RESP order shows scope for creativity in family law costs awards

A recent decision shows the potential for judicial creativity when it comes to costs awards in family matters, says Toronto family lawyer William Abbott.

Abbott, a partner with MacDonald & Partners LLP, acted for the paternal grandparents of the five-year-old boy at the heart of the case of Schmeler v. Schmeler, which concerns their acrimonious dispute over custody and access with the child’s mother.

RESP and Family Law

Following the agreement mid-trial of a settlement favorable to his clients, Abbott convinced Ontario Superior Court Justice Robert Del Frate to order the mother to pay $2,500 per year into a Registered Education Savings Plan (RESP) set up for the benefit of her child, as part of his costs award against her.

“There was some money paid into court to court as security for costs, but this shows that costs awards don’t always have to be in the form of money to the opposing party,” Abbott says. “There is caselaw supporting the idea that judges can also obligate someone to do something, such as making RESP contributions, which is what the court did here.” 

According to the ruling, the case has its roots in the separation of the boy’s parents in early 2015 after less than three years marriage. As Del Frate notes in his judgment, the already fraught situation took on an added level of complexity when the boy’s father was killed in a motorcycling accident in 2018.

The grandparents were already closely involved in the child’s care, because the father had been living with them while sharing custody on a week-about basis with the mother. However, following his death, the grandparents added themselves to the ongoing litigation in order to challenge the mother’s unilateral decision to appoint herself the child’s sole custodian and decision-maker. 

RESP Payments and Custody Settlement

While a settlement halted the custody and access trial on the third of five scheduled days with the week-about schedule and joint decision-making restored, Abbott pursued a costs order on behalf of his clients, arguing that the litigation was only necessary because of the mother’s unreasonable behavior. Indeed, a series of previous judgments in the case were critical of her actions, while the final agreement improved on the grandparents’ earlier offer to settle.

The mother, for her part, claimed that she only ever acted in what she believed were the best interests of her child by asserting her case to be the primary parent. In addition, she asked the judge to consider the impact a cost award would have on her ability to provide for her son, given her limited financial means and diminished earning potential while receiving disability benefits.

Abbott explains that his clients’ request for costs was not so much about the money as it was concerned with deterring further costly, disruptive and unnecessary litigation. While the grandparents assessed their costs at $70,000 on a substantial indemnity basis, they were happy to accept the $35,000 previously paid into court by the mother as security for costs, but also asked for an additional order requiring her to pay $2,500 into an RESP opened for the child.   

Incident of Support under the Family Law Act

“I think judges are going to be more inclined to order costs if the money is going towards the child’s care and education, rather than simple to the other party,” Abbott says.

In his decision, Del Frate said he understood how parties such as the mother in this case can become “obsessed and convinced” in their belief that they are acting in the best interests of their children

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“I do take into consideration the challenges that the mother is facing. Still, her conduct must be deterred,” he concluded, ordering the $35,000 held by the court to be paid out as an all-inclusive amount for the costs claimed by the grandparents.

The judge also ordered the mother to pay $2,500 into an RESP set up for the child annually until 2025. In the event the boy never enters post-secondary education, Del Frate ordered that the funds in the RESP can be paid out directly to the child in 2039, by which time he will be in his mid-20s.

In addition, the judge ruled that the mother’s payments into the fund will be considered an incident of support under the Family Law Act, meaning the requirement would survive the mother’s bankruptcy.