COURT FILE NO.: FC-19-2064-1
DATE: 2023/02/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: E.M., Applicant
-and-
C.V., Respondent
BEFORE: Carter J.
COUNSEL: Deanna Paolucci, for the Applicant for motion, Applicant- currently Self- Represented
Richard Bowles, for the Respondent
HEARD: In Writing
COSTS ENDORSEMENT
Overview
[1] Following a twelve-day trial on a motion to change, the Court made various orders with respect to parenting, decision-making responsibility and, to a lesser degree, child support. The parties were invited to provide written submissions on the quantum of costs if they were unable to agree. Written submissions were received from counsel for the Respondent and from the Applicant, who is now self-represented.
[2] The Respondent is seeking costs in the amount of $91,098.07, all inclusive, calculated as follows:
Partial indemnity to and including November 9, 2022, the date on which he served his offer to settle in the sum of $11,748.75, plus HST of $1,527.33 (an amount which excludes the fees and disbursements already claimed in relation to the motions heard June 30, 2022, and August 10, 2022, before Justice Muszynski and the costs award made;
On a full indemnity basis in the sum of $67,197 from November 10, 2022, onward, plus HST of $8,735.61; and
All disbursements incurred related to this matter in the sum of $1,697.50 plus HST of $191.88.
[3] The Applicant submits that the parties should bear their own costs. Although it is not entirely clear from her submissions, the Applicant appears to take the position that success was divided, that the Respondent was unreasonable and unprepared, and that the trial was lengthened by the Respondent’s failure to engage in the drafting of an agreed statement of facts. Furthermore, the Applicant argues she is unemployed and of limited financial means.
Liability for Costs
[4] The first issue in addressing costs is to determine whether either party is liable to pay the other’s costs. Pursuant to r. 24 (1) of the Family Law Rules, O.Reg. 114/99 as am., there is a presumption that a successful party is entitled to costs. Success should be measured by comparing the positions of the parties on the issues litigated with the orders made. Where success in a case is divided, the court may apportion costs as appropriate (r. 24(6)). Where success is divided equally or roughly equally, it is not uncommon for the court to make no order for costs (Saroli v. Saroli, 2021 ONSC 7491 at paras. 6 to 11)
[5] The Respondent sought to have primary decision making and parenting time and to, in effect, prevent the Applicant from moving to Australia with the children. That was the focus of the trial. On those issues the Respondent was clearly successful. It cannot be said that success was divided to an extent that would justify each party bearing their own costs.
[6] As the successful party, the Respondent is presumptively entitled to costs unless it can be demonstrated that he behaved unreasonably (r. 24(4)). In 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.
[7] There is no evidence (as opposed to the unsworn statements of the Applicant) before me that the Respondent behaved unreasonably in relation to any of the issues in this case. Furthermore, he made an Offer to Settle that was close to the judgment he received after trial. It was reasonable to turn down the offer to settle of the Applicant in light of his ultimate success on the key issues. There is no basis to deprive the Respondent of his costs.
[8] The real issue is the quantum of those costs.
Quantum of Costs
General Principles
[9] If liability for costs is found, the court must determine the appropriate quantum of costs. Proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs (Beaver v. Hill, 2018 ONCA 840, at para. 12).
[10] That said, there are situations in which an order for costs will be made on a full recovery basis. Neither party is alleging “bad faith” on the part of the other that would necessitate an order that costs be made on a full recovery basis (r. 24(8)). However, the Respondent is seeking “full indemnity costs” from the date that his Offer to Settle was served.
Offers to Settle
[11] Subrule 18 (14) of the FLRs states:
COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER
(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
If the offer relates to a motion, it is made at least one day before the motion date.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer.
[12] The burden of proving that a court order is as favourable as or more favourable than an offer to settle is on the party who claims the benefit of this rule (r. 18(15)).
[13] To determine whether an order is as or more favourable than a settlement offer, 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. Rather, what is required is a general assessment of the overall comparability of the offer as contrasted with the orders that were ultimately made (Wilson v. Kovalev, 2016 ONSC 163, at para. 25.) Where the offer to settle is not severable, however, the costs consequences set out in r. 18(14) should not be applied unless judgment is more favourable on all issues (Saroli, at para. 16).
[14] The Respondent’s Offer to Settle was served on November 9, 2022, well before the deadline of seven days prior for recovery of costs under r. 18(14). The order made after trial mirrors most of the terms contained in the Offer to Settle. However, in the Offer to Settle, the Respondent proposed that spousal support be terminated commencing May 31, 2023. There is no indication or evidence that the Respondent’s Offer to Settle was severable. This was a motion to change. The Respondent had the burden of showing why the previous spousal support provision should be set aside. No evidence was led, and no submissions were made on the issue. There was no basis to vary the previous order. As a result, the Respondent did not obtain an order that is as favourable as or more favourable than the offer and is not entitled to full recovery of costs pursuant to r. 18(14).
Factors for Determining Quantum of Costs
[15] The FLRs expressly provide that a judge may increase or decrease what would otherwise be the appropriate quantum of costs awarded. Subrule 24(12) sets out the following list of factors the court must consider in setting the amount of costs:
(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.
[16] “Any other relevant matter” includes consideration of the financial means of the parties, their ability to pay costs (or to absorb their own costs), and the impact of any costs award on children in their care (C.A.M. v. D.M., 2003 18880 (ON CA) at para. 42). A party’s limited financial means will generally be relevant to the appropriate quantum of costs and how payment should be effected, but not to the issue of liability for costs (Izyuk v. Bilousov, 2011 ONSC 7476, at paras. 50–51.)
[17] Ability to pay will be less of a mitigating factor when the impecunious party has acted unreasonably, or where their claim was illogical or without merit (Gobin v. Gobin, 2009 ONCJ 278).
[18] The impact of a costs determination on household budgets applies to both unsuccessful and successful parties. An onerous costs order against an unsuccessful custodial parent may impact on that parent’s ability to provide for a child in their care. But equally, an inadequate costs order in favour of a successful custodial parent may result in similar deprivation for a child in their care. In both instances, we want to ensure that litigation expenses do not impoverish the household where the child resides (D.D. and F.D. v. H.G., 2020 ONSC 1919 at para. 44).
[19] I find that both parties were reasonable in the conduct of the trial. While I made adverse credibility findings against the Applicant, this was not a comment on the way in which the litigation was conducted. The reality of the situation is that the parties had previously agreed that the Applicant could relocate to Australia with the children. I have concluded that intervening events mean that this is no longer in the best interests of the children. However, it was not unreasonable for the Applicant to attempt to maintain the previous order, particularly when she had a much better job waiting for her there. Furthermore, while I raised concerns about the Applicant’s belief that the Respondent was grooming the children as it relates to their best interest, it is important to note that this was not a significant part of the Applicant’s case. In fact, she only reluctantly agreed to this belief under cross-examination.
[20] Nor did the Applicant unnecessarily lengthen the litigation. Her evidence-in-chief and the cross-examination of the Respondent’s witnesses were conducted within appropriate time frames. Some time was lost on procedural and evidentiary issues, which was mostly the result of the Applicant’s counsel being retained only a short time before the commencement of the trial. This
factor, however, is offset by the fact that the Respondent’s examination-in-chief was excessively long and took up much more time than had been anticipated in the TSEF.
[21] While the Respondent’s Offer to Settle did not meet the requirements of r. 18(14), the Respondent did obtain much of the relief that he had proposed, and he was clearly the successful party. As previously noted, however, given that the previous order had allowed for the Applicant to relocate to Australia with the children and that she had far superior employment waiting for her there, it is understandable why she could not accept the offer. As noted by counsel for the Respondent at the outset of the trial, this was one of those cases that would just have to be decided by a judge. I find this factor to be neutral in the assessment of the quantum of costs.
[22] The Applicant has taken issue with certain aspects of the Respondent’s Bill of Costs. Rule
12.2 states that a party who opposes a claim for costs respecting fees or expenses shall provide documentation showing the party’s own fees and expenses to the court and to the other party. While the Applicant has provided some previous statement of accounts and an estimate of the time, she believes her lawyer spent on the trial, she has not provided documentation of her own fees and expenses for the trial. With one exception (discussed below), I find that the amount of time spent on the case, the lawyers’ rates and the expenses incurred by the Respondent are all reasonable. In fact, the Bill of Costs suggests that junior counsel did much of the preparation for the trial and that there was minimal overlap of work.
[23] Costs for second counsel at trial are usually not recoverable (Sepiashvili v. Sepiashviili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (SCJ)). Exceptions may be made, for example where it has led to an exceedingly efficient trial and duplication of time is eliminated (M.P.M. v. A.L.M., 2020 ONSC 3491). The matter must be extremely complicated for the court to find that there is a need for second counsel, and this is particularly so in family law matters where the affordability of trials and the cost of representation for matrimonial clients is increasingly in issue and the affordability of family law counsel has resulted in some 70% of matters involving unrepresented parties ( Iacobelli v. Iacobelli, 2020 ONSC 6128).
[24] I cannot say that this case was so complex, and that second counsel resulted in such efficiencies that the cost is warranted. The cost of second counsel at trial was approximately
$7,500. Some reduction is required as a result.
[25] On the issue of financial hardship, the unchallenged evidence at trial is that the Applicant is in dire financial circumstances. There is some question as to the value of property she owns in Australia. I have the statements of counsel for the Respondent and the Applicant herself, but no evidence has been led. A significant costs award against the Applicant would not be in the best interests of the children, as she will have parenting time with them. But the Respondent should not be expected to shoulder the entire cost of the trial. It is evident that he brought this motion to change because he believed it was in the best interests of the children. I conclude that some modest reduction to the costs award would be appropriate to reflect the Applicant’s financial situation.
Conclusion
[26] In consideration of the factors referred to above, I find it appropriate to award costs to the Respondent in the amount of $45,000 inclusive of HST and disbursements. As was done by Justice
Muszynski with respect to the costs award from the interim motions, this costs award shall be payable 60 days following the resolution of the property dispute, either at trial or by way of settlement.
Carter J.
Date: February 16, 2023
COURT FILE NO.: FC-19-2064-1
DATE: 2023/02/16
ONTARIO SUPERIOR COURT OF JUSTICE
RE: E.M., Applicant
-and-
C.V., Respondent
BEFORE: Carter J.
COUNSEL: Deanna Paolucci, for the Applicant for motion, Applicant- currently Self- Represented
COSTS ENDORSEMENT
Carter J.
Released: February 16, 2023