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BAD FAITH + BAD BEHAVIOUR = COSTS PENALTIES!

Goldstein v Walsh (27 May 2019) cautions family law litigants -  If you take unreasonable and obstructive positions throughout proceedings, this will amount to "bad faith".  Result?  You may be ordered to pay a devastating costs award.  Madam Justice J. Kristjanson of the Ontario Superior Court of Justice ordered the father to pay his ex-spouse's costs on a substantial indemnity basis - $420,000. This huge award was based on:

(1) the mother beat her Offer to Settle at trial; and,

(2) the father conducted himself in bad faith and in an unreasonable manner that substantially complicated the issues and evidence.

Costs are discretionary: Cost orders are discretionary. The Family Law Rules create a presumption that a successful party is entitled to costs on a motion, case, or appeal. The Family Law Rules further contemplate full recovery costs where a party has behaved unreasonably, in bad faith, or has bettered their offer to settle.

Father's Bad Faith Behaviour: In this case the trial judge found that the father had acted in bad faith throughout:

(1) The father inflicted emotional and financial harm on the mother and child. 

(2) The father misled the court and mother both directly and by omission. 

(3) The father made false allegations early on in his without notice motion and continued to defend these false allegations until the bitter end. 

(4) The father tried to undermine the mother's role and competency as a parent.

Unreasonable Conduct: The trial judge further highlighted some of the unreasonable conduct of the father to include his:

(1) Failure to expand the mother's parenting time without motions or threats of motions and in turn driving up legal costs;

(2) Failure to reasonably accommodate requests for travel; and

(3) Failure to consult with the mother regarding health, medical, and extra-curricular issues and failure to share information appropriately with the mother.

Discourage and sanction bad behaviour: Recognizing the father's bad faith conduct and that the mother exceeded her Offer to Settle at trial, the trial judge awarded the mother fees on a full recovery basis. Justice Kristjanson wrote that the costs ordered in the case in part reflects the goal of discouraging and sanctioning inappropriate behavior.

Take Aways:

(1) You need to play fair or it might cost you.

(2) A court will not tolerate being misled in a litigant's attempt to gain a strategic advantage.

(3) By taking a "scorched earth" approach early on in litigation and by presenting misleading evidence to one's apparent advantage, a litigant encourages the other party to defend against the misrepresentations. In turn, this will drive up legal fees for both parties leading inexorably to a substantial indemnity cost award based on bad faith.

This blog post is authored jointly by Jessica Cohen and Gene C. Colman.

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