NEWMARKET COURT FILE NO.: FC-19-58363-00

DATE: 20200923

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Rasa Gostautaite Applicant

– AND –

Alfredo Gonzalez Menendez Respondent

Rachel Radley, Counsel for the Applicant

Dion McClean, Counsel for the Respondent

HEARD: In Writing

RULING ON COSTS

JARVIS J.

[1] This Ruling deals with the costs of a long motion.[^1] There is no dispute that the respondent (“the mother”) was the successful party. She claims full recovery costs of $45,308.42. The position of the applicant (“the father”) is that no Order for costs should be made based on his limited financial resources and dependants’ obligations or, if made, that costs be awarded on a partial indemnity basis, again taking into consideration his financial circumstances.

[2] The costs claimed relate to three lengthy conference events held by Bennett J. for which costs were reserved to this court (April 29, May 7 and June 1, 2020) and three motion events which included leave being granted to the mother to bring her urgent motion (April 21, 2020), directions being given for the hearing of the long motion ordered by Bennett J. after a teleconference with counsel (June 19, 2020) and, lastly, the motion being argued on July 7, 2020. A preliminary Ruling was issued on July 7 appointing the OCL and for other immediate relief: a more comprehensive Order was released on July 17, 2020.

[3] The mother served two Offers to Settle, those dated May 25 and July 5, 2020. Each Offer had severable parts dealing with parenting time, responsibility for ensuring completion of EM’s school work and the reassessment of EM by Dr. Taub, the July 5 Offer adding a term that the OCL be appointed. The first Offer provided for a “no costs payable” term if accepted by 4:00 p.m. the next day and the second Offer contained a similar term but reserved to be separately argued the costs of the mother’s April 15, 2020 14B motion and the three teleconferences held by Bennett J. The second Offer also had a window for a “no costs payable acceptance”, likely less than 24 hours from its service: the first Offer was not withdrawn. In each case, the Offers provided that if all or any part of them was not accepted by certain deadlines they remained open for acceptance afterwards but on a full indemnity basis.

[4] The father served an Offer to Settle dated July 3, 2020. Its principle terms included provisions that the child primarily reside with him, that the mother attend anger management therapy and counselling as a pre-condition to reunification therapy and dealt with responsibility for ensuring completion of EM’s school work. It also contained a severability term. If accepted by a certain deadline (four days after service) no costs would be payable but if accepted afterwards then full recovery costs would be payable for those terms not accepted.

[5] The outcome of the motion was more favourable to the mother than the father. She is entitled to costs but, in my view, not for the amount claimed. For the reasons set out below, a fair and reasonable amount to award her for costs is $30,000 inclusive of disbursements and HST with terms for payment.

Law

[6] Family Law litigants are encouraged to settle their disputes without resort to the courts and to seek reasonable compromise whenever possible. Sections 18(14) 1, 3-5 and 24(1), (5) and (12)(a) and (b) of the Family Law Rules (“the Rules” or “Rule”) deal, respectively, with the exchange and non-acceptance of Offers to Settle and frame the exercise of the court’s discretion when awarding costs, providing as follows:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

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

3. The offer is not accepted.

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

SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

DECISION ON REASONABLENESS

(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(a) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;

(b) expenses properly paid or payable; and

(c) any other relevant matter.

SETTING COSTS AMOUNTS

(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.

[7] The principles guiding the court’s exercise of its discretion pursuant to the Rules are well-established. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. Four fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants;[^2] and (4) to ensure that cases are dealt with justly.[^3] Family law litigants must act in a reasonable and cost-effective way: they should, and will, be held accountable for the positions they take in their litigation.[^4] As observed by the Court of Appeal in Beaver v. Hill[^5] reasonableness and proportionality frame the exercise of the court’s discretion: the amount to be awarded is what the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”: Boucher v. Public Accountants Council for the Province of Ontario.[^6]

Discussion

[8] As the successful party, the mother is presumptively entitled to an award of costs. Provided that the requirements of Rule 18 are met (and they were in this case) the scale of the presumptive award (i.e. full recovery or something less) is subject to the considerations mandated by Rule 24. There were four principal issues:

(a) On the issue of EM’s residency, the mother proposed a 2-2-5-5 arrangement in her May 25Offer. The father sought sole residency with him. The mother was awarded temporary custody, sole decision-making and restricted the father’s contact with the child. The Ruling on this issue was more favourable to the mother;

(b) The mother proposed that during those times when EM was in either party’s care, that parent ensure the child’s completion of her school work and update the other parent daily. This was first proposed in her May 25 Offer and repeated in the July 5 Offer. The father’s Offer that was served four days before the motion was heard and proposed almost the same terms as the mother but without daily contact and requiring an equal sharing of any tutoring expense. Ensuring that EM was completing her school work was a long-standing concern and one that the court found the father had failed to recognize or, if he did, ignored. The Ruling directed the mother to assume responsibility for ensuring that school work was done and that tutoring expenses be equally shared. This outcome was as or more favourable to the mother;

(c) The mother proposed in both of her Offers that EM be reassessed by Dr. Taub. The father opposed any such further involvement: his Offer was silent on this. A reassessment by Dr. Taub was ordered. The Ruling was more favourable to the mother on this issue;

(d) In her July 5 Offer the mother proposed involvement of the OCL. The father opposed this. The court issued a Pre-liminary Ruling shortly after the motion ended appointing the OCL (which appointment has since been accepted). The Ruling was more favourable to the mother;

(e) Viewed holistically the overall contents of the mother’s Offers were reflected in the Ruling whereas what the father proposed was almost entirely rejected (except for the school work issue).

[9] The fact is that the father should have accepted the mother’s first Offer. Applying Rule 18 the mother is entitled to her costs to the date of her May 25 Offer and full recovery costs afterwards, subject to Rule 24 considerations.

Assessment of Mother’s Bill of Costs

[10] As observed by Aston J., fixing costs is not “a simple, mechanical exercise. Such an exercise would be inappropriate and in fact undesirable.”[^7] I agree with A.J. Goodman J. in Miziolek v. Miziolek and Miziolek[^8] that,

…[t]here must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration.

[11] I agree with these observations and this approach.

[12] The mother has presented a Bill totaling $45,308.42 comprising fees ($35,585), disbursements ($510.95) and HST ($5,212.47). Three lawyers were involved in her representation: Ms. Radley (18 years of experience at a $395 hourly rate); Mr. Yu (6 years of experience at a $300 hourly rate); and Ms. Tadman (3 years’ experience at $295 an hour). Except for Ms. Tadman’s rate which I think is slightly too high, the hourly rates for Ms. Radley and Mr. Yu are reasonable. Time recorded totaled 114.1 hours of which Ms. Tadman spent 65.7 hours (totaling $18,067.50), Ms. Radley 37.6 hours (totaling $12,877) and Mr. Yu 15.8 hours (totaling $4,750). Disbursements incurred are modest. No Bill of Costs accompanied the father’s submissions. This is unfortunate because the court is unable to compare the time and presumptively compensable services recorded by the mother to any recorded by the father.

[13] The mother’s Bill detailed the compensable event with a brief description of the service provided, identity of the lawyer involved, time spent and amount claimed. The time spent appears excessive but there is no duplication of services: work appears to have been appropriately delegated. Surprisingly, the Bill did not summarize the mother’s claim for costs incurred before and after her May 25 Offer to Settle. That should not be the court’s task.

[14] In considering the Rule 24 factors, the most important is the reasonableness of the father’s conduct. His conduct needlessly prolonged, and exacerbated the expense of, this proceeding. Although listed in the Ruling[^9] some of the more egregious examples include the following considerations relevant to costs:

(a) The father breached at least two agreements made at, and shortly after appearing in, court. This led to further conflict and court appearances;

(b) He misrepresented to a therapist for EM (Ms. Benrubi) that the mother approved of her involvement. His lawyer (unsuccessfully) sought to frustrate the mother’s contact with the therapist. The father is accountable for that;

(c) He made bald, sweeping allegations of contractual deficiencies (relating to the July 12, 2019 Minutes of Settlement) unsupported by any evidence and made baseless complaints about his treatment by the court. These added an unnecessary element of complexity;

(d) He opposed any reassessment of EM by Dr. Taub disputing her differential diagnosis of EM years after it was made known to him;

(e) Viewed overall, the court concluded that its process was being “gamed” by the father.

[15] While a party should not be penalized in costs for adopting a litigation position with which the court ultimately disagrees there is a point at which an acceptable range of disagreement becomes clearly unreasonable and deserving of sanction. The father exceeded that range.

[16] The father pointed to his comparatively more modest financial circumstances than those of the mother as relevant to the amount of any award. That is fair: a party’s ability to pay costs, or impecuniosity, is a relevant consideration under Rule 24(12).[^10] This is most often raised, especially in parenting cases, where the impact of a significant costs award against a parent could seriously impact a child’s interests. But impecuniosity is not a shield from liability: it cannot be used to excuse a party’s litigation conduct. As observed by Pazaratz J. in Izyuk v. Bilousov,[^11]

…those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings. As Glithero J. noted in Balaban v. Balaban, 2007 7990 (ON SC), 2007 CarswellOnt 1518, at paragraph 7: “…when a person’s financial position is such that they cannot really afford the cost of litigation, then there is all the more reason to attempt compromise of a meaningful nature.

[17] These observations apply in this case. What the court permits, it promotes. The father’s conduct merits sanction.

Disposition

[18] The father shall pay to the mother her costs fixed in the amount of $30,000 inclusive of disbursements and HST as follows:

(a) The sum of $7,500 by November 30, 2020;

(b) The balance of the remaining costs awarded shall be paid in monthly instalments of $750 on the 1st day of every month starting January 1, 2021 until paid in full;

(c) In the event of a default in payment not cured with 15 days of default the full amount of the costs unpaid shall become immediately due and payable;

(d) Post judgment interest at the prescribed rate shall only run on the costs awarded from and after the date of any default in payment of (a) to (c) above.

[19] The amount of the award accounts for the facts that the three conferences with Bennett J. predated the mother’s May 25 Offer, the modestly excessive hourly rate charged by one of the mother’s lawyers who performed over one-half of the work and services recorded but whose recorded time was, in my view excessive, the absence of a clear before and after May 25, 2020 demarcation of services relevant to the issue of full costs recovery and the father’s financial circumstances, more informative details of which the father did not share with the court.

Justice David A. Jarvis

Date: September 23, 2020

[^1]: 2020 ONSC 4396.

[^2]: Serra v. Serra, 2009 ONCA 395.

[^3]: Mattina v. Mattina, 2018 ONCA 867 at para. 10.

[^4]: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317; Peers v. Poupore, ONCJ 615.

[^5]: 2018 ONCA 840, at para. 4.

[^6]: (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 2001, [2001] O.J. No. 2634, 2004 CarswellOnt 521 (Ont. C.A.).

[^7]: Delillis v. Delillis and Delillis, 2005 36447 (ON SC), [2005] O.J. No. 4345 (Ont. S.C.).

[^8]: 2018 ONSC 4372, at para. 32.

[^9]: See paragraph 70 listing 12 examples.

[^10]: M.(A.C.) v. M.(D.), 2003 18880 (ON CA), 67 O.R. (3rd)181 (Ont. C.A.).

[^11]: 2011 ONSC 7176, 7 R.F.L. (7th) 358, [2011] CarswellOnt 14382, [2011] O.J. No. 584 (QL), 210 A.C.W.S. (3rd) 143.