No party in a Family Court case should presume he or she will be awarded his or her costs for the case. Generally, costs are only addressed by the Family Court at the end of the case, when the issues are decided on a final basis by either the Court or by settlement between the parties themselves. The exception – costs incurred for motions or other steps during the case may attract cost orders by the Court, depending on the circumstances.
Several recent Family Court cases in Ontario offer more guidance and direction about entitlement to costs in Family Court cases and the factors usually applied by the Court to decide if costs will be granted to a party and, if so, the manner in which the amount of those costs will be determined.
A. JUDICIAL DISCRETION AND THE FAMILY LAW RULES:
Firstly, whether costs will be awarded to a party in a Family Court proceeding is discretionary. There is no absolute rule of law that the Family Court must award costs in a case. Section 131 of Ontario’s Courts of Justice Act, R.S.O. 1990, c. C. 43 statutorily confers discretion to the Family Court in determining any award of costs in a Family Court proceeding. Sub-section 131(1) reads:
“Costs
131. (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. R.S.O. 1990, c. C.43, s. 131 (1).”
Rule 24 of Ontario’s Family Law Rules, O. Reg 114/99 (the “Rules”) promulgate guiding and general principles for the Court’s exercise of discretion when determining costs in a Family Court proceeding.
Based on the Rules, the case law in Ontario identifies important and fundamental objectives for the Family Court to consider and balance when determining if costs should be awarded in a Family Court proceeding:
(a) to partially indemnify successful litigants for the cost of litigation;
(b) to encourage settlement; and
(c) to discourage and sanction inappropriate behavior by Family Court litigants.
In exercising this discretion whether it is appropriate to award or deny costs to a party in a case, the Family Court should generally consider all of the relevant factors and circumstances in that case, to the extent they could be ascertained.
Reference:
Serra v. Serra, 2009 ONCA 395 (CanLII); 66 RFL (6th); [2009] Carswell 2475; [2009 O.J. No. 1905 (QL) (“Serra”)
Wallegham v. Wallegham, 2015 ONSC 8066 (CanLII) (SCJ) (“Wallegham”)
Scipione v. Scipione, 2015 ONSC 5982 (CanLII) (SCJ) (“Scipione”)
B. ENTITLEMENT TO COSTS – GENERAL PRINCIPLES:
(a) Presumption of Costs to the Successful Party and Unreasonable Behaviour:
Pursuant to sub-Rule 24(1) of the Rules, there is a presumption that a successful party is entitled to costs of a motion, enforcement, case or appeal. However, despite sub-Rule 24(1), sub-Rule 24(4) provides that a successful party who has behaved unreasonably during a case may be deprived of all, or part of, that party’s own costs, or be ordered to pay all, or part of, the unsuccessful party’s costs.
Pursuant to sub-Rule 24(5) of the Rules, in deciding whether a party has behaved 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. O. Reg. 114/99, r. 24 (5).”
(b) Divided Success and Mixed Results:
If success in a step of, or the final outcome of, a case is divided, the Court may apportion costs as appropriate, pursuant to sub-Rule 25(6) of the Rules. If the step or the case is divided, or results in mixed success, sub-Rule 24(6) permits the Court to exercise discretion to apportion costs or order that no costs are payable.
The case law in Ontario establishes that a Court may also assess and ascertain success on a global basis and award costs to whichever party was more successful. Similarly, where the parties have settled their step or case by negotiated agreement, the Court may award costs to the party who was more successful overall or on a global basis.
(c) Non-Attendance; Unprepared for Case or Hearing:
If a party does not appear at a step in the case, or appears but is not properly prepared to deal with the issues at that step, the Court “shall award costs against the party” unless the Court orders otherwise in the interests of justice, pursuant to sub-Rule 24(7). Therefore, where a party has failed to attend at a step in the case or is inadequately prepared to address the issues at hand, sub-Rule 24(7) creates a presumption that the unprepared or absent party will pay the other party’s costs. However, the Court may exercise discretion if it would be in interests of justice to not award costs in the circumstances.
Generally, when deciding whether to award costs and, if so, the appropriate amount of costs, the Court should consider: (i) all of the factors and circumstances of the particular case; and (ii) the reasonableness of the parties’ conduct and their positions during the case, respectively, to the extent they could be ascertained.
If a successful party is determined to have acted unreasonably, sub-Rule 24(4) gives discretion to the Court to deprive the successful party of any costs, to apportion costs between the parties in a manner determined appropriate by the Court or require that the successful party pay the other party’s costs.
Generally, unreasonable behavior that has previously been held to reach this threshold includes, but is not limited to: a “pattern of conduct” reflecting a party’s lack of respect for Court orders and/or the parent-child relationship, even if that objectionable conduct does not constitute bad faith.
(d) Offers to Settle:
In determining entitlement to costs and the amount of costs to award, the Family Court will also consider whether either party made an offer to settle to the other about any of the issues in dispute.
If a party fails to accept a reasonable offer to settle, it potentially could result in that party paying costs to the offering party, particularly if the offer made meets the criteria required for offers to settle set out by sub-Rule 18(14) of the Rules.
If sub-Rule 18(14) does not apply, the Family Court may still consider any written offer given by a party, the date on which any written offer was made, the terms of any such offer and the failure of either party to make or accept an offer to settle when determining costs.
(e) Bad Faith:
If a party has acted in bad faith, the Court “shall decide costs on a full recovery basis and shall order the party to pay them immediately”, provided that the costs claimed by the other party are fair and reasonable, pursuant to sub-Rule 24(8) of the Rules.
C. DETERMINING THE AMOUNT (QUANTUM) OF COSTS – GENERAL PRINCIPLES AND FACTORS:
Ontario case law establishes that, if the Family Court determines a party is entitled to costs, the following general principles and factors will generally be considered by the Court in determining the amount (or quantum) of costs to order:
(a) the amount awarded is not determined by actual costs incurred by the successful party;
(b) the amount of costs must be proportional in relation to the issues and amounts dealt with and the final outcome of those issues;
(c) costs should be fair and reasonable; and
(d) parties’ expectations regarding the amount of costs that will be awarded is a relevant consideration in determining what is fair and reasonable or, what is generally referred to as, “proportionality” of costs.
Generally, the Family Court will also consider the following case-by-case, specific factors, pursuant to sub-Rule 24(11) of the Rules:
(a) the importance, complexity or difficulty of the issues addressed;
(b) the reasonableness or unreasonableness of each party;
(c) the rates of the lawyer(s) involved for the party(ies);
(d) the amount of time properly spent working on the case;
(e) the cost of any expenses properly paid or payable; and
(f) anything else, or other factor, that is relevant or appropriate to consider.
When determining the amount of costs payable, if any, usually the Family Court also considers the ability of a party to pay costs and the impact of ordering costs will have on the party, considering that party’s financial circumstances to the extent they are known. However, this factor will likely be less significant, or be given less weight by the Family Court in determining the amount of costs to be ordered than, for example: (a) the other, successful party’s overall success in the matter; and (b) the reasonableness of the behaviour of the party who will pay costs.
Historically, the Family Court has also taken a somewhat modified approach on costs in cases focusing on parenting matters (custody, access, etc.). Generally, the Family Court has been more cautious in ordering costs in these types of cases or with respect to these specific issues, primarily to try to ensure that parties with valid and meritorious claims or concerns will not be deterred from raising those matters in the Court, when appropriate or necessary to do so.
D. CASE EXAMPLE – MOTION DURING THE CASE:
Wallegham v. Wallegham, 2015 ONSC 8066 (CanLII) (SCJ) (“Wallegham”)
The Wallegham case is an example of the Court applying the principles and factors for costs set out above to an interim, or temporary, motion hearing in a Family Court case dealing with the temporary parenting of a child.
(a) Nature of the Motion – Brief Background:
The parties married in 2008 and separated May 1, 2015. They had one child, born January 9, 2015, who had remained in the mother’s primary care since the date of separation. The mother’s and father’s dispute was acrimonious.
Pursuant to a temporary Court order, dated June 26, 2015, the child was to remain in the mother’s primary care. The father was granted daytime access, but supervised by the mother only, three days per week in the parties’ former matrimonial home. Due to fairly significant conflict and acrimony between the parties, they later agreed that the father’s access would change and take place at the mother’s sister’s home under her supervision.
Subsequently the father brought a motion, heard on October 23, 2015, to change and expand the terms of his access, including eliminating any requirement for it to be supervised by anyone. Specifically, the father requested unsupervised access every weekend from Friday evening to Sunday evening and on every Wednesday for two-hour visits with the child. He also requested the option of taking the child to visit his extended family in London, Ontario, during his time with the child, as he requested.
However, the mother opposed the father’s motion. Her position – the father’s access should continue to be supervised at a local YWCA access centre.
(b) The Decision of the Court on Parenting:
After the hearing, the Court ordered a more expanded, progressive access schedule in favour of the father:
(i) initially, the father would have the child in his primary care during the daytime three days per week (based on the earlier Court order) provided, however, that this access would take place in the father’s own home, supervised by his mother (the paternal grandmother);
(ii) beginning November 23, 2015, the father’s access would be increased to two evenings per week and one overnight per weekend from early evening on Friday to Saturday afternoon, without any supervision requirement; and
(iii) the father was granted the opportunity to take the child to visit extended family in London, Ontario, during his primary care time with the child.
(c) The Decision of the Court on Costs:
After the decision by the Court on the parenting dispute, the father claimed he had been successful on his motion and, therefore, he requested costs against the mother. The mother acknowledged: (i) there had been divided, or mixed, success to both parties on the motion; and (ii) the father had been more successful than she overall. However, the mother asserted that the father’s costs should be limited to only $750, minus the costs she had incurred to prepare her cost submissions to the Court, because she had offered, prior to the Court deciding the issue of costs, to pay the father $1,500, inclusive, to resolve the costs issues, but he did not accept that offer by her.
The Court ordered no costs were payable by either party.
By applying the principles and factors set out above, the Court decided neither party would have to pay costs to the other for this motion during the case because, among other reasons:
(a) from an overall or global perspective, success between the parties was divided, or mixed, even though the father was somewhat more successful than the mother;
(b) both parties initially formed and maintained unreasonable positions with respect to parenting time;
(c) on the one hand, the father had acted unreasonably by requesting fairly dramatic and drastic changes in the parenting arrangements, which were inappropriate given his inexperience as a parent and the fairly tender age of the child and, on the other hand, the mother also acted unreasonably by rejecting the father’s mother (the paternal grandmother) as a person capable of supervising his access with the child;
(d) the Court concluded that both parties, if acting reasonably, ought to have been capable of agreeing on and resolving on their own a compromise, similar to the ‘middle ground’ approach taken by the Court, in the best interests of the child, being the paramount consideration;
(e) the father failed to make an offer to settle the matter out of Court;
(f) the mother had limited financial means and a compromised ability to pay costs to the father; and
(g) the mother had made an offer to pay costs in an amount equal to or higher than what the Court would have awarded, which the father failed to accept before the Court made its decision on costs.
E. CASE EXAMPLE – FAMILY COURT TRIAL:
Scipione v. Scipione, 2015 ONSC 5982 (CanLII) (SCJ) (“Scipione”)
The Scipione case is another example of the Court applying the principles and factors for costs set out above, but with respect to a trial in a Family Court case involving many issues between the parties. However, the Scipione case also offers guidance for the treatment of costs on motions during a case, too, which are consistent with the Wallegham case.
(a) Nature of the Case – Brief Background:
The parties had a relationship for more than twenty years. After it broke down, they became embroiled in an acrimonious, protracted dispute, mostly about child and spousal support. Eventually, when attempted negotiations failed, the husband brought a Family Court case. The case proceeded to a lengthy trial of issues, following which the Court rendered decisions to resolve all of the issues in dispute between the parties. When costs were determined, the Court ordered the husband, who was mostly unsuccessful at the trial, to pay costs to the mother in the amount of $52,000.
Less than one year after the trial decision, the husband brought a new motion seeking to revisit nearly all of the issues regarding support that were determined at the trial. Initially the wife responded by seeking to dismiss the husband’s new motion, but ultimately she made her own counterclaim against the husband and emphasized in her documentation filed with the Court that she preferred for the husband’s motion to be dismissed and that her counterclaims were made by her only in response to the husband’s new motion. In other words, she made it clear that she preferred for the entire case to be dismissed promptly, with the earlier trial decision continuing to apply.
By negotiation in the midst of the hearing, the parties resolved all of the issues raised by the husband’s motion and the wife’s counterclaims, except for costs, by entering a consent on the third day of the hearing of the motion. However, based on their agreement, it was unclear to the Court who succeeded on the motion for the purpose of determining costs of the motion, as requested by both parties.
The wife claimed full indemnity for her costs ($83,034.46), plus HST, by asserting that the husband had been “entirely unsuccessful”. She also claimed that his motion caused her to incur significant legal fees to, effectively, revisit the very same issues that had been previously decided on by the Court. On the other hand, the husband argued that the wife should have to pay to him $20,000 in costs – he believed that success for the motion he brought was divided, or mixed. He also argued that costs should not be triggered, because the matter was resolved by settlement between the parties, rather than by a decision of the Court. He also claimed his total fees arising from his motion were approximately $55,375, before tax.
(b) The Decision of the Court on Costs:
The Family Court did not make a decision on the specific family law issues in dispute in the case, because the parties reached a written settlement of those themselves. However, the Family Court did consider the costs in the case, which both parties requested.
The Court ordered the husband to pay costs of $70,000.00 to the wife, inclusive of tax and disbursements, holding that he had been largely unsuccessful on his motion. The Court did not order full recovery of her legal expenses, because the “bill of costs” submitted by her to the Court did not identify or contain adequate information to justify an order for the full recovery of all of her legal expenses.
The Court considered and applied the general principles and factors for determining costs in a Family Court case, as set out above and, in particular, addressed these specific issues for determining costs:
(i) Offers to settle; Impact – the cost consequences triggered by offers to settle;
(ii) Determining success – how to determine if a party is successful and how that success impacts costs of the case;
(iii) Divided (mixed) success – how to deal with costs when success is divided, or mixed, between the parties for the issues at hand; and
(iv) Allocating costs for settlements – how costs are allocated if the parties resolve and settle their dispute before the case is actually decided finally by the Court;
(v) Unreasonable Behaviour – the consequences and implications for costs; and
(vi) Setting the amount – how to determine the amount of costs and, to do so, the detailed documentation that is generally required by a party to justify a certain amount of costs.
(i) Offers to Settle – Implication on Costs:
Firstly, the Family Court considered when offers to settle trigger cost consequences in Family Court proceedings.
Pursuant to sub-Rule 18(14) of the Rules, a party in the case is entitled to costs, unless ordered otherwise by the Court, if that party: (a) had made a written offer to settle not less than seven days before the trial of issues; and (b) obtained a result at the trial that met, or was better than, the terms of that party’s offer to settle.
If these conditions are satisfied, the party is entitled to partial recovery of his or her legal expenses to the date on which the offer to settle was served and full recovery of his or her legal expenses as of that date, subject to the other factors generally to be considered by the Court before awarding those costs.
(ii) Determining Success and Imp
