Court File and Parties
COURT FILE NO.: FC-08-3322-2 DATE: July 20, 2017
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Lanita Rachelle Luckman (born Dreher) Applicant – and – Brent Luckman Respondent
Counsel: Leighann Burns, Counsel for the Applicant Christopher Rutherford, Counsel for the Respondent
HEARD: In Writing
Cost Endorsement
[1] On May 11, 2017, I released my decision with respect to the respondent’s Motion to Change. I directed that if the parties could not resolve the issue of costs, they were to make written submissions. The parties could not resolve the issue of costs and I have received their written submissions.
[2] The applicant submits that she was the successful party and seeks costs of $27,721 plus HST and disbursements while the respondent argues that success was divided and that he should pay costs of $14,000.
[3] Both parties acknowledge that the successful party is presumptively entitled to a cost award pursuant to the Family Law Rules O. Reg. 114/99 (the “Family Law Rules”).
The Family Law Rules
[4] Under Rule 24 (1) of the Family Law Rules, there is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
[5] Rule 24 (5) states that in deciding whether a party has behaved reasonably or unreasonably, the Court shall examine:
(a) The parties’ 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 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. (Rule 24(8) of the Family Law Rules)
[7] The factors to be considered in assessing costs are set out in Rule 24 (11) of the Family Law Rules, which include:
(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 witness, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of order;
(e) Expenses properly paid or payable; and
(f) Any other relevant matter.
[8] Rule 24(10) mandates the Court to determine costs after each step. Where there is no order as to costs at a certain step, the Court is not to consider costs related to that step. Islam v Rahman, 2007 ONCA 622.
[9] The costs rules are designed to foster three important principles:
(a) To partially indemnify successful litigants for the cost of litigation;
(b) To encourage settlement; and
(c) To discourage and sanction inappropriate behaviour by litigants. (See Serra v. Serra, 2009 ONCA 395)
[10] The Court’s role in assessing costs is not necessarily to reimburse the litigant for every dollar spent on legal fees but 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 (see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.))
[11] Offers to settle are the yardstick with which to measure success and are significant both in considering liability and quantum as set out in Osmar v. Osmar (2000), 8 R.F.L. (5th) 387 (Ont. S.C.).
Analysis
Successful party
[12] The central issue in this case was the determination of the respondent’s income. At the time that the original order was made, the respondent declared an annual income of $82,000. The respondent argued that his income changed allowing for a variation of child support and other relief including a rescission of support arrears.
[13] I dismissed the respondent’s Motion to Change and imputed an income to him of $82,000 for all years except 2015 resulting in significant arrears of support. I find that the applicant was the successful party on this part of the case.
[14] While the applicant was not successful in obtaining an order requiring the respondent to pay the arrears in a lump sum payment, she was successful in having an order requiring the respondent to pay the arrears albeit at $1,000 per month. The applicant was not successful in obtaining an order preventing the respondent from bringing a motion to change without leave of the court.
[15] The applicant was successful in restricting the respondent’s access to the children to be in Canada and requiring the respondent to provide her with a detailed itinerary before leaving on vacation.
[16] The respondent was partially successful in reducing his obligation to pay child support in 2015. He was also successful in terminating his obligation to have life insurance, which he never complied with but an order was made charging his estate with his obligation to pay child support.
[17] Further, the respondent was successful in having the health benefit requirement removed and in obtaining one additional week of access in the summer.
[18] In examining the issues including the complexity and amount of time spent on the various issues, the determination of the respondent’s income took the majority of the time. In the circumstances, while the respondent was partially successful on certain issues, I find that the applicant was successful on the majority of the issues and is presumptively entitled to be compensated in costs.
The importance, complexity or difficulty of the issues
[19] I find that the financial issues were extremely important, complex and difficult because of the calculated scheme created by the respondent to prevent the applicant from being able to determine the actual income of the respondent.
[20] I find that the access issues regarding the children were very important but were neither complex nor difficult.
The reasonableness or unreasonableness of each party’s behaviour
[21] In determining whether a party acted reasonably or unreasonably, I am to examine a party’s behaviour in relation to the issues from the time they arose, determine if an offer to settle was made, determine the reasonableness of any offer and consider any offer that was withdrawn earlier that was not accepted.
[22] The applicant seeks full recovery of her costs arguing the actions of the respondent amounted to bad faith.
[23] In 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] O.J. No. 1056 (SCJ); Leonardo v. Meloche,[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] O.J. No. 796 (SCJ); Cozzi v. Smith, 2015 ONSC 3626, 2015 ONSC 3626 (SCJ).
[24] I found that the respondent had embarked on a course of conduct to convince me that he had little or no income. I did not find that the respondent was credible and I found that he deliberately and wilfully attempted to mislead me in determining his income. I found that the efforts by the respondent were done consciously for a dishonest purpose and this was not a case of bad judgment or negligence but it was done to conceal his actual income to support a reduction in his child support obligation to his two children.
[25] I find that the respondent’s actions equated to bad faith.
[26] I agree with the comments of Justice Campbell in Fard v Fard where he stated at paragraph 12 the following:
… Also, in my view, bad faith “trumps” a somewhat divided “success” since, without bad faith, the parties would’ve avoided the huge cost, both emotional and financial, of the continued litigation. They both would have “succeeded” by saving tens of thousands of dollars that they could have used for their own and their children’s benefit.
[27] In examining the offers to settle, the applicant’s offer on table support is much closer to my decision that the respondent’s offer.
[28] On the issue of arrears, the respondent made an offer to settle on October 27, 2016 where he agreed to pay arrears of child support totalling $7,402.15, while the applicant made an offer to settle on December 19, 2016 where she sought arrears of child support in the amount of $71,665.91. Even though the applicant’s offer to settle does not attract the cost consequences of Rule 18 of the Family Law Rules, I may still consider its terms in my overall analysis. The applicant’s offer was much closer to the amount of arrears.
[29] The mother’s offer to settle required the father to have a life insurance policy purchased by the mother costing $19.00 a month which would be paid by the father in addition to table child support of $1,184 per month. That was not granted.
[30] On the issue of access, I find that the parties’ success was divided on these issues but that the access issues did not consume significant amount of time during the motion.
The lawyer’s rates and disbursements
[31] I find that Ms. Burns hourly rate of $198.00 to be fair and reasonable.
The time properly spent on the case
[32] Ms. Burns provided a Bill of Costs starting on January 2, 2015 up to and including December 21, 2016, indicating a total time of 140.01 hours equating to fees of $27,721.98.
[33] Mr. Rutherford provided a Costs outline indicating that his time equates to $25,173.50.
[34] When comparing the total Bill of Costs, both counsel spent approximately the same amount of time. Consequently, the respondent knew or should have known that his possible liability to pay the applicant’s costs would at least equate with his own legal fees.
Any other relevant matter
[35] The respondent argues that I should not order a lump sum payment of costs as it will affect his ability to work if the Family Responsibility Office enforces the costs award such as suspending his license or passport. Further, based on his financial position and his obligation to pay table child support of $1,198 per month and $1,000 per month towards arrears, he cannot pay a lump sum amount for costs. He proposes to pay the costs off at $1,000 a month once the arrears of support are paid which make take over 5 years to satisfy.
[36] I find that the respondent’s position that his income changed was the driving issue in this case. As a result of his actions, the applicant has been required to spend over $27,000 of legal fees.
[37] Considering that the applicant has been the successful party, that I did not believe the respondent’s evidence and that I found that the respondent acted in bad faith, I reject the respondent’s request.
Disposition
[38] Having found that the applicant has been the more successful party and that the respondent has acted in bad faith, I order the respondent to pay to the applicant the sum of $20,000 in costs.
[39] I further order that the sum of $10,000 of costs award shall be enforceable as child support through the Family Responsibility Office.
Shelston J. Released: July 20, 2017