary statement from Orkin, The Law of Costs, 2nd Ed., (2014 Looseleaf) at para. 403: “Costs are generally not appropriate for a consent order on the reasoning that the order was not made as a result of adjudication on the merits of the application.” Without adjudication, it can be very difficult to know who has had success. As noted in Barber v. Magee, [2013] O.J. No. 4657 (O.C.J.) at para. 23:

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. … 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, 2012 ONSC 6875, [2012] O.J. No. 5790, para. 28; Blank v. Micallef, 2009 ONSC 60668, [2009] O.J. No. 4636, 2009 CarswellOnt 6790, para. 11; Gurzi v. Elliot, [2011] O.J. No. 1427, 2011 CarswellOnt 2169 (O.C.J.) para. 16.

Similarly, the court’s ability to determine whether there has been inappropriate behaviour by a litigant based only on submissions, when the court has not adjudicated the merits or received sworn evidence in keeping with the rules of procedural fairness, is also very limited.

[18] Notwithstanding these difficulties, some courts have awarded costs in cases where the parties settled all issues except costs. In O’Brien v. O’Brien, 2009 ONSC 64829, Taylor J. did determine the costs of a matrimonial proceeding that settled all issues by consent but reserved the issue of costs to be determined by the court. He approached this task with some caution, and determined that the most important factor for him to determine was the reasonableness and timeliness of the parties’ respective settlement offers. He stated at paras. 8 and 9:

The parties wisely chose to settle their differences in order to avoid a trial. The one issue that they were unable to totally resolve was the issue of costs which they agreed to submit to a judge for determination. Notwithstanding the position taken by both parties, I decline to go behind the freely negotiated terms of settlement and engage in an exercise of determining which party's position on each issue I would have accepted had I been the trial judge.

Counsel for both parties also made lengthy and detailed submissions about how unreasonable the other party was during the course of the litigation. While the reasonableness of the conduct of parties is a consideration pursuant to Rule 25 of the Family Law Rules, it is only one consideration and in my view is not the most important consideration. In my opinion, the most important factor in determining both entitlement to and quantum of costs is the reasonableness and timeliness of the parties' respective settlement offers.

[19] Similarly, in Benoit v. Kerr, 2014 ONSC 5401, McGee J. determined costs in a case that settled midway through the trial after a mid-trial settlement conference. At paras. 21 and 29 she agreed with Taylor J.’s assessment from the O’Brien case:

In considering the issue of costs in the specific context of a case that has settled, the most important factor in determining both entitlement and quantum of costs is the reasonableness and timeliness of the parties’ respective offers to settle. It is not appropriate to go behind the freely negotiated terms of settlement and engage in an exercise of determining which party’s position on each issue would have been accepted by the trial judge if the matter had proceeded to trial. (See: O’Brien v. O’Brien, 2009 ONSC 64829)

Much of each counsel’s costs submissions speak to the reasonableness of the opposing parties’ respective conduct during the five years prior to trial and during the trial. As per O’Brien, supra, a court is not able to determine which position would have succeeded at trial when a matter is settled prior to adjudication. In the absence of such findings, it is my view that rule 24(11)(b) has limited application in determining costs arising from a settlement.

[20] Another consideration in this case is Rule 14(16) and 12(3) of the Family Law Rules, which provide that a party that withdraws a motion shall pay costs in relation to every other party up to the date of withdrawal.

Analysis

[21] While the father did not withdraw his motion, there is some validity in the mother’s position that the father’s settlement offer of March 8, 2018, which just confirmed the residential status quo in place when he brought his motion in October 2015, was effectively a withdrawal or abandonment of his motion. The confirmation of the 15 year old son’s residence was unnecessary and did not relate to any real dispute between the parties.

[22] In O’Brien, Taylor J. stated that he would not “go into excruciating detail about the terms of each offer to settle and the varying positions of each party as the litigation progressed”. Nor will I. In my view the most important consideration in this case is that the final settlement left the parties in precisely the position that they were in immediately before the motion was brought.

[23] I do not doubt for a moment the father’s good faith in bringing this motion, nor do I question his motives for settlement. In the absence of a full hearing on the merits I am not in any position to assess these factors. Nonetheless, the fact remains that at the end of the day the mother was put to great legal expense to defend against a motion that had no substantive effect on the parties or their children.

[24] Counsel for the father submits that the total time billed by counsel for the mother is excessive. Counsel for the father spent 15.4 hours on preparation of the motion, as compared to the mother’s counsel’s claim of 58.4 hours. Since the case was not argued before me I am at an obvious disadvantage in trying to assess how much of the material would have actually been relevant to the issues to be argued on the motion. That is, however, an inevitable consequence of having costs decided by a judge who did not deal with the motion. That being said, I agree that the hours spent on the motion appear to be excessive in relation to the issues on the motion.

[25] I also conclude that costs should be paid on a partial indemnity basis. The mother’s earlier offers to settle were withdrawn on January 12, 2016, before the motion was scheduled to be heard, thereby disqualifying them under Rule 18(14) 3. Her March 1, 2016 offer to settle remained open until the hearing, but came after most of the substantive work on the file was completed and included a requirement that the father pay $10,000 costs.

[26] My determination is that the father should be responsible for a portion of the mother’s costs. In my opinion reasonable partial recovery costs in this case is $7,500 all inclusive, plus another $1,000 all inclusive for preparation and argument of this costs motion, for a total partial recovery costs award in favour of the mother of $8,500. These costs are payable forthwith.

Justice R.E. Charney Released: April 28, 2016