Court File and Parties

COURT FILE NO.: FS 43/16 DATE: 2020/03/06

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Claudette Emily Elliot Hawkins Self-represented Applicant

• and -

Coby William Hawkins Respondent Bruce Macdonald for the Respondent

The Honourable Justice N. Gregson

ENDORSEMENT ON COSTS

OVERVIEW

[1] The Applicant mother, Claudette Emily Elliot Hawkins commenced a court application in May 2016 seeking various corollary relief against the Respondent father, Coby William Hawkins. The Respondent made his own counter claims in his responding Answer.

[2] A consent final order was granted on August 17, 2018 dealing with parenting and property issues.

[3] The parties were granted a divorce on November 1, 2018.

[4] The issues of child and spousal support remained outstanding. Evidence was heard during a three-day trial in November 2019. Reasons for Judgment were released on December 12, 2019.

[5] Written submissions were received regarding the issue of costs. Both parties seek costs from the other.

THE PARTIES’ POSITIONS AT TRIAL AND OUTCOME

Imputation of income

[6] At trial, the father sought to impute an income to the mother in the amount of $30,000.00 from October 2017 (when the children began to live with him full-time) to June 2019. From July 2019 until December 2019 and on a go forward basis, the father wished to increase the mother’s imputed income to $40,691.00 based on her estimated annual income from employment.

[7] The mother opposed having her income imputed and preferred to rely on her actual income over the years. The mother acknowledged having an obligation to pay child support as of June 2019 when she began working full-time. The mother was prepared to pay child support in accordance with the table amount of the Child Support Guidelines.

[8] I did not impute income to the mother and used her actual gross yearly income to determine her child support obligation.

[9] Based on the above, the mother was successful on this issue.

Retroactive and ongoing child support

[10] The mother sought retroactive child support from the father for the period of June 1, 2016 to November 1, 2016 which totalled the sum of $1,615.00.

[11] The father felt no retroactive child support was owed by him for this time period. I concurred with his position.

[12] Regarding child support owing by the mother to the father, as previously mentioned, I relied on the mother’s actual income for child support purposes. I determined there were no arrears owing by the mother for the period of October 2017 to May 2019 as the mother earned less than the threshold amount of the Child Support Guidelines. This was contrary to what the father was seeking.

[13] The mother did owe arrears of child support from June 2019 (when she began working) to December 31, 2019 based on a half year of her estimated employment income (rather than annualizing her income as requested by the father). Therefore, the mother owed the father $2,205.00 in child support arrears.

[14] Based on the mother’s projected 2020 gross annual employment income, she was to commence paying ongoing child support to the father as of January 1, 2020 in the amount of $546.00 per month based on an estimated gross annual income of $38,000.00. Child support for the father was therefore established.

[15] Accordingly, there was mixed success on these issues.

Retroactive and ongoing section 7 expenses

[16] The father claimed in excess of $28,000.00 in s. 7 expenses and sought the mother’s proportionate share based on her having an imputed income. The father was seeking reimbursement of $7,588.52 from the mother. The mother opposed this request.

[17] I ordered no reimbursement for s. 7 expenses as they were either not extraordinary, the father had not consulted the mother and/or the mother did not have the ability to contribute towards same.

[18] I concurred with the parties that in the future, upon consultation, the parties would contribute towards the children’s s. 7 expenses in proportion to their incomes.

[19] The mother was the successful party on this issue.

Retroactive spousal support

[20] If the court would have accepted the father’s position to impute income to the mother, the father felt based on what the mother owed him in child support, he had overpaid spousal support in the amount of $35,085.00. The mother refuted the father’s position.

[21] The mother also sought retroactive spousal support from the father in the amount of $14,900.00 for the period of June 1, 2016 to October 1, 2016.

[22] I denied both claims against the parties.

[23] There was mixed success on this issue.

Ongoing spousal support

[24] The father sought an order in the sum of $2,511.00 per month which was the mid-range of the Spousal Support Advisory Guidelines (“SSAG”). The mother sought the high range of $2,870.00.

[25] Based on what I felt the mother’s income to be, I ordered the sum of $2,986.00 per month which was slightly higher than the mid-range amount of the SSAG. There was mixed success on this issue.

Life insurance

[26] The father had a private life insurance with Primerica in which he had maintained the mother as his sole beneficiary on a temporary basis. It appeared the parties were content in having same be finalized in order to secure the father’s spousal support obligation.

[27] Regardless, I made such an order. There was mixed success on this issue.

OFFERS TO SETTLE

[28] I was only provided Offers to Settle that were exchanged during a final Settlement Conference on March 25, 2019 as contained in their Settlement Conference Briefs. Accordingly, the Respondent relies on an Offer to Settle to the mother as follows:

1. An order that the Applicant’s income be imputed at $30,000.00;
2. An order that the Applicant pay the Respondent child support for the two children of the marriage in the amount of $459.00 per month, pursuant to the Child Support Guidelines;
3. An order that the parties share in the children’s extraordinary expenses on a pro rata basis;
4. An order the Respondent pay spousal support to the Applicant in the amount of $2,599.00 per month based on an income of $206,050.00 and the Applicant’s income of $30,000.00;
5. An order that the parties’ property be equalized pursuant to the Net Family Property Statement which was produced; and
6. An order for costs on a substantial indemnity basis.

[29] The father submits that based on the above offer the Respondent did not seek retroactive child support. The spousal support awarded at trial was $2,986.00 per month commencing January 1, 2020 which was slightly higher than what was offered however, the child support amount is less than that awarded which was the sum of $571.00 per month.

[30] Prior to trial, with respect to the issue of retroactivity, through her solicitor at the time, Ms. Kiran Sah, the Applicant sought payment of $25,000.00 for retroactive spousal and child support. The letter dated November 22, 2018 by Ms. Sah also acknowledged the Respondent was prepared to defer the commencement of child support payments until May of 2019, which is also similar to the result at trial.

[31] According to the father, given what he offered, and the position taken by the Applicant, it was necessary for him to proceed to trial and he was successful at trial and therefore should be entitled to an award of costs as he should not be required to bear the entire cost of the proceeding.

[32] On a partial indemnity basis, the Respondent seeks an order for costs in the amount of $17,330.18 including disbursements and HST.

[33] The mother submits she also provided an Offer to Settle to the Respondent at the Settlement Conference in March 2019 with her Settlement Conference Brief which was not signed. The mother was self-represented at that point in time. I am mindful of Browne v. Cerasa, [2018] O.J. No. 1866 (Ont. S.C.J.) which noted that even if both party’s offers are unsigned and unwitnessed, if neither party disputed that they received the other party’s offer, the court will consider them pursuant to Rule 18(16), as well as in the analysis of the relative reasonableness of each party’s behaviour. This reasoning is more consistent with the Family Law Rule’s overall objective, set out in Rule 2(2).

[34] The mother’s Offer to Settle to the Respondent was as follows:

1. Child support to commence April 1, 2018 as per the Child Support Guidelines;
2. To waive Section 7 expenses on account of hardship;
3. The sum of $25,000.00 in retroactive spousal and child support;
4. The Respondent to maintain the Applicant on his life insurance policy irrevocably; and
5. A mid-range spousal support in the amount of $2,978.00 per month for 10 years or a lump sum payment of $170,000.00.

[35] The mother submits the amount of spousal support awarded to her was slightly higher that what she offered. Child support awarded to the father was to commence when she began working in June 2019 and was based on actual income and section 7 expenses were waived.

[36] The mother believes she was the successful party at trial based on her Offer to Settle. As a result of the father’s unreasonableness, it made it necessary to proceed to trial and as such she should be entitled to an award of costs.

[37] The mother seeks full recovery costs including fees, disbursements and HST in the amount of $14,528.46. The sum of $2,995.00 is sought for the work done by her prior lawyer, Ms. Kiran Sah for the preparation of the trial scheduling conference (although Ms. Sah’s Bill of Costs to the mother was not included) and the sum of $9,893.04 for the mother’s four days of missed work (although there was no breakdown of the costs sought by the mother) to attend the trial, mileage and parking. The mother relies on Izyuk v. Bilousov, 2011 ONSC 7476 for her costs.

LAW

[38] The court has a broad discretion to award costs. The general discretion of the courts regarding costs is contained in the Courts of Justice Act, R.S.O. 1990, c. C. 43, as amended. Subsection 131(1) sets out the following specific principles regarding costs:

131(1) (a) The costs of a case are in the discretion of the court; (b) The court may determine by whom costs shall be paid; and (c) The court may determine to what extent the costs shall be paid.

[39] The Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 867 at paragraph 10, reaffirmed modern costs rules are designed to foster four fundamental purposes:

10. (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 Rule 2(2) of the Family Law Rules.

[40] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. See Beaver v. Hill, 2018 ONCA 840 (Ont. C.A.).

[41] There is a statutory presumption as per Rule 24(1) of the Family Law Rules that a successful party is entitled to their costs. 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. See Lawson v. Lawson, , [2008] O.J. No. 1978 (SCJ). The position each party took at trial should also be examined.

[42] An award of costs is subject to Rule 24(11) of the Family Law Rules which provides a list of factors a court should consider in dealing with costs as follows:

24(11) (a) The importance, complexity or difficulty of the issues; (b) The reasonableness or unreasonableness of each party’s behaviour in the case; (c) The lawyer’s rates; (d) The time properly spent on the case, including conversations between the lawyer and the party, drafting documents and correspondence, attempts to settle, preparation, hearing, argument and preparation and signature of the order; (e) Expenses properly paid or payable; and (f) Any other relevant matter.

[43] Rule 24(4) of the Family Law Rules states that despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.

[44] Rule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor to determine quantum as per Rule 24(12)) which 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.

[45] Rule 24(6) of the Family Law Rules states that if success in a step in a case is divided, the court may apportion costs as appropriate. Rule 24(8) further 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.

[46] In assessing reasonableness and proportionality of costs, the Court of Appeal in Snelgrove v. Kelly, 2017 ONSC 4625 at paragraph 31 noted the following factors to be considered:

31. 1. Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.
32. Costs need to be proportional to the issues and amounts in question and the outcome of the case.
33. Amounts actually incurred by the successful litigant are not determinative.
34. In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

[47] Rule 18(14) of the Family Law Rules states the following regarding Offers to Settle:

18 (14) COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER 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 related 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.

[48] The court has a discretion to take into account any written Offer to Settle, the date it was made and its terms, even if Rule 18(14) does not apply, when exercising its discretion over costs. (Rule 18(16)).

ANALYSIS

[49] This case was not complex. I commend the parties for settling a number of corollary issues which narrowed the triable issues.

[50] The child and spousal support issues were important to both parties. Neither party acted unreasonably nor displayed bad faith. It was necessary to hear evidence from both parties to determine whether the mother should have income imputed to her. Once this determination was made, it resolved a number of outstanding support issues.

[51] In my view, success at trial was mixed.

[52] Although both parties suggested they had exchanged Offers to Settle, it is important to note that Offers to Settle appended to conference briefs cannot be relied upon thereafter as a Rule 18(14) Offer to Settle. Rule 17(23) specifically addresses this point, it reads as follows:

17 (23) CONFIDENTIALITY OF SETTLEMENT CONFERENCE BRIEFS – No brief or evidence prepared for a settlement conference and no statement made at a settlement conference shall be disclosed to any other judge, except in, (a) An agreement reached at a settlement conference; or (b) An order.

[53] In Entwistle v. MacArthur, , [2007] OJ No. 1958 (S.C.) Pazaratz J. conducts a detailed review of the case law on this issue and concluded at paragraph 32: “…it is clear that the insular nature of settlement conference materials and discussions is intended to be impermeable” and at paragraph 40 states: “A number of other decisions confirm that, even at the final costs stage of a proceeding, the absolute confidentiality of the settlement conference process should be respected.”

[54] This issue was also reviewed in Owen-Lytle v. Lytle, [2015] O.J. No. 6426 (Ont. S.C.J). The court in this matter took the position that offers contained in Settlement Conference briefs are not Rule 18 offers but a different type of offer that is governed by the law of contract and enforced by analogy to the Family Law Rules, by reference to the Courts of Justice Act and application of the Rules of Civil Procedure.

[55] In Sangha v. Sangha [2014] O.J. No. 4441 (Ont. S.C.J.) although the court did not order costs they opined that because of Rule 18(16), the Rules Committee intended the presiding judge to look at offers including those made at the Settlement Conference despite the blanket prohibition regarding particulars included in the main portion of the Settlement Conference briefs. If the Committee intended that rule 17 was to prevail over rule 18 or if it intended that the broad and general permissiveness allowed by Rule 18(16) was mandated except for the offers attached to the Settlement Conference briefs, it would have explicitly provided that direction. The court went on to state that after trial, the decision maker should be fully informed of all written Offers to Settle in order to intelligently understand what each offer contained and when it was made. To require counsel to prepare and serve two identical offers on the same date (one as Part 4 of the Settlement Conference brief and a separate stand-alone offer) is counter-intuitive and unnecessary, in light of the wording of Rule 17(23)(b) and Rule 18(16).

[56] Despite the above comments, most recently, the decision of Entwistle v. MacArthur, supra, was recently relied upon in L.M.L. v. S.LG., [2019] O.J. No. 3267 as S.E.J. Paull J. stated at paragraph 22 and 23 which reads as follows:

22. However, with respect to offers in settlement conference briefs Rule 17(23) of the Family law Rules is clear that no brief, evidence or statement made at a settlement conference is to be disclosed unless an agreement is reached at a settlement conference or by order. The court in the case of Enwistle v. MacArthur, (2007) CanLII 17375 (ON SC), 157 (SCJ-Ont. Fam. Ct.), and the court in Farook v. Majeed, 2011 ONCJ 827, make clear that there is no exception in Rule 17(23) for the offers to settle in settlement conference briefs to be disclosed in submissions for costs.
23. As such, the offers to settle in settlement conference briefs do not constitute offers for consideration under Rule 18.

[57] There were no other written Offers to Settle provided to me by either party made in advance of the trial in accordance with Rule 18 (14) for my consideration. I agree the Rules Committee needs to clarify the application of Rule 17 (23) and 18(16) as they are incongruent with one another. Until they do so, I concur with Pazaratz J.’s interpretation. It appears to me that Rule 18(16) simply permits the court to use their discretion in considering Offers to Settle made as per Rule 18(14) which might for one reason or another, be defective.

[58] Frankly, even if I were to consider the Offers to Settle contained in the parties Settlement Conference briefs on the basis of Rule 18(16), I still believe there was mixed success and no reason to apportion costs. The father was not successful in imputing an income to the mother. The mother was agreeable to pay child support based on her actual income once she began working and to pay her proportionate share of s. 7 expenses once she had income. Both parties agreed there should be spousal support payable and were relatively close in their positions on quantum. The mother was unsuccessful in seeking retroactive spousal and child support. The issue of life insurance was not really contentious although the mother was the one to raise the issue during trial and I agreed with her.

[59] Considering the outcome at trial was divided and bearing in mind the principles of reasonableness and proportionality, there shall be no costs payable by either party to the other.

Gregson J. Date: March 6, 2020

COURT FILE NO.: FS 43/16 DATE: 2020/03/06 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Claudette Emily Elliot Hawkins Applicant - and - Coby William Hawkins Respondent ENDORSEMENT ON COSTS Gregson, J. Released: March 6, 2020