Eustace v Eustace, 2016 ONSC 8191

COURT FILE NO.: FS-12-4398-00 DATE: 2016 12 22

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Emerencia Yamuna Eustace, Applicant AND: Ernest Jeyaprakash Eustace, Respondent

BEFORE: Emery J.

COUNSEL: Dilani Gunarajah, for the Applicant Ajay Duggal and Harinder Dhaliwal, for the Respondent Hansa Joshi, for the Office of the Children’s Lawyer for the child J.M.

HEARD: In Writing

Decision on costs

[1] I have received written submissions on costs from Ms. Gunarajah on behalf of the applicant mother Emerencia Eustace, and from Mr. Duggal on behalf of the respondent father Ernest Eustace. Each of those parties seek the costs of the trial.

[2] Mr. Duggal also seeks an unusual order to join the Office of the Children’s Lawyer (OCL) as a party liable to pay the costs of the trial jointly with Ms. Eustace. He seeks this unusual order because the position the OCL took at trial was aligned with the case for Ms. Eustace. I have received written submissions from Ms. Joshi on behalf of the OCL and from Ms. Eustace in reply.

[3] Although I awarded sole custody of the 13 year old son, J.M., to Mr. Eustace, I made a multi-directional order that addressed various concerns expressed by many of the parties throughout the case. This order was carefully designed towards establishing a custody and access regime between J.M.’s parents, and sensitizing each of those parents and J.M. about their respective roles and responsibilities to make that regime work in J.M.’s best interests.

Costs Claimed by the Parties

[4] Ms. Gunarajah has filed written submissions in which she seeks costs in the amount of $77,350.00, for fees, HST in the amount of $10,055, and disbursements of $5,765.93 inclusive of HST for a total of $93,171.43. It is not known whether the rate claimed by Ms. Gunarajah of $350.00 an hour expressed in her submissions is intended to represent her actual rate she claims, or the rate for partial indemnity costs. If the former, I would suggest that her overall claim for costs is somewhat less than the amount indicated.

[5] Mr. Duggal claims substantial indemnity costs based on fees charged in the amount of $338,140.00, plus HST in the amount of $43,950.20, for a total of $382,098.20. In addition, he seeks disbursements in the amount of $6,047.10 plus HST for a total of $6,833.22. The sum of all costs that Mr. Duggal claims on behalf of Mr. Eustace adds up to $388,931.42 on a substantial indemnity scale.

[6] Mr. Duggal asks that Mr. Eustace be awarded those costs, payable on a joint and several basis by Ms. Eustace and the Office of the Children’s Lawyer.

[7] This trial was long and bitter, lasting 24 days. It was a battle of perceived entitlements. Mr. Eustace expected that he would be awarded sole custody of J.M. with little regard to the best interests of the child to have his mother as a presence in his life. Ms. Eustace advanced the position that she should be granted equal parenting rights, or alternatively generous access without proposing a parenting plan to support her case. She asserted this position throughout the trial without offering any evidence that she was prepared to make an effort to meet Mr. Eustace halfway for the parenting arrangement to function effectively.

[8] Throughout the trial, I could not help but think there has to be a better way to resolve custody and access disputes between parents.

[9] In this case, the parties resorted to the trial process to utilize all resources available to them for the court to determine what parenting regime would be in J.M.’s best interest. In doing so, each of them engaged a process that cost themselves not only time and emotional capital, but also legal expense. One way or another, there shall be costs awarded according to the right of one party or another to seek those costs for the trial.

General Principles

[10] The Family Law Rules that apply to awarding costs are superimposed on my discretion to award costs under Section 131 of the Courts of Justice Act. Section 131 provides the court with the discretion to order by whom and to what extent the costs of a proceeding or a step in a proceeding shall be paid, subject to the provisions of an Act or rules of court.

[11] The Family Law Rules are consequently applicable by the court when exercising discretion to award costs in a family law proceeding. This was recognized by the Court of Appeal in M.(A.C.) v. M.(D.), 2003 CanLII 18880 (ON CA), [2003] 67 O.R. (3d) 181 (Ont.C.A.), in which the late Justice Rosenberg described how the Family Law Rules have circumscribed the broad discretion of the court to award costs as follows:

[40] Reference should also be made to s. 131(1) of the Courts of Justice Act, which provides that subject to the provisions of an Act "or rules of court, the costs of and incidental to a proceeding . . . are in the discretion of the court". It is apparent that the Family Law Rules have circumscribed the broad discretion granted by s. 131(1). See Biant v. Sagoo, at para. 15. They have not, however, completely removed the trial judge's discretion. Thus, the general provision, Rule 24(1), enacts a "presumption" that the successful party is entitled to costs of the case but does not require that the successful party is always entitled to costs.

[12] Every costs order involves a consideration of entitlement, scale and quantum. Entitlement requires the court to determine the proper party to award costs, leaving the other party to pay them. Scale refers to the level of costs to be paid, in order to reimburse the party awarded costs for legal fees and out of pocket expenses on a partial indemnity, substantial indemnity or full recovery basis. The quantum of those costs calls upon the court to set an actual amount for the costs one party is to pay the other.

[13] In a family law case, the court relies upon Family Law Rule 18 where there is an offer to settle and Family Law Rule 24 with respect to all other aspects of making a costs award. Family Law Rule 24(1) provides a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. In order to determine which party was the successful party, it is often important to determine if a party achieved a result that meets or exceeds the terms of an offer to settle served in accordance with Family Law Rule 18.

[14] When setting the quantum of costs, the court is directed to consider the factors set out in Family Law Rule 24(11). As the Family Law Rules are rules of court applicable to family law proceedings, my discretion to award costs is modified by Family Law Rule 24(11) that mandates that I consider the following factors:

24 (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. O. Reg. 114/99, r. 24 (11).

[15] I speak of two other relevant matters here that are relevant to this costs award.

[16] First, Fong v. Chan sets out the three fundamental objectives that the modern costs rules are designed to serve:

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.

[17] The same three objectives for the modern costs rules have been recognized as applicable to family law proceedings in Serra v. Serra, (2009) ONCA 395.

[18] Second, it is a fundamental principle in the law of costs that the court should only grant what is a fair and reasonable amount for costs. A measure of what is fair and reasonable is generally considered to be what the unsuccessful party could reasonably expect to pay as those costs: Boucher v. Public Accountants Council for the Province of Ontario et al, 2004 CanLII 14579 (ON CA), [2004] 71 O.R. (3^rd) 291.

Entitlement

[19] The starting point in the process to find entitlement in a family law proceeding is to determine the successful party to give effect to the presumption in Family Law Rule 24(1). Family Law Rule 24(1) states that there is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

[20] Mr. Eustace was the successful party at trial. Therefore, he is entitled to rely upon sub rule 24(1) that contains the presumption that a successful party is entitled to the costs of the case.

[21] Ms. Gunarajah claims that either Mr. Eustace should be ordered to pay costs to her client on a partial indemnity basis, or that no costs should be awarded at all. Neither of these positions is appropriate, given the results at trial.

Scale

[22] Mr. Duggal asks the court to consider the offer to settle made by Mr. Eustace dated May 18, 2015 when deciding costs. Mr. Eustace, as the respondent, offered to settle the outstanding issues on the following terms:

a) That he have sole custody of J.M.

b) That Ms. Eustace have overnight access upon completion of a recognized extensive parenting course and counselling

c) The access exchange to be supervised and take place at a center midway between the residences of Ms. Eustace and himself

d) Ms. Eustace shall have alternative weekend access on Saturday and Sunday 10:00 a.m. to 6:00 p.m.

e) Ms. Eustace shall have following access on weeks with no weekend access:

a. One weekday evening access 5:00 p.m. to 9:00 p.m., with supervised access exchange at centre midway between her residence and the residence of Mr. Eustace.

[23] Mr. Duggal relies upon rule 18(14) for the cost consequences that follow a failure to accept an offer to settle. He puts forward Sims-Howarth v. Bilcliffe 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (SCJ) as authority that offers to settle are not only “a yardstick by which to measure success, but also become a prime consideration in determining the quantification of costs.”

[24] Mr. Duggal also relies upon O’Connor v. Kenney 2000 Carswell Ont. 3695 for the proposition that an offer to settle does not have to be identical to the award made at trial, and that “favourability requires only comparability, not equivalence and not correspondence”.

[25] Ms. Gunarajah advances the position on behalf of Ms. Eustace that Mr. Eustace behaved unreasonably throughout the litigation. He requested that the OCL become involved, and then he did not want to follow the OCL recommendation. He requested a Section 30 Assessment and when Justice Mossip ordered an assessment by The Willow Centre under s. 30 of the Children’s Law Reform Act, Mr. Eustace stopped her client’s access to J.M. in June of 2014 after the bicycle incident. Ms. Gunarajah points to several other instances where Mr. Eustace allegedly frustrated the assessment process that would enable Ms. Eustace to prepare for trial.

[26] Ms. Gunarajah also states in her submissions made on behalf of Ms. Eustace that Mr. Eustace is not complying with the judgment at the present time. He has not provided the mother, Ms. Eustace with the written report pursuant to paragraph 6 of the judgment, and he has not encouraged Ms. Eustace to take J.M. for counselling.

[27] This is not the time or place to raise such issues. If Ms. Eustace has evidence of non-compliance, it is open for her to bring a motion under Family Law Rule 1(8) or under Family Law Rule 31 for contempt. Costs submissions generally do not include evidence of conduct after the issues at trial have been decided. Therefore, complaints of non-compliance after judgment do not stand as a factor for consideration on the issue of costs.

[28] In any event, Ms. Joshi has also provided the following information that shows Ms. Eustace had not cooperated as of September 20, 2016 with the OCL under the terms of the order:

a) The OCL has not been able to arrange viewing of the sleeping arrangements for J.M. at his mother’s residence.

b) Trisha Ryan, the investigator for OCL has attempted to contact Ms. Eustace to make arrangements to attend her home. As of September 20, 2016, Ms. Ryan had not heard back from Ms. Eustace.

c) Ms. Joshi has suggested the names of three counsellors for the counselling to take place between Ms. Eustace and J.M. pursuant to my order.

[29] The offer to settle made by Mr. Eustace dated May 18, 2015 does not equate in all respects with the result obtained at trial, but it is comparable with the result in most aspects of substance. Under the principle of comparative equivalence in O’Connor v. Kenney and the provisions of Family Law Rule 18(14), Mr. Eustace is entitled to his costs on a substantial indemnity basis. However, substantial indemnity costs are subject to the principle that the amount of those costs must be fair and reasonable, just like any other award of costs.

Quantum

[30] Ms. Eustace submits that a costs award should reflect what the court considers a fair and reasonable amount to be paid by the unsuccessful party rather than the exact measure of the actual costs paid by the successful litigant to his lawyer. She relies upon Biddle v. Biddle, 2005 CanLII 7660 as authority for that submission. This is a principle from Boucher that is enshrined in the law of costs.

[31] Mr. Duggal seeks costs in round, bold figures. He claims $400 an hour against his actual hourly rate of $500 an hour as counsel having 13.1 years of experience. I would reduce that rate to $325 an hour on a substantial indemnity scale, based on his level of experience.

[32] Mr. Duggal seeks costs for 90 hours spent meeting with the client to prepare for trial and corresponding with other counsel for a total of $36,000. He also claims 250 hours for researching and reading authorities, preparing for examinations, reviewing the section 30 report, CAS and OCL notes and records and other handwritten documents for a total of $100,000.

[33] Mr. Duggal claims $104,000 at $4,000 for each day of trial for himself and his team Harinder Dhaliwal and Pankaz Sharma. In addition to attendance at trial, he claims 104 hours for the daily review of evidence and preparation after court, for a total of $41,600. He also seeks a further 90 hours for trial preparation on weekends for another $36,000. There is also time claimed for his clerk Pankaj Sharma to prepare for trial on weekends in the amount of $5,400.

[34] Mr. Duggal further claims $12,000 for 30 hours of work to prepare the draft final submissions for court after a full review of the evidence at trial, and another $2,000 for 5 hours to prepare the bill of costs and costs submissions.

[35] Mr. Duggal claims 15 hours for his clerk to photocopy and bind records and documents, and a further 4 hours of time for his clerk to attend at the court office to retrieve documents from the court file.

[36] I have no way of knowing whether the round, bold numbers provided by Mr. Duggal have any back up in the form of dockets or time records. None were attached to his submissions. In such circumstances, I can only compare the language used to describe the time and work claimed for each component of work with what time and value Ms. Gunarajah describes for the same work to determine what I consider to be fair and reasonable under the circumstances.

[37] Ms. Gunarajah has 11 years of experience. Her hourly rate is $350 an hour. She claims 32 hours for time spent meeting with her client and preparing for trial and all related correspondence with counsel for Mr. Eustace. This totals $11,200. Ms. Gunarajah also claims 22 hours for legal research, preparing for examinations in trial, and for reviewing the section 30 report, CAS and OCL notes and records for a total of $7,700. Ms. Gunarajah also claims 153 hours for attending at court to participate in the trial in the amount of $53,550. She claims $3,500 for preparing closing submissions, and another $1,400 for preparing the bill of costs and costs submissions to court.

[38] Having regard to all factors set out in Family Law Rule 24(11), I consider the time spent by Mr. Duggal and his team to meet with their client to prepare for trial, as well as for research, reading authorities, preparation for examinations and review of section 30 report, CAS and OCL notes and records to be one and the same exercise. In doing so, I accept that Mr. Duggal was required to devote considerable time and attention to the file when he was retained shortly before the trial. I accept that Mr. Duggal invested 200 hours of time intensive preparation to meet his professional obligations to Mr. Eustace. I therefore allow $65,000 for trial preparation and related services.

[39] I consider the costs claimed for trial attendance at $4,000 a day to be excessive by half. The daily review of evidence and the preparation for trial at the end of each day and on weekends during the trial should be included in the time for trial preparation and attendance. Mr. Eustace would therefore have been entitled to the costs of the trial in the amount of $48,000. However, Mr. Eustace was in part responsible for the length of the trial because he chose not to consider options under The Willow Centre assessment as steps to take or as a basis for further discussion, or to encourage J.M. to meet with counsel appointed by the OCL. The time for trial was prolonged directly or indirectly by Mr. Eustace as a result.

[40] Under Family Law Rule 24 (11), I may take the reasonableness or unreasonableness of each party’s behavior into account when setting the amount for any costs award. I find that Mr. Eustace was unreasonable in taking the positions he took with respect to providing the cooperation expected of him as a responsible parent and litigant. I therefore reduce the costs for his counsel’s attendance at trial to $24,000.

[41] With those qualifications, I consider the fee component for the costs claimed on behalf of Mr. Eustace by Mr. Duggal and his team in the amount of $89,000 to be fair and reasonable, plus HST of $11,570 and $6,833.22 inclusive of HST for the disbursements claimed. I also consider this result to resonate with the three purposes set out in Fong v. Chan that modern costs rules are designed to serve.

[42] I order Ms. Eustace to make payments towards this costs award commencing January 1, 2017 in the amount of $500.00 a month. This monthly payment shall be deducted from any spousal support that Mr. Eustace has been ordered to pay Ms. Eustace each month. This payment shall be deducted each month until the costs award plus interest has been paid in full, notwithstanding any payment against the balance of costs owing at any given time by a third party, or upon the application of any credit in favour of Ms. Eustace pursuant to a court order. This costs award is subject to any agreement between the parties for a settlement of property interests, or a final order that determines an equalization of their respective net family properties.

[43] A support deduction order shall issue to modify the existing SDO to this extent, effective January 1, 2017.

Costs Claimed against the OCL

[44] Mr. Eustace also seeks his costs against the OCL for the position the OCL adopted at trial as counsel appointed for J.M. under section 89(3.1) of the Courts of Justice Act. The position the OCL took encouraged Ms. Eustace to maintain the position she advanced. The two positions complimented each other and resulted in an argumentative approach to the case that lengthened and complicated the trial. Ms. Joshi set out the reason why the case was unusual from the OCL perspective, and the essential reason why the OCL supported the position of Ms. Eustace to claim sole custody of J.M. in paragraph 4 of her submissions this way:

This case was unusual from the OCL perspective for several reasons:

a) Although the OCL initially took a position which was largely supportive of Mr. Eustace’s position (joint custody with primary residence to Mr. Eustace and counselling) Mr. Eustace did not agree. Following disclosure of the OCL position, Mr. Eustace, the custodial parent, (a) denied the OCL any meaningful communication with our child-client, hampering the OCL’s ability to represent J.M. effectively; and (b) insisted on a section 30 assessment as he disagreed with the OCL position. The assessment was thorough and provided evidence that J.M.’s interests would best be served by either living equal amounts of time with each parent, or failing that, being placed in the care of his mother. Absent meaningful contact with our client, and considering Mr. Eustace’s strong resistance to the assessment’s recommendations and subsequent efforts to exclude it at trial, the OCL relied largely on the evidence in the assessment and took the position that Ms. Eustace should have custody of J.M.

[45] Mr. Duggal relies upon the following cases for his position that the OCL ought to be ordered to pay costs. In Children’s Aid Society of London and Middlesex v. S. (T.), 2013 ONSC 4517, [2013] O.J. No. 3141 (SCJ), Justice Quinn stated that “the general rule for ordering costs against a Children’s Aid Society is that the society must have conducted itself in a manner that is unfair.” Mr. Duggal equates the OCL to that of a Children’s Aid Society a government agency for the purposes of whether the OCL should be found liable for costs.

[46] Mr. Duggal also argues that the OCL should be held liable where the counsel for the OCL has total control over the decision making power on how to conduct the case and the position that it took in the litigation: Children’s Aid Society of St. Thomas (City) and Elgin (County) v. S. (L), 2004 CanLII 19361 (ON CJ), 2004 Carswell Ont. 390.

[47] The OCL opposes the claim for costs made by Mr. Eustace. Ms. Joshi submitted that costs should not be awarded against the OCL because:

a) There is no presumptive entitlement to costs against a government agency;

b) Taking a position that is not accepted by the court is not sufficient to attract a costs order; and

c) The conduct of the case by counsel for J.M. did not amount to bad faith, nor did it amount to conduct that could be characterized as unfair or unreasonable.

[48] Ms. Joshi made submissions on behalf of the OCL that Mr. Eustace was uncooperative to the extreme with the efforts of the OCL to investigate and to have J.M. participate in the clinical and counselling process to determine what parenting regime would be best for him.

[49] Ms. Joshi further submits that the OCL was involved as J.M.’s lawyer because it accepted the order made by the court under section 89(3.1) of the Courts of Justice Act seeking its involvement. Ms. Joshi made the representation that the OCL is an independent law office located within the Ministry of the Attorney General. The OCL is an advocate for any child about whom a court order is made for the OCL to represent. Therefore, an award of costs against the OCL is “tantamount to an award of costs against a lawyer.” Given its unique role, no party should have a presumptive entitlement to costs against the OCL.

[50] Ms. Joshi submits that the OCL had significant evidence to support the position she advanced on J.M.’s behalf that J.M. live with his mother, with access to his father. She cites the following evidence in support of this submission:

a) The evidence of Ms. Eustace of the power exerted by Mr. Eustace and his parent’s over her and her relationship with J.M.;

b) The conclusion reached by The Willow Centre assessors; and

c) J.M.’s distorted perception of the OCL role that resulted in his refusal to meet with Ms. Joshi as his court appointed advocate.

[51] In Children’s Aid Society of the City of St. Thomas and County of Elgin v. L.S., 2004 CanLII 19361 (OCJ), Justice Schnall awarded costs to the Children’s Aid Society against the OCL on a full recovery basis for five and a half days of the hearing. The court in CAS v. L.S. acknowledged that no presumptive entitlement to costs operates against the OCL as a government agency. The court also recognized that the OCL rarely seeks costs when it finds itself in a position to do so. However, the OCL has claimed costs on those rare occasions. Where the OCL was entitled to costs where it had been to considerable time and expense responding to a case of little merit. See Randy L. v. Children’s Aid Society of Ottawa- Carleton (1990), [1999] O.J. No. 3211 (SCJ).

[52] If the OCL can claim costs on the basis of time spent having regard to the merits, there is no reason why costs cannot be awarded against the OCL on the same basis. I find that the OCL favoured the position of Ms. Eustace because of Mr. Eustace refused to cooperate. The OCL relied upon the findings of Dr. Rex Collins and The Willow Centre team in the section 30 assessment without regard to the express wishes of J.M. Counsel appointed by the OCL could have instead made a motion to court to direct that Mr. Eustace cooperate or to facilitate one or more meetings with J.M. to take his instructions.

[53] The role of the OCL and its predecessor, the Official Guardian, has been defined for many years to have a fact finding mandate. That mandate requires the OCL to put all evidence relevant to the best interests of the child before the court, to ascertain and provide the court with the views and preferences of the child and the context for those view, and to formulate a position to make known to the court taking the child’s best interests into account. Counsel for the OCL (formerly, the Official Guardian) is not entitled to express his or her personal opinion on any issue, including the child’s best interest: Official Guardian v. Strobridge 1994 CanLII 875 (Ont. C.A.). I am concerned that, in this case, counsel and the clinical investigator for the OCL may have permitted their personal views to usurp their professional function.

[54] I do not find that the OCL should be liable for costs because it took a position that was not accepted by the court, or that it acted in bad faith. However, the OCL ignored the general rules of fairness by not seeking further assistance of the court before trial to obtain the cooperation of Mr. Eustace and J.M. to the process in order to complete its investigation. This lead to a very long trial, requiring Mr. Eustace to incur significant expense.

[55] In Catholic Children’s Aid Society of Toronto v. SSB, 2013 ONSC 5184 (SCJ), the OCL was awarded costs against the CCAS. At paragraph 12 and 13, Justice Mesbur made the following statement:

[12] In my view, this is one of those exceptional cases where it is appropriate to require the society to pay costs. Like any other litigant, the society must conduct itself according to the rules. It is given broad investigative scope, and cannot and should not be liable for costs for actions it takes in good faith in its duty to investigate cases. That, however, does not give a society licence to ignore the general rules of procedural fairness. When it does, it should be liable in costs.

[13] Here, I determined that the society’s actions verged on acting in bad faith. Both the OCL and the mother were put to considerable expense as a result. They are entitled to be compensated.

[56] In this case, counsel for the OCL took an adversarial position not only to Mr. Eustace, but to J.M. to such an extent that J.M. would not speak with Ms. Joshi or Ms. Ryan. The breakdown between J.M. and those appointed by the OCL to represent him was evident when he asked that even Ms. Joshi be excused from the courtroom before a judicial interview was conducted on the record under s. 64 of the Children’s Law Reform Act.

[57] Under these circumstances, I find that the OCL’s involvement protracted the case and lengthened the trial. The trial would have proceeded in any event and would have taken a certain period of time. However, the involvement of the OCL and the position that it took against Mr. Eustace essentially fortified the position of Ms. Eustace and increased the length of the trial by at least 20%. I am therefore making the OCL jointly and severally liable with Ms. Eustace for approximately 20% of the costs and disbursements awarded, namely to the extent of $20,000 inclusive of HST.

Emery J.

Date: December 22, 2016

CITATION: Eustace v Eustace, 2016 ONSC 8191

COURT FILE NO.: FS-12-4398-00

DATE: 2016 12 22

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Emerencia Yamuna Eustace, Applicant AND: Ernest Jeyaprakash Eustace, Respondent

BEFORE: EMERY J.

COUNSEL: Dilani Gunarajah, for the Applicant Ajay Duggal and Harinder Dhaliwal, for the Respondent Hansa Joshi, for the Office of the Children’s Lawyer, for the child J.M.

DECISION ON COSTS

Emery J.

DATE: December 22, 2016