Court File and Parties
Newmarket Court File No.: FC-15-49190-00 Date: 2018-10-09 Corrigenda: 2018-10-12 Superior Court of Justice - Ontario
Re: Tracy Bernadette Rea, Applicant And: Natale Antonio Rea, Respondent
Before: The Honourable Mr. Justice D.A. Jarvis
Counsel: L. Pawlitza/C. Ashbourne, Counsel for the Applicant J. Moldaver/M. Ordon, Counsel for the Respondent* [1]
Heard: In Writing
Ruling on Costs
(Text of original decision has been amended – change appended)
[1] This Ruling deals with a motion by each party for an Order dealing with the custody and parenting of a child (JR). The mother claims that she was completely successful and that she is entitled to an award of full recovery costs of $62,939.39 comprising fees ($51,721.25), disbursements ($3,970.69) and HST ($7,239.95). The father claims that the costs should be payable in the cause or, alternatively, if he is ordered to pay costs that they not exceed $10,500.
[2] The mother made no Offer to Settle: the father made an Offer to Settle but only he signed it, contrary to Rule 18(4) of the Family Law Rules that requires an Offer to be signed by a party and (if represented) their lawyer. The father's Offer largely mirrored the unsuccessful positions he took when the motions were argued. It is of no assistance to him, or this court, in this Ruling.
Law and Analysis
[3] In Serra v. Serra, 2009 ONCA 395, the Court of Appeal made the often repeated observation that 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.
[4] The 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), 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.). As 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.
[5] In that part of his Ruling dealing with disclosure and costs made on March 23, 2016 Douglas J. outlined in paragraphs [12] to [15] the Family Law Rules guiding the exercise of the court's discretion in costs awards. Those observations will not be repeated here. However, the mother in this case claims that the father has acted in bad faith and that his conduct should be sanctioned. Family Law Rule 24(8) deals with a party’s bad faith behaviour.
Bad Faith
(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. O. Reg. 114/99, r. 24 (8).
[6] In Scalia v. Scalia, 2015 ONCA 492, 2015 CarswellOnt 9780, a case on which the mother relies, the Court of Appeal observed that,
- …[t]he legal test for bad faith in the family law context, as set out in S. (C.) v. S. (M.) (2007), 38 R.F.L. (6th) 315 (Ont. S.C.J.), at para. 17, aff’d 2010 ONCA 196, 262 O.A.C. 225 (Ont. C.A.), is that the impugned behaviour must be shown to be carried out with “intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court.” In short, the essential components are intention to inflict harm or deceive.
[7] A finding of bad faith is rarely made because a high threshold is required to prove it. In Scipione v. Del Sordo, 2015 ONSC 14971 Pazaratz J. contrasted bad faith and unreasonable behaviour when assessing costs,
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.
[8] The mother points to a number of reasons why the father should be found to have been acting in bad faith:
(a) the involvement of the children by the father in their parents’ litigation, in particular JR; (b) the demonstrated record of the father’s Order non-compliance. I described that as “alarming”; (c) the husband’s refusal to comply with the Order for assessment to which he had consented; (d) the father’s disregard of JR’s access schedule; and (e) the father’s vile, often derogatory and abusive language to the mother.
[9] In his submissions, the father said he was concerned that the Senior Family Law Justice who had case managed much of these proceedings (there are now almost 60 volumes in the Continuing Record) had demonstrated “an appearance of bias” with respect to what the father said was a mediation on March 22, 2018. That event was a day long Settlement Conference involving the SFLJ and a judge from the Commercial list in Toronto at which counsel for all parties in the civil and family litigation were involved and which conference led to directions being given that led to a settlement of the non-parenting financial issues about four weeks later. An insinuation such as that made by the father is a serious matter and not to be made lightly or indifferent to its consequences.
[10] It is worth noting that the father is a sophisticated, successful businessman. He cannot have been unmindful of the consequences of his conduct. I agreed with the mother in my Ruling that the father demonstrated a win-at-all-costs attitude. That went above and beyond unreasonable litigation behaviour. His bias insinuation was shameful. In my view, the father has acted in bad faith.
[11] It is also noteworthy that the mother made no Offer to Settle.
[12] In Blanchard v. Walker, 2012 CarswellOnt 16857, 2012 ONCJ 799 [2012] O.J. No. 6269, [2013] W.D.F.L. 932, 222 A.C.W.S. (3d) 452, 25 R.F.L. (7th) 487 (OCJ), Curtis J. commented on the importance of Offers to Settle,
Offers to settle are a significant part of the costs landscape in family law in Ontario. They are important to the possible resolution of cases. In addition, they are important to determining costs.
Parties and their lawyers have a positive obligation to behave in ways which enable the court to move cases forward to resolution (Rule 2). Rule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (Rule 2(2)). This includes taking appropriate steps to save time and expense (Rule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute: Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134, 2011 CarswellOnt 12972 (Ont. S.C.J.), para. 7.
[13] Similarly in F. (H.) v. H. (M.), 2014 ONCJ 526 Sherr J. observed,
…it should be a fundamental step in any family law case to serve at least one offer to settle. Parties and their counsel now have a mandate under subrule 2(4) of the rules, to promote the primary objective of the rules; to deal with cases justly (subrule 2(2)). Dealing with a case justly includes taking steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense in a case. They are an important vehicle in promoting settlements, focus the parties and often narrow the issues in dispute.
There are consequences in the rules for not making or accepting reasonable offers to settle. Subrule 18 (14) sets out the costs consequences of not accepting an offer to settle that is as good as or better than the final result. When determining the reasonableness of a party’s behaviour in the case, clauses 24 (5) (b) and (c) of the rules direct the court to examine the reasonableness of any offer made, withdrawn or not accepted. This does not preclude the court from examining the failure of a party to make an offer to settle. (bolding added)
[14] The mother is entitled to have her costs assessed on a bad faith basis but not in the amount claimed. Given that amount, the sensible approach of A.J. Goodman J. in Miziolek v. Miziolek and Miziolek, 2018 ONSC 4372 is instructive,
[32] There must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration.
[15] The mother has presented a detailed record of her counsel’s services. These include conference costs for which the costs were reserved and which related to the Ruling made.
[16] In reviewing the claim for costs, the following is noted:
(a) the issues were important as they involved JR’s best interests and were complicated by the positions taken by the father, the effect of which was to delay a more timely resolution of the issues to this point in time; (b) the father acted in bad faith. Even if I am in error in this conclusion, the father’s behaviour was unreasonable and is deserving of sanction; (c) the hourly rates charged by the mother’s counsel ($615/$430) and her associate ($350/$245) are reasonable on both a full recovery and partial recovery basis (70%). The rates for the senior law clerk ($300/$210) and student ($200/$140) are somewhat high but no claim was made for the latter’s services as it is noted those were written off; (d) Ms. Pawlitza recorded 55.7 hours, her associate 41.6 hours and the law clerk 9.6 hours. The material provided to the court for the motion was comprehensive. The redacted dockets attached to the wife’s Bill of Costs are detailed and descriptive of the services rendered. While there is no double-docketing of senior and associate time, the time recorded appears excessive given the familiarity of the wife’s counsel and her offices with the relevant facts; and (e) the disbursements claimed ($3,970.69) involve over $2,300 in document reproduction and copying costs. It was not necessary to reproduce all of the endorsements made in this proceeding for the motion.
[17] No Bill of Costs was presented by the father to facilitate a more critical, comparative analysis of the time spent, and the accuracy of the time spent and recorded by the mother’s counsel. The father submitted that it was inappropriate for the mother to refer to events and conduct before April 20, 2018 because paragraph 4.8 (k) of their Separation Agreement settled costs claims pre-dating the Agreement and preserved each party’s rights to seek costs “for any steps taken with respect to custody of and access to [JR] following” the signing of the Agreement. The mother pointed out that that the father’s prior conduct was relevant from an historical standpoint and that all of the conferences for which she was claiming costs dealt with JR, post-dated their Agreement and noted that costs were reserved or reserved to the motions’ judge.
[18] In my view, a fair and reasonable award for costs payable by the father to the mother for the motions is $45,000 inclusive of disbursements and HST. This award reflects the court’s disapproval of the father’s conduct, is discounted for the absence of an Offer by the mother, and for an excessive amount of time spent and unnecessary disbursements. It also reflects the father’s ill-conceived and gratuitous allegation of an appearance of bias by a senior member of the court.
[19] The mother also requests that the award be enforceable as a support Order so that it can be filed with the Family Responsibility Office for enforcement purposes and because of the father’s history of Order non-compliance. The motions did not deal with support, directly or indirectly, and there is no evidence before the court that the husband has arranged his affairs to insulate him from debt collection efforts. That request from the mother is declined.
Justice David A. Jarvis
Date: October 9, 2018
Amendment
Footnote 1 on the first page has been added and reads:
“Counsel of record identified in the style of cause and who argued the motions were not counsel who made the respondent’s costs submissions.”
[1] Counsel of record identified in the style of cause and who argued the motions were not counsel who made the respondent’s costs submissions.