Superior Court of Justice - Ontario

COURT FILE NO.: FC-11-37727-00
DATE: 20140707
CORRECTED DATE: 20140708

RE: Piotr Sobiegraj, Applicant

AND:

Monika Sobiegraj, Respondent

BEFORE: McDermot J.

COUNSEL: Antal Bakaity, for the Applicant

Jason K. Allan, for the Respondent

HEARD: By written submissions

Corrected decision: The text of the original judgment was corrected on July 8, 2014 and the description of the correction is appended

COSTS ENDORSEMENT

Introduction

[1] I heard this two day trial during the November, 2013 sittings. Custody and equalization issues were settled prior to trial. The only issues before the court were therefore spousal and child support, both retroactive and ongoing; both parties, however, raised income imputation issues, and the husband had business income which required the court to determine his actual income beyond what he declared for tax purposes. A supplementary matter involved the question of whether Mr. Sobiegraj was permitted to fly the parties’ daughter, Nicole, to Poland on an unaccompanied basis to visit his family this summer; very little trial time was spent on that particular issue.

[2] I determined that there was retroactive child and spousal support owing by Mr. Sobiegraj in the amount of $23,294. Ongoing differential child support was set at $243 per month and Mr. Sobiegraj was ordered to pay ongoing spousal support of $300 per month for eight years.

[3] The parties have now made written costs submissions. Mr. Bakaity on behalf of the Applicant suggests that, based upon the offers made by the parties, that success was divided and that each party should bear his or her own costs. Mr. Allan on behalf of Ms. Sobiegraj suggests that, considering the offers made by his client, she had been “entirely successful” at trial and he requests on her behalf an order for costs, although he does not make it clear as to whether he requests costs on a full or partial recovery basis. The total costs claimed in Mr. Allan’s Bill of Costs, however, are in excess of $58,000.

[4] For the reasons set out below, I have determined that the Respondent was largely successful at trial and that she shall have her costs of the trial in the amount of $18,000.

Analysis

[5] It appears from the costs submissions that neither party relies upon Rule 18(14) of the Family Law Rules[^1] and this appears to make sense as neither of the parties’ offers were, in all respects, exceeded by the result at trial. The parties’ respective offers to settle are, however, relevant as to success at trial and also as to conduct issues.

[6] As noted above, the first issue to be determined is whether success at trial was divided or whether the Respondent was successful at trial. Moreover, both parties raise conduct issues and state that the other is guilty of unreasonable conduct.

Result at Trial

[7] The first issue to be considered is whether success at trial was divided, as proposed by Mr. Bakaity, or alternatively, whether the Respondent was successful at trial as suggested by Mr. Allan.

[8] In considering costs, under Rule 24(1) of the Family Law Rules, costs follow the event, and a successful party is presumed to be entitled to costs. In determining success, I may take into account the offers to settle submitted by each of the parties: see Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.) at paragraph 9 and Lawson v. Lawson, 2008 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.) at paragraph 7. Finally, where there are a number of issues before the court, I can have regard to the dominant issue at trial in light of those offers to settle: see Firth v. Allerton, [2013] O.J. No. 3992 (S.C.J.).

[9] A number of offers were made by each of the parties. The husband made two offers to settle and the wife made four. Although at least one of the offers mentions custody and access, and all make proposals as to equalization of property, those issues were settled prior to trial and are only marginally part of this analysis.

[10] The Applicant’s offers to settle can be summarized as follows:

a. On April 11, 2013, Mr. Sobiegraj offered to accept an equalization payment of $32,714, with no retroactive support or ongoing spousal support. He was only willing to pay child support in the amount of $23 per month.

b. On October 25, 2013, Mr. Sobiegraj made a second offer, agreeing to reduce the equalization payment to $12,500, with no child support arrears. He again suggested that there was no entitlement to retroactive or ongoing spousal support and that there were no child support arrears. He only agreed to pay child support of $100 per month ongoing, based upon annual income of $50,000 in his hands, and $40,000 in the wife’s.

[11] On the other hand, Ms. Sobiegraj made four different offers. I have some sympathy with Mr. Allan’s suggestion that she appears to have made a greater effort towards settlement, effectively being forced to “negotiate with herself” for a period of time when no counter-offers were made by Mr. Sobiegraj. In any event, her offers can be summarized as follows:

a. On April 19, 2013, Ms. Sobiegraj made her first offer to settle. That offer provided for no equalization payment or retroactive support. She proposed $1,000 per month for seven years in spousal support and $546 per month in ongoing child support. It is to be noted that this was a severable offer and that the second part of that offer suggested that there be no equalization payment and no retroactive support and that the ongoing child and spousal support issues be addressed at trial.

b. On June 21, 2013, Ms. Sobiegraj made a second offer. She now offered an equalization payment of $13,063.21, to be set off against child support arrears of $16,400 and spousal support of $400 per month retroactive to June 2012. Spousal support would continue for five years and child support would be $400 per month.

c. A third offer was made by Ms. Sobiegraj on September 4, 2013. The equalization payment remained as before, but the offer suggested that there were no child support arrears (which means that the Respondent would have to make the net equalization payment where under the earlier offer, Mr. Sobiegraj would have had to pay a net payment of $3,336.79). Under this offer, spousal support would only be retroactive to October, 2012. Ongoing child support and spousal support was as in the earlier offer.

d. The final offer made by Ms. Sobiegraj was served on November 17, 2013, just days before commencement of trial. It provided for no equalization payment and no retroactive spousal or child support. She requested a lump sum payment of spousal support in the amount of $20,000 and ongoing child support of $333 per month. This offer was the Respondent’s only offer which mentioned income amounts; she suggested that child support would be based upon income being imputed to her in the amount of $40,000 per annum; in addition to the Applicant’s income from employment, a further amount of $25,000 plus an income tax gross-up would be imputed to the Applicant.

[12] None of the offers mentioned or considered the issue of the Applicant’s proposal to send the child to Poland this coming summer which apparently only arose recently, perhaps out of the settlement of the custody and access issues.

[13] Although I have noted that the quantum of the equalization payment is largely irrelevant to the costs amount, as that issue was settled prior to trial, the net payment to the Applicant of arrears, taking into account the equalization payment is relevant, because the funds which flow in or out of each of the party’s pockets is obviously crucial to the result.

[14] And on this particular issue, it is apparent that all of the offers made by the Respondent are closer to the result than were those made by the Applicant. And at least one of the Respondent’s offers (withdrawn by the time of trial) was essentially more favourable to the Applicant than the result.

[15] The net result at trial was that neither the Applicant nor the Respondent had to pay anything as the arrears set by me were almost exactly the same as the equalization payment that the Respondent agreed to pay the Applicant. That was also the proposal in both the Applicant’s first and last offer, which stated that there would be no support arrears and no retroactive support. Under the second offer, Mr. Sobiegraj would have been worse off than the result at trial, considering that he would have owed a net amount of $3,336.79 plus the retroactive spousal support. Under the third offer, Mr. Sobiegraj would have been substantially better off than the result at trial, as he would have received the equalization payment, would have owed no child support arrears and would have only owed a small amount of retroactive spousal support.

[16] This is in contrast to the Applicant’s last offer which would have required a net payment by the Respondent to him in the amount of $12,500, which was nowhere near the net result at trial.

[17] On the issue of ongoing child support, none of the offers made by parties met the mark. However, Mr. Sobiegraj’s offers were all further from the result than were those made by Ms. Sobiegraj. By the time the final offers were made prior to trial, Ms. Sobiegraj had offered child support of $333 per month, while Mr. Sobiegraj was only offering $100 per month. The final award of $243 per month was much closer to the offer made by Ms. Sobiegraj than that of the Applicant.

[18] Regarding ongoing spousal support, the offer made by Ms. Sobiegraj was also closer to the result than was the offer made by the Applicant. Mr. Sobiegraj offered exactly nothing in spousal support throughout. In her final offer, Ms. Sobiegraj offered to accept a lump sum payment of $20,000. The result at trial, which was $300 per month periodic support over a period of eight years results in a total of $28,800 in support payable to the termination date. Absent a material change in circumstances (which is a speculative exercise at best), taking into account the tax consequences of periodic support as opposed to a lump sum award, it may very well reflect the equivalent of what was ordered.

[19] Although Mr. Sobiegraj was successful on the issue of Nicole’s travel to Poland this summer, this was not the major issue at trial, and very little time was spent by the witnesses on the travel question. It was a late breaking issue which apparently arose from the custody agreement made between the parties. It was not part of either of the parties’ offers which indicates to me that the issue arose after those offers were drafted. I do not find the issue to be determinative in any material way as to who was successful at trial.

[20] Therefore, taking into account the offers made by the parties, and taking into account the fact that spousal support was ordered where the Applicant had offered nothing, I find that the Respondent was the successful party at trial. Barring conduct issues, the Respondent is, prima facie, entitled to her costs of the trial.

Conduct Issues

[21] Mr. Bakaity suggests that the Respondent’s conduct disentitles her to costs. He notes that she was tardy on disclosure, only providing her 2012 income tax return immediately prior to trial. She also failed to provide evidence about her job search notwithstanding an order to do so. She was, in my view, disingenuous about her resume and provided contradictory and unreliable evidence at trial.

[22] Unfortunately, Mr. Sobiegraj was not much better. He was defiant and argumentative. When giving evidence, his girlfriend attempted to coach him from the back of the courtroom. He also failed to provide crucial disclosure and also provided contradictory and unreliable evidence. He paid no child support throughout, notwithstanding my findings at trial; however, I note that considering the net effect of the equalization payment, support paid to Ms. Sobiegraj would only have to have been paid back in the end.

[23] Finally, it is apparent to me that the Respondent was the party who attempted to avoid trial and made greater efforts to settle this matter as disclosed by the various offers summarized above.

[24] In the result, and regarding conduct, neither party was better than the other. As such, I do not find that either party can rely upon unreasonable conduct in the assessment of costs herein.

[25] As such, as the successful party, Ms. Sobiegraj is entitled to her costs of the trial.

Quantum of Costs

[26] Ms. Sobiegraj has provided a bill of costs which claims $58,400.29 inclusive of disbursements and HST. These are the costs of the entire proceeding, including attendances at conferences leading up to trial.

[27] My review of the various endorsements indicates that costs were not reserved at any of the conferences in this proceeding. As such, costs are not claimable in respect of the conferences in this proceeding: see Islam v. Rahman, 2007 ONCA 622, [2007] O.J. No. 3416 (C.A.) wherein the Court stated (at para. 2):

However, we accept the appellant's submission that the trial judge erred in failing to exclude from the award of costs amounts claimed for steps taken in the case where no order was made as to costs or where there was silence on the issue. Rule 24(10) of the Family Law Rules provides that the judge who deals with a step in a case shall decide who, if anyone, is entitled to costs. If a party who has served an offer to settle the case as a whole wishes that fact taken into consideration in relation to a particular step, it is incumbent on that party to raise that issue with the judge who deals with that step. In this case, various steps were taken (e.g. motions, conferences) in relation to which either there was an endorsement that there be no order as to costs or the issue of costs was not addressed. In the absence of a specific order for costs in favour of the respondent, the trial judge should have disallowed costs claimed by the respondent in relation to such steps.

[28] That being said, the Respondent is entitled to her costs of the trial and of the unsuccessful motion to adjourn the trial. Mr. Allan’s hourly rate of $350 per hour is a reasonable amount and the disbursements surrounding trial and these costs submissions are not unreasonable.

[29] Mr. Allan suggests that he spent just over 100 hours on this matter after the trial management conference. I assume that this includes preparation time for trial, but that it would also include the time that was necessary to negotiate the settlement of the equalization and custody issues, which also should be excluded from the costs award herein. As well, 55 hours for trial preparation for a two day trial appears to be excessive, especially where the only witness called was his own client. I find the statement of Wildman J. in Murphy v. Murphy, 2010 ONSC 6204, 2010 CarswellOnt 8616 (S.C.J.) at para. 20 of the report as being particularly applicable:

I am assuming that the decision to spend so much money preparing for this motion was Mr. Sapir's rather than his counsel's. Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term "full recovery costs", there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner.

[30] I am going to allow 20 hours of preparation time for trial rather than the 55 hours claimed by Mr. Allan. This means that, including the time taken for the October 9, 2013 motion, written submission and the costs motion, allowable hours for this trial would total 65 hours.

[31] This would mean that full recovery costs for fees alone would be $22,750;[^2] taking into account HST, the total fees would therefore be $25,707.50. Allowable disbursements for trial including copies for disclosure are $442.82;[^3] HST added to that amount brings that to about $500. This would mean that, were costs payable on a full recovery basis, Ms. Sobiegraj would be entitled to costs of $26,207.50.

[32] However, there is no reason in this case to award full or even substantial recovery costs. That is especially so considering the conduct issues mentioned above as well as the fact that Ms. Sobiegraj was only partially successful on the child support issues, unsuccessful on the child’s travel issues and made claims for support in her written submissions which were, in my view, excessive and unreasonable. Even taking into account the offers to settle, I therefore do not find that there is any reason to award costs beyond a partial recovery basis.

[33] Accordingly, the Respondent shall have her costs of the trial in the amount of $18,000. As support was largely in issue in the trial of this matter, costs are collectable as support.

McDERMOT J.

Date: July 8, 2014

Correction made in paragraph 23 from Applicant to Respondent.

[^1]: O. Reg. 114/99

[^2]: 65 hours @ $350 per hour

[^3]: The costs of the process server filing Notice of Motion and Affidavit, obtaining a copy of the Order, disclosure photocopies and filing Submissions