Superior Court of Justice – Ontario
COURT FILE NO.: FC-19-586
DATE: 2022/07/29
RE: H.G.
AND: J.R.N.
BEFORE: Justice D.J. Gordon
COUNSEL: William R. Clayton, for the Applicant Scott Grainger, for the Respondent
HEARD: In writing
SUPPLEMENTARY ENDORSEMENT RE: COSTS
- In my Reasons for Decision released June 14, 2022, as 2022 ONSC 3436, I invited written submissions from counsel on the issue of costs.
Issues at Trial
- The parties were able to resolve the parenting issues regarding their child, O.L.G., prior to trial. The issues requiring determination were:
i) Child support, including income of the parties;
ii) Ownership of a vehicle; and
iii) The request for a restraining order.
- Eleven days of trial time were required to address these issues.
Reasons for Decision
- After reviewing the evidence and considering the relevant principles, in my Reasons for Decision, I concluded:
i) The respondent mother’s income was as reported in her income tax returns;
ii) The applicant father’s income for 2022 and future years would be imputed at $55,000.00;
iii) Based on actual incomes, together with the applicant’s imputed income in 2022, the applicant was to pay the respondent child support to June 30, 2022, in the amount of $5,052.00;
iv) Future child support, commencing July 1, 2022, was payable by the applicant to the respondent, on a set off basis, in the monthly amount of $113.00;
v) The court has no jurisdiction to grant relief regarding the vehicle, as sought by the respondent, and that claim was dismissed; and
vi) The evidentiary record did not support a finding there was an objective basis for the respondent’s subjective concern for her safety and her request for a restraining order was dismissed.
Request for Costs
Mr. Clayton, counsel for the applicant, seeks a cost award, on a full indemnity basis, in the amount of $116,162.87, inclusive of HST. Mr. Grainger, counsel for the respondent, requests a cost award, on a reduced partial indemnity basis, in the amount of $76,840.00, inclusive of HST and disbursements. He also reports the equivalent full indemnity costs would be $132,502.56.
Mr. Clayton and Mr. Grainger indicate the costs claimed pertain only to the issues at trial as the settlement on the parenting issues was on a without costs basis.
The written submissions address offers to settle, positions, conduct, and related matters having regard to the factors involved in addressing costs.
Principles
The legislative authority for a costs award is section 131(1), Courts of Justice Act. Prior to the Family Law Rules coming into force, family law cases were subject to the Rules of Civil Procedure. In result, the general principle continues to be that a costs award is to be fair and reasonable and within the reasonable expectation of the parties. See: Boucher v. Public Accountants Counsel (Ontario), (2004) 2004 14579 (ON CA), 71 OR (3d) 291 (ONCA).
The Family Law Rules came into effect in this court in 2004. While following the Rules of Civil Procedure in a general manner, these Rules recognized the unique features in family law. This is particularly evident in Rule 2 by identifying the primary objective. Rules 18 and 24 also altered the methodology in determining costs. There is no reference to a scale of costs in Rule 24. Rather, the court, in the exercise of its discretion, has the flexibility when addressing the relevant factors to determine a fair and reasonable costs award.
Given the new provisions, our Court of Appeal has determined such were designed to foster the following fundamental purposes:
i) To partially indemnify successful litigations;
ii) To encourage settlement; and
iii) To discourage and sanction inappropriate behaviour by litigants. See Sera v. Sera, 2009 ONCA 395.
While Rule 2(2) does not specifically address costs, the primary objective must be considered in every stage of a case. Litigants and lawyers must consider the factors involved, such as attempting to resolve disputes, litigating only what is necessary, presenting their case within a reasonable amount of time, and being focused on the issues in dispute. With the significant backlog of cases in our system, court resources have become a significant matter.
Offers to settle, reasonableness, and proportionality are core principles to be considered by a trial judge in exercising discretion as to a costs award, including whether such ought to be increased or decreased in the circumstances of the particular case. See Beaver v. Hill, 2018 ONCA 840.
Analysis
i) Full Recovery Costs – Rule 18
- As hereafter discussed, neither party presented an offer to settle that met the conditions in Rule 18(14) 5 in all respects. In result, full recovery costs are not an automatic consideration. The offers, however, warrant review having regard to Rules 18(16) and 24(5).
ii) Success
a) Child Support
The child support results in payments from the applicant to the respondent. It is more than the offer of the applicant and less than that of the respondent. The order bears no resemblance to the positions of the parties at trial.
On its face, success was divided. However, when considering the litigation expense, neither party was successful.
b) Vehicle and Restraining Order
The applicant was completely successful on both issues. Indeed, in my view, there was no possibility of success for the respondent. Given the anticipated evidence and relevant principles, their claims ought not to have been pursued.
iii) Offers to Settle
There were a number of offers to settle exchanged during the litigation. Such ultimately lead to a resolution of the parenting issues.
In relation to the issues at trial, the final offers by the parties were as follows:
a) Child Support
Both parties proposed there would be no child support payable going forward on the basis of imputing income to each of them at $50,000.00. The respondent offered to accept $20,000.00 from the applicant for child support arrears while the applicant declined to make any payment.
b) Vehicle
The applicant initially proposed that the respondent sign over ownership to him. The respondent did offer to do so but required him to indemnify her for any potential claims. Subsequently, the applicant responded by saying the respondent could retain ownership but without any indemnification from him.
c) Restraining Order
None of the offers addressed this claim.
The Family Law Rules encourage litigants to attempt to resolve their dispute. One such method is with offers to settle as they may result in cost consequences if the case is not resolved. Reasonableness becomes an important consideration. The primacy objective in Rule 2 also becomes a factor.
Offers to settle traditionally present a compromise from a prior position. While parties are expected to be realistic in presenting a proposal, offers rarely indicate an abdication simply to avoid a trial. Hence, there should be some connection between the offer to settle and the position presented at trial. In this case, the positions at trial were vastly different.
Offers to settle primarily result from the recommendations from the lawyer. I have long been of the view that the role of litigation counsel involves assessing the case and providing the client with an opinion as to the likely range of outcomes if the case proceeds to trial. Settlement within that range should occur.
On the child support issue, the difference in the parties’ positions was $20,000.00. The order granted was within that range. Why, then, was settlement not achieved? The parties must have been told that litigation expense would greatly exceed any financial benefit.
iv) The Trial Was Too Long
- At trial scheduling court, counsel requested six days to address all issues, parenting then being an outstanding matter. Despite settlement on parenting, the trial lasted eleven days. This is unacceptable, particularly when considering the backlog of other cases in our system. The issues tried should have been fully canvassed, if properly focused, in three days. Far too much time was spent on extraneous matters.
v) A Trial Was Not Needed
Having regard to the offers to settle child support, it is now clear a trial was not required. The issues pertaining to the vehicle and restraining order should also have been predictable, given the anticipated evidence and relevant principles.
Had either party accepted the offer from the other on child support, the financial benefit would have been considerable.
Further, when parties are close to a resolution, negotiations should have followed either in person or virtually. A focused settlement or mid-trial conference could have been scheduled had a request been made.
vi) Reasonableness, Proportionality and Financial Reality
There is an interconnection between these factors. Simply put, neither party acted in a reasonable manner, proportionality is absent, and the financial impact of proceeding to trial must be devastating.
There are numerous examples of unreasonable acts throughout the litigation process. I decline to undertake a review of each item as the trial and the litigation expense are overwhelming when considering reasonableness and, as well, proportionality.
By reference to the bill of costs presented, it appears the litigation expense on the trial issues was well in excess of $100,000.00 for each party. I assume there was also considerable expense in addressing the parenting issues.
The financial circumstances of both parties are modest. Neither could afford this litigation. The applicant may have been able to pay his expense due to his windfall income in 2020 and 2021. However, his mother continues to subsidize his personal living expenses. The respondent reported being in debt for her litigation expense even before the trial commenced. In result, this trial was a financial disaster for both parties.
It is expected that the litigants would understand the financial consequences of proceeding to trial. Again, with reference to the offers to settle, I fail to understand why this trial occurred. Neither party deserves to be rewarded for proceeding to trial. Other litigants need to consider this case as a warning.
Cost Award
The vast majority of time at trial was with respect to the child support issue; perhaps 70%. The remaining time dealt with the vehicle and the restraining order.
As stated above, there was, at best, mixed success with respect to child support. I am not persuaded either party is entitled to a cost award on this issue.
The applicant was completely successful on the other issues, namely, the vehicle and restraining order. These claims, in my view, should not have been presented. The applicant has some entitlement to a cost award on these issues.
Mr. Clayton reports full indemnity fees of $102,799.00, plus HST of $13,363.87, for a total of $116,162.87. As such is comparable, actually less, than the amount identified by Mr. Grainger, I accept the accuracy of the information provide. 30% of Mr. Clayton’s bill of costs is approximately $35,000.00. Full indemnity costs are not appropriate.
In all of the circumstances, I award costs to the applicant in the amount of $25,000, inclusive of HST and disbursements.
Justice Gordon