Court File and Parties

COURT FILE NO.: 16-2406 DATE: 2019/07/17 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Diana Georgieva Yovcheva, Applicant AND Bojidar Lliev Hristov, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Aaron MacKenzie, Counsel, for the Applicant Self-represented

HEARD: In writing

Costs Endorsement

[1] After a six-day trial, the Court rendered a final decision, whereby, among other things, the Court imputed income to the Respondent, ordered retroactive support and ordered ongoing spousal and child support.

[2] If the parties were unable to agree on costs, the parties were to provide written costs submissions.

[3] Having considered their written submissions, the Family Law Rules, O. Reg. 114/99 (the “FLRs”), the bill of costs and offers to settle, the Court orders costs to the Applicant in the amount of $15,000.

Applicant’s Position

[4] The Applicant requests costs in the amount of $59,268.95 including disbursements and HST.

[5] She submits that she was largely successful on the issues at the trial. Based on the offers to settle exchanged by the parties, she submits that on the main issues determined by the Court, she was more successful, specifically on the issues of imputing income to the father and ongoing support.

Respondent’s Position

[6] The Respondent submits that neither party’s offer to settle was more favourable than the ultimate decision by this Court and hence each party should bear their own costs.

[7] In addition, the mother prolonged the completion of the trial by spending excess time on facts that were not relevant or material to the issues and ultimately were not considered by the Court.

Legal Principles

[8] In Mattina v. Mattina, 2018 ONCA 867, the Court of Appeal confirmed the purposes of costs: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under subrule 2 (2) FLRs.

[9] Subrule 24(1) of the Rules creates a presumption of costs in favour of the successful party. Consideration of success is the starting point in determining costs. Sims-Howarth v. Bilcliffe, [2000] O.J. No. 330 (SCJ-Family Court). 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] O.J. No. 1978 (SCJ).

[10] Divided success does not equate with equal success. It requires a comparative analysis. Most family cases have multiple issues. They are not equally important, time-consuming or expensive to determine. Jackson v. Mayerle, 2016 ONSC 1556, para. 66.

[11] Costs awards are discretionary. Two important principles in exercising discretion are reasonableness and proportionality. Beaver v. Hill, 2018 ONCA 840.

[12] Family law litigants are responsible for and accountable for the positions they take in the litigation: Heuss v. Surkos, 2004 CarswellOnt 3317, 2004 ONCJ 141.

[13] One of the considerations in an assessment of costs is to fix costs in an amount that is “fair and reasonable” for the unsuccessful party to pay in a particular proceeding.

[14] In Izyuk v. Bilusov, 2011 ONSC 7476, Justice Pazaratz, reiterates the principle that the ability to pay is relevant to the issue of quantum of costs but not to another party’s entitlement to costs. At para. 51, he states that “A party’s limited finances may not be used to shield liability, particularly where that party has acted unreasonably”.

Analysis

Who was successful?

[15] Before the Court can determine if costs are payable, the Court will be required to determine which party was more successful based on their offers to settle.

[16] Neither party had forwarded an offer to settle with terms more favourable than the ultimate decision of the Court.

[17] However, for the reasons that follow, the Court finds that Applicant was the more successful party on the major issues at trial.

[18] As stated in Jackson v. Mayerle, 2016 ONSC 1556 (SCJ) and Slongo v. Slongo, 2017 ONCA 687, when there is divided success the Court can make a contextual analysis to determine the importance of the issues that were litigated and time and expenses spend to those issues.

[19] Justice Chappel in her decision of Thompson v. Drummond, 2018 ONSC 4762, carefully reviews various cases in dealing with costs. At para 12, she stated:

Where the court concludes that success was in fact divided, it may award costs to the party who was more successful on an overall global basis or on the primary issue, subject to adjustments that it considers appropriate having regard for the lack of success on secondary issues and any other factors relating to the litigation history of the case. (Gomez-Pound v. Pound, [2009] O.J. No. 4161 (O.C.J.); Boland v. Boland, 2012 ONCJ 239, [2012] O.J. No. 1830 (O.C.J.))

[20] The Court’s Final Order provided for the following:

• The Respondent must pay child support in the amount of $1,500.23 for two children based on an imputed income of $102,347 per annum and pay the mid-range of spousal support of $266 per month;
• The Court refused to impute income to the Applicant;
• The Respondent was order to pay $15,000 in retroactive spousal and child support;
• On an ongoing basis, the parties will share the s. 7 special and extraordinary expenses in proportion to their respective incomes, i.e. the Respondent’s proportionate share will be 75% and the Applicant’s share will be 25%;
• The Respondent was not required to obtain a life insurance policy as security for support payments but his obligation would be a first charge on his estate;
• The Respondent was not required to obtain a health plan for the Applicant and children.

[21] The Applicant’s offer to settle dated November 15, 2018 provided for the following:

• Imputed income of $125,000 to the Respondent;
• Child support payable in the amount of $1777 per month retroactive to September 1, 2015 (date of separation) with credit to the Respondent for payments since separation (with no amount given of arrears payable);
• Spousal support payable by the Respondent based on the Respondent’s income of $125,000 and the Applicant’s income of $34,746 per month retroactive to September 1, 2015 with credit to the Respondent for payments since separation (with no amount given of arrears payable);
• Sharing of s. 7 expenses proportionate to above incomes; and
• The Respondent will secure life insurance with a face amount $200,000 as security for support payments and designating the Applicant as irrevocable beneficiary.

[22] The Applicant’s offer to settle dated February 11, 2018:

• Commencing January 1, 2018, the Respondent would pay child support of $2197 per month;
• The retroactive child support in the amount of $39,940 owed by the Respondent to the Applicant;
• The retroactive spousal support in the amount of $32,616 owed by the Respondent to the Applicant;
• Lump sum spousal support payment payable by the Respondent in the amount of $174,581; or for the first 12 months following the transfer of the matrimonial home to the Applicant spousal support based on the Respondent’s annual income of $160,000 and Applicant’s annual income of $8312. For the next for 72 months, spousal support payable by the Respondent based on imputed annual income of $160,000 with the Applicant’s income of $25,000;
• The Respondent to pay 75% of s.7 expenses; and
• The Respondent will secure life insurance with a face amount $200,000 as security for support payments and designating the Applicant as irrevocable beneficiary.

[23] The Respondent’s offer to settle dated January 31, 2019 (after the first few days of trial and before the resumption of the trial), provided for the following:

• Respondent income imputed at $53,920 per annum;
• Applicant’s income imputed at $35,000 per annum;
• The Respondent would pay child support in the amount of $1300 per month commencing January 1, 2019;
• The Respondent would pay 60.6% of s. 7 expenses;
• The Respondent’s retirement shall be a material change of circumstances;
• There would be no arrears; and
• Support payments would be secured against the estate.

[24] The Respondent’s December 3, 2018 offer to settle provided for the following:

• The Respondent’s income would be imputed at $53,290 per annum from December 1, 2018 to November 30, 2019;
• The Applicant’s income would be imputed at $35,000 per annum;
• The Respondent would pay child support in the amount $822 per month commencing January 1, 2019;
• The Applicant would waive spousal support;
• The Respondent would pay 60.6% of s. 7 expenses;
• There would be a material change of circumstances would be his retirement on or after December 1, 2019;
• There would be no support arrears payable; and
• Support payments would be secured against the estate.

[25] The Respondent’s July 20, 2017 offer to settle provided for the following:

• Commencing September 1, 2017, the Respondent’s income would be imputed at $86,600 per annum;
• Commencing September 1, 2017, the Applicant’s income would be imputed at $25,000 per annum;
• Commencing September 1, 2017, the Respondent would pay child support in the amount of $879 per month;
• Commencing September 1, 2017, the Respondent would pay spousal support the amount of $600 per month;
• The Respondent would pay 70% of s. 7 expenses; and
• A material change of circumstances shall include the Respondent’s retirement after reaching the age of 65 or earlier if his medical condition does not permit him to work.

[26] The Court finds that the Respondent’s offers to settle were not at all near what the Court finally determined:

• The Respondent’s offer of July 20, 2017 was sent before the Applicant had obtained an income evaluation from Mr. Hilton and was not close to the final determination of income for that year 2017: i.e. the Respondent’s income was deemed to be $116,710.60 and the Court did not impute income to the Applicant for that year. In addition, retirement was not deemed a material change of circumstances but the Court found that it may be a material change of circumstances.
• The Respondent’s offer of December 3, 2018 provided that the Respondent’s annual income to be $53,920 and the Applicant’s annual income to be $35,000. It would be deemed a material change of circumstances when he retired. For 2018, the Court found the Respondent’s income to be $86,641.50 and the Applicant’s income to be $17,587.
• The January 31, 2019 offer of the Respondent that was sent during the trial offered child support of $3100 per month with the Respondent’s retirement being an automatic material change of circumstances. The Respondent’s income was deemed to be $53,920 and Applicant’s income was $35,000. Spousal support was to be waived.

[27] None of the Respondent’s offers to settle offered retroactive support. The Court ordered $15,000 in retroactive support.

[28] In contrast, on the major issues, the Applicant was more successful.

[29] The Applicant was successful in imputing income to the Respondent even if it was not to the extent of her offers and position at trial. She incurred expenses to retain an expert to put forward evidence in that regard. She was successful in obtaining retroactive support even though not to the extent offered and ongoing spousal support. Also of significance a variation could occur upon a material change of circumstances which could include a retirement.

[30] Therefore, the Applicant is entitled to some costs as she was required to proceed to a trial to obtain a result although not as favourable as her offers but significantly better than the offers to settle presented by the Respondent.

What amount of costs should be awarded?

[31] In determining the quantum of costs, the Court will consider the factors set out in Rule 24(12) of the FLRs.

(a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues:

[32] The issues were complex as the case deal with experts and income determination reports, multiple years, accounting issues and complex calculations for income determination.

[33] The determination of retroactive support involved the income determination of the Respondent, the Applicant and the Respondent’s corporation. Evidence was tendered to determine these issues and credibility findings were made.

[34] These issues were important as it dealt with the Respondent’s past, present and future financial responsibilities to the Applicant and two children.

i) each party’s behaviour,

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

(5) 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.

[36] Both parties are to be commended that they resolved the issues of parenting and property issues. They were able to save time and expense of a trial.

[37] Both parties’ positions on the issues of support were polarized. The Applicant’s position was that the Respondent’s income should be imputed at $160,000 per annum and he should pay retroactive support in the amount of $39,940 plus require a lump sum support of $174,581 was a real stretch. The Applicant insisted that the Respondent obtain a life insurance and health plan at his age regardless of the expense.

[38] On the other hand, the Respondent’s position was that his annual income from his roofing business had dropped drastically after separation to approximately $35,000 even though before separation, he, at times, was earning over $100,000. He denied receiving any cash income after the incorporation even when he had admitted it to his own expert. It was also not realistic that his retirement should automatically entitle him to a reduction of child support.

(ii) the time spent by the Applicant’s counsel

[39] The Court has considered the extensive work completed by the Respondent’s counsel for a six day trial including preparation and attendance at trial. The Court finds that the time spent is not unreasonable.

[40] The Court does not consider it appropriate for the legal assistant to charge $100 per hour for printing and binding of reply submissions which is a clerical duty rather than a legally required issue.

[41] The Court is not prepared to grant the amount of $1500 requested by the Applicant for an adjournment of the settlement conference scheduled for March 20, 2017. I will not consider the time spent in obtaining an adjournment of the settlement conference requested by the Applicant’s previous counsel as her retainer was short-lived, ultimately the trial coordinator communicated to the parties that the adjournment was granted and a Court attendance was not necessary.

(iii) any written offers to settle, including offers that do not meet the requirements of Rule 18,

[42] The Court has considered the offers to settle above and that no offer to settle included all terms more favourable than the Final Order.

(iv) any legal fees, including the number of lawyers and their rates,

[43] The Applicant’s counsel’s rate of $245 per hour for a year of 2015 call is reasonable.

(v) any expert witness fees, including the number of experts and their rates,

[44] The Applicant incurred considerable expense to arrange for an expert’s report regarding income determination of the Respondent for years 2014, 2015 and 2016.

[45] Although the Court’s focus was primarily on the post incorporation income, the Applicant’s expert’s analysis and report was of assistance in the determination of the Respondent’s income after incorporation.

[46] The Applicant’s expert, Mr. Hilton’s analysis and schedules attached to his report assisted the Court in determining post-incorporation income to the Respondent having considered the cash receipts received by the husband. The profit margin utilized by Mr. Hilton was accepted by the Court.

[47] In contrast, the Respondent’s expert, Mr. Desnoyers, did not prepare as a full and extensive report as Mr. Hilton, but rather relied on much of the Respondent’s representations to him. He was also retained to comment on Mr. Hilton’s report and opinion.

[48] The Respondent should bear some of the costs of the Mr. Hilton’s report which was $20,716.67 and the cost of his attendance which was required by the Respondent for cross-examination in the amount of $8259.55.

[49] The rate of the expert was $390 per hour which is an acceptable rate given Mr. Hilton’s expertise in this area.

(vi) any other expenses properly paid or payable;

[50] The Applicant’s disbursements included process server fees, courier fees, parking fees, and photocopying all of which are appropriate.

(b) any other relevant matter.

[51] The trial was originally schedule for three days and was resumed for a further three days. The testimony of two experts certainly increased the length of the time of the trial.

[52] However, the Court notes that the Applicant’s counsel did attempt to introduce taped conversations without proper notice and transcripts.

[53] Although the Applicant’s counsel cross-examined on bank statements and credit card bills that were relevant they did not factor prominently in the overall analysis of the husband’s income. However, his thorough examination of the Respondent and the son on the aspect of the business did assist the Court in making certain credibility findings as a result of contradictions in their evidence.

[54] The determination of costs must reflect proportionality to the issues argued. There should be a correlation between legal fees incurred and the importance and/or monetary value of the issues at trial.

[55] The award of costs should be proportional, fair and reasonable in all the circumstances.

[56] Given the above, the Court orders the Respondent to pay costs in $15,000 to the Applicant from the funds held on behalf of the Respondent in trust by Ron Boivin.

[57] If there are post-trial issues that cannot be resolved, the parties may arrange a 30 minute- hearing before me through the Trial Coordinator’s office.

Justice A. Doyle Date: July 17, 2019.