“Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that “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.”
Pursuant to rule 24(1) of the Family Law Rules, the successful party is presumed to be entitled to recover costs. Rule 24(11) requires the court, in setting the amount of costs, to consider a number of factors including the importance, complexity and difficulty of the issues, the reasonableness or unreasonableness of each party’s behavior in the case, the lawyer’s rates, the time properly spent on the case, expenses properly paid or payable, and any other relevant matter. These factors are to be applied flexibly (see M. (C.A.) v. M. (D.) (2003), 2003 CanLII 18880 (ON CA), 67 O.R. (3d) 181 (Ont. C.A.) at para 42).
Consideration of the relative success of the parties on the issues in the case is the starting point in determining costs (see Butty v. Butty, 2009 CanLII 23111 (ON SC), [2009] O.J. No. 1887 (Ont. S.C.J.) at para. 4, citing Sims-Howarth v. Bilcliffe, 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (Ont. S.C.J.)). In the case of Johanns v. Fulford, 2010 ONCJ 756 (Ont. C.J.) at para. 13, it was held that, for the purpose of rule 24(1), “success” is assessed by comparing the terms of an order against the relief originally requested in the pleadings and against the terms of any offers to settle.
In M. (C.A.) v. M (D.) the Court of Appeal confirmed, at paras. 40-42, that:
(a) although the Family Law Rules have circumscribed the broad discretion granted by s. 131(1) of the Courts of Justice Act, they have not completely removed the trial judge’s discretion;
(b) although the general provision, rule 24(1), enacts a “presumption” that the successful party is entitled to costs of the case it does not require that the successful party is always entitled to costs;
(c) a successful party may not obtain a costs award in his or her favour even in circumstances not falling within rule 24(4);
(d) there may be circumstances aside from the unreasonableness of the successful party’s conduct that rebut the presumption; and
(e) the financial situation of the parties can be taken into account in setting the amount of the costs award either under rule 24 or rule 18 pursuant to the direction in sub rule 24(11) that the court take into account “any other relevant matter”.
The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 3707 (Ont. C.A.) at para. 24).
Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).”