COURT FILE NO.: 37882/15
DATE: 2021-04-06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: JOELLE SPADACINI-KELAVA, Applicant
AND:
DAVID GEORGE KELAVA, Respondent
BEFORE: Kurz J.
COUNSEL: Aaron Franks and Martha McCarthy for the Applicant
Donna Wowk and Harold Niman for the Respondent
HEARD: In writing
COSTS ENDORSEMENT
Background to this Endorsement
[1] This is my costs endorsement regarding an appeal of a family law arbitration award. Each party appealed the arbitration award of Alfred Mamo (“the arbitrator”) regarding parenting and financial issues, dated September 10, 2019, and his clarification award of October 25, 2019 (collectively “the award”).
[2] As I wrote in my endorsement on the motion for a stay of the arbitrator’s award and fresh evidence brought by the Applicant (“Joelle”) (2020 ONSC 3277) and opposed by the Respondent (“David”):
7 The background to this matter is briefly summarized out in Mr. Mamo's costs award of May 7, 2020, as follows:
a) The parties who were married on May 10, 2000, had two children of their marriage, Daks born July 17, 2008, and Coco, born April 27, 2010.
b) The family lived together in the Greater Toronto Area (GTA) until the Spring of 2014 at which time the mother and the children began to live in Indiana in the United States of America, so as to allow Coco to attend a specialized centre for the treatment of autism (BACA) in Indianapolis.
c) While Joelle and the children were in Indianapolis, on a time-limited Visa, David continued to live in the matrimonial home in Oakville, Ontario and visited with Joelle and the children frequently. After the breakdown of the relationship and separation in May of 2015, David continued to live in the former matrimonial home and Joelle continued to live in Indiana.
d) The issues to be determined at the hearing included:
e) Should the children continue to live in Indianapolis or return to the Oakville area?
f) What would the parenting plan, including decision making and residency requirement entail?
g) Ownership of the matrimonial home;
h) Equalization of net family property;
i) A determination of retroactive and prospective child and spousal support as well as extraordinary expenses relating to children.
8 Mr. Mamo made a multidirectional parenting award that required the children to be returned to Ontario upon the earliest occurrence of a number of circumstances, and in any event by May 31, 2020 at the latest. Until then, the children would remain in Indiana in Joelle's primary care. One of the key reasons that Mr. Mamo made that award was his finding that a facility in Toronto, the New Haven Learning Centre ("NHLC"), can offer Applied Behavioural Analysis ("ABA") treatment to Coco that is equivalent to the high level, intensive treatment offered at Coco's Indiana treatment centre, BACA.
[3] The arbitrator also made a number of decisions in regard to the financial issues between the parties. His key financial finding was that the matrimonial home (“the home”), which both parties had incorrectly understood to be jointly owned, was solely David’s property. The arbitrator also made findings regarding various equalization and support issues. As the arbitrator found, success on those financial issues before him was divided.
[4] Because of the need for a timely determination of the parenting issues as well as the volume of material filed in this appeal, I bifurcated it. I dealt first and separately with the parenting issues and then with financial issues.
[5] On May 26, 2020, before determining either the parenting or financial aspect of the appeal, I granted Joelle’s motion for both a stay of the arbitrator’s parenting award and leave to offer fresh evidence on the appeal.
[6] David had opposed the stay and fresh evidence motion. He was willing to concede a 30-day stay of the arbitrator’s award, which would have required the children to return to Ontario by June 30, 2020 in the midst of the pandemic. He argued that any extension could be decided at that time. He added that he doubted the necessity of such an extension.
[7] In my endorsement of May 26, 2020, I rejected David’s arguments and found it appropriate to grant an indefinite stay pending my decision on the parenting issues. I found that such a stay was in the children’s best interests.
[8] Joelle also sought leave to file fresh evidence on the appeal. While David opposed that aspect of the motion, he argued in the alternative that if leave were given to allow Joelle to offer fresh evidence, he should be allowed the same right. I agreed. I granted both parties leave to file certain, specified fresh evidence on the appeal.
[9] In the same motion, Joelle had originally raised a claim for relief against David under the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 (“FCA”). She withdrew that claim after David provided her with evidence that the proceeds of the mortgage in question were used, in part, to pay a previous charge. Nonetheless, both parties filed materials regarding the FCA issue.
[10] In the parenting portion of my appeal decision, dated September 16, 2020 (2020 ONSC 5561), I dismissed Joelle's appeal of the arbitrator's award requiring the return of the children to the GTA. I also dismissed David's appeal of the arbitrator's award regarding parenting arrangements when the children return to the GTA. I stated that I would hold a hearing to determine how to implement the parenting portion of the award. In late 2020, the parties reached an agreement as to Joelle’s return to Ontario with the children, which was effected in December 2020.
[11] In the lead-up to the release of my decision regarding the financial issues raised in this appeal, Joelle moved for further relief. She sought the advance payment of $388,203.21, the amount of equalization that David claimed in this appeal that he owed to her. She asserted that she required the payment in order to afford to return to Ontario. But when Joelle moved, it was clear that if she succeeded in the appeal on the issue of title to the matrimonial home, her equalization entitlement would be significantly reduced by one-half of the valuation day value of the matrimonial home. As it turned out, she did so succeed.
[12] On December 8, 2020, I ordered instead the payment of an advance against equalization to Joelle of $150,000, to assist in the process of moving back to this province. That was the amount that David had offered to advance in response to Joelle’s motion.
[13] At the end of my endorsement regarding the appeal of parenting issues, I raised a series of questions regarding the financial issues in this appeal. After I received those answers from counsel, I raised further questions, which counsel also answered. I then released my decision on the financial issues in this appeal on December 12, 2020 (2020 ONSC 7907).
[14] In that endorsement:
I set aside the arbitrator’s ruling that David is the sole owner of the matrimonial home; declaring instead that Joelle is a joint, 50% owner.
I ordered that the matrimonial home shall be listed for sale by March 1, 2021 and that Joelle is entitled to 50% of the net proceeds of sale of the matrimonial home. The payment to Joelle is subject to adjustments regarding equalization, arrears of support, and debts each party may owe to the other, including the $150,000 advance.
I set aside the arbitrator’s finding that David’s 2018 income for support purposes was $185,000. I found that his income for that year was $177,000.
I ordered that the arbitrator’s equalization determination be recalculated in accord with my decision.
I allowed either party to request a recalculation of the quantum of periodic support in light of my ruling regarding David’s 2018 income.
I set aside the arbitrator’s ruling that David pay Joelle $19,800 in retroactive s. 7 expenses because I found that his reasons were insufficient to allow for appellate review. Thus, I ordered David to immediately pay Joelle the $10,129.91 to which he admitted he owed her (Joelle had claimed $29,378.24). I remitted the issue of whether he owes more on that amount to the arbitrator.
The Parties' Costs Arguments
[15] At the conclusion of my endorsement regarding the financial issues, I wrote that “[t]he results of this appeal are divided, both with regard to parenting and financial issues”. Nonetheless, each party has now filed a series of lengthy submissions, seeking significant costs of this appeal. Each argues that they were primarily successful in this appeal and that the other party acted badly and unreasonably. Each makes reference to what they describe as offers, although only David made any offers to settle within the formal requirements of r. 18 of the Family Law Rules, O. Reg. 114/99. Even so, for reasons set out below, he is not able to rely on any of those offers under r. 18. Otherwise, what the parties provided to each other in the hope of resolving this appeal was a series of proposals that were not open to acceptance.
[16] Joelle seeks $70,000 as her costs of this appeal and a setting aside of the $75,000 costs award made against her by the arbitrator. She cites her full indemnity costs of the appeal of $168,461.81. Her $70,000 calculation includes a 50% discount by Ms. McCarthy and the less senior lawyers and the paralegal on her staff. Ms. McCarthy’s discounted rate is $400/hr. Her co-counsel, Mr. Franks, bills at $675 per hour. Her bill of costs does not set out fees for particular steps in the appeal, including motions. Rather it sets out costs before and after January 2020.
[17] Joelle argues that success in regard to the parenting issues was divided but that she was almost completely successful regarding a variety of financial issues. She also argues that courts should be loathe to award costs in mobility cases, an argument that would diminish David’s claim to costs for his success on the issue of the children’s return to the GTA.
[18] Joelle also points to proposals that she made to David, particularly during a process in which the parties attempted to resolve the issues in this appeal under the auspices of Coats J. She offered three proposals to David which were not formal offers to settle. Nonetheless, she asks the court to consider them as either offers to settle for the purpose of r. 18(14) or as “any other written offer to settle” under r. 18(16).
[19] David seeks his costs of this appeal of $111,734.71, inclusive of the costs of all motions and negotiations leading to consent orders. He argues that he was successful at both the arbitration and the appeal in the “dominant” issue in this case: the return of the children to the GTA. The remaining parenting issues are to him, secondary. However, he points out that the arbitrator made a decision about parenting arrangements when the children return to Ontario that neither party had requested.
[20] David adds that while success was divided, my key finding regarding financial issues, that he was estopped from denying that the matrimonial home is jointly owned, arose from a legal theory that Joelle had not directly advanced.
[21] When dealing with offers to settle, David states that he made three offers that meet the test of r. 18(1) although he is unable to argue that he is entitled to take advantage of the costs provisions of r. 18(14). He also argues that, like Joelle, he made a number of proposals under the auspices of Coats J.’s attempted settlement process for this appeal.
[22] Thus, he argues that he should be granted costs of this appeal, with some adjustments for Joelle’s success in what he wishes the court to see as secondary issues, particularly financial ones.
[23] Each party argues that the other acted badly. While Joelle actually alleges bad faith on David’s part, both argue that the other’s behaviour in this appeal was unreasonable. They also argue that if only the other had been more flexible and open to their position, each of them would have saved a great deal of time and money.
Jurisdiction to Award Costs
[24] The jurisdiction of this court to award costs arises from s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. That provision gives the court broad discretion to determine costs.
[25] Under r. 24(10)(a), courts are required “[p]romptly after dealing with a step in a case” to determine “in a summary manner … who if anyone, is entitled to costs in relation to that step and set the amount of any costs”. In the alternative, the court may “expressly reserve the decision on costs for determination at a later stage of the case”: r. 24(10(b). However the failure to make a decision under r. 24(10) does not prevent the court from making an award of costs in relation to a step at a later stage of the case”: r. 24(11).
General Costs Principles
[26] As the Ontario Court of Appeal for Ontario noted in Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432 (Ont. C.A.), at para. 8:
Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.
[27] In Shute v. Shute, [2017] O.J. No. 4110, Justice Victoria Starr of the Ontario Court of Justice supplemented Serra's three costs purposes by offering a fourth that applies in family law proceedings: ensuring that the primary objective of the Family Law Rules ("FLR"), dealing with cases justly, is met. Starr J. wrote:
29 Subrule 2(2) of the Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the Rules is met -- that cases are dealt with justly. This provision needs to be read in conjunction with Rule 24 of the Rules. Subrule 2(4) of the Rules states that parties have a positive obligation to help the court to promote the primary objective under the Rules. Clauses 2(3)(a) and (b) of the Rules set out that dealing with a case justly includes ensuring that the procedure is fair to all parties and saving time and expense. [See: Sambasivam v. Pulendrarajah, 2012 ONCJ 711].
[28] That finding was echoed by the Court of Appeal for Ontario in Mattina v. Mattina, 2018 ONCA 867, at para. 10, citing Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22.
[29] To those factors, Chappel J. of this court’s Family Court add that “courts must also ensure that the law of costs does not become an impediment to the pursuit of justice… the court should also consider the importance of not unduly deterring potential litigants from pursuing legitimate claims for fear of overly burdensome costs consequences”: Weber v. Weber, 2020 ONSC 6855, at para. 11.
[30] In Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.) ("Boucher"), at para. 24, the Court of Appeal for Ontario concluded that costs awards should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties."
De-Emphasis on Counsel's Hourly Rates and Time Spent
[31] In Delellis v. Delellis, 2005 36447 (ON SC), [2005] O.J. No. 4345 (S.C.J.), Justice David Aston of this court noted the emphasis on setting a "fair and reasonable" amount of costs that emerges from Boucher and the cases following it. Aston J. found that this approach has led to a de-emphasis on hourly rates and time spent by counsel as the key factor in fixing costs. He continued at para. 9:
...Costs must be proportional to the amount in issue and the outcome. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant.
[Citations omitted]
[32] In Beaver v. Hill, 2018 ONCA 840, at para. 10, the Court of Appeal for Ontario clarified that proportionality and reasonableness, the two key factors set out in r. 24(12)(a), are the touchstone considerations to be applied in fixing the amount of costs in family law matters.
Scale of Costs
[33] In deciding costs in family law proceedings, judges are not constrained by the normal scale of costs found in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The court may increase or decrease what would ordinarily be an appropriate amount of costs based on the behaviour of the parties and the presence of absence of offers to settle (Beaver v. Hill, at para. 9).
Party Status does not Grant a License to Litigate Oblivious to the Consequences
[34] The right to bring or respond to a case does not grant either party a license to litigate in a manner that ignores the consequence of that litigation. Justice Carole Curtis of the Ontario Court of Justice emphasized this point in Sabo v. Sabo, [2013] O.J. No. 4628 (O.C.J.), as follows at para. 38:
Parties 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...
Unaccepted Offers to Settle
[35] Rule 18 deals with offers to settle. Rule 18(1) defines the term “offer” as “an offer to settle one or more claims in a case, motion, appeal or enforcement, and includes a counter-offer.” Although r. 18(1) does not explicitly define an offer as being one in writing, the rule implicitly imposes that requirement. For example, an offer under r. 18 must be signed personally by the party making the offer and by their lawyer, if any: r. 18(2).
[36] The terms of r. 18 apply even to an offer made before the case has started: r. 18(2).
[37] Sub-rules 18 (14) - (16) deal with the cost consequences of unaccepted offers to settle. They state:
COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER
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.
COSTS CONSEQUENCES -- BURDEN OF PROOF
- The 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 subrule (14).
COSTS -- DISCRETION OF COURT
- When 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, even if subrule (14) does not apply.
[38] Rule 18(14) requires a party to meet strict requirements regarding offers if they wish to take advantage of the opportunity to obtain full indemnity costs for the period after the offer is made.
[39] In Jackson v. Mayerle, 2016 ONSC 1556, Pazaratz J. considered the requirements for an order under r. 18(14). In order to determine whether a party has obtained a result "as favourable as or more favourable than the offer", the court need not compare the offer and the result with microscopic precision. Rather, as Pazaratz J. stated at para. 47:
To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer) ... The 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... [Citations omitted].
[40] Rule 18(16), is r. 18’s basket clause for offers that may attract costs consequences. Covering “any written offer to settle”, r.18(16) allows the court broad discretion regarding costs, even when the requirements of r. 18(14) are not met. But despite its broad discretionary nature, nothing in the wording of r. 18(16) obviates the requirement that an unaccepted offer must meet the r. 18 formal requirements in order to attract costs consequences.
[41] All of that said, as Lemon J. pointed out in Slongo v Slongo, 2015 ONSC 3327 (S.C.J.), (rev'd. on other grounds, 2017 ONCA 272), r. 18(14) does not require the presiding justice to allow the successful party to demand a blank cheque for his costs. The principle implicitly applies to r. 18(16) as well.
Rule 24 Factors
[42] FLR r. 24 sets out the factors that the court must consider in the exercise of its discretion regarding costs. However the court retains its ultimate discretion to determine what costs are reasonable (C.A.M. v. D.M., [2003] O.J. No. 3707, 2003 18880 (Ont. C.A.), at para. 43).
[43] The starting point, found in r. 24(1), is that the successful party is presumptively entitled to the costs of a motion, enforcement, case or appeal (see also Beaver v. Hill and Berta v. Berta, 2015 ONCA 918). But as Rosenberg J.A. stated in C.A.M. v. D.M., at para. 41, that provision does not completely remove the court's discretion to refuse to grant costs to the successful party.
[44] Further, as the Court of Appeal for Ontario stated in Beaver v. Hill, there is no presumption that the successful party in a family law proceeding is entitled to an amount approaching full or even substantial indemnity costs. The exceptions to that principle are bad faith (r. 24(8)) or besting an offer to settle (r. 18(14)), which can allow enhanced costs up to the point of full indemnity (see paras. 11 and 13).
[45] Further a party may obtain enhanced costs if the party’s conduct of the litigation, including his legal position, was unreasonable: Climans v. Latner, 2020 ONCA 554, at para. 92.
[46] While r. 18 deals with offers to settle and the consequences of their acceptance or rejection, r. 24 also looks to offers to settle as an important element in the determination of costs. It does so as a factor for determining the reasonableness and proportionality of a party’s conduct in the litigation.
[47] In sum, a court determining costs may consider an unaccepted offer in two different ways. First, it may consider the offer in comparison to the result of the litigation. In that case, the offer must meet r. 18’s formal requirements. Second, the court may also consider the offer as part of its consideration of the reasonableness of each party’s conduct in the litigation.
[48] Subrule 24(12) sets out the appropriate considerations in fixing the quantum of costs. It reads:
(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.
Reasonable or Unreasonable Behaviour
[49] As set out above, reasonable litigation behaviour is a touchstone of the costs determination process. That point is made clear by r. 24(4), which allows the court to deprive a successful party of all or some of their costs if they have behaved unreasonably. In fact, such a party may be ordered to pay some or all of the costs of the unsuccessful party.
[50] Under r. 24(5), when the court looks to the reasonableness or unreasonableness of each party's behaviour during the course of the dispute, the following considerations apply:
the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
the reasonableness of any offer the party made; and
any offer the party withdrew or failed to accept.
[51] In Weber v. Weber, above, Chappel J. explains at para. 15 the reasons for the centrality of reasonable behaviour in the assessment of costs as follows:
One of the most important functions of costs is to ensure that litigants conduct themselves in a manner that upholds the integrity of our justice system as a whole. Costs awards are a means of ensuring that litigation is not utilized as a tool to harass parties, that it is conducted in an organized and responsible manner and that the resources of the justice system are not unduly drained by clearly unreasonable claims.
[52] Chappel J. adopts this trenchant statement of Spence J. of the Ontario Court of Justice in Heuss v. Surkos 2004 ONCJ 141 (Ont. C.J.), at para. 20, about the need for prudence in conducting potentially costly litigation:
Parties 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. Matrimonial litigation is an occasion for sober consideration and thoughtfulness rather than intemperate behaviour.
Offers to Settle as a Factor in Determining Reasonable Behaviour
[53] In Serra, cited above, the Court of Appeal for Ontario emphasized the obligation to attempt to settle that arises from the very beginning of a family law case. In doing so, the court adopted the following statement by Spence J. in Husein v. Chatoor, 2005 ONCJ 487, [2005] O.J. No. 5715 (Ont. C.J.), at para. 30:
[P]arties have an obligation to begin to assess their respective cases at the outset of the litigation -- even before the litigation commences -- and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it behoves neither party simply to sit back and to roll the dice while those fees continue to mount.
[Emphasis added by Court of Appeal for Ontario]
[54] In J.V.M. v. F.D.P., 2011 ONCJ 616, [2011] O.J. No. 5441 (Ont. C.J.), Sherr J. of the Ontario Court of Justice equated the failure to make an offer to settle to unreasonable behaviour under Rule 24(5) and (12). He stated at para. 5:
The failure to make an offer to settle much earlier [than trial] by either party is unreasonable behaviour. Subrule 2(4) imposes a duty on parties and their lawyers to promote the primary objective of the rules to deal with cases justly (subrule 2(2)). This includes taking appropriate steps to save time and expense (subrule 2(3)). Offers to settle play an important role in saving time and expense by promoting settlements, focusing parties and often narrowing issues in dispute. See Laing v. Mahmoud, 2011 ONSC 6737, [2011] O.J. No. 5134, 2011 CarswellOnt 12972 (Ont. Fam. Ct.). The failure to serve an offer to settle will be an adverse factor when assessing costs.
[55] However, in Beaver v. Hill, the Ontario Court of Appeal offered a note of caution about excessive reliance on offers to settle in determining costs when the provisions of r. 18(14) are not engaged. The service of an offer to settle may not, in itself, be sufficient to claim reasonable behaviour. The offer must contain what Nordheimer J.A., writing for the court, described at para. 16 as "... a true element of compromise." Even so:
... judges should be very cautious about relying too heavily on this factor to increase or decrease the quantum of costs, when the specific Rules regarding such offers are not directly engaged. Even under r. 24(5)(a) of the Family Law Rules, it is but one factor that is to be considered.
How is Success Measured Within the Context of Divided Success?
[56] When success is divided, the court has the explicit discretion under r. 24 (6) to determine the allocation of costs. One key issue under r. 14(6) is how to allocate success when neither party is the clear winner of a motion, trial or other proceeding.
[57] In Jackson v. Mayerle, 2016 ONSC 1556 (SCJ-FC), Pazaratz J. of this court’s Family Court looked at how to apportion divided success under r. 24(6). He stated that r. 24(6) requires a comparative analysis, as most family cases have multiple issues. However, those issues are not equally important, time-consuming or expensive to determine. Comparative success can also be assessed globally in relation to the whole of the case, asking:
How many issues were there?
How did the issues compare in terms of importance, complexity and time expended?
Was either party predominantly successful on more of the issues?
Was either party more responsible for unnecessary legal costs being incurred?
[58] In Thompson v. Drummond, 2018 ONSC 4762, Chappel J. added to Pazaratz J.’s analysis. She pointed out that the determination of success is not merely a mathematical exercise. Rather, the court must engage in a "contextual analysis" in which it looks first to the kinds of factors set out in Jackson v. Mayerle. If it finds that success is divided, the court will then exercise its discretion. It may simply determine costs globally. Or it may look first to success in the primary issue, but subject to "adjustments" that consider lack of success in any secondary issues, as well as any other appropriate factors. As Chappel J. wrote at para. 12:
The determination of whether success was truly "divided" does not simply involve adding up the number of issues and running a mathematical tally of which party won more of them ... Rather, it 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 which required adjudication ... Where the court concludes that success was in fact divided, it may award costs to the party who was more successful on an overall global basis or on the primary issue, subject to adjustments that it considers appropriate having regard for the lack of success on secondary issues and any other factors relating to the litigation history of the case ...
[Citation omitted]
[59] There are two schools of thought regarding the role of offers to settle in the determination of success under r. 24. On the one hand, in Lawson v. Lawson, 2008 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.), Justice J. Wilma Scott of this court’s family Court wrote that any determination of success "...must take into account how that order compares to any settlement offers made": at para. 7. In Osmar v. Osmar, 2000 20380 (ON SC), [2000] O.J. No. 2504 (S.C.J.), at para. 7, Aston J. was even more direct, in stating that:
Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.
[60] On the other hand, in Jackson v. Mayerle, Pazaratz J. considered offers to settle separately from the issue of relative success. His four factors do not include success in comparison to offers to settle. Similarly, Chappel J.'s analysis of divided success in Thompson v. Drummond did not consider offers to settle. Rather, elsewhere in her decision, she describes offers as "[a]nother important consideration in determining both entitlement to and the quantum of costs."
[61] In Lazare v Heitner, 2018 ONSC 4861, McGee J. clearly planted her flag on the side of the relief sought in the case rather than any offer. She wrote at para. 16:
A comparison of what was sought in the litigation, rather than within the Offers must be the primary Rule 24(6) (divided success) analysis if I am to give effect to the purposes of costs award: to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants. To do otherwise is to encourage all in, or all out litigation; or in other words, the all too familiar "accept my terms or I'll fight you on everything."
[Footnote omitted]
[62] While there are merits to each approach, I accept the one explicitly adopted by McGee J. and implicitly adopted by Pazaratz J. and Chappel J. I say so for four reasons.
[63] First, r. 24(6), like r. 24(1) specifically looks only to a result: "success". The term, success, is defined by the Oxford Canadian Dictionary, Barber ed., 1998, as "1 The accomplishment of an aim; a favourable outcome..." That is the sense in which it is used in the two subrules: the "accomplishment", the "outcome" of the proceeding, rather than the process leading to the result.
[64] Second, r. 18, which is devoted to the making, acceptance and consequences of written offers to settle, makes no reference to the term, success. Rather, the rule relies on a different term of comparison, favourability. Under r. 18(14)(5), when dealing with the costs consequences of unaccepted offers, the court is directed to consider whether the ultimate order is "as favourable as more favourable than the offer". In other words, the court is required to compare the ultimate order to the offer, not to what the other party originally tried to achieve. Favourability is a factor that applies to costs only in the context of a r. 18 offer.
[65] Even when r. 18(16) grants the court the broad right to consider any written offer to settle in its exercise of discretion over costs, it makes no reference to success.
[66] Third, the link between the r. 24 costs factors and those which arise from r. 18 is found in r. 24(5) and r. 24(12), both of which refer to offers in the context of "reasonableness", not success.
[67] Under r. 24(5)(a) and (b), a court can rely on whether a party made an offer to settle as well as the "reasonableness" of any such offer in deciding whether the party acted reasonably or unreasonably. The fact of making an offer is part of a consideration of “the party’s behaviour in relation to the issues from the time they arose”. There is no reference in r. 24(5) to the requirement that an offer be in writing. In r. 24(5)(b) and (c), the rule looks to “any offer” the party “made”, “withdrew or failed to accept”.
[68] Rule 24(12)(a) looks to "the reasonableness and proportionality" of a series of factors as they relate "to the importance and complexity of the issues" in a proceeding. One of those factors, under r. 24(12)(a)(iii), is "any written offers to settle, including offers that do not meet the requirements of rule 18".
[69] In sum, offers to settle are imported into r. 24 only in regard to reasonableness and/or proportionality, not success. Further, while those offers need to be in writing, they do not have to meet the formal requirements of r. 18 in order to be considered under r. 24(12).
[70] On the other hand, r. 24(4) offers a dividing line between success and reasonableness. It allows the court to deprive "a successful party" of all or part of their costs if they have "behaved unreasonably during a case". Clearly r. 24 treats success and reasonableness as separate concepts.
[71] Fourth, on a practical basis, often one or both parties have not made an offer to settle. While the failure to make an offer to settle may be considered unreasonable conduct (see J.V.M. v. F.D.P., above and r. 24(5)(a)), it is not mandatory that a party make an offer. The failure to do so is not relevant to the determination of success under r. 24(1),(4) or (6).
[72] In conclusion on the place of offers to settle in the determination of success, the FLR's costs rules offer a number of routes to the determination of costs. One of them is through favourable offers to settle and another is through success. The scheme under r. 18 compares the ultimate order to the offers that precede it, seen through the lens of favourability to the offeror. On the other hand, r. 24(1), (4) and (6) looks to success by comparing the result to the relief that each party sought. Where r. 24 looks to offers, it does so only in order to determine reasonableness and proportionality, not relative success. Thus, offers to settle are not a factor in the determination of success in a proceeding.
Lack of Success and Unreasonable Behaviour
[73] I add one further consideration as a corollary to my analysis distinguishing the FLR’s consideration of favourability and success. Many factors may be considered in the determination of reasonable or unreasonable behaviour under r. 24. However, lack of success in raising an argument rejected by the court is, in itself, not indicative of unreasonable behaviour. Thus, standing alone, lack of success should not attract enhanced costs. As Gillese J.A. wrote for the Court of Appeal for Ontario in Climans v Latner:
- A basic principle in our legal system is that a defendant is entitled to require the plaintiff to prove its claim - something more than advancing a reasonable position at law is required to attract heightened costs consequences. Thus, an unsuccessful party will not incur heightened costs consequences if his or her conduct, including the legal position advanced, is reasonable: Hunt v. TD Securities Inc. (2003), 2003 3649 (ON CA), 66 O.R. (3d) 481 (C.A.), at para. 153; see also Foulis v. Robinson; Gore Mutual Insurance Co., Third Party (1978), 1978 1307 (ON CA), 21 O.R. (2d) 769 (C.A.), at p. 776.
Bad Faith and Full Indemnity Costs
[74] Under r. 24(8), full indemnity costs are available when a party has been found to have acted in bad faith. That rule states that "[i]f 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." Nonetheless, any costs decision must be in accord with the underlying principles of proportionality and reasonableness (see C.A.M. v. D.M., at para. 41). Further, any application of r. 24(8) must apply to the part of the proceeding in which the party has acted in bad faith. If a party has acted in bad faith in regard to part of a proceeding, the imposition of full indemnity costs may apply to that part or all of the proceeding, as the facts may bear out.
[75] In order to meet the definition of bad faith in r. 24(8), a litigant's conduct must fall far below the standard expected of parties to a proceeding. The misbehaviour must be deliberate and intended to harm, conceal or deceive. In S.(C) v. S.(C), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.), Perkins, J. offered a thorough description of the behaviour required to meet the definition of the term, bad faith, as follows:
17 In order to come within the meaning of bad faith in subrule 24(8), behaviour 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 behaviour, to conceal information relevant to the issues or to deceive the other party or the court. 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. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could 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 behaviour is causing the other party major financial harm without justification.
[76] That test was approved by the Court of Appeal for Ontario in Scalia v. Scalia, 2015 ONCA 492, where Epstein J.A., writing for the court, summarized the test at para. 68 as follows: “[i]n short, the essential components are intention to inflict harm or deceive.” She added at para. 69 that the test for bad faith requires: “wrongdoing, dishonest purpose or moral iniquity”.
[77] Deliberate disobedience of a court order can be bad faith if that disobedience is intended to achieve an ulterior motive (Fatahi-Ghandehari v. Wilson, [2018] O.J. No. 460, at para. 39) or inflict financial harm (S.(C.) v. S.(M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.)).
[78] As Pazaratz J. wrote in Jackson v. Mayerle, at para. 56: "...Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made." Pazaratz J. was careful to distinguish bad faith from bad judgment, negligence, or unreasonable behaviour. Bad faith requires some element of conscious wrongdoing. As Pazaratz J. put it at paras. 58-61:
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...
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. The court can determine costs at a far higher level than those that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated.
To establish bad faith, the court must find some element of malice or intent to harm.
Bad faith can be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive, or an intentional breach of court order with a view to achieving another purpose.
[citations omitted]
Ability to Pay
[79] The ability to pay, particularly for an unsuccessful custodial parent, is a relevant factor for a court to consider. As Rosenberg J.A. wrote for the Court of Appeal in C.A.M. v. D.M., above,
In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. … In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child.
[Reference omitted]
[80] The point was also made by Pazaratz J. in Jackson v. Mayerle at para. 106, above. However, he added at para. 107 that those limited financial circumstances “should not be used as a shield against any liability for costs and should only be taken into account regarding the quantum of costs.” Further, that factor can cut both ways, because as Pazaratz J. pointed out at para. 108:
(a) a large costs order against an unsuccessful party may affect their ability to provide for a child in their care;
(b) but inadequate reimbursement for costs may similarly impoverish a child residing in the successful party's household.
[81] But limited financial means cannot be used as a “get-out-jail-free” pass for an unreasonable party. They cannot, as Chappel J. put it in Thompson v. Drummond, at para. 22, litigate “without regard or concern for potential costs consequences at the end of the line. A party's limited financial means will be accorded less weight if the court finds that they acted unreasonably”. The comments of Spence J. in Heuss v. Surkos, cited above, that parties may not litigate oblivious to the impact of their conduct, are particularly apposite to this point.
Application of Legal Principles to Facts of this Case
Divided Success
[82] Each party admits to the divided success in this appeal but argues that they were ultimately the more successful party. As further stated above, when I consider success, I have to look to what each party requested in this appeal.
[83] In her notice of appeal, Joelle sought, in addition to an order expediting the appeal, interest, costs and such further and other relief as counsel may advise and this court deems just:
- To set aside the arbitrator’s parenting decision as well as his decision regarding equalization (including that David solely owns the matrimonial home) and substitute instead orders that:
a. grant her sole custody and primary residence of the children, including the right to make decisions about their residence (either Ontario or Indiana);
b. the parenting schedule be in accord with a parenting schedule devised by Dr. Irwin Butkowski, that was based on the children continuing to primarily reside in Indiana and David having the majority of his parenting time there;
c. David make an equalization payment to her of $1,090,572.33; or in the alternative
d. David make an equalization payment to her of $338,934.41 and that the net proceeds of sale of the matrimonial home be evenly divided;
e. David be responsible for all costs of cleaning and repairing the matrimonial home to make it fit for sale;
f. David sign any documents required to extend or secure the children’s immigration status in the United States;
g. David pay her pre-judgment interest of $43,946.54 until July 30, 2019 and $29.88 per diem for each day thereafter until the date of the arbitrator’s award;
h. David pay post-judgment interest and costs of the appeal;
- In the alternative, a different hearing before a different arbitrator or the court;
[84] In his notice of appeal, David requested, in addition to an order expediting the appeal, costs and such further and other relief as counsel may advise and this court deems just, orders:
setting aside the terms of the award granting Joelle final decision making power in all major decisions regarding the children, following consultation with him;
setting aside the arbitrator’s parenting schedule and setting instead a week-about schedule;
setting aside the arbitrator’s Christmas 2019 schedule and granting him the entirety of the Christmas holiday;
prohibiting Joelle from applying for any further extensions to the children’s stay in the United States;
setting aside the arbitrator’s differing rights of first refusal and granting each parent the same right of first refusal;
setting aside the arbitrator’s term of the award granting the children the right to contact the parent with whom they are not residing for up to 15 minutes per day and replacing it with a term that the children can contact the non-residential parent at any time;
setting aside the arbitrator’s term that Joelle arrange a psychoeducational assessment for Daks, in favour of one which assigns that task to David;
setting aside the arbitrator’s term regarding offering notice of Coco’s move to NHLC to one assigning the task to David and that he indicate that Coco is expected to begin its full time programme by June 1, 2020;
setting aside the arbitrator’s term requiring Joelle to coordinate with NHLC and substituting himself as the facilitator;
setting aside the arbitrator’s ruling that David is not entitled to an unequal division of the parties’ net family property and granting instead a new hearing before the arbitrator or the court;
setting aide the arbitrator’s ruling denying David’s claim to an exclusion of his interest in Bowood and recalculating his equalization obligation in light of that exclusion;
in the alternative, granting David a deduction for his date of marriage interest in Jarvis and directing a new hearing in regard to the value of that property;
also in the alternative, if the court upholds the arbitrator’s award regarding Bowood, directing a new hearing to determine its net value after taking into account capital gains payable by David;
setting aside the arbitrator’s ruling denying his claim for notional disposition costs regarding Bowood;
setting aside the arbitrator’s ruling that he be required to pay pre-judgment interest to Joelle;
that his income for support purposes is $177,000 per year for 2018 and as found by the expert for other years and that his support obligations be re-calculated accordingly;
fixing his retroactive s. 7 obligation to Joelle at $10,129.91;
that he has no spousal support obligations to Joelle; or in the alternative that it be for a fixed period of time only; or in the further alternative that it be reviewed after two years;
[85] In reviewing these requests, it appears that Joelle received a greater quantity of the relief claimed in this appeal than David. Other than upholding the requirement that the children return to Ontario, Joelle was successful in obtaining the majority of the relief that she sought, particularly financial relief, and in opposing almost all of the relief sought in David’s cross-appeal.
[86] David was successful in this appeal regarding the two following issues:
The Arbitrator’s Ruling that the Children must Return to the GTA;
Reducing the Arbitrator’s Finding of his 2018 Income for Support Purposes: The arbitrator found that it was $185,000. I reduced that figure to $177,000: While David was successful, his position on this issue was inconsistent during the course of this appeal. When an error in the arbitrator’s calculation of his income was discovered, David changed his position to offer a revised argument that it should be calculated at $140,713. I accepted his original position of $177,000.Joelle opposed any change in the arbitrator’s $185,000 income calculation.
[87] Joelle was successful in this appeal regarding the following issues:
Children’s Residential Schedule in Ontario: David unsuccessfully appealed this term of the award;
Equal Decision-Making Authority in Major Parenting Issues: David unsuccessfully appealed this term of the award;
Right of First Refusal: David unsuccessfully appealed this term of the award;
Joelle’s Joint Interest in the Matrimonial Home: I found that David is estopped from denying Joelle’s joint interest in the matrimonial home;
Disposition Costs for Matrimonial Home: This issue was rendered moot by my finding that Joelle has a 50% interest in the home;
Unequal Division of NFP: David unsuccessfully appealed the arbitrator’s refusal to grant his claim for unequal division of the parties’ net family properties;
An Exclusion Rather than Deduction for David’s Interest in 93 Bowood Toronto: David unsuccessfully appealed this term of the award.
Date of Marriage Deduction for 298 Jarvis Street, Toronto: David appealed the fact that the arbitrator did not offer him a date of marriage deduction for his interest in 298 Jarvis Street, Toronto. He did so even though his counsel definitively told the arbitrator that he was not claiming the deduction. I denied this ground of appeal.
Spousal Support: David appealed the quantum of the arbitrator’s award of period spousal support and its indefinite duration. I denied this ground of appeal.
Prejudgment Interest: David appealed the arbitrator’s award of pre-judgment interest. I denied this ground of appeal.
[88] I remitted the issue of whether David owes Joelle retroactive s. 7 expenses in excess of the $10,129.91 back to the arbitrator, so neither party was successful on that issue.
[89] Further, Joelle was successful in her motion for a stay of the Arbitrator’s award pending the disposition of the appeal, in light of the pandemic and in her request to offer fresh evidence on the appeal. However, she raised an issue in that motion under the FCA that she later withdrew, after receiving materials from David that demonstrated that he had not engaged in a fraudulent conveyance.
[90] David moved for an order granting him summer parenting time. That motion resulted in a consent order roughly along the lines of David’s request. However, Joelle was not opposed to his summer parting time, the issue seemed to be logistics and moving across the order during the pandemic and timing. It is not clear that the motion was necessary.
[91] Joelle also moved for an advance on equalization. While that motion was settled before it could be argued, it was settled upon terms proposed by David.
[92] From even a superficial review of listing of issues in which each party was successful in this appeal, it is clear that Joelle was successful in vastly more issues than David. However the determination of success in a proceeding is not like the tallying of the scores in each round in a boxing match. As David pointed out, one issue was the most important one in this appeal, as it was in the arbitration: the children’s return to the GTA. He was the successful party in that issue.
[93] The court’s task is to weigh Joelle’s success in the majority of other issues against David’s success in the key issue.
[94] In looking a bit more closely at the two appeal decisions I released, I find that David’s success in the parenting appeal was somewhat nuanced. While the decision to return the children to the GTA was upheld, it could not be implemented within the timeframe set out in the award because of the pandemic. That is an event that could not have been predicted at the time of the arbitration. But it necessitated a motion for a stay in which Joelle was successful. Joelle was also successful in resisting his appeal to change the parenting terms when the children return to Ontario. But Joelle did not argue strongly on that point, recognizing that she had agreed at the arbitration that if the children were to be returned to the GTA, it would be on a shared-parenting basis.
[95] In regard to the appellate financial decision, David’s only success was in regard to his income for support purposes, but even there, my decision reflected his original position not his final one in this appeal.
[96] I also note that my two appeal decisions, regarding parenting and financial issues, were of equal length. They reflected what appear to be a roughly equal level of lawyering time.
[97] Thus in conclusion, success is truly divided in that David succeeded in the key issue that divided the parties, and the other parenting issue on which Joelle succeeded was not strongly argued. But Joelle was successful in the vast majority of the financial issues.
Offers to Settle
[98] I accept David’s argument that he made the only offers to settle that meet the formal criteria of r. 18. He made three r. 18 offers to settle all or part of this appeal. However, all were non-severable. The advantages of making severable offers to settle were articulated by Wildman J. in Paranavitana v. Nanayakkara, 2010 ONSC 2257, where she wrote at para. 13:
Severable offers are an underused tool that can confer considerable settlement and cost advantages. Because of the full recovery provisions of Rule 18(14), they can provide much more flexibility to the court to award full recovery for at least a portion of the overall costs, if the party is successful on only some of the issues.
[99] Wildman J. continued at para. 14, stating that as the offer before her was not severable, the party making the offer “would have to do as well or better than all the terms of the offer, in order to take advantage of the full recovery cost provisions of Rule 18(14).” See also Daniel v. Henlon, 2020 ONCJ 259, at para. 66 and Brar v. Brar, 2017 ONSC 6372, at para. 19.
[100] Here, none of David’s non-severable offers was as or more favourable to him on all of its terms than my appeal orders. Accordingly he cannot rely on r. 18(14) in making my costs decision. He makes no submissions that I should rely on his offers under r. 18(16), presumably for similar reasons.
[101] Each party’s proposals for consideration, exchanged in the context of their appearances before Coats J., did not meet the r. 18 formal requirements. Further, they were not capable of acceptance. Thus, I cannot consider them under r. 18(16).
[102] The formal requirements of r. 18 do not apply to offers under r. 24(5) or (12). Under r. 24(5), the court can look at whether a party made an offer to settle in determining the reasonableness of their behaviour. The court can then look at the reasonableness of that offer. Unlike r. 18 or even r. 24(12), r. 24(5) does not require the offer to have been made in writing. But what kind of offer meets the definition of r. 24(5)?
[103] While the term, “offer”, is defined in r 18(1), that definition applies to r. 18 only. It states “[i]n this rule, “offer” means…”. On the other hand, r. 24 offers no definition of the term, “offer”, for its purposes.
[104] However, under contract law, which applies to consent agreements, an offer is a building block to the formation of a contract. There is a difference between an offer that is capable of acceptance and a mere invitation to treat. The latter is simply an invitation to make a binding offer in order to complete a contract: Canadian Dyers Assn. Ltd. v. Burton, [1920] O.J. No. 138 (O.H.C.J.), at para. 4; David J. Harvey Holdings Inc v. Hercules Food Equipment Ltd, [2006] O.J. No 4741 (Div. Ct.)
[105] Here, the parties’ proposals were mere invitations to treat. They were not offers that could, in themselves, be accepted to form a contract. I cannot consider them to be offers, even under r. 24(5) or (12). But I can consider the fact that the parties were negotiating and exchanging proposals as an element of reasonable conduct. I can also consider the fact that unlike Joelle, David made formal r. 18 offers to settle. But I can take little more than that from those proposal exchanges.
Other Rule 24 Factors
[106] The issues in this case were important for each party. They were factually and legally complex, requiring numerous lengthy and well researched submissions. My two decisions, in their original form, added up to over 400 paragraphs and over 100 pages.
[107] With regard to reasonableness, each argues that they acted reasonably in this litigation and that the other acted unreasonably. Joelle went so far as to accuse David of bad faith. I disagree with both parties.
[108] This is an extraordinarily complex case. It is one in which neither party, from the perspective of this court, generally acted better or worse than the other. Each party began with the best of intentions and continued to litigate, feeling that their conduct represented those intentions. Joelle felt that remaining in Indiana was best for the children, particularly in light of the services offered to Coco by BACA. She had been there for years and made her life there. David felt that the arrangement, intended to be temporary when the parties were still a couple, needed to finally end. He felt that it was particularly harmful to Daks and that Coco could do just as well in Ontario as in Indiana. The parties legitimately disagreed with each other.
[109] Each party litigated as if their children’s futures were at stake. Each was able, despite the fact that neither was wealthy, to obtain the highest level of legal services from some of Canada’s best family lawyers.
[110] Hand a tool to a carpenter and they will use it. Those lawyers did what could only be expected of them, particularly with two clients who feel intensely responsible for doing the only right thing for their children and themselves. They litigated virtually every potential issue. They picked one of Canada’s senior family lawyers as their arbitrator and conducted a lengthy arbitration hearing. How they were able to afford all of this litigation is beyond me.
[111] Like the arbitrator, I found that each party expressed a great deal of hyperbole and distrust for each other at both the arbitration and this appeal. That fact contributed to the extraordinary and arguably ruinous costs of both proceedings. Through the course of this appeal and even in their costs submissions, each party displayed a willingness to ascribe the basest motives and assume the worst to the other.
[112] In their extensive written costs submissions, each side each justifies their position in this appeal as being the only reasonable one. Each stated that the other’s reasoning, often the other side of the same coin, is unreasonable. In doing so, they managed to reargue a number of the motions in this appeal including the one before Fitzpatrick J., whose costs have already been determined.
[113] Each party’s submissions purports to offer evidence of events that have occurred during the course of this appeal, for which there is no sworn evidence before me: David regarding therapy and Joelle regarding various payments. I cannot rely on either. Costs are supposed to be determined on a summary basis (r. 24(10)(a)). That determination should not represent a rearguing or re-opening of the proceeding that has already been determined.
[114] At the end of the day, I see neither party as more nor less reasonable than the other. Further, I do not see the high bar of bad faith as having been met.
[115] Joelle’s bill of costs is lower than that of David. But by this time, neither party should be surprised by the amounts claimed by the other side. Thus, I cannot say that either bill of costs exceeds the reasonable expectations of the other side, particularly in light of the costs claims already presented to and determined by the arbitrator.
[116] David’s success in the key issue is balanced by Joelle’s success in the majority of the others. Nonetheless, what Joelle describes as the second major issue, her interest in the matrimonial home, was not decided based on the arguments that she offered to the arbitrator, other than raising the issue of estoppel in some general sense. Nor did I adopt her arbitration theory of estoppel in my decision. Further, with regard to upholding the arbitrator’s decision regarding parenting arrangements when the children return to the GTA, Joelle did not vigorously argue that position in this appeal.
[117] While Joelle was successful in the stay motion, David was required to respond to an FCA argument. He filed materials in that regard before Joelle discontinued that portion of the motion. David brought a summer parenting schedule motion which was resolved in his favour, although it may have been unnecessary. Joelle was unsuccessful in seeking more than the $150,000 advance that David was willing to pay her.
[118] Frankly, I do not see an overall winner in this case. Nor do I find that either party is more entitled than the other to the costs of this appeal or to the motions brought during the course of this appeal.
[119] With regard to the costs below, Joelle did not request an order setting aside the costs decision of the arbitrator. But as the Court of Appeal for Ontario stated in Chiaramonte v. Chiaramonte, 2013 ONCA 641, at para. 41:
…the general principle is that, when an appeal is allowed, the order for costs below is set aside and the costs below and the costs of the appeal are awarded to the successful appellant: St. Jean (Litigation Guardian) v. Cheung, 2009 ONCA 9; Hunt v. TD Securities Inc. (2003), 2003 48369 (ON CA), 43 C.P.C. (5th) 211 (Ont. C.A.). Leave to appeal is not required if the substantive disposition is different from that of the decision under appeal: Dines v. Harvey A. Helliwell Investments Ltd., [1992] O.J. No. 2107 (Ont. C.A.).
[120] When a party enjoys only partial success on appeal, that general principle does not apply. However, partial success on appeal still requires this court to reconsider the costs disposition at trial. Thus, it is open for me to reconsider the costs awarded by the arbitrator in light of my orders on this appeal and their effect on the arbitrator’s award: Climans v. Latner, above, at paras. 85-86. During the arbitration, the balance of evidence and argument tilted towards the parenting issues more evidently than it did in this appeal. That fact was recognized in the arbitrator’s costs decision, in which he granted David costs of $75,000 in addition to the reimbursement of certain expenses that should have been shared. He recognized that David had succeeded in the central issue and that success was divided in the other issues. In this appeal, that balance is more evenly divided.
[121] I find that David should still be entitled to his costs of the arbitration. However as I have set aside a number of the arbitrator’s findings regarding financial issues, I reduce his costs award of $75,000 to $50,000. From that I deduct the $850 that the arbitrator awarded Joelle in his clarification endorsement.
Conclusion
[122] Accordingly, I award no costs of this appeal as success was divided in the manner described above. I reduce the costs of the arbitration, payable by Joelle to David to a total of $49,150. That amount is payable to David out of Joelle’s share of the proceeds of sale of the matrimonial home. Joelle shall also reimburse David for the amounts set out in the arbitrator’s costs endorsement.
“Marvin Kurz J.”
Electronic signature of Justice Marvin Kurz,
Original will be placed in court file
Date: April 6, 2021