Court File and Parties

Court File No.: FC-11-038845-00 Date: 2017-04-12 Superior Court of Justice – Ontario

Re: Chris Ouslis, Applicant And: Marcia Lebou Ouslis, Respondent

Before: The Honourable Madam Justice M. E. Vallee

Counsel: L. Liquornik, Counsel, for the Applicant Marcia Lebou Ouslis, Self-represented

Heard: In Writing

Costs Endorsement

Introduction

[1] The Applicant, Mr. Ouslis, requests costs on a full indemnity basis for this application which proceeded to trial for five weeks in 2016. He states that the result on the property issues was much more favourable to him than his offer to settle served May 31, 2015. The Respondent, Ms. Ouslis, states that Mr. Ouslis’s costs submissions are deficient and that costs should not be awarded to him for a variety of reasons. She states that she did not receive Mr. Ouslis’ offers to settle and did not have an opportunity to consider them. She disputes the rates for counsel and his associate and the time spent, among other things. She states that the Rules 18(14), Rule 24(1), (5), and (7) do not apply in the circumstances.

Applicable Legal Principles

[2] In Serra v. Serra, 2009 ONCA 395, [2009] O.J. 1905 (Ont. C.A.), the court confirmed that modern costs rules are designed to foster three fundamental purposes, namely to partially indemnify successful litigants for the cost of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants, bearing in mind that the awards should reflect what the court views is a fair and reasonable amount that should be paid by the unsuccessful party.

[3] Rule 2(2) of the Family Law Rules adds a fourth fundamental purpose for costs: to ensure that the primary objective of the Rules is met – that cases are dealt with justly. This provision must be read in conjunction with Rule 24. Rule 2(4) states that counsel have a positive obligation to help the court to promote the primary objective under Rules. Rule 2(3)(a) and (b) state that dealing with a case justly includes ensuring that the procedure is fair to all parties and saves time and expense.

[4] Rule 24(1) creates a presumption of costs in favour of the successful party. The court must consider success as the starting point in determining costs. Sims-Howarth v. Bilcliffe, 2000 ONSC 22584, [2000] O.J. No. 330. To determine whether a party has been successful, the court should take into account how the order compares to any settlement offers that were made. Lawson v. Lawson, 2008 ONSC 23496, [2008] O.J. No. 1978 (SCJ). The position each party took at trial should also be examined.

[5] Rule 18(14) reads as follows:

COSTS CONSEQUENCES OF FAILURE TO ACCEPT OFFER

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.

Mr. Ouslis’ Offer to Settle Net Family Property

[6] Mr. Ouslis made two offers to settle on May 31, 2015. One offer concerned settlement of the net family property issues. The most significant terms were that Mr. Ouslis offered to pay Ms. Ouslis $121,000 as an equalization payment. He also offered to divide all net funds owned by 3832104 Canada Inc., the shareholders of which were his parents, equally between the parties after calculation of any tax liability and the related accounting fees to file outstanding returns.

Mr. Ouslis’ Offer to Settle Child and Spousal Support

[7] Mr. Ouslis’ other offer to settle concerned child and spousal support for the period June 1, 2015 onward. The most significant terms are as follows:

Commencing on June 1, 2015, the Applicant shall pay child support for two [children] based on an imputed income of $100,000.

Commencing on June 1, 2015, the Respondent shall pay child support for one child based on an imputed income of $35,000.

Based on an offset, the Applicant shall pay the Respondent $1,113 per month in child support commencing June 1, 2015.

Commencing June 1, 2015, the issue of spousal support shall be calculated based on the two incomes and the midpoint of the SSAGs, name [sic] $505 per month. The Applicant shall pay the said sum commencing June 1, 2015. There shall be a de novo review of support no sooner than June 1, 2017, unless there is a material change in circumstances.

There shall be no arrears of support owing by either party.

The children’s RESP in the name of the Respondent shall be administered by a third party, name [sic] a trust Company. Forthwith, $16,000 shall be paid from the RESP to the Applicant to reimburse him for tuition and related expenses paid by him for the child N.O..

Ms. Ouslis’ Offer to Settle Net Family Property

[8] Ms. Ouslis also made two offers to settle dated May 31, 2015. One addressed equalization and property issues. It was served on June 1, 2015 at 3:51 am. The most significant terms of this offer are paraphrased as follows:

(a) The “children’s trust funds” held by the Respondent shall be deposited into a legal trust to be administered by a trust company. These funds shall not form part of the Respondent’s net family property.

(b) The Applicant shall pay an equalization payment in the amount of $122,000, excluding the date of separation values of shares in certain companies, Mr. Ouslis’ patents, Norshield recoveries and Aeroplan points among other things.

(c) The net proceeds from the sale of the matrimonial home shall be divided equally between the parties subject to adjustments to satisfy certain payments including spousal support and the equalization payment.

(d) The Applicant shall pay to the Respondent $290,000 plus interest as compensation for the depletion of the family’s funds occasioned by the allocation of approximately Cdn. $580,000 (US $189,627.18 each) to the Applicant’s parents in December 2000.

[9] Ms. Ouslis also requested payment of the following based on date of separation values:

• half the value of the Applicant’s shares in Fresco Microchip Inc.,
• half the value of the Applicant’s Aeroplan points
• a fifty percent interest in the Applicant’s patent portfolio
• half the value of the Applicant’s investment in the Norshield Group
• half the value of any funds received by 1459336 Ontario Inc. and 3832091 Canada Inc. as well as net income.

Ms. Ouslis’ Offer to Settle Child and Spousal Support

[10] Ms. Ouslis’ offer to settle the support issues was served on June 1, 2015, at 1:11 a.m. The most significant terms of this offer are paraphrased as follows:

(a) For the period January 1, 2011 to December 31, 2014, the net payment for spousal support arrears would be 121,000.

(b) The Applicant shall pay $90,000 for the arrears to be Respondent from his share of the proceeds of the sale of the matrimonial home.

(c) Regarding child and spousal support, commencing January 1, 2015, the Applicant shall pay to the Respondent, interim without prejudice child and spousal support calculated based upon an imputation of income to the Applicant of $120,000 to the Respondent of $25,000 for support purposes, acknowledging that two children reside with the Respondent, one child resides with the Applicant and a high range of support is payable.

[11] I note that no amounts for child or spousal support were included in the offer.

Application of Rule 18(14)

[12] Ms. Ouslis states that Mr. Ouslis’ offers to settle were not properly served on her and that she saw them for the first time in November, 2016. Mr. Ouslis’ costs submissions include cover letters, a fax transmission report, an email and affidavits of service which show that these offers were served on May 31, 2015, at 2:29 p.m. and 3:39 p.m. on Ms. Ouslis’ counsel at the time, Mr. Ludmer. I conclude that these offers were properly served.

[13] With respect to the property issues, the result at trial was significantly more favourable to Mr. Ouslis in contrast to his offer. Ms. Ouslis was ordered to pay Mr. Ouslis an equalization payment of $123,839.73. I held that Ms. Ouslis had no interest in 3832104 Canada Inc.

[14] With respect to the support issues, the result was not as favourable or more favourable to both parties in contrast to their offers to settle.

[15] Mr. Ouslis was more successful than his offer with respect to the children’s RESP. I held that Ms. Ouslis shall reimburse him from the children’s RESP in the amount of $24,000. Nevertheless, the offer with respect to the RESP was included with the terms of Mr. Ouslis’ offer regarding child and spousal support.

Analysis

[16] To trigger full recovery costs, a party must do as well or better than all of the terms of any offer. Scipione v. Scipione, 2015 ONSC 5982. Mr. Ouslis requests full recovery costs of $355,150 for fees for time spent between May 12, 2014, and November 21, 2016. These fees are comprised of an associate lawyer’s time of 146.4 hours at a billable rate of $300 per hour and counsel’s time of 631 hours at a billable rate of $500 per hour. The associate has six years’ experience. Counsel has 24 years’ experience. Counsel states in his submissions that the dockets filed relate only to work done regarding financial issues and attendance at trial.

[17] Regarding the property issues, which consumed a significant portion of the trial time, Mr. Ouslis is entitled to full recovery costs from May 31, 2015, subject to the factors reviewed below. Mr. Ouslis is not entitled to full recovery costs relating to the support issues or for work done prior to service of the property offer. According to the dockets submitted, approximately 25 percent of counsel’s time was spent before Mr. Ouslis’ property offer was served.

[18] Rule 24 (11) sets out factors which must be considered in setting the amount of costs. It states:

In setting the amount of costs, the court shall consider:

(e) the importance, complexity or difficulty of the issues;

(f) the reasonableness or unreasonableness of each party’s behaviour in the case;

(g) the lawyer’s rates;

(h) 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;

(i) expenses properly paid or payable; and

(j) any other relevant matter.

[19] Rule 24(5) provides criteria for determining the reasonableness of a party’s behaviour in a case. It states:

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.

[20] Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Surkos, 2004 ONCJ 141. This trial proceeded for five weeks in 2016.

[21] I now turn to consider reasonableness and the Rule 24 (11) factors.

[22] Ms. Ouslis took the position that her signature on the document transferring her shares in 3832104 Canada Inc. to Mr. Ouslis’ mother was a forgery. She maintained that because she did not sign this document, she never transferred her 50 percent interest in the company; therefore she had a 50 percent interest in the company’s assets. Ms. Ouslis provided no expert handwriting evidence to assist the court. She called Mr. Ouslis’ elderly parents as witnesses. They had very little memory of what occurred approximately 16 years ago. Ms. Ouslis was unsuccessful on this issue which consumed a considerable portion of the trial time.

[23] Mr. Ouslis made significant investments in a hedge fund, Norshield, in approximately 2000. In 2005, Norshield collapsed. It proved to be a Ponzi scheme. Ms. Ouslis argued at trial that Mr. Ouslis’ investment in Norshield, and his borrowing money to make other investments, constituted a reckless depletion of his net family property entitling her to an unequal division of net family property. She maintained this position despite the fact that the parties did not separate until 2011 and Ms. Ouslis herself invested in Norshield. Ms. Ouslis was unsuccessful on this issue which also consumed a considerable portion of the trial time.

[24] The issues in this matter were important. They became complex because Ms. Ouslis filed thousands of pages of financial records and other documents at trial.

[25] Regarding the rates charged, the rate of the associate who assisted counsel, $300 per hour, for pre-trial work is excessive. A more appropriate rate for a lawyer with six years’ experience is $250. She was not counsel at trial. She was not gowned and was not on the record. She did not sit at the counsel table. Counsel’s rate of $500 per hour is excessive. A more appropriate rate for a lawyer with 24 years’ experience is $350.

[26] Mr. Ouslis’ counsel spent many hours preparing for trial. For example, he spent approximately 15 hours reviewing many briefs provided by Ms. Ouslis on a variety of issues. He spent approximately 18 hours reviewing binders provided by Mr. Ouslis on the issues raised by Ms. Ouslis. All of this work was necessary. The trial was set to proceed in November, 2014; however, the parenting issues were resolved and the balance of the trial was adjourned at Ms. Ouslis’ request. Subsequently, Ms. Ouslis was questioned for approximately seven hours. Mr. Ouslis was questioned for approximately 24 hours over several attendances. Counsel was required to prepare a second time for the trial in January, 2016, because a year had elapsed.

[27] The only disbursements requested are the court reporter’s account of $398.89 for Ms. Ouslis’ questioning and the account for transcripts of $2,748.84.

Fairness, Reasonableness and Proportionality

[28] Costs need to be proportional to the issues, the amounts in question and the outcome of the case. Amounts actually incurred by the successful litigant may therefore not be determinative. Hackett v. Leung, 2005 ONSC 42254, [2005] O.J. No. 4888 (ONSC).

[29] I have considered Boucher et al. v. Public Accountants, 2004 ONCA 14579, [2004] O.J. No. 2634 (ONCA). It states that assessing costs is not simply a mechanical exercise. Ultimately, in fixing an amount for costs, the overriding principles are fairness and reasonableness. Furthermore, a costs award should reflect what the court views as a fair and reasonable amount to be paid by the unsuccessful party rather than an exact measure of the actual costs incurred by the successful litigant. Zesta Engineering Ltd. v. Cloutier, 2002 ONCA 25577, [2002] O.J. No. 4495 (C.A.).

[30] I have considered Ms. Ouslis’ ability to pay a costs order. According to Snih v. Snih, 2007 ONSC 20774, a party’s limited financial circumstances will not be used as a shield against liability for costs but will be taken into account regarding the quantum of costs, particularly when that party has acted unreasonably and is the author of his/her own misfortune. In Takis v. Takis, [2003] O.J. No. 4059 (S.C.J.), the court found that the Respondent’s lack of income and assets, though a relevant consideration, could not be used as a shield in unnecessary litigation.

Conclusion

[31] Based on the above, in my view, a fair, reasonable and proportionate costs award is the following: $180,000 for fees, $23,400 for HST on fees and $3,147.73 for disbursements. Ms. Ouslis shall pay these costs to Mr. Ouslis from her 50 percent share of the funds from the sale of the matrimonial home, currently held in trust. The solicitor who holds the funds is directed to calculate each party’s 50 percent share, subtract the above amounts from Ms. Ouslis’ share, add them to Mr. Ouslis’ share and release the funds to the parties within 30 days.

Vallee J. Released: April 12, 2017