COURT FILE NO.: FS-11-374574

DATE: 20150805

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Vico Bordin, Applicant

AND:

Elice Bordin, Respondent

BEFORE: C. Horkins J.

COUNSEL: Marcel Banasinski, for the Applicant

Matthew Armstrong, for the Respondent

HEARD at Toronto: In Writing

COSTS ENDORSEMENT

[1] Following a nine day trial in April 2015, reasons for judgment were released on June 12, 2015 with an addendum on June 20, 2015.

[2] The parties have been unable to agree on costs and have now provided their written submissions. Each party seeks costs from the other. The applicant seeks costs of $230,312.06 and the respondent seeks costs of $19,886.75. Each party claims to have been more successful than the other.

the legal framework

[3] Rule 24 of Family Law Rules, O. Reg. 114/99 deals with costs. Rule 24(1) states that the successful party is presumed entitled to costs.

[4] Costs are to be decided promptly after each step in the case (rule 24(10)). A party cannot go back and seeks costs for a step taken prior to trial unless the judge hearing that event reserved the costs to the trial judge. If the record is silent as to costs or if no costs are ordered then it follows that costs are not reserved to the trial judge. This is the effect of rule 24(10).

[5] Rule 24(11) of Family Law Rules states that in setting the amount of costs the court shall consider the following factors:

(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.

[6] In addition to considering the factors set out in Rule 24.(11), the court must take into account the principles articulated in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). The overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.

[7] As the court stated in Serra v. Serra, 2009 ONCA 395 at para. 8 “[m]odern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.”

Summary of the Parties’ Requests for Costs

1. The Applicant’s Request for Costs

[8] The applicant filed a detailed bill of costs that starts on October 28, 2011 when he retained his lawyer and ends on July 30, 2015. He has broken the bill into nine different blocks of time. For each block of time, he has set out fees for actual, substantial and partial recovery. The bill of costs appears to cover all of the fees that counsel billed through this litigation.

[9] From October 28, 2011 to November 20, 2014, he seeks $111,898.10 for costs, disbursements (excluding expert reports) and HST. He describes this as substantial indemnity. From November 21, 2014 until July 30, 2015, he seeks $61,784.48 for costs, disbursements (excluding expert reports) and HST. He describes this as full indemnity and relies on his offers to settle that I will consider below.

[10] Rule 24(11) of the Family Law Rules effectively does away with the traditional scales of costs that the applicant has used. Instead, the court must fix an amount for costs at some figure between a nominal sum and full recovery. The rule demands flexibility in examining the enumerated list of factors without any assumption about categories of costs (see Sims-Howarth v. Bilcliffe, 2000 22584 (ON SC), [2000] O.J. No. 330 at para. 4; M. (A.C.) v. M. (D.), (2003) 2003 18880 (ON CA), 67 O.R. (3d) 181 (C.A.), at para. 42; Costa v. Perkins, 2012 ONSC 3165 (Div. Ct.)

[11] The applicant also seeks recovery of $56,629.48 for the following expert fees incurred throughout the litigation:

Kalex

$3,908.18 ($8,908.18 - $5,000)

SF Valuations

$30,984.11

Dr Butkowsky

$21,737.19

Rule 24 (10)

[12] The applicant’s request for costs covers the entirety of the litigation. As noted above, a party cannot recover costs for a prior event unless such costs were reserved to the trial judge. As the following confirms, the applicant’s costs must be significantly reduced before the factors in rule 24(11) can be applied. The same concern arises with the expert fees paid to Dr. Butkowsky.

[13] Throughout this litigation costs were only reserved to the trial judge twice. On February 26, 2015, Justice Kiteley ordered the respondent to comply with the applicant’s Request for Information. The court fixed costs against the respondent at $2,000 and left it to the trial judge to decide if the respondent should be required to pay these costs. On April 2, 2015, Justice Kiteley ordered the applicant to answer the respondent’s Request for Information and fixed the respondent’s cost at $1,000. Once again the court left it to the trial judge to decide if the applicant should be required to pay these costs. I will address the question of payment below.

[14] The parties settled many of the issues before trial. Equalization was settled and a consent order was issued on July 18, 2013. The parties agreed to bear their own costs relating to this issue.

[15] Custody and access were settled and a consent order was issued on November 13, 2014. Pursuant to this order, the respondent has sole custody of the children and the applicant has access. The order is silent about costs.

[16] The remaining issues proceeded to trial:

(1) What is the applicant’s income for the purpose of determining child support?

(2) What does the applicant owe for child support from the date of separation forward?

(3) What does the applicant owe for s. 7 expenses?

(4) Is the respondent entitled to spousal support for the years 2009 and/or 2010? If yes, what does the applicant owe for spousal support?

(5) How should the money held in trust be shared?

[17] There is no basis for the applicant seeking costs for the entire proceeding. Aside from the payment issue in Justice Kiteley’s two orders, the costs that either party can seek are limited to those incurred to prepare and attend at trial. A review of the applicant’s bill of costs shows that only four blocks of time fall into this category.

[18] The trial was originally set for two weeks in November 2014. It did not go ahead. Instead, the parties attended before Goodman J. at a trial management conference held on November 10, 18 and 20, 2014. Custody and access were settled and the trial of the remaining issues was adjourned to April 2015. The orders of Goodman J. are silent about the costs of the trial preparation already incurred.

[19] The first block of time that covers trial preparation runs from June 30, 2014 to November 20, 2014. The block is divided into two parts. Part A of this block is titled “Commencing Trial preparation and related work”. Part B does not qualify because it deals with the trial management conference before Goodman J. and costs were not reserved to the trial.

[20] The description of the work in Part A covers matters settled before trial (custody and access). In total, the fees incurred in this block of time total $35,740. It covers 157.8 hours of work for three lawyers and one law clerk. It is not possible to determine what part of this work relates to the issues that did proceed to trial. While somewhat arbitrary, I reduce the amount to $17,000.

[21] The second block of time runs from November 21, 2014 to April 12, 2015. The fees for trial preparation in this block total $19,960 (79.6 hours were docketed.)

[22] The third bock of time runs from April 13 to 23, 2015 and covers the 9 day trial. The fees total $20,000. A total of 56.8 hours were docketed or about 6.3 a day.

[23] The fourth block of time runs from April 24 to July 30 2015. The fees in this block relate to the Addendum to Reasons for Judgment that I issued on June 29 and costs submissions. The fees total $8,911.63. A total of 52.3 hours were docketed.

[24] In summary, these eligible blocks of time represent fees that total $65,871.63. The fees are based on senior counsel’s hourly rate of $300. Senior counsel relied on junior counsel and law clerks to do some of the work. Their hourly rates range from $75 to $250 an hour.

[25] The applicant includes in his bill of costs, fees paid to Dr. Butkowsky. The parties retained Dr. Butkowsky to prepare a report dealing with custody and access. As noted, these issues were settled before trial. According to the applicant, he paid the respondent’s share of Dr. Butkowsky’s initial retainer fee. He wants full reimbursement of what he paid to this doctor ($21,737.19). This includes his payment of the respondent’s share of the initial retainer.

[26] When custody and access were settled, the parties signed Minutes of Settlement and a final order was issued. Both are silent about the issue of fees paid to Dr. Butkowsky. There is no order that reserved the applicant’s claim for recovery of this disbursement to the trial judge. It was never raised at trial and is not a proper expense for the applicant to claim.

[27] The applicant also wants the respondent to pay for part of the fee that he paid to Kalex Valuations Inc. As noted in the reasons for judgment, Kalex was first jointly retained by the parties to value the applicant’s business. The respondent then hired Kalex to prepare an income analysis and the applicant hired SF Valuations to do the same. The applicant paid Kalex $8,908.18. Since only part of the Kalex work covered the valuation of his business, he says that he should only be responsible for $5,000 and the respondent should pay him back $3,908.18.

[28] He seeks full recovery of what he paid his expert, SF Valuations.

2. The Respondent’s Request for Costs

[29] The respondent’s bill of costs covers the period of April 3 to 24, 2015. Counsel was retained to act for the respondent shortly before trial started. The fees incurred total $27,072.50 plus HST. She seeks disbursements of $8,85.99 plus HST. Counsel docketed 154.7 hours and his rate is $175.

[30] The respondent states that no offers were made that trigger rule 18(14).

[31] The respondent seeks costs and argues that she should not have to pay any costs to the applicant for the following reasons:

• She was more successful than the applicant
• The applicant was unreasonable
• She is impecunious

Analysis of the Requests for Costs

Offers to Settle

[32] Both parties made offers to settle. I accept the position of the respondent that these offers do not meet the requirements under rule 18(14) and therefore do not trigger an entitlement to full recovery costs.

[33] The applicant served many offers to settle. His most recent offer to settle is dated March 31, 2015. It was made more than seven days before the start of trial and was open for acceptance when the trial started. However, it cannot be said that the terms of this offer were as favourable or more favourable than the outcome of the trial. The offer lacks the specificity that is required to assess if it qualifies. For example, part of the trial focused on the applicant’s refusal to pay various s. 7 expenses. Going into the trial, the applicant vigorously disputed this claim. A great deal of trial time was spent on the issue of what were proper s. 7 expenses. The offer to settle said that the respondent would be paid from the trust money the “alleged” s. 7 expenses arrears. No amount is noted in the offer to settle. The offer also required the respondent to pay the applicant her portion of Dr. Butkowsky’s fees. The parties had already settled custody and access without reserving the issue of Dr. Butkowsky’s fees to the trial judge. These are but two examples of why the offer does not qualify as an offer under rule 18(14). As a result, the applicant’s offer to settle does not trigger full recovery costs.

Relevant Rule 24(11) Factors

[34] The issues that proceeded to trial were important to the parties and of moderate complexity. The rates that counsel charged were reasonable and consistent with their years of experience at the bar. Counsel for the respondent was retained shortly before the trial started and this accounts, in part, for the difference in the fees between the parties.

[35] I have already addressed the fees and disbursements in the applicant’s bill of costs that cannot be recovered. The starting point for considering the applicant’s requested costs has been reduced.

[36] Neither party was wholly successful. They each claim to have been more successful than the other.

[37] An order of costs is discretionary (see M. (A.C.) v. M.(D.), supra ; Green v. Green 2015 ONCA 541).

[38] In a case of mixed success it is not a simple matter of adding up the issues and awarding costs to the party who won the most issues. The trial focused on two main issues: the applicant’s income for the purpose of determining child support and what the applicant owed for s. 7 expenses.

[39] The respondent failed in her attempt to impute an income of $83,000 to the applicant. On this issue, I accepted the applicant’s position that going forward his salary is $60,000. Dealing with the applicant’s past income, I rejected the applicant’s expert evidence that RRSP income should not be added into income. On this point, I accepted the evidence of the respondent’s expert. I also preferred the evidence of the respondent’s expert on the tax rate to be applied to expenses that were added back into income.

[40] On the issue of s.7 expenses, the respondent was largely successful. The applicant’s attitude toward payment of s.7 expenses was unreasonable. The respondent earns far less than the applicant. The expenses were not excessive and yet the applicant would not pay when requested. As noted in paras 129-130, the applicant’s conduct was unreasonable:

[129] … Many emails were sent to the applicant and he usually did not reply. There is no evidence that the applicant ever disputed these expenses.

[130] In an email dated February 10, 2014, the applicant told the respondent that "expenses will be paid once the courts declare my share with the 60K in trust … until then please concentrate on bringing this process to an end and settling the bigger issues.”

[41] Both parties pursued positions that they withdrew during the trial. The respondent was seeking spousal support. The applicant resisted this claim. He agreed to pay a fixed amount mid-way through trial. I ordered the applicant to pay the respondent spousal support. Similarly, the respondent pursued her claim that the consent order of Justice Archibald be set aside. This is referred to as the “second mortgage issue” in the reasons for judgment. During the trial the respondent withdrew this claim.

[42] The respondent says that she is impecunious and if ordered to pay the applicant costs she would likely have to sell the home that she and the children live in. She argues that this would be disruptive to the children and not in their best interests.

[43] The financial situation of the parties can be taken into account as the Court of Appeal stated in M. (A.C.) v. M. (D.) at para 42:

[42] I am also of the view that the financial situation of the parties can be taken into account in setting the amount of the costs award either under Rule 24 or Rule 18. Thus, while subrule 24(11) enumerates a number of factors that must be taken into account, the person setting the amount of the costs is directed to take into account "any other relevant matter". I agree with Aston J. in Sims-Howarth, at para. 4, that the "Family Law Rules demand flexibility in examining the list of factors in subrule 24(11) without any assumptions about categories of costs". In my view, a consideration of particular relevance may be the financial position of the parties, especially of an unsuccessful custodial parent. See Biant, at para. 17 and Brennan v. Brennan, [2002] O.J. No. 4743 (QL) (S.C.J.), at para. 11. In fixing costs, the courts cannot ignore the best interests of the child and thus cannot ignore the impact of a costs award against a custodial parent that would seriously affect the interests of the child.

[44] The respondent is the custodial parent. As the reasons for judgment confirm, she earns considerably less than the applicant. Her financial statement shows that her expenses are well in excess of her income. I accept that a cost order of the magnitude that the applicant requests would be a financial hardship for the respondent. That said, the amount of costs that the applicant requests is excessive and out of proportion to the issues in dispute. I do not have a sufficient evidentiary base to assess the scope of the hardship and whether the respondent would have to sell her house should a reasonable costs order be made against her. I do not rely on this alleged hardship in reaching my decision.

[45] Both parties complain that the other is not complying with court orders. The respondent states that the applicant has not paid child support for June and July nor complied with many other parts of my order (i.e. proof of life insurance, giving the respondent a copy of the benefit card). As well, she states he has not paid her the equalization payment that is owed from an earlier order. The applicant complains that the respondent is not cooperating and specifically will not allow him to take his children out of the country on a summer vacation.

[46] Clearly these parties must immediately comply with the various court orders. The continuing conflict between them must end. To do otherwise is not in the best interests of the children.

[47] In summary, success at trial was divided. In the circumstances of this case and after careful consideration of the relevant factors, I conclude that each party shall bear their own costs, disbursements and HST. Further, I direct that neither party is required to pay the costs that Kiteley J. ordered.

C. Horkins J.

Date: August 5, 2015