This recent decision from the Superior Court of Justice clarifies the confusion for family law counsel in Ontario following the release of the conflicting decisions of the Ontario Court of Appeal in Berta v. Berta 2015 ONCA 918, and Forrester v. Dennis 2016 ONCA 214 regarding costs, and confirms the decision of Jackson v. Mayerle 2016 ONSC 1556 as the go to case for analysis of Rule 24 of the Family Law Rules.
Jackson v Mayerle, 2016 ONSC 1556
This case serves as an important reminder to lawyers and parents who want to ‘hard-ball’ litigate custody matters – that such litigation should be avoided as it is in no one’s best interests, for the financial ruin it creates or leads to inevitably squanders the lives of the parties and their children and cannot be reversed or undone.
The husband and wife began living together in 1997. They were married in April 2004, separated in July 2011, and have one eight-year-old daughter.
The parties litigated the issues surrounding the dissolution of their marriage, and Justice Pazaratz released a 204 page judgement following a lengthy, 36-day trial.
This particular judgment reviews the issue of costs assessment.
Justice Pazaratz begins by noting that costs rules are designed to foster the following principles: to partially indemnify successful litigants for the cost of litigation, to encourage settlement, and to discourage and sanction inappropriate behavior by litigants. Rules 18 and 24 of the Family Law Rules specifically govern the assessments of liability and amount of costs, but these rules have not completely eliminated judicial discretion.
It is important to note that, pursuant to Rule 24(1), the starting point in all costs analyses is the presumption that the successful party is entitled to costs.
Family Law Rules, Rule 18: Offers to Settle
Offers to settle – especially offers on specific issues – are to be encouraged, and are particularly helpful for the settlement process.
When determining whether a party has been “successful”, courts consider how the order or end result compares to any previous settlement offers. Pursuant to Rule 18(14), a party who makes a written offer and later obtains an order just as or more favorable than said offer, is entitled to costs to the date that the offer was served and full recovery costs from that date. To trigger full recovery of costs however, a party must do as well or better than all the terms of any offer.
In this case, the husband claims that his offers regarding the main issues entitle him to full recovery, whilst his offers on all other issues demonstrate that he made an effort to make reasonable settlement proposals. Contrastingly, the wife asserted that she was making more reasonable efforts, and disputed that the husband’s offers entitled him to full costs recovery.
The Court found that the wife’s obsessive and controlling behavior, and her repeatedly abusing opportunities for control made it so that she could not be entrusted with decision making. The Court further disagreed with the wife that the husband’s previous settlement offers regarding custody should not trigger cost consequences.
The Court then found that the husband’s offers trigger a presumption of full recovery in relation to the issues of child support and child custody. The wife’s offers however, were determined to not trigger cost consequences in her favour.
Family Law Rules, Rule 24: Costs
Pursuant to Rule 24(4), a successful party who has behaved unreasonably may be deprived of all or some of their costs, or otherwise ordered to pay the other party’s costs.
In this case, the wife asserts that although the husband was successful on some issues, he acted unreasonably and this should reduce his costs entitlement. The court disagreed with this sentiment – finding that the husband consistently attempted to take a practical and conciliatory approach towards settlement.
Instead, the court found that the wife’s behavior was unreasonable – she tried to shut her husband out of their child’s life, rejected several reasonable proposals (including mediation), acted dictatorially, and was otherwise oblivious to the negative impact her manipulative acts were having on the child. Where Rule 24(8) allows a court to order costs on an immediate and full recovery basis against a party that has acted unreasonably and in bad faith, the court held that this requires a high threshold of egregious behavior – such that the behavior is shown to be malicious, or carried out with an intent to inflict harm or conceal relevant information. Although the court agreed that there are instances of bad faith behavior by the wife, it found that her behavior does not reach the threshold that constitutes “bad faith”.
The court then went on to consider several factors in analyzing whether or not the husband is entitled to costs recovery – including but not limited to, the importance or complexity of the issues, the reasonableness of the lawyers’ rates, and the time spent on the case. The court found that although success was divided between the parties (as they both were awarded some of the relief they requested), the success was not necessarily equal, because the husband was mostly successful on those issues which took up the most time at trial. The court additionally found that the parenting and custody issues in this case were extremely important, and that the facts related to the matter were complex and complicated.
When determining costs recovery, the court further noted that the quantification of costs should be reasonable and fair – that there should be a correlation between the legal fees incurred and the importance of the issues and a party should not have to reimburse the other for excessive or unnecessary expenses.
The court also considered the parties’ ability to pay costs and the impact it may have on their abilities to provide for their child, and commented that a party’s financial circumstances should not be used as a shield against any and all liability for costs (that it should only be accounted for in terms of the quantum of costs).
Based on its review of these factors, the court ordered that the wife should pay the husband costs fixed in the sum of $192,000.00.