COURT FILE NO.: CV-15-5735-00 DATE: 2018 11 21
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
CONCETTA ANGELONI by her litigation guardians, CALOGERO CINO and MARIA DI STAFANO Applicant
Derek Fazakas and Kaushik Parameswaran, for the Applicant
- and -
ESTATE OF FRANCESCO ANGELONI, MARIA LUGONIA, LILIANA PALERMO, DORA POLLA, MIMMA SISTI, FERNANDO ANGELONI, FRANCA PONARI, TERESA PONARI Respondents
Peter M. Callahan, for the Respondents
HEARD: August 30, 2017, at Brampton, Ontario
Price J.
COSTS ENDORSEMENT
OVERVIEW
[1] On December 18, 2015, three years after her husband moved her to a long-term care facility on account of her dementia, and five months after her husband died with a Will that made no provision for her, Concetta Angeloni, by her litigation guardians, applied to this Court for a declaration that she is a dependent of her deceased husband and requiring that monies distributed by his Estate in breach of the Family Law Act be returned to his Estate for her support.
[2] At a hearing on August 30, 2017, pursuant to a timetable obtained from Tzimas J. on August 3, 2017, Ms. Angeloni moved before this Court for directions in the proceeding, to require Mr. Angeloni’s Estate to provide an accounting of his management of her property during his lifetime, under his continuing Power of Attorney for her Property, and requiring his Estate Trustee, Maria Lugonia, to provide an accounting of her management of Mr. Angeloni’s assets under his Will after his death. Additionally, she moved to prohibit the dissipation of the Estate assets, and to require production of documents and examination of the respondents regarding any distribution of the deceased’s assets. The Court heard argument and reserved its decision until December 15, 2017, when it issued an Order granting Ms. Angeloni substantially all the relief she had requested.
[3] With regard to costs, the Court stated:
- The Applicant is entitled to her costs of the motion. If the parties, after reviewing the principles set out in Arvanitis v. Levers Estate, 2017 ONSC 3758, paras. 68 to 98, and 110 to 135, are unable to agree on costs, they shall submit written arguments, not to exceed four pages, plus a Costs Outline, by December 30, 2017.
[4] Following the motion, Ms. Angeloni, by her Litigation Guardian, filed written costs submissions. The respondents did not file responding submissions. The Court has reviewed the submissions and this endorsement will address the issue of costs.
THE POSITION OF THE APPLICANT ON COSTS
[5] Ms. Angeloni, by her Litigation Guardians, seeks costs on a full indemnity basis in the amount of $10,605.25, consisting of fees in the amount of $9,722.62, inclusive of HST, and disbursements in the amount of $882.63.
ANALYSIS AND LAW
a) General principles
[6] The Court adopts, for this purpose of these reasons, the principles it set out in Arvanitis v. Levers Estate, 2017 ONSC 3758, at paras. 68 to 98, and 110 to 135.
[7] As noted in Arvanitis, costs of litigation involving an estate are no longer routinely ordered payable out of the Estate. In the absence of relevant public policy considerations that may apply, the Court follows the costs rules that apply generally in civil litigation, pursuant to s. 131 of the Courts of Justice Act and guided by Rule 57 of the Rules of Civil Procedure. Applying the objectives of costs orders in civil litigation maintains the necessary discipline in Estate litigation by requiring the parties to assess their personal exposure to costs and to enforce reasonableness in decisions made in estate matters. See: Salter v. Salter Estate, 2009 ONSC 28403, at paras. 5 and 6.
[8] The public policy objectives of giving effect to the intentions of grantors or testators and ensuring that their estates are properly administered do not apply in the present motions, where the issues concern Ms. Lugonia’s compliance with her obligations under the applicable legislation, including the Family Law Act, the Succession Law Reform Act, the Substitute Decisions Act, and the Estates Act, for the protection of Ms. Angeloni as a dependent of her deceased husband’s Estate.
[9] I will now turn to the factors to be considered in assessing costs under Rule 57.
b) Applying the legal principles to the facts of the present case
[10] Ms. Angeloni was successful in her motions and is presumptively entitled to her costs.
[11] Ms. Angeloni seeks her costs against the personal respondents, Maria Lugonia, as Estate Trustee, and the beneficiaries, Liliana Palerma, Dora Polla, Mimma Sisti, Fernando Angeloni, Franca Ponari, and Teresa Ponari, on the ground that the motions for a timetable and for directions were avoidable and were necessitated by the said respondents’ inaction.
[12] I find that the personal respondents precipitated the motions and the necessity of a hearing in the following ways:
(a) The said respondents have failed to respond in a substantive way to the allegations set out in the Notice of Application and supporting affidavits. (b) Ms. Angeloni delivered her Notice of Motion on March 15, 2017, and as no responding material was received. Her lawyers wrote to opposing counsel on May 9 and May 18, 2017, proposing a timetable for the delivery of materials and for cross-examinations. Her counsel advised opposing counsel that if they did not hear from them, a motion for a timetable would be brought. No response was received. (c) The said respondents failed to comply with the timetable set by Tzimas J. They were late in the delivery of their affidavits, did not deliver a Factum, and did not seek to cross-examine, notwithstanding that that they cited the need to cross-examine as their reason for asking to adjourn the motion for directions. (d) The said respondents failed to respond to the Offers made by Ms. Angeloni on May 2, 2016, and August 17, 2017, to resolve many of the issues raised in the motion for directions. (e) The positions taken by the said respondents with respect to the motion for the timetable and the motion for directions resulted in unnecessary delay and costs in resolving the procedural issues.
[13] Costs may be awarded on a substantial indemnity scale based on unexplained delay, calculated to avoid the party’s legal obligations. See: Guelph Storm Ltd. v. Guelph Centre Partners Inc., para. 3; McGregor v. Pitawanakwat, 2017 ONCA 77, para. 33. In the present case, having regard to Ms. Angeloni’s age and the prejudice that delay may cause her, I find that the respondents’ repeated delay is evidence of bad faith and attracts an award of costs on a substantial indemnity scale.
(i) The amount of costs
Legislative framework
[14] Rule 57.01 of the Rules of Civil Procedure gives the Court guidance in the exercise of its discretion by enumerating factors that the Court may consider when assessing costs.
[15] Among the factors set out in rule 57.01(1) are the following:
(i) The complexity of the proceeding; (ii) The importance of the issues; (iii) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; (iv) Any offers to settle; (v) The principle of indemnity; (vi) The concept of proportionality, which includes at least two factors: (a) The amount claimed and the amount recovered in the proceeding; and, (b) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; (vii) Any other matter relevant to the question of costs.
Jurisprudence
[16] Justice Perell summarized the purposes that costs orders serve in 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 (2010). He stated:
Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements. [Internal citations omitted.]
[17] Ultimately, in determining the costs to be awarded, the Court applies fairness and reasonableness as overriding principles. Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291; and Moon v. Sher, 246 D.L.R. (4th) 440. In assessing what is fair and reasonable, it does not engage in a mechanical exercise but, rather, takes a contextual approach, applying the principles and factors discussed above, and sets a figure that is fair and reasonable in all the circumstances. Gratton-Masuy Environmental Technologies Inc. (c.o.b. Ecoflow Ontario) v. Building Materials Evaluation Commission, at para. 17. Rule 1.04(1.1) requires the Court to consider proportionality; that is, the amount of costs ordered should be proportional to the amount of money and other interests at stake in the proceeding. Patene Building v. Niagara Home, 2010 ONSC 468.
[18] In reviewing a claim for costs, the Court does not undertake a line by line analysis of the hours claimed, and should not second-guess the amount claimed unless it is clearly excessive or overreaching. It considers what is reasonable in the circumstances and, taking into account all the relevant factors, awards costs in a global fashion. See the cases referenced in Fazio v. Cusumano, at para. 8.
Applying the legal principles to the facts of the present case
(ii) Importance and complexity
[19] The context of the motions was factually complex. The overlapping of time periods when each of Mr. Angeloni and Ms. Angeloni were incapable of managing their property, and the management of their property under Powers of Attorney and, later, and Estate Trustee, and the various legislative frameworks, each lent complexity to the facts and law that needed to be examined.
[20] The motions were important, having regard to Ms. Angeloni’s vulnerability, her age, and the lack of transparency regarding the management of Mr. Angeloni’s Estate. Based on the disclosure provided to this point, there was approximately $750,000.00 in Mr. Angeloni’s Estate at the time of his death. Ms. Angeloni has a vital interest in ensuring that sufficient funds are available to meet her future care needs. The non-dissipation order was therefore an important remedy, as well as the order for production of the testamentary documents and the financial records of the Estate.
(iii) Conduct that tended to shorten or lengthen unnecessarily the duration of the proceeding
[21] Justice Tzimas noted in her endorsement dated August 3, 2017, that she was “seeing no effort by the Respondents to put anything forward.”
[22] Ms. Angeloni first brought her motion for directions for hearing June 24, 2016. Her lawyer sought to canvass long motion dates with the respondents on two occasions, but no response was received. There was also no response from the respondents to the draft Order sent to their lawyer in May 2016, or to the motion material that was served June 7, 2016. The respondents did not notify Ms. Angeloni’s lawyers until June 23, 2016, that they wished to have the motion adjourned to enable them to cross-examine on the affidavits.
[23] On June 23, 2016, Ms. Angeloni’s lawyer provided three available dates for cross-examinations, but none of the dates were acceptable to the respondents. No alternative dates were proposed by the respondents’ lawyer.
[24] Ms. Angeloni’s lawyer wrote to the respondents on May 11 and May 18, 2017, seeking a timetable for delivery of material and cross-examinations. No response was received, which necessitated the motion for a timetable.
[25] On June 26, 2017, Justice Tzimas set a timetable which the respondents failed to follow. The parties were to complete their cross-examinations and exchange Factums by August 25, 2017. The Applicant delivered her Factum on August 18, 2017, but the respondents did not seek to cross-examine or file a Factum.
[26] Ms. Angeloni’s lawyers made Offers on May 2, 2016, and August 17, 2017, to resolve the issues in the motion for direction and neither Offer was accepted or even responded to.
[27] As noted above, I find that the respondents’ delays and their failure to respond to Ms. Angeloni’s Offers were unreasonable conduct that justifies costs at a substantial indemnity scale.
(iv) Indemnification - The hourly rates charged
[28] Ms. Angeloni’s lawyer, Derek Fazakas was called to the Bar in Ontario in 1996, and had practiced law for over 20 years when the motions were argued. He was assisted by Kaushik Parameswaran, who was called to the Bar in 2013, and by a law clerk with 10 years’ experience.
[29] In determining the appropriate hourly rates to be assigned to the lawyers involved in the motion, the Court follows the approach taken by Aitkin J. in Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041 (2013). That is, the starting point is the successor of the Costs Grid, namely, the “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan edition of the Rules, which sets out maximum partial indemnity hourly rates for counsel of various levels of experience.
[30] The Costs Bulletin suggests maximum hourly rates (on a partial indemnity scale) of $80 for law clerks, $350 for lawyers, like Mr. Fazakas, with more than 20 years’ experience, and $225 for lawyers, like Mr. Parameswaran, who had practiced law for 4 years. The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases.
[31] The Costs Bulletin, published in 2005, is now dated. Aitkin J. considered adjusting the Costs Subcommittee’s hourly rates for inflation, as Smith J. did in First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, but the unadjusted rates of the lawyers in her case were only slightly less than the actual fees they charged, so she elected to use their unadjusted rates. Normally, however, it is appropriate to adjust the hourly rates in the Costs Bulletin to account for inflation since 2005.
[32] Based on the Bank of Canada Inflation Calculator, the 2017 equivalent of the hourly rates in the Costs Bulletin are $97.86 for law clerks, $275.00 for lawyers of under 10 years’ experience, and $428.00 for lawyers of over 20 years’ experience.
[33] The Court is guided by the rates in the Costs Bulletin, not the actual hourly rates charged. The actual rates charged are relevant only as a limiting factor in preventing the costs awarded from exceeding the actual fees charged. The Costs Subcommittee’s rates apply to all lawyers and all cases, so everyone of the same level of experience starts at the same rate.
[34] The Court adjusts the hourly rate, or the resulting fees, to reflect unique features of the case, including the complexity of the proceeding, the importance of the issues, and the other factors set out in Rule 57.01(1). If an excessive amount of time was spent, or too many lawyers worked on the file, the Court reduces the resulting amount of fees accordingly. As long as the resulting amount does not exceed the amount actually charged to the client, the actual fee that the client agreed to pay is irrelevant.
[35] Rule 1 of the Rules of Civil Procedure defines substantial indemnity costs as meaning "costs awarded in an amount that is 1.5 times what would otherwise be allowable in accordance with Part I of Tariff A" - i.e. 1.5 times the partial indemnity rate. Costs calculated on a substantial indemnity scale represent something less than full indemnity. Justice Power, in Hanis v. University of Western Ontario, 2006 ONSC 23155 (2006), stated that in that case, they represent approximately 90% of the fees actually charged. Mr. Fazakas’ adjusted hourly rate of $428.00 is the equivalent of $642.00 on a substantial indemnity scale. Mr. Parameswaran’s adjusted rate of $275.00 is the equivalent of $412.50 on a substantial indemnity scale, and the Law Clerk’s rate of 97.86 is the equivalent of $146.79.
[36] The actual rates of Ms. Angeloni’s lawyers were $400.00 for Mr. Fazakas, $250.00 for Mr. Parameswaran, and $100.00 for the Law Clerk. In each case, these rates are lower than the maximum that could be claimed on a substantial indemnity scale. In Mantella v. Mantella (2006), Corbett J. noted that an award of costs is designed to indemnify, and that the amount should therefore not exceed the amount charged to the client. The Divisional Court, in Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041, adopted Corbett J.’s analysis in Mantella, holding that it was not trumped by earlier jurisprudence from the Court of Appeal. Mr. Fazakas’ hourly rate of $400.00, which is less than the maximum rate he could claim on even a partial indemnity scale, is conservative, especially in the present case, where Ms. Angeloni is entitled to her costs on a full indemnity basis. Similarly, Mr. Parameswaran’s actual rate of $250.00 is less than his partial indemnity rate and the Law Clerk’s rate of $100.00 is only slightly higher. I therefore find Ms. Angeloni’s lawyers’ rates to be reasonable.
(v) Indemnification – Time spent
[37] I have reviewed the time spent, as set out in Ms. Angeloni’s Costs Outline and find it to have been reasonable and necessary, based on my observations of the oral argument and material filed. The respondents have not filed a Costs Outline setting out the time that their own lawyer spent and, in any event, Ms. Angeloni took steps that the respondents’ lawyer did not, including the filing of a Factum.
(vi) Other factors - Disbursements
[38] The disbursements claimed by Ms. Angeloni, in the amount of $495.05, consist, in large part, of filing fees and courier and process server charges. No objection is made to the disbursements, which I find to be reasonable and allow in the amounts claimed.
(vii) Proportionality and the reasonable expectation of the unsuccessful parties
[39] I find the costs claimed to be proportional to the value of the Estate ($750,000.00) and the amount that Ms. Angeloni requires for her continued care at the Long Term Care Facility in Hamilton (residential expenses of $30,578.00 and a similar amount for medical and rehabilitation expenses, for a total of approximately $62,500.00).
[40] The respondents were represented by Peter Callahan, who was called to the Bar in Ontario in 1993 and accordingly, commanded a similar hourly rate to that charged by Mr. Fazakas. It can be presumed that Mr. Callahan advised the respondents of the higher liability for costs they faced by reason of not responding to Ms. Angeloni’s Offers. Accordingly, I find that the costs being awarded were within the range of what the respondents would reasonably have expected to pay if unsuccessful in the motions.
CONCLUSION AND ORDER
[41] For the foregoing reasons, it is ordered that:
The personal respondents shall forthwith pay the Applicant her costs of the motions in the amount of $9,131.91, consisting of the following: (a) Motion for timetable: (i) $1,846.70 Fees (ii) $813.60 Counsel fee for appearance (iii) $387.58 Disbursements (b) Motion for Directions (i) $4,684.98 Fees, inclusive of HST (ii) $904.00 Counsel fee, inclusive of HST (iii) $495.05 Disbursements
Post-judgment interest on the above costs will be payable from the date of his Order at 3% per annum.
Price J.