Court File and Parties

COURT FILE NO.: FS-15-406777 DATE: 2018-12-14 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Chong Liu, Applicant AND: Fang Huang, Respondent

BEFORE: Kristjanson, J

COUNSEL: Toni E. Wharton, for the Applicant Gary S. Joseph, for the Respondent

HEARD: In writing

Costs Endorsement

[1] The trial took place over the course of 12 days; further written submissions were provided in May, July and August. The parties were embroiled in acrimonious litigation, utilizing substantial court time and resources, for three years. In my Reasons for Judgment reported at 2018 ONSC 3499, I found that the Mother, Ms. Fang Huang, took unreasonable and obstructive positions throughout the proceedings.

[2] The Father, Mr. Chong Liu, was successful at trial. I find he exceeded all of his offers to settle. Had the Mother taken a reasonable position and settled the matter based upon the terms which the Father sought, she would have been in a significantly better position on both parenting and financial matters than she is today, and the parties would not have unnecessarily spent over $500,000 on this litigation.

[3] The Father requests his costs in this matter on a full recovery basis. The Father bases the claim for full recovery costs on both exceeding his offers to settle as well as unreasonable or bad faith conduct by the Mother. On all these bases I award full recovery costs to the Father in the amount of $249,765.47, inclusive of disbursements and HST.

The Father's Position and Offers to Settle

[4] The Father tried to settle this matter from the outset and made reasonable offers in his attempt to avoid litigation. Although not an offer to settle within the meaning of Rule 18, I note that at the outset of the litigation, in a letter dated October 19, 2015, the father took the position that joint custody is appropriate, along with an equal parenting schedule, based on a 2-3-2 schedule. The Mother refused to agree to this. Ultimately, sole custody to the Father was ordered, along with essentially the same schedule requested by the Father in 2015.

November 11, 2015 Offer

[5] The Father made reasonable attempts to settle the matter prior to commencing litigation. He served a formal offer to settle related to intended proceedings, requesting joint custody and equal parenting, dated November 11, 2015. While this offer referred to an "intended motion in intended proceedings", it is clear that acceptance of this offer would have resulted in no necessity for an Application to be issued at all. The Mother would have been in a better parenting position if she had accepted that offer. That offer was severable. It expressly states: “The terms of this Offer to settle are severable. The Mother may accept any of the terms of this offer to settle.”

March 21, 2017 Offer to Settle

[6] The Father made an offer to settle all issues dated March 21, 2017. That Offer was accompanied by a 7 page letter from counsel explaining the various terms of the offer to settle. The detailed explanation is a model of the type of letter that counsel should send in an effort to settle; it explains the reasoning behind each portion of the offer to settle, pointing out risks, rationale, and the compromises offered. The Offer was for joint custody and alternate weekend parenting with one mid-week overnight. Although the Father had taken the position from the start of the matter that joint custody and equal parenting was appropriate, he was prepared to settle the matter on the basis of the child spending less time with him, in the hope that stepping back from equal parenting would cause the Mother to negotiate and settle the litigation. This offer was substantially less favourable to the Father than what was ultimately ordered. The majority of the other parenting terms ordered were almost identical to the terms of the offer to settle made by him in March 2017.

[7] The child support sections of the offer to settle were consistent with the final order made, specifying table support under the Guidelines and proportionate section 7 expenses. The Father offered that the matter be settled with no spousal support. This was as favourable as the final order, which dismissed the Mother's spousal support claim. The Father addressed the first-to-die life insurance in this offer to settle, but he also added an offer that he would maintain life insurance in the amount of $200,000 and the Mother maintain life insurance in the amount of $50,000. These sections were severable, such that the Mother could have accepted either section. The final order was more favourable to the Father. Although no order was made with respect to the first-to-die life insurance, an order was made that the Father and Mother each maintain a $200,000 policy.

[8] At the time the March 2017 offer to settle was made, the Mother's pension valuation had not been provided. The Father offered to settle for a payment of $61,170.36 equalization, as well as an equal division of the Mother's pension, or 50% of the Family Law value (which after disposition costs was $5,408.09 (50% of $14,421.57 - $3,605.39). In essence, he was offering to receive $66,578.45 in equalization. This was more favourable than the $74,812.83 ultimately ordered. The Father did not request any occupation rent or post-separation adjustments in this offer to settle all issues. The final order requires the Mother to pay both.

[9] The March 2017 offer to settle was intended to be a Rule 18 offer to settle and was signed by the Father and his lawyer. There was an administrative error when this offer to settle was served upon the Mother, such that the wrong version was actually served and the served offer did not have the signature of the lawyer. However, it was accompanied by a seven page letter signed by the lawyer, and was a complex, 22 page offer clearly drafted by counsel and explained by counsel in the accompanying 7 page letter. It was clear that the lawyer was aware of, authorized and approved the offer to settle, and it was formally valid. As such I find it to be a Rule 18 offer to settle, which can be taken into consideration when determining costs.

[10] The severability provisions are complicated, but explained in Ms. Wharton’s cover letter as follows:

Mr. Liu strongly believes he is making massive concessions, with respect to the parenting, equalization and transfer of the home, in a real effort to resolve the matters outside of litigation. However, in the event Ms. Huang continues to take the position she has been taking regarding custody and access and the parties must go to trial anyway, then Mr. Liu is not prepared to settle the equalization or the transfer of the home on as favourable terms as stated in this offer, hence the limitation on the severability section of the offer to settle. If the parties are not able to resolve the parenting, Mr. Liu’s position will be that the home must be sold, or transferred at the appraised value of $1,250,000 (minus the appropriate deductions for the mortgage). Likewise, Mr. Liu will not be making the concessions he is making in the net family property in the event the parties must attend a trial.

[11] The restrictions on severability essentially tied the offer on transfer of the matrimonial home and equalization to the three parts dealing with custody, regular parenting schedule, and holiday and vacation schedule. Otherwise, the Offer was clearly severable in that the Mother could accept “any combination” of Parts, or “any combination of terms within these parts” relating to Custody, Transitional Parenting Schedule, Regular Parenting Schedule, Holiday and Vacation Schedule, Other Terms Regarding Parenting, Child Support, Special or Extraordinary Expenses, Spousal Support, Life Insurance, and the Parties’ Vehicles. The costs portion of the Offer were clearly severable from the substantive portions. It was open to the mother to accept “any combination of terms” subject to the linking described above, and decline the costs portions and proceed to have a judge decide on costs.

October 6, 2017 Offer to Settle

[12] The Father served a Rule 18 offer to settle on October 6, 2017 which was significantly less favourable to him than the order made following trial. The letter was accompanied by a detailed 5 page letter from counsel explaining the terms of the offer to settle. He waived any and all rights to equalization, $8,000 for occupation rent, and post separation adjustments would have been approximately $13,000. The Father offered to accept approximately $21,000, to settle the matter. By contrast, the final order requires the Mother to pay $140,452.45 respecting these issues, (or $127,527.45 after deducting retroactive child support). The final order was over $100,000 more favourable to the Father than the Offer to settle made. The final order was more favourable to the Father than the custody, access, child support and section 7 paragraphs of this offer to settle. This offer was also severable. The Offer clearly states that the parts dealing with custody, child support and section 7 expenses, spousal support, post-separation adjustments and the Ford Focus “can each be accepted independently or in any combination. The post-separation adjustments were severable, and the Mother could accept any of the paragraphs independently or in any combination. The sections dealing with parenting time, equalization and the matrimonial home could only be accepted “if all other parts of this offer to settle are accepted, such that parties have resolved all issues and no longer require a trial.” I find that the costs provisions were severable.

[13] Even after serving this offer to settle, the Father continued to try to settle the matter without a trial. The Father proposed a mediation session with counsel and Mediate 393 on January 12, 2018, after the final Trial Management Conference. This too was unsuccessful, as the Mother maintained her position that she would only accept sole custody to her. A further Rule 18 offer to settle was served on January 19, 2018, which again was less favourable to the Father than the final order. There were limits on severability, although the parts dealing with custody, extended family access and make up time, parenting time, mobility, child support and section 7 expenses, spousal support, alternative equalization and vehicles could “be accepted independently or in any combination.” Equalization, matrimonial home, post-separation adjustments and occupation rent could only be accepted if those parts were accepted, so that the parties no longer required a trial. I find that the costs provisions were severable.

The Father’s Costs

[14] The Father seeks costs in the sum of $249,765.47, inclusive of disbursements and HST, and excluding costs relating to motions in 2016 and 2017 where costs were already dealt with. That amount has been calculated as follows: legal fees in the amount of $345,438.00, plus HST of $44,906.94, plus disbursements of $8,906.98, with a discount applied of $150,644.36, for the total amount claimed of $249,765.47. The Father has provided the dockets, sorted by date and timekeeper, to support his costs.

The Mother's Unreasonable Positions, Offers to Settle and Bad Faith

[15] There are significant findings in the trial judgment relevant to costs. As set out at paragraph 112 of the trial judgment, and summarized below, I found that:

(1) Before separation, both parents played a relatively equal role in the care and upbringing of the child once the mother returned to work following her maternity leave. The father was a caring and attentive parent who played a full role in the care of their daughter;

(2) The mother made false allegations of domestic violence against the father at separation, which she relied upon to withhold access, and to subsequently insist on supervised access and supervised exchanges for an unreasonably long period of time;

(3) The mother falsely accused the father of attempting to take away the child and called 911 to involve the police in this false accusation, to bolster her position in the litigation;

(4) Expansions of access required motions or threatened motions. Two judges on earlier motions found that Ms. Huang’s positions on access were unreasonable. I also found that the mother unreasonably sought to restrict the father’s access through the period from separation to trial;

(5) The mother prioritized her position in litigation over the well-being and comfort of her daughter. In addition to the unreasonable positions on expansion of access, specific examples included the daughter’s distress during the 911 call incident and the 80-minute round trip to the supervised access exchange insisted upon by the mother;

(6) Between separation and trial, the mother refused to involve the father in decision-making or advise him of important issues concerning their daughter, including hospital visits;

(7) The mother failed to consult the father on health, medical and extra-curricular activity issues, failed to share information appropriately, and made decisions unilaterally. She dismissed his attempts to consult on issues, and failed to respond to reasonable requests for information by the father;

(8) The mother expressed a wish that the father would simply disappear from their daughter’s life.

[16] At a Settlement Conference in December 2016, the Mother agreed to mediate after receiving directions from Madam Justice Frank. She refused to instruct her counsel to remain in the building for the mediation and the result was that they were further apart on the issues after mediation than they were before. Costs were reserved to the trial Judge.

[17] The Mother delayed the proceedings on a number of occasions, on many occasions by changing counsel immediately following or prior to a hearing or decision that was not favourable to her. The Mother changed representation 6 times, leading to delay.

[18] As noted in the trial judgment, the Mother, during a motion regarding temporary custody and access in July, 2016, proposed a Brief Focused Assessment in order to move forward with parenting time. This was endorsed by the motions Judge as appropriate. This proposal affected the decision and Order made on the motion. After significant time wasted back and forth, the Mother eventually stated that she no longer wanted to proceed with this assessment. These delays resulted in further correspondence and legal fees. As I held at paragraph 84 of the trial judgment:

[84] Ms. Huang subsequently discharged her counsel and resiled from her proposal. Ms. Huang was represented by counsel on the motion before Justice Moore when she proposed having a brief focused assessment rather than arguing the motion with respect to access. When she gave her reasons for resiling from the brief focused assessment, she said that Justice Moore in his decision said it’s a good idea but he didn’t order it. She acknowledged a court order would have enforced the completion of the brief focused assessment but in the absence of that she did not regard there to be an obligation to complete it. She also stated that the parties could not agree on either the assessor or on the cost of the brief focused assessment and allocation of costs was of concern. This is truly disturbing conduct. All litigants have a duty to further the primary objective of the Family Law Rules, to deal with cases justly, expeditiously, efficiently and fairly. Her proposal which was accepted by Mr. Liu to resolve the motion was meant to avoid the expense and delay of an assessment. When parties make a proposal like this, particularly one meant to resolve a motion, they are expected to comply with it. A sensible suggestion by Ms. Huang turned into a feint, causing more delay and expense.

[19] The Mother has acted in bad faith throughout these proceedings. This bad faith is characterized by false allegations of domestic violence and false allegations as to Mr. Liu’s role in parenting CL prior to separation; indicating in conferences and Consent Orders that she would consider reviewing and expanding access and then refusing to do so unless threatened with a motion or motions were brought; requiring supervised access for a significant period of time based on nothing other than false allegations; resiling from an agreement to move forward with a Brief Focussed Assessment to determine an appropriate parenting schedule after suggesting the assessment to resolve a motion; calling 911 and telling the police, falsely, that the Father was essentially abducting the child; and providing misleading evidence at trial with respect to a number of issues, including making serious allegations of abuse, in order to advance her claim that sole custody in her favour was in the best interests of the child.

Mother’s Offers to Settle

[20] The Mother served offers to settle dated June 16 and October 17, 2017. All of her offers to settle contained terms less favourable to the Father than those eventually ordered in the final order. All of the Mother’s offers to settle all required that she have sole custody, or “sole major decision-making authority” and were not severable. The October 17, 2017 Offer provided that the Father would make “major decisions regarding Charlene’s religion”, although each parent would be free to share their own religious affiliation with the daughter. The mother was to have sole decision-making authority in all other areas. Primary residence was to be with the Mother. Access exchanges were to take place at the nearest police station to the Mother’s home. Access was much less than the Father received in the final order. The Mother sought spousal support as a lump sum payment of $80,000.00; she was awarded no spousal support. The mother offered to pay $30,000 to the Father for equalization; I ordered her to pay the Father $74,812.83.

[21] Perhaps most importantly, both the June 16, 2017 and October 17, 2017 offers provided that the terms were not severable. Because of the major decision-making provisions and very limited access, the Father could not have reasonably accepted any of the Mother's Offers.

Matrimonial Home

[22] The Mother only accepted that the Matrimonial Home would be sold in the days before the trial commenced. The Father offered to settle the issue of the matrimonial home in his offer to settle dated March 21, 2017. The Offer was for the home to be listed for sale immediately. The section regarding the sale of the matrimonial home was severable and was open for acceptance until one minute after the commencement of trial.

[23] In the days leading up to the trial, the Mother finally took the position that the home would be sold. At the start of trial the Mother's position was that the closing of the sale would not be until after September, 2018. The Father took the position that the closing of the sale should be before September 2018, as the child would start kindergarten in September and the parties should know where they were living, so that schooling would not be interrupted. Ultimately an Order was made for the sale of the home over the summer, with a closing prior to September 2018.

Mother’s Costs

[24] The Mother’s full recovery costs inclusive of fees, disbursements and HST, are $231,748.18. This is based on a Bill of Costs not including detailed dockets.

The Law and Argument Regarding Costs

[25] Costs orders are in the discretion of the court pursuant to Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. The Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 has set out the general legal principles governing costs in family litigation at paras. 10-11, 13 and 15:

[10] This court has held that modern family cost rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, and; (3) to discourage and sanction inappropriate behaviour by litigants: Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8; Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22. Rule 2(2) adds a fourth fundamental purpose: to ensure that cases are dealt with justly: Family Law Rules, r. 2(2); E.H. v. O.K., 2018 ONCJ 578, at para. 8; Sambasivam v. Pulendrarajah, 2012 ONCJ 711, at para. 37. And Rule 24(12)[1], which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award.

[11] Rule 24(1) creates a presumption of costs in favour of the successful party of a motion, case, or appeal: Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730, at para. 94. And the presumption that a successful party is entitled to costs applies equally to custody and access cases: Britt v. Britt, [2000] O.J. No. 5981 (S.C.), at para. 9.

[13] Consideration of success is the starting point in determining costs: Sims-Howarth v. Bilcliffe (2000), 6 R.F.L. (5th) 430 (Ont. Sup. Ct.), at para. 1. This presumption does not, however, require that the successful party always be entitled to costs: M.(C.A.) v. M.(D.), at para. 40. An award of costs is subject to: the factors listed in r. 24(12), r. 24(4) pertaining to unreasonable conduct of a successful party, r. 24(8) pertaining to bad faith, r. 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party: Berta v. Berta, at para. 94.

[15] The Family Law Rules only expressly contemplate full recovery costs in specific circumstances, e.g. where a party has behaved unreasonably, in bad faith or has beat an offer to settle under r. 18(14).

[26] Rule 24(5) sets out provisions regarding reasonableness:

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.

[27] Rule 24(8) sets out the cost consequences for a party who has acted in bad faith:

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.

[28] Pursuant to Rule 24(1) of the Family Law Rules, there is a presumption that a successful party is entitled to costs of the case. The Father was successful with respect to all issues to be determined at trial. The final order is the same as the draft order requested by the Father with respect to the majority of the issues. Where the final order differs, it is still more favourable to the Father than all of the offers to settle served by the Father on the Mother: he beat all his offers.

Quantum of Costs

[29] In fixing costs, the court must consider the factors set out in Rule 24(12) of the Family Law Rules, which are:

(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

(i) each party’s behaviour,

(ii) the time spent by each party,

(iii) any written offers to settle, including offers that do not meet the requirements of rule 18,

(iv) any legal fees, including the number of lawyers and their rates,

(v) any expert witness fees, including the number of experts and their rates,

(vi) any other expenses properly paid or payable; and

(b) any other relevant matter.

Each Party’s Behaviour

[30] The reasonableness of the Father and the unreasonableness of the Mother are set out in detail above, and in the trial decision. The Father has taken reasonable positions throughout and tried to avoid this litigation. The Mother on the other hand, has been unreasonable and obstructive throughout. The Father’s offers to settle were reasonable and expressed a genuine intention to compromise on all of the key issues; the Father beat all of them. The Mother’s offers to settle were unreasonable; she did not express any element of compromise on the key issues.

Reasonableness and Proportionality of Time Spent by Each Party

[31] Over the course of three years, the father attempted to resolve the issues through reasonable compromise. The issues in the litigation were extremely important, as they related to the best interests of a young child, including custody and parenting time, and the parties’ positions were at opposite ends of the spectrum.

[32] The Father had to spend significant time addressing very serious false allegations made by the Mother. The Mother alleged serious anger issues and domestic violence, including anger directed at the child, violence in front of the child and allegations relating to sexual conduct, as well as the 911 call. I found, at para. 94 of the trial reasons:

[94] Ms. Huang provided false information to the 911 Operator. The father was returning the daughter from an access visit, not taking her away. The mother refused open the door and take her crying young child from the grandmother. The mother instead called 911 and reported that they just tried to take her daughter away and that the child was crying and didn’t want to go with the father. Ms. Huang’s statements to 911 clearly imply some sort of child abduction or failure to comply with an access order. It is a serious issue for a party in a custody and access dispute to call up 911 and misrepresent facts regarding the child. No family litigant should do that. It also shows the facility with which Ms. Huang is prepared to tell untruths to officials. (emphasis added)

[33] The serious allegations made could have had a serious impact on the custody and parenting schedule and the Father had to spend time defending the allegations.

[34] The Father attempted to settle the other issues in the matter by making severable offers to settle, but the Mother was not prepared to reach an agreement on any of the issues. All of the Mother's offers to settle were non-severable. The result was that this trial involved all aspects of a family law matter, including parenting, property, occupation rent, post separation adjustments, child support, spousal support and sale of a matrimonial home. While the parenting issues occupied the majority of time at trial, time had to be spent addressing the post-separation adjustments, equalization and other matters. The parties should have at least been able to narrow the issues to be determined at trial, in which case time spent on the matter could have been significantly reduced. They were unable to do so because of the Mother's position.

[35] The Mother argues that the quantum of costs sought by the Father is “unreasonable”, pointing out that her full recovery costs were $231,748.18, compared to the Father’s costs of $399,251.92. The costs sought by the father on a full recovery basis are $249,785.47, which includes a discount of $150,000. The Mother argues that the amount sought includes prior attendances where costs were not reserved to the trial judge; use of too many timekeepers; and duplication of work among the timekeepers. Mother’s counsel failed to identify dates and amounts in the lengthy dockets produced by the Father, and did not suggest a particular amount sought to be reduced, although the assertion is made that the quantum should be significantly reduced. Where contesting individual dockets for particular timekeeper, counsel should prepare a chart or list by date, timekeeper and amount so that the judge can understand the submissions.

[36] I have reviewed all the dockets. The Father’s counsel discounted the fees by $150,000. I am satisfied that all of the alleged duplication or contested inclusion of amounts is encompassed by this $150,000. The rates are reasonable.

[37] I find that the amount sought is proportional and reasonable. In Beaver v. Hill, 2018 ONCA 840, Nordheimer, J.A. stated at para. 12 that “proportionality and reasonableness are touchstone considerations to be applied in fixing the amount of costs.” The father is seeking full recovery costs of $249,765.47, and the mother’s full recovery costs are $231,748.18. The legal fees are comparable. I find that the time expended and the fees are proportionate, in light of the conduct of the Mother and the positions taken by her, and reasonable in the circumstances.

Written Offers to Settle

[38] The Father's offers to settle are set out in detail above. The Father made very reasonable offers to settle and was successful in obtaining an order more favourable than all of them. Although the March 2017 offer to settle was served without the lawyer's signature, as required by Rule 18, it can be taken into consideration, as set out in Rules 24(12)(a)(iii) and 18(16). Moreover, the offer to settle was served with a 7 page cover letter signed by counsel explaining in detail the terms of the offer to settle, including the compromises offered. The purpose of the signed Offer was clearly met, and the Offer was clearly made with the authority of counsel. As such I find that I may consider the March 17 Offer as a written offer to settle in accordance with Rule 18(16): Deelstra v Van Osch, [2003] O.J. No. 273 (Ont. S.C.J.) at para 3.

[39] The majority of fees were incurred in this matter after service of the March 2017 Rule 18 offer to settle, and the Father obtained an order significantly more favourable than that offer.

[40] In accordance with Rule 18(14), the Father is entitled to his costs on a full recovery basis, from March 21, 2017. The Bill of Costs set out a schedule allocating costs for the period leading up to and after the March 2017.

Legal Fees, Including the Number of Lawyers and Their Rates

[41] The legal fees incurred in this matter were reasonable. The lawyer's rates were reasonable for a Toronto matter - well within the expected usual hourly rates for the experience of the lawyers who worked on the matter. The experience of the lawyers who worked on the matter was reasonable, given the size of the matter, amount of issues, the acrimony, and the importance and complexity of the issues.

[42] While there were two lawyers in attendance at the trial (trial counsel and a junior associate), this was taken into consideration in the discounts applied to the matter for the Father. The discounts of legal fees over the course of the litigation amount to approximately $150,000.00. These discounts more than cover any amount of time spent by lawyers considered to be duplicative or above that for which time should have been reduced, as set out above. The court in Fancett v Deprato, [2006] WDFL 1001 (Ont Sup Ct Jus) at paras 10, 19, held that the reduced or discounted rate of the successful party's lawyer was a factor supporting that party's claim for costs on a full indemnity basis.

Expert Witness Fees, Including Rates

[43] There was only one expert in this matter, Jim Parthenis, Real Estate Appraiser and consultant. His fee was required and was reasonable. His fee involved an appraisal of the value of the property, rental analysis and attendance at court. The appraisal was necessary because the Mother initially took the position that she wanted to purchase the Father's interest in the property. The rental analysis and trial evidence of Mr. Parthenis, resulted in the order for occupation rent in the amount supported by the report and evidence of Mr. Parthenis.

Any Other Expenses Properly Paid and Payable

[44] All other disbursements and expenses were reasonable. As a result of the unreasonable and obstructive position taken by the Mother, the Father incurred significant fees for printing and serving of documents. Because the Mother was unable to narrow any of the issues for trial, the exhibit briefs were voluminous.

Costs on a Full Recovery Basis as a Result of Bad Faith Conduct of the Mother

[45] One of the purposes of costs awards is to “to discourage and sanction inappropriate behaviour by litigants.” Family Law Rule 24(8) provides that 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. Family Law Rule 24(12)(a)(i) states that the reasonableness and proportionality of each party’s behavior is relevant to setting the amount of costs.

[46] Bad faith is not simply bad judgment or negligence, but rather implies the conscious doing of a wrong because of dishonest purpose, an intent to inflict harm, to conceal information, or to deceive the other party or the court. In Hendry v. Martins, [2001] O.J. No. 1098 (S.C.J.) at para. 4, Campbell J. stated that bad faith involves “…the conscious doing of a wrong because of a dishonest purpose or moral obliquity...it contemplates a state of mind affirmatively operating with furtive design or ill will.” In S.(C.) v. S.(M.), [2007] O.J. No. 2164 (S.C.J.) at paras. 16-18, Perkins J. held that “in order to come within the meaning of bad faith in subrule 24(8), behavior must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behavior, to conceal information relevant to the issues or to deceive the other party or the court.

[47] The trial decision identifies actions of the Mother which I found were designed to inflict emotional and financial harm to the Father, were harmful to the daughter, and were taken to deceive both the Father and the Court. In the case of Karar v Abo-El Ella, 2017 ONSC 33, the court found that the mother's conduct constituted bad faith, where she had been obstructive, increasing costs in relation to correspondence, emails and phone calls that were necessary in attempts to arrange the father's access visits, based on the mother's intention to only allow the father to have limited supervised access on her terms, along with the fact that she exaggerated concerns about the children's safety and shared with the children the belief that the father was a dangerous man.

[48] The Mother argues that “a misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, conceal relevant information or deceive, saves the activity from being found to be in bad faith”, and argues that “the Mother’s behaviour was guided by what she believed to be in the child’s best interests,” and was not bad faith. I cannot accept this submission in light of the extensive findings at trial.

[49] I found that the Mother deliberately made up false allegations of domestic violence in response to the Father requesting joint custody and equal parenting. The Mother refused to allow anything other than limited supervised access with the child for over a year, followed by limited access with supervised exchanges thereafter for an approximate further nine (9) months, based on these false allegations. The Mother required the child to travel extensively to supervised access and access exchanges with the Father, despite the Father living 1 km away from the Mother. Shortly after overnight unsupervised access was ordered the Mother made a false claim of child abduction to the police in a 911 call, and attempted to use the transcript of the 911 call at trial to support her claim for sole custody. As I found at para. 101 of the trial reasons:

[101] The 911 incident happened almost immediately after Justice Hood's Order, in which exchanges were ordered to be unsupervised for the first time, contrary to Ms. Huang's position, and in which Mr. Liu's access was significantly expanded. Mr. Liu submits that Ms. Huang did not wish to have unsupervised exchange and set out to create a reason why supervision was necessary. Ms. Huang's explanation of her actions lacks any semblance of believability. Ms. Huang's willingness to lie on a 911 call where she feels that doing so will gain her an advantage must be taken into account when assessing her overall credibility in these proceedings.

[50] The Mother introduced misleading evidence and late productions during the trial which she had not previously served on the Father, despite having the documents in her possession for years. As I found in para. 42 of the trial reasons:

The late production and the requirement for translation were meant to undermine [the father’s] ability to respond. The incomplete and late production was meant to leave a misleading impression with the court, and was strategic and improper. I find Ms. Huang’s conduct in this regard worthy of rebuke.

[51] I found as follows in the trial decision, para. 48, with respect to the late production and misleading translation of another document, also produced on the eve of trial:

[48] The "promises note" with the translation was delivered Friday at 4 pm, with the trial starting on Monday. Ms. Huang admitted she had the Promises Note in her possession since 2007 but had failed to disclose until the eve of trial. She admitted that she had the misleading translation in her possession since January, 2016 but failed to produce it, despite court orders that all documents to be relied on at trial were to be disclosed months before trial. I find that Ms. Huang's decision to knowingly withhold the document until the eve of trial, in breach of court orders, with a translation that she knew to be misleading, was a calculated decision aimed to keep Mr. Liu from commissioning an accurate translation of the document for trial.

[52] These examples support a finding of bad faith conduct of the Mother, motivated by a desire to hurt the father and mislead the Court to gain a litigation advantage and inflict harm on the Father. I found at trial that “Ms. Huang used CL as a pawn and a false allegation of domestic violence as an excuse to exclude Mr. Liu from meaningful participation in CL’s life” (para. 3); that the domestic violence was fabricated by Ms. Huang in an attempt to a support the extreme position she took regarding access after separation (para. 39); and that she called 911 falsely implying that Mr. Liu was abducting the child. She told a mutual friend that Mr. Liu should simply exit the child’s life and leave her with the baby; she then implemented a plan to make it so. I also found that she behaved unreasonably on a number of the financial issues.

Conclusion

[53] I must exercise my discretion to award costs that are fair and reasonable in the circumstances of the litigation: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). I must also ensure that the cost award is proportional and reasonable. Unreasonable positions in the course of a family law file mean that the opposing party will often incur substantial costs. I am satisfied that the costs I set are fair and reasonable in the circumstances of this litigation. The position of the Mother in these proceedings resulted in the Father incurring substantial legal fees. The Mother cannot be permitted to litigate with impunity. The Father’s legal fees could have been avoided, but for the unreasonable positions and bad faith conduct of the Mother. The costs order in this case is intended to “discourage and sanction inappropriate behaviour.”

[54] As a result, I award the Applicant Father fees on a full recovery basis, both on the basis of bad faith and unreasonable conduct, and pursuant to Rule 18, on the grounds that the Father exceeded his March 17 offer to settle. The Respondent Mother is to pay costs of $249,765.47, inclusive of disbursements and HST.

Kristjanson, J Date: December 14, 2018