BACKGROUND
The parties were married in 2001, separated in 2016, and have four children, three of whom have special needs. The wife commenced proceedings in 2018 after the husband left the matrimonial home. A Restraining Order was granted and later terminated. Since the separation, the children have resided primarily with the wife.
From 2019 to 2021, the parties engaged in extensive mediation. The wife then retained counsel and incurred over $11,000 in legal fees in an attempt to finalize a Separation Agreement. When negotiations failed, litigation resumed.
The matter proceeded through numerous motions, conferences, and professional conflict between counsel. On the eve of trial, the parties signed final Minutes of Settlement which reserved the issue of costs to be determined by the court.
Between February 2023 and November 2024, the wife served eight non-severable Offers to Settle. The husband served thirteen Offers during the same period, some of which were severable and others not, with two later withdrawn. None of the offers mirrored the final Minutes of Settlement.
THE LAW
In Hassan v Hassan, 2019 ONSC 1199 [Hassan], Justice Akbarali reviewed diverging authorities on whether courts should award costs when parties settle all substantive issues before trial. One line of authority supports post-settlement cost determinations, reasoning that cost disputes should not obstruct settlement and can be resolved summarily to promote resolution (Wunsch v. Wunsch, 2013 ONSC 5208).
However, this approach was criticized in Witherspoon v. Witherspoon, 2015 ONSC 6378, where Justice Leach held that revisiting contested facts after a settlement—without a trial or evidentiary foundation—is inappropriate and contrary to judicial economy.
Justice Akbarali in Hassan noted the practical tension: either a judge who has not been involved in any step of the litigation is asked to determine costs summarily, without a proper evidentiary foundation, or a full evidentiary record is introduced, risking a process that closely resembles the very trial the parties sought to avoid. Her Honour concluded—and the court in this case agreed—that, absent compelling reasons, costs should not be awarded following settlement, particularly where the trial judge has had no prior involvement in the case.
ANALYSIS
The court declined to analyze the parties’ evolving offers in detail, noting that doing so would not be helpful in this case. However, it found compelling reasons to award costs, primarily:
- The mother incurred legal costs to draft a mediated agreement in principle, which the father initially approved but later derailed.
- The mother solely supported the children—three of whom have developmental needs—while the father accumulated over $150,000 in child support arrears. The court considered this blameworthy conduct.
- In a December 2023 offer, the father proposed an unrealistic $300,000 valuation of the mother’s business. This valuation was later reduced and ultimately abandoned. Although the court could not make a finding of bad faith, it noted that adopting ill-conceived positions undermines the settlement process and fosters conflict.
The court emphasized the father’s failure to pay adequate child support and the mother’s legal expenses related to the domestic contract as the most significant factors. Accordingly, it ordered the father to pay $40,000 in costs, to be deducted from his share of the settlement funds held in trust.