SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FS-09-00346780

DATE: 20130830

RE: Reinhold Avraham Wunsch, Applicant

AND

Ronda Stoller-Wunsch, Respondent

BEFORE: Czutrin J.

COUNSEL: Lorne Levine, for the Applicant

Respondent – In Person

HEARD: Written and Oral Costs Submissions Received

ENDORSEMENT

Introduction

[1] With the assistance of Kiteley J. and Goodman J., the parties avoided trial and entered into comprehensive Minutes of Settlement (“Minutes”). I was asked to follow up with a final order consistent with the Minutes. The Minutes and order did not resolve costs but provided that a judge (me) would determine costs by way of written and oral submissions.

[2] There was some delay in receiving material and finalizing the order. The parties filed further material and returned before me in April and then the file was unfortunately removed off site. Hence the delay in this ruling.

[3] Because the parties resolved their issues without a trial (something we all encourage), determining entitlement and quantum of costs raises certain challenges as I made no findings of fact or credibility. Unlike a trial judge or a judge deciding on motions to at first identify the successful party, I have only offers, documents (the trial record), and written and oral submissions to consider in deciding entitlement and quantum of any costs award.

[4] The consent order I signed on April 17, 2013 incorporated the Final Minutes of Settlement with costs reserved and provided the following:

1. The Applicant shall pay the Respondent the sum of $150,000 equalization payment. Such sum to be paid as follows:

a) The sum of $50,000 plus $8,500 (17% tax gross up) by way of RRSP rollover within 30 days;

b) The sum of $50,000 by way of certified cheque or bank draft or money order to be paid within 60 days;

c) The sum of $50,000 secured by a second mortgage on 25 Replin Road Townhouse #2, Toronto (if the Applicant can prove he has sufficient equity) to be paid over a period of five years at the rate of $833 monthly, commencing January 1, 2015 to be paid to the Respondent by post-dated cheques. The Respondent shall provide a receipt for each payment. There will be a $50 penalty for every dishonoured cheque. The Applicant will be responsible for paying the fees of both parties for this mortgage, and a solicitor will give the Respondent an opinion letter verifying the security.

2. The Applicant shall pay to the Respondent through FRO, on the first of each month, spousal support in the sum of $1,091 monthly commencing February 1, 2013 based up to and including March 1, 2015 when the Applicant will turn 70 years of age, and if the children are 15 and 13 respectively. Such sum shall be paid regardless of any change in Respondent’s marital status or income.

3. The Applicant shall pay to the Respondent through FRO child support in the sum of $1,500 monthly commencing February 1, 2013 based on his annual income of $107,000 in accordance with the child support guidelines for the children (for two children named), reassessed annually commencing September 1, 2014 with a mediation provision and terms as to age of children and their residence.

4. The issue of costs, including mediation/arbitration before Dr. Landau, apportionment of the fees paid to Kalex Valuations Inc., and the costs of this action shall be determined by the court.

5. The Applicant to pay $2,000 arrears for the month of August 2012.

6. The Applicant to pay his share of extended health benefits retroactively in the sum of $6,312.

7. The Applicant to pay 80% of s. 7 expenses to the Respondent and the s. 7 expenses are identified to include health costs, tuition, and camp.

8. The Applicant was to reimburse the cost of a child psychologist.

9. There were penalty and other detailed clauses including issues related to children’s clothing and the Respondent’s jewellery.

[5] In this endorsement, I compared the consent order to the parties’ positions throughout the court process to help me determine success as far as any entitlement and the other Rule 24 factors under the Family Law Rules, O. Reg. 114/99.

[6] While Family Law Rules 18 and 24 provide guidance on determining entitlement and quantum of costs, the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131 provides judges discretion to award and quantify costs. Section 131 states as follows:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[7] The Applicant in this case, Reinhold Avraham Wunsch, retained Mr. Lorne Levine to commence this case, complete minutes incorporated into the Final Order on the eve of trial, make costs submissions, and attend for post-settlement issues.

[8] The Respondent, Ronda Stoller-Wunsch, acted without counsel for some time. She previously retained Ms. Judith Holzman. The Respondent submitted Ms. Holzman’s accounts to support her costs claim.

[9] Case law establishes that a party acting without counsel is entitled to recover costs. However, determining how to calculate costs raises certain challenges. The following cases all speak to how a judge might quantify an in-person party’s costs: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.); Izyuk v. Bilousov, 2011 ONSC 7476, 7 R.F.L. (7th) 358; Jahn-Cartwright v. Cartwright (2010), 2010 ONSC 2263, 91 R.F.L. (6th) 301 (Ont. S.C.J.); Cassidy v. Cassidy (2011), 2011 ONSC 791, 92 R.F.L. (6th) 120 (Ont. S.C.J.); and Warsh v. Warsh, 2013 ONSC 1886, [2013] O.J. No. 1474

[10] The above cases consider proportionality, reasonableness, and fairness as an ultimate litmus test when determining costs. The case law also considers the impact of legal fees on access to justice, particularly in family cases.

[11] Costs should not prevent settlement when parties can come to a reasonable settlement on all issues except costs. We should not force parties to go to trial and obtain success in order to recover disputed costs. A summary, fair, and reasonable determination of costs can encourage settlement (if costs are not part of the overall settlement). We need to find a way to address cases where costs impede settlement.

The Parties’ Claims for Costs

[12] The Respondent seeks the following amounts by way of costs:

1. $8,543.25 for costs related to Dr. Barbara Landau’s custody arbitration.

2. $5,000 for work related to Archibald J.’s custody order dated June 1, 2009.

3. Mediator fees in the amount of $155.37.

4. The Respondent’s estimated loss of income in the amount of $5,892.30.

5. $18,572 for the Respondent’s share of Kalex Valuations Inc. (“Kalex”) business and income evaluations.

6. 50% of the fees paid by the Respondent for two parenting coordinators in the amount of $675 and $1,286.94.

7. $500 for costs incurred by the Respondent to obtain a valuation of the cottage property owned by the Applicant.

8. $846.93 and $337.53 for the costs of transcripts of the questioning and the expediting fees to obtain the transcripts in time for the scheduled trial.

9. $500 for legal expenses incurred for evaluating the former matrimonial home “owed after” the partial separation agreement that resulted in the Applicant purchasing the Respondent’s interest.

10. 80% of the Respondent’s remaining legal fees of $132,267.34.

11. $375 for photocopying and faxing costs.

[13] The Applicant seeks an order for no costs.

[14] The Applicant also seeks costs related to Dr. Landau’s arbitration award. Each party paid Dr. Landau’s initial retainer. The Applicant commenced this court action and initially included Dr. Landau as a party to set aside her arbitration award dated December 11, 2008.

Analysis and Disposition

[15] The parties executed a Mediation-Arbitration Agreement with Dr. Landau dated July 15, 2008. Each party had counsel execute Certificates of Independent Legal Advice. The Mediation-Arbitration Agreement contemplated that the parties would address parenting issues, as well as child support, spousal support, and property issues.

[16] Dr. Landau’s arbitration award on parenting issues only was dated December 11, 2008. The award reserved costs awaiting written submissions from the parties’ counsel.

[17] The Applicant commenced this case in response to Dr. Landau’s arbitral award and sought to set it aside.

[18] The Respondent was content with the arbitral award. Her counsel served and filed written costs submissions to Dr. Landau. The Applicant made no costs submissions to Dr. Landau.

[19] At a case conference before Archibald J. on June 1, 2009, the parties reached an agreement that was ultimately incorporated into a court order. The order upheld and incorporated Dr. Landau’s arbitral award. Paragraph 7 of that order provided, “[p]ayment of the costs of Dr. Landau concerning her custody and access award will be resolved by the Judge who ultimately decides this matter.”

[20] Based on the record and what appears to be fair and reasonable, I find that the Applicant is responsible for all costs after Dr. Landau’s initial retainer. The Respondent was successful on this issue and she incurred fees. Therefore, the Applicant is to pay the Respondent $3,046.44 (the additional amount she paid to Dr. Landau to obtain her report).

[21] The Respondent also seeks to recover costs of the mediation-arbitration process consistent with Dr. Landau’s request to receive costs submissions as part of her arbitral award.

[22] I reviewed Ms. Holzman’s written costs submissions submitted to Dr. Landau from December 30, 2008 and her Bill of Costs. In addition to the $3,046.44, I find it fair and reasonable that the Applicant pay Ms. Holzman’s costs claimed in her submissions to Dr. Landau of $8,543.25 (40% of her then counsel’s fee). This includes disbursements and her previous counsel’s fees from July 15, 2008 to December 15, 2008.

[23] The Respondent seeks to recover $5,892.30 for lost income as she took off work to prepare for this case. As a general rule, an in-person party cannot recover costs for time that any party, represented or not, must spend with their lawyer providing information, documentary disclosure, attending in court, or responding to inquiries, letters, or other communication: Fong, at para. 26 and Izyuk, at para. 39. Cost awards do not include these activities or other time a represented party devotes to their own case. However, an in-person party may be entitled to recover costs for work they do that would otherwise be ordinarily performed by counsel. For example, an in-person party may recover counsel fees and disbursements.

[24] In order to recover lost income, an in-person party must provide credible evidence that she lost income to do the work a lawyer would have otherwise performed and the work could not have reasonably been completed without that loss of income. She cannot recover lost income because she chose to work on the case instead of doing her paid job or self-employment.

[25] I have no satisfactory method to determine what, if any, work done by the Respondent was above and beyond what any represented party may have done. Absent a Bill of Costs or a method to sufficiently establish time spent, the reasonableness of the time spent, and the amount claimed, I do not allow the Respondent’s claimed amount.

[26] Paragraph 3 of Archibald J.’s consent order addressed Ms. Melanie Russell’s fees. Ms. Russell prepared the Kalex reports on each party’s income and the value of the Applicant’s business at date of marriage and valuation date.

[27] Initially, the parties were to equally pay Ms. Russell’s joint retainer, subject to further court decision. It was also subject to the Applicant making full disclosure, including Intertrans Group (1362547 Ontario Inc.) (his business) information, cottage and financial information, and Employment Plus Solution records if he had them.

[28] Paragraph 6 of Archibald J.’s order required the Respondent to produce any further financial information concerning Employment Plus Solutions (her business).

[29] I was advised that Ms. Russell brought a separate small claims court action against the Applicant for non-payment of his share of the accounts. The Applicant claimed that Ms. Russell did not divide some of her invoices between the parties.

[30] I advised during oral costs submissions that the Respondent is not responsible for Ms. Russell’s fees provide her opinion as to the Applicant’s income and the value of his business at date of marriage and valuation date. The Applicant is similarly not responsible for Ms. Russell’s fees to provide her opinion as to the Respondent’s income.

[31] The Applicant’s counsel confirmed that Ms. Russell billed the Applicant $25,689.14 and the Respondent $18,572.49. The Applicant’s counsel was unable to get a breakdown of Ms. Russell’s fees. I will assume that the additional billing to the Applicant is related to the date of marriage valuation of his business. Without the breakdown, I allocate 25% of the Respondent’s account of $18,572.49 to her income report and 75% to the Applicant’s income and business valuation. Therefore, the Applicant is to pay the Respondent $13,929.36 towards Ms. Russell’s (Kalex’s) fees.

[32] The Respondent also seeks to recover costs related to parenting coordinators and the legal fees incurred to get the correct payment for the Replin property pursuant to an interim separation agreement. I do not consider these matters as appropriate recoverable items.

[33] The Respondent seeks $500 for the costs she incurred to value the cottage property. The Applicant held title to the cottage and denied that it was a matrimonial home. The Respondent’s valuation formed the basis of the result in this case. I allow her $500 claim.

[34] The Respondent also seeks to recover the cost of expediting transcripts of questioning. She attributes these costs to the Applicant’s delay. I find this reasonable. The Applicant caused delay with his unreasonable offers until the trial was imminent.

[35] The Applicant challenges costs as outlined above, claiming they were not determined each step along the way as required by Family Law Rule 24(10). However, Archibald J. and the final order specifically reserved certain costs along the way to be determined at the conclusion of this case.

[36] While I have discounted costs that were not reserved or addressed, costs are otherwise not automatically eliminated. Gathering disclosure and general counsel fees unrelated to a specific attendance before a judge are appropriate and should be considered in costs: Houston v. Houston, 2012 ONSC 233, 12 R.F.L. (7th) 115 (Div. Ct.), at para. 16 and Islam v. Rahman, 2007 ONCA 622, 41 R.F.L. (6th) 10.

[37] I find Family Law Rule 24(10) is often misinterpreted. The objective of this rule is to keep parties informed about litigation costs for every step to encourage parties to take reasonable steps. I suggest that it is particularly intended to address unnecessary motions and court attendances. Consider the Rule 2 objectives and rule 17(18):

If a conference is adjourned because a party is not prepared, has not served the required brief, has not made the required disclosure or has otherwise not followed these rules, the judge shall,

(a) order the party to pay the costs of the conference immediately;

(b) decide the amount of the costs; and

(c) give any directions that are needed. [Emphasis added.]

[38] The Respondent seeks to recover some of her legal fees incurred before her counsel stopped acting on the record in December 2011 and for counsel’s assistance since then.

[39] I reviewed the valuation reports, financial statements, and settlement offers and compared them to the resolution to better understand the relevant costs factors (particularly reasonableness). None of the offers I reviewed below qualify for the rule 18(14) costs consequences. Nevertheless, the review supports the conclusion that the final order is more consistent with the Respondent’s position, although not identical to the amounts she sought.

[40] While I was advised that the parenting arrangement for the children may have changed after Archibald J.’s final order dated June 1, 2009, this costs decision is based on that order. (I do not consider any parenting schedule changes as I have no information to consider.)

[41] The October 28, 2010 Kalex Report provides the following information on the Applicant’s income:

1. The Applicant is the sole proprietor of The Intertrans Group, a company he started in 1993 after emigrating to Canada in 1993 (the parties married in 1998). The company designs trade show exhibits used in Europe.

2. Ms. Russell investigated the Respondent’s assertion of unreported cash on foreign exchange transactions, housecleaning services provided by company employees, unrecorded cash payments from German suppliers, personal expenses recorded in the company, and cash payments to the Respondent’s son.

[42] The report adjusted the Applicant’s income from the income reported on personal tax returns by $15,000 to $17,000 per annum. The report stated his annual income is $70,000.

[43] The November 5, 2010 Kalex Report provides the following information on the value of the Applicant’s interest in Intertrans Group as of December 31, 2007:

1. The Respondent’s business Employment Plus Solutions administered the payroll function for the company, including filing of government payroll taxes.

2. The report outlined the same issues brought to Ms. Russell’s attention noted above and related to the Applicant’s income.

3. The report provides a value of $215,000.

[44] The Respondent’s expert appraised the cottage at a range of $170,000 to $180,000 as of December 31, 2007 and the Applicant’s expert appraised its value at $140,000.

[45] The Applicant attempted to challenge the jointly retained expert and hired his own financial person. I am uncertain whether the person hired would have been qualified as an expert.

[46] On March 20, 2011, the Respondent offered to settle all financial issues:

1. $200,000 equalization payment.

2. $5,000 child and spousal support arrears.

3. Section 7 and other payments of $21,040.97 and $26,139.86.

4. Spousal support of $1,600 per month for five years commencing April 1, 2011.

5. Ongoing child support of $1,184 per month.

6. Costs of $30,000.

[47] On August 18, 2011, the Respondent offered to settle all issues:

1. $172,903.57 equalization payment.

2. $7,500 child and spousal support arrears.

3. $28,117.77 for s. 7 arrears plus $17,000 on account of shortfall of contribution to household expenses funded by the Respondent’s line of credit.

4. Spousal support of $1,218 per month for three years commencing September 1, 2011.

5. Child support of $1,428 per month based on the Applicant’s total income of $102,000 (consisting of $82,000 self-employment income, $7,800 German pension, $5,000 rental income, CPP of $7,200, and OAS of $6,000).

6. 70% of s. 7 expenses, bar mitzvah costs, and $18,773.72 towards legal fees and arbitral fees.

[48] The above offers were made when the Respondent had counsel. She also made offers without counsel.

[49] On October 30, 2012, she offered to settle as follows:

1. An equalization payment of $150,000 paid by a $30,000 RRSP rollover and the balance of $120,000 to be paid over ten years at the rate of $1,000 per month or alternatively a lump sum of $100,000.

2. Spousal support of $1,500 per month and child support of $1,500 per month based on the Applicant’s income of $102,000 and her income of $33,000 (self-employment of $15,000 and spousal support of $18,000).

3. The spousal support was to be indexed and there were other terms such as request for arrears, other payments, and costs including costs of the arbitral award and Kalex Report.

[50] On November 20, 2012, she made yet another offer similar to the October 30, 2012 offer but included time limits on acceptance and costs increases.

[51] On December 4, 2012, she made yet another offer:

1. $170,000 as an equalization payment with $80,000 by way of RRSP rollover and $90,000 over ten years at the rate of $1,500 every second month or $1,500 by any combination of cash and RRSP rollover.

2. Spousal support of $1,250 per month and child support of $1,250 per month.

3. 75% of s. 7 expenses.

4. Costs terms based on when accepted.

[52] On December 18, 2012, she made another offer with similar equalization amounts ($170,000 equalization payment with half by RRSP rollover), support amounts, and costs consequences as the December 4, 2012 offer.

[53] The Respondent made another offer on January 13, 2013 ($220,000 equalization payment and child and spousal support of $1,750 per month for each category).

[54] On September 12, 2012, the Applicant made the following offer:

1. Combined child and spousal support of $2,000 per month up to and including December 1, 2012 based on his income of $68,000 and the Respondent’s income of $28,000.

2. The trial would be only about equalization and costs.

[55] On December 4, 2012, the Applicant made another offer on financial issues:

1. Section 7 expenses divided equally subject to re-adjustment at 70% / 30% with the Applicant having the higher share once tax returns are exchanged.

2. The Applicant to pay $1,000 per month child support for five years with a review on or before January 1, 2018.

3. The Applicant to pay spousal support of $1,000 per month commencing January 1, 2013 for a period of five years.

4. The Applicant will transfer $85,000 (100%) of his RRSP to the Respondent by way of equalization.

5. No costs.

[56] On December 20, 2012, he made the following offer:

1. $220,000 equalization payment as follows:

a. $50,000 within 90 days of acceptance of offer.

b. $30,000 by way of RRSP rollover within 30 days of acceptance of offer.

c. $20,000 by way of transfer of Applicant’s share in education fund.

d. $120,000 over ten years at $1,000 per month secured against the former matrimonial home.

e. No further spousal support.

f. There were terms as to what the respondent would have to pay monthly for children’s clothes and shoes and to provide receipts for these purchases.

g. The equalization amount would be reduced based on when there was acceptance of the offer.

[57] The Applicant made another offer on the support issues dated January 7, 2013:

1. Spousal support of $596 per month up to and including December 2013.

2. Child support of $917 per month for two children.

3. Section 7 expenses with the Applicant paying net 76% with the Applicant’s income at $95,000 and the Respondent’s income at $30,000.

[58] The Applicant submits that both parties caused delay. For example, he says the Respondent failed to file any personal income tax returns since separation in 2007.

[59] He suggests that he was at all times reasonable and cooperative. The trials were adjourned at the Respondent’s request to attempt to resolve their issues with rabbinical assistance. He claims the timelines set by the case management judge for a January 2012 trial could not be met for the rescheduled trial date in June and the judge felt that the trial should not proceed at that time.

[60] I find that the delay rests mainly with the Applicant. He challenged the jointly retained expert and failed to make reasonable offers. As late as September 12, 2012, the Applicant would not resolve equalization, suggested his income was $68,000, and only offered combined spousal and child support of $2,000 for three months. His financial statements as filed are inconsistent with the outcome of this case. The Applicant was not being reasonable, not negotiating in good faith, and not making serious efforts to resolve the case.

[61] The Respondent was being more reasonable. The ultimate outcome is closer to her position than any of the Applicant’s offers. She is entitled to an equalization payment, ongoing spousal support and child support, and some security for the payments. I find that she was the successful party and her fees were incurred to attempt to prove get the result.

[62] The Respondent had to spend a significant amount on legal fees and experts to have the Applicant come to a reasonable settlement. She is entitled to costs when considering s. 131 of the Courts of Justice Act, Family Law Rule 24, the overall objectives of the Family Law Rules, our appellate court’s guidance on proportionality, and the litmus test of fairness and reasonableness.

[63] . I reviewed Ms. Holzman’s statement of accounts dated May 31, 2009 (covering May 4, 2009 to May 31, 2009) for fees, disbursements, and GST. I also considered that brought forward unpaid balance of accounts related to pre-court fees for a total owing to her counsel of $18,824.59 (of this amount for May only the fees were $4,325.53 with about $1,500 for work related to the case conference).

[64] The June 15, 2009 account was an additional $2,047.50 and it includes work related to what became Archibald J.’s order. I allow $750.

[65] The July 31, 2009 account was $1,640.63. The work relates to issues related to experts, correspondence, and some work related to Dr. Landau.

[66] I reviewed the accounts dated August 15, 2009 and September 15, 2009. I also reviewed a summary of Ms. Holzman’s invoices for the period May 31, 2008 to January 2013 of $164,334.17 ($144,701.50 in fees and $19,632.67 in disbursements and tax).

[67] Unfortunately, I do not have a Bill of Costs or any other itemized invoices.

[68] I also reviewed the endorsement volume with endorsements from June 1, 2009, August 13, 2009, May 13, 2010, August 13, 2010, October 13, 2010, November 8, 2010, November 19, 2010, April 29, 2011, June 24, 2011, July 21, 2011, August 24, 2011, October 28, 2011, November 21, 2011, and January 18, 2012.

[69] Rather than put the parties to more expense and request further invoices and Bill of Costs, I find that excluding the fees related to Dr. Landau and not covering conferences it would be fair and reasonable that the Respondent recover $40,000 of Ms, Holzman’s total accounts as costs payable by the Applicant. I noted that most endorsements relate to conferences where costs were not reserved, but disclosure and work took place apart from the conference preparation and court attendances. The Respondent paid approximately $160,000 to her previous counsel, not including Dr. Landau and Kalex. The Applicant’s unreasonableness added to her expenses.

[70] Therefore, I order the Applicant to pay the Respondent as follows:

1. $3,046.44 for the additional amount she paid to Dr. Landau to obtain her report.

2. $8,543.25 costs claimed by Ms. Holzman in her costs submissions to Dr. Landau.

3. $13,929.36 for the Kalex disbursements that the Respondent paid.

4. $500 for Respondent’s costs to obtain a valuation of the cottage property owned by the Applicant.

5. $846.93 and $337.53 for the costs of transcripts of questioning and the expediting fees of obtaining the transcripts in time for the scheduled trial.

6. $2,000 for work she did that would otherwise have been done by a lawyer.

7. $40,000 for costs of the Respondent’s previous counsel.

[71] The total payment to be made by the Applicant to the Respondent is rounded to $70,000.

Czutrin J.

Released: August 30, 2013