Court File and Parties

COURT FILE NO.: FC-18-1678

DATE: 2022/06/24

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Marina MacLeod Applicant

– and –

Allen Wayne MacLeod Respondent

COUNSEL:

Jeffrey Langevin for the Applicant

Erin Lepine and Ira Marcovitch for the Respondent

HEARD: In Writing

Decision on costs

Shelston, J.

[1] On April 22, 2022, I released my Reasons for Judgment in MacLeod v. McLeod 2022 ONSC 2457. The parties were unable to settle the issue of costs and have provided their submissions.

[2] The applicant seeks substantial indemnity costs in the amount of $68,247.96 and in the alternative, partial indemnity costs in the amount of $45,498.64 on the basis that she was more successful at trial on the various issues before the court.

[3] The respondent submits that, while the success in the trial was divided, he should not be ordered to pay costs to the applicant given her failure to accept his reasonable offer on spousal support, her failure to abide by the disclosure order and her overall irresponsible behavior in advancing her own financial claims. Furthermore, the respondent seeks full recovery costs in the amount of $195,114.50 as being the successful party on the issue of alienation by the applicant and $5,000 in relation to the settlement conference due to the lack of financial disclosure by the applicant that prevented a meaningful review of the financial issues plus HST for a total of $226,129.39.

Successful party

[4] Rule 24(1) of the Family Law Rules provides that there is a presumption that a successful party is entitled to the costs of a motion, enforcement, case, or appeal.

[5] Rule 24(6) provides that if success in a step in a case is divided, the court may apportion cost as appropriate.

[6] In this case, the issues for this trial were as follow:

a) Parenting including decision-making responsibility, parenting time schedule and parent alienation.

b) Child support.

c) Validity of the marriage contract.

d) Spousal support (if marriage contract not enforced).

e) Equalization of the net family property (if marriage contract not enforced).

f) Costs.

[7] In Beaver v. Hill, 2018 ONSC 3352, the court indicated that whether success is truly divided, it is not a mathematical exercise of who won more issues. It requires a contextual analysis that considers the importance of the issues and the amount of time and expenses devoted to each issue and even where a party is successful on an issue, unreasonable behavior may preclude that party being awarded costs.

[8] The two main issues of this trial were the respondent’s allegations that the applicant engaged in a course of conduct to alienate the child from the respondent and the applicant’s claim to set aside the marriage contract. If the marriage contract was set aside, spousal support would be determined under the Divorce Act and the applicant would be entitled to an equalization payment. Most of the trial time was required to address these two issues. On the issue of parenting time and parental alienation, the respondent was successful in obtaining a finding that the applicant had engaged in parent alienation significantly interfering with the respondent’s relationship with his son. Both parties had agreed to joint decision-making responsibility, but the applicant denied that she alienated the child and sought reunification counseling with a counselor with a Russian heritage. I found that the applicant had engaged in alienation conduct and I appointed the previous counselor to conduct the reunification counseling. Furthermore, despite the disparity in the parties’ incomes, I ordered the applicant to equally share the cost of the reunification counseling, based on my finding that she had engaged in conduct amounting to alienation. With respect of the marriage contract issue, the applicant was entirely successful in having the marriage contract set aside.

[9] On the issue of spousal support, the applicant’s claim for a $450,000 lump sum spousal support order was denied. The respondent proposed a duration of seven years at the low end of the SSAG’s. In submissions, the applicant conceded to having an imputed income of $25,000 while the respondent sought to impute an income of $40,000. I imputed an income of $30,000 to the applicant commencing January 1, 2022. On the issue of quantum and duration of spousal support, the respondent was the successful party as I ordered that spousal support terminate in March 2026 and that the quantum of spousal support would be at the low end of the SSAG’s.

[10] On the issue of the equalization of the net family property, the applicant was the successful party in having the marriage contract set aside thereby allowing her to advance a claim for an equalization of the net family property. However, the applicant originally advanced the position seeking an unequal division of the net family property. Only after hearing the submissions of the respondent did the applicant’s counsel realize that his submission on the equalization prejudiced the applicant and that he sought to withdraw his submission. I granted the applicant’s request to amend her submissions and accept the respondent’s calculation of the net family property. Unfortunately, this acceptance was at the end of the trial.

[11] The remaining issue of child support was not contested, other than determining the income of the parties in the commencement date. The applicant was successful in obtaining table child support while the respondent was successful in opposing a retroactive order commencing February 1, 2018.

[12] Accordingly, I find that success was divided.

Importance and complexity of the issues before the court

[13] All issues before the court were very important to the parties, especially with regards to the issue of the parental alienation and setting aside the marriage contract. For the respondent, he sought recognition that the applicant had embarked upon a course of conduct to significantly interfere with the close relationship he had with his son prior to separation. On the other hand, the applicant’s main issue was setting aside the marriage contract, as that would entitle her to spousal support under the Divorce Act that was more favorable than the terms of the marriage contract and that she would be entitled to an equalization of the net family property.

[14] While these issues were very important to the parties, I did not find any of these issues to be difficult or complex.

The reasonableness or unreasonableness of each party’s behavior

[15] In Mattina v. Mattina, 2018 ONCA 867, the court set out the four fundamental purposes of costs being to partially indemnify successful litigants, to encourage settlement, to discourage and sanction inappropriate behaviour by litigants and to ensure that cases are dealt with justly. In Beaver v. Hill, 2018 ONCA 840, the court indicated that cost awards are discretionary and two important principles in exercising discretion are reasonableness and proportionality.

[16] Rule 24(4) provides that, where a successful party has behaved unreasonably, that party may be deprived of all or part of the parties’ own costs or ordered to pay all or part of the unsuccessful party’s costs. Rule 24(5) provides that in deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

a) The parties’ 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.

[17] Rule 24(8) provides 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. Bad faith is not simply bad judgment or negligence. It is the conscious doing of a wrong because of the dishonest purpose or moral obliquity. The behavior 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 behavior, to conceal information relevant to the issues or to deceive the other party or the court. Beaver v. Hill 2018 ONSC 3352.

Parental alienation finding

[18] The respondent submits that the applicant’s conduct has been entirely unreasonable and much of her behavior amounts to bad faith. The respondent submits that the applicant’s conduct was designed to interfere with and destroy the child’s relationship with his father and that a significant costs award is necessary to sanction her behavior by alienating the child. The respondent submits that the entirety of the parenting litigation over the past four years was necessitated solely by the applicant’s campaign to sever the relationship between him and the child, and the applicant’s failure to comply with the terms of the separation agreement and court orders.

[19] The applicant submits that her behavior with the child was reflective of her Russian heritage, that she is the product of a different cultural system, and it is her belief that Russian mothers are highly protective of their children. She submits that she engaged in attending and completing courses on parenting and high conflict situations to address the allegations of alienation. She submits that olive branches were extended to the respondent on multiple occasions without reply. She further submits that the respondent was partially responsible for the lack of reunification by his decision not to start to pay child support to the applicant when the child moved to live with her in October 2020.

[20] In my Reasons for Judgment, I found that the applicant had alienated the child from the date of separation that continued after the decision of Justice Audet. I found that the respondent did not help the situation by refusing to pay his child support obligation to the applicant as of October 2020. While he consented to a retroactive order at the trial, he should have started paying child support in October 2020. I also found that the applicant advised the child that his father was not paying support, which further alienated the child from his father. The applicant should never have disclosed that fact to the child. I reject the submission that the applicant’s cultural background was a factor in her alienating conduct. I find that it was the applicant’s conduct that was the main and most influential factor in the alienation.

[21] Courts have found that when parents engaged in conduct to alienate their children from the other parent, such conduct falls within the scope of “bad faith” as set out in Rule 24 (8) in determining costs, see: M.G. v. G.G. 2010 ONSC 792, Izyuk v. Bilousov, 2011 ONSC 7476 and Cantave v. Cantave, 2014 ONSC 5999. Negin v. Fryers, 2018 ONSC 6713 and O.M. v. S.K., 2020 ONSC 4765.

[22] I find the applicant’s alienation conduct amounts to bad faith within the meaning of Rule 24(8). Justice Doyle, in her decision dated January 31, 2019, found that the applicant acted unreasonably in denying the respondent access with his child. In her May 30, 2019, Justice Audet found that the applicant’s behavior constituted bad faith and that her conduct was clearly designed to undermine and destroy the child’s relationship with his father. Despite these two earlier decisions of the court finding that the applicant acted unreasonably, the applicant continued her campaign of alienation. I find that the applicant’s conduct it was inappropriate, must be discouraged and sanctions must be imposed by this court.

Unreasonable conduct by the applicant

[23] I find that the applicant engaged in unreasonable conduct, including, but not limited to, by failing to follow court orders, failing to provide disclosure, not complying with the Trial Schedule Endorsement Form as follows:

a) Failing to comply with the Order of Justice Doyle to provide her jewelry appraisal.

b) Swearing a Financial Statement and testifying that the jewelry that she retained on separation was worth $5,000, then accepting the respondent’s Net Family Property calculation which included the value of the jewelry that she retained to be $117,900.74.

c) Failing to file a Net Family Property Statement until the end of the trial, contrary to the terms of the Trial Schedule Endorsement Form.

d) Wasting court time by seeking to amend her Application at the commencement of trial to claim an unequal division of the net family property, advancing submissions claiming that relief, then changing her position to accept the respondent’s calculation of the net family property. By this conduct, the court was required to hear evidence regarding the equalization of the net family property and submissions on the equalization of the net family property. Based on the applicant’s acceptance of the respondent’s calculations, this issue should never have been presented as an issue for trial.

[24] I find that the respondent acted reasonably such as agreeing to adjust the child support higher because of an error by the applicant in how his income was being imputed into the DivorceMate Software and in providing the court with the net family property calculation which showed the respondent owing the applicant a higher equalization payment than claimed by the applicant. However, the respondent’s decision not to pay child support in October 2020 was unreasonable.

Offers to settle

[25] 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.

[26] The applicant submitted two offers to settle being August 20, 2021, and January 22, 2022. The applicant submits that the amount of the equalization payment was greater than the applicant’s offer to settle dated January 22, 2022. However, neither of the applicant’s offers had terms that were severable. While the applicant received more on the equalization payment than her offer to settle, she did not receive a decision that was better than most of the remaining terms of either of her offers to settle.

[27] The respondent submits that his offer to settle dated March 24, 2021, was better than the Reasons for Judgment. The respondent submits that he offered a lump sum payment in the amount $275,000, which was based on the after-tax benefit to the applicant of monthly spousal support payments of approximate $3,900 per month for a period of five years ending March 2026. At trial, the applicant was awarded spousal support in the amount of $3,000 per month for 2021, and $3,636 per month terminating in March 2026. The respondent submits that the offer exceeded the Reasons for Judgment and that the requirements of Rule 18(14) are engaged, and he is entitled to his costs.

[28] Upon a review of the respondent’s offer to settle dated March 24, 2021, the terms of the offer were not severable. The offer addresses child support effective April 1, 2021, and spousal support, but does not break down how the lump sum payment of $275,000 was arrived at. Furthermore, the lump sum payment was reduced by $62,458.51 to account for the payment of outstanding costs awards and post separation expenses. Finally, the child support provision, while close, is not better than the trial decision. Based on these factors, I do not find that Rule 14(18) is engaged. However, the offer to settle may be taken into consideration in an overall assessment of costs.

Lawyers’ Rates

[29] I find that the hourly rate charged by the various counsel, law clerks, and articling students to be reasonable for both, the applicant, and the respondent, based on their level of experience.

Time Properly Spent and Expenses Properly Payable

[30] In Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), the court stated that the court’s role in assessing costs is not necessarily to reimburse the litigant for every dollar spent on legal fees, but the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding.

[31] I have reviewed the applicant’s Bill of Costs which start in July 2020. I find that the time docketed and the expenses incurred to be reasonable. The applicant initially retained one lawyer under a Legal Aid retainer, then Ms. Holly, to whom she paid $5,000 and thereafter to counsel for the applicant and two articling students.

[32] The respondent’s Bill of Costs discloses that six different lawyers worked on the file, plus two law clerks and five articling students from 2018 through the trial. The respondent has not provided a bill of costs for all legal services provided, but rather only for financial issues, parenting issues and for a Settlement Conference.

[33] On the issue of parenting alone, the respondent seeks full recovery costs in the amount of $195,114.50 plus HST. In determining costs, the court is required to assess such costs to ensure that they are reasonable and proportional. My first comment is that the respondent had two lawyers working on this file throughout the litigation, including the trial, while the applicant only had one lawyer, albeit three lawyers were involved from beginning to end. The respondent has the right to retain as many lawyers as he wishes. However, in determining costs, duplication of legal services is not a justifiable expense to be imposed upon the losing party unless circumstances dictate the involvement of multiple counsel. This was not one of those cases.

[34] Moreover, the fees sought must be reasonable and proportional. From my review of the dockets, starting in August 2018, Ms. Lepine logged 248.10 hours, while Mr. Marcovitch logged 276.65 hours for a total of 524.75 hours totaling $171,716.75. The balance of the docketed time was incurred by other members of the firm. On the other hand, the total docketed time by counsel for the applicant totals $58,913.52 for all issues before the court. I agree with the applicant’s submission that it is not appropriate to simply take the number of hours spent by counsel on a particular matter, multiply the hours at a determined hourly rate to arrive at a figure in a cost determination. The determination of costs is not a mechanical calculation. The two most important factors are reasonableness and proportionality. In my view, the costs requested by the respondent are unreasonable, excessive, and disproportional to the reasonable expectations of the losing party, in this case, the applicant, on the issue of parenting.

[35] With respect to the financial issues, I reject the respondent’s submission that he is entitled to costs in the amount of $73,580.75 plus HST. Firstly, the respondent concedes that the parties enjoyed divided success on the financial issues and secondly, I do not find that the respondent’s Offer to Settle dated March 21, 2022, was a better result than the Reasons for Judgment. Thirdly, his offer on child support was not better than the Reasons for Judgment and finally that the terms of the Offer to Settle were not severable.

Costs claimed by the respondent for Settlement Conference

[36] The respondent seeks costs in the amount of $5,000 related to the Settlement Conference took place before Justice Doyle. The respondent submits that due to a lack of financial disclosure from the applicant, there was an inability to valuably engage in the financial issues and the conference ultimately resulted in a disclosure order against the applicant. The applicant did not address this issue in her Reply submissions.

[37] Justice Doyle’s endorsement indicates that the parties attended the conference and discussed the issues of parenting, child support, spousal support, marriage contract and disclosure. Further, the court made an order on consent regarding disclosure, granted the party’s rights to bring motions after the settlement conference, signed the Trial Schedule Endorsement Form and placed the matter on the September 2021 trial settings. Finally, the court reserved the costs for the conference to the trial judge.

[38] Based on my review of the endorsement of Justice Doyle, I see no reason to award the respondent costs of $5,000 for that conference. The endorsement of Justice Doyle does not indicate that the parties were unable to engage in a discussion of the financial issues only but while the issue of disclosure was one of the issues canvassed, there were many other issues reviewed and the court signed the Trial Schedule Endorsement Form. In these circumstances, this claim is denied.

Any other relevant matter

[39] The applicant submits that she should not be penalized because she is of limited means, she had greater success at trial and the previous findings of alienation and cost awards do not support further sanctions being granted. Being of limited means is only one factor for the court to consider in a cost decision. Litigants are responsible for the positions they take during the litigation whether they are of limited means or not.

Disposition

[40] I have reviewed the factors set out in Rule 24(12) of the Family Law Rules, considered the written submissions, and have reviewed the offers to settle.

[41] On the two major issues for the trial, being alienation and setting aside the marriage contract, the success was divided. Once the marriage contract was set aside, the applicant was entitled to an equalization payment which amounted to $289,170.15 less $40,575.51. This was a significant amount. On the issue of spousal support, while the applicant was not successful in seeking a lump sum payment of $450,000, she was successful in receiving periodic payments for seven years ending in March 2026 in an amount significantly more than provided in the marriage contract. Consequently, the applicant is entitled to her costs for the success on these three issues.

[42] On the other hand, the respondent was successful on a finding of alienation and, once the marriage contract was set aside, was successful in opposing a lump sum payment and was successful in having a termination date of the spousal support in March 2026 at the low end of the SSAG’s. This result would entitle the respondent to his costs on these two issues.

[43] I have also considered that the costs claimed by the applicant for the entire trial to be reasonable while I find that the costs in the amount of $195,114.50 plus HST claimed by the respondent to be unreasonable and excessive. However, the respondent incurred significant legal fees caused by the applicant’s alienation of the child.

[44] I have also considered the principle that unreasonable behavior is to be sanctioned in a cost award and that a parent who engages in alienation is guilty of bad faith as envisaged in rule 24(8). Finally, a party who is the successful party may still be deprived of costs if they have engaged in unreasonable conduct and, in this case, conduct amounting to bad faith.

[45] Balancing the various issues before the court starting with the positions of the parties, the Offers to Settle, the ultimate trial decision, my finding of bad faith and unreasonable behavior by the applicant and the significant legal fees incurred by the respondent on the alienation issue, I conclude that a reasonable and proportional decision would be met by both parties paying their own legal fees.

[46] Consequently, I order that both parties pay their own costs for this proceeding.

Released: June 24, 2022

Justice Shelston