COURT FILE NO.: FC-19/D-136
DATE: December 13, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jennifer Carmichael
– and –
Rodney James Carmichael
Caroline E. Kelly, counsel for the Applicant
John E. Summers, counsel for the Respondent
HEARD: In Chambers
RULING ON COSTS
Desormeau, j.
Background
[1] On October 30, 2019, after two adjournments, a motion was heard whereby the Respondent Father, Rodney Carmichael, asked for equal time sharing of the children and immediate sale of the matrimonial home.
[2] The Applicant Mother’s cross motion sought an order appointing Catherine Reid, a Registered Social Worker to provide a s.30 CLRA assessment.
[3] In my reasons delivered October 30, 2019 I found it was in the children’s best interest that both parents have week about access to the children, without a police enforcement clause.
[4] The Father’s motion for immediate sale of the matrimonial home was dismissed, subject to leave to revive his motion should a trial on the issues not proceed in the January 2020 or May 2020 sittings.
[5] Regarding the Mother’s request for a s.30 CLRA assessment, I found that such an assessment was warranted and made the order following the receipt of the parties’ comments regarding the s.30 Assessment Endorsement Sheet. I ordered that the costs be borne equally by the parties, subject to any available extended health benefits through their employment.
[6] The parties were directed to try to resolve the issue of costs, failing which written submissions were to be provided to the court.
[7] The costs from the Mother’s motion brought without notice to the Father on October 9, 2019 were also reserved to the October 30th, 2019 motion date. At that Motion, Justice Fraser determined that the Mother was permitted to bring the children to their Maternal Grandfather’s funeral.
[8] The parties have now submitted their costs submissions. Below is my determination on the issue.
Costs
[9] The starting point in addressing the issue of costs is section 131 of the Courts of Justice Act, which provides that subject to the provisions of an Act or rules of court, costs are within the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[10] Rule 24 of the Family Law Rules (FLR) addresses the issue of costs, and states that there is a presumption that a successful party is entitled to the costs of a motion.
[11] Modern costs rules are designed to foster four fundamental purposes (1) to partially indemnify successful litigants; (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules : Mattina v. Mattina, 2018 ONCA 867.
[12] The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2: Lawrence v. Lawrence, 2017 ONCJ 431, at para. 52.
[13] Parties to litigation must understand that court proceedings are expensive, time-consuming and stressful for all concerned. They are not designed to give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and, perhaps most importantly for the purposes of this case, oblivious to the mounting costs of the litigation: Lawrence v. Lawrence, supra, at para. 54.
[14] Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also be used to sanction behaviour that increases the duration and expense of litigation or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 (S.C.C.), para. 25; Lawrence v. Lawrence, supra, at para. 31.
[15] In Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), the Ontario Court of Appeal indicated that a costs award should be a "fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs of the successful litigant". A "fair and reasonable amount" is that amount which the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation: Lupien v. Carmichael, 2017 ONSC 2929, at para. 9.
[16] One measure of what is “fair and reasonable” to pay in costs may be arrived at by looking at what the unsuccessful party paid for their own legal fees. (See Goryn v. Neisner, 2015 CarswellOnt 8562, and Mohr v. Sweeney, 2016 ONSC 3238)
[17] A successful party in a family law case is presumptively entitled to costs, subject to the favours set out in Rule 24 FLR. The Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded. See Beaver v. Hill, 2018 ONCA 840, at paras. 9 and 10.
[18] Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome: Boucher v. Public Accountants Council (Ontario), supra.; Lawrence v. Lawrence, supra, at para. 64.
[19] Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs. Proportionality is a core principle that not only governs the conduct of the proceedings generally, but is specifically applicable to fixing costs: Beaver v. Hill, supra, at paras. 12 and 19.
[20] An award of costs is subject to: the factors listed in Rule 24(12) FLR, Rule 24(4) FLR pertaining to unreasonable conduct of a successful party, Rule 24(8) FLR pertaining to bad faith, Rule 18(14) FLR pertaining to offers to settle, and the reasonableness of the costs sought by the successful party: Berta v. Berta, 2015 ONCA 918 at para. 94.
[21] In making a determination, the court must consider Rule 24(12) FLR, which outlines the factors to be considered in quantifying costs:
24 (12) In setting the amount of costs, the court shall consider,
(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. O. Reg. 298/18, s. 14.
[22] Rule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24(12)(a) (1) above). It reads as follows:
24 (5) 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.
[23] Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.
[24] Rule 18(14) sets out the costs consequences of failure to accept an Offer to Settle:
18 (14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
If the offer relates to a motion, it is made at least one day before the motion date.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer. O. Reg. 114/99, r. 18 (14).
[25] The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of Rule 18(14) FLR: Rule 18(15) FLR. (See Neilipovitz v. Neilipovitz [2014] O.J. No. 3842 (SCJ).
[26] When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, when exercising its discretion over costs, even if Rule 18(14) FLR does not apply: Rule 18(16) FLR.
[27] Close is not good enough to attract the costs consequences of 18 (14). The offer must be as good as or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in Rule 18 (14) FLR, it may be considered under Rule 18 (16) FLR: Gurley v. Gurley, 2013 ONCJ 482.
[28] The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order: Wilson v Kovalev, 2016 ONSC 163.
[29] Rule 24(6) FLR provides that where success in a step in a case is divided, the court may exercise its discretion to order and apportion costs as appropriate. However, the determination of whether success was truly "divided" requires a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues that required adjudication (Jackson v. Mayerle, 2016 ONSC 1556 (Ont. S.C.J.); Slongo v. Slongo, 2017 ONCA 687 (Ont. C.A.)): Lippert v. Rodney, Norton and Norton, 2017 ONSC 5406, at para. 14.
[30] While Rule 24(12)(b) FLR [previously 24(11)(f)] does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success. (See Biant v. Sagoo, 2001 28137 (ON SC), 2001 CarswellOnt 3315, [2001] O.T.C. 695, 20 R.F.L. (5th) 284 (Ont. S.C.J.): Lawrence v. Lawrence, supra, at para. 33)
[31] Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24(12). (See Peers v. Poupore, 2008 ONCJ 615 (Ont. C.J.), para. 42; Lawrence v. Lawrence, supra, at para. 35)
[32] The (financial) means of the unsuccessful party may not be used to shield them from liability for costs, particularly when they has acted unreasonably: Gobin v. Gobin (2009), 2009 ONCJ 278, 71 R.F.L. (6th) 209 (Ont. C.J.), para. 24; Lawrence v. Lawrence, supra, at para. 36.
[33] Those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings: Balsmeier v Balsmeier, 2016 ONSC 3485, adopting with approval the comments of McGee J, from Mohr v. Sweeney 2016 ONSC 3338, 2016 CarswellOnt 7716, at para. 17, citing Balaban v. Balaban, 2007 7990 (ON SC), 2007 CarswellOnt 1518, at para. 7.
[34] To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made: Lawson v. Lawson, 2008 23496 (ON SC), 2008 CarswellOnt 2819, [2008] W.D.F.L. 3600, 167 A.C.W.S. (3d) 723, [2008] O.J. No. 1978 (Ont. S.C.J.). The position each party took in the case should also be examined: Lawrence v. Lawrence, supra, at para. 41.
[35] Rule 24(8) of the Rules states 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. Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith: DePace v. Michienzi (2000) 2000 22460 (ON SC), 12 R.F.L. (5th) 341 (Ont SCJ); Kardaras v. Kardaras, 2008 ONCJ 616. A bad faith finding on some specific issue does not necessarily have a spill-over effect to other issues: Hunt v. Hunt [2001] O.J. No. 5111 (SCJ).
[36] Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. (See Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Scipione, 2015 ONSC 5982) 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: S.(C.) v. S. (M.) (2007), 2007 20279 (ON SC), 38 R.F.L. (6th) 315 (Ont. SCJ). 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. (See Scipione, supra.)
[37] Even where the "full recovery" provisions of the Rules are triggered -- either by an offer which meets Rule 18(14) requirements, or by a finding of bad faith -- quantification of costs still requires an overall sense of reasonableness and fairness: Goryn v. Neisner 2015 ONCJ 318 (OCJ). The Rules do not require the court to allow the successful party to demand a blank cheque for their costs: Slongo v. Slongo 2015 ONSC 3327 (SCJ). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances: M.(C.A.) v. M.(D.) 2003 18880 (ON CA), [2003] O.J. No. 3707(supra); Scipione v. Scipione, supra.; Jackson v. Mayerle, 2016 ONSC 1556.
Analysis
[38] In determining the quantum of costs, I have taken into account the factors set out in Rule 24(12):
(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
The issues at the motion were important to both parties. The evidence provided by both parties for the motion was proportional to the issues in question.
(i) each party’s behaviour:
This was a very contentious file. The Application was issued on June 10, 2019. As noted by this court on October 30, 2019, the parties have appeared in court on July 5, 2019 for a motion and September 3, 2019 for a case conference. Thereafter, an urgent motion was brought by the Mother, but adjourned from September 17, 2019 to September 27, 2019, then ultimately to October 30, 2019.
Another urgent motion was brought by the Mother, without notice, on October 9, 2019, to permit the children to attend their paternal grandfather’s funeral. For the October 9, 2019 motion, even though it was brought without notice, Justice Fraser granted the relief sought. This court finds the Father’s position about the children not attending the funeral a demonstration of unreasonable behaviour. The Father’s thinking was distracted by the animosity toward the other parent rather than focusing on the love and best interests of the children.
Meanwhile, the Mother’s behaviour was also unreasonable when she requested that all access be suspended until terms could be agreed upon, and later requiring it to be confirmed in writing through counsel.
From this court’s perspective, both parties were attempting to control the narrative rather than place the children’s needs and interests at the forefront.
(ii) the time spent by each party:
Clearly both counsel have set aside a lot of time to deal with this matter, and it was important to their clients.
(iii) any written offers to settle, including offers that do not meet the requirements of Rule 18:
Please see below.
(iv) any legal fees, including the number of lawyers and their rates:
I take no issue with counsel’s hourly rate for legal fees.
(v) any expert witness fees, including the number of experts and their rates: n/a
(vi) any other expenses properly paid or payable:
The disbursements claimed by each party appear reasonable.
(b) any other relevant matter:
n/a
[39] I am mindful that the Court’s role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees: Aprile v. Aprile, 2016 ONCJ 678, at para. 13.
[40] I have considered the submissions of counsel regarding the July 5, 2019 endorsement which states “no costs ordered today but they are reserved”. I am not persuaded that this means “costs in the cause”. I am equally not persuaded that those costs were reserved to the October 30, 2019 motion date, and as such, I defer to the trial judge to determine the costs of the July 5, 2019 motion.
[41] I am persuaded that the costs for motion without notice by the Mother of October 9, 2019 should be fixed on a substantial indemnity basis. The Father’s refusal, in the circumstances, was unreasonable, and necessitated the motion being brought. However, I am not persuaded that these actions were in bad faith. I also note that though a formal offer to settle was not served, Ms. Carmichael’s proposal was very similar to the order made by Justice Fraser.
[42] As for the remainder of the issues which were properly before me, I am unable to conclude that one was more meaningful that the others. Mr. Carmichael was successful in his request for shared time, but his motion for sale of the matrimonial home was dismissed without prejudice to him to revive his request should the trial not proceed in the next two trial sittings. Ms. Carmichael meanwhile was not successful in her access requests but was successful in the request for a s.30 CLRA Assessment, and maintaining her exclusive possession of the matrimonial home. Ultimately, I find that success was divided on the motion of October 30, 2019, and find that neither party are entitled to costs of that motion.
[43] In reviewing the offers to settle for the September 17, 2019, September 27, 2019 and October 30, 2019 motion dates, neither party made any formal or informal offer that was as favourable or more favourable than the court’s endorsements, particularly on all of the issues which were determined. In the circumstances, I find that neither party is entitled to costs for these motion dates.
Disposition
[44] As a result, costs for the September 17, 2019, September 27, 2019 and October 30, 2019 motion dates are fixed at zero. Costs of the October 9, 2019 motion date are fixed at $1,725.79, inclusive of HST and disbursements, payable by Mr. Carmichael to Ms. Carmichael, forthwith.
Justice Hélène C. Desormeau
Released: December 13, 2019
Carmichael v. Carmichael, 2019 ONSC 7224
COURT FILE NO.: FC-19/D-136
DATE: December 13, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
Jennifer Carmichael
– and –
Rodney James Carmichael
Ruling on COSTS
Justice Hélène C. Desormeau
Released: December 13, 2019