A recent decision exemplifies why reasonableness is the favoured approach to family law proceedings. Taking reasonable positions results in less conflict, reduced financial impact on children, a greater likelihood of settlement, shorter timelines, and drastically reduced costs for all involved. Despite voluminous court decisions that portend predictable and financially paralyzing outcomes for unreasonable litigants, some parties remain impervious to reason. In Horowitz v. Duthie, 2021 ONSC 7902, Justice Himel exemplifies the importance of reasonableness and provides another cautionary tale to wayward family law litigants hell-bent on achieving their unreasonable goals.
The Facts
This costs decision stems from a Motion to Change brought by the child’s father seeking joint custody, shared parenting, a vacation/holiday schedule and other relief. The child's mother sought sole custody (a departure from the joint custody order in place at the time), primary residence, child support, and section 7 expenses. The primary issues included the parenting schedule, choice of school for the child, and decision-making (formerly “custody”) regarding major decisions about the child’s health, education, and religion.
Two years before the trial, a section 30 assessment was conducted and delivered to the parties. The assessment report recommended joint-decision making and a parallel parenting arrangement transitioning from a 2/2/3/3 schedule to a 2/2/5/5 schedule.
Between February 7, 2019, to November 9, 2021, the father made seven Offers to Settle to the mother attempting to resolve the outstanding issues. The mother made only two Offers to settle.
Despite resolving all outstanding matters on consent, the costs incurred once the parties finally settled had mounted to over $400,000.00, $250,00.00 for the father and at least $150,000.00 for the mother respectively.
The Law
Justice Himel provides a concise overview of the role that cost decisions have in encouraging settlement and discouraging unreasonableness in family law litigation. Rules 18(14) and 24 from the Family Law Rules, O Reg 114/99 provide the relevant framework.
Rule 18(14) outlines the importance of making Offers to Settle and the consequences of failing to accept Offers to Settle in pursuit of family law claims. Rule 18(14) provides:
COST CONSEQUENCES OF FAILURE TO ACCEPT OFFER
18(14) A party who makes an offer is, unless the court orders otherwise, entitled to cost to the date the offer was served and full recovery costs from that date, if the following conditions are met:
(1) If the offer relates to a motion (as in the case here), it is made at least one date before the motion date.
(3) The offer does not expire and is not withdrawn before the hearing starts.
(4) The offer is not accepted.
(5) The party who made the offer obtains an order that is as favourable or more favourable than the offer.
The purpose of Rule 18 is to promote settlement. Exchanging Offers to Settle forces parties to make concessions they may not otherwise have made in court. If the matter proceeds to court and the outcome in court "beats" the Offer to Settle, the losing party may expect to pay some or all of the successful party's costs. The rationale behind the rule is straightforward: if the losing spouse had accepted their former spouse's Offer, they would have achieved a better result and avoided the costs, delay, and use of family court resources.
Rule 24(1), which governs costs in family law proceedings, provides a presumption that the successful party is entitled to their costs on a motion, enforcement, case, or appeal. The losing party may be liable for both their own costs and the costs of their former spouse.
Rule 24(5) permits judges to consider such factors as the time spent on the case by lawyers with parties and witnesses, drafting documents, correspondence, preparing offers to settle, and the time spent for preparation, attending the hearing in question, preparing any orders required, and expenses incurred on behalf of the party. Courts have broad discretion to consider “any other relevant matter” in assessing the reasonableness or unreasonableness of each party’s actions.
Finally, Rule 24(12) sets out a list of factors that a court may consider when assessing costs in family proceedings:
SETTING COSTS AMOUNT
24(12)
(a) The reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:
Each party’s behaviour,
The time spent by each party,
Any written offers to settle, including offers that do not meet the requirements of rule 18,
Any legal fees, including the number of lawyers and their rates,
Any expert witness fees, including the number of experts and their rates,
Any other expenses properly paid or payable; and
(b) Any other relevant matter.
In a nutshell, the question of who is entitled to costs boils down to "Who got what they asked for?", as Justice Pazaratz described in an earlier decision. Courts may increase a costs award if one or both parties acted unreasonably, failed to make or accept offers to settle, or acted in bad faith. Costs are ultimately discretionary and may be reduced where appropriate to deal with the case justly and might otherwise cause extreme financial prejudice to the losing party.
The fundamental purposes of awarding costs in family law matters include: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are to be dealt with justly.
The Decision
Justice Himel ultimately found that the father was the successful party and entitled to costs of $50,000.00 on a partial indemnity (as opposed to full recovery) basis, far less than the $217,000.00 which he sought. The Court found that the mother acted unreasonably throughout the proceedings by failing to attend or continue mediation, taking unreasonable positions on issues, changing her legal counsel on eight separate occasions, and incurring $80,000.00 in loans from family members to pursue her claims. Justice Himel reasoned that the mother must be accountable for unnecessarily escalating both parties costs in the proceedings but not to the extent of the $217,000.00 that that father was seeking, on top of her costs of over $150,000.00 as a student with no income would not result in a just outcome. Justice Himel stated:
[22] While there are public policy reasons against costs orders in the face of negotiated resolutions, there are also public policy reasons to hold parties liable for some of the expenses incurred when one party’s actions extend the time to resolution and increase the other party’s costs. I find that costs should be awarded in an amount that reflects the parties’ consensual resolution which negated the need for a 16-day trial. The family justice system benefits when matters resolve on consent and judicial resources can be allocated more equitably to other families waiting for assistance.
[23] Litigants must be discouraged from spending close to (or perhaps more) than $500,000 (collectively) in costs, funds that could otherwise be spent on a child’s day-to-day needs or university education. Discouraging such behaviour is a compelling reason to order costs.
This case serves as a valuable reminder that unreasonableness comes with lasting financial consequences in family law cases. While family conflict can be polarizing, it is crucial to remain focused on negotiating outcomes that reflect the actual strength of legal positions, with cost consequences in mind. Where it is clear that one party (or their counsel) takes unreasonable positions that may have little prospect of success, making well-timed and thoughtfully drafted Offers to Settle can go a long way to securing favourable cost awards for the reasonable litigant. Had the mother not been of such limited means, the Court may have ordered a higher costs award more in line with the father's request.
Posted on January 20, 2022