COURT FILE NO.: FS-22-28918
DATE: 2023/01/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sanjin Hrvic, Applicant
AND:
Aida Hrvic, Respondent
BEFORE: M. Kraft, J.
COUNSEL: Gary S. Joseph, for the Applicant
Ravital Kharda, for the Respondent
HEARD: In writing
ENDORSEMENT
[1] This is the costs endorsement in respect of the motion argued before me on November 15th and December 1st, 2022. The respondent brought a motion to 1) strike the applicant’s pleadings because of his failure to comply with court order with respect to disclosure; 2) increase the daily penalty of $100 a day ordered by Shore, J. to $150 a day for as long as the applicant had outstanding disclosure; and 3) to fix the penalty owing by the applicant to the respondent between September 1, 2022 and November 15, 2022 at $7,600, payable within 7 days.
[2] On December 1, 2022, I found that the applicant was in breach of the court orders for disclosure and ordered him to bring a motion against a third party for disclosure, within 45 days, failing which his pleadings were to be struck. I also ordered that the applicant not be permitted to take any further steps in the litigation until his disclosure was completed, except for the step to bring a motion against the third party. Finally, I ordered that the penalty be fixed at $7,600 for the period September 1, 2022 to November 15, 2022, payable within 30 days. I did not, however, strike the applicant’s pleadings, nor did I increase the daily penalty as sought by the respondent.
[3] The respondent argues that she was successful on the motion. She seeks costs on a full recovery basis in the sum of $13,735.43, inclusive of HST and disbursements on the grounds that the issues addressed on the motion were of great importance to the parties; she behaved reasonably throughout the matter; she was as successful on the motion as the terms she set out in her Offer to Settle; the applicant behaved unreasonably; and the legal fees incurred by her counsel were reasonable in the circumstances.
[4] The applicant argues that success was divided on the motion; that the respondent incorrectly scheduled this as a short motion when it should have been a long motion which caused the motion to be argued over two days; the respondent did not comply with the Practice Direction in terms of the length of her material and that, as a result, no costs should be payable by either party.
The Applicable Law:
[5] The Court of Appeal has identified the four fundamental purposes that modern cost rules are designed to foster as follows: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are dealt with justly. See Mattina v. Mattina, 2018 ONCA 867 at paragraph 10.
[6] The exercise of judicial discretion in awarding costs is guided by Rule 24 of the Family Law Rules both in terms of the entitlement of a party to an award of costs as well as to the quantum of that award.
Entitlement:
[7] Rule 24(1) of the Family Law Rules creates a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. This presumption applies equally to custody and access issues. See Mattina supra at paragraph 12.
[8] As such, “success” is the starting point in determining a costs award. See Sims-Howarth v. Bilcliffe, 2000 ONSC 22584 at paragraph 1.
[9] In assessing the success of a party, the court looks to the positions taken by the parties at trial [or in this case, at the motion], see Berta v. Berta, 2015 ONCA 918 at paragraph 102 as well as to the offers to settle exchanged by the parties as compared with the terms of the final order see Lawson v. Lawson 2008 23496 (ON SC), [2008] O.J. No. 1978 and Smith-Howarth v. Bilcliff supra at paragraph 9.
[10] Where there are a number of issues before the court, it can have regards to the dominant issue at trial [or in this case, at the motion] see Firth v. Allerton, [2013] O.J. No 3992 and Mondino v. Mondino, 2014 ONSC 1102. Success may also be determined on an issue-by-issue basis. However, not all issues bear equal weight in determining success. See Jackson v. Mayerle, 2016 ONSC 1556.
Divided Success
[11] Pursuant to r. 24(6), if success in a case is divided, the court may apportion costs as appropriate, and a contextual analysis is needed to consider the importance of the issues that were litigated and the amount of time and expenses devoted to the issues that required adjudication.
[12] The analysis to be undertaken when success is divided to analyze a) how many issues there were; b) how the issues compared in terms of importance, complexity and time expended; c) whether either party was predominantly more successful on more of the issues; and d) whether a party was more responsible for unnecessary legal costs.
[13] My analysis of the various issues determined on the motion are set out in the chart below:
| Issue | Result on Motion | Who was Successful |
|---|---|---|
| Whether the applicant had failed to comply with disclosure orders? | The applicant was found to be in breach of the disclosure orders | The respondent |
| If so, whether the applicant’s pleadings should be struck? | I did not order the applicant’s pleadings to be struck, if the applicant does not bring his third-party disclosure motion within 45 days, his pleadings were ordered struck | The applicant |
| Whether the applicant shall not be permitted to take any further steps in this matter, except to bring the necessary third party disclosure motion, until he complies with the disclosure order? | I made an order that the applicant shall not be permitted to take any further steps in the proceeding, except to bring the third-party disclosure motion within 45 days | The respondent |
| Whether the daily penalty imposed by Shore, J. should be increased from $100 a day to $150 a day while the applicant’s disclosure remains outstanding; | I dismissed the respondent’s motion in this regard and declined to increase the daily penalty | The respondent |
| Whether the penalty owing by the applicant to the respondent should be fixed at $7,600 payable within 7 days | I fixed the penalty at $7,600 but made it payable within 30 days | The respondent was predominantly more successful on the amount fixed but not the time within which the penalty is payable |
[14] On the five issues before me, the respondent was successful on all but two: I declined to grant an order increasing the daily penalty from $100 to $150 and I declined to strike the applicant’s pleadings immediately. Of the five issues, therefore, I find that the respondent was predominantly more successful than the applicant. As such, she is presumptively entitled to some costs.
Section 24(12) Factors
[1] In setting the amount of costs, the court must consider the reasonableness and proportionality of the rule 24(12) factors as they relate to the importance and complexity of the issues. Rule 24(12) provides as follows:
24(12) In setting the amount of costs, the court shall consider,
(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
a. each party’s behaviour;
b. the time spent by each party;
c. any written offers to settle, including offers that do not meet the requirements of rule 18;
d. any legal fees, including the number of lawyers and their rates;
e. any expert witness fees, including the number of experts and their rates;
f. any other expenses properly paid or payable; and
g. any other relevant matter.
[2] There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. The FLRs “only expressly contemplate full recovery costs in specific circumstances”, e.g., where a party has behaved unreasonably, in bad faith or has beat an offer to settle under r.18(14)”: Mattina, at para. 15; Beaver, at para. 13.
Written Offers to Settle
[15] Rule 18(14) provides, in part, that a party who serves a written offer to settle, which the party and his/her lawyer have each signed, at least one day before a motion date, and the offer does not expire and is not withdrawn before the hearing starts; the offer is not accepted and obtains an order as favourable as or more favourable than the offer, is, unless the court orders otherwise, entitled to costs to the date that the offer was served and full recovery of costs from that date.
[16] On October 17, 2022, about a month before the return of the first motion date, the respondent served an Offer to Settle. She submits that her offer was more or less in keeping with the order I made and, as a result, she is entitled to her costs on a full recovery basis pursuant to rule 18. The offer was for the applicant to comply with the disclosure order within 60 days; that he not be permitted to take any further steps in the matter until he complies with the disclosure orders; that the penalty be fixed at $6,100 for the period September 1, 2022 to October 31, 2022, payable within 14 days, and that the daily penalty of $100 a day continue to accrue.
[17] On November 14, 2022, the day before the motion was first returnable before the court, the applicant made an offer to settle that a) the respondent bring a third-party disclosure motion against Concept Build Inc. for the outstanding disclosure; b) the applicant not oppose the third-party disclosure motion she will bring against the third party, CCC, for outstanding disclosure; and c) the motion returnable for November 15, 2022 be adjourned to a date following the disclosure motions. The offer was open for acceptance until after the motion had started.
[18] I find that the respondent received as favourable an order on the motion as her offer to settle. Her offer to settle the motion was premised on third-party motions being brought for the outstanding disclosure, which is what I ordered. She proposed that the daily penalty of $100 continue to accrue with no increase, which I ordered. She provided the applicant with 60 days to comply with the disclosure order and that he not be permitted to take any further steps in the proceedings until he complied with the outstanding disclosure, I gave him 30 days to comply with the disclosure and found that until he did so, he could not participate in the proceedings. I find that the respondent has met her burden to prove that my order is as favourable as her October 17, 2022 Offer to Settle, as required by Rule 18(14).
[19] The term “full recovery” refers to the full amount which the party has claimed, subject to any adjustments that the court considers appropriate based on the reasonableness and proportional amount that a court determines the party should have spent dealing with the case: Beaver v. Hill.
[20] The court retains discretion not to make an award of full recovery even where the party has met the conditions in rule 18(14), which states that “unless the court orders otherwise” the party is entitled to full recovery. In considering the costs to which the respondent is entitled prior to the October 17, 2022 Offer to Settle being made, I turn also to the factors set out in r.24(12).
Reasonableness or Bad Faith Conduct
[21] Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour in a case (a factor in clause 24(12)(a) (1) above). It reads as follows:
DECISION ON REASONABLENESS
(5) 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.
[22] The applicant argues that the respondent was unreasonable because of how she scheduled her motion, resulting in the motion having to be argued on 2 separate dates: November 15th and December 1st, 2022.
[23] I agree with the applicant, I find that the respondent is the party more responsible for creating unnecessary legal costs. My endorsement dated November 15, 2022 is clear that the respondent’s motion was improperly brought on the regular motions list and ought to have been scheduled as a long motion. Further, I found that the respondent did not comply with the Practice Direction in terms of the length of her motion material. The respondent argues that she was in compliance with the Practice Direction because her affidavit was not more than 12 pages and that although her exhibits exceeded 10 pages, it was necessary for her to attach additional pages to her affidavit because the exhibits contained relevant evidence. I disagree. The respondent’s affidavit and exhibits, sworn on October 24, 2022, amounted to 156 pages, which also contributed to an increase in the applicant’s costs. Accordingly, as I indicated in my Endorsement, dated November 15, 2022, the respondent’s non-compliance with the Practice Direction and her failure to recognize that this motion needed to be scheduled as a long motion, will impact the amount of costs I order.
Legal Fees
[24] I have carefully reviewed the time the respondent’s counsel spent on the motion and set out in her Bill of Costs. The respondent’s lawyer spent a total of 28.6 hours on the motion at an hourly rate of $295. The law clerk spent a total of 4.4 hours, at an hourly rate of $185. The total fees came to $13,735.43.
[25] The respondent’s bill of costs, however, does not provide dockets or sufficient details for me to determine what costs were incurred by the respondent up until October 17, 2022 when her offer to settle was served, to enable me to determine the full recovery of her costs from the date of her offer onward, which is required by r.18(14).
[26] The issues on the motion were of significant importance to both parties. The fees incurred by the respondent’s counsel were significant and I note that the applicant’s counsel’s Bill of Costs was significant lower, and the total fees came to $7,698.69 for the same motion. The applicant’s counsel is a 1978 call to the Bar and his hourly rate was $725. However, an associate lawyer did the majority of the work at an hourly rate of $250.
CONCLUSION AND ORDER
[27] Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs he/she may face if she/he is unsuccessful. Given the fact that a) this motion had to be argued over two days and the Practice Direction was not followed in terms of the length of Exhibits filed, all of which could have been avoided by the respondent; b) I cannot determine what of the respondent’s counsel’s fees relate to the time period after her October 17, 2022 Offer to Settle was filed, I am discounting the amount of costs claimed by the respondent to $8,250.00.
[28] The applicant shall pay the respondent costs, fixed in the sum of $8,250, inclusive of HST and Disbursements, payable within 15 days.
Date: January 16, 2023
M. Kraft, J.