Court File and Parties

COURT FILE NO.: FC-21-57041

DATE: 2022-10-17

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michael Paul Denomme, Applicant

AND:

Faune Marie Denomme, Respondent

BEFORE: Justice D. Piccoli

COUNSEL: Steven Lubczuk/Kaitlin Jagersky for the Applicant

Lorrie Stojni-Kassik, for the Respondent

COSTS ENDORSEMENT

[1] The court heard a long motion on September 8, 2022 and released its decision on September 13, 2022. My decision was that the schedule for the children would be 2-2-5-5, that the child, Nash, would attend school in the Applicant’s catchment area and, on consent, that the Applicant be permitted to enrol the child, Violet, in the daycare of his choice during his parenting time at his expense and, further, that he was to notify the Respondent of the name of the daycare. I declined to make an order for primary residence as requested by the Applicant for the purposes of enrolling the child in school as I did not find it necessary. I indicated that, should the school require otherwise, the parties could return before me.

[2] The parties made written cost submissions and this is my decision regarding costs.

[3] The Applicant seeks costs of the motion on a full recovery basis in the amount of $21,425.93. He states that he was wholly successful on the motion, that his offer to settle dated June 9, 2022 was what I ordered and that the Respondent acted in bad faith.

[4] The Respondent does not set out her position as to what, if any, costs should be ordered. She instead notes that the court declined to make an order for primary residence, that she consented prior to argument of the motion that the child, Violet, could attend daycare on the condition that the Applicant be responsible for the related expenses and that further information be provided including a specific daycare location. She further asserts that the issues were not complex, that the costs claimed are excessive, that she has limited ability to pay, and that she did not act in bad faith nor was she unreasonable. I do note that the Respondent has not attached her bill of costs to the submission which would have been of assistance in ascertaining whether, as she states, the costs sought by the Applicant are not consistent with what the unsuccessful party might be reasonable expected to pay.

The Law

[5] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that cost orders are in the discretion of the court. Rule 24 of the Family Law Rules, O. Reg. 114/99, sets out a framework for awarding costs in family law cases in the Superior Court of Justice: Mattina v. Mattina, 2018 ONCA 867, at para. 9 (Mattina).

[6] The modern costs rules are designed to foster four fundamental purposes:

i. to partially indemnify successful litigants for the costs of litigation;

ii. to encourage settlement;

iii. to discourage and sanction inappropriate behaviour by litigants;

iv. to ensure that cases are dealt with justly pursuant subrule 2 (2) of the Family Law Rules (“the Rules”)

Mattina v. Mattina, 2018 ONCA 867; Serra v. Serra, 2009 ONCA 395.

[7] Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes “reasonableness and proportionality” in any costs award: Mattina, at para. 10, citing Serra v. Serra, 2009 ONCA 395, at para. 8, and Sambasivam v. Pulendrarajah, 2012 ONCJ 711, at para. 37, Beaver v. Hill 2018 ONCA 840 at para. 12 (Beaver).

[8] Rule 24(1) creates a presumption of costs in favour of the successful party in a motion, case or appeal. Success is the starting point in determining costs. This does not mean that a successful party is always entitled to costs. An award of costs is subject to r. 18(14), the factors listed in r. 24(12), r. 24(4) pertaining to unreasonable conduct, r. 24(8) regarding bad faith and the reasonableness of the costs sought by the successful party: Mattina, at paras. 12-13; Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (Ont. S.C.), at paras. 1-2; Berta v. Berta, 2015 ONCA 918, at para. 94.

[9] The Family Law Rules do not provide for a general approach of “close to full recovery” of costs. Instead, r. 24(12) sets out the appropriate considerations in fixing a quantum of costs. As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: Beaver at paras. 11-12, 19.

[10] The Family Law Rules expressly contemplate full recovery costs in specific circumstances, such as when a party has behaved unreasonably, acted in bad faith or beat an offer to settle under r. 18(14). Rule 24(4) addresses situations where a successful party has behaved unreasonably, and r. 24(5) provides guidance on how to evaluate reasonableness. Rule 24(8) discusses the costs consequences of a party who has acted in bad faith: Mattina, at paras. 15-18; Beaver, at para. 13.

[11] Bad faith can be found in a number of ways. The essence of bad faith is the representation that one's actions are directed toward a particular goal while one's secret, actual goal is something else – something that is harmful to other persons affected or at least something they would not willingly have supported or tolerated if the true intention had been known. However, not all bad faith involves an intent to deceive. In rare cases, bad faith can be overt, such as when actions are carried out with an intention to inflict harm on another party without an attempt to even conceal the intent: S.(C.) v. S.(M.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (Ont. S.C.), at para. 16.

[12] In order to be considered bad faith, the behaviour must be carried out with an 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: S.(C.), at para. 17. If bad faith is found in relation to some issues but not the whole case, full recovery costs should be awarded in relation to the issues affected by the bad faith and then the whole picture should be reconsidered in light of the factors in r. 24(11) (now r. 24(12)). The discretion in that provision should be used as necessary to produce the correct result: S.(C.), at para. 24.

[13] When reviewing an offer to settle, the absence of a true element of compromise is a factor to be considered in deciding whether the offer should properly impact the appropriate costs award. In addition, judges should be very cautious about relying too heavily on this factor to increase or decrease the quantum of costs when the specific Rules regarding such offers are not directly engaged. Even under r. 24(5)(a) of the Family Law Rules, it is but one factor to be considered: Beaver, at para. 16.

[14] Once liability for costs has been established, the court must determine the appropriate quantum of costs. Rule 24(12) prescribes some of the factors which the court must consider in deciding the appropriate quantum.

[15] The assessment of costs is not a mechanical exercise. It is not just a question of adding up a lawyer’s dockets. The overall purpose is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances of the case: Jackson v. Mayerle, 2016 ONSC 1556, 130 O.R. (3d) 683, at paras. 16-21.

[16] In Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905; Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.), the Court of Appeal for Ontario set out the following additional general principles relating to quantum:

i. Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.

ii. Costs need to be proportional to the issues and amounts in question and the outcome of the case.

iii. Amounts actually incurred by the successful litigant are not determinative.

iv. In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

(See also Selznick v. Selznick, 2013 ONCA 35, [2013] W.D.F.L. 1013).

Analysis

[17] Rule 24(12) sets out specific factors the court should consider. These include:

a. Each party’s behavior: Rule 24(12)(a)(i): In this respect, I find that the Applicant’s behaviour was reasonable. He demonstrated a strong desire to resolve the issues as is seen from his offer to discuss schooling before the motions were brought and his offer to settle of June 9, 2022. He was substantially successful. The Respondent’s position was not reasonable, nor was her refusal to discuss the issue with the Applicant in advance of the motion. She was also not successful in relation to her offer to settle.

b. The time spent by each party: Rule 24(12)(a)(ii): In reviewing the Bill of Costs of the Applicant, I find the hourly rates to be reasonable. I do find that the time spent by the Applicant’s legal team was excessive. It may have been a learning experience for students at law or more junior lawyers, but it appears that resulted in a duplication of work and redundancies. For example, although it is reasonable for the student to prepare the factum, in this case two students (one summer and one articling) worked on the factum and two skilled lawyers reviewed and prepared for the motion. Further, although the matter was of great importance to the parties, it was not overly complex. There was no need for two skilled lawyers to attend for argument of the motion. That said, I reject the argument made by the Respondent that a lawyer of 40 years’ experience was not required. The Applicant is entitled to his choice of lawyers.

c. Written offers to settle: Rule 24(12)(a)(iii): The Applicant served an offer to settle with his motion materials. Other than his request for an order that he be the primary residence parent, he was successful on all other issues. The offer to settle dated June 9, 2022, was reasonable. He offered that each party would pay his and her own costs if the offer was accepted on or before June 15, 2022. The Respondent on the other hand waited until July 28, 2022, to serve her offer to settle. She was not successful other than consenting to the relief of daycare in her confirmation to the court on August 12, 2022.

d. The legal fees, including the number of lawyers and their rates: see (b) above.

e. Any other expenses: Rule 24(12)(a)(v): All of the disbursements claimed are reasonable.

[18] Applying the principles of success to this case, the Applicant is clearly entitled to his costs. Although I do not find that the Respondent acted in bad faith, I find that she did not act reasonably throughout.

[19] Generally, the courts have held that the paying party’s impecuniosity or limited financial resources cannot serve as a basis to disallow costs to the successful party: Mark v. Bhangari, 2010 ONSC 4638, at para. 10. The courts have noted that to do so would undermine the logic and purpose of the rules: Garand v. Mutual of Omaha Insurance Co., 2001 ABQB 964, at para. 49l; Dykens v. Van Horn, 2009 BCSC 418, at para. 22. However, this does not mean that their limited financial position cannot factor into the court’s assessment of the quantum of costs. The Court of Appeal for Ontario has stated that "[i]n our view, the plaintiff's impecuniosity is clearly a factor which here would merit some reduction in the costs sought": Jeremiah v. Toronto Police Services Board, 2009 ONCA 671, at para. 13. Further, in Basley v. Basley, 2009 O.J. No. 806 at para 7, the court considered whether a particular cost award may place either parent at a “terrible disadvantage” or “may jeopardize the residential arrangement in which the children are living”.

[20] In this case, the Respondent is not impecunious. She failed to disclose her income at the argument of the motion, although, for reasons that are unclear, she indicated at the motion that she had reduced her hours from full time (she was earning $60,000 per annum) to part time. It is clear that at the current time she has less disposable income than the Applicant. The Applicant points out that when the litigation commenced the Respondent had in excess of $250,000 in bank and investment accounts. The parties’ financial statements were not before the court in the motion. A significant cost award payable immediately may impact the Respondent’s ability to financially provide for all four of her children while the issues of retroactive and ongoing support and equalization remain outstanding. I reject the argument to reduce the cost payable by her but consider it in determining how and when the costs are to be paid.

[21] I have considered the applicable law and all of the circumstances and find that it is proportionate and reasonable that the Respondent pay to the Applicant $14,000 in costs inclusive of HST and disbursements. The Respondent shall pay a minimum of $400 per month towards the cost, commencing November 1, 2022. Once the property and or support issues are determined, if there are costs still owing by the Respondent to the Applicant, she shall pay the amount owing from her share of any payment which may be owing to her. The costs order if not paid in full within 60 days shall attract interest at the post-judgement interest rate.

D.Piccoli, J.

Date: October 17, 2022