Court File and Parties

COURT FILE NO.: 1255/17

DATE: 2020-10-26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Aly Kachra, Applicant

AND

Karen Elizabeth Skeaff, Respondent

BEFORE: The Honourable Mr. Justice A. Pazaratz

COUNSEL: R. Grosz, Counsel, for the Applicant

M. Rose, Counsel, for the Respondent

HEARD: October 23, 2020

ENDORSEMENT

[1] I have now considered the written and oral submissions which followed my September 18, 2020 motion endorsement.

[2] This was a disclosure motion brought by the Applicant father within a long-standing, aggressively litigated proceeding which is soon scheduled for trial.

[3] The Applicant has always been represented by counsel.

[4] At the disclosure motion the Respondent represented herself, although she had previously been represented by counsel. Following the motion the mother retained new counsel who is now on record and participated in the costs hearing.

[5] The Applicant was overwhelmingly successful at the disclosure motion:

a. His Notice of Motion dated September 1, 2020 included a list of 22 numbered paragraphs (some with sub-paragraphs) listing disclosure being requested.

b. At the hearing of the motion I stood the matter down for the parties to determine whether the issue could be resolved or narrowed.

c. When the parties returned, the Respondent had consented to most of the items requested. They presented me with a short list of items they couldn’t agree upon.

d. Of the short list of items which remained in dispute, the Applicant ultimately withdrew one request (a major item), but the Applicant was primarily successful in relation to the balance of the disputed list.

[6] The Applicant’s request at the costs hearing:

a. Full recovery of costs in relation to the disclosure motion in the sum of more than $22,000.00.

b. Enforcement of any costs order through the Family Responsibility Office (“FRO”).

[7] The Respondent’s request at the costs hearing:

a. Despite some success, the Applicant should be deprived of any costs recovery as a result of unreasonable behaviour and bad faith. As well the costs claimed are excessive.

b. The Applicant should reimburse the Respondent for $6,123.07, as costs owing to a self-represented party.

[8] Costs rules are intended to foster four fundamental purposes:

a. To partially indemnify successful litigants;

b. To encourage settlement;

c. To discourage and sanction inappropriate behaviour by litigants; and

d. To ensure that cases are dealt with justly pursuant subrule 2(2) of the Family Law Rules ("the Rules") Mattina v. Mattina, 2018 ONCA 867 (Ont CA); Serra v. Serra, 2009 ONCA 395 (Ont CA)

[9] Costs awards are discretionary. In exercising that discretion, the court should be mindful of two touchstone considerations: reasonableness and proportionality. Beaver v. Hill, 2018 ONCA 840 (Ont CA).

[10] Costs are an important tool to promote the efficient use of judicial resources and the orderly administration of justice. Costs can be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, 2003 S.C.C. 71 (SCC); Lewis v. Silva, 2019 ONCJ 795 (OCJ).

[11] Rules 18 and 24 of the Family Law Rules (“the Rules”) govern the determination of costs in family law proceedings.

[12] Consideration of success is the starting point. Rule 24(1) creates a presumption of costs in favour of the successful party. Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330

[13] There can be no doubt that the Applicant was successful:

a. He brought a motion for numerous items of disclosure.

b. Less than three days prior to the hearing of the motion, and after the Applicant had served a Reply affidavit, the Respondent confirmed by email that she was agreeable to some of the items being requested.

c. On the day of the motion the matter was stood down and the Respondent agreed to additional items to be produced.

d. Of the short list of items which had to be argued, the Applicant was mostly successful.

e. During submissions the Applicant’s counsel wisely withdrew a request that the Respondent produce her former solicitor’s file. The Respondent was correct to resist this request.

f. But the Applicant obtained an order for just about all of the other disclosure requested.

[14] To determine whether a party has been successful, the court should take into account how the eventual order compares to any settlement offers that were made. Lawson v. Lawson, 2008 23496 (ON SC), [2008] O.J. No. 1978 (SCJ); Ajiboye v. Ajiboye. Rule 18(14) sets out the consequences of a party's failure to accept an offer to settle that is as good or better than the hearing's result.

[15] The Applicant filed three offers to settle.

[16] His September 3, 2020 non-severable offer would have required the Respondent to produce the entire list of disclosure set out on the schedule attached to the Applicant’s motion. If the offer was accepted by 2:00 p.m. on the following day, there would be no costs. If accepted afterward, costs would be as agreed between the parties or fixed by the court.

a. This was a good faith effort to settle, but the offer does not precisely match the end result, so Rule 18(14) is not triggered.

b. However, it is still a relevant consideration pursuant to Rule 18(16).

[17] The Applicant served similar offers on September 8, 2020 (non-severable) and September 11, 2020 (severable). These were good faith efforts to promote resolution, but the offers do not match the end result. On motions for production of specifically enumerated items of disclosure, an offer to settle should match the result precisely, to trigger Rule 18(14) costs consequences.

[18] The Respondent served an offer to settle dated September 8, 2020 in which she agreed to produce some but not all of the items she was ultimately ordered to produce. That offer does not trigger Rule 18(14) costs consequences, and it is sufficiently different from the ultimate result that Rule 18(16) is marginally applicable.

[19] Rule 24(6) provides that where success in a step in a case is divided, the court may exercise its discretion to order and apportion costs as appropriate. However, the determination of whether success was truly "divided" 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 that required adjudication. Jackson v. Mayerle; Slongo v. Slongo; Lippert v. Rodney; Norton and Norton, 2017 ONSC 5406(SCJ).

[20] In this case, the Applicant achieved most of what he wanted. But there was a small element of divided success in relation to the disclosure request the Applicant ultimately withdrew.

[21] There is no presumption in the Rules that provides for a general approach of "close to full recovery" costs. The Rules expressly contemplate full recovery only in specific circumstances:

a. Matching/exceeding an offer to settle (Rule 18(14)).

b. Bad faith (Rule 24(8)). Beaver v. Hill

[22] And even in circumstances in which Rules 18(14) or 24(8) trigger "full recovery costs", the court still has an overriding discretion and responsibility to determine a costs award that is proportional, fair and reasonable in all the circumstances. Chomos v. Hamilton, 2016 6232 (SCJ).

[23] The Respondent submits that the Applicant’s costs claim should be dismissed or significantly reduced as a result of “bad faith” on his part. Although bad faith is usually the basis of a request for elevated costs, in this case the Respondent’s bad faith argument is related to Rule 24(4) which provides that in some circumstances a successful party can be deprived of their costs if they have behaved unreasonably. Ajiboye v. Ajiboye, 2019 ONCJ 894 (OCJ).

[24] A finding of bad faith on the part of a litigant is rarely made, because it requires a high threshold. S.(C). v. S(M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (SCJ): Piskor v. Piskor, 2004 5023 (SCJ); Cozzi v. Smith, 2015 ONSC 3626 (SCJ); Hum v. Skoll, 2020 ONSC 275(SCJ).

a. The behavior 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 behavior; to conceal information relevant to the issues at stake in the case; or to deceive the other party or the court. S.(C). v. S(M.)

b. 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. Calver v. Calver, 2019 ONSC 7317(SCJ).

c. The requisite intent to harm does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. S.(C). v. S(M.)

d. At some point a party can be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behavior is causing the other party major financial harm without justification. S.(C). v. S(M.).

e. Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation. Scipione v. Del Sordo, 2015 ONSC (SCJ); Children's Aid Society of the Region of Peel v. F. (I.J.), 2009 ONCJ 252 (OCJ); Biddle v. Biddle, 2005 7660 (SCJ); Leonardo v. Meloche, 2003 74500 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ); Carter v. Carter, 2020 ONSC 1095 (SCJ); Jackson v. Mayerle, 2016 ONSC 1556 (SCJ); Green v. Whyte, 2019 ONSC 7133 (SCJ).

f. To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison, 2015 ONSC 2002(SCJ).

g. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are motivated by one purpose when they are actually motivated by another purpose. It is done knowingly and intentionally. A bad faith finding on a specific issue does not necessarily have a spill-over effect to other issues. The court can order full recovery costs in relation to the portion of the proceeding where bad faith is applicable. Hunt v. Hunt, [2001] O.J. No. 5111 (SCJ). Scipione v. Del Sordo; Stewart v. McKeown, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W. 2015 ONCJ 94 (OCJ)

h. Even where the "full recovery" provisions of the Rules are triggered by a finding of bad faith, the quantification of costs still requires an overall sense of reasonableness and fairness. The successful party is not entitled to a blank cheque. Goryn v. Neisner, 2015 ONCJ 318 (OCJ); Jackson v. Mayerle; Belair v. Bourgon, 2019 ONSC 2170; Slongo v. Slongo, 2015 ONSC 3327(SCJ).

i. The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. M. (C.A.) v. M. (D.); Scipione v. Del Sordo; Jackson v Mayerle.

[25] The Respondent submits that the Applicant’s approach to this litigation – and to the specific disclosure motion – has been unreasonable, oppressive, and needlessly aggressive.

a. She says, for example, that the Applicant was simply asking for too much disclosure, completely ignoring (or obfuscating) the fact that she had already made significant disclosure. (In response, the Applicant’s counsel acknowledges that some disclosure had been produced, but there was still a great deal missing – as evidenced by the September 18, 2020 order requiring more disclosure.)

b. The Respondent says the Applicant’s lawyer was too aggressive and unfair with respect to scheduling the motion and imposing onerous deadlines for a response. (In response, the Applicant’s counsel says she was simply adhering to the court protocols with respect to filing and scheduling motions.)

c. The Respondent submits the Applicant should not be entitled to pursue costs when he is in contempt of requirements in other orders, unrelated to the disclosure issue. (In response, the Applicant’s counsel notes that there has been no finding of contempt or disobedience in relation to the Applicant; he has no opportunity at this costs hearing to present evidence in response; and such allegations merely distract from a proper analysis of costs in relation to a specific court event. I agree with that position.)_

[26] This shouldn’t be so complicated.

a. The Applicant brought a one-issue motion requesting disclosure.

b. He was successful in obtaining most of the disclosure he asked for.

c. The disclosure relates to important issues such as custody/access and child support.

d. The most basic obligation in family law is the duty to disclose financial information. This requirement should be automatic, immediate and ongoing. Family Court cannot function and vitally important family issues cannot be determined, until all necessary information is available. Martin v Watts 2020 ONCA 406 (Ont CA); Leitch v Novac 2020 ONCA 257 (Ont CA); Mullin v Sherlock 2018 ONCA 1063 (Ont CA); Fielding v Fielding 2015 ONCA 901 (Ont CA); Roberts v Roberts 2015 ONCA 450 (Ont CA); Leskun v Leskun 2006 SCC 25 (SCC).

e. There is no doubt that requests for disclosure must be tempered by proportionality, relevance, practicality and cost-effectiveness. Never-ending requests for additional disclosure can quickly yield diminishing returns, and create needless distraction and expense. Repetitive complaints about non-disclosure which ignore what has already been produced may unfairly malign a party, for strategic or other purpose.

f. But none of those caveats apply in this case.

g. With few exceptions, everything the Applicant asked for was reasonable. It should have been produced – quickly and voluntarily – and without valuable resources being wasted on a disclosure motion where the result was inevitable.

h. And in determining costs following a successful disclosure motion, the court will have neither the time nor the inclination to microscopically review the agonizing trickle-rate at which relevant and necessary documents languidly surface.

i. The message has to get out: Produce the damn disclosure!

[27] The most compelling submission on behalf of the Respondent relates to the amount of costs being claimed by the Applicant: $22,184.16.

a. This includes three lawyers spending 63.7 hours on this motion at hourly rates ranging from $300.00 to $385.00 per hour. Plus a “paraprofessional” at the rate of $185.16 per hour.

b. There can be no doubt that chasing after necessary disclosure can be a time-consuming and tedious endeavor. The Applicant’s counsel are to be commended for being thorough. But 63.7 hours chasing after a two-page list of disclosure is a lot of time. Perhaps too much time.

c. I acknowledge that the issues herein are important. And I don’t really take exception to the hourly rate.

d. But full-recovery costs are appropriate in only limited circumstances. And even where Rules 18(14) (matching an offer) or 24(8) (bad faith) are triggered, the court still has an overriding obligation to ensure that costs orders reflect reasonableness and proportionality.

e. While in this case Rule 18(14) is not triggered, by the same token an ongoing failure to produce disclosure usually approaches bad faith (or in any event a high level of indemnification for costs).

f. But the moral authority of a successful litigant’s position should never translate to a “blank cheque” approach to costs.

g. Lawyers can charge their own clients whatever they want. But they must always be mindful that the touchstones of reasonableness and proportionality create a tipping point, beyond which the prospects of full recovery rapidly diminish. No matter how much work the successful lawyer performed, costs claims still have to reflect an amount which is fair and reasonable for the unsuccessful party to pay. Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291; Selznick v Selznick 2013 ONCA 35.

[28] In summary:

a. The Applicant was primarily successful. There was a very small element of divided success.

b. The full recovery provisions of the Rules are not triggered.

c. Costs in relation to securing disclosure should be at an elevated rate, to reflect the fundamental importance of this topic to the family court system.

d. But whatever the aggravating factors, reasonableness and proportionality are the guiding principles.

[29] I have considered ability to pay.

a. The Respondent earns approximately $100,000.00 per year.

b. That’s a fraction of the more than $300,000.00 the Applicant earns.

c. I have considered their comparative ability to fund or withstand this litigation.

d. Both parties fall into the income category where they will have to assume responsibility for the litigation decisions they make.

[30] I have considered – and rejected – the Respondent’s counterclaim for costs.

a. She was not successful.

b. She created needless expense by resisting disclosure.

c. She behaved unreasonably.

d. I do not accept her submission that the successful Applicant behaved unreasonably.

[31] Balancing all of these considerations, I conclude that $12,000.00 costs (inclusive of HST and disbursements) is reasonable.

[32] The Applicant proposes that any costs order be payable forthwith. Given the fact that the parties are soon to go to trial, I am not prepared to impose a payment deadline which might only serve to create more complications at trial. The issues herein should be determined quickly, and on the merits.

[33] The Applicant requests that the costs order be enforceable by the Family Responsibility Act as a support order, pursuant to s. 1(1)(g) of the Family Responsibility and Support Arrears Enforcement Act.

[34] Where the court judgment involves a mix of support and other issues, the court has the discretion to determine what portion of the costs should be allocated to the support issue. Sordi v. Sordi, 2011 ONCA 665 (Ont CA); Clark v. Clark; A.A. v. Z.G., 2016 ONCA 737 (Ont CA); D.D. and F.D. v. H.G. 2020 ONSC 1919 (SCJ)

[35] In this case the disputed disclosure related to child support and a variety of other important issues. It is not possible for me to delineate a specific amount or portion of the costs order which relates to child support. As a result, based upon the information presented, I do not feel it is possible or appropriate to specify that any portion of the costs award should be enforced by FRO.

[36] The Respondent shall pay to the Applicant $12,000.00 costs in relation to the disclosure motion, inclusive of HST and disbursements.

Date: October 26, 2020