Court File and Parties

COURT FILE NO.: D25934/17 DATE: 2020/04/27 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Jessica Chiara Rogers J. Christopher Young for the Applicant Applicant

- and -

Steven Alexander Rogers Stanleigh E. Palka for the Respondent Respondent

The Honourable Justice M.A. Kril

Endorsement on Costs

[1] In my Reasons for Judgment released on March 27, 2020, I invited counsel to make written submissions should they be unable to agree on the issue of costs. I have now received submissions from both counsel and the following is my ruling on costs.

Background

[2] This was a six-day trial. The issues subject to determination are outlined in detail below, having been reproduced from paragraph 1 of the Reasons for Judgment.

1. Final decision-making authority with respect to the children of the marriage.
2. Parenting time or physical time sharing (including the method for allocation of special occasion and holiday time) of the children.
3. The table amount of child support on a go forward basis.
4. The appropriate s.7 expenses on a go forward basis and a determination of the parties’ proportionate contributions to same.
5. The calculation of the equalization payment owing by one party to the other which required determination of the following issues: (a) The parties’ respective date of marriage deductions; (b) Whether certain funds advanced by the mother’s parents during the marriage are properly characterized as loans or gifts; (c) Whether the value of shares held by the mother on separation were properly included in her net family property; (d) The values to be allocated to certain assets for the purposes of equalization; and (e) Whether the resulting equalization payment should be paid in cash or by way of a transfer of pension assets.
6. Whether paragraph 1 of the order of Madam Justice Carpenter-Gunn dated July 26, 2017 should be ordered on a final basis.
7. Reimbursement of post separation adjustments arising from the costs related to a missed vacation and the costs associated with repairing a vehicle; and
8. The period of time for which occupation rent is payable by the mother.

Positions of the Parties

[3] The Respondent father submits that his offer dated June 6, 2019 complies with the requirements of Rule 18(14) of the Family Law Rules. It is his position that, as such, he is entitled to costs to June 6, 2019 and full recovery of costs from that date. On this basis, he seeks an order for costs payable by the Applicant in the amount of $119,729.85.

[4] The Applicant mother submits that each party should bear their own costs. It is her position that success at trial was divided. She submits that due to the complexity of the case and the number of attempts by both parties to achieve settlement before trial there should be no order as to costs.

The Applicable Law

[5] The Court of Appeal has identified the four fundamental purposes that modern cost rules are designed to foster as follows: (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. See Mattina v. Mattina, 2018 ONCA 867 at paragraph 10.

[6] The exercise of judicial discretion in awarding costs is guided by Rule 24 of the Family Law Rules both in terms of the entitlement of a party to an award of costs as well as to the quantum of that award.

Entitlement

[7] Rule 24(1) of the Family Law Rules creates a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. This presumption applies equally to custody and access issues. See Mattina v. Mattina, 2018 ONCA 867 supra at paragraph 12.

[8] As such, “success” is the starting point in determining a costs award. See Sims-Howarth v. Bilcliffe, 2000 ONSC 22584 at paragraph 1.

[9] In assessing the success of a party, the court looks to the positions taken by the parties at trial, see Berta v. Berta, 2015 ONCA 918 at paragraph 102 as well as to the offers to settle exchanged by the parties as compared with the terms of the final order see Lawson v. Lawson, 2008 ONSC 23496, [2008] O.J. No. 1978 and Sims-Howarth v. Bilcliffe, 2000 ONSC 22584 supra at paragraph 9.

[10] Where there are a number of issues before the court, it can have regards to the dominant issue at trial see Firth v. Allerton, 2013 ONSC 4900 and Mondino v. Mondino, 2014 ONSC 1102. Success may also be determined on an issue by issue basis. However, not all issues bear equal weight in determining success. See Jackson v. Mayerle, 2016 ONSC 1556.

Discussion

[11] By any measure applied, the Respondent father was the successful party at the conclusion of this trial.

[12] The Applicant mother sought an order granting her final decision-making authority in the face of an existing final order for joint custody. The offer made by the Applicant mother reflected her proposal that she have final decision-making authority. The Respondent father’s offer proposed shared decision-making authority and this was his position at trial. The Applicant mother did not succeed in her claim. This issue was responsible for a significant amount of trial time.

[13] Parenting time was at issue at the trial. The Respondent father had sought an order for equal time sharing. The Applicant mother had opposed this claim and proposed a complicated schedule which would have minimized the children’s time with the Respondent father. A significant amount of trial time was devoted to the Applicant mother’s evidence (and that of her mother) that the children could not be in the extended care of their father for various reasons. The Applicant pursued her argument in the face of evidence from third party institutions that her allegations were without foundation. The offers exchanged by the parties in advance of the trial reflected the positions taken by them at trial. I ordered equal time sharing on an alternating week basis. The Respondent father was the successful party.

[14] The Applicant mother sought an order that each special occasion day be divided between each of the parents (i.e. each parent to have some time on each special occasion day). The Respondent proposed sharing special occasions on an alternating basis. An order for alternating special occasion access was made at trial. Again, the parties’ offers exchanged prior to trial reflected the positions each took at the trial. The Respondent father was the successful party on this issue.

[15] My order for child support reflected the shared parenting regime that was ordered. The Applicant mother’s offer proposed that she receive the full table amount of support. The Respondent father’s offer proposed that no child support would be payable by either party despite the Applicant’s higher income. If accepted, the Respondent father’s offer would have led to a more favourable result for the Applicant mother than did my order.

[16] On those issues relating to the children, the Respondent father was entirely successful at trial.

[17] The trial time was fairly evenly divided between the child related issues and those relating to the determination of the equalization payment.

[18] The Applicant mother was successful in her argument that she should be entitled to a date of marriage deduction for her interest in the parties’ first home in the amount of $100,000 and that the Respondent father’s date of marriage deduction should be set at $26,000. At trial, the Respondent father had taken the position that each party should be entitled to a date of marriage deduction in the amount of $62,000.

[19] This was one issue of several involved in the calculation of the equalization payment. The Respondent father was successful in arguing that the value of the shares held by the Applicant mother should be included in her net family property. At trial the Applicant argued that the monies advanced to the parties during the marriage by her parents should be allocated as 100% her debt in the calculation of the equalization payment. The Respondent father argued that these advances should be characterized as gifts. Neither party was entirely successful as the advances (save for one smaller amount which was characterized as a gift) were characterized as joint loans for the purposes of the equalization calculation. On balance, the Respondent father enjoyed greater success with respect to the property issues.

[20] The same conclusion results from a review of the parties’ respective offers. The Respondent father had offered to settle the property issues for an amount substantially less than that ordered at the trial. It is not necessary that I consider success on each and every issue which resulted in the final equalization calculation. It is reasonable to look to the “bottom line” to determine which party achieved success. See Lawson v. Lawson, 2008 ONSC 23496, 2008 CarswellOnt 2819 at paragraph 11. The Respondent father had offered to settle for a lower equalization payment than was ultimately ordered at trial.

[21] In summary, I find that the Respondent father was the successful party at trial and as such is presumptively entitled to an award of costs.

Quantum

[22] Once the court has determined which of the parties is presumptively entitled to costs, the inquiry turns to the determination of the quantum of the award.

Full Recovery

Bad Faith

[23] Rule 24(8) of the Family Law Rules provides that the court shall decide costs on a full recovery basis if a party has acted in bad faith. Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See Chomos v. Hamilton, 2016 ONSC 6232 at paragraph 43.

[24] Bad faith has been defined as follows: 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. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. 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. See Chomos v. Hamilton, 2016 ONSC 6232 supra at para. 44 citing Perkins, J. in S. (C.) v. S. (M.), 2007 ONSC 20279, [2007] O.J. No. 2164.

Besting a Formal Offer

[25] Rule 18(14) provides that, unless the court orders otherwise, a party is entitled to costs to the date the offer was served and full recovery of costs from that date subject to certain conditions being met. One of the terms to be met is that the party who made the offer must have obtained an order that is as favourable or more favourable than the offer.

[26] To trigger the potential of full recovery costs pursuant to Rule 18(14) a party must do as well or better than all of the terms of an offer (or a severable section of an offer) (emphasis added). See Chomos v. Hamilton, 2016 ONSC 6232 at para. 19.

[27] An offer which includes costs obligations not yet determined by the court cannot satisfy the strict requirement of this section. See Chomos v. Hamilton, 2016 ONSC 6232 supra at para. 29.

[28] The onus of proving that the offer made was more favourable than the result at trial rests with the person claiming the benefit of full recovery costs. See Rule 18(15) and Neilipovitz v. Neilipovitz, 2014 ONSC 4400.

[29] Other than as provided in Rules 24(8) or 18(14) there is no provision in the Family Law Rules that provides for a general approach of “close to full recovery” costs. See Beaver v. Hill, 2018 ONCA 840 at para 11.

[30] The considerations in determining the appropriate quantum of a costs award are found in Rule 24(12) of the Family Law Rules which reads as follows:

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) and 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 expense properly paid or payable; and (b) any other relevant matter.

[31] The Court of Appeal has held that proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs. See Beaver v. Hill, 2018 ONCA 840 supra at para 12.

[32] With respect to Rule 24(12)(iii) above: a. the failure of an offer to contain a true element of compromise is a factor to be considered in deciding whether the offer properly impacts on the quantum of costs to be awarded; b. the court should be cautious about relying too heavily on Rule 24(12)(iii) in determining quantum when Rule 18(16) is not engaged. It is but one factor to be considered; c. the making of offers to settle is to be encouraged but the court is to be mindful that a party is not under a legal obligation to make an offer and some circumstances are not amenable to compromise. See Beaver v. Hill, 2018 ONCA 840, supra at paragraph 15 and 16.

[33] The ability of a party to pay a cost award is a factor to be considered pursuant to Rule 24(12)(b). See M. (C.A.) v. M. (D.), 2003 ONCA 18880, [2003] O.J. No. 3707 (Ont. C.A.). A party’s limited financial resources may not be used as a shield against liability for costs but may be considered when determining the appropriate quantum. See Ellis v. Ellis, 2004 ONSC 33293 at par. 1.

[34] Divided success may be a factor in apportioning costs. See Rule 24(6). However, not all issues are equally important, time consuming or expensive to litigate. See Jackson v. Mayerle, 2016 ONSC 1556.

[35] In summary, the overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant. See Delellis v. Delellis, 2005 ONSC 36447.

Discussion

[36] The Respondent father argues that he is entitled to full recovery costs based upon his offer dated June 6, 2019. The offer complies with Rule 18(14) 2. 3. and 4. There were however additional terms in the offer which were not the subject of an order at trial. For example, the offer proposed that the Applicant obtain a release from her parents with respect to advances made to the parties during marriage.

[37] In addition, the offer was not severable and contained terms with respect to the issue of costs. See Chomos v. Hamilton, 2016 ONSC 6232 supra. I find that the offer dated June 6, 2019 does not trigger the cost consequences contemplated in Rule 18(14) for full recovery.

[38] I did give consideration to Rule 24(8) in relation to the Applicant mother’s conduct at trial. However, after reviewing the definition of bad faith ( see S. (C.) v. S. (M.), 2007 ONSC 20279, [2007] O.J. No. 2164 ) I find that the Applicant mother’s behaviour, although egregious does not satisfy the threshold for a finding of bad faith. That conduct will instead be considered below pursuant to Rule 24(12).

[39] Having considered those provisions which would warrant an order for costs on a full recovery basis, I turn to a consideration of those factors enumerated in Rule 24(12) applicable to these facts in order to set the amount of costs. In doing so, I am mindful of the caveat emphasized by the Court of Appeal in Beaver v. Hill, 2018 ONCA 840 supra that the reasonableness and proportionality of the factors are touchstone considerations. Reasonableness and proportionality of the factors must be considered as they relate to the importance and complexity of the issues.

Behaviour

[40] There were issues with the Applicant mother’s behaviour both during the litigation process and at trial which resulted in substantially increased costs to the Respondent father.

[41] I found that the Applicant mother unreasonably denied the Respondent father access to the children over several periods of time after separation. This resulted in a motion (the costs of which have already been considered). However, even after an order for access was made, the Applicant mother continued to deny access. This resulted in increased ongoing legal fees for the Respondent father as he attempted to obtain the Applicant mother’s compliance with the order.

[42] The Applicant mother openly acknowledged that she also intentionally disobeyed a court order to list the matrimonial home for sale. Following efforts to secure compliance, the Respondent father’s counsel prepared a contempt motion. Although the motion was never argued, the Respondent father incurred increased legal fees as a direct result of the Applicant mother’s actions.

[43] The Applicant mother sought relief at trial that was not available at law. She asked that the court characterize advances made by her parents to both parties as debt in her name alone for the purposes of equalization. This and her improperly prepared Net Family Property Statement both resulted in increased trial time.

Time Spent

[44] I have reviewed the Bill of Costs provided by the Respondent father. I note that, contrary to the objection made by the Applicant mother, there was no time included in that Bill of Costs for the motion argued before Mr. Justice Ramsay. The costs ordered on that motion were dealt with as a post separation adjustment and were not included in the Respondent’s claim for costs.

[45] I find the hourly rate of the Respondent father’s counsel to be reasonable at $300 and note that he made use of assistants at lower hourly rates when appropriate. I note that although the Applicant’s counsel’s net hourly rate was lower, this was due to a 25% discount available to the Applicant by virtue of her employment. Her counsel’s actual hourly rate was $366 before the discount was applied. As such, the Applicant mother should have reasonably expected the level of costs to which she was exposed. See Lawson v. Lawson, 2008 ONSC 23496, 2008 Carswell Ont 2819 at par. 18.

[46] I have reviewed the description of services and the time expended by the Respondent father’s counsel and find that it was reasonable considering both the number of issues and their complexity.

Offers to Settle

[47] Earlier in this endorsement I reviewed the Offers to Settle exchanged by the parties in determining which party was successful. Rules 18(16) and 24(12)(iii) direct me to consider the offers exchanged whether or not they attract full recovery costs pursuant to Rule 18(16).

[48] I have already indicated that the child related terms in the offer made by the Respondent father were largely reflected in the order made at trial. His offer on child support was more favourable to the Applicant mother than the order made at trial.

[49] The result of the various findings at trial with respect to the property issues resulted in a higher equalization payment due to the Respondent father than his offer. Had the Applicant mother accepted the Respondent father’s offer to settle the property issues, she would have owed the Respondent father approximately $50,000 less.

Any Other Relevant Matter

[50] As I found at the conclusion of the trial, the financial positions of the parties are not comparable. The Applicant mother is in a far better financial position than that of the Respondent father. Her income is substantially greater than the Respondent father’s, her debt position less and her capital position better. The Applicant mother has the financial ability to satisfy a costs order. Her financial situation is not such as would warrant the court reducing the amount otherwise found to be appropriate.

[51] I have considered the four fundamental purposes of a cost award namely to provide a partial indemnity to the successful party for their fees, to encourage settlement, to sanction inappropriate behaviour and to ensure that cases are dealt with justly.

[52] I find that an order that the Applicant mother pay costs to the Respondent father in the amount of $95,000 within 90 days is appropriate in all of the circumstances.

“Justice M.A. Kril” Kril J. Date: April 27, 2020