Court File and Parties
COURT FILE NO.: FC-17-54087 DATE: 20200427 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Emma Claire Trefler, Applicant AND: Stephen Adam Elias and William (Bill) Elias, Respondents
BEFORE: The Honourable Mr. Justice R.E. Charney
COUNSEL: Applicant – Self Represented Jesse Rosenberg, for the Respondent, Stephen Adam Elias Martine Ordon, for the Respondent, William Elias
HEARD: In-Writing
Endorsement
[1] On January 13-15, 2020, I heard the respondents’ motion for summary judgment to determine the validity of a $950,000 mortgage for a loan allegedly made by the respondent, William Elias (William) to his son, the respondent, Stephen Elias (Stephen). The motion was opposed by the applicant, Emma Trefler, who is Stephen’s former spouse. On January 29, 2020, I released Reasons for Decision (Trefler v. Elias, 2020 ONSC 582), granting summary judgment in William’s favour, and found that the impugned mortgage was a valid mortgage. As a result, $950,000 from the proceeds of the sale of the mortgaged property that was being held in trust was released to William.
[2] The parties have not been able to agree on costs, and have filed written costs submissions in accordance with para. 134 of the Reasons for Decision.
[3] The respondent, Stephen Elias, seeks costs in relation to both the summary judgment motion and an earlier “emergency” motion that resulted in a consent order by Bennett J. dated September 5, 2019. The costs of that emergency motion were reserved to the judge who heard the respondents’ summary judgment motion.
[4] Stephen seeks his costs for the emergency motion on a full indemnity basis (90%) in the amount of $11,059, or, alternatively, on a substantial indemnity basis (80%) in the amount of $9,840, payable by the applicant.
[5] Stephen also seeks his costs for the three day summary judgment motion on a full indemnity basis in the amount of $29,636, or, alternatively, on a substantial indemnity basis in the amount of $26,343.
[6] William, who was added to this proceeding by consent order dated July 24, 2019, seeks his costs for the summary judgment motion on a substantial indemnity basis (80%) in the amount of $63,636.
Offers To Settle
[7] Stephen argues that the result he achieved on the summary judgment motion was more favourable than his offer to settle dated November 14, 2019, and therefore the costs consequences of Rule 18(14) of the Family Law Rules should apply. Rules 18(14) and (15) provide:
(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.
COSTS CONSEQUENCES — BURDEN OF PROOF
(15) 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 subrule (14).
[8] The November 14, 2019 offer to settle provided that the applicant would consent to the release of $749,757.50 from the proceeds of sale, and that amount would be applied against the mortgage. The final decision ordered the release of $950,000 to be applied against the mortgage.
[9] The November 14, 2019 offer to settle provided that the offer was capable of acceptance on a without costs basis until November 18, 2019, and thereafter, if accepted, the applicant would be required to pay Stephen’s costs on a full recovery basis from the date of the offer (November 14, 2019), and costs on a full recovery basis for the attendance on the emergency motion in September, 2019.
[10] In my view, this offer does not comply with the requirements of Rule 18(14). For an offer to settle to meet the requirements of Rule 18(14), it cannot demand more than partial indemnity costs as a condition of acceptance before the hearing starts. See: Walsh v. Davidson, 2017 ONSC 196, at paras. 7 and 8; Chomos v. Hamilton, 2016 ONSC 6232, at paras. 22-30.
[11] Costs in family law proceedings are generally payable on a partial recovery basis. Costs are recoverable on a full recovery basis only in prescribed and limited circumstances (Beaver v. Hill, 2018 ONCA 840, at paras. 11 and 13). The costs consequences of Rule 18(14) apply only if the “the offer is not accepted”. The terms of the November 14, 2019 offer seek to impose the costs consequences of Rule 18(14) even if the applicant accepts the offer. Making acceptance of the offer conditional on the applicant paying the respondent’s costs on a full recovery basis is, in my view, equivalent to withdrawing the offer as of November 18, 2019. As such, the offer to settle did not remain open until the motion was heard on January 13, 2020. Accordingly, this offer did not comply with Rule 18(14) 3 of the Family Law Rules (“the offer does not expire and is not withdrawn before the hearing starts”), and the costs consequences of Rule 18(14) (full recovery of costs from the date of the offer) do not apply.
[12] Moreover, Rule 18(14) applies only if the respondent “obtains an order that is as favourable as or more favourable than the offer”. In the ordinary course (putting Rule 18(14) to the side for a moment), the court awards costs on a partial recovery basis. The respondent would meet or beat his offer (which had costs payable by the applicant on a full recovery basis after November 18, 2019) only if the court were to award costs on a full recovery basis irrespective of Rule 18(14). But, of course, if the court was prepared to award costs on a full recovery basis irrespective of Rule 18(14), then the application of Rule 18(14) becomes redundant.
[13] In Beaver, the Ontario Court of Appeal noted, at para. 16, that “the failure of an offer to settle to contain a true element of compromise is a factor to be considered in deciding whether the offer properly impacts on the appropriate award of costs”. By demanding, as a condition of settlement, costs for the emergency motion and the summary judgment motion on a full recovery basis, the respondent’s offer did not contain a “true element of compromise”, and no longer met the requirements of Rule 18(14) as of November 18, 2019.
[14] William also takes the position that the order matched his offer to settle served on October 31, 2019. That offer provided for the release of $950,000 to William, without prejudice to any of the parties to pursue their various claims. I agree that this matched the terms of the order made, and, but for the issue of costs discussed below, would qualify as a Rule 18(14) offer.
[15] William’s offer provides that the offer can be accepted on a without costs basis until November 1, 2019, and, if accepted after November 1, 2019, costs will be determined by the motions or trial judge. It does not, however, indicate the scale of costs to be claimed by William, whether he will be seeking costs on a partial, substantial or full indemnity basis.
[16] In my view, the scale of costs, but not the quantum, must be part of the offer to qualify as a Rule 18(14) offer. Without fixing the scale of costs, the offer does not contain the predictability and certainty necessary to permit the opposite side to know what they are accepting: Rosenberg v 206 Bloor Street West Limited, 2016 ONSC 1111, at para. 13. Moreover, if there is any potential that the party making the offer will seek full indemnity costs even after the offer has been accepted, the offer suffers from the disqualification identified at paras. 10-13 above.
Analysis
[17] Modern family cost rules are designed to foster three fundamental purposes: (i) to partially indemnify successful litigants; (ii) to encourage settlement; and (iii) to discourage and sanction inappropriate behaviour by litigants. Serra v. Serra, 2009 ONCA 395, at para. 8; Mattina v. Mattina, 2018 ONCA 867, at para. 10.
[18] Rule 24(1) creates a presumption of costs in favour of the successful party. While consideration of success is the starting point in determining costs, this presumption does not automatically require that the successful party be awarded his or her costs. Entitlement to costs is subject to a variety of factors, including whether the successful party has behaved unreasonably, whether there has been bad faith conduct, and the nature of any offers to settle made by either party: Mattina at para. 13.
[19] Rule 24(4) provides that a successful party who has behaved unreasonably may be deprived of costs. It states:
(4) 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.
(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.
[20] In this case, one of the overwhelming factors is the behaviour of the respondent, Stephen, in the events leading up to the various motions. As I indicated at para. 118 of the Reasons for Decision, the applicant was subjected to emotional abuse and bullying by Stephen. The evidence on the summary judgment motion included text messages from Stephen to the applicant that I described, at para. 118, as “the most hurtful, abusive and hateful that I have ever seen”. The texts included a stream of anti-Semitic invectives aimed at the applicant and her parents.
[21] While these text messages were not relevant to the merits of the respondents’ position on the summary judgment motion, they are highly relevant to the issue of costs. These text messages created a toxic environment and effectively prevented reasonable discussion and settlement of the outstanding issues. Settlement requires some level of trust and goodwill, and these were destroyed by Stephen’s abusive text messages. Stephen cannot now ask the Court to ignore his previous behaviour and pretend that he has acted reasonably throughout these proceedings.
[22] In my view, Stephen’s behaviour, as evidenced by these text messages, disentitles him to any costs in these proceedings.
[23] I am not absolving the applicant. Many of the procedural steps, taken on the advice of her counsel, were ill-advised and added to the costs of these proceedings. That said, Stephen’s previous behaviour cannot be countenanced, and this is an appropriate case in which to exercise my discretion under Rule 24(4) and disentitle the successful party to costs.
[24] I recognize that William did not exhibit the same unreasonable behaviour as Stephen. Given Stephen and William’s identity of interest in this matter, however, it would, in my view, defeat the purpose of Rule 24(4) to order the applicant to pay any portion of William’s costs.
[25] William’s involvement in these proceedings was necessitated by two factors:
(a) The consent order of February 7, 2018, in which Stephen agreed to provide documentary proof that William had lent him the $950,000 secured by the mortgage. (b) Stephen’s abusive behaviour which doomed any efforts to settle this issue.
[26] The evidence provided by William in support of his summary judgment motion was required in any event as a result of a consent order of February 7, 2018, in which Stephen agreed to provide documentary proof that William had lent him the $950,000 secured by the mortgage (Reasons for Decision, para. 29). The evidence provided by William in his affidavit on the summary judgment motion was the documentary proof that Stephen had previously promised to the applicant. The registration of the mortgage was a non-arms length transaction between William and Stephen around the time that the spouses separated. Since Stephen wanted to deduct the mortgage from the valuation date value of the property, he was obligated to disclose the documentary proof to support the amount of the loan in any event.
[27] The point here is that Stephen had previously consented to a court order obliging him to provide proof of the amount of the loan. The cost of proving this amount increased dramatically because, by his own admission, William was unable to account for much of the money he claimed to have spent on the construction of the house (see para. 113 of Reasons for Decision). William and Stephen have the same interest in this matter. The applicant should not now be required to pay costs to William (or Stephen) because Stephen has finally complied with the February 7, 2018 court order and produced that proof as part of the summary judgment motion. As indicated in para. 126 of the Reasons for Decision, the applicant was acting in good faith when she took the position that Stephen’s “proof” was not sufficient.
Conclusion
[28] For the foregoing reasons, each of the parties will bear their own costs.