Court File and Parties

COURT FILE NO.: FS-16-20931 DATE: 20190527 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joshua Louis Goldstein, Applicant AND: Evelyn Walsh, Respondent

BEFORE: Kristjanson, J

COUNSEL: Avra Rosen/Kelly Eckert, for the Applicant Harold Niman/Donna Wowk, for the Respondent

HEARD: In writing

COSTS ENDORSEMENT

[1] The custody and access trial took place over the course of 12 days. The parties were embroiled in acrimonious litigation for two years. In my Reasons for Judgment reported at 2018 ONSC 3499, I found that the father, Josh Goldstein, took unreasonable and obstructive positions throughout the proceedings.

[2] The Respondent mother, Evelyn Walsh, seeks her costs on a full recovery basis of $456,411.14, inclusive of disbursements and HST. Evelyn argues that (a) she beat her Offer to Settle, and (b) the Applicant father, Josh Goldstein, conducted himself in bad faith and unreasonably, in a manner which substantially complicated the issues and evidence and resulted in high legal fees. Josh takes issue with the quantum, arguing that the costs incurred by the Mother are “grossly punitive, excessive, unreasonable and disproportionate to the complexity of the proceeding.” Given the exceptional nature of this case, in which Josh’s bad faith and unreasonable conduct permeated the entirety of the litigation, and Evelyn beat her offer to settle on the issues at trial, I award full recovery costs to Evelyn in the amount of $420,000.00, inclusive of disbursements and HST.

The Father’s Unreasonable Positions and Bad Faith

[3] There are significant findings in the trial judgment relevant to costs. As set out in the trial judgment, I found that Josh made false allegations against Evelyn at the inception of the case which he relied upon in an ex parte motion to withhold access, to restrict AB’s residence to Toronto, and to subsequently insist on supervised access until a motion was brought. Some of the false allegations were defended until the end of trial, in a bid to undermine Evelyn’s role and competence as a parent. Josh did not amend his application until 10 days before trial, when he changed his claim from sole to joint custody. I concluded that Josh misled the ex parte motion court in order to obtain a strategic advantage in the litigation, thereby depriving AB of contact with her mother contrary to AB’s best interests. Despite the falsity of the allegations, I found that all expansions of access required motions or threatened motions, driving up legal costs. Josh failed to reasonably accommodate requests for extended travel to allow Evelyn to take AB to Ireland. He failed to reasonably sign travel consents in March 2017 and September 2017, in one case resulting in a consent order at a case conference. All of these drove up legal costs. Josh failed to consult Evelyn on health, medical and extra-curricular activity issues, failed to share information appropriately, and made decisions about medical care and religion unilaterally. He dismissed Evelyn’s attempts to consult on issues, and failed to respond to her concerns.

[4] The Father has acted in bad faith throughout these proceedings. This bad faith is characterized by false allegations as to Evelyn’s role in parenting; requiring supervised access for a significant period of time based on nothing other than false allegations; and providing misleading evidence at trial with respect to a number of issues, in order to advance his claim that primary residency with Josh was in the best interests of the child.

[5] 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 at para. 10 held that family cost rules are designed for the fundamental purposes of: (1) partially indemnifying successful litigants; (2) encouraging settlement, (3) discouraging and sanctioning inappropriate behaviour by litigants, and (4) ensuring, in accordance with Rule 2(2), that cases are dealt with justly. Reasonableness and proportionality are the touchstone considerations to be applied in fixing costs.

[6] Rule 24(1) creates a presumption of costs in favour of the successful party on a motion, case or appeal; the presumption that a successful party is entitled to costs applies equally to custody and access cases. An award of costs is subject to the factors listed in Rule 24(12) including the importance and complexity of the issues, the reasonableness of each party’s behaviour in the case, the lawyer’s rates, the time properly spent on the case, the expenses and any other relevant matter. Other factors include Rule 24(4) (the unreasonable conduct of a successful party), Rule 24(8) (bad faith), Rule 18(14) (offers to settle) and the reasonableness of the costs sought by the successful party: Mattina para. 12-13; Berta v. Berta, 2015 ONCA 918 at para. 94.

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

Bad Faith Conduct

[8] Bad faith is not simply bad judgment or negligence. In S.(C.) v. S.(M.) at paras. 16-18 and 24, Perkins J. held that bad faith within the meaning of Rule 24(8) encompasses:

• behaviour shown to be carried out with intent to: (a) inflict financial or emotional harm on the other party or other persons affected by the behavior; (b) to conceal information relevant to the issues; or (c) to deceive the other party or the court;
• behaviour relating to the issues at stake in the case or the conduct of the case;
• costs incurred in relation to the issues affected by the bad faith; and
• the essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose.

[9] The trial decision identifies actions of the Father which I found were designed to inflict emotional and financial harm to the Mother, were harmful to the daughter, and were taken to deceive both the Mother and the Court.

[10] In Kaverimanian v. Kaverimanian, 2013 ONSC 5265, the father brought an ex parte order for custody, and the police apprehended the children from their mother. When the motion was ultimately heard, evidence disclosed that the father had omitted material information and misrepresented evidence to obtain the ex parte order. In this case, I found that Josh misled the court at the time of his ex parte motion and also at trial; he did not withdraw many of the false allegations he made at the time of the ex parte motion, which were contained in his Application, and were the subject of evidence at trial.

[11] 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, e-mails 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.

[12] In this case, I found that Josh misled the ex parte motion court in order to obtain a strategic advantage in litigation, thereby depriving the child of contact with Evelyn contrary to the child’s best interests. Justice Stevenson found that Josh did not place all of the evidence before the ex parte motions judge; at trial, Josh conceded in cross-examination that he misled the ex parte motions court. I found that Josh obtained the ex parte Order through misrepresentations, both direct and by omission, in his sworn affidavit evidence. I found that Josh “continued his misrepresentations until he got caught, gave misleading evidence at trial, and continued exclusionary actions well after the ex parte order was set aside.” These examples support a finding of bad faith conduct of the Father, motivated by a desire to mislead the Court to gain a litigation advantage and inflict harm on the Mother.

[13] I also found that Josh acted unreasonably in relation to the parenting issues, in a manner which unduly complicated the litigation, and increased the costs of litigation. Examples set out in the trial decision include:

(a) requiring supervision and refusing to waive supervision, involving counsel and driving up costs; (b) refusing requests for any parenting time in Buffalo; refusing overnight parenting time requests; (c) failing to accept recommendations from Buffalo physicians and requiring second opinions in Toronto; (d) failing to consult Evelyn on issues from caregivers to extracurricular to religion; (e) failing to reasonably accommodate travel and weather related requests; (f) Josh allowed his father to take their daughter to the doctor without informing Evelyn and indeed misrepresented that he had done so, and scheduled appointments and referrals without her consent; and (g) When enrolling the child in programs, Josh consistently failed to advise Evelyn of the child’s activities, failed to seek her consent, and did not for many months list Evelyn as a parent or provide her contact information to the programs.

[14] There was strained communication between the parties about major and minor decisions, with Josh’s unreasonable behaviour requiring that counsel become involved in all manner of decisions, driving up the costs of litigation. As stated by Justice Perkins in S.(C.) v. S.(M.) at para. 17:

At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

[15] All the parties agreed that this case has been a financial catastrophe, although at trial Josh’s financial statement showed a net worth of $354,000, and Evelyn’s net worth was negative $569,000.

[16] I note that even where the full recovery costs provisions are triggered, quantification of costs still requires an overall sense of reasonableness, fairness and proportionality: Jackson v. Mayerle, 2016 ONSC 1556.

The Issues: Importance, Complexity, Difficulty

[17] The issues of custody and residency were of critical importance to the parties, as they related to the best interests of a very young child, including custody and parenting time, and the party’s positions were at opposite ends of the spectrum. Evelyn had to spend significant time addressing false allegations made by Josh.

[18] I find that Josh’s behaviour throughout – including misleading allegations as to Evelyn’s parenting, and the unreasonable conduct set out in the trial decision and highlighted above - caused the matter to become much more factually complex than it should have been, and drove up the costs of ligation. The parents live in different countries, and this was going to be a complex and difficult case in any event, without the necessity of disproving unfounded allegations.

Legal fees, including the number of lawyers and their rates

[19] The Applicant took issue with the quantum of legal fees sought by the Respondent, including over-lawyering and excess time, but did not initially file his Bill of Costs. After receiving his submissions I wrote to counsel for the Applicant to provide him opportunity to file his Bill of Costs. I specifically drew counsel’s attention to Justice Chappel’s decision in Beaver v. Hill, 2018 ONSC 3352 at para. 46:

A useful benchmark for determining whether costs claimed are fair, reasonable and proportional is to consider the amount that the other party has paid for their own legal fees and disbursements in the matter (Smith Estate v. Rotstein, 2011 ONCA 491 (C.A.); Durbin v. Medina, 2012 ONSC 640 (S.C.J.); Scipione v. Del Sordo, 2015 ONSC 5982 (S.C.J.)). Although there is no requirement that a party resisting costs file their own Bill of Costs, it is preferable that they do so to assist the court in dealing with costs in a fair and reasonable manner (Risorto et al. v. State Farm Mutual Automobile Insurance Co., 2003 ONSC 43566 (S.C.J.), at para. 10). Failure on their part to provide details regarding their own costs is a factor that the court may take into account in considering the reasonable expectations of the losing party, and may entitle the court to draw an adverse inference (Smith Estate, at para. 50; Scipione, at para. 126; 206637 Ontario Inc. (c.o.b. Balkan Construction) v. Catan Canada Inc., 2013 ONSC 5448 (S.C.J.), at para. 7). Consideration of the other party’s Bill of Costs is particularly helpful if that party challenges a costs claim on the basis of alleged excess and over-lawyering (Mullin v. Sherlock, 2017 ONSC 6762 (S.C.J.), at para. 89; Brar v. Brar, 2017 ONSC 6372 (S.C.J.), at para. 30; Bielak v. Dadouch, 2017 ONSC 4255 (S.C.J.), at para 10). As Winkler J. stated in Risorto, at para. 10, such allegations amount to “no more than an attack in the air” if the unsuccessful party fails to produce their own Bill of Costs. In addition, a significant discrepancy in the amount of fees that the parties have incurred may prompt the court to embark upon a more detailed scrutiny of the costs claimed to ensure that the amount meets the overall objectives of a costs order (Jackson, at para. 99). (emphasis added)

[20] The fees claimed by the Respondent commence at the initiation of the file from drafting the Answer through all steps in the litigation except for the ex parte motion, where the costs were settled. The Applicant’s Bill of Costs did not commence at the outset of the file. It commences 12 days before trial, and finishes on the last day of trial. It included only 8 business days of trial preparation. For this period, the Applicant’s fees and disbursements on a full recovery basis were $242,445.06.

[21] It is not up to the Applicant to decide on an arbitrary starting date for a Bill of Costs. Recoverable costs at trial clearly include steps taken from the drafting of pleadings through to trial. As well, the Applicant retained co-counsel, Thomson Rogers LLP, in 2017. By e-mail dated April 5, 2018, Applicant’s counsel advised that Thomson Rogers was no longer co-counsel, as the lawyer had a peremptory trial in another jurisdiction. Those were legal fees incurred by the Applicant, and should properly have been included in the Applicant’s Bill of Costs.

[22] It is disingenuous to produce a Bill of Costs starting 12 days before trial. The manner in which the Applicant chose to produce a truncated Bill of Costs does not meet the clear requirement to provide a Bill of Costs which will assist the court in determining the reasonable expectations of the losing party, gauging reasonableness in part through costs incurred by both sides. In the absence of a proper Bill of Costs, the criticisms of the Respondent’s costs are “an attack in the air.”

[23] Josh submits that the costs sought by Evelyn are “grossly punitive, excessive, unreasonable and disproportionate”, citing the use of too many timekeepers and duplication of work among the timekeepers. Josh’s counsel did not identify dates and amounts in the lengthy dockets produced by Evelyn, and did not suggest a particular amount sought to be reduced, although the assertion is made that costs of $100,000.00 would be appropriate. Where contesting individual dockets for particular timekeepers, counsel should prepare a chart or list by date, timekeeper and amount so that the judge can understand the submissions.

[24] There have been a large number of timekeepers over two years, although on review of the dockets, the bulk of the work has been done by three main counsel, properly assisted by law clerks. One of the lawyers retired, and Ms. Wowk took over. The rates of counsel were reasonable and consistent with the rates of lawyers in downtown Toronto law firms, with similar years of experience in a specific area of expertise: Knop v. Nezami, 2016 ONSC 6286 at para. 20. While Mr. Niman’s rates are higher than those of Ms. Rosen, I find them to be reasonable in this litigation, in which from inception, with the ex parte motion, the Applicant pursued a scorched earth policy. Scorched earth litigation calls out big guns in response. The rates and 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.

[25] While a third lawyer, Mr. DeMarco also attended at the trial, his time was not billed except for one day when he facilitated international witnesses participating by Skype. Both parties had two lawyers attend at trial.

[26] As noted above, I find that Josh’s bad faith and unreasonable conduct required frequent resort to counsel throughout the file. His misrepresentations led to increased documentary evidence required to address misrepresentations.

[27] There is no explanation for the taxi fare charges, and those disbursements of $1,185.35 plus HST are disallowed.

Costs of Conferences and Mediation

[28] Josh objects to costs claimed for conferences and mediation. There are four conferences in which no order for costs were made or reserved (September 22, 2016 adjourning the ex parte motion; December 14, 2016 (adjourning SC/TMC for mediation); August 23, 2016 (SC/TMC, where summer travel to Ireland was addressed); April 11, 2018 (TMC)).

[29] In a case based on false or misleading evidence at the outset – here, the false allegations were raised both in the Application and the ex parte motion – I agree with Justice Price that the costs of related conferences should generally be determined as part of the costs of the action at the conclusion at trial: Kaverimanian v. Kaverimanian, 2013 ONSC 5265 at paras. 29-43. Bad faith allegations shape and may distort the outcome of case, settlement and trial management conferences, reduce the prospect of negotiated settlement or compromise, and lengthen the trial. It is also consistent with Rule 17(18) and 17(18.1), in which costs may be awarded where the conduct of a party “otherwise contributed to the conference being unproductive.” Bad faith and unreasonable conduct, which can be measured only at the end of trial, lead to unproductive conferences.

[30] I have, however, removed the costs associated with the private mediation, which I calculate to be $11,253.67 inclusive of HST and disbursements.

Written Offers to Settle

[31] The starting point in determining success is to consider Rule 18 Offers to Settle, as a successful party is entitled to costs on a full recovery basis, or close to full recovery, from the date of the Offer, when the party obtains a result at least as favourable as its Offer to Settle, or when the other party has acted in bad faith: Beaver v. Hill, 2018 ONCA 840 at paras. 13, 17.

[32] Evelyn served her valid Rule 18 Offer to Settle on April 16, 2018, seven days before trial, and it was not withdrawn before trial. Josh’s Offer to Settle was served April 18, 2018, which is too late to attract the costs consequences of the Rules. Josh does not dispute that Evelyn’s Offer was as favourable as what she was awarded at trial.

[33] I note, however, that due to the fact that the Offer to Settle was served only a week before trial, the costs consequences only apply after the date served, and not to the costs prior to the offer.

Other Relevant Matters

[34] Josh asserts that a party’s ability to pay is relevant to the quantum or scale of costs, and that Rule 24(11)(f) includes a consideration of the relative means of the parties. Josh submits that while he had savings at trial, he “had obligations to his counsel and substantial tax liabilities, such that his net worth has been grossly depleted.” Josh did not produce any financial disclosure to support these assertions, and I place no weight on them.

Costs on a Full Recovery Basis

[35] 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 Father in these proceedings resulted in the Mother incurring substantial legal fees. The Father cannot be permitted to litigate in the manner he did with impunity. The Mother’s legal fees could have been substantially lower, but for the unreasonable positions and bad faith conduct of the Father. The costs order in this case in part reflects the goal of discouraging and sanctioning inappropriate behaviour.

[36] 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. Finally, Evelyn is entitled to her full recovery costs from the date of her Offer to Settle. All of these contribute to my decision to award full recovery costs.

[37] As a result, I award the Respondent Mother 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 Mother exceeded her Offer to Settle, in the amount of $420,000.00, inclusive of disbursements and HST.

Child Support and Section 7 Expenses

[38] Josh is ordered to pay child support in accordance with the Guidelines. Josh has agreed to pay child support of $794.00, based on an estimated 2018 income of $85,265.00, subject to adjustment based on his notice of assessment.

[39] Evelyn’s estimated income for 2017 is $74,734.61. Josh is responsible for 54% of section 7 expenses. The child’s section 7 expenses include her preschool tuition and medical expenses not covered by insurance.

[40] Josh is ordered to pay his arrears of child support beginning December 7, 2018.

[41] Child support may be adjusted annually in accordance with the Ontario Child Support Guidelines, O. Reg. 391/97. Josh is to provide financial disclosure pursuant to section 24.1 of the Child Support Guidelines by May 1, 2019 and each year thereafter, unless he has income which is other than employee T4 income in which case he shall provide the relevant financial disclosure as set out in section 21(1) of the Guidelines. If Evelyn seeks a contribution to section 7 expenses she must provide financial disclosure.

[42] A support deduction order to issue accordingly.

Kristjanson, J Date: May 27, 2019