Court File and Parties

COURT FILE NO.: FC-21-1273-01 DATE: 2023-09-20

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

PATRICIA BEAUDOIN K. Ketsetzis, for the Applicant Applicant

- and -

PAUL JOHN STEVENS Self-represented Respondent

HEARD: In writing

THE HONOURABLE JUSTICE PICCOLI

COSTS ENDORSEMENT

[1] The court heard a four-day trial on May 23-25 and May 29, 2023, and released its decision on July 28, 2023.

[2] The parties were invited to make submissions on costs and have done so. This is the court’s decision regarding costs.

The Respondent’s request to be provided more time to file further material

[3] On page 5 of his cost submissions, the Respondent requested an extension of 10 days to prepare further costs submissions. He asserts that the Applicant’s materials are very lengthy and he requires legal assistance to respond.

[4] The Respondent’s request to be afforded more time to file further material is denied. The court’s order as it relates to costs was very clear and stated:

I strongly encourage the parties to resolve the issue of costs. If the parties are unable to do so, the Applicant may file written submissions on costs within 14 days. The Respondent may file responding written submissions within 10 days thereafter. The Applicant may provide brief reply 4 days thereafter. Submissions are not to exceed 4 pages, plus a detailed bill of costs which must be submitted and copies of any offers to settle. If a party does not serve and file submissions respecting costs in accordance with these deadlines, there shall be no costs payable to that party, although costs may still be awarded against that party. Cost submissions shall be sent to Kitchener.SCJJA@ontario.ca and Beth.Anderson@Ontario.ca.

[5] The Respondent’s material exceeded the length and did not include a bill of costs or any offer to settle. He has had the assistance of counsel and paralegals and other professionals at different points in time. It would be unfair to put the Applicant to any further expense or delay.

Position of the parties

[6] The Applicant seeks costs against the Respondent on a full recovery basis. She seeks costs of $66,220.84 which includes costs already ordered by Justice Brown of $1,000 and $1,750. She seeks this amount because she states she was clearly successful. She further asserts that the Respondent acted unreasonably and in bad faith. She maintains that he attempted to avoid his financial obligations to the children, depleted his assets in Ontario while at the same time concealed relevant information from this court. She refers to his behaviour as “ambush tactics” and points to his failure to provide financial disclosure in the face of court orders and the Family Law Rules. She includes two offers to settle in her submissions and asserts that those offers are more favourable to the Respondent than the ultimate orders of the court. Finally, the Applicant seeks costs to be enforceable by the Family Responsibility Office (“FRO”).

[7] The Respondent acknowledges that “there are some costs he should pay” on “a partial indemnity basis”. He asserts that some of the costs sought are not appropriate because he was relying on the 2012 and 2014 agreements signed by the parties which the court did not set aside. He asserts that those agreements did not require him to provide financial disclosure and that he did not understand that he was to provide detailed disclosure throughout the years. He maintains that the Applicant’s Motion to Change did not set out the detailed disclosure she was requesting.

[8] It is the Respondent’s position that the parties were required to use Alternative Dispute Resolution (“ADR”) as a first step and that although his counsel requested mediation in September 2021, and mutually convenient dates were set for the week of October 4, 2021, the mediation did not proceed. He seeks that the portions of the bill of costs that would have been required for ADR should be separated from those required for the court process given her refusal to engage in ADR. He does not specify what portions should be reduced.

[9] The Respondent also posits that the pre-litigation portion of the bill of costs should be denied and that costs should not be considered prior to the first case conference in June 2022. He asserts neither party provided disclosure pre-litigation. He maintains that the Applicant’s bill of costs does not show any content “to help decipher if they were legitimate to seek from the other party”. He also points to the Applicant’s failure to consent to file his documents in the early stages of this proceedings which he asserts were only a day late. He points to the obstacles in providing his disclosure, namely the ice at the cottage which caused him not to be able to attend to retrieve much of the disclosure requested. Finally, he disputes that the costs should be enforceable by FRO because “they make any difficulty in paying all at once subject to incarceration and punish litigants for trying to advance their case.”

[10] For the reasons that follow, the court orders that the Respondent pay to the Applicant the sum of $50,000 in costs, inclusive of HST and disbursements. Those costs will be enforced by the Family Responsibility Office.

The Law on Costs

[11] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that costs 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: see Mattina v. Mattina, 2018 ONCA 867, at para. 9.

[12] Modern family law cost rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants. Subrule 2(2) adds a fourth fundamental purpose: to ensure that cases are dealt with justly. Subrule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes “reasonableness and proportionality” in any costs award: see Mattina, at para. 10, citing Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8; Sambasivam v. Pulendrarajah, 2012 ONCJ 711, at para. 37.

[13] Subrule 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: see Mattina, at paras. 12-13; Sims-Howarth v. Bilcliffe (2000), 6 R.F.L. (5th) 430 (Ont. S.C.J.), at paras. 1-2; Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730, at para. 94.

[14] I also note that r. 24(6) allows the court to consider divided success, although it is not mandatory.

[15] Rule 24(12) of the Family Law Rules sets out the appropriate considerations in fixing a quantum of costs. These include: each party’s behaviour, the time spent by each party writing offers to settle including those that do not meet the requirements of rule 18, legal fees including the number of lawyers and their rates, other expenses properly paid or payable, and any other relevant matter. As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs: see Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at paras. 11-12, 19.

[16] 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). Subrule 24(4) addresses situations where a successful party has behaved unreasonably, and r. 24(5) provides guidance on how to evaluate reasonableness. Subrule 24(8) discusses the costs consequences of a party who has acted in bad faith: see Mattina, at paras. 15-18; Beaver, at para. 13.

[17] The assessment of the party’s Bill of Costs to determine the reasonableness and proportionality of the items claimed should be undertaken in a global fashion. The court is not required to embark upon a painstaking, line-by-line analysis of Bills of Costs and to second-guess every hour and item docketed, unless there are clear concerns about excessive claims and overreaching: see Docherty v. Catherwood, 2016 ONSC 2140 (Ont. S.C.), at para. 50; Snelgrove v. Kelly, 2017 ONSC 4625 (Ont. S.C.), at para. 35; Arthur v. Arthur, 2019 ONSC 938 (Ont. S.C.), at para. 29. The goal of this exercise is to identify a reasonable and proportionate full recovery amount from which the balance of the quantification analysis can then be carried out. The court should then consider any other factors relevant to the costs analysis to reach an overall fair, just, and proportionate award. The Ontario Court of Appeal has emphasized that the principles of reasonableness and proportionality must inform the costs analysis both at the initial stage in reviewing the Bill of Costs and once again at the conclusion of the quantification process after considering all relevant factors, as a “final check” for assessing whether the award being considered is fair and just having regard for the purposes of costs awards: see Beaver.

[18] This court also relies upon the thorough review of the caselaw pertaining to “bad faith” in the context of costs considerations as provided by Justice Pazaratz in Chomos v. Hamilton, 2016 ONSC 6232, 82 R.F.L. (7th) 395 (Ont. S.C.) at paras. 42-47:

Pursuant to Rule 24(8) if a party has acted in bad faith, the court shall decide costs on a full recovery basis and order the party to pay them immediately.

But Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. S.(C.) v. S.(C.), [2007] O.J. No. 2164; Piskor v. Piskor, [2004] O.J. No. 796 (SCJ); Cozzi v. Smith, 2015 ONSC 3626 (SCJ).

In S.(C) v. S.(C) Perkins J. defined bad faith as follows:

In order to come within the meaning of bad faith in sub rule 24(8), behaviour 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 behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person’s sole or primary intent, but rather only a significant part of the person’s intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children’s Aid Society of the Region of Peel v. F.(K.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (OCJ); Biddle v. Biddle (SCJ); Leonardo v. Meloche (SCJ); [2003] O.J. No. 1969 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ).

There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W., 2015 ONCJ 94 (OCJ).

To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison, 2015 ONSC 2002.

Costs of cases that settle

[19] In the decision of Beardsley v. Horvath, 2022 ONSC 3430 (Ont. S.C.), Summers J. sets out a comprehensive analysis of the law regarding costs of settled cases. She notes the following in paras. 10-12:

(i) The caselaw has developed since the decision in Blank v. Micallef (2009), 75 R.F.L. (6th) 308, where the court held that costs of a settled case should not be awarded absent compelling circumstances.

(ii) Citing the cases of Scipione v. Scipione, 2015 ONSC 5982, 68 R.F.L. (7th) 66 (Ont. S.C.), Ball v. Ball, 2014 ONSC 5754, 52 R.F.L. (7th) 244 (Ont. S.C.), and A.C. v. G.K., 2015 ONCJ 399, 64 R.F.L. (7th) 496, Summers J. identifies some general principles that have emerged:

i. It is not uncommon for the court to receive last minute settlements which resolve all issues other than costs.

ii. Parties are always encouraged to settle; even at the last moments of a motion or trial – if signing minutes of settlement will jeopardize a litigant’s ability to seek costs, it will create a disincentive for settlement.

iii. There is a presumption that a successful party is entitled to costs pursuant to r. 24(10)); a party’s behaviour may be a relevant factor. If a court can assess success and reasonableness, costs may be awarded even when there has been a settlement. This is often the case where there is an extensive record with supporting documentation.

iv. If a party brings a motion asking to change almost everything, and, at the last minute, signs a consent which changes almost nothing, it may not be difficult for a judge to determine success.

v. “Success" is assessed by comparing the terms of the order made against the relief requested in the pleadings and, where applicable, against the terms of an offer to settle.

vi. When a case is determined by a settlement rather than a judicial decision, a court often does not have the information and evidence required to assess who was "successful" or the degree of that success. Sometimes the issues are so numerous and the results so different from either party's offer that "success" cannot be measured. For example, in Page v. Desabrais, 2012 ONSC 6875 (Ont. S.C.) at para. 42, a multi-issue case, the court compared the offers of the parties throughout the proceeding and found it "simply impossible...to declare one party more successful than the other."

vii. Sometimes, however, a court is able to assess what represents "success" after a settlement is reached. In Kearley v. Renfro, 2012 ONSC 5391 (Ont. S.C.), the only issue before the court on a motion was the residency of three children; the mother agreed on the day scheduled for the motion and settlement conference that the children would go into their father's care immediately. The court found that the father was substantially successful, and awarded him costs.

Analysis

[20] The trial involved six issues; the parenting issue was settled at the commencement of the trial. The Applicant was successful on all but one of the tried issues; that one issue was her request to set aside the agreements. Her offers to settle of September 22, 2022, and April 27, 2023, were more favourable to him than the result achieved at the trial, save and except that part of each offer required the Respondent to pay costs. Any offer to settle includes the payment of costs should be severable as it impacts negatively the court’s ability to determinatively state that the offers were as or more favourable than the result achieved.

[21] The Applicant was also successful as it relates to the parenting issues. The parties settled the matter at the commencement of the trial on the same terms she requested in her Motion to Change and her offers to settle.

[22] The Respondent’s failure to provide full and frank financial disclosure cannot be excused because he was self-represented at trial. He had a lawyer at the commencement of the litigation, there were court orders made for disclosure, and it is his responsibility to know and understand the requirements. The matter was conferenced by Justice Brown.

[23] The court finds that the Respondent acted in bad faith. The videos he sent to the Applicant and the children make it clear that he intended to inflict emotional harm in order to conceal his financial status and to avoid his financial obligations. Even if he did not act in bad faith, the unreasonableness of his behaviour, including his failure to produce financial disclosure, rises to the level where substantial indemnity costs are appropriate. (See Pescarino v. Spencer, 2018 ONSC 6945 (Ont. S.C.), at paras. 28, 47; Hatcher v. Hatcher, 2009 W.F.L.D. 1088, [2009] O.J. No. 148 (Ont. S.C.), at para. 77. See also Samnani v. Galmani, 2019 ONSC 224 (Ont. S.C.), at paras. 27-29; Trudel v. Trudel, 2010 ONSC 5177 (Ont. S.C.), at paras. 17-18; Bullock v. Bullock, 2018 ONSC 6841 (Ont. S.C.), at paras. 28-30).

[24] The court finds that the Respondent knew he was obligated to provide financial disclosure, that he had ample opportunity to do so, but that his intention was to circumvent his obligations and cause the Applicant unnecessary financial and emotional costs. I reiterate some of the findings I made at trial:

(a) The Respondent lacked credibility; (b) The Respondent had no intention of paying child support and had taken action to move his assets and life to Costa Rica; (c) The Respondent was dishonest; (d) The Respondent used financial and emotional intimidation and abuse against the Applicant and children; (e) The Respondent engaged in blameworthy conduct.

[25] In making this order, the court has estimated and deducted:

(a) the time spent on matters for which costs have already been decided; (b) the time that predates the commencement of the litigation, i.e., That predates the drafting of the motion to change on October 21, 2021. See Miller v. Volk, 2010 ONSC 99, 79 R.F.L. (6th) 207 (Ont. S.C.), at paras. 15, 26; (c) the time that was spent dealing with setting aside of the 2012 and 2014 agreements.

[26] The court finds that is fair, reasonable and proportionate that the Respondent pay to the Applicant $50,000 in costs.

[27] In making this order, the court did not consider the correspondence attached to the Applicant’s cost submissions as it relates to settlement on the issue of costs.

Enforcement

[28] The Applicant argues that the full costs I order should be enforced by the Family Responsibility Office (“FRO”). I agree.

[29] In Clark v. Clark, 2014 ONCA 175, 318 O.A.C. 66, at paras. 80-81, the Court of Appeal stated the following:

It is appropriate to address one additional aspect of Gregory’s challenge to the Costs Order at this stage. Gregory argues that only costs related to support are eligible for enforcement by the FRO under the Act. Accordingly, he submits, the trial judge erred by failing to identify those costs of the trial that were unrelated to support issues and by failing to direct that only those costs relating to support should be enforceable by the FRO.

The decision of this court in Wildman provides a full answer to this claim. In Wildman, a similar argument was advanced and rejected. Wildman holds, at para. 59, that where, as here, a support claim is a principal issue at a multi-issue matrimonial trial, the allocation of costs as between support and non-support issues may be both impractical and inappropriate. Although a trial judge, in the exercise of his or her discretion, may identify those costs of a proceeding that were directly incurred in relation to a contested support claim, so as to designate those costs as enforceable by the FRO, this is not a necessary undertaking. As this court noted in Sordi, at para. 25, trial courts have considerable discretion concerning requests that legal costs in a multi-issue matrimonial proceeding be designated as support for the purpose of FRO enforcement. Absent legal error, designations of this kind attract considerable deference from this court.

[30] In this case, child support was the principal issue. It is noteworthy that neither party attempted to distinguish the time spent on the financial issues and the parenting issues. The bill of costs makes little reference to parenting issues and the trial was focused on child support and issues related to child support. It is not therefore possible for the court to determine what percentage of the Applicant’s fees related to parenting issues.

[31] As such, the costs order are all enforceable by FRO.

[32] The court orders that the Respondent shall pay to the Applicant the sum of $50,000 in costs enforceable by the Family Responsibility Office.

Piccoli, J. Released: September 20, 2023