COURT FILE NO.: FC-06-FS038912-0003

DATE: 2021-08-26

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ANNETTA ELLEN CRAIG Applicant

– and –

ROBERT BRUCE CRAIG Respondent

Shuchanna Swaby, counsel for the Applicant

Richard M. Van Buskirk, counsel for the Respondent

THE HONOURABLE MADAM JUSTICE D. PICCOLI

COSTS ENDORSEMENT

[1] This decision on costs follows the release of my trial judgment in this matter on May 5, 2021.

[2] The court heard an eight-day trial which commenced in February 2020 and, as a result of the suspension of court operations because of COVID-19, concluded February 5, 2021. The trial was a result of a motion to change by Mr. Craig, whereby he sought to reduce and/or eliminate his spousal support obligation to Ms. Craig as set out in the order of Gordon J. dated September 17, 2007. Ms. Craig, in her response, sought a number of orders, many of which were abandoned during the trial and/or in closing submissions. As already set out in my trial decision, several of the orders Ms. Craig sought were not orders that I had the jurisdiction to make.

[3] By the end of the trial, I was required to determine four issues exclusive of costs, namely:

(i) the date of separation of the parties;

(ii) the quantum of support payable by Mr. Craig to Ms. Craig for the period February 1, 2024, to July 26, 2025;

(iii) the amount of life insurance, if any, that Mr. Craig should be required to maintain and whether Ms. Craig should be an irrevocable beneficiary or a co-owner of the policy; and

(iv) whether Mr. Craig should be ordered to pay Ms. Craig’s Trillium Drug Benefit Program deductible as an incident of spousal support until she turns 65 years of age.

[4] In my judgment, I found that the parties had separated in 2002 as asserted by Mr. Craig, that Mr. Craig would continue to pay spousal support in the amount of $600.00 for the time period at issue, that Mr. Craig would no longer be required to pay Ms. Craig’s Trillium deductible, effective May 2021, and that Ms. Craig be named the irrevocable beneficiary of Mr. Craig’s life insurance with a face amount of $37,360.00 which would decline each year. If Ms. Craig did not cooperate in signing the forms required to reduce the amount, the parties could return before me.

[5] I found that Mr. Craig was generally credible but that he had breached orders. I did not find Ms. Craig to be credible.

[6] Mr. Craig seeks his costs on a full indemnity basis from the inception of these proceedings, including fees and disbursements, plus HST in the amount of $27,464.31.

[7] Ms. Craig also seeks her costs on a full indemnity basis. Her costs based on the Legal Aid rate, including fees and disbursements, plus HST, are $25,264.65, and on the service-provided rate of her lawyer, total $47,455.19.

[8] For the reasons that follow, I find that Ms. Craig is to pay to Mr. Craig his costs in the amount of $14,000, payable at a rate of $50.00 per month until paid in full. If the parties are able to ascertain what, if any, amounts are owing by Mr. Craig to Ms. Craig as an outstanding equalization from the order of Gordon J., the amount owing by Mr. Craig will be off-set by the costs award. To be clear, the $50.00 per month will commence September 1, 2021 and will continue unless and until the parties are able to reach agreement on the off-set.

Position of the Parties

[9] Mr. Craig seeks his costs for the following reasons:

(a) He brought a simple motion to change spousal support based on two factors: that his income had declined and that given the length of time he had paid support and the passage of time he was entitled to reduction or cessation at some point in time.

(b) Ms. Craig behaved unreasonably: she sought relief that was not related to the motion and some of which the court had no jurisdiction to grant, nor was there any basis for in law; she used the trial as a means of rehashing the marriage relationship of the parties and the years of litigation engaged by the parties, which substantially lengthened the trial; she brought a motion during the trial which she then abandoned; and she did not admit facts within her knowledge. She also brought a motion mid-trial seeking that Mr. Craig be re-examined and made other requests for disclosure.

(c) He acted reasonably throughout, including admitting facts, even if they were not favourable to him.

(d) Although he has gotten into arrears in spousal support payments, the recent history from the Family Responsibility Office (the “FRO”) shows that he had been maintaining payments.

(e) He submits that he sought reasonable relief in regard to the life insurance policy.

[10] It is Ms. Craig’s position that she should receive partial indemnity costs for costs incurred prior to her offer to settle dated November 9, 2019, pursuant to Rules 18(14), 18(15) and 18(16) of the Family Law Rules, and substantial indemnity costs for amounts incurred subsequent to her offer to settle dated November 9, 2019. She did not provide a copy of that offer with her costs submissions or thereafter, despite repeated requests from the trial coordinator’s office.

[11] In the alternative, she states that Mr. Craig should pay full indemnity costs commencing December 1, 2018 due to bad faith on his part. She asserts that he acted in bad faith because he failed to produce financial disclosure, he disobeyed court orders, he was untruthful before the court and he engaged in egregious and unreasonable behaviour. She also states that he was the perpetrator of domestic violence and he weaponized the court process by calling his daughter to testify. She also refers to missed opportunities to settle.

[12] Finally, Ms. Craig seeks an order pursuant to Rule 1(8) of the Family Law Rules that Mr. Craig pay a financial penalty, given his unreasonable behaviour and/or bad faith throughout the litigation, to be collected by the FRO as related to the support payments.

Laws and Rules Respecting Costs

[13] The award of costs is within the discretion of the court: Courts of Justice Act, R.S.O. 1990, c. C.43, at s. 131.1.

[14] The modern costs rules are designed to foster four fundamental purposes:

(i) to partially indemnify successful litigants for the costs of litigation;

(ii) to encourage settlement;

(iii) to discourage and sanction inappropriate behaviour by litigants; and

(iv) to ensure that cases are dealt with justly pursuant to subrule 2(2) of the Family Law Rules: Mattina v. Mattina, 2018 ONCA 867; Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40.

[15] The Court of Appeal for Ontario has stated that proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12.

[16] Rule 24(1) of the Family Law Rules, O. Reg 114/99, states that a successful party is presumptively entitled to their costs.

[17] Rule 24(12) outlines the factors to be considered by a court in setting the amount of costs, which centres around:

(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 the experts and their rates;

vi. any other expenses properly paid or payable; and

(b) any other relevant matter.

[18] Rules 24(4) and 24(5) direct the court to evaluate whether a party has behaved reasonably or unreasonably, by examining:

(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;

(b) the reasonableness of any offer the party made; and

(c) any offer the party withdrew or failed to accept.

[19] Rule 24(6) allows the court to apportion costs as appropriate where success in a case is divided.

[20] Rule 24(8) deals with what the court may do if a party has acted in bad faith.

[21] If offers to settle which meet the requirements of Rule 18 were made, I am required to consider Rule 18(14), which sets out the costs consequences of failing to accept an offer, which refers to a written offer that was made at least seven days before the trial and obtains an order as favourable as or more favourable than the offer.

[22] Rule 18(15) provides that the burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party that claims the benefit of the rule.

[23] Rule 18(16) states that costs are at the discretion of the court and the court may consider any written offer to settle, the date it was made, and its terms, even if Rule 18(14) does not apply.

[24] Pazaratz J. in Chomos v. Hamilton, 2016 ONSC 6232, 82 R.F.L. (7th) 395, at para. 19, stated that 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.

Offers to Settle

[25] Based on the submissions I have received, Mr. Craig made no formal offers of settlement.

[26] Based on the submissions I received from Ms. Craig, she made two offers to settle; one dated November 9, 2019 and another dated March 13, 2020. Neither offer to settle was attached to her cost submissions. Mr. Craig attached Ms. Craig’s March 13, 2020 offer to settle to his reply cost submissions. The court requested the November 9, 2019 offer to settle from Ms. Craig but did not receive it. The March 13, 2020 offer to settle revokes previous offers of settlement.

[27] Ms. Craig’s offer to settle dated March 13, 2020 is not as favourable or more favourable than my order at trial – it does not even come close.

Was Either Party Successful at the Trial?

[28] Mr. Craig acknowledges that Ms. Craig was successful on the small issue of being designated an irrevocable beneficiary on a policy of life insurance.

[29] Other than this small issue, he states that she was not successful on any other issues.

[30] Ms. Craig asserts that success was divided, as I found that spousal support would continue to July 2025 and I made her an irrevocable beneficiary of Mr. Craig’s life insurance.

[31] Each party achieved success on two of the four issues. Success was divided.

Did Either Party Act in Bad Faith?

[32] Ms. Craig asserts that Mr. Craig acted in bad faith as he perjured himself during the trial and he repeatedly refused to provide full and complete disclosure. She also claims that he acted in bad faith by calling the parties’ daughter as a witness when the divorce order of 2015 established the date of separation. She requests that a fine be paid to her directly and enforced through the FRO as any costs I order against Mr. Craig would be paid to Legal Aid and not to her directly, and hence she would not receive any benefit.

[33] I do not find that Mr. Craig acted in bad faith. There is no merit to the assertions made by Ms. Craig with respect to the allegations of bad faith.

[34] Rule 24(8) of the Family Law Rules reads as follows:

BAD FAITH

(8) 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. O. Reg. 114/99, r. 24(8).

[35] Pazaratz J. in Chomos v. Hamilton, at paras. 42-49, reviewed the case law pertaining to “bad faith” in the context of costs considerations, which is summarized as follows:

• Pursuant to Rule 24(8) if a party has acted in bad faith, the court shall decide costs on a full recovery basis and order the party to pay them immediately.

• Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made: S.(C.) v. S.(C.), 2007 20279 (Ont. S.C.), 38 R.F.L. (6th) 315; Piskor v. Piskor, 2004 5023 (Ont. S.C.), and Cozzi v. Smith, 2015 ONSC 3626.

• 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: Children’s Aid Society of the Region of Peel v. F.(K.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (Ont. C.J.); Biddle v. Biddle, 2005 7660 (Ont. S.C.), 13 R.F.L. (6th) 63; Leonardo v. Meloche, 2003 74500 (Ont. S.C.); and Hendry v. Martins, [2001] O.J. No. 1098 (Ont. S.C.).

• 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 that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated: Stewart v. McKeown, 2012 ONCJ 644; F.D.M. v. K.O.W., 2015 ONCJ 94.

• To establish bad faith the court must find some element of malice or intent to harm: Harrison v. Harrison, 2015 ONSC 2002.

• In S.(C.) v. S.(C.), Perkins J. defined bad faith as follows:

In order to come within the meaning of bad faith in sub 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. 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.

[36] In this case, there is no merit to Ms. Craig’s assertion that Mr. Craig acted in bad faith. He did not perjure himself during the trial. He made mistakes which he readily admitted. He may have jumped to conclusions about the life insurance policy that were incorrect. I found that he did these things out of frustration. Calling his daughter as a witness was made necessary because Ms. Craig continued to assert that the date of separation was 2005. It is the daughter’s evidence that I accepted. He did provide the disclosure required for the trial – any previous orders in relation to disclosure were made and costs of those motions were dealt with.

Did Either Party Behave Unreasonably?

[37] Ms. Craig claims that Mr. Craig’s behaviour was dishonest, that he failed to provide financial disclosure, that he breached court orders and that he caused unnecessary costs to be incurred by her (for example, ignoring a joint statement of agreed facts dated January 7, 2020, ignoring requests for disclosure, defiance of my order of January 10, 2020 which resulted in a midtrial motion, and delaying the matter on February 6 and 7 while I stood the matter down to prepare a joint statement of facts). She also asserts that Mr. Craig weaponized the court process by downplaying his threat to kill her, for which he was convicted in 2009, and requiring his daughter to testify. She claims that Mr. Craig turned down various attempts to settle matters. She states all of this was unreasonable.

[38] Mr. Craig asserts that it was Ms. Craig who was unreasonable for reasons that include: her behaviour lengthened the trial; her response to the motion to change sought numerous forms of relief which were not related to the motion to change and for which there was no basis in law; she refused to admit certain facts which were clearly within her knowledge, such as the date of separation, and her failure to do so significantly lengthened the trial; she persisted in attempting to prove Mr. Craig had assets which he clearly did not have even after he provided his bank records; she refused to admit she had received any payment towards the final order until part way through the trial; her midtrial motions were without merit and lengthened the trial; and the positions she took on various facts and issues turned the trial from a straightforward motion to change to a rehashing of the marriage relationship of the parties and years of litigation engaged in by all the parties.

[39] I find that Ms. Craig was the unreasonable party.

[40] With respect to unreasonable behaviour, Rule 24(4) and Rule 24(5) read as follows:

SUCCESSFUL PARTY WHO HAS BEHAVED UNREASONABLY

(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. O. Reg. 114/99, r. 24(4).

DECISION ON REASONABLENESS

(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;

(b) the reasonableness of any offer the party made; and

(c) any offer the party withdrew or failed to accept. O. Reg. 114/99, r. 24(5).

[41] I am guided by the specific wording with respect to “reasonableness” as contained within Rule 24(4): “a successful party who has behaved unreasonably during a case” and 24(5)(a): “the party’s behaviour in relation to the issues from the time they arose”, under the Family Law Rules.

[42] Bale J. in Kisten v. Kosewski, 2020 ONSC 3380, stated that “a practical application of this language requires some measure of causal connection between the offensive behaviour, and the conduct of the litigation. That is, except in extreme circumstances, the behaviour will have resulted in unnecessary steps or increased costs. To suggest otherwise, in this court’s opinion, would lead to unintended and sometimes absurd results.”

[43] There were a number of claims made in the submissions by Ms. Craig about Mr. Craig, which are unsupported by the evidence and my findings.

[44] I can have no regard to characterizations of settlement discussions that took place with Walters J. in the midst of the second trial session. It is improper for references to be made to that discussion and all those categorizations of negotiations should be ignored, particularly when Mr. Craig does not agree.

[45] With respect to the paragraphs in each parties’ submissions devoted to the task of putting together previous court proceedings, this was a result of Ms. Craig’s request that Mr. Craig be found to be a vexatious litigant. Had she not advanced that claim (which she later withdrew) there would have been no need for anyone to obtain that information.

[46] Ms. Craig’s behaviour throughout the trial, as outlined in my decision, significantly lengthened the trial. The claims advanced by her (some of which I had no jurisdiction to make) also significantly lengthened the trial. At their first appearance in assignment court, the parties estimated 1-2 days of trial time. The increase in time was a result of Ms. Craig’s behaviour. She was clearly attempting to re-litigate matters.

[47] Ms. Craig’s assertion that she required a restraining order, close to the end of trial, had no merit (see paragraph 26 of my decision).

[48] I did not find Ms. Craig credible and I found her behaviour unacceptable (see paragraph 26 of my decision).

[49] Mr. Craig did not make any offers of settlement. Furthermore, he testified that the insurance policy had only lapsed for one week when in fact it had lapsed since December 2019. This behaviour is also taken into account in fixing costs.

Quantum of Costs for the Trial

[50] Once liability for costs has been established, the court must determine the appropriate quantum of costs. Rule 24(12) prescribes some of the factors which the court must consider in deciding the appropriate quantum.

[51] Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: see Beaver v. Hill, at para. 12.

[52] The assessment of costs is not a mechanical exercise. It is not just a question of adding up a lawyer’s dockets. The overall purpose is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances of the case: Jackson v. Mayerle, 2016 ONSC 1556, 130 O.R. (3d) 683, at paras. 16-21.

[53] In Serra v. Serra, Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.), the Court of Appeal for Ontario set out the following additional general principles relating to quantum:

(i) Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.

(ii) Costs need to be proportional to the issues and amounts in question and the outcome of the case.

(iii) Amounts actually incurred by the successful litigant are not determinative.

(iv) In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

(See also Selznick v. Selznick, 2013 ONCA 35, [2013] W.D.F.L. 1013).

[54] Rule 24(12) sets out specific factors the court should consider. These include:

a. Each party’s behaviour: Rule 24(12)(a)(i): In this respect, I have found that Ms. Craig acted unreasonably.

b. The time spent by each party: Rule 24(12)(a)(ii): On this topic, I am satisfied that all of the time set out on Mr. VanBuskirk’s bill of costs as it pertained to the trial was required and reasonable. His bill of costs indicates that $4,530.00 related to work that did not involve the actual trial.

c. Written offers to settle: Rule 24(12)(a)(iii): I have already commented on the written offers provided in this case.

d. The legal fees, including the number of lawyers and their rates: Rule 24(12)(a)(iv): In this respect, Mr. VanBuskirk’s hourly rate of $300.00 is reasonable given his years of experience. As a courtesy to Mr. Craig he maintained his hourly rate from 2018. I also find that he properly utilized junior lawyers and law clerks.

e. Any other expenses: Rule 24(12)(a)(v): All of the disbursements claimed are reasonable.

Ability to Pay

[55] Ms. Craig asserts that she does not have the means to pay Mr. Craig’s costs.

[56] I note that cost consequences typically have a negative impact on the losing party. It is upon this basis that consequences serve to encourage settlement.

[57] A court must consider a party’s ability to pay costs: C.A.M. v. D.M. (2003), 2003 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.). However, while a party’s limited financial circumstances are a factor for the court to consider, it should not be used as a shield against any liability for costs and should only be taken into account regarding the quantum of costs: Snih v. Snih, 2007 20774(Ont. S.C.).

[58] An unsuccessful party’s ability to pay must be assessed in conjunction with the successful party’s ability to absorb legal fees which shouldn’t have arisen in the first place: Scipione v. Scipione, 2015 ONSC 5982, 68 R.F.L. (7th) 66, at para. 138.

[59] In this case, I agree that Ms. Craig has limited ability to pay and she needs the support she receives to meet her needs. Despite that, a clear message needs to be sent to Ms. Craig about her behaviour during the trial and the unreasonable positions she took. As a result, she will be ordered to pay costs of $14,000.00, payable at a rate of $50.00 per month.

Method of Payment

[60] The parties agreed by way of statement of agreed facts that costs owing by Ms. Craig to Mr. Craig in the amount of $3,350.00 would be off-set or deducted from amounts owing to Ms. Craig by Mr. Craig for the equalization payment and post-separation debts as ordered by Gordon J. on September 17, 2007 (see paragraph 10 of the statement of agreed facts).

[61] I see no reason to treat this costs award differently. Furthermore, there is authority for the cost payment to be offset: see Lidell-MacInnis v. MacInnis, 2021 ONSC 2777.

[62] Ms. Craig asserts in her cost submissions that Mr. Craig owes to her a total of $14,819.45 on account of equalization and interest on equalization. It is unknown what, if anything, he owes to her.

Conclusion

[63] Balancing the divided success and Ms. Craig’s inability to pay with her unreasonable behaviour, I fix costs in the sum of $14,000.00.

Order

[64] Ms. Craig shall pay to Mr. Craig the sum of $14,000.00. She shall pay this amount at a rate of $50.00 per month commencing September 1, 2021 and on the first of each month thereafter. If there is any amount owing by Mr. Craig on account of equalization, her costs can be off-set against this amount, but until that is agreed upon or enforcement proceedings are concluded, she must pay $50.00 per month until paid in full.

D. Piccoli J.

Released: August 26, 2021