Court File and Parties
CITATION: Purcaru v. Seliverstova, 2015 ONSC 7515
COURT FILE NO.: FS-10-16657-00
DATE: 20151202
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
FELICIA PURCARU Applicant
- and -
MARINA SELIVERSTOVA, MARINA SELIVERSTOVA, MIRCEA PURCARU, REDINA INC., DARIBO CONSULTING INC., and DAN PURCARU Respondents
Morris Cooper for the applicant
Gary S. Joseph for the respondents Marina Seliverstova and Marina Seliverstova,
HEARD: October 5-9 and 12-15, 2015
F.L. Myers J.
REASONS FOR decision
[1] By Reasons dated October 29, 2015, reported as Purcaru v. Seliverstova et al., 2015 ONSC 6679, the court granted judgment in favour of the applicant under the provisions of the Fraudulent Conveyances Act, R.S.O. 1990, c. F-29. The applicant now seeks costs on a substantial indemnity basis. She does so because (a) the value of her recovery exceeds the amount for which she offered to settle; (b) the nature of the dishonest conduct found by the court; and (c) fraudulent conveyance proceedings are a form of class action on behalf of all creditors. If the applicant is not entitled to substantial indemnity costs, she says, the other creditors will obtain a windfall at her expense.
[2] At paragraphs 102 and 103 of the Reasons, I ruled as follows:
[102] In light of the holdings above concerning the advances of funds that preceded the purchase by Marina Seliverstova of units 1710 and 1809 of 30 Gloucester Street, it follows that I am satisfied that those advances were made by Dan Purcaru with the intention to defeat, hinder, delay, or defraud his creditors and are hence void as against those creditors. The respondents’ explanations have already been found to be lacking of cogency and credibility. While unnecessary for these two transactions that were not supported by good consideration, I find that Marina Seliverstova shared Dan Purcaru’s intention to defeat, hinder, delay, or defraud his creditors. There was no intention to make a gift to Marina Seliverstova claimed. The extensive efforts to which they went to launder Dan Purcaru’s funds and hide the truth of the transactions that they conducted in light of the multiple badges of fraud surrounding the transactions, especially in light of Marina Seliverstova’s knowledge of the divorce proceedings, leads me to readily conclude that Marina Seliverstova was an active and knowing participant in Dan Purcaru’s effort to defeat the rights of the applicant.
[103] The granting of the mortgage to CIBC was not in itself a fraudulent conveyance. It is saved under ss.3 and 7(2) of the statute. However, the drawing of $325,000 from the CIBC line of credit and the alleged loan to Dan Purcaru’s brother in direct defiance of the orders of Herman and Belobaba JJ. was a fraudulent conveyance by Dan Purcaru and hence is void as against his creditors. I do not accept his evidence that he loaned the money to his brother. It was a non-arm’s length transfer with no consideration, secrecy, haste and in knowing breach of orders of the court. I draw an adverse inference against the brother who declined to appear in this proceeding to try to establish the bona fides of the transaction. I infer and find that it was not a bona fide loan made on good consideration.
[3] In my view, in light of the nature of the conduct of the respondents, this is one of the rare cases in which it is appropriate to award costs on a substantial indemnity basis throughout. The applicant’s counsel rightly notes that had the court dismissed the proceeding, the respondents surely would have called for costs on a substantial indemnity basis in light of the serious nature of the claims made against them. Having found that the respondents engaged in coordinated efforts to defeat the course of justice, it strikes me as appropriate to award substantial indemnity costs.
[4] In addition, by offer to settle dated August 21, 2015, the applicant offered to settle for the sum of $600,000 all-in. The value of the conveyances set aside is approximately $655,000 before prejudgment interest and costs. However, $325,000 of this amount is due from the Purcaru respondents and not Ms. Seliverstova. But as I noted in my Reasons Ms. Seliverstove knowingly functioned “as a conduit through which [Dan Purcaru] was seeking to hide his assets from his wife. She actively and knowingly helped him in this wrongdoing and she ought therefore to be equally liable with him.” Accordingly, I would be inclined to award costs against Ms. Seliverstova on a substantial indemnity basis since at least August 21, 2015.
[5] Finally, the applicant did not ask for a charging order under the Solicitors Act. R.S.O. 1990, c. S.15. Where a lawyer obtains recovery against property the first charge against the property for costs incurred is fair and appropriate. I do not have any law submitted by the parties to support the creation of a court-ordered charge in an action under the Fraudulent Conveyances Act. However, by awarding costs on a substantial indemnity basis, the applicant will be entitled to access to other assets of the respondents to pay the costs. If there are insufficient other assets and bankruptcy of one or more respondents ensues, the applicability of the petitioning creditor’s preferential claim for costs can be dealt with at the time.
[6] The respondent Marina Seliverstova makes several arguments. First, she notes that the applicant was unsuccessful on some of the grounds that she advanced. Under the applicable Family Law Rules, costs can be considered on an issue by issue basis especially where the issues are severable. Ms. Seliverstova, also argues that the applicant’s conduct through the litigation was unreasonable at times and she was found to be an unreliable witness. Ms. Seliverstova contests whether any offers to settle made by the applicant were capable of acceptance. Finally, she claims that the applicant did not come to court with clean hands.
[7] The applicant only abandoned her claim to unit 902 at trial. Ms. Seliverstova purchased that unit before the applicant and her former husband even broke up. There was no reasonable basis to make serious allegations of fraudulent conveyance against that property. Moreover, the applicant was not as forthright in the conduct of the proceeding as she ought to have been. While perhaps trying to keep all of her options open, she simply refused to particularize her claims to the level of detail required by successive court orders. I do not think that the respondents were particularly prejudiced as they were the ones who held all of the financial information about the properties. However, they were entitled to know more specifically the arguments and claims advanced in respect of each property as ordered by Justices Penny and Chiappetta at least.
[8] Ms.Seliverstova argues that since the offers to settle made by the applicant required the respondents to pay funds to her rather than simply noting that certain transactions were “void as against creditors,” the offers were not capable of acceptance. I disagree. The effect of declaring the transactions void as against creditors was to make the property that was subject to the transactions exigible to seizure. It is tantamount to the taking of money’s worth from the respondents. I am not aware of any provision of the Fraudulent Conveyances Act or the Rules of Civil Procedure that prevents parties from settling an action prior to trial, based upon a private payment. While there may be arguments that this is inconsistent with the quasi-class action nature of the proceedings, the Legislature has not seen fit to regulate settlement as far as I am aware.
[9] Ms. Seliverstova argues that efforts by the applicant to expand her claim by treating different documents of the same transaction as if they evidenced separate transactions was a failure to come to court with “clean hands.” I did not accept the applicant’s evidence concerning, in particular, her allegation that there were two transactions of approximately $300,000 between the Purcaru brothers. It seems to me however that it would be double counting to limit costs based on divided success and then further penalize the rejection of evidence.
[10] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.
[11] Subject to the specific comments below, in my view, it is appropriate, fair, and reasonable, to take into account the applicant’s lack of success in respect of unit 902, her failure to obtain a damages order against Ms Seliverstova, and her failure to fulfill her procedural obligations (which had the effect of lengthening the proceedings) by awarding the applicant only 75% of her costs calculated on a substantial indemnity basis.
[12] Ms. Seliverstova also correctly notes that it is inappropriate to include in the costs sought, time spent on motions where costs have already been awarded or where no costs were awarded. The only time that is properly before me in respect of pre-trial motions is time spent on motions where costs were reserved to the trial judge. The order of Justice Czutrin dated April 8, 2010 and the order of Justice Chiappetta dated June 26, 2015 both reserved costs to the trial judge. I am satisfied that costs of those motions ought to be awarded to the applicant as claimed.
[13] I have reviewed carefully the Costs Outlines submitted on behalf the applicant by Mr. Cooper and Mr. Legge. The fees claimed by Mr. Cooper, totaling $80,375 strike me as very reasonable in rates charged and hours spent. Similarly, the disbursements of $7,190.44 including HST as claimed are reasonable.
[14] The majority of the fees claimed for Mr. Legge relate to motions. I have allowed only time in respect of the action generally and the motion before Justice Czutrin referred to above. On this basis, Mr. Legge’s assessable time on a full indemnity basis is $15,600. I cannot award substantial indemnity costs calculated at 1.5 times Mr. Legge’s partial indemnity rate as this exceeds his full indemnity rate. Accordingly, it seems to me that the next best proxy is to treat substantial indemnity costs as 90% of full indemnity. On this basis, fees for Mr. Legge amount to $14,040. His disbursements of $5,178.15 inclusive of HST are reasonable.
[15] Therefore, the total fee component of the costs awarded to the applicant amount to $94,415. Reduced by 25%, this entitles the applicant to costs of $70,811.25 plus $12,368.59 for disbursements. The respondents Marina Seliverstova, Dan Purcarus and Mircea Purcaru are jointly and severally liable for all of these amounts. Anna Seliverstova participated in this proceeding as a bare trustee only of one piece of property. No costs order is made against her.
F.L. Myers J.
Date: December 2, 2015
CITATION: Purcaru v. Seliverstova, 2015 ONSC 7515
COURT FILE NO.: FS-10-16657-00
DATE: 20151202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
FELICIA PURCARU Applicant
- and -
MARINA SELIVERSTOVA, MARINA SELIVERSTOVA, MIRCEA PURCARU, REDINA INC., DARIBO CONSULTING INC., and DAN PURCARU Respondents
REASONS FOR JUDGMENT
F. L. Myers, J.
Released: December 2, 2015