Court File and Parties

COURT FILE NO.: FC-20-235 DATE: 2024/01/22 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

JULIAN MALONE Applicant – and – NATASHA CAPPON Respondent

Counsel: Jonathan M. Richardson, counsel for the Applicant Alexandra Kirschbaum, counsel for the Respondent

HEARD: In writing

COST DECISION

AUDET J.

[1]

Introduction

Following the release of my trial decision in this matter (Part I and Part II), this is my decision on costs.

2This trial lasted thirteen days and focused almost entirely on the parenting arrangements that would be best for the parties’ three children. I was also asked to adjudicate on the issues of ongoing child support, spousal support and the faith of the parties’ embryos stored in a fertility clinic in the United States.

3The father seeks his full indemnity costs for the entire proceeding, based on what he states were bad faith and unreasonable behavior on the part of the mother throughout these proceedings, and based on the various offers to settle that he made which met the requirements of rule 18(14) of the Family Law Rules, O. Reg. 114/99 (hereinafter “the Rules”).

4The mother argues that it would not be appropriate or just in the circumstances of this case to order costs on a full indemnity basis for four main reasons:

• Her conduct did not amount to bad faith;
• She made numerous offers to settle through the proceeding in a good faith attempt to resolve the issues;
• A large and immediate cost award could have serious and detrimental implications on the children, as the mother’s own high cost of litigation limits her ability to pay such an award. Any award that results in the mother having to sell her home would not be in the children’s best interests;
• Events which occurred after the release of my trial decision may result in the re-opening of the Partial Minutes of Settlement that the parties signed before trial (resolving most financial issues), which may have a significant impact on the parties’ financial circumstances.

5The issue of parenting was very complex due to a multitude of allegations made against the Applicant father including family violence and sexual abuse, the recent conclusion of a criminal trial in relation to some of those claims, and the involvement of many parenting professionals with this family (assessors, reunification therapists, individual therapists, and parenting counsellors), the Children’s Aid Society and the police.

[6]

Conduct of the Parties

There is no doubt that the Applicant father was the successful party following the trial, on all issues. As stated above, to support his claim for costs on a full indemnity basis, the father submits that the mother acted in bad faith. If a party has acted in bad faith, the court must decide costs on a full indemnity basis and must order the party to pay them immediately (rule 24(8)). To come within the meaning of bad faith under rule 24(8), a litigant’s behavior must be shown to be carried out with the intent to inflict financial or emotional harm on the other party, intent to conceal relevant information, or intent to deceive the other party or the court (C.S. v. M.S., 2010 ONCA 196).

7When one reads Part I of my trial decision (Malone v. Cappon, 2023 ONSC 4344), it is quite evident that I made very harsh findings against the mother, including as to her credibility and intentions. It is hard, given these findings, not to conclude that the mother acted in bad faith. However, for the purpose of assessing costs, I am prepared to give her the benefit of the doubt as to the motives which led to her taking the various positions she took in this proceeding. In other words, I am prepared to accept that the mother held a genuine belief that the events occurred as she alleged, and that she held a strong belief based on past traumas and life experiences, that she was acting in the best interests of the children.

8However, there can be no doubt that the mother behaved unreasonably throughout these proceedings. Unreasonable behaviour, even if it does not rise to bad faith, can result in award of full indemnity costs against a party (Jackson v. Mayerle, 2016 ONSC 1556).

9In addition, the severable offers to settle made by the father, one dating back to June 2021, clearly met the threshold required to attract the full indemnity cost consequences set out in rule 18(14). While the mother also made several offers to settle throughout the course of this litigation, and genuinely tried to settle the disputes between the parties, in her various offers she never wavered from the position she maintained throughout this proceeding that she should have primary care of the three children, as well as primary decision-making responsibility for all three children. She clearly did not achieve this result at trial. However, I acknowledge that her offers regarding parenting time were in line with what the assessor was recommending some two years before the trial was held.

[10]

Quantum of Costs

I have reviewed the father’s Bill of Costs, which is reasonable, and I find that appropriate adjustments have been made to account for cost awards previously made in the proceeding, issues having been settled, and work which should not be part of the cost award that I make today. Indeed, counsel for the mother is not taking issue with the quantum of costs being claimed by the father. His partial indemnity costs amount to $100,472; his full indemnity costs after his June 2021 Offer to Settle amount to $145,500; and his full indemnity costs for the entire proceeding total $159,529.

11I am not prepared to consider, in the context of my decision on costs, the alleged precariousness of a financial settlement reached prior to trial based on alleged events that occurred after the trial in this matter.

[12]

Financial Circumstances and Ability to Pay

In determining the amount of costs, the Court may consider any relevant matters, including the financial means of the parties, their ability to pay costs, and the impact of the cost award on children in their care; Saroli v Saroli, 2021 ONSC 7491. In M. (C.A.) v. M. (D.), 67 O.R. (3d) 181, the Ontario Court of Appeal stated:

42 I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18. Thus, while subrule 24(11) enumerates a number of factors that must be taken into account, the person setting the amount of the costs is directed to take into account "any other relevant matter". I agree with Aston J. in Sims-Howarth at para. 4, that the " Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs". In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. See Biant at para. 17 and Brennan v. Brennan, [2002] O.J. No. 4743 (Ont. S.C.J.) at para. 11. In fixing costs the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child. That, however, was not a consideration in this case. The mother is not the custodial parent.

43 I am also of the view that the court has a discretion not to make an award of full recovery even where the party has met the conditions in Rule 18(14). The rule makes that clear since it provides that "unless the court orders otherwise" the party is entitled to full recovery. Again, a relevant consideration would be the financial condition of the parties, especially an unsuccessful custodial parent. See Church v. Church, [2003] O.J. No. 2811 (Ont. S.C.J.) at paras. 14 - 18. Finally, I am of the view that even when making an award of full recovery the trial judge must ensure that the costs sought by the successful party are reasonable.

13The mother argues that she has used all her savings and maxed out her borrowing capabilities to pay legal fees. She states that due to trauma during the marriage, the protracted conflictual separation, the unremitting financial pressure over the past four years through legal costs, and the trauma of the trial itself and its results (among other things), she has fallen seriously ill and has been placed on indefinite medical leave following the release of the trial decisions. The father in his reply submissions takes issue with these allegations which he states are not supported by any evidence.

14It is difficult to accept that any of the above should relieve the mother from her obligation to pay costs, since there is absolutely no doubt that the father, who has gone through the exact same ordeal as the mother, also had to assume the high (financial and emotional) costs of a criminal proceeding.

[15]

Jurisdiction to Order Pension Transfer

The mother submits that she will not be in a position to pay (immediately and in cash) a cost award other than by selling her home. For that reason, she asks that any award of costs be made payable by way of a pension transfer under the Pension Benefits Act, RSO 1990, C. P.8 (“the PBA”).

16I conclude that the Court does not have the jurisdiction to order the payment of a cost award by way of a pension transfer unless the cost award is related, in full or in part, to an order made under Part I (related to property) of the Family Law Act, R.S.O. 1990, c. F.3 (hereinafter “the FLA”).

17Various provisions in the PBA and the FLA are relevant to the transfer of pension funds in the context of family law matters. Section 67.3(1) of the PBA, which governs the transfer of a lump sum from a pension plan for certain family law purposes, sets out the eligibility requirements that must exist for a spouse to apply for a transfer. One such requirement is that “the transfer is provided for by an order made under Part I (Family Property) of the Family Law Act or is authorized under a family arbitration award or domestic contract.”

18Section 10.1(3) of the FLA mirrors s. 67.3(1) of the PBA by allowing the court to order an immediate transfer of a lump sum from a pension plan, if the order is made pursuant to ss. 9 or 10, or if the order is for the division of pension payments pursuant to s. 10.1(5) of the FLA. All these sections deal with the court’s authority to make orders related to the ownership or right to possession of property.

19In all the decisions I was able to locate where an award of costs was ordered to be paid by way of a pension transfer, including in Bartley v. Brown, 2022 ONSC 6264 upon which the mother relied to support her position, the overall monetary payment related in full or in part to a property settlement. In Gielen v. Gielen, 2023 ONSC 4157, the court concluded that outstanding costs resulting solely from successful support claims could not be satisfied by way of a pension transfer.

20I was unable to find any caselaw dealing with the issue as to whether an order can be made for the payment of costs by way of a pension transfer without another form of monetary obligation being attached to it (i.e., equalization payment, pre- or post-judgement interest, child support or spousal support). In my view, the clear language of section 10.1(3) of the FLA and s. 67.3(1) of the PBA does not grant the Court the power to order the payment of a cost award, in and of itself, by way of a pension transfer.

21Both parties are currently required to pay significant s. 7 expenses for the three children, in addition to private school, reunification therapy, and ongoing day-to-day expenses for the children. The income that was imputed to the mother is much less than the father’s income (although after payment of set-off child support and all children’s s. 7 expenses, the net income available to both is not hugely different). The cost award that I make must strike a balance between the father’s clear entitlement to significant costs, in light of the success he achieved at trial, the mother’s unreasonable behavior and the offers to settle that he made (which met the requirements of rule 18(14)), and the need for both parties to give priority to their children’s present and ongoing financial needs.

22For this reason, I make the following order:

Final Order

Final Order

The mother shall, on or before February 2, 2024, elect (by written notice to the father) between the following three option:

1. The mother shall pay costs to the father in the amount of $120,000 (all inclusive), forthwith; or

2. The mother shall pay costs to the father in the amount of $125,000, payable as follows: a. The sum of $50,000 shall be payable forthwith; b. The balance of $75,000 shall be paid at the rate of $1,250 per month, beginning on February 1, 2024, until fully paid. If the mother misses a payment and does not cure her default within five days or receiving written notice thereof, the balance owing shall become payable forthwith. c. If this option is selected, and in the event of default, any balance owing shall be deemed child support for the purpose of enforcement by the Family Responsibility Office;

3. The mother shall pay costs to the father in the amount of $130,000, payable as follows: a. The sum of $75,000 shall be payable forthwith; b. The balance of $55,000 shall become payable in full on January 1, 2027; c. If this option is selected, and in the event of default, any balance owing shall be deemed child support for the purpose of enforcement by the Family Responsibility Office.