Court File and Parties
COURT FILE NO.: FS-98-FP242436-0001 and 0002 DATE: July 15, 2021 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: James Ostapchuk, Applicant AND: Svitlana Benyk, Respondent
BEFORE: Kiteley J.
COUNSEL: David Frenkel, counsel for the Applicant Galyna Pribytkova, counsel for the Respondent
HEARD: in writing
ENDORSEMENT AS TO COSTS
1The Applicant brought a motion pursuant to Family Law Rule 25(19) to amend the order dated June 4, 2018. In the endorsement dated May 18, 2021 [2021 ONSC 3637], I accepted the evidence and the submissions of the Respondent that three amounts in the June 4^th^ order should be corrected and, otherwise, I dismissed the motion. I set a timetable for written submissions as to costs.
2In her written submissions dated May 27, 2021, the Respondent asked for substantial indemnity costs in the amount of $17,615.59 inclusive of HST. She relied on the presumption in Family Law Rule 24(1). In her evidence, she had conceded that there were three calculation errors in the June 4 order and had confirmed in her affidavit her willingness to have the Court amend the order accordingly. She observed that even though there was no formal offer to settle by either party, her admission in her evidence conceded the corrections which the court ordered. She pointed out that the Court found that the Applicant had not proved that fraud had been perpetrated by the Respondent and she provided authority for the proposition that the Court should award full indemnity costs where allegations of fraud were not proved. [Lewis v Cantertrot Investments Ltd. [2010] O.J. No. 4439] She noted that the parties were questioned on November 5, 2020 and that numerous affidavits were served after that date. She relied on the factors in rule 24(12) that the Court should consider in setting the amount of costs. She took the position that the Applicant had been unreasonable in his position with respect to his motion.
3In her bill of costs, the Respondent calculated full indemnity costs in the amount of $17,615.59 and partial indemnity costs in the amount of $11,761.06. The hourly rate for her counsel was $220 for a total of 47.10 hours.
4In his written submissions dated June 11, 2021, the Applicant asked that any costs should be reserved to the trial judge and in the alternative that the costs be fixed in the amount of $9,500.
5In support of his request to defer the costs, the Applicant takes the position that rule 57.03(1) of the Rules of Civil Procedure applies and, in the circumstances of this case, it would be more just to reserve costs to the trial judge. He noted that he is unemployed, his driver’s licence had been suspended by the Family Responsibility Office and he has no source of employment income to satisfy any order for costs. He pointed out that he is considering an appeal from the decision, particularly on the issue of support for the child Samantha. He took the position that the issue of arrears may be addressed in an appeal or at trial. In light of his inability to pay any costs award at this time and the incomplete determination of the arrears issue, he asserted that any significant award of costs would result in an unjust situation and it would be better if the trial judge would have the opportunity to review any appeal decision and/or all the evidence in their entirety. He pointed out that as a result of the conceded corrections to the order, the amount of $10,000 was deducted from the arrears, resulting in partial success for the Applicant.
6With reference to the case law on the cost consequences of failing to prove fraud, the Applicant asserted that the decision in Lewis v Cantertrot Investments Ltd. was distinguishable and not applicable for four reasons. The first was that it was a class action and not a family law matter. The second was that the plaintiffs had agreed to dismiss the case against the defendants after a summary judgment motion was brought whereas in this case, the matter had proceeded by way of a motion, there had not been any cross-examination and the claim of fraud was brought with adequate justification and in good faith. Third, in Lewis, the matter started five years earlier when the class action was certified in 2005, examinations for discovery were completed and the action had been set down for a trial date. Whereas in this case, a trial date has not been set down and the case was first commenced less than one year prior to the date of the motion. The fourth was that it was reasonable for the Applicant to maintain a claim of fraud until sufficient evidence was brought forth to the contrary. He asserted that there was sufficient basis for the Applicant to suspect fraud due to the income information of the Respondent that was not fully disclosed. He noted that while the Court had not found that fraud had been proved, the Court had not concluded that the claim of fraud was unreasonable or untenable for lack of proof.
7The Applicant also submitted that his Motion to Change Final Order had not been concluded and therefore the costs should be reserved to the trial judge. He also noted that the issue of disclosure had not been fully concluded as it relates to the Respondent’s income and her knowledge as it related to the living conditions of the child Samantha and this effect on the Applicant’s overpayment of child support for nearly 8 years.
8The Applicant provided a costs outline that attached invoices from the Applicant’s previous lawyer that reflected total legal fees including HST plus disbursements in the amount of $19,567.64. He asserted that partial indemnity costs were in the amount of $12,914.64. The hourly rates of his counsel were $450 and $325 and the hours of service totalled 32.
ANALYSIS
9Rules 24 of the Family Law Rules provides that a successful party is presumed to be entitled to the costs of this motion. Rules 24(10) provides that promptly after dealing with a step in a case, the court shall, in a summary manner, determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or expressly reserve the decision on costs for determination at a later stage.
10In asking for deferral to the trial judge, the Applicant relies on rule 57.03(1) of the Rules of Civil Procedure as the basis upon which the Court should find that deferral would be “more just”. Assuming, without deciding that rule 57.03(1) applies, I am not persuaded that deferral would be more just for these reasons.
11First, this was a motion launched by the Applicant for an order pursuant to rule 25(19) of the Family Law Rules. The Applicant was not successful and the motion was dismissed. There will not be a trial of the issues raised in that motion. As indicated in paragraph 97 of the endorsement dated May 18, 2021, the only issue remaining is whether the Applicant pursues his Motion to Change Final Order.
12Second, I do not agree with the suggested bases to distinguish Lewis v. Cantertrot Investments Ltd. That was a decision in a civil case but those principles have also been applied in family law cases. I do not accept the Applicant’s submission that “it was reasonable for the Applicant to maintain a claim of fraud until sufficient evidence was brought forth to the contrary”. The burden is on the party who alleges fraud to prove fraud. The responding party is not required to provide “sufficient evidence” to the contrary unless the moving party has provided evidence that would warrant a finding of fraud. The Applicant failed to provide that evidence. He had the opportunity to question the Respondent on November 5, 2020. According to Family Law Rule 20 (2), the right to question a person includes the right to cross-examine. The opportunity to obtain evidence from the Respondent was on November 5, 2020. All that the Applicant accomplished was admissions as to three errors in calculation. As indicated in paragraph 29 of the May 18^th^ endorsement, subsequently, notwithstanding rule 20(8), the Applicant filed numerous affidavits in which his claim was asserted based on hearsay and speculation. As indicated in paragraphs 86 and 87 of the May 18^th^ endorsement, he did not have evidence to prove fraud yet he persisted. Under those circumstances, it is not “just” to defer the decision as to costs.
13Third, the submissions with respect to an appeal are inappropriate. If the Applicant does appeal the decision dated May 18, 2021, he will likely also appeal this decision as to costs.
14I am not persuaded that it is “more just” to defer the decision to the judge hearing the Motion to Change Final Order.
15For the same reasons as mentioned in paragraph 12, I am satisfied that the failure of the Applicant to prove fraud warrants an order that the Applicant pay full indemnity costs. It is the case that the Applicant achieved partial success in the corrections conceded by the Respondent. But she made those concessions shortly after the questioning on November 5, 2020. The Applicant refused to accept the concessions and instead filed many more affidavits as indicated in paragraph 17 of the endorsement dated May 18, 2021.
16In considering the amount of costs pursuant to rule 24(12), the following factors are relevant. The issues were important to both parties. The costs outline of the Respondent included 47.10 hours while the invoices on behalf of the Applicant totalled only 32 hours. However, the hourly rates were significantly different. The total of the fees and disbursements incurred by the Applicant was $19,567.64 and the total incurred by the Respondent was $17,615.59. In my view, it is within the reasonable expectation of the parties that the Respondent would incur similar legal expenses in instructing counsel to take steps to react to the serious allegation of fraud and, subject to a minor deduction, the full amount of costs she incurred is fair and reasonable. As indicated above, the Respondent readily conceded that there were three calculation errors in the signed order. He is entitled to have those errors recognized in costs. After her early concession, the Applicant could have agreed to those minor modifications but failed to do so. Given the modest legal expenses that would have been incurred as a result of the Respondent’s early concession, I discount the full indemnity costs by only $1000.00 which reflects roughly three hours of the services of the less senior lawyer.
17The Applicant also raises the issue of his ability to pay. He asserts that the Director, Family Responsibility Office has suspended his driver’s licence and he is unemployed. I have no evidence as to efforts to obtain employment. The invoices from his former lawyer indicate that he made several payments into her trust account, notwithstanding being unemployed. I am not satisfied that ability to pay is a factor in the decision as to costs on this motion.
Next Steps
18In paragraph 97 of the May 18^th^ endorsement, I pointed out that the only issue remaining is whether the Applicant pursues his Motion to Change Final Order. The material on the Motion to Change was not before me. However I did make some observations about the income of the Applicant that is critical to whether he will be successful on his Motion to Change Final Order.
19As indicated below, I will require that the Applicant arrange a settlement conference on the Motion to Change Final Order before attempting to set that Motion down for a hearing. Trial dates are not routinely provided for the hearing of a Motion to Change Final Order.
20Counsel are likely aware that since the Motion to Change Final Order was initiated in early 2020, the forms required pursuant to Family Law Rule 15 have changed. It will be necessary for the parties to recast their materials to reflect those changes.
ORDER TO GO AS FOLLOWS:
21By August 16, 2021, the Applicant shall pay to the Respondent full indemnity costs in the amount of $16,615.59 inclusive of HST.
22The Applicant shall do the following:
(a) ensure that, in accordance with the amendments to Rule 15, the Motion to Change Final Order, affidavit in support and up-to-date form 13 are served and filed;
(b) arrange a settlement conference with a judge before the hearing of the Motion to Change Final Order;
(c) serve an offer to settle the Motion to Change Final Order no less than 20 days before the date of the settlement conference.
23The Respondent shall do the following:
(a) ensure that, in accordance with the amendments to Rule 15, her response to Motion to Change Final Order and related documents are served and filed;
(b) attend the settlement conference;
(c) serve an offer to settle the Motion to Change Final Order no less than 20 days before the date of the settlement conference.
24This order takes effect immediately and without the order being signed and entered.
25This order bears interest at the rate provided in the Courts of Justice Act.
Kiteley J.
Date: July 15, 2021