Rondelet v. Neff, 2011 ONCJ 407

Toronto Registry No. D49657/09 DATE: 2011·VIII·17 CITATION: Rondelet v. Neff , 2011 ONCJ 407 ONTARIO COURT OF JUSTICE BETWEEN: MARION ELIZABETH RONDELET, Applicant (Moving Party), — AND — KIRK DAVID NEFF, Respondent (Responding Party).

Before Justice Carole Curtis Heard on 10 August 2011 Reasons for Judgment released on 17 August 2011 CIVIL PROCEDURE — Costs — Assessment of costs — Full recovery — Grounds — Acting in bad faith — Encouraging financial disclosure in child support litigation — Father was salary earner whose income for child support purposes would be relatively easy to determine but in response to mother’s repeated requests for income disclosure that began 6 years ago, he began making voluntary increases in child support and contribution to special expenses but they were always less than what Child Support Guidelines required him to pay and he knew it — He did not reveal his salary until about 2 years ago, only after mother had started her claim for increased support in court — Thus, father’s conduct forced mother to start her court action — Modern cost rules are designed to foster, among other things, change in litigation behaviour — Rules of court have detailed, specific and clear requirements for disclosure in family law cases — In fact, financial disclosure by paying parents is cornerstone of child support litigation — Father in this case did not do so when asked by mother and instead forced her run up legal costs to do what he could easily have done at outset — Mother was entirely successful on part of her claim on table amount of child support — Under guidelines, her claim should have been simple adjustment based on father’s income bracket if only he had disclosed his income for particular years in question — On part of case dealing with table amount of child support, mother was entitled to her costs on “full recovery” basis of $14,000.

CIVIL PROCEDURE — Costs — General — Fundamental objectives of costs — Deterring and punishing inappropriate behaviour by litigants — Encouraging financial disclosure in child support litigation — Father was salary earner whose income for child support purposes would be relatively easy to determine but in response to mother’s repeated requests for income disclosure that began 6 years ago, he began making voluntary increases in child support and contribution to special expenses but they were always less than what Child Support Guidelines required him to pay and he knew it — He did not reveal his salary until about 2 years ago, only after mother had started her claim for increased support in court — Thus, father’s conduct forced mother to start her court action — Modern cost rules are designed to foster, among other things, change in litigation behaviour — Rules of court have detailed, specific and clear requirements for disclosure in family law cases — In fact, financial disclosure by paying parents is cornerstone of child support litigation — Father in this case did not do so when asked by mother and instead forced her run up legal costs to do what he could easily have done at outset — Mother was entirely successful on part of her claim on table amount of child support — Under guidelines, her claim should have been simple adjustment based on father’s income bracket if only he had disclosed his income for particular years in question — On part of case dealing with table amount of child support, mother was entitled to her costs on “full recovery” basis of $14,000.

CIVIL PROCEDURE — Costs — General — Fundamental objectives of costs — Deterring and punishing inappropriate behaviour by litigants — Presentation of clear and organized financial basis for money claim — In this case, mother was presumed under subrule 24(1) of Family Law Rules to be entitled to costs because she was successful on motion for increase in child support — First part of her claim that dealt with ongoing child support was straightforward because of prescribed tables under Child Support Guidelines — On that part, court granted her costs on “full recovery” basis — But second part of her claim dealing with special expenses under

section 7 of guidelines was poorly documented, disorganized, incomplete and difficult to follow, forcing court to wallow through pages of questionable material — Furthermore, mother never revealed whether two other “father figures” in children’s lives had contributed to special expenses — Mother was party with information at her control regarding

section 7 expenses but failed to present it properly and certainly made no offer to settle — Mother’s actual cost for second portion of case was $18,246.55, but court trimmed it down to partial recovery fixed at $9,000.

CIVIL PROCEDURE — Settlement — Offers to settle — General — Quasi-obligatory nature of offer to settle — Motion judge wasdisappointed to learn at conclusion of mother’s successful motion for increase in child support that neither party had made offer to settlein this case, even though both parents were represented by experienced lawyers — Citing Klinkhammer v.

Dolan and Tulk, 2009 ONCJ774, judge pointed out that, in any family law dispute about money, once disclosure has been made, offer to settle should be almostautomatic and fundamental step — Under subrule 2(4) of Family Law Rules, parties and their lawyers have duty to promote primaryobjective of rules: namely, to deal with cases justly per subrule 2(2) — And just dealing includes taking steps to save time and expenseper subrule 2(3) — Offers to settle play important role in saving time and expense in case by promoting settlements, focusing parties andoften narrowing issues in dispute.

STATUTES AND REGULATIONS CITED Child Support Guidelines, O. Reg. 391/97 [as amended],

section 7. Courts of Justice Act, R.S.O. 1990, c. C-43 [as amended], subsection 131(1). Family Law Rules, O. Reg. 114/99 [as amended], rule 2, subrule 2(2), subrule 2(3), subrule 2(4), subrule 24(1) and subrule 24(11). CASES CITED Boucher et al. v. Public Accountants Council for the Province of Ontario, , 71 O.R. (3d) 291, 188 O.A.C. 201, 48C.P.C. (5th) 56, [2004] O.J. No. 2634, 2004 Cars​well​Ont 2521 (Ont. C.A.). Delellis v Delellis and Delellis, , 143 A.C.W.S. (3d) 235, [2005] O.J. No. 4345, 2005 Cars​well​Ont 4956 (Ont. Fam.Ct.). Klinkhammer v. Dolan and Tulk, 2009 ONCJ 774, [2009] O.J. No. 6370 (Ont. C.J.).

Osmar v. Osmar, , 8 R.F.L. (5th) 387, [2000] O.J. No. 2504, [2000] O.T.C. 979, 2000 Cars​well​Ont 2343 (Ont. Fam.Ct.) Panny v. Gifford and Gifford, , 31 R.F.L. (4th) 440, [1997] O.J. No. 2241, 1997 Cars​well​Ont 2028 (Ont. Prov. Div.). Parsons v. Parsons (No. 2), , 31 R.F.L. (5th) 373, [2002] O.J. No. 3034, 2002 Cars​well​Ont 2536 (Ont. Fam. Ct.) Steven D. Benmor ................................................. counsel for the applicant mother (moving party) Samantha Keser ............................................. counsel for the respondent father (responding party) For previous proceedings, see Rondelet v.

Neff, 2011 ONCJ 240, [2011] O.J. No. 2105, 2011 Cars​well​Ont 3084 (Ont. C.J.), per JusticeCarole Curtis. JUSTICE C. CURTIS:— 1: OVERVIEW [1] This is the decision regarding costs of a motion to change the child support provisions of an agreement signed by theparents on 26 September 1995. The mother’s motion to change was decided in reasons for judgment released on 15 March 2011. Theorder made granted the mother periodic increases in the table amount of child support from 1 January 2006 onwards. As well, the ordergranted a lump sum to the mother for expenses under

section 7 of the Child Support Guidelines, O. Reg. 391/97, as amended, for thechild for the years 2006 to 2010. [2] The father is now to pay the following child support (among other terms in the order): (

a) table amount from 1 January 2009, $806 per month, on income of $91,074; (

b) as of 31 December 2010, his 50% share of special expenses for 2006 to 2010 in the sum of $8,614; (

c) arrears of child support (table amount and

section 7 expenses) to be paid at $200 per month from 1 April 2011; (

d) specified annual financial disclosure; and (

e) equal sharing of future

section 7 expenses, including post-secondary education costs. [3] The mother claimed costs of the motion to change. She claimed that she is entitled to costs as she was successful in themotion. The mother’s cost for the case was $32,355.52. She claimed partial recovery costs of $25,000 all inclusive (fees plus HST, anddisbursements plus HST).

Later, in argument, she claimed partial recovery costs of $18,000 all inclusive. [4] The father claimed that the mother is not entitled to her costs, as she was not entirely successful in the motion, and thatcertain aspects of the motion (i.e., the adjustments to the table amount from 2006 to 2009) proceeded on consent. If the mother isentitled to costs, the father claims that the amount should be nominal, and that he requires time to pay any costs and a repayment plan. 1.1: The Law of Costs — Entitlement

[5] The courts have a broad discretion to award costs. The general discretion of the courts regarding costs is contained inthe Courts of Justice Act, R.S.O. 1990, c. C-43, as amended, subsection 131(1), which sets out three specific principles: (

a) the costs of a proceeding are in the discretion of the court; (

b) the court may determine by whom costs shall be paid; and (

c) the court may determine to what extent the costs shall be paid. [6] Modern costs rules are designed to foster three fundamental purposes; see Osmar v. Osmar, , 8R.F.L. (5th) 387, [2000] O.J. No. 2504, [2000] O.T.C. 979, 2000 Cars​well​Ont 2343 (Ont. Fam. Ct.), at paragraphs [2]-[3]: (

a) to indemnify successful litigants for the cost of litigation; (

b) to encourage settlement; and (

c) to discourage and sanction inappropriate behaviour by litigants. [7] Pursuant to subrule 24(1) of the Family Law Rules, O. Reg. 114/99, as amended, the wife is presumed to be entitled tocosts because she was successful on the motion. [8] The factors to consider in awarding costs in family law matters are ( see subrule 24(11)): (

a) the importance, complexity or difficulty of the issues; (

b) the reasonableness or unreasonableness of each party’s behaviour in the case; (

c) the lawyer’s rates; (

d) the time properly spent on the case, including conversations between the lawyer and the party orwitnesses, drafting documents and correspondence, attempts to settle, preparation, hearing,argument, and preparation and signature of the order; (

e) expenses properly paid or payable; and (

f) any other relevant matter. 1.2: Quantum of Costs [9] Determining the amount of costs is not simply a mechanical exercise; see Boucher et al. v. Public Accountants Councilfor the Province of Ontario, , 71 O.R. (3d) 291, 188 O.A.C. 201, 48 C.P.C. (5th) 56, [2004] O.J. No. 2634, 2004Cars​well​Ont 2521 (Ont. C.A.); Delellis v Delellis and Delellis, , 143 A.C.W.S. (3d) 235, [2005] O.J. No. 4345, 2005Cars​well​Ont 4956 (Ont. Fam. Ct.), at paragraph [9]: [9] . . . recent cases . . . have begun to de-emphasize the traditional reliance upon “hours spenttimes hourly rates” when fixing costs. . . .

Costs must be proportional to the amount in issue and theoutcome. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful partyto pay in the particular circumstances of the case, rather than an amount fixed by the actual costsincurred by the successful litigant. 1.3: Costs and Ability to Pay [10] Ability to pay may be relevant to the issue of the quantum or scale of costs, but not to another party’s entitlement to costs; see Parsons v. Parsons (No. 2), , 31 R.F.L. (5th) 373, [2002] O.J. No. 3034, 2002 Cars​well​Ont 2536 (Ont. Fam. Ct.),at paragraph [12]; and Panny v.

Gifford and Gifford, , 31 R.F.L. (4th) 440, [1997] O.J. No. 2241, 1997 Cars​well​Ont2028 (Ont. Prov. Div.). 1.4: Offers to Settle [11] Offers to settle are a significant part of the costs landscape in family law in Ontario. They are important to the possibleresolution of cases. And they are important to determining costs. Parties and their lawyers have a positive obligation to behave in wayswhich enable the court to move cases forward to resolution (rule 2 of the Family Law Rules). [12] There were no offers to settle made in this case. This is quite surprising. Neither parent made an offer to settle.

Neitherparent made an offer either about the table amounts of child support, the

section 7 expenses or the retroactive portion of the claim. Thisis concerning. [13] In cases such as this, that are disputes about money, once disclosure is available, an offer to settle should be almostautomatic. [14] It is especially concerning that both parents were represented by lawyers, and by experienced lawyers, and there were stillno offers to settle made. This should not happen. [15] It should be a fundamental step in any family law case to serve at least one offer to settle.

Parties and their counsel nowhave a mandate under subrule 2(4) of the rules, to promote the primary objective of the rules; to deal with cases justly (subrule 2(2)). Dealing with a case justly includes taking steps to save time and expense (subrule 2(3)). Offers to settle play an important role in savingtime and expense in a case. They are an important vehicle in promoting settlements, focus the parties and often narrow the issues indispute. See Klinkhammer v. Dolan and Tulk, 2009 ONCJ 774, [2009] O.J. No. 6370 (Ont. C.J.).

2: ANALYSIS [ 16 ] The father is an employed person whose income for child support purposes is relatively easy to determine. In response to requests from the mother, he began to voluntarily increase child support payments in 2005 (he increased the table amount and made a contribution to the

section 7 expenses). He was not paying the correct amount of child support and he knew it.

Even then, however, he did not make disclosure to the mother of his income (although she asked) and the increases he made were not consistent with the proper table amounts of child support for the income he was earning: • in 2006, he paid $564 per month, when the proper table amount for his income would be $733 per month; • in 2007, he paid $564 per month, when the proper table amount for his income would be $747 per month; and • in 2008, he paid $564 per month and then, from September, he paid $720 per month, when the proper table amount for his income would be $884 per month. [ 17 ] The mother was required to bring a motion to change the child support.

Although the mother initially claimed retroactive support adjustments back to 1996, she later sought those adjustments from 2006 onwards. [ 18 ] Only after the litigation was started and after the father hired a lawyer did he make full disclosure of his income tax returns for those years. Even then, the father still made no offer to settle.

However, at a case conference, the parties reached a consent to an order on 15 March 2010 to increase the table amounts of child support for the years 2006 to 2009. 2.1: Analysis re Claim for Table Amounts [ 19 ] The mother’s own costs for this portion of the case was $14,108.96, all inclusive, and she claimed that amount as full recovery of her costs. [ 20 ] In determining costs for the table amount portion of the mother’s claim, the court took into account the factors set out in subrule 24(11) as follows: (

a) The importance, complexity or difficulty of the issues: the case was neither complicated not difficult, but it was important to the parents; (

b) The reasonableness or unreasonableness of each party’s behaviour in the case: the lack of cost of living increases by the father, the lack of disclosure by the father over many years and initially in the litigation, and the lack of offers to settle by both parents are the kinds of behaviour that courts routinely take into account when determining costs; (

c) The lawyer’s rates and the time properly spent on the case: the lawyer’s rates and time spent were not specifically disputed by the father, other than to allege that the overall amount claimed was excessive. The rates and time claimed were generally reasonable. The time spent in this segment of the case was directed towards efforts to get disclosure from the father, and to determine the proper table amounts for the years 2006 to 2009, all of which would have been simpler if the father had made proper disclosure earlier and when requested; (

d) Any other relevant matter: (

i) No cost-of-living increases were paid under the original 1995 agreement. (ii) In 2005, the mother asked the father for a contribution to

section 7 expenses, and he made a voluntary contribution to the

section 7 expense for baseball. In 2006, the mother asked the father for proof of his income and for him to pay child support as due under the Child Support Guidelines . He did not disclose his increase in income and, although he voluntarily increased the table amount on four occasions (in 2005, 2006, and 2008), he did not do so in accordance with the correct amounts owing under the Child Support Guidelines . Certainly by 2005, and perhaps even earlier, the father knew that his child support obligation was tied to his income. He knew that his income had increased.

By his own behaviour, the father acknowledged that he knew he had a responsibility to pay an increased amount of child support in accordance with increases in his income. He was not paying the correct amount of child support and he knew it. (iii) As he had not disclosed his income to the mother, it was not possible for her to know whether the table amount adjustments that he made voluntarily in 2005, 2006, and 2008 were in accordance with the proper Child Support Guidelines amounts for his income level (they were not).

In any event, these amounts were paid under the separation agreement of 1995 and had tax consequences attached to them (the mother paid tax on the amounts and the father was able to deduct the amounts for income tax purposes), so the net amounts paid were actually well below the proper amounts owing under the Child Support Guidelines . (iv) The latest date on which the father can rely as the date of actual notice of the mother’s request for increased support is 2005.

Yet, he did not increase the child support table amount to the proper level for his income, did not disclose his income to the mother, and the mother had to start a court case in order to get the proper disclosure to adjust the child support, and to get the child support increased to the proper level. [ 21 ] One of the purposes of costs is to change behaviour. The disclosure requirements currently in place in family law are detailed, specific and clear. Disclosure is the cornerstone of child support litigation. Paying parents are required to make disclosure when requested.

This father did not do so and forced the mother to start a court case in order to get even the table amounts of support adjusted to the proper level. Courts must discourage this behaviour, as it adds litigation and cost. Orders for costs are one way to discourage this behaviour. [ 22 ] The mother was entirely successful on the portion of her claim related to the table amount of support. This part of her claim should have been a simple adjustment based on the incomes disclosed by the father for the years in question.

She is entitled to her costs of the table amount of child support on a full recovery basis. 2.2: Analysis re Claim for

Section 7 Expenses

[ 23 ] The outcome, and therefore the analysis regarding the

section 7 expenses is, however, more complicated. [ 24 ] The mother’s costs for this portion of the case was $18,246.55. She claimed partial recovery of her costs for this portion in the amount of $10,891.04, all inclusive. Later, in argument, she claimed partial recovery of $4,000 for this segment. [ 25 ] After the order dealing with the table amount of child support in March 2010, the mother advised the court that she was seeking

section 7 expenses only from 2006 onwards. The mother’s claim was that the father’s proportionate share of those expenses for the years 2006 to 2010 is the amount of $27,375. The amount ordered was $8,614. [ 26 ] The father said in his pleading that he was prepared to pay expenses for the child, where he is aware of those expenses, and has been provided with invoices continually since 1996. But he did not do so, even when receipts for some of those legitimate expenses were produced. He did not make payments of those expenses (either before or during the litigation), and he did not make an offer to settle. [ 27 ] The onus is on the mother to prove the

section 7 expenses. However, the evidence produced by the mother for many of the

section 7 expenses claimed fell far short of being adequate to support those claims. [ 28 ] At the request of the court, the mother prepared a chart of the amounts that she wanted for the

section 7 expenses. But in support of the chart, she simply produced a large amount of paper, and basically asked the court to rely on this as evidence about the cost of the activities. The material was not organized, was incomplete and difficult to follow. The court struggled through many pages to try to determine whether or not the amounts claimed were properly proven, whether the amounts claimed fell properly under special expenses and whether the amounts were reasonable. [ 29 ] In addition, the quality of the materials produced varied widely and was generally inadequate.

The mother produced documentation proof for some, but not all, of the various special expenses claimed. Few receipts were provided; instead she produced e- mails or letters confirming fees paid or due, and hand-written amounts of the cost of a given activity or the estimate of the cost. [ 30 ] The mother also made claims for certain items that were clearly outside the scope of claims permitted under

section 7. [ 31 ] Although relevant to these issues, there was no evidence about the amount of money contributed by either of the child’s two father figures (Mr. Ronen, or the mother’s husband Mr. Grand) who financially assisted the mother with the expenses of the child. Given the totals of those expenses and the years in which they were incurred and compared to the mother’s disclosed income during those years, it is obvious that those men contributed financially to those expenses and may have paid those expenses entirely. [ 32 ] The court declined to share the cost of the

section 7 expenses in proportion to the parents’ incomes, as the mother claimed, and instead ordered an equal sharing of those expenses. There are several reasons for this. It is unclear whether the father knew of all these activities. In any event, he was not consulted about the activities and he did not participate in the child’s outstanding athletic career. This arrangement (equal sharing of the expense) is the arrangement to which the parents agreed regarding the child’s post-secondary expenses in original agreement signed on 26 September 1995. It was not possible, on the evidence given, to determine who paid for all the

section 7 expenses over the years (on the mother’s income alone, clearly, it was not her). And finally, these expenses are being claimed, calculated and awarded on a retroactive basis. [ 33 ] The mother was the person with the information in her control regarding the

section 7 expenses. Yet she made no offer to settle those amounts. [ 34 ] Although the order provides for the father to share in the cost of the

section 7 expenses for 2006 to 2010, the mother was not as successful in this part of her claim: (

a) the amounts ordered do not cover all the categories of expenses that the mother sought; (

b) the amounts ordered do not require the father to share in all the actual expenses that the mother claimed; and (

c) the amounts ordered provided a different regime for sharing of the expenses (50/50) than that claimed by the mother. [ 35 ] As a result, although the mother is entitled to costs for the

section 7 portion of her claim, she is not entitled to full recovery of her costs on the portion of the motion that dealt with the

section 7 expenses. 3: ORDER [ 36 ] The court must determine an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case. The mother’s cost for the case was $32,355.52. She claimed partial recovery costs of $25,000 all inclusive (fees plus HST, and disbursements plus HST). Later, in argument, she claimed partial recovery costs of $18,000 all inclusive. [ 37 ] In this case $23,000 all inclusive (fees plus HST, and disbursements plus HST) is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case.

That amount is comprised of the following amounts: Full recovery regarding the table amount, fixed at $14,000 Partial recovery regarding

section 7 expenses, fixed at $9,000 Total: $23,000 [ 38 ] The father is currently paying about $1,000 per month towards the table amount ($806 per month) and the arrears of child support owing ($200 per month). As well, he will be contributing to the cost of the

section 7 expenses related to the child’s university education. The child is older now and will only be eligible for child support for a few more years. It is far more important that those payments be made than that the costs be paid right now.

[ 39 ] An appropriate order is one in which payment of the costs can be deferred and spread out, but only if the father remains in good standing for all ordered payments. [ 40 ] Payment of the costs owing shall be stayed until the child is no longer eligible for child support. When the child ceases to be eligible for child support, the father shall pay $1,000 per month until all arrears of child support are paid in full and all costs are paid in full. [ 41 ] This repayment scheme for costs is conditional on the father’s fully complying with the table amount of the child support order and the arrears payments ordered. However, if he is more than 30 days in default of any of: (

a) the ongoing periodic table amounts of child support payments ordered on 15 March 2011; (

b) the periodic child support arrears payments ordered on 15 March 2011; or (

c) the periodic costs payments ordered in this decision, the entire amount of costs then owing shall immediately become due and payable. As well, in the event of such a default, as ordered in the order of 15 March 2011, the entire amount of arrears of child support then owing shall become due and payable. [ 42 ] These costs relate to the mother’s efforts to claim child support. They shall be enforced by the Family Responsibility Office as child support.