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
1The applicant, Donna Miovski, and the respondent, Aleko Miovski, each seek costs arising from my trial decision of March 28, 2013.
2Donna 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.
3Aleko 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.
4The costs sought by both parties include costs of some motions, which were reserved to the trial judge.
Success at trial
Success at trial
5There is a presumption that the successful party is entitled to costs. Donna and Aleko each claims to be the more successful party.
6Each 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.
7In the result, I ordered a decrease in child and spousal support from May 2011 onwards based on an annual imputed income of $35,000.
8Aleko 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.
9In 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
Offers to settle
10Aleko made two offers to settle; Donna made none.
11Aleko did not do better at trial than his first offer, dated April 23, 2012.
12Aleko’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.
13Aleko 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.
14However, 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.
15It 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
The importance, complexity or difficulty of the issues
16The 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
The reasonableness or unreasonablness of each party’s behaviour in the case
17The way in which this case was conducted on both sides was entirely disproportionate to what was at issue.
18This 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.
19Other 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.
20Donna 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.
21Aleko 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
Compliance with court orders
22Donna was in breach of several orders for disclosure as well as a costs award.
23Donna 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.
24Aleko 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
Lawyers’ rates and time properly spent
25The 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.
26What 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.
27The 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.
28The Bill of Costs from Donna’s counsel includes: about 110 hours of trial preparation; and 11 days at trial.
Expenses properly paid
Expenses properly paid
29The 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
Impact on the child
30Donna submits that any costs award against her will impact on her ability to meet Alexa’s daily needs. Alexa is 16 years of age.
31The 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).
32Donna 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.
33Donna 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.
34The 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.
35In 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.
36Unfortunately, the legal costs incurred by both parties may well have an impact on their ongoing ability to support Alexa.
Conclusion
Conclusion
37Neither side was more successful than the other.
38The 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.
39Another 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.
40Aleko, 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.
41In these circumstances, it is appropriate that each party bears his or her own costs.
Herman J.
Date: June 11, 2013