Court File and Parties

Court File No.: FC-17-2212 Date: 2022/06/07 Superior Court of Justice - Ontario

Re: Jayme Beardsley, Applicant -and- Matthew Horvath, Respondent

Before: Justice D. Summers Counsel: Deborah E. Bennett, for the Applicant Loreen Irvine, for the Respondent Heard: In Writing

Costs Endorsement

[1] The issue of costs arises following a five-day trial on unsettled issues in the application, namely the respondent father’s parenting time, child support and section 7 expenses. For ease of reference, paragraph [100] of the trial reasons is set out below to show the terms of the order made:

1. Effective Sunday, December 20, 2020, and every Sunday thereafter, Mr. Horvath shall have parenting time with the children, Cammera Horvath, born October 4, 2010 and Sariah Horvath, born April 24, 2014, from 10:00 a.m. until 4:00 p.m.

2. Effective Sunday, January 17, 2021, and every Sunday thereafter, Mr. Horvath’s parenting time with the children shall be extended until 6:15 p.m.

3. Ms. Beardsley shall transport the children to Mr. Horvath’s residence Sunday morning, and he shall return them to her home that evening.

4. Subject to credit for amounts paid under Justice Engelking’s interim order dated April 5, 2018, Mr. Horvath shall pay child support to Ms. Beardsley as follows:

(i) Commencing January 1, 2017, the sum of $915 per month based on income of $61,592.

(ii) Commencing May 1, 2017 until October 31, 2017, the sum of $439 per month being the set off amount between his monthly support obligation of $915 per month and Ms. Beardsley’s monthly payment obligation of $476 based on her 2017 income of $32,654.

(iii) Commencing December 1, 2017, the sum of $939 based on the revised table amounts that took effect November 22, 2017.

(iv) Effective January 1, 2018, the sum of $1,498 per month based on his annual income of $98,276.

(v) Effective January 1, 2019, the sum of $1,298 per month based on annual income of $86,000.

(vi) 65% of her after-tax daycare cost in 2017 based on $11,513 being the gross amount paid.

(vii) 75% of her after-tax daycare cost in 2018 based on $13,542 being the gross amount paid.

(viii) $1,181 in satisfaction of his one-half share of the reunification counsellor’s initial retainer and unreimbursed dental expenses for the children in 2019.

5. The child support amounts set out above shall be paid forthwith.

6. Within 30 days of the release of these reasons, both parties shall deliver to the court and to each other, a copy of their 2019 Income Tax Return and Notice of Assessment. If total earnings for 2019 are different than found, I reserve the right to make the necessary adjustments to the amount of child support payable including the proportionate sharing of s. 7 expenses.

7. Mr. Horvath shall sign an authorization and direction to the insurance carrier providing extended health and dental coverage as an employment benefit and authorize them to release directly to Ms. Beardsley all cheques issued to him as reimbursement for any cost incurred by her for either child, within 30 days. Mr. Horvath shall immediately provide Ms. Beardsley with a copy of the authorization and proof of receipt by his insurer.

8. Ms. Beardsley’s claim for Mr. Horvath’s retroactive contribution to the girls’ activity expenses is dismissed.

9. Ms. Beardsley shall request her lawyer to prepare SupportMate calculations setting out Mr. Horvath’s proportionate share of daycare costs for 2017 and 2018 based on the incomes set out above, with adjustment for the related income tax deduction. The calculations shall be forwarded to me in chambers for review, with a copy to Mr. Horvath. I will then issue a separate endorsement fixing the amount to be paid by Mr. Horvath.

10. I shall remain seized of the access issues in this matter, for the next eighteen months, should a further dispute arise.

11. The parties are urged to settle costs between them, otherwise Ms. Beardsley shall deliver her costs submissions by January 15, 2021 and Mr. Horvath shall have until February 8, 2021 to deliver his. Submissions shall not exceed 10 pages, double-spaced using 12-point font, exclusive of Bills of Costs and offers to settle. Reference to the Family Law Rules or case law shall be supported by hyper-link only. Ms. Beardsley shall have a 5 day right of reply not to exceed 2 pages.

[2] I also reserved the ability to adjust child support, the proportionate sharing of section 7 expenses for 2019, and to fix the amount to be paid by the respondent for daycare, upon receipt of after-tax calculations. Similarly for ease of reference, I insert paragraphs [84] and [97] of my trial reasons:

[84] Within 30 days of the release of these reasons, both parties shall deliver to the court and to each other, a copy of their 2019 Income Tax Return and Notice of Assessment. If total earnings for 2019 are different than found, I reserve the right to make the necessary adjustments to the amount of child support payable including the proportionate sharing of s. 7 expenses.

[97] Counsel shall prepare SupportMate calculations setting out each party’s proportionate share of daycare costs for 2017 and 2018 based on the incomes set out above and adjusting for tax considerations. The calculations shall be forwarded to me in chambers for review, with a copy to Mr. Horvath. I will then issue a separate endorsement fixing the amount to be paid by Mr. Horvath.

[3] The other issues in the application were resolved on consent at a last-minute settlement conference just prior to the commencement of trial. That final order does not address costs in relation to the issues it dealt with.

Positions of the Parties

[4] The applicant seeks costs on a full indemnity basis equal to 90% of her total bill from counsel, for all steps in the case for which costs had not previously been decided, including time spent on the issues settled by the final consent order. She claimed $50,120.89 for fees, however, after correcting for an arithmetical error, the amount claimed is actually $45,120.89. With HST the total claimed is $50,986.60.

[5] In support of her position the applicant relies upon her overall success, the offers to settle she made, and on aspects of the respondent’s conduct that she submits were unreasonable.

[6] The respondent concedes that the applicant was more successful at trial and is entitled to some costs, but not the percentage requested. He points to some success he had at trial in obtaining an extension to his parenting time hours and in defeating one aspect of the applicant’s claim for section 7 expenses. The respondent also notes that she did not obtain an order for supervised access as requested at trial nor the delegation of authority to a counsellor proposed in her offers to settle. Additionally, he relies on some findings made that she engaged in negative messaging to the children.

[7] Also, the respondent submits that costs in relation to the settled issues should not be awarded absent compelling circumstances that he submits do not exist here. He further argues that the court may not award costs in relation to prior steps in a case where the prior court did not award costs or had been silent on the issue.

[8] In terms of the amount of costs to be awarded, the respondent submits that the applicant’s recovery should be limited to 40% – 60% of the time spent to prepare for and conduct the trial which came to $28,945.50.

Costs of the Settled Issues

[9] The respondent relies on Blank v. Micallef, [2009] O.J. No. 4636, 2009 60668, 2009 CarswellOnt 6790 (S.C.J.), for the proposition that costs of a settled case should not be awarded absent compelling circumstances:

[11] Finally, the parties themselves were in the best position to determine the issue of costs of the attendance before Justice Baltman when they negotiated the consent agreement. Justice Mackenzie in Dhillon v. Dhillon, FS-08-62289-00, September 28, 2009 made the following comments at paragraphs 15-17:

There appears to be some authority to support the proposition made by Orkin, M., in his Law of Costs to the effect that “the view has been expressed that when parties reach a settlement as between themselves, the court should be very slow to make an award of costs against one of them” – see page 2-86.

The basis for this proposition appears to be the case of Anishinaabe Child and Family Services Inc. v. CBC, 1997 22764 (MB QB), [1997] M.J. No. 181 (Q.B.).

In declining to make a costs award in the face of the parties’ settlement, the court (Oliphant, J.) made the following observations:

Where parties make a settlement as between themselves, the court in my view should be very slow to make an award of costs against one of the parties. Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. [para. 37]

[12] I agree with Justice Mackenzie. I find no “compelling reasons” to award costs of the motions before Justice Baltman.

[10] The law has developed since the Blank decision and more recently courts have ruled that costs may be awarded on a settlement in certain circumstances. For example, in Scipione v. Scipione, 2015 ONSC 5982, 68 R.F.L. (7th) 66, the court awarded costs, stating:

[64] While the court in Davis identified that it may sometimes be difficult to determine success (or relative success) when the parties sign a settlement document, the mere fact that settlement was by way of Minutes does not pre-empt a full costs analysis.

a. Rule 24(1) states that there is a presumption that a successful party is entitled to costs.

b. The August 6, 2015 Consent filed by the parties specifically set out that even though all other issues were resolved, costs were still to be determined by this court.

c. Parties are always encouraged to try to settle. Even up to the last moments of a motion or trial.

d. It is not uncommon for the court to receive last minute settlements which resolve all issues other than costs.

e. A party’s behaviour in settling a case and signing Minutes may be a relevant factor in deciding costs.

f. But 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.

g. A party who has behaved reasonably throughout – and who may quite accurately perceive imminent success in an ongoing hearing – should not be discouraged from signing Minutes which reflect that success, out of fear that they will jeopardize a potentially sizable costs claim.

h. If we make execution of Minutes the determining factor precluding costs, it will create a disincentive for settlement at trial.

i. And in some cases – particularly motions to change where the onus of proof is quite clear – determination of success may be relatively straightforward.

j. If a party brings a motion asking to change almost everything, and at the last minute signs a Consent which changes almost nothing, how can they possibly argue that a judge will have a hard time figuring out who was successful?

[69] I would summarize “success” in this case as follows:

a. The Applicant raised major, time consuming issues and he was unsuccessful on virtually all of them.

b. The Respondent raised a couple of minor, relatively straightforward cross-claims – which also did not prevail.

c. There was divided success in relation to one aspect of one issue: future spousal support.

i. The Applicant wanted to terminate spousal support and rescind arrears.

ii. The Respondent wanted to continue her open ended spousal support order, with increased quantum.

iii. The Applicant didn’t get any of the retroactive or current change that he was asking for.

iv. But ultimately the parties agreed to an entirely new regime for future spousal support: time-limited and non-variable.

v. The Respondent was successful slightly increasing the Applicant’s imputed income from $72,500.00 to $80,000.00.

vi. Arguably, each party achieved something on this one issue.

[70] The fact that this unnecessary motion was cut short by a last minute consent does not affect the determination of success. It merely mitigates the Applicant’s costs exposure by stopping the meter.

[11] Other more recent decisions include Ball v. Ball, 2014 ONSC 5754, 52 R.F.L. (7th) 244, where costs were not ordered:

[11] Regarding entitlement to costs in the face of a settlement, Ms. Ball relied on Johanns v. Fulford, [2011] O.J. No. 4071 (S.C.J.), for the proposition that I have the authority to make such an order. That legal position was not disputed; indeed Mr. Ball was seeking his own costs. The court in Johanns distinguished Cogan v. Groulx [2004] O.J. No. 5541 (S.C.J.), where the court had declined to fix costs following a settlement finding that it would be impossible to do so judicially given lack of prior participation in the case and the absence of evidence on which to base a decision. Johanns stands for the logical flip side of that same proposition, namely that the court can take jurisdiction where there is an extensive record with supporting documentation.

[12] I accept the following summary statement from Orkin, The Law of Costs, 2nd Ed., (2014 Looseleaf) at para. 403: “Costs are generally not appropriate for a consent order on the reasoning that the order was not made as a result of adjudication on the merits of the application.” Without adjudication, it can be very difficult to know who has had success. As noted in Barber v. MaGee, [2013] O.J. No. 4657 (O.C.J.) at para. 23:

Consideration of success is the starting point in determining costs. However, any attempt to determine a "winner" or "loser" in a settlement is, in most cases, complex if not impossible. … Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court. See: Page v. Desabrais, 2012 ONSC 6875, [2012] O.J. No. 5790, para. 28; Blank v. Micallef, 2009 60668 (ON SC), [2009] O.J. No. 4636, 2009 CarswellOnt 6790, para. 11; Gurzi v. Elliot, [2011] O.J. No. 1427, 2011 CarswellOnt 2169 (O.C.J.) para. 16.

Similarly, the court’s ability to determine whether there has been inappropriate behaviour by a litigant based only on submissions, when the court has not adjudicated the merits or received sworn evidence in keeping with the rules of procedural fairness, is also very limited.

[20] I find that, overall, success has been divided, and there is no compelling reason to make a costs order or to reapportion costs.

[12] There is also the case of A.C. v. G.K., 2015 ONCJ 399, 64 R.F.L. (7th) 496, where costs were ordered:

[16] Thus, there is no question that a court may determine the costs of a case that has been settled prior to trial. The question is, when will a court take that step? My review of the caselaw does not suggest that it is only in “compelling” circumstances that costs will be awarded when a case is resolved by a settlement.

[17] The Family Law Rules start with the presumption that a successful party is entitled to costs. “Success” is assessed by comparing the terms of the order made against the relief requested in the pleadings and, where applicable, against the terms of an offer to settle.

[18] When a case is determined by a settlement rather than a judicial decision, a court often does not have the information and evidence required to assess who was “successful” or the degree of success. Sometimes the issues are so numerous and the results so different from either party’s offer that “success” cannot be measured. For example, in Page v. Desabrais[^2], a multi-issue case, the court compared the offers of the parties throughout the proceeding and found it “simply impossible …to declare one party more successful that the other”. Sometimes the judge asked to determine costs has had no prior involvement with the case. For example, in Blank v. Micaleff, (2009) 2009 60668 (ON SC), O.J. 4636 (S.C.), Justice L. Richetti was asked to award costs for a prior attendance before another judge who had reserved costs pending the hearing of a motion. That motion was then settled prior to any involvement in the case by Justice Richetti. Justice Richetti was asked by the parties to assess costs; she declined.

[19] Sometimes, however, a court is able to assess what represents “success” after a settlement is reached. In Kearley v. Renfro, 2012 ONSC 5391, the only issue before the court on a motion was the residency of three children; the mother agreed on the day scheduled for the motion and settlement conference that the children would go into their father’s care immediately. The court found that the father was substantially successful, and awarded him costs.

[13] I conclude that this is a case where costs can and should be ordered with respect to the issues that were settled. The terms of that consent order do permit me to evaluate the success of the parties in relation to the settled issues. The applicant was clearly successful on two significant primary issues: primary residence and decision making. Having presided over the trial on related parenting issues and based on findings I made in my reasons for decision, it is apparent that the respondent bowed to the inevitable in resolving these issues just prior to the commencement of trial.

[14] Rule 24(10) and (11) of the Family law Rules, O. Reg 114/99 were amended in 2018 to specifically allow the court to award costs in relation to prior steps:

Deciding costs

(10) Promptly after dealing with a step in a case, the court shall, in a summary manner,

(a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or

(b) expressly reserve the decision on costs for determination at a later stage in the case. O. Reg. 298/18, s. 14.

Same

(11) The failure of the court to act under subrule (10) in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case. O. Reg. 298/18, s. 14.

[15] The decision the respondent relied on to say the court may not award costs for prior steps in a case was decided before these amendments were made and is no longer authoritative on this point.

Applicant’s Offers

[16] In this section, I will review the applicant’s offers to explain my conclusion that they do not support her claim for full indemnity costs.

[17] On March 26, 2019, the applicant offered to settle terms of the respondent’s request to re-open pleadings and allow him to deliver an Answer. This offer is of little assistance on the issue of costs now before me.

[18] The applicant also made two offers on September 9, 2019. The offer with respect to parenting time required the respondent to meet with the children’s counsellor for an unspecified purpose, and proposed stepped-up parenting time, in intervals, in accordance with the recommendation of the children’s counsellor. In a similar vein, the respondents time could revert to 6 hours on Sundays, at any time the counsellor determined the children were experiencing difficulty with their time in his care, pending determination of a Motion to Change.

[19] If the offer was accepted after September 9, 2019, the respondent was required to pay the costs of the application on a full indemnity basis.

[20] The September 9 offer to settle child support proposed a discount for 2017 and 2018 as an incentive to settle but overestimated the amounts required for 2018 and ongoing. However, the total amount proposed up to the point of the trial decision was slightly more favourable to the respondent than ultimately ordered.

[21] The child support adjustment clause in the offer is worded such that the first automatic adjustment would take effect July 1, 2020, based on the respondent’s previous year’s income. The amount payable from January 1, 2019, until then would be based on the respondent’s 2018 income of $98,276. Perhaps unintentionally, but nonetheless problematic when considering the offer in relation to the costs sought by the applicant, the respondent’s 2019 income was found to be $86,000, such that the offer would have required him to overpay child support throughout 2019 and perhaps part of 2020, potentially without recourse having regard to the legal test required to support a Motion to Change.

[22] The child support offer also includes the same provision with respect to costs namely, if accepted after September 9, the respondent would be required to pay the applicant her costs of the application on a full indemnity basis.

[23] The costs consequences of failure to accept an offer are set out in the following provisions of r. 18 of the Family Law Rules:

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:

1. If the offer relates to a motion, it is made at least one day before the motion date.

2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.

3. The offer does not expire and is not withdrawn before the hearing starts.

4. The offer is not accepted.

5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

Costs consequences – burden of proof

(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14).

Costs – discretion of court

(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.

[24] The weight to be given to the applicant’s offers in relation to her claim for costs is mitigated by the inclusion of terms that the court cannot or would not order. The court cannot delegate future parenting decisions to a third party without the consent of both parents. Nor is it likely a court would require full indemnity costs to be paid for an entire application when the offer is made at a significantly later date. A more practical offer would have mirrored the preamble of the rule.

[25] Including the terms noted above effectively means that rule 18(14.5) is not engaged. The applicant did not obtain an order as favourable, or more favourable, than her offer. That said the offers can be and are considered as part of my judicial discretion in setting the amount of costs.

Scale of Costs

[26] It is my conclusion that the applicant is not entitled to full indemnity costs. There are two primary reasons, in addition to what I have just said about her offers, both of which have been addressed in DeJong v. DeJong, 2022 ONSC 252, at paras. 12 and 18:

[12] To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer) Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (SCJ); Rebiere v. Rebiere, 2015 ONSC 2129 (SCJ); Scipione v. Scipione, 2015 ONSC 5982 (SCJ). 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 (Sepiashvili v. Sepiashvili, 2001 25708 (ON SC), 2001 CarswellOnt 3459, additional reasons to 2001 CarswellOnt 3316 (SCJ); Wilson v. Kovalev, 2016 ONSC 163 (SCJ)).

[18] I also consider the Court of Appeal decisions in Mattina v. Mattina, 2018 ONCA 867 and Beaver v. Hill, 2018 ONCA 840. In Mattina the court identified the fundamental purposes of modern costs rules. They are: (i) to partially indemnify successful litigants; (ii) to encourage settlement; (iii) to discourage and sanction inappropriate behaviour by litigants; and (iv) to ensure that cases are dealt with justly as required by subrule 2(2) of the FLRs. In Beaver v. Hill, the court reminded us, as set out in rule 24(12) itself, that reasonableness and proportionality are touchstone considerations to be borne in mind by the court when exercising its’ discretion over costs.

[27] However, it is also my conclusion that the respondent behaved unreasonably and his conduct should be reflected in the amount of costs awarded. In this regard, the relevant provisions of r. 24 are:

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.

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.

[28] The respondent did not comply with two disclosure orders made before trial, nor did he comply with the disclosure order I made at the opening of the trial. I also regard his failure to agree to pay the table amount of child support with no plausible legal basis to support his position as unreasonable litigation conduct.

[29] The respondent made one offer prior to trial but did not provide a copy to the court. I infer that the terms of his offer were unlikely to have been realistic in comparison to the probable outcome of the trial and would not have assisted him on the issue of costs. In my view, this, when combined with the eleventh-hour settlement of other issues that no doubt cried out for settlement, also amounts to unreasonable litigation conduct.

[30] I also consider the delays occasioned throughout trial due to the respondent’s lack of preparedness. Due to this, the trial lasted longer than it ought to have.

[31] The applicant was clearly the successful party both in the settled terms and those decided after trial. The respondent’s level of success was slight by comparison. Having considered all of the factors set out in r. 24 of the Family Law Rules and the parties’ submissions, I conclude that the applicant is entitled to costs within the ambit of partial recovery.

Amount of Costs

[32] The applicant’s counsel time and charges are reasonable and were not challenged by the respondent. Her costs of the application are fixed in the amount of $34,057 for fees, plus HST, for a total of $38,485 and are payable by the respondent forthwith. This amount represents a partial recovery award, but in the more generous percentage of 70% of her own solicitor-client bill.

[33] The percentage of costs in relation to support issues is 30%. The proportion totals $11,545.50 and shall be enforced by the Family Responsibility Office as support.

Matters Outstanding from Trial

[34] The applicant forwarded her 2019 Income Tax Return and Notice of Assessment, as I requested. Her assessed line 150 income was $43,781. The respondent did not comply with my order. The purpose of the order was to determine if I should adjust the child support order and percentage of s. 7 expenses for that year. In the absence of his documents, I make no change to the order without prejudice to the applicant’s entitlement to seek an adjustment should it be in her favour to do so after she obtains the respondent’s 2019 Income Tax Return and Notice of Assessment.

[35] The applicant’s counsel also provided the Supportmate calculations required by my order so that I could fix the after-tax costs of daycare to be paid to her by the respondent for 2017 and 2018.

[36] For January to April, November, and December 2017, the respondent’s share is $482 per month. For the period of May to October 2017, his share is $488 per month and for 2018 the monthly share is $396. On this basis, I fix the respondent’s after-tax share of daycare for 2017 and 2018 at $10,572 and order him to pay that amount to the applicant forthwith.

[37] Both orders form part of my final order made following the trial and shall be included in the formal order of the court.

Justice D. Summers

Date: June 7, 2022

COURT FILE NO.: FC-17-2212 DATE: 2022/06/07

ONTARIO SUPERIOR COURT OF JUSTICE

RE: Jayme Beardsley, Applicant -and- Matthew Horvath, Respondent

BEFORE: Justice D. Summers COUNSEL: Deborah E. Bennett, for the Applicant Loreen Irvine, for the Respondent

COSTS ENDORSEMENT

D. SUMMERS J.

Released: June 7, 2022