SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FC-12-177
DATE: 20150902
RE: Anna Toscano, Applicant
AND
David Toscano, Respondent
BEFORE: Blishen J.
COUNSEL: Leonard Levencrown, Counsel for the Applicant; Any Mayer for Costs Submissions
Gary Blaney Counsel, for the Respondent
HEARD: by written submissions
COSTS ENDORSEMENT
[1] The central issue on this five day trial was the validity of a marriage contract signed by the parties. Ms. Toscano argued the marriage contract should be set aside on numerous grounds pursuant to s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3. In addition, she claimed spousal support in the amount of $20,000 per month and an order that Mr. Toscano provide life insurance in the amount of $2 million with her as the irrevocable beneficiary.
[2] Mr. Toscano claimed child support for the two children of the marriage in his care based upon an imputed income to Ms. Toscano in the amount of $40,000 annually. He further requested an order that she pay a proportionate share of the extraordinary/special expenses for the two children.
Positions of the Parties
[3] Ms. Toscano argues she is entitled to full recovery costs in the amount of $100,000 in fees plus disbursements of $31,478.55 for a total of $131,478.55. In the alternative, she requests that each party bear their own costs in light of the divided success at trial and the disparity of incomes and net worth of the parties.
[4] Mr. Toscano requests costs on a partial indemnity basis to an offer made March 25, 2013 and on a full recovery basis thereafter. His Bill of Costs does not reflect the time spent before and after that offer. Nevertheless, his fees for trial total $97,110 plus disbursements of $81,778.29 for a total of $178,888.29. Mr. Toscano claims an additional disbursement of $20,662.05 which was the amount claimed by Anna Toscano’s former lawyer Ronald Peterson, called by Mr. Toscano as a witness at trial. Therefore, Mr. Toscano’s total fees and disbursements, including Mr. Peterson’s account, are $199,550.34.
Success
[5] Pursuant to subrule 24(1) of the Family Law Rules, O. Reg. 114/99 [FLR], there is a presumption that a successful party is entitled to costs. Offers to settle are important and can be the yardstick by which to measure success. They are significant in determining both liability for costs and quantum. See Osmar v. Osmar (2000), 2000 20380 (ON SC), 8 R.F.L. (5th) 387, at para. 7 (Ont. S.C.) and Lawson v. Lawson, 2008 23496 (ON SC), 2008 CarswellOnt 2819, at para. 7 (Ont. S.C.).
[6] As stated by Mackinnon, J. in Neill v. Egan, 2000 21156 (ON SC), [2000] O.J. No. 1567: “Both parties should make an offer covering in detail all aspects of the case. Even where the case appears intractable, an offer can serve to settle some issues or narrow the issues, with the saving to time and effort for all concerned.”
[7] In considering when a party is successful, the court should also consider the party’s position at trial.
[8] Subrule 24(6) of the FLR provides that if there is divided success, a court may apportion costs as appropriate.
Marriage Contract
[9] As noted above, the central issue at trial was the validity of the marriage contract. Mr. Toscano was completely successful on that issue. Ms. Toscano raised numerous arguments as to why the contract was invalid including: unconscionability, undue influence, duress, misrepresentation and lack of adequate independent legal advice. She was unsuccessful on every argument. In presenting her position, Ms. Toscano made a number of unfounded and serious allegations. The court found overall Ms. Toscano’s testimony regarding the marriage contract lacked credibility. The position and approach taken by Ms. Toscano substantially added to the length of the trial and its complexity.
[10] No offers to settle were attached to Ms. Toscano’s Costs Submissions. Mr. Toscano attached Ms. Toscano’s last offer to settle dated November 22, 2013 to his Costs Submissions. In that offer Ms. Toscano continues to claim the invalidity of the marriage contract and an equalization payment of $3,625,000.
[11] Mr. Toscano made nine offers to settle. He argues that his offer made March 25, 2013 in which he stated the marriage contract was valid and binding but subject to Ms. Toscano being able to assert a claim for spousal support, fits within the parameters of subrule 18(14) such that he is entitled to full recovery costs from that date. Although this offer was signed by Mr. Toscano; was made at least seven days before the trial; did not expire and was not withdrawn before the trial, I find it required further explanation and elaboration prior to Ms. Toscano’s acceptance. The term “subject to the wife being able to assert a claim for spousal support” is unclear and requires clarification. No offer was made with respect to quantum or duration. Therefore, I do not find Mr. Toscano entitled to full recovery costs from the date of that offer, although he was clearly the successful party on the issue of the validity of the marriage contract.
Spousal Support
[12] On the issue of spousal support I find success was divided. The court ordered Mr. Toscano to pay $11,300 per month in spousal support commencing December 1, 2013.
[13] Ms. Toscano’s final offer to settle regarding spousal support provided that Mr. Toscano pay support in the amount of $20,000 per month retroactive to the date of separation on July 17, 2011. She maintained that position at trial.
[14] Mr. Toscano’s final offer to settle regarding spousal support provided that he would transfer three rental properties which he said were valued at $1,050,000 to Ms. Toscano and that he would provide her with an employment contract “in terms required by David” with “a corporation designated by David” for an annual salary of $65,000 until November 30, 2025. In exchange, the offer required Ms. Toscano to waive all her rights to severance pay or other benefits at the end of the contract and any right to sue the corporation or Mr. Toscano for breach. Finally the offer required Ms. Toscano to waive any right to allege “the employment contract constitutes evidence of an agreement that she was entitled to ongoing spousal support”. Mr. Toscano never offered ongoing periodic spousal support to Ms. Toscano. I agree with Ms. Toscano’s submissions that such an employment contract in lieu of spousal support was not reasonable and therefore it was reasonable for her not to accept it and to proceed to trial on the issue of spousal support. At trial, Mr. Toscano acknowledged Ms. Toscano was entitled to spousal support for an unlimited duration but argued the quantum be closer to $5,000 per month.
[15] Ms. Toscano was successful in obtaining periodic support of $11,300 per month for an unlimited duration. Ms. Toscano was also successful in her argument that the determination of Mr. Toscano’s income be based on the report of her expert Mr. Clarke for 2013. She was not successful in obtaining retroactive spousal support.
[16] Mr. Toscano was successful in arguing that the court impute income to Ms. Toscano thereby ultimately reducing the amount of spousal support to which she was entitled.
Child Support and section 7 Expenses
[17] On the issue of child support Mr. Toscano was the more successful party. As noted above, income was imputed to Ms. Toscano in the amount of $40,000 per year and she was ordered to pay $579 per month in child support. Mr. Toscano was ordered to pay all special and extraordinary expenses. Ms. Toscano’s final offer to settle was for no child support and no payment of special and extraordinary expenses by her.
[18] Mr. Toscano’s final offer was that Ms. Toscano pay no child support and he pay all special or extraordinary expense costs. At trial however, Mr. Toscano requested that she pay child support based on the imputed income as well as a proportionate share of special or extraordinary expenses. He was successful in obtaining the order of child support of $579 per month and did better than his final offer on that issue.
Conclusion
[19] In summary, overall, Mr. Toscano was the more successful party, particularly on the most time consuming, important and complex issue as to the validity of the marriage contract. Therefore he is entitled to some costs.
Quantum
[20] Subrule 24(11) sets out the relevant factors in determining the amount of costs as follows:
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.
Nature of the Issues
[21] As noted above, the most important, complex and difficult issue was the determination of the validity of the marriage contract. This issue was made more difficult and consumed more time at trial given that Ms. Toscano raised a myriad of issues regarding the contract. In addition she made numerous allegations which were found to lack credibility. Given her position on the marriage contract, evidence had to be led regarding all property issues and possible equalization, which were complex and required extensive expert evidence.
[22] The issue of determination of Mr. Toscano’s income was also complex and required the evidence and testimony of two experts.
Reasonableness
[23] The factors to be considered in determining reasonableness are outlined under subrule 24(5) as follows:
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.
[24] In this case, I find both parties behaved unreasonably.
[25] As previously noted, Ms. Toscano made a number of unfounded allegations regarding the marriage contract that significantly lengthened the trial process. In addition, her testimony at trial with respect to the validity of the marriage contract lacked credibility and was inconsistent and contradictory. Family law litigants are responsible and accountable for the positions they take during litigation (see Hackett v. Leung (2005), 2005 42254 (ON SC), 22 R.F.L. (6th) 314, at para. 15 (Ont. S.C.); and, Katarzynski v. Katarzynski, 2012 ONCJ 393, 2012 CarswellOnt 8116, at para. 22).
[26] Ms. Toscano also behaved unreasonably in the position outlined in her last offer to settle. She once again asserted the invalidity of the marriage contract and claimed an equalization payment of $3,625,000 as well as significant retroactive spousal support and $200,000 in legal costs. This offer was unreasonable and was the only one provided to the court by Ms. Toscano in the written Submissions on Costs.
[27] I find that Mr. Toscano acted unreasonably by failing to disclose financial documentation required for trial. Ultimately, Ms. Toscano had to bring a motion for the production of documents less than a month prior to trial. On that motion, Master Roger found that a number of key documents had not been produced despite a number of requests from Ms. Toscano’s counsel. He ordered Mr. Toscano to disclose all the requested documents within two weeks.
[28] In Roberts v. Roberts, 2015 ONCA 450, 2015 CarswellOnt 9247, the Ontario Court of Appeal affirmed at paras. 11-14, the following fundamental principle:
[11] The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.
[12] Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.
[13] Financial disclosure is automatic. It should not require court orders – let alone three – to obtain production.
Lawyers rates, time spent and expenses
[29] I find the rates charged by both senior family law counsel to be reasonable as was the time spent in preparation for trial and at trial. While the costs award must be proportionate to the amount in issue, the costs award requested for fees is very similar. Therefore, it cannot be said that the amounts requested by either party exceed reasonable expectations. In fact, I find that the fees claimed of $100,000 by counsel for Ms. Toscano to be reasonable under all the circumstances.
[30] Both counsel’s disbursements include fees for the preparation of reports and testimony at trial by two expert witnesses. Mr. Pittman who did extensive valuation reports and income assessment reports submitted an account of $76,579.82 which I find to be reasonable. David Clarke, retained by Ms. Toscano, did a critique of Mr. Pittman’s report and provided his own reports for a total fee of $31,479 which I also find reasonable.
[31] Ronald Peterson claimed costs at trial. He submitted an account for $20,662.05 to Mr. Toscano to prepare and testify. Mr. Peterson was Ms. Toscano’s counsel at the time she signed the marriage contract. I do not find this to be a reasonable request. Mr. Peterson was not called as an expert witness and could have been simply summoned and paid the requisite witness fee. In addition, it appears he had his own counsel attend and assist him in preparation. This is not a reasonable expense under all the circumstances.
Any other relevant matter
[32] Ms. Toscano submits in light of the significant disparity of incomes and net worth between the parties, Mr. Toscano is in a better position to pay the costs of litigation. She argues an order for costs against her would impair her ability to meet her child support obligations and result in an even greater disparity between the parties’ standards of living.
[33] While the court recognized in the judgment a significant disparity in the standard of living between the parties, it was further determined that neither party is of limited financial means. At the date of separation Ms. Toscano had a net worth of approximately $1.27 million and Mr. Toscano $9.16 million. As noted above the Costs Submissions by the parties with respect to legal fees are very similar and therefore did not exceed reasonable expectations.
Conclusion
[34] The assessment of costs is not a mechanical exercise (see Boucher et al v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, at para. 26 (C.A.)).
[35] As stated by the court in Delellis v. Delellis, 2005 36447 (ON SC), 2005 CarswellOnt 4956, at para. 9 (Ont. S.C.): “The overall objective 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.” See also Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th).
[36] There must be flexibility in examining the factors under subrule 24(11). In this case, as previously noted, Mr. Toscano was 100% successful with respect to the issue of the validity of the marriage contract which took approximately 70% of the time at trial and 22 ½ pages of the 32 page judgment. I find Mr. Toscano entitled to partial indemnity costs of approximately $35,000 on that issue. The disbursements relevant to the issue of the marriage contract would include half of Mr. Pittman’s account or an amount of $38,290.
[37] Mr. Toscano was also successful on the issue of child support which was a less complex issue and took only approximately 5% of the time. Partial indemnity costs of approximately $2,000 would be reasonable.
[38] On the issue of spousal support, although success was divided, I find Ms. Toscano the more successful party. This issue took approximately 25% of the time and was more complex in that expert evidence was required as to Mr. Toscano’s income. Taking into consideration that Ms. Toscano was not successful on the issue of retroactivity and is therefore entitled to partial indemnity costs as a partially successful litigant on this issue, I find $10,000 a reasonable amount for legal fees on that issue. The disbursement for Mr. Clarke’s expert reports and testimony would amount to approximately half of his total fee or an amount of $15,739.50.
[39] Therefore, a general analysis results in a total for Mr. Toscano’s fees and disbursements on the issues upon which he was successful of $80,488.47 and a total of $25,740 for Ms. Toscano for a net payment of approximately $54,748 to Mr. Toscano.
[40] Taking into consideration all the circumstances of this case including the disparity in income and net worth as between the parties and the unreasonable behavior of both, I order Ms. Toscano to pay Mr. Toscano costs of $50,000 inclusive of disbursements and HST as a fair and reasonable amount under all the circumstances. These costs are to be paid within 60 days.
Blishen J.
Date: September 2, 2015
COURT FILE NO.: FC-12-177
DATE: 20150902
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Anna Toscano, Applicant
AND
David Toscano, Respondent
BEFORE: Blishen J.
COUNSEL: Leonard Levencrown Counsel, for the Applicant; Any Mayer for Costs Submissions
Gary Blaney Counsel, for the Respondent
COSTS ENDORSEMENT
Blishen J.
Released: September 2, 2015