COURT FILE NO: 5388/15

DATE: February 8, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dawn Diane Arthur

Applicant

– and –

Lorne Wayne Arthur

Respondent

Kathleen P.M. Bingham, for the Applicant

Respondent Self-Represented

The Honourable Madam Justice Deborah L. Chappel

REASONS FOR JUDGMENT RESPECTING COSTS

PART I: INTRODUCTION

[1] On September 5, 2018, I presided over the hearing of a Motion to Change Final Order which the Respondent had commenced on February 7, 2017. The Respondent requested an order varying the order of Pazaratz J. dated November 2, 2016, which required him to pay the Applicant spousal support in the amount of $1,750.00 per month. Specifically, he requested an order terminating his spousal support obligation altogether, or in the alternative, significantly reducing the quantum of support. On November 14, 2018, I made an order dismissing the Motion to Change Final Order. I invited the parties to file Written Submissions respecting costs, and I set deadlines for the service and filing of Submissions, Responding Submissions and Reply. In addition, given that the Applicant was entirely successful in this matter, I ordered the parties to engage in meaningful discussions regarding the issue of costs.

[2] The Applicant filed Written Submissions seeking costs in connection with this proceeding. I am satisfied based on the affidavit of Karen Elaine Langston sworn November 29, 2018 which the Applicant filed with her Written Submissions that the Applicant and her counsel made diligent efforts to attempt to engage the Respondent in discussions to resolve the costs issue, but that the Respondent did not respond to those efforts. The Respondent did not file any Responding Submissions by the deadline of December 7, 2018.

[3] The Applicant seeks costs from the Respondent in the amount of $6,394.97, inclusive of HST and disbursements. In addition, she requests an order that the costs award be designated as a support order within the meaning of s. 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, S.O. 1996, c. 31 (the “FRSAEA”), and as such, that it be enforceable by the Director of the Family Responsibility Office (the “FRO”). She submits that the sum which she is requesting represents her reasonable costs, inclusive of HST and disbursements, on a partial indemnity basis from the commencement of the proceedings until June 7, 2017, and full indemnity costs, inclusive of HST and disbursements, from June 8, 2017 onward. Her position is that she is entitled to costs in this matter, given that she was entirely successful and acted reasonably throughout the proceedings. She also claims that the Respondent’s decision to pursue his Motion to Change Final Order was unreasonable. The Applicant submits that she is entitled to full indemnity costs from June 8, 2017 onward because she served an Offer to Settle which satisfies the requirements of Rule 18(14) of the Family Law Rules, O. Reg. 114/99, as amended.

[4] For the reasons that follow, I conclude that the Applicant is entitled to costs in connection with the Motion to Change Final Order, and that the sum of $6,302.00 is a reasonable and proportionate award. I am also ordering that these costs be enforceable by the FRO.

PART II: BACKGROUND

[5] An appreciation of the background in this matter is essential to the determination of costs. As I indicated in my Reasons for Judgment, the parties separated on March 1, 2014, following a 34.5 year marriage. They were unable to resolve the issue of spousal support, and therefore the Applicant commenced an application to deal with this issue. On November 2, 2016, Pazaratz J. made a final order following a trial requiring the Respondent to pay the Applicant spousal support in the amount of $1,750.00 per month.

[6] The Respondent commenced his Motion to Change Final Order on February 7, 2017, only four months after the final order was issued. He brought a motion on July 7, 2017, seeking a temporary order reducing his spousal support obligation to $1,000.00 per month. The Applicant brought a cross motion, seeking an order staying the Motion to Change Final Order until the Respondent had paid all costs that had been ordered against him in the context of the original application. As of that time, the Respondent still owed the Applicant costs in the amount of $7,350.00 in relation to the application. On July 21, 2017, I stayed the Motion to Change Final Order until the Respondent paid the Applicant the sum of $4,410.00 on account of costs. I also ordered him to pay the Applicant costs of the motions in the amount of $1,000.00.

[7] In my final Reasons for Judgment in the Motion to Change Final Order, I concluded that the Respondent had not satisfied the threshold test of demonstrating that a material change in circumstances relevant to spousal support had occurred since November 2016. The Respondent advanced several arguments in an effort to meet the threshold test, but I found that the evidence did not support any of the grounds which he relied on. With respect to his own condition, means, needs and circumstances, I found that his income had actually increased from the income upon which the November 2, 2016 had been based, that his debt load apart from his spousal support arrears and costs liability had also decreased, and that his cash flow situation and asset base had also improved. I found that the only evidence of increased financial hardship related to his arrears of spousal support and payments which he had been required to make towards his costs liabilities in connection with the court proceedings. I also found that the evidence did not substantiate the Respondent’s claims that his income earning capacity had become impaired due to health issues, and that there had not been any material change in the Applicant’s condition, means, needs or circumstances since November 2016.

PART III: THE LAW RESPECTING COSTS

I. GENERAL PRINCIPLES AND PURPOSES OF COSTS AWARDS

[8] The starting point in addressing the issue of costs is section 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, as amended, which provides that subject to the provisions of an Act or Rules of Court, costs are in the discretion of the court, which may determine by whom and to what extent the costs shall be paid. This section must be read in conjunction with Rule 24 of the Family Law Rules, which sets out a number of principles to guide the court in the exercise of its discretion in the Family Law context.

[9] The traditional purpose of a costs award was to indemnify the successful party in relation to the expenses they incurred in either defending a claim or in pursuing a valid legal right (Ryan v. McGregor (1926), 1925 460 (ON CA), 58 O.L.R. 213 (Ont. C.A.), at p. 216); British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 (S.C.C.), at paras. 21-24 (“Okanagan Indian Band”). However, the Supreme Court of Canada underlined in Okanagan Indian Band that developments in the law respecting costs have significantly broadened the purpose of costs awards such that they have become a valuable tool for furthering the efficient, orderly and fair administration of justice (at para. 25). It noted that costs awards are a means of sanctioning parties who refuse to engage in concerted settlement efforts, or who engage in behaviour that increases the duration and expense of litigation or that is otherwise unreasonable or vexatious (at paras. 25-26). The court also established that costs awards are an important tool for ensuring meaningful access to justice for litigants who seek to vindicate a legally sound legal position but who have limited financial means to do so (at para. 26). The Ontario Court of Appeal subsequently reiterated the importance of costs awards as a tool for promoting efficient, fair and meaningful access to justice in Fong v. Chan, 1999 2052 (ON CA), 1999 CarswellOnt 3955, 181 D.L.R. (4th) 614, 46 O.R. (3d) 330 (C.A.) and Serra v. Serra, 2009 ONCA 395 (C.A.). In those cases, the court summarized that modern rules respecting costs aim to foster the following 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.

(see also Mattina v. Mattina, 2018 ONCA 867 (C.A.))

[10] While these three objectives provide a general framework for the analysis of costs, the courts must also ensure that the law of costs does not become an impediment to the pursuit of justice. Accordingly, in seeking to advance these objectives, the court should also consider the importance of not unduly deterring potential litigants from pursuing legitimate claims for fear of overly burdensome cost consequences (Cassidy v. Cassidy, 2011 CarswellOnt 1541 (S.C.J.)).

[11] In addressing the issue of costs, the court must also be guided by the primary objective of the Family Law Rules as set out in Rule 2(2), which is to enable the court to deal with cases justly (Mattina, at para. 10).

[12] The Court of Appeal has highlighted the discretionary nature of costs awards, and the importance of considering all relevant factors based on the unique facts of each case (Andrews v. Andrews, 1980 3619 (ON CA), [1980] O.J. No. 1503 (C.A.)). It has emphasized that although court rules respecting costs have circumscribed the broad discretion which section 131 of the Courts of Justice Act grants the court in regard to costs, they have not completely negated this discretion (M.(C.A.) v. M.(D.), 2003 18880 (ON CA), [2003] O.J. No. 3707, 67 O.R. (3d) 181, 2003 CarswellOnt 3606 (C.A.); Fielding v. Fielding, 2015 ONCA 901 (C.A.)).

II. LIABILITY FOR COSTS

A. Costs Liability Should Ideally be Considered After Each Step in the Case

[13] The first issue to be determined in addressing costs is whether either party is liable to pay costs. Rule 24 of the Family Law Rules sets out a number of factors relevant to the preliminary issue of liability. Rule 24(10) establishes the general principle that the court should promptly after dealing with a step in the case decide in a summary manner the issues of entitlement and quantum of costs, or alternatively should expressly reserve the decision on costs for determination at a later stage in the case. However, Rule 24(11) provides that the court’s failure to act pursuant to Rule 24(10) in relation to a step in the case does not prevent the court from awarding costs in relation to the step at a later stage in the case.

B. Factors Relevant to Liability for Costs

1. Degree of Success

[14] Rule 24(1) establishes a presumption that a successful party to a motion, enforcement, case or appeal is entitled to costs. This Rule must be considered in conjunction with Rule 24(6), which 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. The determination of whether success was truly “divided” does not simply involve adding up the number of issues and running a mathematical tally of which party won more of them (Brennan v. Brennan, 2002 CarswellOnt 4152 (S.C.J.)). Rather, it 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 which required adjudication (Jackson v. Mayerle, 2016 ONSC 1556 (S.C.J.); Slongo v. Slongo, 2017 ONCA 687 (C.A.)) Where the court concludes that success was in fact divided, it may award costs to the party who was more successful on an overall global basis or on the primary issue, subject to adjustments that it considers appropriate having regard for the lack of success on secondary issues and any other factors relating to the litigation history of the case (Gomez-Pound v. Pound, [2009] O.J. No. 4161 (O.C.J.); Boland v. Boland, 2012 ONCJ 239, [2012] O.J. No. 1830 (O.C.J.)).

2. Bad Faith and Liability for Costs

[15] A finding that a party has acted in bad faith will result in liability for costs as against the offending party, regardless of that party’s success. 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. This costs provision is subject to the general principle that costs claimed must be reasonable. Bad faith is not simply bad judgment or negligence. As the court stated in Hendry v. Martins [2001] O.J. No. 1098 (S.C.J.), it implies “the conscious doing of a wrong because of dishonest purpose or moral obliquity… it contemplates a state of mind affirmatively operating with furtive design or ill will” (see also Biddle v. Biddle (2005), 2005 7660 (ON SC), 137 A.C.W.S. (3d) 1164); Children’s Aid Society of the Region of Peel v. K.J.F. and K.P.F., 2009 ONCJ 252 (O.C.J.)). Perkins J. described the concept of “bad faith” within the meaning of this Rule in S.(C.) v. S. (M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.), aff’d 2010 ONCA 196, [2010] O.J. No. 1064 (C.A.) as follows:

In order to come within the meaning of bad faith in rule 24(8), behaviour 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 behaviour, to conceal information relevant to the issues or to deceive the other party or the court… The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. 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.

(See also Scalia v. Scalia, 2015 ONCA 492 (C.A.)).

3. The General Conduct of the Parties

[16] Unreasonable conduct that falls short of bad faith is also relevant to the issue of liability for costs. One of the most important functions of costs is to ensure that litigants conduct themselves in a manner that upholds the integrity of our justice system as a whole. Costs awards are a means of ensuring that litigation is not utilized as a tool to harass parties, and that the resources of the justice system are not unduly drained by unmeritorious claims. As Spence J. stated in Heuss v. Surkos 2004 ONCJ 141 (O.C.J.), at para. 20:

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. Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.

[17] The presumption that a successful party is entitled to costs does not apply where that party has acted unreasonably, in which case that party may be deprived of all or part of their costs or may be ordered to pay the unsuccessful party’s costs (Rule 24(4)). Rule 24(5) sets out factors that the court must examine when deciding whether a party has acted reasonably or unreasonably, as follows:

Decision on Reasonableness

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.

[18] Rule 24 establishes additional presumptions regarding entitlement to costs that apply regardless of success, and which are focussed on a party’s litigation conduct. Rule 24(7) stipulates that if a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step or otherwise contributes to that step being unproductive, the court shall award costs against the party “unless the court orders otherwise in the interests of justice.”

4. The Importance of Offers to Settle in Determining Liability for Costs

[19] Another important consideration in determining both liability and the quantum of costs is whether or not any party has served or accepted an Offer to Settle. Rule 18(14) establishes costs consequences for failing to accept an Offer to Settle that complies with the requirements of that Rule. In order for these costs consequences to come into play, the Offer to Settle must be signed by the party making the offer and their lawyer. Failure to comply with this requirement may result in the offer not being a valid formal offer that attracts the consequences outlined in Rule 18(14) (Riss v. Greenhough, 2003 CarswellOnt 1450 (S.C.J.); Jakubowski v. Kopacz-Jakubowski, 2008 CarswellOnt 2149 (S.C.J.)). The costs consequences, and conditions precedent to these consequences, are set out in Rule 18(14) as follows:

Costs Consequences of Failure to Accept Offer

Rule 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:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. 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.

3. The offer does not expire and is not withdrawn before the hearing starts.

4. The offer is not accepted.

5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

[20] For the purposes of subsection 5 of this Rule, the burden of proving that the order is as favourable or more favourable than the Offer to Settle is on the party who claims the benefit of Rule 18(14) (see Rule 18(15).

[21] The costs consequences set out in Rule 18(14) do not automatically apply when the requirements set out in the Rule are satisfied. The Rule simply establishes a rebuttable presumption regarding costs, and the court ultimately maintains the discretion to determine whether the costs consequences are appropriate having regard for all of the circumstances of the case (M.(C.A.); Cole v. Freiwald, 2011 CarswellOnt 10517 (O.C.J.)). With respect to the requirement that the order obtained be as or more favourable than the Offer to Settle, 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. Rather, what is required is a general assessment of the overall comparability of the offer as contrasted with the order that was ultimately made (Sepiashvili v. Sepiashvili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (S.C.J.), additional reasons to 2001 CarswellOnt 3316 (S.C.J.); Wilson v. Kovalev, 2016 ONSC 163 (S.C.J.); Jackson).

[22] In deciding both liability for and quantum of costs, Rule 18(16) directs that the court may also take into consideration any written Offer to Settle, the date it was made and its terms, even if the conditions and presumptive consequences set out in Rule 18(14) do not apply. The court may in the exercise of its discretion compare portions of any Offer to Settle dealing with discrete issues to the terms of the order that was made. A party’s failure to serve an Offer to Settle is also a highly relevant factor in determining both liability for costs and the appropriate amount of a costs award (M.(J.V.) v. P.(F.D.), 2011 CarswellOnt 13510 (O.C.J.); Menchella v. Menchella, 2013 ONSC 367 (S.C.J.); Potter v. DaSilva, 2014 ONCJ 443 (O.C.J.)). As Zisman J. stated in Potter, at para. 22:

Offers to settle play an integral role in saving time and expense by promoting settlements, focusing parties and often narrowing the issues in dispute. Offers to settle are therefore important in any consideration of the issue of costs. In my view, it is unreasonable behaviour for a party not to make an offer to settle.

5. Financial Means of the Parties

[23] Although not specified in Rules 24 and 18 as factors in deciding costs, the financial means of the parties, their ability to pay costs and the effect of any costs ruling on the parties and any children are also relevant to the adjudication of both liability for costs and the appropriate quantum of a costs award (Murray v. Murray, (2005), 2005 46626 (ON CA), 79 O.R. (3d) 147, [2005] O.J. No. 5379 (C.A.); Tauber v. Tauber, 2000 5747 (ON CA), [2000] O.J. No. 2133; additional reasons at 2000 22280 (ON CA), [2000] O.J. No. 3355 (C.A.); Cassidy v. McNeil, 2010 ONCA 218 (C.A.); M.(C.A.); Clark v. Clark, 2014 ONCA 175 (C.A.)). In most cases, a party’s limited financial means will be relevant to the appropriate quantum of costs and how payment should be effected rather than to the issue of liability for costs (Snih v. Snih, 2007 20774 (S.C.J.), at paras. 7-13; Izyuk v. Bilousov, 2011 ONSC 7476 (S.C.J.), at para. 51). However, the court may decline to order costs against an unsuccessful party if it is clear that the party would be unable to pay the costs, and the practical effect of a costs order would be to destroy any chance that the party may have to achieve financial self-sufficiency (Murray, at para. 10).

III. QUANTUM OF COSTS

A. General Principles

[24] Once liability for costs has been established, the court must determine the appropriate quantum of costs. In Serra, Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 1042 (ON CA), 2005 CarswellOnt 189 (C.A.), the court set out the following additional general principles relating to the quantum issue:

1. Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.

2. Costs need to be proportional to the issues and amounts in question and the outcome of the case.

3. Amounts actually incurred by the successful litigant are not determinative.

4. In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

(See also Selznick v. Selznick, 2013 ONCA 35 (C.A)).

[25] There are no presumptions respecting the quantum of costs in Family Law matters in Ontario, apart from the specific provisions in the Family Law Rules discussed below directing the court to order full recovery costs in certain circumstances (Anderson v. Anderson, 2016 ONSC 7774 (S.C.J.)). In particular, there is no provision in the Family Law Rules or presumption in the case-law favouring a general approach of awarding “close to full recovery” costs in Family Law litigation (Beaver v. Hill, 2018 ONCA 840 (C.A.), at paras. 9-11). However, the court need not find that bad faith or other special circumstances exist to make a costs award approaching full recovery (Sordi v. Sordi, 2011 ONCA 665 (C.A.), at para. 21).

B. Factors Relevant to the Quantum of Costs

1. Rules 24(12), 1(8) and 2(2) of the Family Law Rules

[26] Rule 24(11) prescribes some of the factors which the court must consider in deciding the appropriate quantum of costs, as follows:

Setting Costs Amounts

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.

[27] In considering the quantum of costs, the court should also consider Rule 1(8), which provides that the court may respond to a failure to follow the Rules or abide by an order by making an order for costs, and Rule 2(2), which provides that one of the primary objectives of the Rules is to ensure that cases are dealt with justly (Mooney v. Fast, 2013 CarswellOnt 15659 (O.C.J.)).

2. The Appropriateness, Reasonableness and Proportionality of the Amounts Claimed

[28] The principles of proportionality and reasonableness are “the touchstone considerations to be applied in fixing the amount of costs” (Beaver, at para. 12). In determining the appropriate quantum, the court should consider the amount that 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 (S.C.J.); Darling at para. 12). Polowin J. commented on the general principles respecting the quantification of costs in Sommerard v. I.B.M. Canada Ltd., 2005 40140 (ON CA), [2005] O.J. No. 4733 (S.C.J.). She succinctly captured the essence of the quantification exercise based on the principles outlined above as follows, at paras. 53-59:

The fixing of costs is not a mechanical exercise of calculating hours times hourly rates. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. In doing so, I must stand back from the fee produced by the raw calculation of hours spent times hourly rate and assess the reasonableness of the counsel fee from the perspective of the reasonable expectation of the losing party.

[29] As a starting point in determining the appropriate quantum of costs, the court has an obligation to review the specifics of the Bill of Costs to assess whether items claimed are properly the subject of a costs award, and if so, to consider the reasonableness of the amounts requested (Donnelly v. Donnelly, 2004 CarswellOnt 2076 (S.C.J.); Snelgrove v. Kelly, 2017 ONSC 4625 (S.C.J.)). The court must as part of this process consider whether all of the items claimed actually relate to the legal step in question, and whether the hours spent can be reasonably justified (Pagnotta v. Brown, [2002] O.J. No. 3033 (S.C.J.); Murphy v. Murphy, 2010 ONSC 7204 (S.C.J.); Jackson; Snelgrove; Beaver). The goal of this exercise is to come up with an amount that the court considers to be a reasonable and proportionate full indemnity amount from which the balance of the quantification analysis can then be carried out. However, this analysis should be undertaken in a global fashion. The court is not required to embark upon a painstaking, line-by-line analysis of Bills of Costs and second guess every hour and item docketed, unless there are clear concerns about excessive claims and overreaching (Docherty v. Catherwood, 2016 ONSC 2140 (S.C.J.), at para. 50; Snelgrove).

[30] The principle of proportionality must always remain at the forefront of the costs analysis (Beaver, at para. 12). As Pazaratz J. stated in Jackson, the Supreme Court of Canada recognized in Hryniak v. Mauldin, [2014] 1 S.C.R. 87, 2014 SCC 7 (S.C.C.) that timeliness, affordability and proportionality are essential components of a legal system that ensures true access to justice. In the context of the costs analysis, these factors require the court to ensure that expenses claimed make sense having regard for the importance and complexity of the issues that were litigated. If the case was complicated and involved novel or important issues, the principle of proportionality may support a higher award (L.(J.K.) v. S.(N.C.), 2009 CarswellOnt 1017 (S.C.J.), at para. 34; Goodwin v. Goodwin, 2011 ONSC 2402 (S.C.J.), at para. 35).

[31] A useful benchmark for determining whether costs claimed are fair, reasonable and proportional is to consider the time that the other party has spent and the amount they have 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). 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 time spent and costs incurred 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). 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).

3. Degree of Success in the Case

[32] The degree of a party’s success in the case is a critical factor in determining the appropriate quantum of costs. If the case involves numerous issues, it is important to consider whether one party was more successful overall than the other(s). If one party was indeed the most successful overall, the court may nonetheless make adjustments to the costs award to take into account that party’s lack of success on certain issues in the proceeding. The nature and extent of the adjustments will be a matter of discretion and will depend in part on the nature, importance and complexity of the issues on which the party was successful and unsuccessful (Eastern Power Ltd. v. Ontario Electricity Financial Corp., 2012 ONCA 36 (C.A.), at para. 18). The court should adopt a broad and flexible approach in making such adjustments. It is not appropriate to engage in a detailed costs analysis respecting each separate issue and then tally up an ultimate “costs score-sheet.” The Ontario Court of Appeal cautioned against adopting this type of approach to formulating a costs order, which it referred to as a “distributive costs award,” in Oakville Storage and Forwarders Ltd. v. Canadian National Railway, 1991 CarswellOnt 440 (C.A.). It emphasized the importance of considering the success of each party on particular issues in a case, but concluded that this analysis is more appropriately undertaken as part of the general exercise of discretion respecting costs, taking into account the factors outlined in the applicable Rules. In Skye v. Matthew, 1996 CarswellOnt 37 (C.A.), the court reiterated its caution about resorting to distributive costs orders, and expressed concern that such awards undermine the purposes of Offer to Settle provisions in court Rules, which are result-oriented rather than issue-driven. The Court of Appeal has clearly indicated that the use of distributive costs awards should be restricted to “the rarest of cases” (Eastern Power Ltd., at para. 18; Murphy v. Alexander (2004), 236 D.L.R. (45h) 302 (C.A.); Armak Chemicals Ltd. v. Canadian National Railway Co. (1990), 1991 7060 (ON CA), 5 O.R. (3d) 1 (C.A.)).

4. Bad Faith and General Conduct of the Parties

[33] As indicated above, Rule 24(8) is relevant to both liability for costs and the appropriate quantum. It provides that where a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order that the party pay them immediately. The full recovery portion of the award should relate to the issues affected by the bad faith. Once the full recovery analysis is complete with respect to those issues, the court should assess costs in relation to the other issues by considering the overall circumstances of the case in light of the factors outlined in Rule 24(11), and should use the discretion permitted by that section to reach a correct overall result (Hunt v. Hunt, 2001 CarswellOnt 4548 (S.C.J.); Likins v. MacKenzie, 2003 CarswellOnt 3007 (S.C.J.); additional reasons at 2004 CarswellOnt 2157 (S.C.J.); Snelgrove).

[34] The general conduct of the parties is also a key factor in determining the amount of costs, even if their conduct falls short of bad faith. As Campbell J. highlighted in Parsons v. Parsons, 2002 CarswellOnt 2536 (S.C.J.):

[W]hen the respondents have acted unreasonably, the applicants should not have to financially "pick-up" or absorb the result of those respondents' impulsive and punitive decisions. While the court recognizes that costs orders may "fan the fires", I interpret the rules as recognizing that there must be consequences for unreasonableness.

There is an element of behaviour modification to a costs order in that it encourages a change in attitude from a "litigate with impunity" mindset.

[35] In assessing the parties’ overall conduct, the court should consider Rule 24(5), discussed above, which sets out factors that the court must examine when deciding whether a party has acted reasonably or unreasonably. Evidence that a party engaged in litigation conduct that was disrespectful of the other participants or the court, which unduly complicated the proceedings, which needlessly increased the cost of the litigation or which was otherwise unreasonable may lead to increased cost consequences (Parsons, at para. 14). Similarly, a high or full recovery costs award may be justified where a party persists in advancing unreasonable claims (Lawrence, at paras. 58-60; Westendorp v. Westendorp, 2000 CarswellOnt 2047 (S.C.J.), at para. 4; Ojo v. Ojo, 2005 CarswellOnt 1239 (S.C.J.), at para 16). By contrast, evidence that a litigant “behaved in ways that saved time and expense and minimized strain on the court’s resources” will militate in that party’s favour in the costs analysis (Cornwall v. Jevons, 2015 ONCJ 772 (O.C.J.), at para. 1).

5. Offers to Settle

[36] As discussed above, a party who serves an Offer to Settle which meets the requirements of Rule 18(14) is presumptively entitled to full recovery of costs from the date the Offer was served. Rule 18(16) clarifies that the court may consider as a favourable factor in the costs analysis any Offer to Settle, even if the Offer does not meet the formal requirements of Rule 18(14). Furthermore, Rules 24(5)(b) and (c) require the court to consider the reasonableness of any offer that a party made, withdrew or failed to accept in deciding costs. However, in quantifying costs, the court should be very cautious about relying too heavily on an Offer to Settle that does not meet the requirements of Rule 18(16) (Beaver, at para. 16). In addition, the failure of an Offer to Settle to contain a true element of compromise is a factor to be considered in assessing the weight that should be accorded to the offer in the costs analysis (Beaver, at para. 16). A party’s failure to serve an Offer to Settle may also be viewed as an adverse factor in determining the quantum of costs (M. (J.V.)). This is so even if the party was the successful litigant (Smith v. Smith, 2007 CarswellOnt 1538 (S.C.J.)).

6. Financial Means of the Parties

[37] As I have indicated, the financial means of the parties is a relevant factor in the quantification of an award. Costs awards must take into consideration the reasonable prospects of a party being able to pay and the impact of an award on the ability of the party to meet their basic needs and those of any children in their care. This factor is properly considered at the end of the costs analysis. The court may in the exercise of its overriding discretion reduce the quantum of costs that a party would otherwise have to pay on the basis of their financial condition (Beaver at para. 18). However, this principle does not apply in reverse. The Ontario Court of Appeal has held that it is not appropriate to increase the amount of costs that a party may otherwise have to pay based solely on that party’s financial means and ability to pay (Beaver, at para. 18). In other words, the financial ability of a party to pay a significant costs award that the hearing judge has determined to be appropriate is relevant, but it is not a basis for artificially boosting that quantum.

[38] A litigant’s limited financial means will be given less weight in the costs analysis than the court’s determination regarding overall success in the litigation (Biant v. Sagoo, 2001 28137 (ON SC), [2001] O.J. No. 3693 (S.C.J.); Gobin v. Gobin, 2009 CarswellOnt 3452 (O.C.J.)). Furthermore, ability to pay alone cannot override the other factors set out in Rule 24(11) (Peers v. Poupore, 2008 ONCJ 615 (O.C.J.)). A party’s constrained financial means will also be accorded less weight in quantifying costs if the court finds that the party acted unreasonably. As Curtis J. stated in Mooney, “[i]t must be made clear to family law litigants that there is no right to a day in court, or at least, that the right to a day in court is tempered by the requirement that the parties take a clear-headed look at their case before insisting on their day in court.”

7. The Meaning of “Full Recovery Costs” Under the Family Law Rules

[39] The reference in Rules 18(4) and 24(8) to “full recovery” costs has led to discussion about the precise meaning of this phrase. This phrase is distinct from the “scales” or “ranges” for costs awards referred to in the Ontario Rules of Civil Procedure, namely “partial indemnity costs,” “substantial indemnity costs” and “full indemnity” costs. It is also distinct from the phrase “solicitor and client costs” that is referred to in some court Rules. The Family Law Rules do not make reference to these scales, and the civil Rules do not include definitions for any of these terms. Although many judges determining the issue of costs in Family Law matters refer to these ranges, the court is not constrained by these scales in the Family Law context (Beaver, at para. 9). In Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J), Aston J. held that the concept of scales of costs that applies in the civil context is not the appropriate way to quantify costs under the Family Law Rules. In his words, “[h]aving determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery. The Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs.” The Ontario Court of Appeal supported this approach in M.(C.A.) and Beaver (see also Costa v. Perkins, [2012] O.J. No. 2400 (Div. Ct.)).

[40] With respect to the term “full recovery” costs referred to in the Family Law Rules, the question has arisen as to whether this phrase refers to the full amount which a party claims, subject to adjustments based on reasonableness, or something between the concept of “substantial indemnity” and the full amount claimed. In my view, the term “full recovery” refers to the full amount which the party has claimed, subject to any adjustments that the court considers appropriate based on the reasonableness and proportionality of the costs claimed. In other words, it means the total reasonable and proportional amount that a court determines the party should have spent in dealing with the case (Jackson, at para. 91). This conclusion accords with the case-law in the civil context which has interpreted the phrase “full indemnity costs” (Toronto Standard Condominium Corporation v. Baghai Development Ltd., [2012] O.J. No. 2746 (C.A.)). While the Family Law Rules outline certain circumstances in which full recovery costs are appropriate, the court is not limited to making a full recovery award in those specified situations (Sims-Howarth). It is ultimately a matter of the court’s discretion to determine whether full recovery is appropriate having regard for the particular circumstances of the case.

8. Whether a Costs Award Can Include Costs Associated with Pursuing Costs

[41] As part of its discretionary authority respecting costs, the court may include as a component of a costs award the expenses and disbursements associated with pursuing the costs claim (C.(K.D.) v. C. (M.C.), 2007 ONCJ 210 (O.C.J.); Johanns v. Fulford, 2010 CarswellOnt 10903 (O.C.J.); Hesketh v. Brooker, 2013 ONSC 5433 (O.C.J.)). A request for costs relating to the preparation and advancement of a costs argument should be made as part of the general submissions respecting costs of the hearing in question, unless there are exceptional circumstances which satisfy the court that procedural and substantive justice cannot be achieved unless a separate costs hearing is held (C.(K.D.); Johanns; Osmar v. Osmar, 2000 20380 (ON SC), [2000] O.J. No. 2504 (S.C.J.)).

IV. ENFORCEMENT OF COSTS BY THE FAMILY RESPONSIBILITY OFFICE

[42] The Applicant requests that any costs award be designated as being in relation to support. The consequences of such a designation include that the costs award would be immune from discharge in a bankruptcy by virtue of s. 178(1)(c) of the Bankruptcy Act, R.S.C. 1985, c. B-3, and would be enforceable by the FRO pursuant to the FRSAEA. With respect to enforcement, the relevant legislative provisions are sections 5(1) and 1(1)(g) of the FRSAEA. Section 5(1) provides that it is the duty of the Director of the FRO to enforce support orders where the support order and the related support deduction order are filed in the Director’s office, and to pay the amounts collected to the person to whom they are owed. Section 1(1) of the Act includes the definition of “support order.” Section 1(1)(g) provides as follows:

1 (1) In this Act,

“support order” means a provision in an order made in or outside Ontario and enforceable in Ontario for the payment of money as support or maintenance, and includes a provision for,

(g) interest or the payment of legal fees or other expenses arising in relation to support or maintenance

[43] Trial and appellate courts have the authority to designate costs orders as arising in relation to support within the meaning of section 1(1)(g) of the FRSAEA and as such, that they be enforceable by the Director of the FRO (Drygala v. Pauli, 2002 41868 (ON CA), [2002] O.J. No. 3731, 164 O.A.C. 241, 61 O.R. (3d) 711 (C.A.), at para. 16; Wildman v. Wildman, 2006 33540 (ON CA), 2006 CarswellOnt 6042, 215 O.A.C. 239 (C.A.), at para. 56). The broad purpose of section 1(1)(g) is to bolster efforts to provide dependants with the financial support that they require to meet their basic needs in a timely manner. The section provides some assurance to dependants who pursue support rights on behalf of their children that they will receive assistance in recovering costs which they have incurred in carrying out this task. In applying section 1(1)(g), the courts should interpret it broadly and in a manner that advances its purposes.

[44] A judge addressing the issue of costs has a wide scope of discretion in deciding how to deal with a request that legal costs be designated as arising in relation to support. Such an order is contingent on the court being satisfied that the costs arose “in relation to support” within the meaning of section 1(1)(g) of the FRSAEA. In order to fall within the scope of this section, the costs must in some way relate to the advancement or protection of a support claim in the proceeding (Clark at para. 68). However, the costs in question need not necessarily relate to the hearing and adjudication stages of a support claim for the costs to fall within the scope of section 1(1)(g). They may pertain to a case management step in the case in which the issue of support was addressed (Meidell v. Meidell, 2013 ONSC 438 (S.C.J.)).

PART IV: ANALYSIS

[45] Applying these principles to the case at hand, I conclude that that Applicant is entitled to costs in relation to the Motion to Change Final Order, and that the sum of $6,302.00 is a reasonable and proportionate award. Dealing first with liability, the Applicant was completely successful in obtaining a dismissal of all claims which the Respondent advanced in this proceeding, and therefore she is presumptively entitled to costs pursuant to Rule 24(1). She did not engage in any unreasonable conduct which would disentitle her to costs. She took a sensible position throughout the proceedings, and her counsel was consistently well prepared and managed the litigation in an efficient manner. In addition, she took reasonable steps to try to resolve the case. In particular, she served an Offer to Settle on June 7, 2018, in which she proposed that the proceeding be dismissed on a without costs basis. The Offer to Settle satisfies the criteria outlined in Rule 18(14), and the Applicant is therefore presumptively entitled to her costs on this basis as well. The outcome of this case is in fact more favorable to the Applicant than the terms of the Offer to Settle in that the Respondent will now be required to pay costs.

[46] In deciding the issue of liability for costs, I have also considered the conduct of the Respondent throughout these proceedings. While his conduct did not cross the line into the realm of bad faith, I am satisfied that his decision to pursue this proceeding and his litigation conduct were extremely unreasonable. He commenced the proceeding less than three months after the existing order was made, and I concluded that the motion was completely without merit. Although he initiated this proceeding, he failed to serve and file a Case Conference Brief for the Case Conference that occurred on June 12, 2017, and he was therefore ordered to pay the Applicant costs of $200.00. In addition, he commenced the proceeding before paying off the significant costs that had been ordered against him during the original proceeding. As a result, the Applicant was compelled to bring a motion on July 21, 2017 to stay the proceeding until the outstanding costs were paid. The Applicant was completely successful on that motion as well, and the Respondent was ordered to pay additional costs of $1,000.00 in connection with that motion. Finally, with respect to the final hearing of the Motion to Change Final Order, the Respondent advanced several arguments that were completely without merit. By way of example, he argued that a termination or reduction of support was appropriate based on the splitting of his CPP credits with the Applicant and the fact that the Applicant was involved in a spousal-type relationship with another man. I rejected both of these arguments outright. The Respondent’s conduct and the unreasonable positions which he took created an unnecessary burden for the Applicant and a drain on valuable judicial resources.

[47] Turning to the question of quantum of costs, I have reviewed the Applicant’s Bill of Costs with a view to ascertaining whether the amounts included represent a reasonable and proportionate full indemnity amount. I am satisfied that the amounts claimed are appropriate, subject to the following exceptions:

a) Counsel has included time for the preparation of the Dispute Resolution Officer (“DRO”) Case Conference brief. However, Lafrenière J. addressed the issue of costs in relation to the Case Conference on June 12, 2017, and ordered the Respondent to pay the Applicant costs fixed in the sum of $200.00 inclusive of HST and disbursements. I have therefore deducted half of this amount, i.e. $100.00, from the amount claimed for the period prior to June 8, 2017 for preparation of the brief.

b) Similarly, counsel has included time for attendance at court on June 12, 2017 in relation to the Case Conference. Again, I am reducing the amount claimed for the period from June 8, 2017 onward by $100.00, since Lafrenière J. ordered costs of the Case Conference as the backup judge on that date.

[48] With respect to the period up to June 7, 2018, the total full indemnity amount for fees and disbursements after making the adjustments outlined above, and including HST, is $1,897.67 (fees of $1,497.50, disbursements of $181.85 and HST on both of $218.32). The Applicant seeks the sum of $801.67 for this period, inclusive of HST and disbursements. This is a reasonable and proportionate amount. It represents less than 43% of the total expenses incurred. The time spent during this period is more than fair, having regard for the importance and complexity of the issues. The question of spousal support was exceedingly important to the Applicant given her limited financial means. The rate which Ms. Bingham charged is also exceedingly reasonable given her years of experience, her expertise in Family Law and the competence which she demonstrated in managing this file. I have also reviewed the amounts that the Applicant has claimed for disbursements, and I conclude that they are likewise fair and reasonable. I do not have any concerns about the items claimed or the amounts incurred for disbursements. In considering the quantum of costs for this period, I have also taken into account the Respondent’s failure to make any Offers to Settle or to engage in any meaningful settlement discussions.

[49] Turning to the period from June 8, 2017 onward, the total full indemnity amount for fees and disbursements after making the adjustments outlined above, and including HST, is $5,500.30 (fees of $4,342.50, disbursements of $525.02 and HST on both of $632.78). I agree with the Applicant that she is entitled to full indemnity costs for this period of time. Again, I conclude that this is a reasonable and proportionate amount, having regard for the number of court appearances, the work required to prepare for those appearances including the final hearing and the other factors discussed above. The Applicant’s Offer to Settle complies with Rule 18(14), and she is therefore presumptively entitled to full indemnity costs from June 8, 2017 onward. There are no considerations that would support a deviation from this presumption. The amount claimed includes time spent to prepare Costs Submissions and a Bill of Costs. The Applicant should receive compensation for those tasks, given her complete success, the Respondent’s poor litigation conduct and his failure to engage in settlement discussions regarding the costs issue. The service of the Applicant’s Offer to Settle should have prompted the Respondent to take another good, hard look at the merits of his case and to embark upon concerted settlement discussions. He failed to do so, and chose instead to continue upon an ill-advised course of unreasonable and costly litigation. Accordingly, it is appropriate that the costs award include an element of sanction for this period of time.

[50] Based on the foregoing, the total appropriate costs award in this case is $6,301.97, inclusive of HST and disbursements. I am rounding this figure up to $6,302.00. I have considered the financial means of the Respondent in reaching my decision respecting quantum of costs. While the Respondent has struggled to meet his financial obligations, I found in my Reasons for Judgment that many of these difficulties related to the costs awards and spousal support arrears that he had accumulated as a result of his own decisions and conduct. As I noted in my Reasons, he had been able to pay off the costs award and significant spousal support arrears since November 2016. Based on this history, I am satisfied that he will be able to pay the costs that I am ordering as well. These costs were incurred to ensure ongoing spousal support. I am therefore designating the costs award as being in relation to support, with the result that they will be enforceable by the FRO.

PART V: TERMS OF ORDER TO ISSUE

[51] Based on the foregoing, an order shall issue as follows:

1. The Respondent shall pay the Applicant costs in the amount of $6,302.00, inclusive of HST and disbursements, payable forthwith.

2. This costs award is a support order within the meaning of s. 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act, S.O. 1996, c. 31, and as such, it is enforceable by the Director of the Family Responsibility Office.

3. Unless the support order herein is withdrawn from the Office of the Director, Family Responsibility Office, it shall be enforced by the Director, and amounts owing under the order shall be paid to the Director, who shall pay them to the person to whom they are owed.

4. This Order bears post-judgment interest at the rate of 3% per annum, effective from the date of this Order. Where there is a default in payment, the payment in default shall bear interest only from the date of default.

5. A Support Deduction Order shall issue. The Respondent shall complete a Support Deduction Information Form and submit it to the Family Responsibility Office within 7 business days of being served with this order.

The Honourable Madam Justice Deborah L. Chappel

Released: February 8, 2019

COURT FILE NO: 5388/15

DATE: February 8, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dawn Diane Arthur

Applicant

– and –

Lorne Wayne Arthur

Respondent

REASONS FOR JUDGMENT

Chappel J.

Released: February 8, 2019