COURT FILE NO.: 08-382
DATE: 2022/06/14
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lisa Saroli Applicant
– and –
Dean Jason Grette Respondent
Angela Livingstone, counsel for the Applicant
Rodney Cross, counsel for the Respondent
HEARD: April 26, 2022
addendum reasons for judgment and costs
Justice H. Desormeau
[1] On January 12, 2022, following a focused trial on the Motion to Change regarding the issues of parenting time and child support, I released my Reasons for Judgment: 2022 ONSC 148. Unfortunately, as set out in paragraph 415 of the Reasons there was insufficient information regarding CPI and proper Divorcemate inputs to be able to complete the requisite calculations to establish the total income for the father, and thus what support was properly payable by him.
[2] I invited counsel to return before me to provide the necessary calculations based on findings made in my Reasons. I also heard cost submissions. These Reasons address both outstanding issues.
Child support - addendum
[3] In my decision, I found it was appropriate that the father pay child support based on the following total income: the structured settlement (to be grossed up), SABS (to be grossed up) plus CPI, CPP, rental income and investment income. The total amounts were to be calculated from June 1, 2016 onward.
[4] I now have submissions on the CPI and the Divorcemate calculations.
[5] In sum, the mother’s position is from June 1, 2016 to December 31, 2021, there was an overpayment of child support by the father of $4,970.00. However, the mother’s calculations include payments until April 30, 2022. By readjusting to reflect to payments to December 31, 2021, then the overpayment by the father would be $3,698.00.
[6] The father’s position was that from January 1, 2016 to December 31, 2021 there was an overpayment by the father of child support to the mother of $6,168.20.
[7] While I do not reach the same calculations to the penny as either party, I find the father’s calculations more reliable regarding the CPI as they reflect percentage increases as opposed to the dollar increases.
[8] Having considered the submissions of both parties, I find that the father has overpaid child support in the amount of $6,168.20.
[9] However, the mother argued that based on each parties’ financial circumstances, it would be unfair to ask her to repay the overpayment of child support. In support of her position, she relied on Meyer v Content, 2014 ONSC 6001, where Chappel J. addressed what factors should be considered in dealing with a claim for reimbursement of child support paid to a support recipient. None of these factors are determinative, and the appropriate weight depends on the unique facts of the case. The factors included (at para. 100):
The amount of the overpayment;
The overall financial situation of the parties, including their incomes and their net worth;
The extent to which each party continued to support the child financially during the period of uncertainty regarding the outcome of the support dispute, and whether it was objectively reasonable for them to do so;
Whether an order requiring the support recipient to repay all or part of the child support overpayment would cause the recipient hardship;
The overall condition, means, needs and circumstances of the child of the relationship, and the extent if any to which the child's situation may impact on the level of hardship which a reimbursement order would create for the recipient;
Conversely, whether an order releasing the recipient from repaying the overpayment in full or in part would result in hardship for the support payor;
Whether there is a reasonable explanation for any delay on the part of the payor in commencing proceedings to request reimbursement;
Whether the support recipient has a reasonable explanation for why they continued to accept support during the time frame when the overpayment accrued;
Any evidence of blameworthy conduct on the part of either party relevant to the overpayment issue;
Whether the recipient made reasonable efforts to keep the payor apprised of changes in the child's situation which were relevant to the overpayment issue;
Conversely, whether the payor made reasonable efforts to keep abreast of developments in the child's life and maintain contact with the recipient so as to enable discussion and negotiation about issues involving the child;
The extent to which either party attempted to make efforts to resolve any concerns about overpayment with the other party or through the Family Responsibility Office; and
Evidence of any oral or written agreement between the parties during the period when the overpayment arose that sheds light on the intentions of the parties respecting child support payments during that time.
[10] In my Reasons, I found that the father engaged in blameworthy conduct by failing to provide financial disclosure in a timely manner, despite a court order providing for same. This had the effect of privileging the father’s interests over the child’s right to support.
[11] The father refused to provide for his proportional sharing of the child’s special and extraordinary expenses despite an order to that effect. However, he increased child support of his own volition without the need to attend court.
[12] The evidence supported that the child has special needs, for which the mother has sacrificed to meet such needs. To meet the child’s needs, the mother made many financial sacrifices.
[13] The matter did not return to court by the father until November 2019.
[14] The child’s interest in a fair standard of support commensurate with income is the core interest to which all rules and principles must yield.
[15] I find the mother would suffer financial hardship if ordered to repay the total overpayment. I am of the view that this financial hardship would have an impact on the child’s situation. Conversely, I find that releasing the recipient from repaying the overpayment in full or in part would not result in a hardship to the father.
[16] Having considered all the above, while there has been an overpayment by the father, I am of the view the circumstances dictate a significant reduction of the overpayment. I find it to be fair and reasonable that the overpayment by the father be reduced to $1,500.00, payable by the mother to the father at a rate of $50.00 per month until paid in full.
Miscellaneous issues raised in submissions
[17] Though the father raised miscellaneous issues in his CPI and costs submissions, on consent, those issues were dismissed as they were not properly before me.
Costs
[18] In determining costs, the starting point is s. 131 of the Courts of Justice Act, which sets out that costs are within the discretion of the court. The court must also consider Rule 24 (costs) of the Family Law Rules (“FLR”), Rule 18 (offers to settle) FLR, and the relevant case law.
[19] Some general themes that emanate from the Rules and the case law are:
a. A successful party in a family law case is presumptively entitled to costs, subject to the factors set out in Rule 24 FLR. The Family Law Rules expressly provide that, depending on the conduct of the parties and the presence or absence of offers to settle, a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded: Beaver v. Hill, 2018 ONCA 840, at paras. 9 and 10.
b. A costs award should be a "fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs of the successful litigant": Boucher v. Public Accountants Council (Ontario)(2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.).
c. A "fair and reasonable amount" is that amount which the unsuccessful party could reasonably have expected to pay in the event of lack of success in the litigation: Lupien v. Carmichael, 2017 ONSC 2929, at para. 9.
d. Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs. Proportionality is a core principle that not only governs the conduct of the proceedings generally but is specifically applicable to fixing costs: Beaver v. Hill, supra, at paras. 12 and 19.
e. 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 Rule 18(14) FLR: Rule 18(15) FLR; see Neilipovitz v. Neilipovitz [2014] O.J. No. 3842 (SCJ).
[20] An award of costs is subject to the factors listed in Rule 24(12) FLR, Rule 24(4) and 24(5) FLR pertaining to unreasonable conduct of a successful party, Rule 24(8) FLR concerning to bad faith, Rule 18(14) FLR regarding to offers to settle, and the reasonableness of the costs sought by the successful party: Berta v. Berta, 2015 ONCA 918 at para. 94.
[21] 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 Rule 18(14) FLR does not apply: Rule 18(16) FLR.
[22] Close is not good enough to attract the costs consequences of 18(14) FLR. The offer must be as good as or more favourable than the trial result. However, even if the offer does not attract the costs consequences set out in Rule 18(14) FLR, it may be considered under Rule 18(16) FLR: Gurley v. Gurley, 2013 ONCJ 482.
[23] 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: Wilson v Kovalev, 2016 ONSC 163; also see Muncan v. Muncan, 2021 ONSC 1369.
[24] Where there is divided success, a comparative analysis may be required. As stated by Kimmel J. in Habibi v Aarabi, 2022 ONSC 240, while almost all family cases have multiple issues, not all issues are equally important, time consuming or costly to determine. An analysis of the followings factors is required: a) How many issues were there? b) How did the issues compare in terms of importance, complexity, and time expended? c) Was either party predominantly successful on more of the issues? d) Was either party more responsible for unnecessary legal costs? (Also see J.Y. v L.F.T., 2017 ONSC 6039, at para 11.)
[25] Difficult financial circumstances are a factor but not are always a reason to deprive a successful party of costs or to reduce the amount of costs: Beaulieu v. Diotte, 2020 ONSC 6787.
[26] Parties cannot expect to be immune from an order of costs based on their limited financial resources. If this were the case, parties would be free to conduct litigation as they wished without fear of reprisal in the form of adverse costs orders and this would be contrary to the philosophy and requirements of the Rules. See: Culp v. Culp, 2019 ONSC 7051 (SCJ); Mark v. Bhangari, 2010 ONSC 4638 (SCJ).
[27] In Van Rassel v. Van Rassel, 2008 56939 (ON S.C.), [2008] O.J. No. 4410, 61 R.F.L. (6th) 364 (S.C.J.) at para. 9, Mossip J. concluded that the court should also consider the financial means of the unsuccessful party including the issue of the impact on the child of the paying party of a large costs order.
[28] However, a parent is not absolved from a costs disposition simply because he or she is the custodial parent, particularly where the court is not persuaded that the child’s best interests would be negatively affected. The impact of a costs disposition on the children would be, at most, minimal in light of their circumstances: Cassidy v. McNeil, 2010 ONCA 218.
Analysis
[29] Here, the two primary issues were parenting time and child support. There were several corollary issues to be determined, such as s.7 expenses and the recommendations contained in the s.30 assessment.
[30] The mother submitted there was divided success, but felt she had some measure of success. She argued that the father’s behaviour should play a role in determining costs, particularly regarding his refusal to provide financial disclosure and the inaccurate estimate of trial time. She submitted that partial recovery would be $27,618.69; substantial recovery would be $41,333.06; and full recovery would be $45,904.62.
[31] The father submitted he was partially successful on parenting time and fully successful on child support. He sought costs on a full indemnity basis in the amount of $77,140.02 but understood that costs are often ordered on a partial indemnity basis. Partial indemnity would be $46,284.01.
[32] In determining the quantum of costs, I have considered the factors set out in Rule 24(12):
(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.
Importance and complexity of the issues and time spent by each party
[33] The issues at trial were very important to both parties and based on the review of the bill of costs, the time spent by each party was reasonable.
Legal fees, expert witness fees, and other expenses
[34] The mother argued that the father’s costs included $10,000.00 for enhancement of legal fees based on success was prohibited. In support of same, she directed the court to Jackson v. Stephen Durbin and Associates, 2018 ONCA 424. There, Justice Benotto for the court pointed out that the Solicitor’s Act at section 28.1(3)(b) prohibits a solicitor entering into a contingency fee agreement on a family law matter. In that case, the argument was that the “Results Achieved Fee” was not a contingency fee, but rather a permissible “premium” or “bonus”. The court indicated that the Solicitor’s Act was amended in 2004 to include the phrase “contingent, in whole or in part” on a successful outcome. The court determined that a “premium” or “bonus” added on to a lawyer’s fee was captured by the meaning of contingency fee agreement and is thus prohibited by s. 28.1(3)(b).
[35] Here, the father’s bill of costs includes “enhancement for excellent result as allowed by LSO.”
[36] Both the Rules of Professional Conduct and the Solicitor’s Act prohibit contingency fee agreements for family law matters (see Rule 3.6-2 RPC). In applying the same logic as found in Jackson v. Stephen Durbin and Associates, above, I find that the enhancement of fees due to results is equivalent to a bonus based on successful outcome, thus prohibited.
[37] The mother argued that the costs claimed by the father for the September 2021 motion costs had already been determined, as have those from the February and July 2021 motions. I agree.
Behaviour
[38] Both the mother and father alleged the other demonstrated unreasonable behaviour.
[39] Section 24(5) states: [i]n 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.
[40] Section 24(8) states that 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.
[41] In Parry v. Parry, 2020 ONSC 3437, Sheard J. cited with approval Pazaratz J.’s review of the law of bad faith in Jackson v. Mayerle, 2016 ONSC 1556. Pazaratz J. observed that Rule 24(8) requires a high level of egregious behaviour and is not synonymous with bad judgment or negligence; to establish bad faith the court must find an element of malice or intent to harm. At para. 57, Pazaratz J. referenced the following:
In S.(C) v. S.(C) 2007 20279 (ON SC), [2007 CarswellOnt 3485] Perkins, J. defined bad faith as follows:
In order to come within the meaning of bad faith in subrule 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.
[42] A party who adopts “a catch-me-if-you-can approach to financial disclosure” demonstrates bad faith and breaches Rule 13 of the FLR. See: Parry v. Parry, 2020 ONSC 3437, at para. 48. The financial non-disclosure amounts to dishonesty, which equates to bad faith.
[43] Here, the father admittedly failed to make full, accurate and timely financial disclosure.
[44] As made clear in my Reasons at paragraph 306, I found the father engaged in blameworthy conduct by failing to provide proof of income. He did not fully comply with my disclosure Order of June 14, 2021, in particular regarding his interest or investment income; and regarding quantum of the SABS income replacement benefits (para 122). I find that these actions equate to bad faith, thus full recovery should be ordered in favour of the mother.
[45] Meanwhile, the father submitted that the mother also engaged in blameworthy conduct by her “wildly”, “staggering” and “unreasonable” demands, which necessitated the matter proceeding to trial. These demands included the request to have the father’s condo in Ottawa transferred to the mother’s name. It was also argued that mother ought to have hired an expert to assist in this litigation, as set out in the Parfett Order.
[46] The father suggested that based on the findings by the court regarding financial disclosure, a partial indemnity award would be more appropriate, in favour of the father. He submitted to award costs in favour of the mother would be absurd, particularly given the overwhelming success enjoyed by the father.
Offers to settle
[47] I have reviewed the offers to settle exchanged by the parties. As stated by Chappel J. in Proulx v. Proulx, formal offers to settle can provide an added incentive for the other party to take a hard look at the evidence and engage in meaningful settlement discussions: Proulx v. Proulx, 2017 ONSC 5134, at para. 58.
[48] Both parties are commended for having served offers to settle.
[49] The trial was heard October 12-14, 2021.
[50] The mother made three offers: June 10, 2021; September 24, 2021; and October 4, 2021. The first offer was severable by parts. The September and October offers were non-severable, each addressing financial and parenting issues respectively. The mother’s offers do not engage Rule 18(14) FLR.
[51] The father provided evidence of four offers to settle: September 20, 2021 (on all issues); September 24, 2021 (financial); October 4, 2021 (parenting); and October 5, 2021 (parenting). The father’s offers were not severable.
[52] The mother argued that the father’s offer of September 20, 2021 regarding accepting the recommendations of the assessor with out seeing them would have been nonsense to accept. Further, the father’s offer regarding special and extraordinary expenses stated: … “but asks for some evidence be provided that both the horse and dog are “special and extraordinary expenses…” I am of the view that this was ambiguous, and thus Rule 18(14) is not engaged on this non-severable offer. The father was partially successful on the October 4, 2021 offer to settle, but did not engage Rule 18(14) on his offer of October 5, 2021.
Determination of costs
[53] In this case, there are several significant factors which must be considered in determining costs.
[54] While the father made very reasonable offers to settle, they were non-severable.
[55] The mother’s offers to settle were, in my view, less reasonable, but severable.
[56] The father engaged in blameworthy behaviour, particularly by failing to provide full financial disclosure as ordered in 2011 by Justice Parfett, and as ordered by this court in 2021. At trial, full financial disclosure was still lacking. Given the lack of financial disclosure, I am of the view it was reasonable that the mother rejected the offers.
[57] The mother was given the opportunity in 2011 to hire an expert to assist in confirming the father’s income. She chose not to hire an expert, thereby, in my view, increasing the trial time and level of complexity. This issue was mitigated by the father’s lack of financial disclosure – which would have been required by any expert engaged by the mother.
[58] The father was successful at trial regarding the main triable issue of child support. The father however took more time than estimated at trial, which as per Davids v David, 2017 ONSC 4685, has the potential of increasing his costs exposure.
[59] The mother was successful on two of the three modifications to the recommendations from the s. 30 assessment. But for the requested modifications by the mother, the father wholeheartedly accepted all recommendations by the assessor, without any question. He remained steadfast throughout the proceedings, as evidenced in his offers, that he would accept what the court found just, or what an assessor recommended. The court found two of the three requested modifications were in the child’s best interest.
[60] I considered the financial means of the parties, and whether a costs award could negatively impact the child, noting that this does not absolve a parent from a costs disposition.
[61] I have considered the capable submissions of counsel, the case law, and the Rules. Ultimately, the court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances.
[62] But for the father’s failure to provide financial disclosure as ordered, I would have been inclined to order costs in his favour.
[63] I exercise my discretion to not order costs in favour of either party.
Disposition:
[64] Final order to go as follows:
The overpayment of child support is fixed at $1,500.00, payable by the mother to the father at a rate of $50.00 per month, commencing July 1, 2022, until paid in full.
No costs.
Justice Hélène C. Desormeau
Released: June 14, 2022
COURT FILE NO : 08-382
DATE : 2022/06/14
ONTARIO
SUPERIOR COURT OF JUSTICE
Lisa Saroli
– and –
Dean Grette
addendum REASONS FOR JUDGMENT and costs
Justice H. Desormeau
Released: June 14, 2022