Horowitz v. Duthie, 2021 ONSC 7902
NEWMARKET COURT FILE NO.: FC-16-50108-00
DATE: 20211130
ONTARIO
SUPERIOR COURT OF JUSTICE
Between
Daniel Horowitz
L.H. Pawlitza & J. Waxman
Applicant
– and –
Brittany Duthie
Respondent
B.J. Burke & K. Chapman
HEARD: November 30, 2021
RULING ON COSTS
A. Himel J.:
Background
[1] The parties were involved in a short relationship and share one son, Jacob (age 5.5). They have chosen to spend most of Jacob’s life in this litigation.
[2] The parties have spent excessive amounts of time, judicial resources and costs litigating this matter since before the child was born.
[3] The request for costs arises from the Motion to Change that was brought by the Applicant (“father”) dated March 18, 2019. At that time the father requested an order for joint custody and shared parenting, vacation/holiday time and other related relief.
[4] The Respondent (“mother”) responded with a request for sole custody (a change from the prior joint custody order), primary residence, child support, section 7 expenses. She requested that the father have parenting time 5/14 overnights and vacation/holiday time.
[5] The main areas of dispute that required that matter to be set for trial in November 2021, included the regular parenting time schedule (whether the child ought to reside with the father for 5 or 7 overnights in a 14-night period), choice of school (an issue that was identified in October 2021) and major decision-making (health, religion and education). Child support was resolved on consent.
[6] On or about October 28, 2019, a section 30 (Children’s Law Reform Act) assessment report was delivered by Ms. Blau. The assessor recommended parallel parenting and joint decision-making (including school choice); a 2/2/3/3 shared parenting schedule transitioning to a 2/2/5/5 schedule in 2020; specified holidays and vacation time, communication and the appointment of a Parenting Coordinator.
[7] The father made seven Offers to Settle from February 7, 2019 to November 8, 2021. The mother made two Offers to Settle commencing August 27, 2020.
[8] Following two days of exit pre-trial attendances (November 4 and 5, 2021), Macpherson J. endorsed the record as follows: “To their credit, the parties have agreed, in principle, to a resolution. The specific wording of the consent needs to occur and that will take some time.”
[9] Following a third attendance before Macpherson J. on November 12, 2021, the parties executed a final consent. The father now seeks costs in the amount of $217,000.
[10] The father has incurred costs of at least $250,000. The mother has incurred costs of at least $150,000 to $200,000.
The Law and Analysis
[11] Family Law litigants are encouraged to settle their disputes without resort to the courts and to seek reasonable compromise whenever possible. Sections 18(14) 1, 3-5 and 24(1), (5) and (12)(a) and (b) of the Family Law Rules (“the Rules” or “Rule”) deal, respectively, with the exchange and non-acceptance of Offers to Settle and frame the exercise of the court’s discretion when awarding costs, providing as follows:
COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER
(14) 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 following conditions are met:
If the offer relates to a motion, it is made at least one day before the motion date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
SUCCESSFUL PARTY PRESUMED ENTITLED TO COSTS
24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
DECISION ON REASONABLENESS
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(b) expenses properly paid or payable; and
(c) any other relevant matter.
SETTING COSTS AMOUNTS
(12) 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. O. Reg. 298/18, s. 14.
[12] The principles guiding the court’s exercise of its discretion pursuant to the Rules are well-established. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. Four fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants;[^1] and (4) to ensure that cases are dealt with justly.[^2]
[13] Family law litigants must act in a reasonable and cost-effective way: they should, and will, be held accountable for the positions they take in their litigation.[^3] As observed by the Court of Appeal in Beaver v. Hill[^4] reasonableness and proportionality frame the exercise of the court’s discretion: the amount to be awarded is what the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”: Boucher v. Public Accountants Council for the Province of Ontario.[^5]
[14] As plainly stated by Pazaratz J. in Scipione v. Del Sordo,[^6] “Who got what they asked for?”.
[15] The final resolution favours the positions taken by the father in the litigation, as set out in his pleadings and various Offers to Settle.
[16] It is clear that the mother made more concessions than the father to achieve the final consent order.
[17] I note the following; (a) this case revolves around a young child whose needs have changed from the date of the final order of McGee J. (November 10, 2016); (b) the parties are enmeshed in a high conflict relationship, and (c) mother raised concerns about the family violence.
[18] I agree with the mother’s counsel that it is unclear as to what motivated her to change her positions over time. A party who makes concessions may do so because of a disinclination to continue with the litigation rather than the absence of merit to their position.[^7]
[19] I am unwilling to find that the mother acted in bad faith.
[20] The parties ultimately agreed to forgo a stressful, expensive and lengthy trial which would have caused further harm to their already precarious co-parenting relationship. The Court must encourage these settlements even when they take place on the eve of trial.
[21] The litigation should have resolved well before a trial, and likely would have ended earlier had the mother taken more reasonable positions. As held by Pazaratz J., “if a party eventually makes a good litigation choice by signing Minutes, that epiphany doesn’t automatically wipe out any history of bad litigation choices which would otherwise justify costs. Settling in the face of the inevitable may be little more than damage control.”[^8]
[22] While there are public policy reasons against costs orders in the face of negotiated resolutions, there are also public policy reasons to hold parties liable for some of the expenses incurred when one party’s actions extend the time to resolution and increase the other party’s costs. I find that costs should be awarded in an amount that reflects the parties’ consensual resolution which negated the need for a 16 day trial. The family justice system benefits when matters resolve on consent and judicial resources can be allocated more equitably to other families waiting for assistance.
[23] Litigants must be discouraged from spending close to (or perhaps more) than $500,000 (collectively) in costs, funds that could otherwise be spent on a child’s day to day needs or university education. Discouraging such behavior is a compelling reason to order costs.[^9]
[24] The father claims costs of $217,000, over the course of five years. Some of the costs relate to the significant number of hours billed by various legal professionals. The requested costs are excessively high for a matter that settled, in principle, 10 days before the trial. The costs incurred by the father between November 6 and 12, 2021, could have been avoided if the mother/her counsel had been more responsive and/or if counsel had requested an earlier attendance before Macpherson J. (rather than wait until November 12, 2021).
[25] However, the father was aware that the mother intended to bring a motion for summary judgment if an agreement was disputed. Given Macpherson J.’s endorsement on November 6, 2021, the decision to incur costs of $46,000 in seven days (including one weekend) is neither proportionate nor reasonable.
[26] The mother is a student with no income. She owes various third parties more than $244,000, including credit cards, government student loans and various law firms. The mother has no assets of value and has dissipated the lump sum funds paid by the father on account of her interest in a home/her claim for spousal support. While a costs order will impact the mother’s finances, so too do the loans that she incurred pursuing this litigation.
[27] In M(C.A.), Justice Rosenberg, writing for the Ontario Court of Appeal, stated:
I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18… In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. [citations omitted] In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child.[^10]
[28] I agree. While the mother is not the custodial parent, the Court should consider the impact of a costs award on her ability to support the child.
[29] However, I cannot ignore that the mother chose to incur $80,000 in loans provided by the maternal grandmother (and others). The mother declined requests to attend or continue mediations, and she changed legal counsel eight times. The mother took unreasonable positions and unreasonably declined to accept the father’s offers (some parts were severable). As noted by McGee J. in J. Y. v. L.F.-T., “those who can least afford litigation should be the most motivated to pursue resolution.”[^11]
[30] I decline to accept that the mother should forgo any liability for the father’s costs as she cannot afford to pay, in part due to her obligation to repay loans on account of her own legal costs.
[31] In the totality of the above, I find that partial indemnity costs in the amount of $50,000, inclusive of HST is reasonable and proportionate. That amount will: (a) partially indemnify the father for the cost of litigation; (b) encourage (or at least not discourage) settlement; (3) discourage and sanction inappropriate positions taken by the mother; and (4) ensure that both the father (who was successful) and the mother (who is of limited means) are treated justly.
[32] The costs are payable by the mother in the amount of $250 per month commencing January 1, 2022. The child will be 21 years of age by the time that the costs are fully paid (2038).
[33] The costs are not enforceable by the FRO as they have not been incurred in pursuit of or in payment of child support.
[34] Order to go as per the draft order signed by me this day.
Justice A. Himel
Date: November 30, 2021
[^1]: Serra v. Serra, 2009 ONCA 395.
[^2]: Mattina v. Mattina, 2018 ONCA 867 at para. 10.
[^3]: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317; Peers v. Poupore, ONCJ 615.
[^4]: 2018 ONCA 840, at para. 4.
[^5]: (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 2001, [2001] O.J. No. 2634, 2004 CarswellOnt 521 (Ont. C.A.).
[^6]: 2015 Carswell ONT 5982, at para 6.
[^7]: Witherspoon v. Witherspoon, (2015) O.J. No. 5406 at para. 24.
[^8]: Supra, note 6.
[^9]: Supra, note 7.
[^10]: CAM v. DM, 2003 CanLII 18880 at para 42 (Ont CA).
[^11]: 2017 ONSC 6039, para 40.