Court File and Parties
COURT FILE NO.: FS-18-19208
DATE: 20220608
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
A.R.N.
Applicant
– and –
M.A.P.
Respondent
COUNSEL:
Deborah L. Severs and Georgette Makhoul, for the Applicant
Daniel G. Katzman, for the Respondent
HEARD: Written submissions
Ruling on Costs
Hebner J.
[1] The parties have two children, N.P. and L.P., currently aged six and four years. The proceeding was commenced in September 2018, when the children were only aged three and one years. A bifurcation order was made on August 30, 2019, whereby the parenting issues were to be tried separately. That trial took place over 18 days between October 2020 and April 2021. My reasons for judgment were released on November 22, 2021, and I invited written submissions on costs. This is my costs ruling.
Position of the Applicant
[2] The applicant, A.R.N., seeks costs in the total amount of $418,795 comprised as follows:
• Full indemnity from October 21, 2020 to the last day of trial – $344,070;
• Substantial indemnity for all of the interim motions for which the applicant was successful – $29,640; and
• Partial indemnity for the remainder – $45,085;
Position of the Respondent
[3] The respondent, M.A.P., submits that success was sufficiently divided on the interim motions such that there should be no order as to costs.
[4] The respondent acknowledges that the applicant obtained a result that exceeded her last formal offer to settle and is entitled to substantial indemnity costs from October 21, 2020, to the conclusion of the trial but submits that the costs claimed by the applicant are excessive and disproportionate to the proceedings.
[5] The respondent asserts that a costs award will result in a significant onerous obligation upon him that may place him in financial jeopardy and affect his ability to proceed with litigating the financial issues. He seeks time to pay the award.
Legal Principles
[6] The costs of and incidental to a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs should be paid: see Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1).
[7] The following rules are applicable from the Family Law Rules, O. Reg. 114/99:
18 (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.
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.
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.
(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behavior 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.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(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.
(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.
(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.
[8] In Serra v. Serra, 2009 ONCA 395, at para. 8, the Court of Appeal for Ontario confirmed that modern costs rules are designed to foster three fundamental purposes, namely “(1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants.” Costs awards should reflect what the court views as a fair and reasonable amount that the unsuccessful party should pay.
[9] Offers to settle are an important consideration in determining both liability and quantum of costs. Rule 24(5) of the Family Law Rules requires that in assessing whether parties have behaved reasonably or unreasonably, the court must consider whether they have made offers to settle, the reasonableness of any such offers, and any offers that they withdrew or failed to accept. Rule 18(14) establishes costs consequences for failing to accept an offer to settle that complies with the specific requirements of that rule, which include whether the party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[10] In Weber v. Weber, 2020 ONSC 6855 (“Weber”), the court indicated the following, at para. 28:
Although not specified in Rules 24 and 18 as factors in deciding costs, the financial means of the parties, their ability to pay costs and the effect of any costs ruling on the parties and any children are also relevant to the adjudication of both liability for costs and the appropriate amount of a costs award.
[11] Once liability for costs has been determined, the court must turn its mind to quantum. The following general principles apply:
Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant.
Costs need to be proportional to the issues and amounts in question and the outcome of the case.
Amounts actually incurred by the successful litigant are not determinative.
In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration
See Weber, at para. 29.
[12] In Beaver v. Hill, 2018 ONCA 840, [143 O.R. (3d) 519] (“Beaver”), the Court of Appeal clarified two important principles in exercising discretion: reasonableness and proportionality. These principles are “the touchstone considerations to be applied in fixing the amount of costs”: Beaver, at para. 12.
[13] The concept of reasonableness was aptly described by the Divisional Court in Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission (2003), 2003 8279 (ON SCDC), 170 O.A.C. 388 (Div. Ct.), at para. 17:
The amount at which costs are to be fixed is not simply an arithmetic function dependent on the number of hours worked and the hourly rates employed but, rather, the party paying the costs should be subjected to an order which is fair and predictable. In other words, the party required to pay costs must not be faced with an award that does not reasonably reflect the amount of time and effort that was warranted by the proceedings. This court accepts as valid the following excerpt from the decision of Wright J. in Lac Des Mille Lacs First Nation v. Canada (Attorney General) (Sep. 12, 2002), (S.C.J.) as follows:
[12] As salutary as it may be to keep judges up to date on the actual costs of litigation, one must never forget that in determining costs as between party and party one is not pronouncing upon the legitimacy of fees charged by solicitors to their clients, one is simply determining what, in the circumstances of a particular trial, application or motion, an unsuccessful party should be ordered to contribute towards the costs of the successful party. While the actual costs incurred by the successful party may be a factor to be consider [sic, considered], a factor which does not appear to be enunciated in Rule 57.01 (1), it is not a governing factor.
[14] Proportionality must be considered in terms of the importance and complexity of the issues litigated. If the case was complicated and involved novel or important issues, the principle of proportionality may support a higher award: see L.(J.K.) v. S.(N.C.), [2009] O.J. No. 804 (S.C.), at para. 34; Goodwin v. Goodwin, 2011 ONSC 2402, at para. 35. By contrast, a high costs award may be inappropriate if the case does not involve any complex legal issues and should have been fairly straightforward.
Analysis
[15] This has been a high-conflict and hotly contested file. The parties were unable to agree on any parenting and decision-making issues, which necessitated an 18-day trial costing this family many thousands of dollars. This case is an example of the emotional and financial cost of protracted litigation on parenting issues, and I expect it will take the parties many years to recover.
[16] A costs award will not help the parties overcome their animosity and learn to work together in parenting their children. Nonetheless, the rules are clear. The applicant, as the successful party, is presumed to be entitled to costs. As the applicant obtained a result more favourable than her last offer to settle, and that offer met the conditions set out in r. 18(14) of the Family Law Rules, the applicant has a reasonable expectation of receiving a costs award at an elevated level from the date the offer was served.
[17] I will deal with the request for costs of motions separate from the costs of the proceeding and trial.
Motions
[18] The applicant claims costs for specified motions. The respondent asserts that success was divided on all of the motions as a whole, and therefore there ought to be no costs. Rule 24(6) provides for an apportionment of costs as appropriate “if success in a step in a case is divided.” The wording of that subrule makes it clear that divided success is a consideration in each step of a proceeding and not a consideration in all of the steps as a whole. In my view, I must therefore consider each motion where a cost request is made separately.
A. Easter 2019
[19] The parties came to an agreement on parenting over the Easter weekend in 2019. The applicant insisted that the agreement be the subject of a court order. The respondent refused to sign a consent. Although the applicant incurred costs in order to obtain an order, the fact is that the parties came to an agreement on parenting time over the Easter weekend. I decline to make an order for costs for this motion.
B. Three intertwined motions in August and September 2019
[20] There were three motions brought in August and September 2019: two by the applicant and one by the respondent. The motions resulted in three separate arguments on various issues. They were:
An argument before me on August 23, 2019, respecting the children's attendance at a family wedding. I decline to order costs for this argument. Although the applicant received additional parenting time, she did not receive as much as she requested.
An argument before Carey J. on August 30, 2019, resulting in an order respecting the trial of the parenting issues. The trial was scheduled for the week of September 23, 2019. I decline to order costs for that motion.
On September 6, 2019, an argument before King J. took place on the issue of school. At that time, the parties anticipated the trial on the parenting issues taking place during the week of September 23, 2019. The applicant took the position that N.P. ought to attend Holy Cross school immediately. The respondent took the position that N.P. should not attend school pending trial. Justice King ordered that N.P. attend Holy Cross school commencing September 9, 2019. He ordered that costs of the motion be dealt with in the cause. The applicant was successful on the motion before King J. Moreover, the applicant was successful at trial. She is entitled to her costs.
[21] The fees related to these three motions total $20,695. I discount the amount by two thirds and award costs on a partial indemnity basis to the applicant for the one motion before King J. in the sum of $5,000 plus HST.
C. Christmas 2019 and N.P.’s transportation to school on Monday mornings
[22] The parties could not agree on a parenting schedule for Christmas in 2019. Moreover, the respondent refused to drive N.P. to school on his alternating Monday mornings. The two issues were argued before me on December 13, 2019, and the applicant was the more successful party. The issue of transportation was adjourned to a date in January 2020, but the respondent was required to drive N.P. on a without prejudice basis to school on his Monday mornings. The applicant incurred fees of $5,799. She is entitled to her costs on a partial indemnity basis, which I assess at $3,500 plus HST.
D. Return of Monday morning issue and respondent’s motion to change the parenting schedule.
[23] Both of these motions were heard by Howard J. on January 17, 2020. Justice Howard ordered the respondent to continue to drive N.P. to school on his Mondays and dismissed the respondent’s motion to change the parenting schedule. Costs were ordered in the cause. The applicant was successful and is entitled to her costs. She asserts that fees incurred totalled $2,954. I find the applicant is entitled to her costs on a partial indemnity basis, which I assess at $1,800 plus HST.
E. Motion for in-person schooling
[24] In September of 2020, parents of school-age children in Essex County had to choose whether their children would attend school in person or virtually. The parties could not agree, and the respondent brought a motion requesting an order that N.P. attend school virtually. The motion was heard by King J. on September 29, 2020. Justice King dismissed the motion, finding that it was in N.P.’s best interests to attend school in person. Costs were deferred to the trial judge. The applicant was entirely successful and is entitled to her costs. She incurred fees of $8,254 for the motion. I find that she is entitled to her costs on a partial indemnity basis, which I assess at $5,000 plus HST.
F. Total costs on motions
[25] I therefore find that the applicant is entitled to her costs of the motions requested in the total sum of:
$5,000 + $3,500 + $1,800 + $5,000 = $15,300 plus HST.
Trial
Offers to Settle
[26] The applicant made several offers to settle the parenting issues from the time the parties separated in July of 2018 until the trial started on October 28, 2020. The offers provided for increasing parenting time for the respondent, with only the final offer exceeding the result obtained by the applicant after the trial. I summarize the parenting provisions of those offers here:
The applicant made a pre-litigation offer to settle dated August 15, 2018. The offer included joint custody of the children, primary residence with the applicant, and the respondent having two afternoons per week until bedtime and alternating Sundays.
On September 12, 2019, the applicant offered to settle for joint custody, with the applicant to have decision-making responsibility for education and health care decisions and the respondent to have decision making with respect to spiritual and extracurricular activities. The children were to have their primary residence with the applicant and have parenting time with the respondent on alternating weekends from Friday until Sunday and 50 percent of the summer plus some mid-week access should the respondent move his residence closer to the children's school.
On August 28, 2020, the applicant expanded her offer of alternating weekends to Monday morning.
The offer on October 21, 2020 expanded the parenting time to equal parenting time based on a 2-2-3 schedule.
[27] The respondent also made some settlement offers. On November 14, 2019, the respondent offered to continue the ongoing schedule with some adjustments. On October 27, 2020, the respondent served a formal offer responding to the applicant’s October 21, 2020 offer. In the respondent’s offer, he proposed a 2-2-5-5 parenting schedule. He also proposed that all decisions be made jointly. He set out demands with respect to the children’s schooling, namely that when they were with the applicant they would not bus to school and would eat lunch on school days at the residence of the applicant or her mother.
Entitlement
[28] The respondent concedes that the applicant obtained a result exceeding her offer made on October 21, 2020. The offer satisfies the conditions set out in r. 18(14). Accordingly, based on that rule, the applicant is entitled to partial indemnity costs to the date the offer was served and a full recovery of costs from that date, unless the court orders otherwise.
[29] The respondent proposes that instead of full recovery costs, the applicant receive substantial indemnity costs.
[30] In M.(C.A.) v. M.(D.) (2003), 2003 18880 (ON CA), 67 O.R. (3d) 181 (C.A.), a parenting case, the trial judge awarded the father costs in the sum of $49,405. The father had achieved a result more favourable than his offer to settle, and r. 18(14) applied. The mother took the position on appeal that the trial judge erred in holding that he had no discretion but to award costs to the father on a full recovery basis from the date of the offer. The Court of Appeal set out the following principles:
• There is a presumption that a successful party is entitled to costs (r. 24(1)).
• The “presumption” does not remove the trial judge’s discretion in s. 131(1) of the Courts of Justice Act.
• The financial situation of the parties can be taken into account in setting the amount of costs either under r. 24 or r. 18, especially in the case of an unsuccessful custodial parent.
• The court has the discretion not to make an award of full recovery costs even where the party has met the conditions in r. 18(14). The rule makes this clear since it provides that “unless the court orders otherwise”, the party is entitled to full recovery.
• Even when making an award of full recovery, the trial judge must ensure that the costs sought by the successful party are reasonable.
[31] The applicant is entitled to her costs. The issue is one of quantum.
Quantum
[32] In determining the amount of costs the respondent ought to be required to pay to the applicant, I consider the factors set out in r. 24(12) of the Family Law Rules.
[33] Having reviewed the offers to settle, I have difficulty understanding how this matter came to a trial. A review of the applicant’s offers shows a progressed determination to resolve the matter. By the time the trial was a week away, the applicant became exceedingly reasonable in her offers to settle. In the face of a strong s. 30 assessment under the Children’s Law Reform Act, R.S.O. 1990, c. C.12, that was favourable to the applicant’s position, she was prepared to resolve the matter on the basis of a 50/50 sharing of parenting time. She was prepared to resolve the matter on the basis that the respondent have responsibility for extracurricular activities and spiritual upbringing.
[34] I cannot say the same about the respondent’s offers. In his offer to settle served the day before the commencement of the trial, the respondent continued in his attempt to control the manner in which the applicant parented the children when they were in her care. His offer contained a term that the children not take a bus to school while in the applicant’s care. His offer contained a term that the children eat lunch at the applicant’s residence, or her mother’s residence, during her days with the children, which meant that these two women could not both work during the school day. His offer required that all decisions be made jointly, without any separation of areas of responsibility, when that arrangement had the parties coming to motions court for every parenting decision prior to the trial.
[35] The applicant asks me to consider the respondent’s behaviour. While the applicant's behaviour was child focused, the respondent’s behaviour was focused on his parental rights. Moreover, the respondent’s behaviour towards the applicant was deplorable. I set out in my reasons for judgment specific examples of incidences where the respondent exhibited disrespect for the applicant in the presence of the children. Indeed, the respondent’s disrespect toward the applicant was evident continued during trial when he made faces at her during her testimony.
[36] In short, the respondent was unreasonable in his settlement proposals and in his treatment of the applicant.
[37] When considering proportionality, I consider the extreme importance of the child-related parenting and decision-making issues. They were important not only to the children and the parties but to the extended family.
[38] The issues were not, however, particularly complex in and of themselves. They became complex because of the history of this litigation, the numerous motions brought to court, and the fact that every single issue that could be raised was raised and litigated aggressively at trial. They became complex because of the complicated family relationships involved and, particularly, the intransigence of the respondent on each and every issue.
[39] The applicant has incurred total costs of $534,219.35. After removing the motion costs, the applicant seeks full indemnity costs from October 21, 2020, to the last day of trial. The amount is $344,070. She seeks partial indemnity for the remainder of the costs in the sum of $45,085.
[40] The respondent provided his legal accounts totalling $177,266. He asserts that his costs for trial preparation and attendance were $104,490. However, as Ms. Severs – counsel for the applicant – points out, there appears to be some irregularities in the calculation of Mr. Katzman’s – counsel for the respondent – accounts. Moreover, there is a difference in counsel’s respective hourly rates. Mr. Katzman’s rate is $280, while Ms. Severs’ rate is $350, both of which I find to be very reasonable for their levels of experience.
[41] According to the numbers provided to me, the applicant has incurred costs of more than double that of the respondent. When I factor in the irregularities, the applicant has still paid substantially more than the respondent in this litigation. That she has done so does not necessarily make the quantum of those costs unreasonable or disproportionate. On the other hand, I must consider the reasonable expectation of the losing party. What amount of costs could the respondent reasonably expect to be required to pay?
[42] The fixing of costs is not a mechanical exercise of calculating hours times hourly rates. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay to the successful party in the particular proceeding. In doing so, I must stand back from the fee produced by the calculation of hours spent times hourly rate and assess the reasonableness of the counsel fee from the perspective of the reasonable expectation of the losing party.
[43] Taking all of these factors into consideration, in my view, the total costs that the respondent ought to be required to pay to the applicant, in addition to the specific costs for motions identified above, is $300,000 plus HST. In my view, this amount provides the applicant significant indemnification of her legal expenses while at the same time being consistent with the concepts of reasonableness and proportionality.
Payment Terms
[44] The respondent requests time to pay the costs award. He points out that he suffered a significant financial investment loss and that the property and support issues have not yet been addressed. He expects to receive an equalization payment from the applicant.
[45] The financial investment loss was discussed briefly at trial. I comment on it at paras. 29-30 of my reasons for judgment. The respondent requested that the applicant provide $200,000 toward his investment, and that money had not been repaid. There is no indication that it has been repaid since the trial. Accordingly, the applicant has also suffered a financial loss as a result of the respondent’s investment.
[46] As for the outstanding financial litigation, if I were to delay payment of the costs award, the result would be that the applicant would be funding the respondent’s litigation against her. Such an order may be sought under r. 24(18) of the Family Law Rules, but no such motion is before me and, in my view, it is improper to make such an order without a motion under that rule and full argument.
[47] I decline to delay payment of the costs award.
Disposition
[48] For these reasons, I order that the respondent pay to the applicant her costs in the total sum of $315,300 plus HST.
Original signed by Justice Pamela L. Hebner
Pamela L. Hebner
Justice
Released: June 8, 2022
COURT FILE NO.: FS-18-19208
DATE: 20220608
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
A.R.N.
Applicant
– and –
M.A.P.
Respondent
Ruling on costs
Hebner J.
Released: June 8, 2022