Sylvia Bosanac v. John Ivan Bosanac, 2015 ONSC 3157
CITATION: Bosanac v. Bosanac, 2015 ONSC 3157
COURT FILE NO.: D-425/98
DATE: 2015/06/15
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SYLVIA BOSANAC, Applicant
AND:
JOHN IVAN BOSANAC, Respondent
BEFORE: Turnbull, J.
COUNSEL: Ted R. Lann, Counsel, for the Applicant
James D. Higginson, Counsel for the Respondent
Costs ENDORSEMENT
[1] The court rendered judgment in this matter recently.[^1] Pursuant to that ruling, written submissions with respect to costs have been received from counsel for the parties. By letter dated March 8, 2015, I requested additional information and submissions from counsel which were received in April 2015.
[2] The trial of this matter centered on three issues: spousal support, child support and S.7 extraordinary expenses. At the core of the dispute was the income to be attributed to each of the parties. The continuation and duration of spousal support was also a live issue, which if continued, clearly depended on knowing the income of each of the parties.
[3] Neither of the parties was particularly forthright throughout the entirety of the proceedings with respect to their income. Ms. Bosanac was initially insisting that the respondent’s income be deemed to be $300,000. A week before a private arbitration to determine that issue, she offered to have calculations based on an imputed income of $200,000. Ultimately, she compromised again and it was settled at $187,000 on the very eve of the arbitration.
[4] The respondent likewise blinked before the arbitration and agreed to increase his income for calculation of child support and spousal support from $135,000 to $187,000.
[5] In the end, the applicant was successful on that portion of the litigation and should be entitled to her costs incurred to that point on a partial indemnity basis. Mr. Laan has outlined those costs in his submissions which I find are reasonable and fair and not seriously contested by Mr. Higginson in his submissions.
[6] On the issue of child support and S. 7 expenses, by the time the trial was completed, the respondent was ordered to pay approximately $5,000 to the applicant. A significant problem for the respondent was caused by the applicant failing to provide him and the court with accurate accounting of expenses paid by her in a timely way and to provide any meaningful accounting of contributions made by the boys to their post- secondary educations despite clearly having resources to do so. In my view, the time spent on the issue of child support and s. 7 expenses made up about 25 per cent of the time involved in this trial and the success was essentially divided. Hence, neither party shall have his/her costs for that portion of the trial. I further note that counsel for the respondent, in his opening statement to the court, took the position that the small remaining amounts in dispute with respect to child support and section 7 issues were not worth litigating.
[7] On the issue of spousal support, the applicant sought indefinite spousal support. That submission was rejected and a “sunset clause” was imposed with the sun setting on spousal support December 31, 2016. In her Offer to Settle of January 2014, the applicant sought arrears of spousal support in the amount of $54,000 which was $21,000 more than what was ordered. However, the applicant was found to be entitled to approximately $33,000 of spousal support arrears and she should have her partial indemnity costs for one half of the trial time spent on spousal support. I estimate that time to have occupied approximately 15 per cent of the trial time.
[8] The applicant’s most recent Offer to settle dated January 14, 2014 (after the respondent’s continued payment of child support after he was legally obliged to do so) sought $141,862.00 for retroactive spousal/child support and section 7 expenses and indefinite spousal support in the amount of $3,000 per month and costs on a substantial indemnity basis. She was awarded a substantially less sum on the retroactive spousal/child support and S. 7 issues, recovering approximately $39,000. This is more than $100,000 less than what she offered and does not reflect a reasonable bargaining position, any more than her initial bargaining position of $300,000 with respect to the respondent’s income.
[9] The respondent’s most recent Offer to Settle in 2010 dealt with spousal support. It proposed a “sunset clause” be put in place based on the then monthly spousal support order of $2,000 per month. It offered to settle the issue by reducing the monthly amount by $500 per month every two years with the final payment of spousal support being made on January 1, 2018. While the “sunset provision” was ordered by the court, the offer of the respondent for the three years of 2015, 2016 and 2017 would have provided the applicant with only $42,000 of spousal support. The court has ordered that she be paid $54,000 in 2015 and 2016.
Experts’ Costs
[10] Each of the parties incurred significant expenses to retain professional business valuators to value the business of the respondent so as to be able to impute a proper income to him. The applicant spent $44,775 to retain Pettinelli Mastroluisi Consulting Inc. The respondent spent $37,175 to retain Durward, Jones, Barkwell to provide an opinion. The issue settled immediately prior to private arbitration and the issue of costs relative to the experts was not dealt with by counsel. The initial position of the applicant that the respondent’s income be imputed at $300,000 clearly initiated this war of the experts. It was a position that clearly was not tenable nor was she prepared to rely on that position at arbitration. On the other hand, the respondent was steadfast in his position that income should only be imputed to him at $135,000. In the end, the applicant was successful on this issue in that Mr. Bosanac ultimately agreed that his annual income for the years in question should be set at $187,000, which for support purposes was more than $50,000 per year more than he asserted. Ms. Bosanac had no choice but to retain financial experts to support her contention that his income for support purposes was understated and she ultimately was successful on that issue.
[11] I requested additional information from counsel with respect to the arbitration process, including the agreement with respect to costs relating to that process and copies of the dockets and hours and rates charged by each of the experts. That information was received on April 7, 2015 in my office.
[12] The issue of costs was not dealt with in the agreement to refer the issue of Mr. Bosanac’s income for 2007 to 2011 to arbitration. It also was not dealt with by counsel at the time they agreed upon Mr. Bosanac’s income being established at $187,000. The calculation of his income had to be determined for the other issues in dispute to be determined by the court. The opening statements of counsel in that arbitration were provided to me and the style of cause of this case and the court file number were included in each document. Each of the parties included the time spent by counsel and the disbursements incurred in their costs submissions forwarded to me after the trial of this action. Hence, I find it reasonable to assess the time spent by counsel on the arbitration and the reasonableness of the costs of the experts’ reports as part of this assessment of costs. The information provided by the experts and the agreement reached by the parties was integral to the trial process before this court. It was all part of the trial process.
[13] The costs incurred and the time spent by both counsel with respect to the arbitration were necessary to allow the court to determine the issues between the parties. I find the expenses incurred to retain experts were reasonable and necessary. The amount incurred by the applicant to retain her experts was a little larger than that of Mr. Bosanac, largely due to the extensive time required by the expert’s for the applicant trying to get information from the respondent with respect to background information relative to the financial statements provided by Mr. Bosanac with respect to his various holding companies. Hence, the respondent Mr. Bosanac shall pay the applicant the sum of $44,775 to indemnify her for the costs of retaining Pettinelli Mastroluisi Consulting Inc.
Mr. Wasserman’s Accounts:
[14] The applicant claims indemnity for the fees previously paid to her former lawyer Robert Wasserman in the amount of $15,926.30.
[15] I noted that there was nothing which had been presented to the court to substantiate the fees, disbursements, services rendered by Mr. Wasserman or the other factors usually contained in a Costs Outline. I wrote to counsel by letter dated March 7th, 2015 requesting additional information, part of which related to the Wasserman accounts. I indicated that I was prepared to consider those factors if submitted with submissions and provided Mr. Higginson was given time to respond. Mr. Laan did provide detailed copies of the accounts rendered by Mr. Wasserman to the applicant from November 21, 2007 to March 3, 2009.
[16] His account dated November 21, 2007 is in the amount of $9,546.08 for services rendered to that date. It is noteworthy that Mr. Wasserman attended in court on behalf of the applicant at the time that Pazaratz J. made an order dated July 24, 2007 (para. 12 of the Judgment rendered after this trial) increasing the amount of child support payable by the respondent. The issue of costs relating to that proceeding should have been dealt with at the time of the event pursuant to Rule 24(10) of the Family Law Rules and I do not have any information as to whether that was done at the time nor do I have information relative to the discussions between counsel to resolve that issue at the time.
[17] The costs of each stage of the proceeding must be determined by the presiding judge. If there is an order that there be no costs or if the issue of costs was not addressed, neither party may thereafter seek costs associated with that step of the proceedings. Islam v Rahman, 2007 ONCA 622.
[18] In the circumstances, the applicant is not entitled to be indemnified by the respondent with respect to that account.
[19] Mr. Wasserman’s account in the amount of $3,981.25 dated April 22, 2008 covers services rendered by him from November 21, 2007 to April 22, 2008. In reviewing the details of the account, the services were largely related to the successful motion brought by the applicant before Stayshyn J. on February 29, 2008. (para. 13 of the Judgment rendered after this trial). At that time, the applicant was awarded $4,000 costs. Justice Stayshyn made his costs order at the time of the motion as required by Rule 24(10) and if the applicant felt it was insufficient, she had the right to appeal. I have no information indicating that was done. In any event, I do not feel the respondent should have to again contribute to the applicant’s costs inasmuch as he had previously been ordered by the presiding judge, who was in the best position at the time to assess appropriate costs, to pay $4,000.
[20] The final account from Mr. Wasserman was dated March 23, 2009. It largely dealt with correspondence between counsel and between Mr. Wasserman and the applicant. Mr. Wasserman was required to attend three times for a Case Conference which was adjourned each time to another date. Ultimately, an account was rendered for $2,234.54. Mr. Laan has fairly indicated that in his accounts rendered in this matter, there probably is about 3.8 hours of work which he has done after taking carriage of the file from Mr. Wasserman which overlapped with the work of Mr. Wasserman. At $400 per hour, that is approximately $1600 which nearly offsets the amount charged by Mr. Wasserman. I am not in the circumstances prepared to allow the applicant anything for Mr. Wasserman’s account. I have no evidence that Mr. Wasserman requested costs be ordered at any or all of the case conference adjournments as prescribed by Rule 24(10). To ask the court years after the events to assess the costs is neither consistent with the requirements of Rule 24(10) nor fair to the party being asked to pay the costs.
Some General Principles in Assessing Costs:
[21] In this matter, Rule 24 of the Family Law Rules is central. It specifies the factors which a judge assessing costs must take into consideration. The provisions of that Rule which I consider most pertinent to this assessment of costs are as follow:
Rule 24.(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
Rule 24.(4) Despite sub-rule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.
Rule 24.(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
Rule 24.(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
Rule 24.(8) If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately.
Rule 24.(10) Promptly after each step in the case, the judge or other person who dealt with that step shall decide in a summary manner who, if anyone, is entitled to costs, and set the amount of costs.
Rule 24.(11)
A person setting the amount of costs shall consider,
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness or unreasonableness of each party’s behaviour in the case;
(c) the lawyer’s rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter.
[22] It has been held that the preferable approach in family law cases is to have costs recovery generally approach full recovery so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the results. Where the Rules leaves a discretion to the trial justice on how much to award, it is reasonable to look at the full amount claimed, look at the impact of reasonableness of behaviour and divided success, test the amount against the factors listed in Rule 24 (11) and then look at factors such as ability to pay in deciding whether the costs awarded should be substantial (about 80%) or full recovery or somewhere in between. Biant v. Sagoo (2001) 2001 CanLII 28137 (ON SC), O.J. No. 3693 (S.C.J.).
[23] The Ontario Court of Appeal has directed that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful litigant. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The Court is required to consider what is “fair and reasonable” having regard to what the losing party could have expected the costs to be. In applying this “reasonable expectations” analysis comparative information between the costs incurred by each party provides the Court with some perspective. Boucher v. Public Accountants Counsel (Ontario) (2004) 2004 CanLII 14579 (ON CA), O.J. No. 2634 (ONCA).
Assessment of Applicant’s Costs
[24] In the end, the discrepancy between the amounts ordered in the Reasons for Judgment and the Respondent’s offer to settle was $74,838.00. The applicant had to come to court to obtain that judgment. Pursuant to Rule 24(1), the successful party is presumed to be entitled to recover costs.
[25] In family law cases, it generally has been the rule that costs approach full recovery for so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the results. The court is bound to consider the amount claimed, the impact of the reasonableness of the parties and divided success, test the amount against the factors listed in Rule 24(11) and then look at factors such as ability to pay in deciding whether the costs should be substantial or fully recovery.
[26] Mr. Laan, in his fair and comprehensive submissions on costs, sought partial indemnity costs for the applicant. I concur that the applicant is only entitled to her partial indemnity costs as I am not satisfied that she has acted reasonably throughout (nor has the respondent) and there has been divided success on some of the issues as noted above. I feel that an award of partial indemnity costs rather than full costs or substantial indemnity costs will reflect the court’s concern with Ms. Bosanac’s delay in providing proper section 7 expense documentation, her unreasonably high assertion of the respondent’s annual income in the period leading up to the arbitration and her rather inexplicable decision to continue running a business when it clearly was not profitable.
[27] In assessing costs, the reasonable expectations of the parties are a relevant consideration. Mr. Higginson was billing Mr. Bosanac $350 per hour for his work. Mr. Higginson is an experienced family law practitioner who has been a member of the Ontario Bar for 33 years.
[28] Mr. Laan, counsel for the respondent, is also an experienced family law practitioner with 35 years at the bar. He has billed Ms. Bosanac $550 per hour. While I recognize that Mr. Laan practices law in Toronto where rents are higher and incidental expenses are marginally higher than in Hamilton, I do not think it is reasonable to expect Mr. Bosanac to indemnify the applicant based on an hourly billing rate $200 per hour higher than that of Mr. Higginson. I note that the applicant’s former lawyer Mr. Wasserman was billing Ms. Bosanac approximately $325 per hour. In assessing costs, the court must take into account the “reasonable expectations” of the payor.
[29] Mr. Laan has provided detailed dockets to substantiate the actual total of his solicitor client bill of costs (reduced) in the sum of $109,752.50. His client seeks partial indemnity costs of $71,339.13 plus disbursements of $46,519.80.
[30] Mr. Higginson billed Mr. Bosanac $42,658.15 from June 2008 to the conclusion of the trial. I recognize that Ms. Bosanac had to keep chasing Mr. Bosanac for information and for an agreement to increase his imputed income, I find that the time expended by Mr. Laan was somewhat on the high side, even with the reduction provided to his client.
[31] In my review of his dockets, Mr. Laan has docketed 199.55 hours. I think a reasonable billing rate for a matter such as this, in which the issues were not nearly as complex as the behaviour of the parties, is $400 per hour. That totals $79,820 for fees. On a partial indemnity basis, that amounts to $51,883.00 which I round out to $50,000 plus HST.
Conclusion:
[32] It is ordered that the respondent shall pay to the applicant her partial indemnity costs fixed in the amount of $50,000 plus HST plus disbursements claimed in the applicant’s cost outline of $46,519.80 (which includes the account of Pettinelli Mastroluisi Consulting Inc.).
Turnbull, J.
Date: June 15, 2015
[^1]: 2014 ONSC 7467.