Court File and Parties

Court File No.: FC-00-2853-2 Date: 2016/04/11 Superior Court of Justice - Ontario

Re: Bonnie Charlene Beach And: Nicolas Tolstoy

Before: Blishen J.

Counsel: Bonnie Charlene Beach, self-represented Michael Rappaport, Counsel for Nicolas Tolstoy, Respondent

Heard: By written submissions

Costs Endorsement

Introduction

[1] The focus of this day long Motion to Change was on child support and special or extraordinary expenses for the parties’ 19 year old daughter, Anastassia, who has been residing with her father since late October, 2010.

[2] Mr. Tolstoy’s Motion to Change requested: Child support and a proportionate share of special or extraordinary expenses, including university costs, retroactive to November 1st, 2010, along with life insurance.

[3] Ms. Beach disputed the claim for child support arguing that, as of her 18th birthday, Anastassia no longer qualified as a “child of the marriage”. She did agree to contribute to reasonable Section 7 expenses. In addition Ms. Beach filed a cross-motion claiming a retroactive adjustment to child support paid by Mr. Tolstoy from February 1st, 2004, to October 1st, 2010, as well as a contribution to Section 7 expenses.

[4] Mr. Tolstoy argues he was the successful party on all issues and claims full recovery costs in the amount of $44,113 for the four lawyers he retained over the course of the case.

[5] Ms. Beach argues she was the more successful party and based on partial success is entitled to costs in the amount of $42,692.92, including the cost of her former counsel in the amount of $32,692.92.

Success

[6] In Serra v. Serra, 2009 ONCA 395, [2009] O.J. 1905, the Ontario Court of Appeal confirmed that modern cost rules are designed to foster three fundamental purposes: to partially indemnify successful litigants for the cost of litigation; to encourage settlement and to discourage and sanction inappropriate behavior by litigants, bearing in mind the awards should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party.

[7] Pursuant to sub-rule 24(1) of the Family Law Rules, O. Reg. 114/99 (the “Family Law Rules”), there is a presumption a successful party is entitled to costs. Consideration of success is the starting point in determining costs. See Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330.

[8] Offers to settle are important and can be the yard stick by which to measure success. They are significant in determining both liability for costs and quantum. See Osmar v. Osmar (2000), 8 R.F.L. (5th) 387 at para. 7 (Ont. S.C.) and Lawson v. Lawson, 2008 CarswellOnt 2819, at para. 7 (Ont. S.C.).

[9] As stated by Mackinnon J. in Neill v. Egan, [2000] O.J. No. 1567:

Both parties should make an offer covering in detail all aspects of the case. Even when 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.

[10] In considering whether a party has been successful, the court should also consider the parties’ position at trial.

[11] Sub-rule 24(6) of the Family Law Rules provides that if there is divided success a Court may apportion costs as appropriate.

Child of the Marriage

[12] Ms. Beach strongly argued that Anastassia is not a child of the marriage as she has been completely alienated from her mother and they have little or no contact. I found that, on balance, the evidence did not support such a finding and found Anastassia continues to be a “child of marriage” pursuant to Section 2 of the Divorce Act, eligible for child support as an adult child attending a full time program of post-secondary education. Mr. Tolstoy was successful on this issue.

Child Support Retroactive to November 1st, 2010

[13] Ms. Beach indicated if Anastassia was found to be a “child of the marriage”, she would agree to pay child support retroactive to November 1st, 2010. However, she argued that in determining quantum the standard Guidelines approach under Section 3(2)(a) of the Child Support Guidelines, S.O.R./97-175, (“Guidelines”), was not appropriate. I found the standard Guidelines approach appropriate and ordered Ms. Beach to pay child support in an amount as per the Guidelines based on her income. In determining Ms. Beach’s income I included a cash-out of a severance entitlement she received in 2011, which she argued should not be included as income for child support purposes.

[14] Therefore, Mr. Tolstoy was successful in obtaining child support retroactive to November 1st, 2010, based on the usual Guidelines approach with Ms. Beach’s income including the cash-out of her severance entitlement. The lump sum of retroactive child support payable by Ms. Beach was $30,799.

Retroactive and Ongoing Section 7 Expenses

[15] Mr. Tolstoy requested payment proportionate to income of a number of Section 7 expenses retroactive to November 1st, 2010. I disallowed most of the contentious expenses claimed by Mr. Tolstoy, those being: Heritage Academy Private School expenses; a rural bus pass; some medical expenses and other miscellaneous expenses. Ms. Beach was the more successful party with respect to the appropriate Section 7 expenses.

[16] Ms. Beach argued that with respect to retroactive post-secondary education costs, Anastassia herself should have contributed to those expenses. I found, going forward, there is no reason Anastassia could not obtain summer employment and contribute approximately 25% of the costs. However I did not make this determination retroactively. I further ordered Ms. Beach be provided with proof of Anastassia’s registration in continued post-secondary education, along with progress reports and that Anastassia visit her mother on an ongoing basis. Success was divided with respect to post-secondary education costs.

[17] Overall, Ms. Beach was ordered to pay $10,158.22 in retroactive Section 7 expenses.

Retroactive Child Support Payable by Mr. Tolstoy

[18] The real issue was not whether the previous order for Mr. Tolstoy to pay child support should be varied but the start date of any variation. Mr. Tolstoy agreed to vary the child support payable retroactive to January 2008, whereas Ms. Beach argued there should be an adjustment back to 2004. I found January 1st, 2008, 3 years prior to the date of effective notice, a fair starting point for recalculating child support. Mr. Tolstoy was successful on that issue. He was ordered to pay $8,500 in retroactive child support.

Retroactive Section 7 Expenses payable by Mr. Tolstoy

[19] Ms. Beach argued there should be adjustments of Section 7 expenses and an accounting back to February, 2004. I found Ms. Beach did not meet the onus of establishing a legitimate claim for retroactive Section 7 expenses. Mr. Tolstoy was the successful party on this issue.

Summary

[20] After considering the appropriate amount owed by Ms. Beach for retroactive Child Support and retroactive Section 7 expenses along with the amount owed by Mr. Tolstoy for retroactive child support, Ms. Beach was ordered to pay $32,457.22. She was further ordered to pay ongoing child support in the amount of $1,197 per month on the basis of a $141,097 annual income.

[21] In considering the issues argued at trial and the positions of the parties at trial, Mr. Tolstoy was the more successful party. However it is also important to consider the offers to settle in assessing success as well as quantum of costs.

Offers to Settle

[22] Sub-rule 18(14) of the Family Law Rules reads as follows:

A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

1. If the offer relates to a motion, it is made at least one day before the motion date.
2. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
3. The offer does not expire and is not withdrawn before the hearing starts.
4. The offer is not accepted.
5. The party who made the offer obtains an order that is as favourable as or more favourable than the offer. O. Reg. 114/99, r. 18 (14).

[23] Even if sub-rule 18(14) does not apply, pursuant to sub-rule 18(16) the Court has a discretion to consider any written offer to settle, the date it was made and its terms, when exercising jurisdiction over costs.

[24] In deciding whether a party has behaved reasonably or unreasonably, the court is to examine the reasonableness of any offer the party made pursuant to sub-rule 24(5)(b).

[25] In this case, both parties served a number of offers to settle commencing early in the process. There were attempts by both parties to resolve the issues without the necessity of arguing the motion. Unfortunately the attempts at resolution were unsuccessful and the motion was set to be heard on February 10th, 2015. On that date, the motion was adjourned as the written materials were voluminous and the time allotted insufficient. Instead of hearing the motion, Justice James offered to hold a Settlement Conference and the parties and counsel agreed.

[26] Following the Settlement Conference, Mr. Tolstoy served a time limited settlement offer dated February 12th, 2015. Ms. Beach served a counter offer dated February 14th, 2015. In that counteroffer she rejected the condition that support payments be made through FRO and sought a number of other clauses which would provide her with some discretion in terminating support payments.

[27] After Ms. Beach’s counteroffer, there were further offers and discussions back and forth on February 17th. Mr. Tolstoy requested some wording changes and that child support be enforced by FRO. Ms. Beach, agreed to the wording changes but did not agree to enforcement through FRO. Unfortunately the discussions went no further.

[28] No up to date offers were served by either party prior to the argument of the motion on July 8th, 2015. The offers exchanged in February were reasonable and the parties appeared to be close to resolution. It is unfortunate the matter continued and was ultimately argued at a significantly greater cost to both parties.

Conclusion Regarding Success

[29] Overall, having considered the positions taken at trial and the offers, I find Mr. Tolstoy, although not completely successful was the more successful party. As noted above, there were no up to date offers exchanged prior to the argument on the motion.

Quantum

[30] Sub-rule 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. O. Reg. 114/99, r. 24 (11).

a) Nature of the issues

This motion to change was complex as it involved issues of both fact and law including: parental alienation/unilateral withdrawal from the relationship; the entitlement of a child over the age of majority to child support; entitlement to retroactive child support and Section 7 expenses as well as adjustments beyond three years from the date of effective notice. The most time consuming, difficult and important issue was the determination of whether or not Anastassia remained a child of the marriage. As previously noted, I found that she did and Mr. Tolstoy was successful on that issue.

b) Reasonableness

The factors to be considered in determining reasonableness are outlined under sub-rule 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. O. Reg. 114/99, r. 24 (5).

As noted above, both parties made reasonable offers early on in the process, in particular in February, 2015. Unfortunately neither party provided an up to date offer prior to the argument of the motion in July 2015. Therefore, both behaved unreasonably in that respect.

Mr. Tolstoy argues Ms. Beach’s conduct was unreasonable in that she prolonged and delayed the proceedings after the motion to change was originally issued on August 2nd, 2013. In particular she was unreasonable in issuing a cross-motion seeking retroactive child support back to 2004 and Section 7 expenses between 2004 and 2010, 6 years before the date of effective notice. In addition when the motion was finally set for February 10th, 2015, for 2 hours, she served voluminous material, hundreds of pages going back over the history of the case to 1997. It was impossible for the presiding judge to review this material nor was there adequate time set given the amount of material. Therefore, Justice James conducted a Settlement Conference and set a full day for the argued motion.

In addition to her conduct in pursuing the matter before the court, Mr. Tolstoy argues that Ms. Beach’s refusal to pay child support after Anastassia moved in with her father in October, 2010 until July 2012 was unreasonable. Early on, Ms. Beach acknowledged her obligation in correspondence from her counsel but she wanted to set off what Mr. Tolstoy owed her in increased child support based on his increased income and disclosure was requested right away. This was not resolved until July 2012.

Overall, I find Ms. Beach behaved in some respects unreasonably as noted by Mr. Tolstoy. In addition, I note most of Ms. Beach’s cost submissions dealt with issues that have arisen since the decision on the Motion to Change on November 20th, 2015. These submissions which were detailed and voluminous are not relevant to the costs of the Motion to Change.

Both parties were unreasonable in not serving up to date offers to settle.

c) Lawyers’ Rates, Time Spent and Expenses

Both Mr. Tolstoy and Ms. Beach request costs going back to the beginning of the issuing of the Motion to Change and beyond.

Sub-rule 24(10) sets out that costs are to be determined in a summary manner after each step in the proceeding by the presiding judge. A step in the proceeding is one of the discreet stages recognised by the rule such as the case conference, settlement conference etc. See Hussein v. Chatoor, 2005 ONCJ 487, [2005] O.J. No. 5715 (OCJ). The trial judge should not deal with requests for costs that were addressed or should have been addressed at these prior steps in the case. See Islam v. Rahman, 2007 ONCA 622.

Mr. Rappaport’s Bill of Costs for Mr. Tolstoy includes bills from three previous counsel over a four year period, beginning with the very first meetings between Mr. Tolstoy and his first counsel, Sean Jones, in October 2010. I will not consider the Bills of Costs from previous counsel.

Mr. Rappaport’s Bill of Costs is in the amount of $25,932.72, as full recovery costs. His hourly rate, time spent and expenses are reasonable. As the more successful party, I find Mr. Tolstoy entitled to partial indemnity costs.

Conclusion

[31] The assessment of costs is not a mechanical issue. See Boucher et. al v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, at para 26 (C.A.). As stated by the court in Delellis v. Delellis, 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).

[32] As the more successful party, Mr. Tolstoy is entitled to partial indemnity costs from Ms. Beach. Taking into consideration all the factors noted above, I order Ms. Beach to pay Mr. Tolstoy costs in the amount of $15,000 inclusive of disbursements and HST as a fair and reasonable amount under all the circumstances, payable within 60 days.

Blishen J. Released: April 11, 2016