Superior Court of Justice - Ontario

COURT FILE NO.: FS-01-FP271761-001
DATE: 2013/06/11

RE: Flame Miovski v. Aleko Miovski

BEFORE: Herman J.

COUNSEL:
Amanda Taerk, for the Applicant and for Ms. Melpomeni Davie
Elliot Birnboim, for the Respondent

costs ENDORSEMENT

[1] The applicant, Donna Miovski, and the respondent, Aleko Miovski, each seek costs arising from my trial decision of March 28, 2013.

[2] Donna seeks costs of about $95,000 on a partial indemnity basis or about $127,000 on a full recovery basis. These amounts include disbursements of about $48,000.

[3] Aleko seeks costs of about $135,000, including disbursements. The amount reflects partial indemnity costs up to trial, full indemnity costs at trial on the issue of child support and partial indemnity costs at trial on the issue of spousal support.

[4] The costs sought by both parties include costs of some motions, which were reserved to the trial judge.

Success at trial

[5] There is a presumption that the successful party is entitled to costs. Donna and Aleko each claims to be the more successful party.

[6] Each party sought a variation to Aleko’s child and spousal support, which had been based on Aleko’s annual income of $40,000. Donna sought an increase in child and spousal support, based on an annual income imputed to Aleko of $80,000. Aleko sought a decrease in child support based on an annual income of $24,960, and a termination of spousal support.

[7] In the result, I ordered a decrease in child and spousal support from May 2011 onwards based on an annual imputed income of $35,000.

[8] Aleko argues that he was the more successful party because he obtained a material reduction in child and spousal support. Donna argues that she was more successful because income was imputed to Aleko on the basis of intentional underemployment and no income was imputed to her. She also says she was successful with respect to access to the trust funds for s. 7 expenses and the payment of s. 7 expenses on a proportional basis.

[9] In my opinion, neither party was more successful. Aleko obtained some reduction in child and spousal support, although not to the extent he sought. Aleko did not obtain a termination of spousal support nor an imputation of income to Donna. The s. 7 issues were not seriously contested.

Offers to settle

[10] Aleko made two offers to settle; Donna made none.

[11] Aleko did not do better at trial than his first offer, dated April 23, 2012.

[12] Aleko’s second offer provided two options: combined child and spousal support of $640.00; or settlement of child support alone, for an amount of $315 per month, with the trial to proceed on spousal support and costs.

[13] Aleko did better at trial than his offer with respect to child support alone. It is on this basis that Aleko claims half of the trial costs on a full indemnity basis.

[14] However, had the trial proceeded on spousal support alone, it would have made little, if any, difference to the trial. The central issue on child support, that is, Aleko’s income, would still need to be determined for the purpose of spousal support.

[15] It was not unreasonable of Donna not to accept this alternative offer, since the trial would still have proceeded and would have required much of the same evidence. However, what was unreasonable was Donna’s failure to make any counter offers in response to Aleko’s offers.

The importance, complexity or difficulty of the issues

[16] The issues were not complex or difficult. While they were undoubtedly important to the parties, they are not of general importance.

The reasonableness or unreasonablness of each party’s behaviour in the case

[17] The way in which this case was conducted on both sides was entirely disproportionate to what was at issue.

[18] This case should have been a straightforward application for a variation, with the focus on the determination of Aleko’s income. Instead, it occupied an 11-day trial, 6 days of questioning and numerous appearances for conferences and motions.

[19] Other judges expressed concern about the lack of proportionality in this case: “…there appears to be an incredible expenditure of legal resources being used over changing support that is somewhat minimal” (Czutrin J., Endorsement, July 12, 2012); “…some proportionality and common sense has to be brought to bear. These parties have little if anything to fight over” (Penny J., Endorsement, October 29, 2012). Notwithstanding these admonitions, the matter proceeded to an 11-day trial.

[20] Donna spent a great deal of time and expense in trying to challenge Aleko’s 2003 agreement with Mr. Kuzmanovic. Penny J. had already indicated in his Endorsement of October 4, 2012, that, in the absence of an allegation of material non-disclosure and an attempt to set aside the separation agreement, questions about the real value of the business prior to its sale or Aleko’s income prior to the settlement were not relevant.

[21] Aleko spent a great deal of time at trial exploring the wife’s mother’s various real estate transactions, which had no relevance to the central issues. Aleko also provided the court with voluminous materials.

Compliance with court orders

[22] Donna was in breach of several orders for disclosure as well as a costs award.

[23] Donna says she provided all the documents she was able to collect. On March 13, 2013, Donna paid the costs ordered by Penny J. on October 29, 2012.

[24] Aleko says he was never in breach of any disclosure orders, although he failed to attend for an examination when he switched counsel. At trial, it was apparent that he had failed to disclose funds he received from his parents.

Lawyers’ rates and time properly spent

[25] The lawyers’ rates are not, in themselves, unreasonable. While Aleko’s counsel’s rates are higher than Donna’s counsel, this is justifiable in view of the fact that he is more senior.

[26] What is problematic, however, is the time spent. The time spent by both parties’ counsel was vastly disproportionate to the issues and the amount of money at stake.

[27] The Bill of Costs from Aleko’s counsel includes: 48 counsel hours related to the trial (preparing response to motion to change and financial statements, questioning, etc.); 132 counsel hours of trial preparation; and 11 days at trial.

[28] The Bill of Costs from Donna’s counsel includes: about 110 hours of trial preparation; and 11 days at trial.

Expenses properly paid

[29] The one expense that is of particular concern is $40,000 for Donna’s expert, Jonathan Hames. Mr. Hames’ report and evidence were of little value. His opinion was largely based on an analysis of Aleko’s agreement with Mr. Kuzmanovic and Aleko’s earnings capacity prior to 2003. The parties had agreed in their separation agreement that Aleko’s income was the income set out in the employment agreement. The separation agreement was incorporated into a court order. Donna did not seek to set the agreement or the court order aside. On a refusals motion prior to trial, Penny J. had already questioned the relevance of evidence regarding the value of the business and Aleko’s income prior to 2003.

Impact on the child

[30] Donna submits that any costs award against her will impact on her ability to meet Alexa’s daily needs. Alexa is 16 years of age.

[31] The court may take the financial situation of the parties into account in determining a costs award. In particular, the court may consider the impact of a costs award on the best interests of the child (see C.A.M. v. D.V., 2003 18880 (ON CA), [2003] O.J. No. 3707 (C.A.), at paras 40-43).

[32] Donna has no income other than what she receives in child and spousal support and assistance from her mother. Donna is the titled owner of the home in which she resides with Alexa.

[33] Donna notes that it is likely that, if a costs order is made against her, Aleko will move to enforce the order against the home. Aleko did, indeed, move during the course of the trial, for an order preventing the home from being sold, transferred or encumbered, as security for costs. Donna has no other assets or income to pay a costs award.

[34] The matter of the home is complicated by the fact that it was purchased by Donna’s mother and then placed in Donna’s name. Donna’s mother pays the majority of house-related costs. She indicated that she intends to have the house transferred back to her.

[35] In my opinion, there is a significant possibility that a substantial costs order would have an impact on Donna’s ability to support and care for Alexa.

[36] Unfortunately, the legal costs incurred by both parties may well have an impact on their ongoing ability to support Alexa.

Conclusion

[37] Neither side was more successful than the other.

[38] The predominant factor in determining costs in this case is the disproportionate amount of time and money spent by each side on what should have been a straightforward variation of support. It is, indeed, unfortunate that the parties have spent far more money than what they were fighting about and far more money than either of them has, borrowing substantially in order to fund the litigation.

[39] Another important factor is the significant possibility that a substantial costs award against Donna would have an impact on her ability to care for the child, Alexa.

[40] Aleko, in his submissions, cited the following statement of Campbell J. in Parsons v. Parsons (No. 2), 2002 45521 (Ont. S.C.J.) at para. 14: “There is an element of behaviour modification to a costs order in that it encourages a change in attitude from a ‘litigate with impunity’ mindset”. In my opinion, both parties demonstrated a willingness to litigate with impunity.

[41] In these circumstances, it is appropriate that each party bears his or her own costs.

Herman J.

Date: June 11, 2013