G.C. v. R.D.P., 2021 ONSC 5648

COURT FILE NO.: FS-19-10732

DATE: 20210824

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: G.C.[^1], Applicant

AND:

R.D.P., Respondent

BEFORE: Kimmel J.

COUNSEL: Amal Nayyar, for the Applicant

Andrew Chris / Cara Senese, for the Respondent

HEARD: Trial April 6, 7, 8, 9, 12, 13, 14, 16, 2021 (Written closing submissions received April 23, 27 and May 4, 2021) – Supplementary Cost Submissions dated July 9, July 23 and July 27, 2021

TRIAL Costs ENDORSEMENT

[1] My reasons for decision following the eight-day trial of this matter were released on June 11, 2021 (G.C. v. R.D.P., 2021 ONSC 4206). The parties were unable to resolve the matter of costs and provided supplementary written submissions on costs after my decision had been released.

[2] At the outset of the trial, I signed a consent order that encompassed a multitude of issues that the parents had reached agreement on regarding: the severance of their divorce, child support and related expenses, retroactive child support, arrangements for travel, and the terms for communication and the sharing of information (the “April 12, 2021 consent order”). The April 12, 2021 consent order also confirmed the then current arrangements for decision-making, responsibility and authority for the children’s government documents, parenting time and the holiday schedule. These were the matters that the applicant sought to change and were the subject of my trial judgment.

[3] The respondent’s position at the trial on the contested issues of decision-making and parenting time prevailed, for the most part. The applicant suggests that there was “divided” success because my judgment provides for counselling and an objective means through which the views and preferences of the children can be expressed and taken into account in adjustments that might be made to the residential schedule going forward. The applicant also suggests that the respondent’s “success” at trial should be measured by also taking into account how he conducted himself prior to the proceeding and positions he took in the proceeding leading up to the trial.

[4] This was a high conflict case in which emotions ran high, allegations of manipulative conduct ran deep, and mutual trust and respect was largely absent. The history of the parties’ dealings provides some important context, but the ultimate trial decision was unquestionably aligned with the position of the father and not with any of the specific relief sought by the mother, having regard to the evidence, submissions and draft orders presented by each side. This was not a case of divided success at trial.

The Positions of the Parties on Costs

a) The respondent/father’s position

[5] The father seeks costs of $205,252.38, which represents essentially full indemnification of his costs of the issues that were decided at trial. He submits that the time spent and hourly rates of his counsel were reasonable having regard to the matters at issue (that challenged his parenting abilities and also threatened to disrupt the shared decision making and shared parenting time that he had enjoyed with the children for a number of years) and having regard to the manner in which the applicant conducted the litigation (by refusing until just prior to trial to make any settlement offers that severed the financial issues from the parenting issues, by persisting in arguing financial issues at trial after they had been settled and by raising last minute issues at trial such as the request for the court to interview the parties’ eldest child).

[6] It has been represented to the court that the costs sought by the father do not include any trial fees for the second, more junior, lawyer’s attendance at the trial, although she was tasked with much of the drafting and preparation work to keep those aspects of the claimed fees down. It has also been represented to the court that the costs of all settled matters, such as were covered by the April 12, 2021 consent order, have not been included in the cost amounts claimed by the father.

[7] The father seeks payment of the claimed costs presumptively as the successful party and based on the eight severable settlement offers that he made during the course of the proceeding (dating back to November of 2019) that provided for the continuation of the existing shared parenting arrangement, which the trial judgment ordered be continued. The father argues that the continuation of the shared parenting arrangement was the primary issue left to be decided at the trial. All other issues were settled just prior to the trial and incorporated into the April 12, 2021 consent order on the basis of the mother’s last pre-trial offer dealing with financial matters that the father accepted once she presented an offer that was not tied to the disputed parenting terms.

[8] The father maintains that he and his partner have taken on significant debt (of approximately $100,000.00) to cover his legal expenses. He argues that the mother’s claimed inability to pay an award of costs against her should not trump his entitlement to costs as the successful party, nor should it trump the rules that provide for cost consequences in favour of a litigant who achieved an outcome that was as good or better than settlement offers they made. Neither party has significant financial means and the mother has largely been able to fund her legal costs through legal aid, whereas the father has had to go into significant debt.

[9] The father suggests that some of the costs ordered payable by the mother can be offset against specific amounts he owes her (an estimated $11,850.00 in child support arrears and an estimated $10,000.00 for previously paid orthodontic expenses, although these amounts might have changed since the last cost submission made on July 27, 2021).

b) The applicant/mother’s position

[10] The mother’s position is predicated mostly on her assertion that there was divided success, implying that there should be no costs awarded to either side. The mother’s success is said to be reflected in the aspect of the trial decision that allows for the children to have some say in the parenting time arrangements as they get older, which was provided for in at least one of her earlier settlement offers (albeit under different terms and tied to other financial terms as well).

[11] She argues that the father’s historical behaviour necessitated the application and that his willingness to be “flexible” in the parenting arrangements was a position he adopted at the trial and not one that could have been meaningfully implemented by the parties given their history of conflict and disagreement. She also points out that the financial issues were only resolved on the eve of the trial.

[12] The mother asks for the court’s empathy to her situation. She has started to turn things around financially, but claims to still be $43,027.57 in debt (including some legal fees owing outside of her legal aid certificate, of approximately $9,500.00), and to be financially dependent on her new spouse, with a young child to care for. She says that a costs award against her will be financially devastating.

[13] Beyond the $9,500.00 debt for legal fees indicated on the applicant’s most recently filed financial statement, no information can be found on CaseLines or in the material sent to my assistant regarding the applicant’s legal fees. The parties were directed at the conclusion of the trial to exchange Bills of Costs and attach them to their cost submissions. The respondent did so. According to the respondent’s cost submissions, the applicant provided a Bill of Costs to the respondent at the time of the agreed exchange, as it was observed that the two Bills of Costs were of a similar magnitude. Unfortunately, the material sent to my assistant and uploaded onto CaseLines by the applicant was not bookmarked or indexed and, as far as I can tell, no Bill of Costs was attached. The referenced legal aid certificate for the applicant was also not readily identifiable in the material provided.

[14] This missing documentation is not essential to the analysis, given the respondent’s observation of the roughly equivalent quantum of costs claimed, and given that the applicant’s fees charged to legal aid are indicated to have been an understatement of actual time spent, much of which her cost submissions indicate was done without charge or “pro bono”, over and above what legal aid covered. The applicant’s cost submissions do not focus on challenges to the reasonableness of the time spent by respondent’s counsel. Rather, she criticizes the respondent for hiring an expensive law firm and the firm’s use of multiple counsel.

Guiding Rules and Principles on Costs

[15] Rule 24(1) of the Family Law Rules, O.Reg. 114/99, creates a presumption of costs in favour of the successful party. Costs awards are discretionary. In the exercise of its discretion, the court must consider two important touchstone principles: proportionality and “the ‘reasonableness’ evaluation of the ultimate award”: see Beaver v Hill, 2018 ONCA 840, [2018] O.J. No. 5412, at paras. 4,12.

[16] The factors in determining costs are set out in r. 24(12). The court is to consider the importance, complexity or difficulty of the issues, the number of lawyers and their rates, the time properly spent on the case, and the reasonableness or unreasonableness of each party’s behaviour in the case, including settlement offers (whether or not they meet the requirements of r. 18).

[17] In addition to the factors listed in r. 24(12), an award of costs is subject to: r. 24(4) (unreasonable conduct of a successful party), r. 24(8) (bad faith), r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party: see Berta v. Berta, 2015 ONCA 918, [2015] O.J. No. 6844, at para. 94. Rules 24(4), (5) and (12) all contain factors that the court can consider in deciding to deprive a successful party of costs or even order a successful party to pay costs.

[18] The ability of a party to pay a costs award made against them has been found to be a relevant “other” factor to consider in determining the quantum of costs payable under r. 24(12)(b). However, it is to be given less (not more) prominence than the general presumption that costs will follow success: see Lawrence v. Lawrence, 2017 ONCJ 431, 96 R.F.L. (7th) 456, at paras. 33-36.

[19] Modern family law cost rules are based on broad objectives. These objectives are: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage improper behaviour by litigants; and (4) to ensure cases are dealt with justly under r. 2(2) of the Family Law Rules: see Mattina v. Mattina, 2018 ONCA 867, [2018] O.J. No. 5625, at para. 10; see also Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905, at para. 8).

[20] Rule 18(14) sets out 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 the party who made the offer obtains an order that is as favourable as the offer and the offer meets the other criteria.

[21] Even where there is “divided success”, it does not necessarily mean “equal success.” And “some success” may not be enough to impact costs. Rule 24(6) requires a contextual analysis. Most family court cases involve multiple issues, and not all issues are equally important, equally time-consuming or equally expensive to determine: see Scipione v. Scipione, 2015 ONSC 5982, 68 R.F.L. (7th) 66, at para. 68.

[22] There is no presumption of full indemnification. The Court of Appeal in Beaver, at para. 13, made it clear that “close to full recovery” is not the norm under the Family Law Rules, but is reserved for the specific circumstances indicated in the Rules, such as bad faith under r. 24(8) or besting an offer to settle under r. 18(14).

[23] Ultimately, the court is to order a fair and reasonable amount in the particular circumstances and need not be fixed by the actual costs incurred. The expectations of the parties, including what was within the contemplation of the losing party, is a relevant consideration: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A), at paras. 37-38.

[24] The above principles are not controversial. Some have been taken from the parties’ submissions and others are trite law. The challenge is in how they should be applied in a given case.

Costs Analysis

a) Entitlement to Costs

[25] Insofar as the issues that were decided at trial are concerned, the respondent was the successful party. There was no divided success. The parenting time was ordered to remain on the week-about schedule and decision-making remains joint. Some guidance was provided in the trial decision to allow for the views and preferences of the children to be taken into consideration, and for adjustments to be made with regard to those views and preferences, which are to be ascertained through a neutral third-party counsellor. Both parents were encouraged to be flexible to allow for planning around holidays, given that there are blended families on both sides. While the applicant says that this is what she had wanted all along, the relief she was seeking was for the children’s primary residence to be with her and for her to have sole decision-making. The relief proposed by the respondent in his draft order was much more closely aligned to the judgment rendered at trial.

[26] I have no difficulty in finding that, as the successful party, the respondent is entitled to an award of some costs (of the action and the trial) in respect of the disputed issues that were adjudicated at the trial under r. 24(1) of the Family Law Rules.

b) Quantum of Costs

[27] The respondent has broken down his claimed costs, as follows:

a. $53,397.83 for full indemnity costs up to January 29, 2021 (“pre-trial costs”); and

b. $158,600.13 for full indemnity costs from January 30, 2021 through to the end of the trial (“trial preparation and trial costs”).

Both amounts are stated to be inclusive of all fees, disbursements and applicable taxes. The respondent says that these amounts do not include the costs associated with the matters that were settled. That means that the respondent’s total actual costs of this action far exceeded $200,000.00.

i. Pre-Trial Costs

[28] The costs incurred by the respondent in connection with the matters addressed in the April 12, 2021 consent order that finally resolved virtually all of the financial issues at the outset of trial are not specifically addressed in that order. According to the representation of respondent’s counsel, none of the costs associated with those settled matters have been claimed. The applicant argues that the financial issues settled by that order were what drove her to commence the application in the first instance. The reasons for judgment at trial address in more detail some of the historic financial issues between the parties.

[29] Historically, the father’s historical track record regarding transparency about his finances and his willingness to pay child and spousal support was not perfect. He eventually did come around in the course of the litigation, but there is some merit to the mother’s assertion that his historic behaviour drove her to bring this application. However, the father did eventually come around to making numerous settlement offers, many of which allowed for the financial and parenting issues to be severed, which the mother did not accept, nor did she make offers herself that were severable and might have allowed for an earlier resolution of at least some of the issues. The respondent argues that it was not until the applicant served an offer that severed the financial issues from the parenting time and decision-making issues that the financial issues could be resolved, on the eve of the trial.

[30] At different points in time, each parent took positions that made it difficult for them to resolve the financial issues, but in the end they were resolved, on the basis of the last offer made by the applicant and accepted by the respondent and incorporated into the April 12, 2021 consent order that made no specific provision for costs. This leads me to conclude, in the exercise of my discretion and having regard to the justice of this case and the objective of encouraging settlement and reasonable compromises as were eventually reached on the financial issues, that each party should bear their own costs of the financial issues that were resolved by the April 12, 2021 consent order.

[31] That still leaves the respondent with a claim for over $53,000.00 in full indemnity pre-trial costs associated with the unsettled matters that went to trial. I would roughly estimate that two-thirds of the time and fees claimed during this pre-trial period were for work done after the respondent’s first severable settlement offer made in November, 2019 that provided for joint decision-making and the week-about parenting time schedule. That November 2019 offer did not, however, address all of the parenting time issues that were eventually dealt with at trial and was not strictly within the r. 18(14) requirements, although still a relevant consideration under r. 18(16). That, and all subsequent offers made by the respondent in this pre-trial period, remained open for acceptance until the commencement of the trial. The respondent’s positions (as reflected in his severable settlement offers) and proposed terms for settling the parenting time and decision-making issues evolved over time.

[32] For the pre-trial period, having regard to the r. 24 factors, the evolving positions of the parties, the report and assessment from the Office of the Children’s Lawyer (that was received during this period and whose recommendations were reflected in the respondent’s settlement positions), I find that the respondent was reasonable in the conduct of the litigation and the positions he took and made reasonable attempts to settle those issues.

[33] The trial judgment acknowledged the complicated dynamic that was the source of the applicant’s strong compulsion to pursue the change in the existing shared parenting regime when she commenced the application. The mother’s instinct and desire to try to address a situation that her daughter had expressed displeasure with, through words and conduct, were observed to have been genuine. However, as time went on and further professional inputs were received, including from the OCL who did not record having heard from the children a preference for a change in the residential schedule and who expressed concern that the daughter might be saying things to make her mother feel better, the applicant continued to pursue a rigid and inflexible outcome. Taking into account that the applicant was, in her mind, working towards an outcome that she felt reflected her daughter’s wishes I am prepared to give her some latitude during this pre-trial period and will not go so far as to say that her positions on the parenting time and decision making were unreasonable from the outset but her unwillingness to consider anything other than the parenting regime that she proposed became an obstacle to any prospect of settlement.

[34] Taking the various factors into account, I find it to be fair and reasonable to award the respondent some pre-trial costs for the issues that were later tried and determined in his favour. I fix these costs in the all-inclusive amount of $35,000.00 (slightly higher than the amount certified in his Bill of Costs for partial indemnity costs during this period).

[35] Given what was at stake for the respondent, I find this amount and the time spent by the respondent’s counsel to be proportionate and reasonable. The respondent was entitled to select a lawyer to represent him who was experienced in these matters and I do not find the hourly rates of his counsel to be high having regard to their expertise and the division of labour between senior and junior counsel (at $415 and $295 per hour, respectively).

[36] This award of costs is subject to the comments below about the applicant’s ability to pay and its impact on the total costs awarded.

ii. Trial Preparation and Trial Costs

[37] The respondent also claims full indemnity trial-preparation and trial costs of $158,600.13. The same comments as indicated above regarding the experience of respondent’s counsel, hourly rates and the division of labour between junior and senior counsel applies to these trial preparation and trial fees claimed (and it is noted that no fees have been claimed for junior counsel’s attendance at the trial itself). I do not doubt that the hours indicated, and likely more, were spent by the counsel involved who were very well prepared and were dealing with a multitude of factual and legal issues, some of them having been raised without much warning. Even after the financial issues were settled by the April 12, 2021 consent order, much of the evidence about historic financial dealings was re-hashed by the applicant in service of her claim of financial oppression as a form of family violence (which was ultimately not successful).

[38] The fees indicated to have been accrued by counsel for the respondent is not a disproportionate or unreasonable amount of legal fees to prepare for and defend a highly contentious trial conducted over almost two weeks in which the respondent’s parenting abilities and commitment to his children dating back over a number of years were put under the microscope

[39] Given the numerous severable settlement offers made by the respondent regarding the parenting time and decision-making issues, dating back to early in the litigation process, that incorporated terms which cumulatively were consistent with the outcome of the trial, there is a strong justification under r. 24(12)(a)(iii) and r. 18(16) of the Family Law Rules to award substantial or close to substantial indemnity costs to the respondent based on the amount indicated his Bill of Costs.

[40] The settlement offers cannot be exactly matched to the final trial decision because of some of the unique terms that were incorporated into the trial decision so I will not go so far as to say that this is a case that warrants full indemnity costs as they are not necessarily entirely compliant with the requirements of r. 18(14). However, the existence of these offers is relevant to the determination of the quantum of costs payable to the respondent. The many and consistent offers made by the respondent demonstrates that he was willing to be reasonable and was attempting to settle the issues of parenting time and decision-making.

[41] This is contrasted with the absence of any severable offers from the applicant until just prior to the trial, and no offers from her that approximated the trial judgment parenting time and decision-making terms. These too are factors that can and should be reflected in the quantum of costs awarded to the respondent.

[42] The respondent’s Bill of Costs presented substantial indemnity costs that mathematically equate to approximately 80% of the full indemnity costs claimed and partial indemnity costs that mathematically equate to approximately 65% of the full indemnity costs claimed. The indicated substantial indemnity costs for trial preparation and trial are $126,880.10 and the indicated partial indemnity costs are $103,090.08.

[43] Having regard to the complexity of the issues, the time and hourly rates of the senior and junior counsel for the respondent, the nature of the offers to settle and the outcome of the trial, in the exercise of my discretion I find that it is fair and reasonable to award the respondent his trial preparation and trial costs in the all inclusive amount of $115,000.00 (in between the partial and substantial indemnity amounts claimed).

[44] This award of costs is subject to the comments below about the applicant’s ability to pay and its impact on the total costs awarded.

iii. The Applicant’s (in)ability to Pay Costs

[45] It objectively ought to have been within the contemplation of the applicant that the respondent was incurring costs of the magnitude indicated (in excess of $200,000.00) and that she could be ordered to pay him costs if she lost at trial. The fact that she was not paying her lawyer directly because she was on a legal aid certificate does not mean that it would have been outside of her reasonable contemplation that the respondent’s costs of defending the trial might be in this order of magnitude. Reasonable expectations do not limit the opposing side to retaining counsel of a similar level of experience or at similar hourly rates.

[46] Aside from her assertion that there was divided success at trial (which was not the case), and her assertion that the respondent behaved unreasonably (in relation to the financial matters that were settled by the April 12, 2021 consent order and for which no costs are being awarded to either side), the primary justification that the applicant has offered in opposition to an award of costs of this (or any) magnitude being made against her is that she is only just now starting to turn her financial affairs around, is already in debt for over $40,000.00 , is financially dependent on her new partner and a costs award against her would mean financial ruin.

[47] However, the respondent says he and his new partner are now facing a debt of over $100,000.00 for his legal fees that exceed $200,000.00. Given that he was the successful litigant and made reasonable settlement offers leading up to the trial, it is not fair and reasonable for him to be left with this significant debt without any recourse to the applicant. See Lawrence, at paras. 33-36.

[48] Parties should be held accountable for positions that they take in litigation: see Lenihan v. Shankhar, 2021 ONSC 1537, at para. 11. A legal aid certificate does not give the applicant a free pass to take any position in litigation without impunity for the cost consequences if those positions do not succeed: see Izyuk v. Bilousov, 2011 ONSC 7476, [2011] O.J. No. 5814, at paras. 54-62.

[49] I appreciate that the applicant does not have the funds to pay the costs I have indicated the respondent is entitled to, totalling $150,000.00 in the aggregate for his pre-trial costs and trial preparation and trial costs (inclusive of all fees, the nominal disbursements claimed, and any applicable taxes). The respondent suggested that some of these costs can be defrayed by amounts that he owes the applicant, for historic support arrears (estimated to be $11,850.00) and for orthodontics (estimated to be $10,000.00). I agree that these amounts (or whatever remains payable of them) can and should be offset against the costs payable by the applicant to the respondent.

[50] However, there should not be an offset against future child support and any s. 7 expenses payable by the respondent to the applicant pursuant to the April 12, 2021 consent order. Those amounts are for the children and they should not be set off if the court is concerned that to do so would harm or diminish the children’s lifestyle when with their mother, which is a concern in this case given that she has no other sources of income: see Izyuk, at paras. 63-66.

[51] The most significant reduction to a costs award on account of a party’s inability to pay costs that has been indicated in the caselaw presented to the court was 50%: see Izyuk at paras. 57, 72. Applying that discount to this case will still result in an all-inclusive amount of costs payable by the applicant to the respondent of $75,000.00.[^2] Given the applicant’s financial circumstances, I am prepared to apply this significant discount. I have not made this decision lightly, as I recognize the unfairness to the respondent, who has paid, and remains in debt, for actual legal costs of far more than this amount.

[52] Determining costs in a situation such as this is not a science. That is why costs are discretionary. I have attempted to address the competing positions, the relevant factors and the overall fairness in arriving at this amount, which I expect is unsatisfactory to both sides.

[53] I do not know when or how the mother will be able to satisfy the costs award against her, but I am satisfied that making an award of an amount that she may have to go into debt and/or may take many years to pay off is appropriate having regard to the principles and objectives of costs awards, all of which favour a substantial award of costs in favour of the father in this case (for the reasons outlined earlier in this endorsement, such as his numerous and reasonable attempts to settle and attempts to encourage the applicant to engage in an issue by issue settlement dialogue and to take to heart the OCL recommendations, including with respect to the shared parenting arrangement). It is fair and just that he receive an award that at least partially indemnifies him for some of his costs as the successful litigant.

[54] The court urges the applicant to make a reasonable proposal for payment terms to the respondent so that the costs can be paid off over time and/or in combination with some form of financing if she is able to obtain such.

Costs Order

[55] The applicant is ordered to pay the respondent costs of the issues determined at the trial of this action in the all-inclusive amount of $75,000.00. Any remaining outstanding amounts payable by the respondent to the applicant for past support arrears and contributions towards orthodontics are to be offset.

[56] I am not setting a specific date by which the balance of these costs must be paid as I have no basis on which to determine that. If the parties cannot come to terms, a further case conference may be requested before me to address this narrow issue of the time for payment by the applicant. It is not my intention that it be indefinite.

[57] Interest will accrue pursuant to the Courts of Justice Act on the costs owing until they are paid.

[58] This endorsement is an order of the court, enforceable by law from the moment it is released without the necessity of formal issuance and entry.

Kimmel J.

Date: August 24, 2021

[^1]: The parties’ names have been initialized throughout this judgment so that their identities and the identities of their children are not disclosed. Anonymization has been deemed by the court, upon the court’s own initiative, to be in the best interests of the children.

[^2]: Applying a significant discount is also a way of addressing any other concerns about specific items in the respondent’s Bills of Costs that might have been objectionable, even if not specifically raised in the submissions (such as costs claimed for attendances at conferences and the like). These would not account for any significant amounts and should not detract from the big picture here, which is the magnitude of costs that the father may have a claim to and the financial circumstances of the mother.