Cost Basics in Ontario

Motions for costs arise with extraordinary frequency in Ontario, so it is helpful to revisit some basic concepts as illustrated by Brock v. Sorger, 2016 ONSC 1498.

Costs serve three main purposes: to indemnify successful litigants, to encourage settlement, and to sanction unreasonable behaviour by litigants (Fong v. Chan (1999), 46 O.R. (3d) 330, at para 22).

Cost awards should reflect what the Court deems to be a fair and reasonable amount that should be paid by the unsuccessful party (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 at para 24). The actual amount incurred by the successful litigant is of course relevant, but not determinative (Delellis v. Delellis, 2005 CanLII 36447 (Ont. S.C.).

Determining who was successful is not always a straight forward task. Some issues are, not surprisingly, more significant than others (Brennan v. Brennan, 2002 CanLII 2742, at para 3 (Ont. S.C.).

Rule 24(11) of the Family Law Rules establishes factors the court considers in determining costs, including: the importance, complexity, or difficulty of the issues; each parties’ behaviour; the lawyers’ rates; the lawyers’ preparation; expenses paid and so on.

Offers to settle impact cost determinations. Under Rule 18, if a party does as well or better than an offer they made, they are entitled to full recovery effective the date of the offer if it is not accepted by the other side.

In strategizing, counsel should plan very carefully to obtain the most favourable cost consequences for clients.

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Varying Imputed Income in Ontario

Imputing income for support is an issue that arises time and again in my practice so I pay close attention to new case law on the matter.

Ruffolo v. David, 2016 ONSC 754 is one such case. The father’s income was imputed at trial. He later brought a motion to vary support and presented new evidence (tax returns, notices of assessment, and an accountants’ report) that was not available at trial but obviously should have been. The motions court found a material change in circumstances and reduced his support obligations. Consequently, the mother owed the father some $80,000.00 in overpayments and appealed the motion court’s decision.

The appeal was allowed. The father failed to establish a material change in circumstances. Trang v. Trang (2013) 29 R.F.L. (7th) 364 (Ont. S.C.J.) was cited. It provides that a party seeking to vary an imputed income faces a difficult burden. They must show the factors considered when income was imputed and whether those factors have changed; it is not enough simply to present evidence of a declared income. Otherwise this would benefit the payor at the recipient’s expense, as the payor could wait and see whether income was imputed and, if so, re-litigate the issue using their declared income. The onus should not fall on the recipient to show why income should still be imputed.

The payor must address why income had to be imputed in the first place. They must show a change in circumstances establishing either: (a) it is no longer necessary or appropriate to impute income and their representations should now be accepted, or (b) even if income should still be imputed, a change in circumstances results in the imputation of a different amount.

The Court comments on the meaning of a material change. A material change likely exists where, if the facts were known at the time of the initial order, a different result would have followed. Willick v. Willick, [1994] 3 S.C.R. 670 was cited for the principle that if the matter relied on as constituting the material change was known when the initial order was made, it cannot be relied upon as a basis for variation.

The main take away point from Ruffolo is this: tell your clients to prepare their financial statements right the first time.

Obtaining Leave to Appeal from an Interim Order

The recent case of Reddy v. Reddy, 2016 ONSC 807 deals with a motion for leave to appeal from an interim order granting a variety of relief. This article focuses on the appeal process.

Ontario’s Family Law Rules do not specify an appeal process, so we must turn to the Rules of Civil Procedure. Rule 62.02 governs appeals from an interim order made by a judge.

The test is found in Rule 62.02 (4) (a) and (b). According to Reddy, leave should not be easily granted and the test is very strict. The rule states that leave shall not be granted unless one of two circumstances exist.

Leave may be granted under (a) where there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted. The Court in Reddy stated that the conflict must regard a matter of principle, not simply a situation where a different result is reached.

Leave may also be granted under (b) where there appears to the judge hearing the motion good reason to doubt the correctness of the order and the proposed appeal involves matters of such importance that leave should be granted. The Reddy Court explains that leave may be granted where the correctness of the decision is open to vary serious debate. Further, the judge granting leave need not believe that the decision is actually wrong. The Court lastly reminds that the matter must touch upon the broader interests of law and the administration of justice.