COURT FILE NO.: 20-1237
DATE: 2021/03/19
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Chenguang Li, Applicant
AND:
Xudong Wu, Respondent
BEFORE: Somji J.
COUNSEL: Kathleen Jin, for the Applicant
Ping Chen, for the Respondent
HEARD: In Writing
costs ENDORSEMENT
Introduction
[1] The Respondent Xudong Wu (“father”) seeks costs as the successful party on a motion for relocation brought by the Applicant Chenguang Li (“mother”). The father also seeks costs for an application by the mother to bring the same motion on an urgent basis (“Urgency Application”). On September 22, 2020, Engelking J. heard the Urgency Application and denied it.
[2] The issues on the motion (the “Motion”) were: 1) relocation, sole custody, and child support for one-year-old Haoyuan; 2) loco parentis and child support for nine-year-old Muyang; 3) possession of the matrimonial home (the “MH”); and 4) restraining and communication orders.
[3] The father seeks costs on a full recovery basis in the amount of $25,743.20 for the Urgency Application, a case conference, the Motion, review of the draft Order, and costs submissions. The father made offers to settle and alleges the mother and her Counsel engaged in unreasonable conduct that warrants an award on a full recovery basis.
[4] The mother argues that either no costs or nominal costs should be awarded to the father because: 1) costs for the Urgency Application should not be included; 2) post-Motion costs should not be included; 3) no qualified offer exists to warrant a full-indemnity costs award; 4) the father engaged in unreasonable conduct; and 5) the costs amount requested is excessive.
[5] Upon review of the parties’ submissions and upon consideration of the factors set out in r. 24(12) of the Family Law Rules, O. Reg. 114/99 (“FLRs”), as well as the mother’s ability to pay, I find that the father is entitled to costs fixed at $18,000. My reasons are set out below.
General Legal Principles
[6] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that costs orders are in the discretion of the court. Rule 24 of the FLRs sets out the legal framework for awarding costs for family law cases: Mattina v. Mattina, 2018 ONCA 867, at para. 9.
[7] Modern 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, as per r. 2(2) of the FLRs, that cases are dealt with justly: Mattina, at para. 10.
[8] The success of a party is the starting point: FLRs, r. 24(1). However, an award of costs in the family context also requires consideration of the factors set out in r. 24(12) of the FLRs. The judge must 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.
[9] In addition to these factors, I must also consider:
➢ any unreasonable conduct on the part of a successful party: FLRs, r. 24(4);
➢ if a party has acted in bad faith: FLRs, r. 24(8);
➢ offers to settle: FLRs, rr. 18(14) and 24(12)(a)(iii);
➢ the reasonableness of the costs sought by the successful party: Mattina, at para. 13; see also Berta v. Berta, 2015 ONCA 918, 75 R.F.L. (7th) 299, at para. 94; and
➢ the financial means of the parties, their ability to pay, and the effect of any costs ruling on the parties and the children: Fyfe v. Jouppien, 2012 ONSC 97, 10 R.F.L. (7th) 371, at para. 11.
[10] The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26.
[11] In this case, the relevant factors for consideration as identified by the parties include: the overall successful party, offers to settle, the conduct of litigants, ability to pay, and the reasonableness of the costs amount. Each of these considerations are analyzed below.
Analysis
Overall Success
[12] The starting point is that the successful party is presumptively entitled to costs: FLRs, r. 24(1).
[13] In this case, the father is the successful party on the Motion. In my ruling dated November 27, 2020, I dismissed the mother’s application for relocation and interim sole custody of Haoyuan as well as child support for Muyang. I granted interim possession of the MH to the father. I granted both parties their requests for mutual restraining and communication orders. I deferred the decision of child support for Haoyuan until the mother decided on relocation. I also ruled that the father was entitled to costs on the Motion.
[14] The mother sought to bring the Motion for relocation on an urgent basis in September 2020. Justice Engelking did not find that the matter was urgent and denied the application. The matter was scheduled for an urgent case conference before Smith J. The matter was not resolved at that case conference, and Smith J. ordered the Motion to proceed as soon as possible.
[15] I do not agree, as suggested by the mother, that Engelking J.’s decision to order an urgent case conference indicates that there was divided success. The Urgency Application was denied. The father was the successful party on the Urgency Application and is entitled to costs.
[16] Justice Engelking did not award costs for the Urgency Application. Justice Smith reserved costs on the case conference for the Motion judge. I find that all three proceedings related to the same issues on the Motion, and that the father is entitled to costs related to all three proceedings. I also find that the review of the draft Order following my ruling and costs submission form part of the same step and can be included in the costs award at this time: FLRs, r. 24(11).
Offers to Settle
[17] Offers to settle are important and can become a yardstick by which to measure success. They are significant in determining both liability for costs and the amount of costs: Osmar v. Osmar (2000), 2000 CanLII 20380 (ON SC), 8 R.F.L. (5th) 387, at para. 7 (Ont. S.C.); Lawson v. Lawson, 2008 CanLII 23496 (ON SC), 2008 CarswellOnt 2819, at para. 7 (S.C.).
[18] The father made four offers to settle before the Motion. In three of the offers, the father agreed to the mother’s relocation to Deep River with Haoyuan with an arrangement for the father to access the child every weekend or on alternate weekends. These three offers were more favourable to the mother than what I ordered on the Motion. They support an award of costs to the father: FLRs, rr. 18(14) and 24(12)(a)(iii).
[19] The mother argues that Offers 1 and 2, dated September 9, 2021, were not signed or dated and expired the next day, and that therefore they do not constitute a valid offer warranting a full-indemnity consequence. I respectfully disagree. Rule 18(16) of the FLRs allows the court to consider any written offer to settle when exercising its discretion over costs: Deelstra v. Van Osch, 2003 CanLII 2007 (ON SC), [2003] O.J. No. 273, at para. 3 (S.C.). Furthermore, even if Offers 1 and 2 are excluded, two further offers were made to settle on November 12, 2020, one day before the Motion was heard. Furthermore, the correspondence filed between the parties indicates the offers were seriously considered by both sides. They constitute valid offers for consideration in a costs award.
Conduct of the Parties
[20] In addition to offers to settle, a costs award also requires consideration of any unreasonable conduct of a successful party: FLRs, r. 24(4).
[21] The mother alleges unreasonable conduct on the part of the father and argues that this warrants a minimal costs award. More specifically, the mother argues that the father acted unreasonably in settlement negotiations. The mother argues that although the father was eventually agreeable with Haoyuan’s relocation to Deep River, he would not separate this issue from the other issues in dispute and caused all these issues to be argued at the Motion.
[22] I find that the father did not act unreasonably in settlement negotiations. The primary issue in this Motion was the relocation of Haoyuan which was prompted by the fact that the mother’s maternity leave was coming to an end in the fall of 2020. To continue her employment, the mother was potentially required to return to Deep River. This relocation was going to result in a significant change to the parenting plan for Haoyuan and would spillover into more issues than just primary residence for Haoyuan. During the negotiations, the father eventually agreed to the mother’s relocation with Haoyuan, the primary issue in dispute. Furthermore, his positions on the other issues such as custody, access, child support, possession of the MH, length of vacation, Christmas holidays, and costs were certainly reasonable, if not generous. The father was entitled to negotiate an all-inclusive interim settlement agreement, and failing which, proceed with the mother’s Motion. The evidence indicates he did so in good faith.
[23] Furthermore, as indicated in my Motion decision, following the events of the summer of 2020 wherein the mother attempted to take Haoyuan to Deep River without the father’s consent, it should come as no surprise that the father was concerned about the mother returning to China with Haoyuan for a two-month period. Furthermore, Haoyuan is a child of tender age. The father’s refusal to agree to more than one month of vacation for each parent, a time during which the other parent would have no access to the child, is not unreasonable.
[24] The mother also argues that the father’s affidavits alleged facts about various issues such as the mother’s being an unfit parent, Haoyuan’s medical condition, and the mother’s abuse of the court process which forced the mother to gather additional evidence and provide an unnecessarily lengthy Reply. Having reviewed the factums and supporting exhibits filed by both parties in the Motion, I do not find that the father or his Counsel made frivolous or unnecessary arguments that would constitute unreasonable conduct.
[25] For all these reasons, I do not agree with the mother’s claim that no costs or only nominal costs should be awarded to the father based on unreasonable conduct.
[26] The father also alleges that the mother engaged in unreasonable conduct and that this warrants a costs award approaching full recovery. The father argues that the unreasonable conduct relates largely to procedural fairness attributable to the mother’s Counsel, and therefore, Counsel should pay part of the costs award against the mother.
[27] First, the father alleges that Counsel for the mother was evading service of the originating process and urgent motion materials on the father. Furthermore, the father alleges that the email sent to him regarding service of documents on the Urgency Application was intended to intimidate him.
[28] I find that at the time of the filing of the Urgency Application, there was some confusion about whether the father had retained counsel. While the communications could have been clearer, I do not find that the steps taken by the mother’s Counsel to serve the father directly were intended to evade service or to intimidate the father.
[29] Second, the father alleges that Counsel for the mother delayed filing the family doctor’s opinion letter. However, Counsel for the mother explains that she filed it the day after she received it. I do not find this unreasonable. I would add that the conflict between counsel appears to be more about the filing of the Applicant’s 2nd Supplementary Reply Affidavit and the limited time given to Counsel for the mother to grant consent for the filing than the timing of the doctor’s opinion letter.
[30] Third, the father alleges that Counsel for the mother asked this court to reconsider its ruling on the Motion after it was issued. I addressed my views on this matter directly with Counsel for the mother at the court appearance on the review of the draft Order. I do not see any need to revisit this issue by way of a further costs sanction.
[31] Finally, the father alleges that Counsel for the mother filed a version of the Mother’s Reply Affidavit with this court that differs from that which was filed on the parties, and furthermore, that the Mother’s Reply Affidavit was filed after the prescribed deadline as per Smith J.’s endorsement.
[32] I agree that the Mother’s Reply Affidavit should have been filed within business hours, but I do not believe that much turns on this fact because Counsel for the father did ultimately agree to the late filing. With respect to the additional paragraphs, Counsel for the mother provided an explanation that these paragraphs were added in the Mother’s Reply Affidavit upon realization that the mother had failed to address an issue in the earlier version. Counsel for the mother states that she did not think that she would get consent from opposing counsel and so she did not bother to seek it.
[33] I agree with Counsel for the father that if an addition was being contemplated on a document that was already being filed late, Counsel for the mother should have alerted opposing counsel immediately and sought opposing counsel’s consent or alternatively, leave of the court for an extension to file an amended Reply Affidavit rather than filing a different version of the Mother’s Reply Affidavit with the court. Having said this, I do not find that it amounts to bad faith that warrants costs on a full recovery basis: Piskor v. Piskor, 2004 CanLII 5023 (Ont. S.C.), at paras. 8-9.
Ability to Pay
[34] The mother makes several arguments in relation to her ability to pay and the timing of the costs award. First, she argues that she does not have ability to pay the costs amount requested. Since the separation, the mother has been incurring costs for maintaining a separate home as well as for full-time care for Muyang and part-time care for Haoyuan. She claims that if she is required to pay the costs amount requested, she will drain her financial resources which will consequently prejudice the children. Second, the mother relies on Stone v. Williams, 2014 ONSC 5720, 50 R.F.L. (7th) 93, at para. 17, for the proposition that a party should not be faced with costs sanctions where a motion for access and custody is still pending and the party has acted reasonably and in good faith. Third, the mother asks that any costs awarded should be payable at trial after all issues have been decided.
[35] The father disputes the mother’s claim that she is unable to pay the costs award. The father argues that the mother’s employment situation has improved upon her return to work on October 22, 2020 and that at the time the Motion was heard, the mother had $20,648.69 in her joint account. The mother’s share of childcare costs as well as the issue of child support were deferred until she made a final decision on relocation. The mother also never indicated at the time of the Motion that she had childcare costs for Muyang, who attends school. The father also indicates that the mother has failed to provide an updated Form 13.1 since her return to work to support her claim regarding her inability to pay.
[36] I find that the mother’s ability to pay is a factor for consideration. Upon separation, there will be considerable costs to her in establishing a new home for herself and the children. I agree that the award for costs should not result in undue hardship to the mother during this time of transition. Costs awards are discretionary and can include consideration of hardship claims: see e.g., Osmar, at para. 16.
[37] Having said this, I do not agree that the mother has no ability to pay. Having reviewed the materials filed in support of the Motion, I find that the mother does have assets and income available to her to pay some costs immediately.
[38] I also disagree that the costs awarded for the Urgency Application, the case conference, and the Motion should be delayed until after trial. Justice Smith indicated that costs for the case conference would be reserved for the Motions judge. I also ordered costs on the Motion for the father. Subrule 24(10) of the FLRs encourages the awarding of costs promptly after each step in a case. However, r. 24(11) notes that the failure of the court to act under r. 24(10) in relation to a step in a case does not prevent the court from awarding costs for that step at a later stage. I am not satisfied that there is any valid reason to delay the award of costs in this case.
Reasonableness and Quantum of Costs
[39] The Applicant father seeks costs on a full recovery basis in the amount of $25,743.20 for 135.5 hours of work. These hours of work include responding to the Urgency Application, case conference, and the Motion, reviewing the draft Order, and preparing the costs submissions.
[40] Counsel for the mother argues that the costs amount is excessive. However, I note from her own bill of costs that she has charged the mother at a higher hourly rate and a total amount of $19,134.48 for the Urgency Application, case conference, and Motion. This does not include the time spent reviewing the Order, or the costs submission.
[41] The issues in this Motion were significant issues in a divorce proceeding that could have a long-term impact on the parenting plan for Haoyuan. At the time of the Motion, disclosure and questioning was not complete and so the parties could not rely on agreed facts. Furthermore, given the mother’s allegations and the involvement of the Children’s Aid Society, it was necessary for Counsel for the father to scrutinize the evidence filed and gather whatever evidence Counsel required to respond accordingly. Hence, I find that the number of hours billed as well as the rate charged by the father’s counsel are both reasonable.
[42] The FLRs only expressly contemplate full recovery costs in specific circumstances, such as where a party has behaved unreasonably, in bad faith, or has beat an offer to settle under r. 18(14): Mattina, at para. 15; Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at paras. 9-13, leave to appeal refused, [2019] S.C.C.A. No. 82.
[43] There is merit to the argument that elevated costs to the father are warranted in this case, but not to the extent of full recovery as suggested by the father. Costs awards are discretionary and must be reasonable and proportionate: Beaver, at para. 12. Taking into consideration the number of issues to be decided on the Motion, the offers to settle, the conduct of the parties, the legal fees and rates charged, and the mother’s ability to pay, I find that an award of costs to the father in the fixed amount of $18,000 is fair and reasonable in this case.
[44] The mother is ordered to pay costs to the father in the amount of $18,000 within 30 days.
Somji J.
Date: March 19, 2021
COURT FILE NO.: 20-1237
DATE: 2021/03/19
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Chenguang Li, Applicant
AND:
Xudong Wu, Respondent
BEFORE: Justice N. Somji
COUNSEL: Kathleen Jin, for the Applicant
Ping Chen, for the Respondent
costs endorsement
Somji J.
Released: March 19, 2021