Court File and Parties
COURT FILE NO.: FS – 17189 – 0003
DATE: 20221017
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Willi S. Goetschel, Applicant
AND:
Samira Goetschel, Respondent
BEFORE: P. J. Monahan J.
COUNSEL: Alexandrea Grant, for the Applicant
Eric Sadvari for the Respondent
HEARD: In writing
Costs ENDORSEMENT
[1] The parties were married in 1998 and separated in 2006 and have been involved in extensive matrimonial litigation since that time. They have two children: a son who is 22, and a daughter who is 17.
[2] The most recent proceeding involving these parties is a Motion to Change that was commenced by the Respondent on October 21, 2020. That matter was settled by a Final Order issued on consent by Diamond J. on June 24, 2022 (the “June 2022 Consent Order”). Although the June 2022 Consent Order resolved all of the substantive issues in dispute, the parties agreed to submit the issue of costs to me for “summary determination”, based on written costs submissions.
[3] The parties served and filed their costs submissions in accordance with the timetable set out in the June 2022 Consent Order. Apart from a passing reference in the Respondent’s submissions, neither party considered whether it was appropriate to award costs where the parties had settled the substantive issues in dispute. Following a teleconference with counsel, I directed the parties to file brief supplementary submissions on this issue. In preparing this Costs Endorsement, I have taken into account both the initial as well as the supplementary costs submissions.
The Parties’ Costs Submissions
[4] The Respondent’s initial cost submissions argued that she had been forced to commence the Motion to Change simply to obtain full financial disclosure and Table child support from the Applicant. She argued that she was successful, since the Applicant has now provided disclosure and is paying the child support that was always owed. She further argued that the Applicant has acted unreasonably dating back to the parties’ separation in 2006. She says she is entitled to costs because, otherwise, the Applicant will have succeeded in burying her in costly re-litigation simply to obtain the child support that was he was legally required to pay. She seeks a full recovery costs award of $25,000, which is approximately 80% of the $32,000 she incurred in connection with this proceeding.
[5] In support of her submissions, the Respondent included 10 attachments, including a number of Endorsements issued in connection with previous litigation between the parties. The Respondent also attached five Offers to Settle she had made in 2020 and 2021, as well as 11 pages of emails between the parties in December 2021 and January 2022. Her costs submissions, including attachments, were 75 pages long.
[6] The Applicant’s responding cost submissions argued that he was the successful party and was entitled to his costs. He claimed that the June 2022 Consent Order was, in essence, consistent with the positions he had taken throughout the litigation. He maintained that he had acted reasonably throughout, whereas the Respondent had acted unreasonably, offering numerous examples to illustrate his claims. He argued that he should receive his costs on a full-indemnity basis, namely, his actual legal fees of $39,021 (not including HST).
[7] In support of his submissions, the Applicant included 28 attachments, including numerous endorsements or orders issued in connection with prior litigation involving these parties, dozens of pages of emails between the parties between August 2018 and June 2022, and various other documents (including a copy of a June 2022 plane ticket for the parties’ son, and copies of webpages involving properties previously owned by the Respondent). The Applicant’s cost submissions, including attachments, were 158 pages long.
[8] The Respondent filed short Reply submissions in which she disputed a number of the factual allegations and claims made by the Applicant. In particular, the Respondent disputed the Applicant’s allegations in relation to the parties’ involvement with their son in June 2022, as well as the manner in which the Respondent had dealt with various real estate properties in the United States.
[9] In their supplementary cost submissions (filed in accordance with my direction described above), both parties argued that they are entitled to their costs notwithstanding the fact that the substantive issues in dispute were settled on consent.
[10] The Respondent acknowledges that the general rule is that costs should not be awarded following a settlement. However, she argues that the court should depart from this general rule because of the unique circumstances of child support litigation. The Respondent argues that failure to award costs would create an incentive for a child support payor to delay compliance and impede the recipient’s ability to recover support that is legally the right of the child. Without a risk of cost consequences, a support payor would be incentivized to delay compliance with the child support obligation, knowing they can enter into a settlement on the eve of trial without cost penalties.
[11] The Applicant argues that he is entitled to his costs notwithstanding that the parties settled the substantive issues in dispute, since Respondent’s Motion to Change was without merit and unreasonable ab initio. The Applicant argues that, although costs are not generally awarded following settlement, this case is exceptional as there would have been no settlement if the parties had not referred the issue of costs to the court. The Applicant argues that refusing to exercise jurisdiction to award costs when a case has been difficult to settle could encourage reasonable parties, especially parties with a stronger case, to pursue trial specifically to recover costs.
Principles Governing Costs Awards Following a Negotiated Settlement
[12] Courts have a broad discretion to award costs, and the court may determine by whom and to what extent costs shall be paid.[^1] In the family law context, there is a presumption that a successful party is entitled to the costs of a proceeding and, in fixing the quantum of costs, the court shall consider the reasonableness and proportionality of each party’s behaviour.[^2]
[13] These determinations presuppose the existence of objective benchmarks against which relative success, reasonableness and proportionality can be measured. Those objective benchmarks are present when a court makes findings of fact and law and issues an order. It is for this reason, as Middleton J. succinctly observed over a century ago, that costs are generally regarded as “incident to a determination of the rights of the parties, and ought not to be made themselves the subject matter of the litigation.”[^3]
[14] These objective benchmarks are absent when parties resolve disputed issues on consent.[^4] There are a myriad of reasons why parties may decide to compromise or settle their claims without necessarily conceding that positions previously held were wrong. Thus, to attempt to use a negotiated compromise solution as the proper benchmark against which to assess relative success, or the reasonableness of either party’s behaviour, is questionable as a matter of principle.[^5]
[15] It therefore follows that, where parties compromise their claims and settle litigation, the award of costs is very much the exception rather than the rule. Another way of expressing this principle is 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.”[^6]
[16] This is not to deny that there may be exceptional cases in which a costs order is appropriate even following a negotiated resolution. For example, where there has been a vast disparity in the relative costs that have been incurred by the parties, thereby precluding a negotiated settlement without an award of costs, and where the court is in a position to determine relative success based on the record before it, it may well be appropriate for the court to make an award of costs.[^7] But as a matter of principle, an award of costs following a negotiated resolution will generally be inappropriate.
Application of General Principles
[17] The parties both maintain that the June 2022 Consent Order represents an appropriate benchmark against which to measure their relative success, and ask the Court to make a costs order accordingly. But they disagree on virtually everything else. Each argues that the other behaved unreasonably and that they were the successful party. They have each provided extensive documentation in support of their respective positions.
[18] In effect, the parties are attempting to re-argue the merits of their respective positions on the Motion to Change in the guise of a cost determination. They invite me to embark upon a review of the reasonableness of each of their conduct based on an untested written record, including numerous factual claims that appear to have arisen only after the June 2022 Consent Order. I see no fair or appropriate way in which I could possibly resolve these disputed issues of fact in a summary matter. I refer once again to the pithy words of Middleton J: “[w]hen the merits for any reason cannot be determined, there ought not to be a pretended investigation of the merits for the purpose of awarding costs.”[^8]
[19] This conclusion is not affected by the fact that the subject matter of the litigation involves a claim for child support. Each party claims that they acted reasonably, while the other did not, in their respective positions on this issue. In order to resolve these disputed matters, I would be required to make the same findings of fact that, in present circumstances, would be manifestly inappropriate.
[20] In their supplementary cost submissions, both parties claim that they would not have settled the matter and would have continued on to trial had they not been provided the opportunity to have costs determined by the court. Yet neither party made such a claim in their initial costs submissions. As noted above, there are many reasons why parties may decide to settle a case and I am unable to confidently determine why that was the outcome here. In any event, the June 2022 Consent Order merely provides that the parties may submit the issue of costs for summary determination. The court retains its discretion to determine whether a costs order would be appropriate in the circumstances of this case.
[21] I see nothing exceptional in the record before me which would justify a departure from the general rule that costs ought not to be awarded in cases where the parties settle litigation on consent. I therefore find that no costs should be awarded to either party.
P. J. Monahan J.
Date: October 17, 2022
[^1]: Courts of Justice Act, RSO 1990, c. C. 43, s. 131 (1). [^2]: Family Law Rules, O. Reg. 114/99, r. 24 (1) & (12). [^3]: McClellan v. Powassan Lumber Co., [1914] O.J. No. 381 (Ont. H.C.), at para. 8 (emphasis added) (“McClellan”). The same point was made more recently by Myers J. in Muskala v. Sitarksi, 2017 ONSC 2842, at para. 8. [^4]: Dhillon v. Dhillon, 2009 CanLII 58607 (ON SC), [2009] O.J. No. 4459 (S.C.J.), at para. 10; Witherspoon v. Witherspoon, 2015 ONSC 6378 ("Witherspoon"), at para. 42. [^5]: Witherspoon, at para. 42. See also Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304, at paras. 24-39; Talbot v. Talbot, 2016 ONSC 1351, at paras. 44-60. [^6]: Mark M. Orkin & Robert G. Schipper, Orkin on The Law of Costs, 2nd ed., (Toronto: Thomson Reuters Canada Ltd., 2022), at § 2:35. [^7]: Kearney v. Hill, 2017 ONSC 6306. [^8]: McClellan, at para. 8.