Court File and Parties
Ontario Superior Court of Justice
Endorsement
Applicant: Samina Hakim Counsel: Melissa Young
Respondent: Muhammad Omar Hakim Counsel: Shahida faisal
ADDENDUM ON COSTS
Background
1As Case Management Judge, I presided over six Case Conference teleconferences scheduled by me during the COVID-19 suspension of regular Superior Court of Justice operations; on each of May 21, May 27, June 10, June 24, July 2 and July 8, 2020.
2I have now considered the Applicant’s Costs Submissions dated July 24, 2020 and the Respondent’s Costs Submissions dated August 7, 2020, and the Exhibits attached thereto including case authorities.
3The Applicant seeks an Order that the Respondent pay her costs of these six Case Conferences on a full recovery basis in the all-inclusive amount of $11,410.64. The Respondent denies that he has acted in bad faith and denies that the Applicant is entitled to costs on a full recovery basis. It is also submitted at paragraph 8 of the Respondent’s Costs Submissions that “Based on the foregoing, the factors set out in Family Law Rule 24 (12), the Respondent is liable to pay any costs to the Applicant.”
4The Applicant had brought a Motion to Strike the Respondent’s Pleadings in January 2020, and the April 2020 hearing date before another Judge was adjourned as a consequence of COVID-19. I recused myself from hearing Motions in this matter since I have had comprehensive settlement discussions with both parties and their various Counsel over the years. Since I was appointed as Case Management Judge, the Applicant has had two different Counsel while Shahida Faisal is now the fourth Counsel of record for the Respondent.
Legal Principles
5The starting point in addressing the issue of costs is section 131 of the Courts of Justice Act, which provides that subject to the provisions of an Act or rules of Court, costs are within the discretion of the Court, and the Court may determine by whom and to what extent the costs shall be paid.
6Rule 24 of the Family Law Rules (FLR) addresses the issue of costs, and states that there is a presumption that a successful party is entitled to the costs of a motion.
7Modern costs rules are designed to foster four fundamental purposes; (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 under subrule 2 (2) of the Family Law Rules : Mattina v. Mattina, 2018 ONCA 867.
8The justice system is a precious public resource. Access to the justice system by individuals must be balanced with the need to ensure that the resource is available for all those who need it. This is one of the purposes of Rule 2: Lawrence v. Lawrence, 2017 ONCJ 431, at para. 52.
9Parties 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: Lawrence v. Lawrence, supra, at para. 54.
10Modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer. Costs can also be used to sanction behaviour that increases the duration and expense of litigation or is otherwise unreasonable or vexatious. In short, it has become a routine matter for Courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 (S.C.C.), para. 25; Lawrence v. Lawrence, supra, at para. 31.
11In Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ONCA), 71 O.R. (3d) 291 (Ont. C.A.), the Ontario Court of Appeal indicated that a costs award should be a "fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs of the successful litigant". A "fair and reasonable amount" is that amount which the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation: Lupien v. Carmichael, 2017 ONSC 2929, at para. 9.
12One measure of what is “fair and reasonable” to pay in costs may be arrived at by looking at what the unsuccessful party paid for their own legal fees. (See Goryn v. Neisner, 2015 CarswellOnt 8562, and Mohr v. Sweeney, 2016 ONSC 3238)
13A successful party in a family law case is presumptively entitled to costs, subject to the factors set out in Rule 24 FLR. The Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded. See Beaver v. Hill, 2018 ONCA 840, at paras. 9 and 10.
14Determining the amount of costs is not simply a mechanical exercise. Costs must be proportional to the amount in issue and the outcome: Boucher v. Public Accountants Council (Ontario), supra.; Lawrence v. Lawrence, supra, at para. 64.
15Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs. Proportionality is a core principle that not only governs the conduct of the proceedings generally, but is specifically applicable to fixing costs: Beaver v. Hill, supra, at paras. 12 and 19.
16An award of costs is subject to the factors listed in Rule 24 (12) FLR, Rule 24 (4) FLR pertaining to unreasonable conduct of a successful party, Rule 24 (8) FLR pertaining to bad faith, Rule 18 (14) FLR pertaining to offers to settle, and the reasonableness of the costs sought by the successful party: Berta v. Berta, 2015 ONCA 918 at para. 94.
17In making a determination, this Court must consider Rule 24 (12) FLR, which outlines the factors to be considered in quantifying costs:
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) 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.
18Rule 24 (5) provides criteria for determining the reasonableness of a party’s behaviour in a case (a factor in clause 24 (12)(a) (i) above). It reads as follows:
24 (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.
19Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.
20Rule 18 (14) sets out the costs consequences of failure to accept an Offer to Settle:
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:
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.
21The 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 Rule 18 (14) FLR: Rule 18 (15) FLR. (See Neilipovitz v. Neilipovitz [2014] O.J. No. 3842 (SCJ).
22When 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, when exercising its discretion over costs, even if Rule 18 (14) FLR does not apply: Rule 18 (16) FLR.
23Close is not good enough to attract the costs consequences of 18 (14). The offer must be as good as or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in Rule 18 (14) FLR, it may be considered under Rule 18 (16) FLR: Gurley v. Gurley, 2013 ONCJ 482.
24The 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: Wilson v Kovalev, 2016 ONSC 163.
25Rule 24 (6) FLR 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, 2016 ONSC 1556 (Ont. S.C.J.); Slongo v. Slongo, 2017 ONCA 687 (Ont. C.A.): Lippert v. Rodney, Norton and Norton, 2017 ONSC 5406, at para. 14.
26While Rule 24 (12)(b) FLR does permit the consideration of ability to pay (under the umbrella of "any other relevant matter"), it is given significantly less prominence than the presumption that costs will follow success. (See Biant v. Sagoo, 2001 28137 (ON SC), 2001 CarswellOnt 3315, [2001] O.T.C. 695, 20 R.F.L. (5th) 284 (Ont. S.C.J.): Lawrence v. Lawrence, supra, at para. 33)
27Ability to pay alone cannot, nor should it, over-ride the other factors in Rule 24 (12). (See Peers v. Poupore, 2008 ONCJ 615 (Ont. C.J.), para. 42; Lawrence v. Lawrence, supra, at para. 35)
28The financial means of the unsuccessful party may not be used to shield them from liability for costs, particularly when they has acted unreasonably: Gobin v. Gobin (2009), 2009 ONCJ 278, 71 R.F.L. (6th) 209 (Ont. C.J.), para. 24; Lawrence v. Lawrence, supra, at para. 36.
29Those who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings: Balsmeier v Balsmeier, 2016 ONSC 3485, adopting with approval the comments of McGee J, from Mohr v. Sweeney 2016 ONSC 3338, 2016 CarswellOnt 7716, at para. 17, citing Balaban v. Balaban, 2007 7990 (ON SC), 2007 CarswellOnt 1518, at para. 7.
30To determine whether a party has been successful, the Court should take into account how the Order compares to any settlement offers that were made: Lawson v. Lawson, 2008 23496 (ON SC), 2008 CarswellOnt 2819, [2008] W.D.F.L. 3600, 167 A.C.W.S. (3d) 723, [2008] O.J. No. 1978 (Ont. S.C.J.). The position each party took in the case should also be examined: Lawrence v. Lawrence, supra, at para. 41.
31Recently, in Hmoudou v. Semiali, 2020 ONSC 1330, Swartz J. endorsed the opinion of Justice Pazaratz in Scipione v. Scipione, 2015 ONSC 5982, noting that “who got what they asked for?” is the primary question in every costs decision: In Hmoudou the Court elaborated:
a. “It is completely unreasonable to not get what you ask for, and then argue that somehow success was divided or that you were in fact successful;
b. There are situations where there is divided success, or where in examining a comprehensive settlement it may be impossible to unravel who got what and whether it was valuable to them or not;
c. Caution must be exercised in situations where a settlement has been presented to a Court, and then the Court is asked to assess costs. Where there are allegations of unreasonable behaviour, bad faith, or where the minutes of settlement are so intricate as to be enmeshed in a global structure, this initial caution may lead to a refusal to order costs in such circumstances. There will clearly be compromises made and settlements reached, where the motivation and considerations are unknown. It may then be impossible to determine who was successful, to assess reasonableness and reach a just and equitable order of costs.”
32Rule 24 (8) of the Rules states that: “If 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.” Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith: DePace v. Michienzi (2000) 2000 22460 (ON SC), 12 R.F.L. (5th) 341 (Ont SCJ); Kardaras v. Kardaras, 2008 ONCJ 616. A bad faith finding on some specific issue does not necessarily have a spill-over effect to other issues: Hunt v. Hunt [2001] O.J. No. 5111 (SCJ).
33Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. (See Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Scipione, supra. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally: S.(C.) v. S. (M.) (2007), 2007 20279 (ONSC), 38 R.F.L. (6th) 315 (Ont. SCJ). 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. (See Scipione, supra.)
34Even where the "full recovery" provisions of the Rules are triggered, either by an offer which meets Rule 18 (14) requirements or by a finding of bad faith, quantification of costs still requires an overall sense of reasonableness and fairness: Goryn v. Neisner 2015 ONCJ 318 (OCJ). The Rules do not require the Court to allow the successful party to demand a blank cheque for their costs: Slongo v. Slongo 2015 ONSC 3327 (SCJ). 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.) 2003 18880 (ON CA), [2003] O.J. No. 3707(supra); Scipione v. Scipione, supra.; Jackson v. Mayerle, 2016 ONSC 1556.
Analysis
35As somewhat reflected in my Endorsements of June 10 and 24, 2020 and of July 2 and 8, 2020, I have been tempted by the submissions of Counsel for the Applicant to make a finding that the Respondent has acted in bad faith during these Case Conferences by requiring this Court to provide six separate appearances in order to finally be in a position to complete my duties as the Case Conferencing Judge. However, I cannot find that the behaviour of the Respondent was so egregious as to warrant the rare finding of bad faith in these circumstances. I fully appreciate the difference between bad faith and unreasonable behaviour, and the latter is most appropriate here.
36In exercising my discretion regarding the costs of these six Case Conferences, this Court additionally takes account of Rule 17 (18) and (18.1) of the Family Law Rules, which provide:
17 (18) Costs shall not be awarded at a conference unless a party to the conference was not prepared, did not serve the required documents, did not make any required disclosure, otherwise contributed to the conference being unproductive or otherwise did not follow these rules, in which case the judge shall, despite subrule 24 (10),
(a) order the party to pay the costs of the conference immediately;
(b) decide the amount of the costs; and
(c) give any directions that are needed.
17 (18.1) Subrule (18) does not prevent the court from awarding costs in relation to the conference at a later stage in the case, if costs are not awarded at the conference.
37As previously stated, consideration of the relative success of the parties is normally the starting point in determining costs. Because there was no motion before me to consider on these six Case Conference dates, this is not a factor to be considered in the present case. Instead, Rule 17 (18) directs me to consider the unreasonable conduct of the Respondent for these events.
38The Applicant seeks her costs of these six Case Conferences based on the submission that the Respondent failed to provide disclosure in advance of the Case Conference, which in her submission contributed to it being unproductive. In my view, the Respondent did not comply with the disclosure that was required by Orders arising from previous attendances. In order for the Applicant to establish an entitlement to costs of each Case Conference, I have been satisfied that the Applicant has proven that the Respondent “was not prepared, did not serve the required documents, did not make any required disclosure, otherwise contributed to the conference being unproductive or otherwise did not follow these rules”: Family Law Rule 17(18). My Endorsements rendered further to the Case Conferences show that the parties were to address substantive issues, and they were not due to the unreasonable conduct of the Respondent.
39Family Law Rule 24 (12) sets out the factors the Court shall consider in setting the amount of costs. These include the importance or complexity of the issues, the lawyer’s rates, the time spent and the expenses paid or payable. As stated earlier, the Court shall also ensure reasonableness, fairness and proportionality in the cost assessment. I have therefore decided to assess on a global basis the Applicant’s costs of the six Case Conferences on a partial indemnity scale. Each party shall however bear their own expense of submitting their written cost submissions. I find that the number of hours incurred are reasonable in the circumstances. I agree with the finding by Nordheimer J., as he then was, that it is not “the role of the Court to second-guess the time spent by Counsel unless it is manifestly unreasonable”, and the amount of hours spent here are not: Basdeo v. University Health Network [2002] O.J. No. 597 (S.C.J.) at para. 7. I will however adjust the amount of the Applicant’s partial recovery fees to reflect the extent that the Respondent did not make all of the required disclosure and did not follow the rules of this Court, which contributed to these Conferences being less productive than they should have been.
40I also find here, that from his unreasonable conduct during these Case Conferences, it became obvious to this Court that the Respondent was “not properly prepared to deal with the issues at that step or otherwise contributes to that step being unproductive” and therefore “the court shall award costs against the party” pursuant to Rule 24 (7).
Disposition
41As a result, having considered all applicable principles to the circumstances presented during these six Case Conferences, including those as set out in Family Law Rules 17, 18 and 24, and in the exercise of my discretion, including as set out in section 131 of the Courts of Justice Act, I have determined that it is fair, reasonable, just and proportionate to award the Applicant costs in the amount of $3,000.00 all-inclusive, payable by the Respondent forthwith. These costs shall be collectable as child support.
Released: November 6, 2020
The Honourable Mr. Justice David J. Nadeau