NEWMARKET COURT FILE NO.: FC-14-47204-00

DATE: 20181019

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Snezana Milutinovic, Applicant

AND:

Radmilo Milutinovic, Respondent

BEFORE: The Honourable Mr. Justice J.P.L. McDermot

COUNSEL: R. Switzer, for the Applicant

Respondent, Unrepresented

HEARD: By Written Submissions

COSTS ENDORSEMENT

[1] This costs award is the culmination of years of extremely destructive litigation between these parties. Although custody and access issues were settled prior to trial, most issues were litigated to the maximum extent possible. Throughout, the Respondent, Radmilo Milutinovic (“Radmilo”) was uncooperative at best, and both unreasonable and obstructive at worst. His disclosure was incomplete and his income complex, and there were three motions brought to strike his pleadings as a result. Two motions were unsuccessful; Radmilo’s pleadings were struck by me as a result of an argued motion immediately prior to trial and the trial continued on an uncontested basis for two days.

[2] At trial, I found Radmillo’s income to be $300,000 per year. Retroactive child and spousal support was set in the amount of $481,641. Ongoing child support was set at $3,877 per month plus $1,671 per month for s. 7 expenses. Spousal support was set at $5,213 per month and ongoing support was set off against the amount owing by the Applicant, Snezana Milutonovic (“Snezana”) to Radmillo of $505,000. The matrimonial home was to be sold and the equalization payment owing by Radmillo to Snezana was set at $717,393 to be paid from the Respondent’s TD Wealth Fund and his share of the net proceeds of the matrimonial home.

[3] The extent of Radmilo’s poor litigation conduct was obviated by the numerous costs awards made in this proceeding for various unsuccessful motions. There were six of them, totalling $62,298. It is unclear to me as to how much of these costs awards have been paid, but I suspect none of them have.

[4] After trial, in my endorsement I invited costs submissions from the Applicant. She requests costs of the proceeding totalling just over $147,000, including HST and disbursements. She bases her request on offers to settle filed in this proceeding, as well as Radmilo’s unreasonable behaviour and bad faith. There is no reply by Radmilo as his pleadings are struck.

[5] There is little doubt that, based upon the offers and her success at trial, Snezana is entitled to payment of her costs of this proceeding: See Rule 24(1) of the Family Law Rules.[^1] The live issue is whether costs are payable on a full or partial recovery basis, and the amount of costs payable.

Offers to Settle

[6] Where a litigant has made an offer to settle and the result is better at trial than as set out in the offer to settle, that party is entitled to full recovery costs. Rule 18(14) of the Family Law Rules reads as follows:

(14) 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.

[7] In addition, the offer must be signed by the party making the offer: see Rule 18(4).

[8] Applicant’s counsel made three offers to settle in this proceeding. It appears that all of the offers in this matter comply with the service and formal requirements of Rule 18. The issue is whether the offers allow for full recovery costs from the date of any of the offers as provided for in Rule 18(14).

[9] In the course of these proceedings, Snezana made three severable offers to settle, while Radmilo made none. The fact that the offers were severable allows the court to base its costs award on the portion of the offer applicable to the issues at trial only (as opposed to reviewing the entire offer in light of the trial results): see Sepiashvili v. Sepiashvili, 2001 25708 (ON SC), 2001 CarswellOnt 3459 (S.C.J.).

[10] The results of the offers as opposed to the results at trial are set out in the chart below. As custody and access issues were settled prior to trial, I have specifically excluded those issues below:

Issue	Offer of June 24, 2016	Offer of June 30, 2017	Offer of May 7, 2018	Result at Trial
Respondent’s Income	To be imputed at $325,000	To be imputed at $200,000	To be imputed at $200,000	Imputed at $300,000
Base Child Support	$4,007 per month commencing July 1, 2016	$2,582 per month commencing July 1, 2017	$2,677 per month commencing June 1, 2018	$3,877 per month commencing June 1, 2018
Section 7 Expenses	Radmilo to cover 100% of expenses including summer camp, tennis lessons and uninsured medical and dental expenses	Radmilo to pay 75% of expenses including camp fees, tennis lessons, orthodontic expenses and uninsured medical and dental expenses	Radmilo to pay $2,091 per month commencing June 1, 2018 being 86% of orthodontic expenses, tennis lessons, music lessons and dental expenses	Commencing June 1, 2018, Radmilo to pay $1,671 per month being 77% of orthodontic expenses, tennis lessons, music lessons and dental expenses
Spousal Support	$8,000 per month commencing July 1, 2016	$4,151 per month commencing July 1, 2017	$1,799 per month commencing June 1, 2018	$5,213 per month commencing June 1, 2018
Support Insurance	Maintain $2,100,000 RBC insurance policy	Maintain $2,100,000 RBC insurance policy	Maintain $1,600,000 life insurance policy	Maintain $1,600,000 life insurance policy
Medical and Dental Coverage	To be maintained for Snezana and the children so long as available	To be maintained for Snezana and the children so long as support payable	To be maintained for Snezana and the children so long as support payable	Claim dismissed
Security for Support	Not addressed	Not addressed	Credit support against the advances made by the Respondent throughout the litigation (then $455,000)	Credit support against the advances made by the Respondent throughout the litigation (at the end of trial, $505,000)
Retroactive Support	Not addressed; if offer accepted support would have commenced July 1, 2016	Not addressed; if offer accepted, support would have commenced July 1, 2017	Lump sum retroactive spousal support and child support from June 1, 2016 of $218,279	Lump sum retroactive spousal support and child support from June 1, 2016 of $481,641
Equalization Payment	Not quantified; Radmilo to transfer his 50% interest in matrimonial home to Snezana and pay off line of credit and mortgage	Not quantified; Radmilo to transfer his 50% interest in matrimonial home to Snezana, pay her $150,000 and assume and pay off line of credit, mortgage and property taxes	Payment by Radmilo to Snezana of $717,393 to be paid from TD Wealth fund	Payment by Radmilo to Snezana of $717,393 to be paid from TD Wealth fund and his share of matrimonial home net proceeds
Matrimonial Home	To be transferred to Snezana to satisfy equalization payment	To be transferred to Snezana to satisfy equalization payment	To be sold with Radmilo to pay the CRA lien and CIBC execution from his share; Snezana to have control over listing and sale	To be sold with Radmilo to pay the CRA lien and CIBC execution from his share; Snezana to have control over listing and sale
Business Interests	Not addressed	Remove Snezana from any business or partnership interests	Reimburse Snezana the amount of $3,268 for unpaid taxes of Northern Vision; remove Snezana from any business or partnership interests; indemnify Snezana from any liabilities arising from businesses	Reimburse Snezana the amount of $3,268 for unpaid taxes of Northern Vision; remove Snezana from any business or partnership interests; indemnify Snezana from any liabilities arising from businesses

[11] The first two offers are vague in form. They do not address retroactive support, although had the first offer been accepted, Radmilo’s income would have been set at a higher amount, and the support would have commenced on June 1, 2016, a month earlier than that ordered at trial and at a greater amount than that ordered at trial. It is difficult, if not impossible to assess the effect on support of accepting the either of the 2016 or 2017 offers taking these factors into consideration.

[12] As well, the equalization payment in both of the earlier offers involved a transfer of the matrimonial home to Snezana. That is, again, impossible to quantify as the value of the home at the time of both of these offers is unknown. It is difficult, again, to relate the proposed property settlement to the order made by me in July, 2018.

[13] There may be a reason for the third offer being close to the result at trial; there was little disclosure made by Radmillo, and the first and second offers were made well prior to trial. The third offer to settle, on the other hand, was made on May 7, 2018 and this trial took place on May 24 and 25 of the same year. The facts surrounding the making of the offer were well known when it was made, and the fact that this ended up being an unopposed trial allowed the Applicant to tailor her trial submissions keeping the offer in mind. There is nothing wrong with this; it was just the way that the proceedings went when Radmilo’s pleadings were struck.

[14] The third offer to settle was therefore clearly related to the result at trial. Other than two small issues, the medical and dental insurance, and the amount of s. 7 expenses payable on an ongoing basis, Snezana clearly got a better result at trial than her May 7 offer to settle. Because of this, I accept that, under Rule 18(14), Snezana is entitled to her full recovery costs after May 7, 2018.

[15] I note that assessing costs after this offer was not made easy by the fact that the last entry in the Bill of Costs is from March 20, 2018 to the end of trial. That does not allow me to assess exactly what costs were incurred after the last offer to settle was made. For that reason, I will review the other issues raised by Snezana concerning the costs, namely the Respondent’s litigation conduct and the other factors under Rule 24 in assessing the quantum of costs.

Rule 24 Factors

[16] There are a number of factors that go into the quantification of costs. As can be seen by the amount of this costs claim, over $147,000, these factors must be considered carefully as the results may be financially devastating to an unsuccessful party.

[17] Snezana’s solicitors have cited Biant v. Sagoo, 2001 28137 (ON SC), 2001 CarswellOnt 3315 (S.C.J.) to support the proposition that costs should be for the purpose of indemnifying a successful party; Mr. Frodis suggests that costs should approach full recovery as much as possible where the successful party has behaved reasonably and the costs claimed are proportionate to the issues and the results.

[18] There are other purposes to costs, however. In Serra v. Serra, 2009 ONCA 395, 2009 CarswellOnt 2475 (C.A.), the Ontario Court of Appeal confirmed that there are three purposes to any costs award of which indemnification of a successful litigant is only one:

(a) To indemnify successful litigants for the costs of litigation;

(b) To encourage settlement; and,

(c) To discourage and sanction inappropriate behaviour by litigants.

[19] These issues have been codified in Rule 24(11) which reads as follows:

(11) In setting the amount of costs, the court 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.

[20] The relevant factors to this case are those set out in clauses (a) to (d) inclusive. There is, in my mind, no issue with the disbursements chargeable by counsel in this proceeding.

Importance and Complexity of Issues

[21] This is the “proportionality factor” mentioned by Perkins J. in Biant v. Sagoo. The court must review what is in issue in the proceedings as well as how complex it may have been to prove the case considering the circumstances and the issues involved.

[22] This case initially involved every issue arising out of the separation of the parties. Although custody and access were settled, it required a social work investigation prior to settling. The financial issues were, on a scale of one to ten, about a seven: Radmilo had recently obtained a settlement on a wrongful dismissal and had gone into business on his own. His income remained a guessing game at the time of trial. There were several corporations and the financial affairs of these parties were intertwined. Support was not paid, and had to be assessed to the date that Radmilo failed to adhere to an order requiring him to pay the expenses of the home; as a result, money had to be handed out on a piecemeal basis throughout the proceedings. The amounts involved, taking into account retroactive support and equalization were well in excess of $1,000,000. And I accept the fact that, based upon the fact that the Respondent’s pleadings remained in place at the commencement of trial, Snezana’s counsel had to prepare on the basis of running a full trial estimated to take more than four days; even on an uncontested basis the trial took two days.

[23] The complexity of the issues to be argued were made more difficult by the Respondent’s litigation conduct. He failed to adhere to court orders, and did not pay the expenses of the home, as ordered early in the proceeding. He attempted to remove more than $2,000,000 from the joint account, requiring an order freezing assets; both of these factors resulted in the Applicant’s having to obtain funds on an ad hoc basis throughout. The Respondent failed to value his income or make proper disclosure. All of these factors had to have increased the legal fees of the Applicant substantially and the complexity of making the Applicant’s case at trial.

Unreasonable Conduct

[24] In my decision on the motion to strike, I described Radmilo as an “ungovernable litigant” and I have been given no reason to change my assessment of him today.

[25] Radmilo’s conduct in the course of this litigation can only be described as egregious. He has been difficult to deal with from the start, when he removed the vast majority of the funds in the joint account almost immediately after separation. He then followed up by breaching the order requiring him to pay the expenses of the matrimonial home in lieu of support; that resulted in the Applicant having to request funds from Radmilo throughout the proceedings, up until trial, when she was forced to ask for an advance of $50,000 on the last day of trial.

[26] The conduct of this litigation by Radmilo resulted in a finding early on by Rogers J. as “bad faith” in her endorsement of October 14, 2015, more than two years prior to trial, when she noted that the Respondent withheld funds from Snezana for the purpose of causing emotional distress. His conduct of the litigation also led to two motions to strike pleadings; even though those motions were not granted, costs were awarded against Radmilo on both occasions, which confirms the court’s views of his conduct each time.

[27] This behaviour did not abate right up to the eve of trial. That fact was made plain by the fact that on February 12, 2018, Bennett J. gave the Applicant the right to obtain funds to pay for the financial disclosure ordered to be made by him not months, but years prior; however, Radmilo elected to request those funds as late as on the first day of trial, and he only acknowledged this when he was found out when he mistakenly copied the email requesting the funds to counsel. A third motion was brought to strike Radmilo’s pleadings prior to trial based again on his lack of disclosure and litigation conduct; I granted that motion.

[28] I have already noted that Radmilo’s litigation conduct obviously increased the Applicant’s costs in proving her case, and made the matter needlessly complex for trial.

[29] I note that one of the aspects of costs, as noted in Serra, is to encourage settlement. I note that Radmilo made no offer to settle in this proceeding and I find that, in itself, to be unreasonable conduct.

[30] There is sufficient evidence to find that Radmilo acted in bad faith as described in Rule 24(8), which is behaviour described as being “shown to be carried out with intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court” [Perkins J. in S.(C.) v. S.(C.), 2007 20279 (ON SC), [2007] O.J. No. 2164 (Ont.S.C.J.)]. I have little doubt that the behaviour of Radmilo was bad faith conduct; his actions cannot be demonstrated to have any purpose other than to leave nothing in this war, other than scorched earth and ruined ground for Snezana and the children.

[31] Under Rule 24(8), a finding of bad faith results in full recovery costs being ordered on a full recovery basis, payable forthwith.

The Lawyer’s Rates and Time Properly Spent on the Case

[32] These criteria have been answered in the Bill of Costs filed with the material. The Applicant requests what seems to be a large amount for costs. It must also be remembered that the time spent by counsel included the lawyer’s time spent in preparing for both the motion to strike at trial (for which costs have not yet been ordered) and a 4.5 day trial. The total amount of costs claimed are not unreasonable as a result.

[33] I note as well that the lawyers’ respective hourly rates are not unreasonable for the experience and family law specialization of counsel. I further note that the lawyer who appeared for Snezana at trial charged a lesser hourly rate than did Mr. Frodis who was lead counsel.

Ruling

[34] I am going to deduct $10,000 from the amount owing for the custody and access issues which were settled and quantified in the Applicant’s costs submissions.

[35] The time included does not appear to include any time for preparation or argument of any motions on the file for which costs have already been ordered. However, the Bill of Costs does not allow me to determine that with any exactitude because it is not a detailed docket, but only contains generalized statements as to what was done. I am therefore going to round the costs award down to $110,000 to take into account any possible duplication or expenses were in respect of conferences where costs might not have been appropriate.

[36] I therefore find that the Respondent is liable to pay full recovery costs to the Applicant in the amount of $110,000.

[37] The costs shall be payable forthwith from the TD Wealth account in the Respondent’s name, as well as the Respondent’s share of the net proceeds of the matrimonial home. Any costs remaining unpaid shall be enforceable as support as the major issue at trial was the Respondent’s income for support purposes.

McDermot J.

Date: October 19, 2018

[^1]: O. Reg. 114/99