In this case the court dealt with a number of issues concerning costs. It demonstrates just how quickly costs can build up in a court case. The couple settled most of their issues in a settlement, but a five day trial was held to determine an equalization payment based on the division of the wife’s pension, and section 7 expenses. The husband and wife had been hoping to use the new legislation to split her pension, but this ended up being impossible. The applicant husband was awarded an equalization payment of $60,393.20 and the wife received $5,570 in Section 7 expenses. The applicant then sought an award for costs from the court for $21,000. The court had to determine whether or not any offer engaged Rule 18(14) of the Family Law Rules, whether or not the applicant’s costs were reasonable, and if the respondent and applicant’s financial position should alter the award.
Offers to Settle and Rule 18(14)
A critical part of this case was, Rule 18(14) of the Family Law Rules, this rule deals with the cost consequences of a failure to accept an offer. If a party makes an offer to settle and it is rejected, they are presumed to be entitled to their costs up to that point if was served to the other party in accordance to the act and the party who made the offer receives an order from the court that is as favourable or more favourable than the terms of the offer. Rule 18(15) of the Family Law Act there were three offers in this case that the court analyzed to see if they fell under rule of 18(14). The applicant made two offers. The court determined they did not fall under rule 18(14). They had been in good faith, but neither was considered to be as favourable or more favourable than the order. The respondent also made an offer, but the court found that it also failed to trigger rule 18(14). The court determined that rule 18(14) did not apply to this case.
Reasonableness of Costs
Since the court did not find rule 18(14) applied, the normal rule for costs applied. This is Rule 24(1) of the Family Law Rules, which states that the successful party is presumed to be entitled to costs. If an individual acts unreasonably, however, the court can reduce the amount they are awarded for costs under Rule 24 (4). The court determined that the applicant had acted reasonably, his lawyer had worked in an efficient manner and had billed at an appropriate rate. The respondent on the other hand, according to the court, seemed unprepared, pursued futile arguments and delayed litigation through her actions. The court determined that costs in this case corresponded with the three objectives of awarding costs as outlined by the Ontario Court of Appeal in Fong v. Chan;
- to indemnify successful litigants for the cost of litigation;
- to encourage settlements; and,
- to discourage and sanction inappropriate behaviour by litigants.
Varying an Award of Costs
While the court agreed to award costs to the applicant, the respondent argued that costs would cause her financial hardship. The court determined that under Rule 24 (11) that the court could consider a number of relevant matters when awarding costs, including the financial hardship. The court determined that while costs would put financial hardship on the Respondent, not awarding them would make it difficult for the Applicant to play child support. The court stated:
“In assessing costs, the court must be mindful of the financial circumstances in each parent’s household. It would be unfair – and somewhat ironic -for the unsuccessful party’s obligations toward children to take primacy over the equally compelling child-related responsibilities of the successful parent.”
By taking this into account the court decided to award the Applicant $13,500.00 in costs.