Court File and Parties

COURT FILE NO.: FS-16-85704-00

DATE: 2021-08-04

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SARA HAWAS Applicant

AND:

MOHAMED TAREK MAHMOUD HALIL IBRAHIM Respondent

BEFORE: Justice J. Stribopoulos

COUNSEL: Ms. C.A. Haber, for the Applicant Mr. T. Ibrahim, Self-Represented

HEARD: In Writing

COSTS ENDORSEMENT

[1] This endorsement addresses the costs for an application ultimately tried over fifteen days: see Hawas v. Ibrahim, 2021 ONSC 3713. Ms. Hawas was successful in her claims against Mr. Ibrahim for spousal and child support, including for substantial arrears concerning each, along with various ancillary claims. The principal issue at trial was Mr. Ibrahim’s income for support purposes. In its decision, the court imputed a substantial income to Mr. Ibrahim, as urged by Ms. Hawas. However, the court also imputed some income to Ms. Hawas, favouring Mr. Ibrahim's position on that discrete issue.

[2] The court advised the parties that if they were unable to agree on costs, they should file written submissions at specified deadlines for them to do so. Each party has now filed written submissions concerning costs, enclosing their respective bills of costs and various offers to settle that they exchanged before trial.

[3] Ms. Hawas seeks costs totalling $346,216.55, inclusive of HST and disbursements. That amount reflects her costs to litigate the claims ultimately decided at trial on a full recovery basis. (Other claims, originally advanced, were resolved before trial and Ms. Hawas has not sought her costs concerning those claims.) Ms. Hawas submits that she is entitled to full recovery of her costs on two alternative bases. First, she made offers to settle that engage Rule 18(14) of the Family Law Rules. Alternatively, she claims Mr. Ibrahim acted in bad faith, thereby engaging Rule 24(8) of the Family Law Rules.

[4] Mr. Ibrahim responds with various alternative submissions. First, he submits that there was divided success and that each party should bear their own costs. Second, if the court concludes that Ms. Hawas was the successful party, Mr. Ibrahim submits that her various offers to settle fail to engage Rule 18(14). Third, he denies that he acted in “bad faith” and maintains that, as between the two of them, it was Ms. Hawas who behaved unreasonably, necessitating a trial, and disentitling her to costs. Finally, should the court conclude that Ms. Hawas is entitled to costs, either on a partial or full recovery basis, he submits that Ms. Hawas' bill of costs includes inappropriate claims and amounts that are excessive.

[5] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that cost orders are in the court’s discretion. In addition, Rule 24 of the Family Law Rules sets out a framework to guide judges in exercising their discretion to award costs in family cases.

[6] The Court of Appeal for Ontario has observed that modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the costs of litigation; (2) to encourage settlement, and (3) to discourage and sanction inappropriate behaviour by litigants: Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8; Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.), at para. 22. Rule 2(2) adds a fourth overarching objective that informs the court’s application of the Family Law Rules, including when it comes to ordering costs: to deal with cases justly: Mattina v. Mattina, 2018 ONCA 867, at para. 10. Further, Rule 24(12) specifies factors courts must consider in making cost orders, emphasizing “reasonableness and proportionality” when it comes to each.

[7] Rule 24(1) creates a presumption of costs in favour of the successful party: Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730, at para. 94. Therefore, consideration of success is the starting point in determining costs: Sims-Howarth v. Bilcliffe (2000), 2000 22584 (ON SC), 6 R.F.L. (5th) 430 (Ont. S.C.), at para. 1. However, this presumption does not mean that the successful party is always entitled to costs: M.(C.A.) v. M.(D.) (2003), 2003 18880 (ON CA), 67 O.R. (3d) 181 (C.A.), at para. 40.

[8] An award of costs is subject to the factors listed in Rule 24(12), the directions found in Rule 24(4) (unreasonable conduct), Rule 24(8) (bad faith), Rule 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: Berta v. Berta, at para. 94.

[9] With the positions of the parties and the governing principles summarized, I turn next to consider the issues raised by the parties’ respective costs’ submissions.

[10] The starting point is determining which party was successful. Ms. Hawas claims that she was. In contrast, Mr. Ibrahim maintains that the parties enjoyed divided success, and each should bear their own costs. In my view, Ms. Hawas was unquestionably the successful party. Ultimately, she succeeded on the issue that was the focus of most of the evidence and argument at trial, the imputation of income to Mr. Ibrahim. Although she was not successful on every issue, for example, the court imputed some income to her and gave Mr. Ibrahim credit for his share of the matrimonial home, these were comparatively less consequential issues relative to the imputation of income to Mr. Ibrahim. As a result, Ms. Hawas was the more successful party and under Rule 24(1) she is entitled to costs.

[11] Mr. Ibrahim, citing Rule 24(4), submits that Ms. Hawas is not entitled to costs because she behaved unreasonably. He cites various examples concerning her attitude towards settlement and how she conducted the litigation. With some, the court is not able to adjudicate the claims. For example, the court has no way of determining if, as Mr. Ibrahim claims, putting to one side issues of settlement privilege, that Ms. Hawas was not interested in spending time with the settlement judge to resolve the issues. (Given the offers to settle exchanged, I am far more inclined to think that it was Mr. Ibrahim's position that was the real obstacle to settlement.)

[12] With other examples, the court does not agree with Mr. Ibrahim's characterization of the events at trial. For example, he faults Ms. Hawas because she never called Mr. Ibrahim's former counsel to testify after forcing a voir dire to obtain a ruling that he waived solicitor and client privilege. However, his position ignores that the former lawyer's evidence became unnecessary after the court’s ruling when Mr. Ibrahim changed his testimony and reluctantly took sole responsibility for attempting to mislead the court on an interim motion for child and spousal support.

[13] There is little to gain by chronicling each of Mr. Ibrahim's specific claims concerning what he alleges was Ms. Hawas' unreasonable behaviour during this proceeding. Suffice to say that I have considered each of the examples he provides, and I am far from persuaded that anything about how Ms. Hawas conducted the litigation engages Rule 24(4).

[14] With the court having decided that Ms. Hawas was the successful party and that nothing concerning her conduct of the litigation disentitles her to costs, I turn to determine whether to award costs to her on a partial or full recovery basis.

[15] Ms. Hawas claims she is entitled to costs on a full recovery basis because she made offers to settle that engage Rule 18(14). Ms. Hawas made three separate offers to settle, the first on September 9, 2019, the second on January 7, 2020, and the last on January 8, 2020. The trial commenced before me on January 14, 2020.

[16] The offer to settle, dated January 8, 2020, cannot engage Rule 18(14) because it was not served “at least seven days before the trial”: Family Law Rules, r. 18(14)2. In contrast, the first offer to settle, dated September 9, 2019, was well before the time limit. Mr. Ibrahim submits that the second offer to settle, dated January 7, 2020, does not engage the rule because it was served at 10:58 a.m. that day, and the trial commenced at 10:00 a.m., missing the deadline, he says, by nearly an hour.

[17] Mr. Ibrahim’s submission concerning the timing of the second offer to settle, dated January 7, 2020, overlooks Rule 3(1) of the Family Law Rules. It provides that under the rules, “the number of days between events is counted as follows: 1. The first day is the day after the first event. 2. The last day is the day of the second event.”: Family Law Rules, r. 3(1). Applying that rule, the offer to settle, dated January 7, 2020, was served seven days before the trial commenced on January 14, 2020. As such, it satisfies the temporal requirements for engaging Rule 18(14).

[18] The first and second offers to settle also satisfy the other procedural preconditions for engaging the rule. The offers were signed by Ms. Hawas and her lawyer: Family Law Rules, r. 18(4). Neither offer expired before the trial commenced, nor were they accepted: Family Law Rules, r. 18(14)3 and r. 18(14)4. The more contentious issue between the parties concerns a matter of substance, whether the outcome at trial was “as favourable as or more favourable than” the offers to settle: Family Law Rules, r. 18(14)4. Ms. Hawas bears the burden on that question: Family Law Rules, r. 18(15).

[19] In conducting the required comparison between an offer to settle and the outcome at trial, 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:” Chomos v. Hamilton, 2016 ONSC 6232, 82 R.F.L. (7th) 395, at para. 19. Instead, what “is required is a general assessment of the overall comparability of the offer as contrasted with the order:” Chomos v. Hamilton, at para. 19.

[20] Considering the offers compared to the outcome at trial generally, I am satisfied that the result achieved by Ms. Hawas at trial was far better than either of her two offers to settle. By way of summary:

• Child Support and Section 7 Expenses - Had Mr. Ibrahim accepted either of the two offers, he would only be required to pay $5,253.00 per month in child support. Instead, the court ordered him to pay $9,015.00 per month in child support. Although he would have paid $2,125.00 per month towards section 7 expenses under the offers and the court only ordered him to pay $732.60 per month, either offer still provided a better outcome for him. In total, under both, he would only have been required to pay $7,378.00 per month for child support and section 7 expenses, whereas under the court’s order, he must now pay $9,747.60 per month. Meaning he will pay $2,372.60 per month more under the court’s order than he would have if he had accepted either of the offers.
• Spousal Support – Had Mr. Ibrahim accepted either of the two offers, he would have to pay $6,035.39 per month in periodic spousal support. In contrast, the court ordered him to pay $7,806.00 per month in periodic spousal support. Meaning he will pay $1,770.61 per month more under the court’s order than he would have if he had accepted either of the offers.
• Child Support and Spousal Support Arrears – Had Mr. Ibrahim accepted either of the two offers, he would be required to pay Ms. Hawas $133,855.00 for child support arrears and $96,179.40 in spousal support arrears. In short, a total payment of $230,034.40 on account of child and spousal support arrears. In contrast, the court ordered him to pay $400,530.00 in child support arrears and $275,000.00 in spousal support arrears. Consequently, he must pay $675,530.00 on account of child and spousal support arrears. The net effect being that Mr. Ibrahim must pay $445,495.60 more than he would have if he had accepted either of the offers.
• Equalization Payment and Matrimonial Home – Under the offers, Mr. Ibrahim would have paid an equalization payment of $458,453.46 and vested his interest in the matrimonial home to Ms. Hawas (a value of $275,000). On the eve of trial, the parties settled the equalization payment, with Mr. Ibrahim agreeing to pay Ms. Hawas $377,000 at a date to be determined by the court. The court vested Mr. Ibrahim’s interest in the matrimonial home to Ms. Hawas, credited towards the outstanding equalization payment. And it ordered him to pay her the balance of the equalization payment ($102,000.00). As a result, the total cost to Mr. Ibrahim was $377,000.00. In contrast, had he accepted either offer to settle, the cost to him would have been $733,453.46. In that regard, on these issues Mr. Ibrahim fared much better at trial than he would have under either offer, saving $356,453.46.

Other differences between the offers and the outcome were comparatively minor and largely favoured Ms. Hawas. For example, the court ordered a charge on Mr. Ibrahim’s condominium as security for support, which neither of the offers to settle required. The court also ordered Mr. Ibrahim to obtain $2 million in life insurance as security towards his spousal and child support obligations. In comparison, Ms. Hawas proposed $1.5 million in her first offer to settle and $2.5 million in her second offer.

[21] After making a global assessment of the offers to settle compared to the outcome at trial, it is readily apparent that Ms. Hawas achieved a far better result after trial than what she proposed in either of her two offers to settle. Ultimately, Ms. Hawas will receive much more because of the judgment than she would have obtained under either of her offers. And, correspondingly, Mr. Ibrahim will be required to pay a great deal more than would have been the case if he had accepted either offer.

[22] Accordingly, Ms. Hawas’ first and second offers to settle satisfy the preconditions for making a costs order on a full recovery basis under Rule 18(14). As a result, it is unnecessary to address her further submission that Mr. Ibrahim “acted in bad faith,” thereby entitling her to full recovery of her costs under Rule 24(8) of the Family Law Rules from the time of her first offer.

[23] All of that said, even if the circumstances meet the preconditions of Rule 18(14), the court must ensure that any costs award remains reasonable: M.(C.A.) v. M.(D.), at para. 43. Ultimately, costs awards should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party: Serra v. Serra, at para. 12.

[24] Despite the undoubted importance of the issues to Ms. Hawas and even though the imputation of income to Mr. Ibrahim was both factually and legally complex, $340,000.00 in legal fees is an extraordinarily large sum for a case that took fifteen-days of court time to try. That amount is far from fair and reasonable in all the circumstances of this case.

[25] In my view, a fair and reasonable amount, in terms of costs, remembering all the circumstances, including Ms. Hawas’ success at trial and that she achieved a result much better than the terms of her offers to settle, is $175,000.00 inclusive of disbursements and HST.

[26] Accordingly, this court orders Mr. Ibrahim to pay Ms. Hawas $175,000.00 in costs, inclusive of HST and disbursements, forthwith. This costs order shall be enforceable by the Family Responsibility Office as costs incurred are directly related to the issues of child and spousal support payable.

Released: August 04, 2021

Justice J. Stribopoulos