ENDORSEMENT

I. OVERVIEW

[1] Kelly Lyn Taylor and John Robert Schultz were married and subsequently divorced. The parties have three children together. They resolved all issues arising from their separation, and a consent final order was signed. Two years later, the mother commenced a Motion to Change. In these reasons, I shall refer to the parties as the mother and the father.

[2] I heard the trial on the Motion to Change. For the reasons set out in Taylor v. Schultz, 2020 ONSC 5974 (the “Judgment”), I made orders terminating child support payments by the mother; retroactively adjusting child support; imputing income to the father; determining how the parties should share post-secondary expenses; and providing direction regarding payment for orthodontic work for one of the children.

[3] The mother has brought a motion seeking to deal with two matters that were before the court at trial but were not decided. In addition, the parties have provided written submissions regarding trial costs. These are my reasons regarding the motion and regarding costs of the trial.

II. ANALYSIS

A. Should this Court Vary the Final Order?

[4] The Judgment was released on October 1, 2020. This court is ordinarily functus and has no jurisdiction to make changes to the final order. However, there is a narrow exception that would permit the order to be changed to deal with a matter that was before the court but that it did not decide, pursuant to Rule 25(19)(c) of the Family Law Rules, O. Reg. 114/99.

[5] The mother has brought a motion, pursuant to that rule, seeking two variations of the order. Both matters were orders requested by the mother at trial but were not decided:

1. Request for FRO Enforcement of Overpayment of Child Support

[6] Paragraph 2 of the order states: “The mother’s overpayment of support, as at October 1, 2020, shall be set at $5,063.34, which shall be credited to the mother’s future child support obligation.” The mother seeks a variation of this paragraph directing the Family Responsibility Office to enforce the repayment if no further child support obligations arise prior to September 1, 2021.

[7] It is appropriate that the overpayment be enforced by the Family Responsibility Office since it is the payment of support. However, I do not agree with the proposed deadline for enforcement.

[8] The Judgment contemplates that the parties’ sons may attend school full-time in the future, and puts the onus on the father to provide proof of full-time enrolment. There is a realistic possibility that one or more of the sons will live at home while attending a post-secondary program within the next two years, which would make child support payable pursuant to the Judgment. I will therefore vary the order to provide enforcement of the repayment by the Family Responsibility Office if no further child support obligations arise prior to September 1, 2023.

2. Request to Enforce Payment to CIBC Line of Credit

[9] The Judgment includes a calculation of the father’s liability for past s.7 post-secondary expenses that are owing for the parties’ oldest son, James. The order directs the father to pay his portion of a joint line of credit that he shares with James. Paragraph 3 of the order states: “The father shall pay $7,197.57 towards the CIBC line of credit bearing the account number 04252-18-92533, and shall arrange for the credit available on the line of credit to be reduced by that amount.”

[10] The mother seeks an order requiring the father to make the payment to the line of credit within 90 days, and to provide proof of payment to the mother.

[11] The father states that he does not have the funds to make this payment. Because the father will be required to pay a substantial costs order, I decline to set a deadline for the line of credit payment. However, it is appropriate that the father be required to provide proof of payment to the mother when he makes payments toward his share of the line of credit.

3. The Father’s Request for Relief

[12] In an affidavit filed in response to the mother’s motion, the father seeks to revisit other portions of the Judgment. I have no jurisdiction to grant such relief and decline to do so.

4. Costs of the Motion

[13] I decline to make a separate order for costs of the motion. Those costs shall be considered as part of the overall costs order for the trial.

B. What Is the Appropriate Quantum of Costs to be Paid on the Trial?

i. Position of the Parties Regarding Costs

[14] At trial, the mother enjoyed substantial success on all issues. The father was not successful with respect to any position he advanced. The mother is entitled to costs of the Motion to Change.

[15] The mother submits that she is entitled to full indemnity costs of $32,372.24, or in the alternative substantial indemnity costs of $25,897.79. She also seeks costs of the motion after trial, which were $1,371.59 on a partial indemnity scale and $1,828.79 on a substantial indemnity scale. The father argues that the quantum of costs sought by the mother is excessive, and that it includes fees for prior steps in the matter that have already been subject to a costs order. He also states that he does not have the financial ability to pay costs.

[16] Rule 24 of the Family Law Rules sets out principles to guide the court regarding costs. Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43 grants broad discretion to the court regarding costs. The court may determine by whom and to what extent costs shall be paid: see M.(C.A.) v. M.(D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (C.A.).

[17] In determining the appropriate quantum of costs, the court must consider the complexity and importance of the proceeding and the conduct of the parties in litigation: see Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40.

[18] 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 that cases are dealt with justly under Rule 2(2) of the Family Law Rules: see: Mattina v. Mattina, 2018 ONCA 867.

ii. Did the Father Engage in Bad Faith?

[19] The mother submits that, pursuant to Rule 24(8), the father should pay costs on a full recovery basis, because he engaged in “bad faith”.

[20] During this litigation, the father failed to provide basic financial disclosure, which made the trial longer and more difficult. Costs can be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious.

[21] In order to come within the meaning of bad faith in Rule 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: see Scalia v. Scalia, 2015 ONCA 492, 126 O.R. (3d) 241, at para. 68.

[22] There is a high bar to a finding that a party has acted in bad faith. Such a finding requires more than evidence that a party has acted unreasonably – or even very unreasonably. Rule 24(8) requires a high threshold of egregious behaviour, and as such a finding of bad faith is rarely made: Cozzi v. Smith, 2015 ONSC 3626, at para. 28 and X. v. Y., 2016 ONSC 5551, 88 R.F.L. (7th) 446, at paras. 58-63.

[23] In the case before me, many of the mother’s examples of alleged bad faith are not persuasive. Some of the examples demonstrate poor or questionable litigation decisions but do not constitute bad faith.

[24] The mother’s primary bad faith argument relates to the father’s inadequate financial disclosure, and his failure to comply with numerous court orders requiring that financial disclosure. I find there is merit to this position.

[25] The mother requested basic financial disclosure on numerous occasions. She then obtained court orders requiring the father to provide the disclosure. Section 21 of the Guidelines and Rule 13 of the Family Law Rules clearly set out each party's financial disclosure obligations. Even though the Rules require disclosure of tax returns and Notices of Assessment, the father did not produce them at any point in the litigation. At trial, he maintained the position that the financial disclosure was not relevant, even though the court had told him on numerous occasions that it was relevant.

[26] This trial was originally scheduled for two days. In total, the parties appeared before me on six days. The father’s failure to provide adequate disclosure unduly lengthened and complicated the trial. The father’s persistent breach of court orders and rules regarding financial disclosure caused the trial to be much longer than it would ordinarily have been. When faced with a motion to strike his pleadings due to his lack of financial disclosure, the father suggested that he would consent to his income being imputed. Later in the trial, he changed his mind and fought against any imputation of income, even though he had still not provided the required financial disclosure. The father’s conduct negatively impacted the duration and complexity of this matter.

[27] The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing. The failure to abide by this fundamental principle impedes the progress of the action; causes delay; disadvantages the opposing party; and impacts on the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled: see Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6.

[28] Indifference or willful blindness to the most basic disclosure obligations is more than a nuisance or irritant. Such contemptuous behaviour undermines the integrity of the court process and public confidence in our system. To the extent that inadequate disclosure creates a strategic advantage — by causing delay, frustration and needless expense for the opposing party — the court has both an obligation and a self-interest to severely sanction such mischief: see Benzeroual v. Issa and Farag, 2017 ONSC 6225, 97 R.F.L. (7th) 111.

[29] I find that the father’s contemptuous behaviour regarding basic financial disclosure constitutes bad faith as contemplated by Rule 24(8).

iii. Offers to Settle

[30] Unless the court orders otherwise, a party who makes an offer is entitled to costs to the date the offer was served and full recovery of costs from that date, if certain conditions are met.

[31] Approximately one month prior to trial, the mother made a written Offer to Settle that was almost as favourable as the ultimate outcome at trial. The Offer included terms that child support terminate on the dates that were ordered by the court. The Offer included a term that the mother pay 23 percent of the s.7 expenses, which was slightly more generous than the 15 percent ordered at trial. The Offer sought an overpayment amount to the mother that was approximately $400 more than the Judgment amount. Because the overpayment amount in the Offer was higher than achieved at trial, the mother’s Offer was not as favourable or more favourable than the ultimate outcome at trial.

[32] Close is not good enough to attract the costs consequences of 18(14). The offer must be as good or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in Rule 18(14), it may be considered under Rule 18(16): see Gurley v. Gurley, 2013 ONCJ 482.

iv. The Father’s Ability to Pay

[33] The financial means of the parties, their ability to pay a costs order, and the effect of any costs ruling on the parties and the children are relevant considerations in reaching a determination on the issue of costs: M. (C.A.) v. M. (D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (C.A.); Fyfe v. Jouppien, 2012 ONSC 97, 10 R.F.L. (7th) 371.

[34] Even if the father had limited financial circumstances, it cannot be used as a shield against liability for costs. However, it would be taken into account regarding the quantum of costs, particularly when they have acted unreasonably and are the author of their own misfortune: see. Snih v. Snih, 2007 Canlii 20774 and Takis v. Takis, [2003] O.J. No. 4059 (S.C.).

[35] Those who can least afford to litigate should be most motivated to seriously pursue settlement and avoid unnecessary proceedings: see Balsmeier v Balsmeier, 2016 ONSC 3485, 80 R.F.L. (7th) 274.

[36] At trial, the father failed to provide evidence of his health and employment situation. In making submissions after trial, the father has provided documents that show that he is on leave from work and receiving disability payments. However, the evidence provided by the father does not demonstrate that he has no ability to pay costs.

[37] According to the father’s most recent financial statement sworn December 11, 2020, his annual income is $44,244. At trial, the court terminated child support for all three sons, given their ages and the lack of evidence that they were attending school full-time. The father does not have child-related obligations because there are no longer any children of the marriage. The father is receiving an income and is able to pay costs.

v. Conclusion Regarding Costs

[38] The length and complexity of the trial were increased because of the father’s bad faith conduct. The mother’s Offer to Settle was almost as favourable as the trial outcome. Although the Offer does not attract the cost consequences in Rule 18(14), I have still taken it into account. The father is able to pay costs.

[39] The mother filed numerous documents at trial. The factual and legal issues in this motion were of moderate complexity. The proceeding was of high importance to the parties.

[40] Costs awards are discretionary. The two important principles in exercising discretion are reasonableness and proportionality: Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519.

[41] I have considered the principles in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual costs to the successful litigant. In this case, I find that a fair and reasonable award of costs is $25,000.

[42] For all of these reasons, this court orders that the father shall pay costs of to the mother in the amount of $25,000, inclusive of taxes and disbursements.

III. ORDERS

[43] For the reasons set out above, the court makes the following final orders:

Paragraph 2 of the Order of Braid J. dated October 1, 2020, which states:

“The mother’s overpayment of support, as at October 1, 2020, shall be set at $5,063.34, which shall be credited to the mother’s future child support obligation.”

Is varied as follows:

“The mother’s overpayment of support, as at October 1, 2020, shall be set at $5,063.34, which shall be credited to any of the mother’s future child support obligation, should such an obligation arise prior to September 1, 2023. If no further child support obligation of the mother arises prior to September 1, 2023, the father shall pay to the mother $5,063.34 by September 1, 2023, failing which these amounts shall be enforced by the Family Responsibility Office.

Paragraph 3 of the Order of Braid J. dated October 1, 2020, which states:

Is varied as follows:

“The father shall pay $7,197.57 towards the CIBC line of credit bearing account number 04252-18-92533, and shall arrange for the credit available on the line of credit to be reduced by that amount. The father shall promptly provide proof of payment to the mother when he makes payments toward his share of the line of credit.”

The remaining relief sought in the motion is dismissed.
The father shall pay costs of the motion and the trial to the mother in the amount of $25,000, inclusive of taxes and disbursements.
Approval of the Order by the father is hereby waived.

_______________________________

Braid, J.

Released: January 18, 2021

COURT FILE NO.: 41469-08 (01)

DATE: 2021-01-18

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

KELLY LYN TAYLOR

and –

JOHN ROBERT SCHULTZ

spondent

ENDORSEMENT

CDB

Released: January 18, 2021

Taylor v. Schultz, 2021 ONSC 334

Case Summary

ENDORSEMENT

I. OVERVIEW

II. ANALYSIS

A. Should this Court Vary the Final Order?

B. What Is the Appropriate Quantum of Costs to be Paid on the Trial?

III. ORDERS

ENDORSEMENT

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 4