Court File and Parties
COURT FILE NO.: 15-402
DATE: 2021/06/10
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sheila Louise McDonald, Applicant
AND:
Perry Ian Earl Thompson, Respondent
BEFORE: The Honourable Justice Laurie Lacelle
COUNSEL: P. Gardner, Counsel for the Applicant
Respondent is Self-represented
HEARD: By written submissions dated April 30th, 2021 and May 13, 2021
Costs ENDORSEMENT
[1] The Applicant seeks her costs following her success in her Motion to Change. The Respondent is opposed to a costs award being made.
The positions of the parties
[2] The Applicant argues she is entitled to full indemnity costs in the amount of $27, 470.30 inclusive of HST. She cites a number of circumstances in favour of that award, including:
a. The Respondent’s failure to respond constructively to the Applicant’s attempt to discuss a number of issues through text and email;
b. The need in the past to bring a motion (to address the issuance of passports), which resulted in a costs award against the Respondent;
c. The number of court appearances and conferences held in this case;
d. The Respondent’s failure to file pleadings, or to file them on time;
e. The Respondent’s failure to sign Minutes of Settlement following the disclosure meeting with the OCL, given that he was not intending to contest the outcome recommended;
f. The finding in the ruling on the Motion to Change that the Respondent had engaged in blameworthy conduct in regard to his child support obligations;
g. The Respondent’s failure to respond to an attempt to carve the parenting issues from the financial issues in order to focus the genuine issues on the motion (and remove the need for the attendance of OCL counsel).
[3] The Respondent files an Affidavit setting out his position on the costs submissions. He has attached various financial documents which had not previously been filed. He files an updated Financial Statement.
[4] The Respondent argues that he is not able to afford the payment of additional funds to the Applicant. He says he has been unable to afford legal representation of his own and has no means to pay for the Applicant’s legal fees. He says he has made attempts over the years to “negotiate an offer of settlement” he could afford, and received responses that were threatening, character attacking, and fueled by greed. He says that as a result of the awards granted to the Applicant, he is currently struggling to cover the cost of living and is facing the eventuality of bankruptcy.
The governing principles
[5] Rule 24 of the Family Law Rules governs the court’s approach to awarding costs.
[6] Subrule 24(1) addresses entitlement to costs and sets out the presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
[7] Subrule 24 (12) provides that 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.
[8] Subrule 24(5) provides further direction as to how a court may determine whether a party’s behaviour has been unreasonable. It directs the court to examine the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle.
[9] Subrule 24(7) states that if a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step or otherwise contributes to that step being unproductive, the court shall award costs against the party unless the court orders otherwise in the interests of justice.
[10] Subrule 24(8) holds that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. I will further discuss the meaning of “bad faith” momentarily.
[11] The importance of offers to settle, and the costs consequences associated with them, are further clarified in Rule 18. Subrule (14) provides that 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 certain conditions are met. One of those conditions is that the party who makes the offer obtains an order that is as favourable or more favourable than the offer. Regardless, pursuant to subrule (16), 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.
[12] Further guidance as to the factors applicable to the exercise of the court’s discretion in awarding costs is found in the jurisprudence. In Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905 (C.A.), the Court of Appeal for Ontario confirmed at para. 8 that “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”.
[13] These principles were more recently affirmed in Mattina v. Mattina, 2018 ONCA 867 at para. 10, which also confirms that
Rule 2(2) adds a fourth fundamental purpose: to ensure that cases are dealt with justly: Family Law Rules, r. 2(2); E.H. v. O.K., 2018 ONCJ 578 (Ont. C.J.), at para. 8; Sambasivam v. Pulendrarajah, 2012 ONCJ 711 (Ont. C.J.), at para. 37. And Rule 24(12)1, which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award.
Bad faith
[14] Subrule 24(8) holds that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.
[15] Unreasonable conduct is not the same as bad faith conduct. This helpful summary of the law on this issue was provided by Desormeau J. in Belair v. Bourgon at paras. 38-40:
Rule 24(8) of the rules states that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. Persistent refusal by a party to make accurate financial disclosure and reveal their true income may rise to the level of bad faith. See: (2000), 2000 CanLII 22460 (ON SC), 12 R.F.L. (5th) 341 (Ont. S.C.J.); Kardaras v. Kardaras, 2008 ONCJ 616 (Ont. C.J.). A bad faith finding on some specific issue does not necessarily have a spill-over effect to other issues. Hunt v. Hunt, [2001] O.J. No. 5111 (Ont. S.C.J.).
Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. See: Cozzi v. Smith, 2015 ONSC 3626 (Ont. S.C.J.); Scipione v. Del Sordo, 2015 ONSC 5982 (Ont. S.C.J.). 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. See: (2007), 2007 CanLII 20279 (ON SC), 38 R.F.L. (6th) 315 (Ont. S.C.J.). Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation. See: Scipione, supra.
Even where the "full recovery" provisions of the Rules are triggered -- either by an offer which meets Rule 18(14) requirements, or by a finding of bad faith -- quantification of costs still requires an overall sense of reasonableness and fairness. Goryn v. Neisner, 2015 ONCJ 318 (Ont. C.J.). The Rules do not require the court to allow the successful party to demand a blank cheque for their costs: Slongo v. Slongo, 2015 ONSC 3327(Ont. S.C.J.). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances. M. (C.A.) v. M. (D.), 2003 CanLII 18880 (ON CA), [2003] O.J. No. 3707 (Ont. C.A.) (supra); Scipione v. Del Sordo, supra.; Jackson v. Mayerle, 2016 ONSC 1556 (Ont. S.C.J.).
[16] Ultimately, the amount of any costs award is within the court’s discretion having regard to these Rules and principles.
Analysis and Decision
[17] I find it is fair, reasonable and proportionate that the Respondent pay $15, 000.00 (inclusive of HST) in costs to the Applicant. I arrive at that conclusion for the following reasons.
[18] The Applicant is entitled to a costs award. While she was not successful in her claim for s. 7 expenses, she was successful on the remaining substantial issues, including the changes sought to the parenting order, the ongoing child support order, and child support arrears.
[19] The procedural history of this matter is reviewed in my Ruling on the Motion to Change and I will not repeat it here. Suffice to say, the matter has taken more appearances and time than it should. On a number of occasions, the Respondent did not attend scheduled court appearances. He failed to file required financial disclosure. This conduct has increased the costs of the proceeding.
[20] The Bill of Costs submitted by the Applicant shows legal fees and disbursements of $27, 470.30 (inclusive of HST), for roughly 79 hours of work. Forty hours of that time is allocated to emails, which adds $12, 000 in costs to the bill. Apart from the emails, the time allocated to work on the file appears reasonable. While the issues in the motion were not complex, the manner in which the Respondent proceeded in responding to it required more time than usual on the part of counsel to prepare for the motion and defend the Applicant’s position.
[21] I also consider that the Respondent has engaged in unreasonable conduct. I make this finding because the Respondent has failed to make the required disclosure, has failed to attend court appearances, and has failed to do anything to limit the genuine issues to be litigated on the motion. In the circumstances, the Applicant had no choice but to proceed with the motion and incur the costs associated with it. A substantial costs award serves the purpose of reinforcing that the Respondent must behave reasonably and try to resolve issues through negotiation. Where he does not intend to dispute a claim made by the Applicant, he needs to do something to confirm his consent to an order, such as signing minutes of settlement.
[22] While I appreciate that the Respondent is not a lawyer, he has been given prior notice of how costs are awarded since costs were awarded against him in the motion regarding the issuance of the passports.
[23] I have also considered the Respondent’s arguments about his ability to pay a costs award. The inability to pay an award cannot be used as a shield by litigants who engage in unreasonable conduct that prolongs litigation and makes it more costly for the other party. While the Respondent may not get along with the Applicant and may mistrust her, this does not entitle him to ignore efforts to settle or narrow the issues once the matter has reached the point of being addressed in court.
[24] In determining the quantum of the award, I also consider that the Applicant was not successful on the s. 7 claim, and that some of the expenses incurred would have been associated with that claim. In addition, the time allocated for emails appears excessive.
[25] I find that is just, fair and reasonable that the Respondent pay a substantial portion of the Applicant’s costs. I fix the costs award payable to her at $15, 000 inclusive of HST.
Conclusion
[26] In the result, the Respondent shall pay costs of $15, 000.00 (inclusive of HST) to the Applicant forthwith.
The Honorable Justice Laurie Lacelle
Date: June 10, 2021