Court File and Parties
COURT FILE NO.: FS-16-414146 DATE: 20180905
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jennifer Montemarano, Applicant AND: Robert Montemarano, Respondent
BEFORE: Kiteley J.
COUNSEL: Jaret Moldaver and Jesse Rosenberg, counsel for the Applicant Elliot Birnboim, counsel for the Respondent
HEARD: in writing
ENDORSEMENT AS TO COSTS
[1] In an endorsement dated March 5, 2018[^1] and a supplementary endorsement dated April 9, 2018[^2], I made orders in connection with the motion brought by the Applicant and the cross-motion brought by the Respondent. In the latter, I directed counsel to make written costs submissions arising from the motions including the settlement of the parenting issues prior to the motion. I directed counsel not to exceed 5 pages double-spaced (together with costs outlines and offers to settle).
Positions of the Parties
[2] On May 8, 2018, the Applicant filed submissions of 5 pages double-spaced together with her offer to settle dated February 9, 2018, a letter from Mr. Birnboim dated February 9, 2018 with respect to that offer, and a copy of an endorsement by Kruzick J. dated July 4, 2017 in which he ordered that “costs claimed by both parties with respect to these motions today and any costs thrown away with respect to the aborted questioning will be determined by the Judge hearing the long motion on November 2, 2017”.
[3] In connection with the services rendered in June and July 2017 specific to the endorsement of Kruzick J., counsel provided a bill of costs as follows:
| Full Indemnity 90% | Substantial Indemnity 80% | Partial Indemnity 60% | |
|---|---|---|---|
| Fees | $ 10,206.90 | $ 9,072.80 | $ 6,804.60 |
| Disbursements | $ 785.45 | $ 785.45 | $ 785.45 |
| HST Fees | $ 1,326.90 | $ 1,179.46 | $ 884.60 |
| HST Disbsmts | $ 102.11 | $ 102.11 | $ 102.11 |
| TOTAL | $12,421.36 | $11,139.82 | $ 8,576.76 |
[4] In connection with the services rendered in respect of the motions, the period covered started February 27, 2017 and ended April 19, 2018. The 78 pages of docket entries have been heavily redacted and the remaining entries indicate that attention has been paid to relevance to the motion. On my review, the services rendered are focused on the motions. The bill of costs for that period is as follows:
| Full Indemnity 90% | Substantial Indemnity 80% | Partial Indemnity 60% | |
|---|---|---|---|
| Fees | $ 76,120.65 | $ 67,662.80 | $ 50,747.10 |
| Disbursements | $ 29,232.05 | $ 29,232.05 | $ 29,232.05 |
| HST Fees | $ 9,895.68 | $ 8,796.16 | $ 6,597.12 |
| HST Disbsmts | $ 3,800.17 | $ 3,800.17 | $ 3,800.17 |
| TOTAL | $119,048.55 | $109,491.18 | $ 90,376.44 |
[5] Of the disbursements, $24,607.25 was paid to the Applicant’s valuator. As indicated at paragraph 31 of the endorsement I concluded that the analysis prepared by Mr. Ranot more closely followed the scheme of the Child Support Guidelines than the analysis prepared by Mr. Strezos.
[6] The Applicant asks for substantial indemnity costs arising from the endorsement of Kruzick J., namely $11,139.82. In connection with the hearing of the long motion, including the financial and parenting issues, the Applicant asks for costs at the mid-point between partial and substantial indemnity in the amount of $99,933.81; or, in the alternative, costs on a partial indemnity basis in the amount of $90,376.44.
[7] On May 22, 2018 the Respondent filed costs submissions of 5 pages along with his offer dated February 9, 2018, the Applicant’s offer dated February 6, 2018, his analysis of support payable pursuant to the order compared to the support reflected in the Applicant’s offer and the Respondent’s offer, a copy of the endorsement of December 7, 2017, a copy of the transcript of his questioning on June 20, 2017, a copy of his 13 page affidavit sworn January 23, 2018 in support of his motion to compel answers to undertakings etc, and, at tab 7, a copy of voluminous correspondence and disclosure related to the undertakings and refusals and particularly related to the marriage contract.
[8] At Tab K, the Respondent provided a bill of costs “following long motion returnable February 13, 2018, attendance before Justice Kruzick on July 4, 2017 and settlement of parenting issues”. The entries started with review of the notice of motion returnable July 4, 2017 and ended with preparation and attendance at the hearing on February 13, 2018. It reflects 60 hours for an associate and 45 hours for Mr. Birnboim. His analysis was as follows:
| Associate | E. Birnboim | |
|---|---|---|
| Hourly rate | $ 275 | $ 650 |
| Full Indemnity (success on all issues) | $16,500 | $29,250 |
| Partial Indemnity 60% (success on all issues) | $ 9,900 | $17,550 |
| Divided success, favouring Respondent by offers – Subject to re-apportionment at trial | $ 4,500 | $ 8,500 |
[9] The Respondent allocated $13,000 as “total divided success, subject to re-apportionment at trial” and, with HST, the amount was $14,690. On the basis of achieving partial success, the Respondent asked for an order that the Applicant pay costs of $13,000.
[10] In the written submissions, the Respondent did not challenge the dockets, the hourly rates or the disbursements reflected in the bill of costs of the Applicant.
[11] On May 25, 2018, counsel for the Applicant filed reply submissions denying all of the allegations and assertions made in the Respondent’s submissions, taking the position that the Respondent had exceeded the limits I had imposed and that substantial documents had been improperly attached and should be disregarded, and that the nature of the Respondent’s costs submissions underscored the Respondent’s continuing unreasonable litigation conduct.
Analysis
[12] I will not detail the criticisms each party makes against the other. Suffice it to say that the submissions, particularly those of the Respondent, demonstrate the antagonism that persists. I will focus only on what I consider to be relevant.
[13] The Applicant brought a motion for disclosure, temporary child support (table amount and s. 7), temporary spousal support, interim exclusive possession of the matrimonial home, interim disbursements and costs. The Respondent brought a motion for an order fixing temporary child and spousal support effective December 1, 2016 in the amounts he had been paying and an order that he be responsible for 70% of the special and extraordinary expenses. He also requested an order that the parties “shall attend at a global mediation” before a specified mediator.
[14] I did not grant any of the orders sought by the Respondent. He was not successful in any aspect of his motion.
[15] One of the issues in the motion was the parenting arrangements. As a result of the exchange of offers on February 6 and 9, the parties settled on an interim basis. This issue generated enormous conflict since the separation. I was grateful for the efforts of counsel to assist their clients in arriving at an interim solution. In the context of costs, I do not intend to make any findings as to which parent was more or less reasonable. I will defer to the trial judge the issue of costs of the parenting issues that arose in this long motion.
[16] I did make an order for temporary child and spousal support and interim exclusive possession of the matrimonial home. I did not make an order for interim disbursements but I did order the Respondent to obtain a written report of a chartered business valuator that reflects the market value of his interest in all of the corporations and partnerships and other business entities he had as of the date of that order and to serve it at least 90 days before trial.
[17] One of the key issues was the income of the Respondent. As indicated at paragraph 7 of the endorsement, the Respondent’s counsel took the position that the Respondent’s income was $200,000 or $260,000[^3]. At paragraph 8, I indicated that counsel for the Applicant took the position that the Respondent’s income was $1,436,198. At paragraph 26, I found his income for purposes of the interim support motion to be $707,500. Based on that income, I directed counsel to prepare divorcemate calculations and at paragraph 39 I held that there was no basis to depart from the Child Support Guidelines and divorcemate.
[18] I made a finding that his income was roughly equivalent to 3 times what the Respondent proposed and roughly equivalent to 50% of what the Applicant sought. But, as indicated at paragraph 49 of the endorsement, the Respondent was in the driver’s seat in that he had all of the knowledge of his actual income. He cannot complain that the estimate of the Applicant was that high. I repeat paragraph 33 of the endorsement:
Second, the burden is on the Respondent to provide a basis upon which the court can establish his income for purposes of determining temporary child and spousal support. It is unreasonable for him to put forward an income that is so inconsistent with the standard of living the family enjoyed before separation and inconsistent with his ongoing standard of living. In addition, he relied on the dueling experts and he did not provide his own form 13.1 that would have reflected his evidence of his income and of his expenses since he changed his residence. From that I draw an inference against him that his income for purposes of child and spousal support is much higher than he asserts.
[19] The Applicant was successful in two key aspects of the motion and partially successful on the third. Pursuant to rule 24(1) she is presumed to be entitled to costs of the long motion.
[20] I turn to the offers to settle.
[21] The Applicant’s offer to settle all issues is dated February 6, 2018 and was served February 7. In her February 6 offer, the Applicant took the position that, for purposes of the motion for temporary child and spousal support the Respondent’s income should be found to be $791,066 per annum. Her offer was proximate to the finding I made.
[22] In his offer to settle dated February 9, 2018, he proposed the continuation of the status quo, as he had advocated in his motion. And he offered a payment of $100,000 as a credit to any obligations in the action to be allocated by the trial judge. His offer to settle was silent as to the amount of his income.
[23] I find that it was unreasonable for him to put forward an offer to settle that did not address a key and highly contentious issue. The thrust of the Child Support Guidelines is that the court must take steps to establish the income of the payor, even for interim support motions. Pursuant to rule 24(5) and (11), his unreasonable conduct should be reflected in the award of costs to the Applicant.
[24] The second key issue was temporary exclusive possession of the matrimonial home. In her February 6 offer, the Applicant proposed that she have temporary exclusive possession of the home and contents. In his offer to settle, he proposed that “the Applicant shall be permitted to continue to reside in the matrimonial home, pending disposition of trial, or the return of any interim support motion, whichever is earlier. This shall be without prejudice to any claims which may be advanced by the Respondent at trial in respect of such occupation”. The Respondent’s offer to settle did not recognize the difference between “exclusive possession” and “be permitted to continue to reside in the matrimonial home”. The outcome was consistent with the Applicant’s offer and bore no relationship to the Respondent’s offer.
[25] In her February 6 offer, the Applicant proposed to adjourn her motion for interim disbursements and a valuation of the Respondent’s business interests. In his offer, the Respondent proposed that the motion that for interim disbursements or that he prepare a valuation of his own business be dismissed. As indicated in the endorsement at paragraph 58, I made an order requiring the Respondent to prepare the valuation and specified a deadline. The Applicant was partially successful on that issue.
[26] In comparison with the offers to settle, the Applicant’s offer was more reasonable than the Respondent’s offer on the key issues of the amount of his income (therefore interim child and spousal support) and exclusive possession. She was also partly successful on the valuation report.
[27] The costs incurred by each of these parties are significant and that provokes counsel to make fulsome submissions. However, rule 24(10) requires that the court decide costs after dealing with a step in the case. Because of the requirement to provide a decision as quickly as possible, judges often limit the page content and the subject content. The Respondent’s written submissions were in compliance with the page limit. While I did not permit the comparative analysis, I am prepared to accept it as an unobjectionable 6th page of his submissions. However, the enormous volume of documentation submitted, in connection with the modest costs of the motions before Kruzick J. in July 2017 and in connection with his assertions of unreasonable behaviour by the Applicant and her counsel was inflammatory, unnecessary and irrelevant. I agree that the Respondent’s failure to comply with straitforward directions as to submissions on costs underscores the Respondent’s continuing unreasonable litigation behaviour.
[28] I accept the alternative submissions that the Respondent should pay partial indemnity costs. The Applicant succeeded on the two key issues and achieved some success on the question of the valuation of the Respondent’s assets. While she did not obtain an outcome that met or exceeded her offer to settle, her offer was reasonable in these circumstances. Notwithstanding his attempt to demonstrate otherwise by his comparative analysis, his offer bears no relationship to the outcome.
[29] I find that the Respondent should pay approximately 2/3 of the partial indemnity costs on the basis that the remaining 1/3 were associated with the third key issue, namely parenting.
[30] With respect to the costs arising from the endorsement of Kruzick J., I will defer to the trial judge. As the Respondent pointed out, the questioning that was the subject of the motion was questioning in the application, not in the context of the motion.
ORDER TO GO AS FOLLOWS:
[31] In connection with the endorsement dated July 4, 2017, the costs are deferred to the trial judge.
[32] The costs associated with the parenting issues in the long motions are deferred to the trial judge.
[33] In connection with the long motions, the Respondent shall pay to the Applicant costs in the amount of $60,000 including fees, disbursements, and HST on both.
[34] The Respondent shall pay those costs no later than September 28, 2018.
[35] If necessary, the Director, Family Enforcement Office shall enforce 50% of those costs as child support.
Kiteley J.
Date: September 5, 2018
[^1]: ONSC 1481 [^2]: ONSC 2279 [^3]: At paragraph 5 of the costs submissions, the Respondent asserts that his counsel’s position on the motion was $290,000.