Court File and Parties

Court File No.: 41901/19 Date: 2020-06-22 Superior Court of Justice - Ontario

Re: MC, Applicant And: MAC, Respondent

Before: Kurz J.

Counsel: Kathryn L. Smithen, for the Applicant Harold Niman/Christopher Mamo, for the Respondent

Heard: in writing

Costs Endorsement

Introduction

[1] On November 25, 2019, I released my decision on the Respondent father’s motion, found at 2019 ONSC 6769. I denied much of the relief that the father requested in regard to his contact with the parties’ two children. I granted an order that varied the without prejudice temporary order of Coats J. of May 6, 2019 on the following “with prejudice” terms:

a. The access and communication terms of that order were amended such that its terms apply only to 12 year old JC but not 16 year old TC. I found that TC, because of her age, wishes and preferences would not be required to obey the terms of the Coats J. order. b. The father may choose the location of the access with JC set out in the order of Coats J., provided that it is in a public place and that it is within the reasonable driving range of the mother. If there is any disagreement regarding this term, the parties may attend before me. c. The balance of the Coats J. order shall remain in full force and effect. d. The consent interim-interim order of Conlan J. of September 26, 2019 shall remain in full force and effect until further order. That order limits the mother’s right to travel with the children, change their school, make major decisions regarding JC’s hockey, enroll them in activities or incur any s. 7 expenses without the father’s consent. It also requires the mother to provide the father with a variety of information, schedules, documentation and records regarding the children.

[2] Until last week, I was under the assumption that the parties had settled the issue of costs because my endorsement included the following:

If the parties are unable to agree on costs, each may file a three-page costs submission, along with a bill of costs/cost outline and any applicable, highlighted authorities.

[3] Unbeknownst to me, the parties filed their costs submissions in January 2020. They brought that fact to the attention of my judicial secretary last week. I apologize to the parties and their counsel for the delay in releasing this decision.

Positions of the Parties Regarding Costs

[4] The mother seeks something approaching her substantial indemnity costs of this motion, fixed at $12,000 (out of $16,294.55 in full indemnity costs). She argues that she was the successful party on the substantive issues related to the father’s access to the children. She also refers to her omnibus offer to settle parenting and financial issues of October 2, 2019. While that offer was fully severable, the only parenting terms that it included were to the effect that the parties would implement the recommendations of Dr. Shely Polak.

[5] Dr. Polak felt that the parties were not appropriate candidates for the Families Moving Forward programme. But she offered them five recommendations, four of which called for counselling or parenting coaching. The fifth recommendation was that the family undergo a s. 30 assessment.

[6] Under the mother’s offer, she was to commence the recommended counselling and the father was to commence the parenting coaching by November 15, 2019. The father actually began his coaching, but the mother had failed to start her counselling by the commencement of the motion before me. In my endorsement, I strongly recommended but did not order that the parties follow the recommendations of both Dr. Polak and Dr. Saini. That is because neither party had moved for an order to that effect.

[7] The father’s position is that there should be no costs. In the alternative, the mother’s claim should be “substantially reduced” to an unspecified figure. In essence, the father argues two things. First, he says that success was divided in that he received the continuation of the terms of the Conlan J. order of September 26, 2019. That order was made on consent as a term of an adjournment on the first attendance for the father’s motion. They were terms that he had requested for the adjournment.

[8] The father says that those terms may seem “basic” in comparison to the issues argued in greater detail before me. But they were important to him because the mother had acted unilaterally in regard to those issues before he brought his motion. Had he not brought his motion, he says, he would not have received that relief.

[9] Second, the father relies on and compares the parties’ offers to settle. He argues that the terms of the Conlan J. order were contained in his first offer, regarding the adjournment of his motion on September 26, 2019. It resulted in the consent order that was carried through in my order. The father’s second offer, of October 7, 2019, again included the terms found in the Conlan J. order as well as the terms regarding his parenting time and arrangements with the children. I did not accept most of those terms. However, since that offer was fully severable, the father states that the mother should have explicitly accepted the Conlan J. terms anyways. He compares the severability of his second offer to the purported non-severability of the mother’s sole offer. That comparison is inaccurate in that the mother’s offer states at its para. 16 that each term is severable from the others.

[10] For the reasons that follow, I grant the mother her costs, fixed at $7,500. I order them payable upon the terms set out below.

Law Regarding Costs

Jurisdiction to Award Costs

[11] The jurisdiction of this court to award costs arises from s. 131 of the Courts of Justice Act. That provision gives the court broad discretion to determine costs.

General Costs Principles

[12] As the Ontario Court of Appeal noted in Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432 (O.C.A.), at para. 8:

Modern costs rules are designed to foster 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: Fong v. Chan (1999), 46 O.R. (3d) 330, at para. 22.

[13] In Shute v. Shute, [2017] O.J. No. 4110, Justice Victoria Starr of the Ontario Court of Justice supplements Serra’s three costs purposes by offering a fourth which applies in family law proceedings: ensuring that the primary objective of the Family Law Rules (“FLR”), dealing with cases justly, is met. Starr J. wrote:

29 Subrule 2(2) of the Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the Rules is met -- that cases are dealt with justly. This provision needs to be read in conjunction with Rule 24 of the Rules. Subrule 2(4) of the Rules states that parties have a positive obligation to help the court to promote the primary objective under the Rules. Clauses 2(3)(a) and (b) of the Rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. [See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711].

[14] That finding was echoed by the Ontario Court of Appeal in Mattina v. Mattina, 2018 ONCA 10, citing Fong v. Chan (1999), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22.

[15] In Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (Ont.C.A.) (“Boucher”), at para. 24 the Ontario Court of Appeal stated that costs awards should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties."

De-Emphasis on Counsel's Hourly Rates and Time Spent

[16] In Delellis v. Delellis and Delellis, [2005] O.J. No. 4345 (S.C.J.), Justice David Aston of this court noted the emphasis on setting a "fair and reasonable" amount of costs that emerges from Boucher and the cases following it. Aston J. found that this approach has led to a de-emphasis on hourly rates and time spent by counsel as the key factor in fixing costs. He continued at para. 9:

...Costs must be proportional to the amount in issue and the outcome. 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. [Citations omitted]

[17] In Beaver v. Hill, 2018 ONCA 840 at para. 10, the Ontario Court of Appeal clarified that proportionality and reasonableness, the two key factors set out in r. 24(12)(a), are the touchstone considerations to be applied in fixing the amount of costs in family law matters.

Scale of Costs

[18] In deciding costs in family law proceedings, judges are not constrained by the normal scale of costs found in the Rules of Civil Procedure. The court may increase or decrease what would ordinarily be an appropriate amount of costs based on the behaviour of the parties and the presence of absence of offers to settle. (Beaver v. Hill at para. 9).

Party Status does not Grant a License to Litigate Oblivious to the Consequences

[19] The right to bring or respond to a case does not grant either party a license to litigate in a manner that ignores the consequence of that litigation. Justice Carole Curtis of the Ontario Court of Justice emphasized this point in Sabo v. Sabo, [2013] O.J. No. 4628 (O.C.J.), as follows at para. 38:

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...

Offers to Settle

[20] Rule 18 deals with offers to settle. Sub-rules 18 (14) - (16) deal with the cost consequences of offers to settle. They state:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER (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.

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).

COSTS -- DISCRETION OF COURT (16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.

[21] In Jackson v. Mayerle, 2016 ONSC 1556 (SCJ-FC), Pazaratz J. considered the requirements for an order under r. 18(14). In order to determine whether a party has obtained a result "as favourable as or more favourable than the offer", the court need not compare the offer and the result with microscopic precision. Rather, as Pazaratz J. stated at para. 47:

To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer)... The court is not required to examine each term of the offer as compared to the terms of the order and weigh with microscopic precision the equivalence of the terms. What is required is a general assessment of the overall comparability of the offer as contrasted with the order... [Citations omitted]

[22] All of that said, as Lemon J. pointed out in Slongo v Slongo, 2015 ONSC 3327 (S.C.J.), (rev’d. on other grounds, 2017 ONCA 272), r. 18(14) does not require the presiding justice to allow the successful party to demand a blank cheque for his costs.

Rule 24 Factors

[23] FLR r. 24 sets out the factors that the court must consider in the exercise of its discretion regarding costs. However the court retains its ultimate discretion to determine what costs are reasonable (C.A.M. v. D.M. at para. 43).

[24] The starting point, found in r. 24(1), is that the successful party is presumptively entitled to the costs of a motion, enforcement, case or appeal (see also Beaver v. Hill and Berta v. Berta, 2015 ONCA 918). But as Rosenberg J.A. stated in C.A.M. v. D.M., at para. 41, that provision does not completely remove the court’s discretion to refuse to grant costs to the successful party. Further, as the Ontario Court of Appeal stated in Beaver v. Hill, there is no presumption that the successful party in a family law proceeding is entitled to an amount approaching full or even substantial indemnity costs. The exceptions to that principle are bad faith (r. 24(8)) or besting an offer to settle (r. 18(14)) (see paras. 11 and 13).

[25] Subrule 24(12) sets out the appropriate considerations in fixing the quantum of costs. It reads:

(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.

[26] Under r. 24(5), when the court looks to the reasonableness or unreasonableness of each party’s behaviour during the course of the dispute, the following considerations apply:

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.

[27] While the successful party is presumptively entitled to costs, as set about above that decision remains discretionary; under r. 24 (6) the court has the explicit discretion to determine the allocation of costs when there is divided success.

[28] Under r. 24(8), full indemnity costs are available when a party has been found to have acted in bad faith. That provision states that “[i]f 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.” Nonetheless, any costs decision must be in accord with the underlying principles of proportionality and reasonableness (see C.A.M. v. D.M., at para. 41). Further, any application of r. 24(8) must apply to the part of the proceeding in which the party has acted in bad faith. If a party has acted in bad faith in regard to part of a proceeding, the imposition of full indemnity costs may apply to that part or all of the proceeding, as the facts may bear out. Bad faith is not a factor in this case.

Offers to Settle as a Factor in Determining Reasonable Behaviour

[29] In Serra, cited above, the Ontario Court of Appeal emphasized the obligation to attempt to settle that arises from the very beginning of a family law case. In doing so, the appellate court adopted the following statement by Spence J. of the Ontario Court of Justice in Husein v. Chatoor, 2005 ONCJ 487, [2005] O.J. No. 5715 (O.C.J.), at para. 30:

[P]arties have an obligation to begin to assess their respective cases at the outset of the litigation -- even before the litigation commences -- and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it behoves neither party simply to sit back and to roll the dice while those fees continue to mount.

[Emphasis added by Ontario Court of Appeal]

[30] In J.V.M. v. F.D.P., 2011 ONCJ 616, [2011] O.J. No. 5441 (O.C.J.), Sherr J. of the Ontario Court of Justice equated the failure to make an offer to settle to unreasonable behaviour under Rule 24. He stated at para. 5:

The failure to make an offer to settle much earlier [than trial] by either party is unreasonable behaviour. Subrule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (subrule 2(2)). This includes taking appropriate steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute. See Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134, 2011 CarswellOnt 12972 (Ont. Fam. Ct.). The failure to serve an offer to settle will be an adverse factor when assessing costs.

[31] However, in Beaver v. Hill, the Ontario Court of Appeal offered a note of caution about excessive reliance on offers to settle in determining costs when the provisions of r. 18(14) are not engaged. The service of an offer to settle may not, in itself, be sufficient to claim reasonable behaviour. The offer must contain what Nordheimer J.A., writing for the court, described at para. 16 as "... a true element of compromise." Even so:

... judges should be very cautious about relying too heavily on this factor to increase or decrease the quantum of costs, when the specific Rules regarding such offers are not directly engaged. Even under r. 24(5)(a) of the Family Law Rules, it is but one factor that is to be considered.

How is Success Measured?

[32] In Jackson v. Mayerle, 2016 ONSC 1556 (SCJ-FC), Pazaratz J. of this court’s Family Court looked at how to apportion divided success under r. 24(6). He stated that r. 24(6) requires a comparative analysis as most family cases have multiple issues. However, those issues are not equally important, time-consuming or expensive to determine. Comparative success can also be assessed globally in relation to the whole of the case, asking:

i. How many issues were there? ii. How did the issues compare in terms of importance, complexity and time expended? iii. Was either party predominantly successful on more of the issues? iv. Was either party more responsible for unnecessary legal costs being incurred?

[33] In Thompson v. Drummond, 2018 ONSC 4762, Chappel J., also of this court’s Family Court, added to Pazaratz J.’s analysis. She pointed out that the determination of success is not merely a mathematical exercise. Rather, the court must engage in a “contextual analysis” in which the court looks first to the kinds of factors set out in Jackson v. Mayerle. If it finds that success is divided, the court will then exercise its discretion. It may simply determine costs globally. Or it may look first to success in the primary issue, but subject to “adjustments” that a consider lack of success in any secondary issues and any other appropriate factors. As Chappel J. wrote at para. 12:

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 … 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 … 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 ...

[Citation omitted]

[34] There are two schools of thought regarding the role of offers to settle in the determination of success. On the one hand, in Lawson v. Lawson, [2008] O.J. No. 1978 (S.C.J.), Justice J. Wilma Scott of this court wrote that any determination of success "...must take into account how that order compares to any settlement offers made." In Osmar v Osmar, [2000] O.J. No. 2504 (S.C.J.), Aston J. was even more direct, in stating that:

Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.

[35] On the other hand, Pazaratz J. considered offers to settle separately from the issue of relative success in Jackson v. Mayerle. His four factors do not include success in comparison to offers to settle. Similarly, Chappel J.’s analysis of divided success in Thompson v. Drummond did not consider offers to settle. Rather, elsewhere in her decision she describes them as “[a]nother important consideration in determining both entitlement to and the quantum of costs.”

[36] In Lazare v Heitner, 2018 ONSC 4861, McGee J. directly stated that the comparison must be made to the relief sought in the litigation rather than the offers. She stated:

16 A comparison of what was sought in the litigation, rather than within the Offers must be the primary Rule 24(6) (divided success) analysis if I am to give effect to the purposes of costs award: to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants. To do otherwise is to encourage all in, or all out litigation; or in other words, the all too familiar “accept my terms or I’ll fight you on everything.”

[Footnote omitted]

[37] While there are merits to each approach, I accept the one explicitly adopted by McGee J. and implicitly adopted by Pazaratz J. and Chappel J. I say so for four reasons.

[38] First, r. 24(6), like r. 24(1) specifically looks only to a result: “success”. The term, success, is defined by the Oxford Canadian Dictionary, Barber ed., 1998, as “1 The accomplishment of an aim; a favourable outcome…” That is the sense in which it is used in the two subrules: the “accomplishment”, the “outcome” of the proceeding, rather than the process leading to the result.

[39] Second, r. 18, which is devoted to the making, acceptance and consequences of written offers to settle in family law matters, makes no reference to success. Rather, when dealing with costs consequences of unaccepted offers, r. 18(14)(5) looks to whether the ultimate order is “as favourable as more favourable than the offer”. In other words, it instructs the court to compare the ultimate order to the offer, not to what the other party tried to achieve. It looks to favourability only from the point of view of the person who makes it.

[40] Further, r. 18(16) simply grants the court the broad right to consider any written offer to settle in its exercise of discretion over costs. But again, there is no reference to success.

[41] Third, the link between the r. 24 costs factors and those which arise from r. 18 is found in r. 24(5) and r. 24(12), both of which refer to “reasonableness”, not success. Under r. 24(5)(b), the court can rely on the “reasonableness” of any offer that a party made in order to determine whether the party acted reasonably in a proceeding. Subrule 24(12)(a) looks to “the reasonableness and proportionality“ of a series of factors as they relate “to the importance and complexity of the issues”. One of those factors, under r. 24(12)(a)(iii) is “any written offers to settle, including offers that do not meet the requirements of rule 18”. In other words, offers to settle are imported into r. 24 only in regard to reasonableness and/or proportionality, not success.

[42] On the other hand, r. 24(4) offers a dividing line between success and reasonableness. It allows the court to deprive “a successful party” of all or part of their costs if they have “behaved unreasonably during a case”. Clearly r. 24 treats the two concepts, success and reasonableness, as separate ones. Offers to settle, as set out above, are a factor in the determination of reasonableness. They cannot at the same time be a factor in the determination of success.

[43] Fourth, on a practical basis, in many cases, one or both of the parties have not made an offer to settle. While the failure to make an offer to settle may be considered unreasonable conduct (see J.V.M. v. F.D.P., above), it is not mandatory that a party make an offer. The failure to do so does not eliminate the determination of success under r. 24(1),(4) or (6).

[44] In conclusion on the place of offers to settle in the determination of success, the FLR’s costs rules offer a number of routes to the determination of costs. One of them is through favourable offers to settle and another is through success. The scheme under r. 18 compares the ultimate order to the offers that precede it, seen through the lens of favourability to the offeror. On the other hand, r. 24(1) and (6) looks to success by comparing the result that each party sought. Where r. 24 looks to offers, it does so only in order to determine reasonableness and proportionality, not relative success. Thus, offers to settle are not a factor in the determination of success in a proceeding.

Application of Legal Principles to the Facts of this Case

[45] When I look to success in this case, it is clear that the mother was, on an overall basis, the more successful party in the motion. But she was not completely successful. She successfully resisted most of the parenting relief requested by the father, particularly with regard to TC but also in regard to JC. I did give the father slighter greater discretion with regard to the place of his access to JC. The father also did obtain a modicum of success in obtaining the terms set out in the Conlan J. order, which I adopted. As he said, those terms were important to him because of the feeling that the mother was trying to eliminate his involvement with the children.

[46] Both parties made an offer or offers to settle. Both sets of offers were severable. As set out above, the terms of the father’s first offer were adopted into the consent order of Conlan J. and later adopted into my order without opposition. The father’s success with regard to his second offer, which dealt with the larger parenting issues, was not as favourable as his first offer. He received little else than a continuation of the Conlan J. terms and an expanded say about the location of the access with JC.

[47] On the other hand, the mother’s only offer to settle dealt with many issues. But it was not fully responsive to the parenting issues raised in this motion by the father. It only included an adoption of Dr. Polak’s recommendations, without reference to any parenting arrangements. Those recommendations were only process oriented, dealing with counselling, coaching and assessment. But, while I did recommend their voluntary implementation, there was no motion before me to adopt Dr. Polak’s recommendations. Accordingly, one cannot say that there was what Nordheimer J. described in Beaver v. Hill as a “true element of compromise” in her offer.

[48] Further, the father did begin parenting counselling, as recommended by Dr. Polak, while the mother had failed to commence her own individual counselling or even arrange it for the children, two steps recommended by Dr Polak. That certainly was not reasonable behaviour as reflected in the mother’s own offer.

[49] In reviewing my findings above, the favourability of the offers, the relative success of the parties, and Ms. Smithen‘s bills of costs (which the father does not challenge), I find that it would be fair, reasonable and proportionate in the circumstances of this case to order the father to pay costs of this motion to the mother, fixed at $7,500. As I understand that the father is presently unemployed, he shall pay those costs upon the earliest of:

1. The resolution of his wrongful dismissal claim, with payment to be made from the net proceeds of that claim;
2. The sale of the property located at 1110 Morrison Heights Drive, Oakville, with payment to be made from the net proceeds of that sale;
3. Sixty days of him obtaining new employment.

Endorsement Deemed an Order

[50] In the circumstances of the COVID-19 emergency, this endorsement is deemed to be an Order of the Court. It is operative and enforceable from the time of its release, without any need for a signed or entered, formal, typed Order. The parties may submit a formal Order for signing and entry once the court re-opens.

“Marvin Kurz J.” Electronic signature of Justice Marvin Kurz, Dated: June 22, 2020 Original will be placed in court file