Introduction

[1] On August 31, 2020 I released my decision following a family law trial to determine issues including interest in the matrimonial home, equalization of property, and spousal support following the end of the parties’ 11-year relationship. That decision is reported at 2020 ONSC 5176.

[2] My decision stated as follows regarding costs:

COSTS

[258] Both parties were partially successful. Overall, Ms. El Hadi was more successful on the net family property issues, and Mr. Elbahr was more successful on the matrimonial home and spousal support issues.

[259] The trial evidence established that both parties are under financial constraints. They are therefore strongly encouraged to agree on costs. By doing so they will accelerate certainty as to what is payable to whom and when. They will also eliminate the additional time and legal costs associated with preparation of cost submissions.

[3] The parties did not reach agreement on costs. Each was represented by counsel and filed written costs submissions, which I have now reviewed.

Applicant Mr. Elbahr’s submissions and position on costs:

[4] The Applicant (“Husband”) seeks full indemnity costs in the amount of $102,324.18. He points to offers to settle in support of his position. He also argues that his position throughout the litigation was more resolution-oriented than that of the Respondent, whom he characterizes as inflexible and unreasonable regarding settlement.

Respondent Ms. El Hadi’s submissions and position on costs:

[5] The Respondent (“Wife”) does not seek costs. She takes the position that success was divided, and emphasizes the importance of the court’s recognition of her entitlement to spousal support, even though no spousal support is payable at this time.

[6] The Wife argues that the amount of costs sought by the Husband is excessive and disproportionate. She asks the court to take her modest financial means into account in any cost award made against her.

[7] The Wife filed three cases in support of her position: M. (A.C.) v. M. (D.) (2003), 2003 CanLII 18880, 67 O.R. (3d) 181 (C.A.), at para. 43; Negin v. Fryers, 2018 ONSC 6713, at para. 34; Wright v. Wright, 2018 ONSC 46, at para. 14.

Legal framework

[8] In Mattina v. Mattina, 2018 ONCA 867, the Court of Appeal for Ontario summarized the legal principles for determining costs in family law cases as follows (citations omitted):

[9] Section 131(1) of the Courts of Justice Act provides that cost orders are in the discretion of the court. Rule 24 of the Family Law Rules sets out a framework for awarding costs for family law cases in the Family Court of the Superior Court of Justice, in the Superior Court of Justice and in the Ontario Court of Justice. Although the Family Law Rules do not expressly govern costs awards in the Court of Appeal, they have been used to guide this court’s analysis on costs in family law disputes.

[10] This court has held that modern family cost rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, and; (3) to discourage and sanction inappropriate behaviour by litigants. Rule 2(2) adds a fourth fundamental purpose: to ensure that cases are dealt with justly. And Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes “reasonableness and proportionality” in any costs award.

[11] The Family Law Rules are a marked departure from some aspects of the Rules of Civil Procedure. As such, case law pertaining to costs decided under the Rules of Civil Procedure should be approached with some caution.

[12] Rule 24(1) creates a presumption of costs in favour of the successful party of a motion, case, or appeal and the presumption that a successful party is entitled to costs applies equally to custody and access cases.

[13] Consideration of success is the starting point in determining costs. This presumption does not, however, require that the successful party always be entitled to costs. An award of costs is subject to: the factors listed in r. 24(12), r. 24(4) pertaining to unreasonable conduct of a successful party, r. 24(8) pertaining to bad faith, r. 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party.

[14] Rule 24(12) sets out a list of factors the court shall consider in determining an appropriate amount of costs:

(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.

[15] The Family Law Rules only expressly contemplate full recovery costs in specific circumstances, e.g. where a party has behaved unreasonably, in bad faith or has beat an offer to settle under r. 18(14).

[16] Rule 24(4) addresses the situation in which a successful party has behaved unreasonably:

Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.

[17] Rule 24(5) provides guidance on how to evaluate reasonableness:

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

Analysis:

[9] To their mutual credit, the parties settled their child-related issues a year before trial.

[10] The three categories of issues determined at trial are summarized as follows. I have noted the outcome in italics after each item:

a. The matrimonial home: The Wife claimed a 50% beneficial interest in the matrimonial home [claim dismissed, Husband successful]. The Husband claimed occupation rent in the amount of $36,000 [claim dismissed, Wife successful].

b. Contested inclusions in equalization calculations: the Husband claimed a $80,731.79 deduction as a loan from his father [deduction reduced by 95% to $4,036.59, Wife successful]. The Wife claimed deductions of $25,000 for jewelry and $10,000 for furniture [claims dismissed, Husband successful].

c. Spousal support: Wife sought retroactive and prospective spousal support. I found that no retroactive spousal support was owing [retroactive claim dismissed, Husband successful]. Regarding prospective support, I ruled that the Wife was entitled to support including on a compensatory basis, but that no spousal support is currently payable due to the parties’ incomes and the priority given to the Husband’s obligation to pay child support [Wife’s entitlement to spousal support established, Wife successful; Wife’s claim for lump sum spousal support order dismissed, Husband’s position successful]. The Husband asked that any spousal support order be made for a fixed duration [duration of spousal support entitlement not fixed, Husband not successful].

[11] I would characterize the success at trial as divided. Both parties were unsuccessful on their “big ticket” items: the Husband failed in his bid to deduct the full value of money received from his father and in his claim for occupation rent. For her part, the Wife did not obtain an order for either 50% of the post-separation increase in value of the matrimonial home or a lump sum in spousal support.

[12] If the costs analysis turned solely on the parties’ relative success at trial, I would order no costs.

[13] I note that the total gross annual incomes of the parties is a little more than $100,000. Their combined legal costs, after their trial, exceed that amount significantly.

[14] If we think of the actions of each party as driving their own “trial train” at each other at full speed, fuelled by their hostility toward their former spouse and by their unwavering belief in their own position, the outcome of this trial was a train wreck for both.

[15] I use the image of a train wreck in order to highlight the importance, in the costs analysis, of evidence that either party took reasonable, resolution-focused steps to avoid their collision.

[16] Using this metaphor, offers to settle and other efforts to resolve differences before trial are the actions that can, at best, avert collision altogether and avoid trial. Even where trial is unavoidable, such efforts may slow the speed of the trains and reduced the damage on impact.

[17] Refusal by a party in litigation to make such efforts is analogous to refusing to slow down their own train as the other gets closer, or to alter course to avoid head-on collision. Such refusal is not, in the language of costs, reasonable.

Offers to Settle in this case:

[18] The Husband relies on two offers to settle, described and discussed below. He submits that the Wife did make an offer to settle, which she did not come close to exceeding. Neither party asks the court to consider offers made by the Wife in my costs analysis.

[19] The Husband’s first offer was dated August 31, 2017, almost 18 months before trial. It offers to settle all issues except prospective spousal support. The offer covers all the property issues, retroactive child support, and also retroactive spousal support on the following terms:

a. Husband to pay to Wife a total payment of $30,000 over 180 days to settle all property issues, which figure was net of $7,300 owed by the Husband to the Wife for cost orders made against her on September 30, 2016 and on March 13, 2017;

b. Wife to release her claims for retroactive child support and retroactive spousal support.

c. Offer open for acceptance for eight days with no costs payable by Wife.

d. If not accepted within eight days (by September 8, 2017), the Wife to pay the Husband’s full recovery costs to the date of her acceptance of the Offer for the Husband’s “preparation, negotiation, litigation and settlement” of all issues resolved by the offer.

[20] I note that the August 31, 2017 offer was not severable. It was left open to trial and was not withdrawn.

[21] At trial, the Husband obtained a more favourable result on the quantum of the property issues, as he was ordered to pay the Wife $29,626.45, less the sum of $7,300, thereby resulting in his owing a net payment to the Wife of $22,326.45. The Husband therefore obtained a better equalization payment result at trial than the payment offered in his August 31, 2017 offer to settle.

[22] I cannot conclude, however, that this offer meets the requirements of Rule 18. Although the offer was left open until trial, the value of the offer to the Wife – a payment of $30,000 over 180 days in exchange for an immediate release of property and retroactive child and spousal support – was only available for eight days.

[23] After September 8, 2017, the terms of the offer required her to pay to the Husban his full recovery legal costs to the date of acceptance, to compensate for his “preparation, negotiation, litigation and settlement” of those issues.

[24] That is, after the first week following the offer, the $30,000 payment to the wife would be reduced by her simultaneous payment of some of his legal costs. The Husband’s offer does not quantify what his full recovery costs were as of September 9, 2017, if, for example, the Wife accepted his offer a day past the deadline. The offer does not provide any guidance to the Wife as to how she could calculate those costs, which would have enabled her to subtract that amount from the $30,000 offered and know the net value of the offer at any time between September 9, 2017 and the start of trial on March 4, 2019.

[25] A review of the bills of costs included at Tab B of the Husband’s cost submissions shows that his full recovery costs for the period between the August 21, 2017 offer and the February 2, 2019 offer made four days before trial started, total $50,997.87. Given that the offer to settle covered all the issues in dispute except prospective spousal support, it is a reasonable inference that most of that amount could be described as time spent by counsel in the “preparation, negotiation, litigation and settlement” of the issues settled by the offer.

[26] Based on the above figures, if the Wife had accepted the Husband’s August 31, 2017 offer the day before trial, she would have had to pay him somewhere in the range of $40,000-50,000 for his costs, before he would in turn be obligated to pay her the offered $30,000. It would therefore not have been advantageous for the wife to accept the offer any time after the first week the offer was made, as she would have paid the Husband and released her claims against him, with no net benefit to herself

[27] With respect to the August 31, 2017 offer, therefore, I cannot conclude that the Husband obtained a better result at trial than if the offer had been accepted by the Wife any time up to the start of trial. The offer does not meet the requirements of an offer under Rule 18(14).

[28] The Husband also relies on an offer to settle served on February 28, 2019, just four days before trial. This offer was therefore not made “at least seven (7) days before the trial” as required to be considered as an offer under Rule 18(14).

[29] I note further that this offer was non-severable. In order to accept the payment offered, the terms of this offer required the Wife to release all issues including prospective spousal support. The Wife took the issue of spousal support to trial and was successful in establishing her economic disadvantage resulting from the marriage and having her entitlement to compensatory support recognized by the court. Although no spousal support is payable at this time due to the priority of child support, the door remains open for the Wife to seek spousal support in the future should circumstances change.

[30] Had the Husband’s February 28, 2019 offer been made seven or more days before trial, and had it also been severable as to the prospective spousal support claim, it might have met the requirements of Rule 18(14). However, it did not, and accordingly it cannot benefit from the terms of that subrule.

[31] Despite their non-compliance with Rule 18(14), the offers made by the Husband are relevant to considerations of the respective reasonableness of the parties’ efforts to avoid trial.

Factors considered regarding entitlement to costs:

[32] I have reviewed the parties submissions and considered the case law cited by the parties and the legal framework set out earlier in this endorsement. In particular I have noted the following factors in my analysis:

a. I take into account that, as reflected in several places in my reasons for judgment following trial, the Husband behaved reasonably after separation by continuing to pay the costs of the matrimonial home so that the Wife and children could stay there until the Wife established herself, for the first time, in the employment market.

b. I find that the Husband’s behaviour prior to trial was more resolution-oriented, as evidenced by making offers to settle and his willingness to attend settlement meetings. The evidence confirmed that the Wife was not as reasonable. At one point she even proposed a settlement meeting, only to refuse hersef to attend after the Husband had agreed to participate.

c. While the Husband’s offers did not attract the consequences of Rule 18(14), his approach and proposals for resolving the property-related issues was the more reasonable. The Wife did not respond in a reasonable manner to opportunities for resolution. For example, it was open to the Wife to accept his figures and counter-propose resolution and release on all but the prospective spousal support entitlement issue. Had the parties severed property and spousal support, and been able to settle property on reasonable terms, the trial would have been brief, or potentially unnecessary altogether.

d. I have found that the Husband was more reasonable in his efforts to avoid trial. However once trial began, reasonable positions were abandoned, as both parties called evidence and took positions which demonstrated their continuing animosity and lack of respect for each other. In the case of the Husband, his animosity toward the Wife was shown most clearly by the testimony elicited from his own father, whom he called as a witness. The Husband’s father spoke in judgmental terms about the Wife, accused her of having “jailed her Husband”, and agreed that he changed his expectation of repayment of funds used by the Husband because of his disapproval of the Wife’s decision to leave the Husband.

e. For her part, the Wife did not deny that she did not want to leave the matrimonial home, even after the court had ordered her to do so, and believed she was entitled to stay in the home. She did not dispute the Husband’s testimony that she was responsible for creating a “foul odour” in the matrimonial home just before she moved out. The Husband testified that shrimp had been hidden in several heating vents of the home, creating a rotting odour which took two days to trace.

f. As referenced earlier, both parties spent significant time at trial in advancing issues on which they were ultimately unsuccessful. In doing so, each required the other party to expend significant time responding to those issues.

g. I also take into account the importance to the Wife of preserving her spousal support entitlement, which she was successful in doing at trial. It was reasonable for her not to concede her spousal entitlement as part of settlement, despite the fact that there is no spousal support payable at present due to the priority of child support. Given her status as an immigrant still learning to speak English, and having recently entering the paid workforce, the Wife may experience unemployment at some future point despite her best efforts. As such, spousal support entitlement may become relevant again to her ability to maintain a home for herself and the parties’ two young children.

h. The Wife did not file or point to any offers to settle in support of her position. I note that at the opening of trial, the Wife’s draft order sought: an equalization payment of $96,351; $68,688 as lump sum spousal support; $20,532 for retroactive child support; and, $25,000 for jewelry. The total sought at trial by the Wife was $210,571. I agree with the submission of Husband’s counsel that this amount was completely out of proportion with the legal issues and applicable law.

i. I do not agree with the Husband that the Wife’s two unsuccessful motions in 2016 to delay her move from the matrimonial home should count against her in this costs analysis. I say this because, after each motion, pursuant to Rule 24(10), the court determined and ruled on liability and quantum in awarding costs against the Wife. This Court should not double-count the same actions in its analysis of costs following trial. I do find, however, that the fact that the Wife brought those motions, rather than complying with the court order requiring her to move out of the home, is consistent with my finding earlier that, overall, the Husband’s behaviour was more resolution-oriented than that of the Wife.

Conclusion on Liability

[33] This is a case of divided success. The Husband was consistently more reasonable prior to trial in attempting to settle the remaining issues between the parties.

[34] Once trial began, each party devoted significant time in evidence and argument on issues on which they did not succeed. However, as case law says, being unsuccessful does not equate necessarily to being unreasonable: see Wauthier v. McAuliff, 2019 ONSC 5302, at para. 8. The court must be careful not use hindsight to punish parties for resorting to litigation when they could not solve matters otherwise.

[35] I find that the Husband’s reasonable conduct referenced above, including making offers to settle, entitle him to some costs. Expressed conversely, I find the Wife liable to the Husband for some costs because her pretrial litigation conduct was less reasonable and she failed to participate meaningfully in settlement efforts prior to trial.

Quantum of costs payable by Wife

[36] The factors relevant to assessing quantum of costs were summarized succinctly by Chappel J. in Weber v. Weber, 2020 ONSC 6855:

[33] Rule 24(12) and the case-law respecting costs establish that reasonableness and proportionality are “the touchstone considerations to be applied in fixing the amount of costs” (Beaver, at para. 12). The specific factors set out in Rule 24(12)(a)(i) to (vi) and any other relevant matter that the court considers pursuant to Rule 24(12)(b) must be assessed against these two fundamental guiding principles, taking into consideration the importance and complexity of the issues involved.

[37] In considering quantum of costs to order in this case, I consider the factors identified above, the divided success on issues taken to trial, the modest complexity of the issues, and the Wife’s ability to pay a cost award.

[38] The financial means of the party ordered to pay costs is a relevant factor in the quantification of a costs award. As stated by Chappel J in Weber:

[47] Costs orders must take into consideration the reasonable prospects of a party being able to pay and the impact of an award on the ability of the party to meet their basic needs and those of any children in their care. This factor is properly considered at the end of the costs analysis. The court may in the exercise of its overriding discretion reduce the quantum of costs that a party would otherwise have to pay on the basis of their financial condition, and may order a payment plan that relieves the potential hardship of an award (Beaver at para. 18; S. (S.T.) v. E.(B.), 2016 ONSC 2142 (S.C.J.); Remillard v. Le, 2016 ONSC 3116 (S.C.J)). The party seeking to rely on this factor to reduce their costs liability should adduce some evidence in support of their position (Levin v. Levin, 2020 ONCA 675 (C.A.), at para. 3).

[39] However, a party’s limited financial circumstances will not be used as a shield against any liability for costs but will be taken into account regarding the quantum of costs, particularly when they have acted unreasonably: Snih v. Snih, 2007 CanLII 20774 (Ont. S.C.), at paras. 7-13. Those who can least afford to litigate should be most motivated to seriously pursue settlement: per McGee J. in Mohr v. Sweeney, 2016 ONSC 3238, at para. 17, citing Balaban v. Balaban, 2007 CanLII 7990 (Ont S.C.), at para. 7.

[40] The evidence at trial was that the Wife and children were living in a basement apartment. She supported the children and herself with her own employment income and child support received from the Husband. She retained no interest in the matrimonial home following separation, and will likely remain in modest rental housing with the children. The Husband did not dispute this evidence of the Wife’s circumstances.

[41] In this separated family, the impact of any cost award on the Wife will adversely impact her financial circumstances and her ability to provide for the children. Despite the potential of an adverse cost award following trial, the Wife failed to engage in meaningful settlement negotiations.

[42] The parties both had counsel prior to and at trial. With respect to the expectation of the parties, each was aware of their own and the other’s financial circumstances, and of the risk that one or the other of them would have to pay some costs to the other, as well as their own legal fees, at the end of the process.

[43] The issues in the litigation were fact-driven. None was complex or novel in nature.

Conclusion on quantum

[44] I have considered the applicable law cited above, the circumstances of the parties, and their submissions.

[45] I fix the amount of costs the Wife is to pay at $12,000.00, inclusive of disbursements and HST.

[46] This is a significant amount for the Wife to pay relative to her net recovery at trial. It represents a recognition of the greater reasonableness of the efforts made by the Husband to avoid trial, despite the ultimate mixed success. Further, this amount is proportionate to the importance and complexity of the issues in this case, and takes into account all relevant considerations including the means of the Wife. For the reasons given, this amount is fair and just in the circumstances.

Terms of Order to Issue

[47] For the reasons set out above, an order shall issue as follows:

The Respondent, Ms. El Hadi, shall pay to the Applicant, Mr. Elbahr, costs fixed in the amount of $12,000.00, inclusive of disbursements and HST.
This amount may not be deducted from any child support payable to the Respondent by the Applicant, unless the parties agree.

McSweeney J.

Released: December 8, 2020

COURT FILE NO.: FS-15-84512

DATE: 2020 12 08

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

AHMED ELBAHR

Applicant

and -

AL SHAYMAA ABD EL HADI

Respondent

COSTS ENDORSEMENT

McSweeney J.

Released: December 8, 2020

Elbahr v. El Hadi, 2020 ONSC 7611

Case Summary

Introduction

Applicant Mr. Elbahr’s submissions and position on costs:

Respondent Ms. El Hadi’s submissions and position on costs:

Legal framework

Offers to Settle in this case:

Factors considered regarding entitlement to costs:

Conclusion on Liability

Quantum of costs payable by Wife

Conclusion on quantum

Terms of Order to Issue

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 1