Echeverria v. Villatoro et al. , 2021 ONSC 7220

COURT FILE NO.: FS-19-13819

DATE: 20211101

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KAREN ELENA ECHEVERRIA VILLATORO

Applicant

– and –

BORIS VILLATORO

Respondent

• and –

MARIO ASCENCIO and MARTA GLORIA ASCENCIO

Sandra Lozano and Lester R. Cuellar, for the Applicant

Shelly Kalra, for the Respondent

Elena E. Mazinani, for the Co-Respondents

Co-Respondents

HEARD: In writing

COSTS ENDORSEMENT

P.J. Monahan J.

1In my Endorsements dated May 20, 2021 and August 27, 2021, I ordered the Respondent, Boris Villatoro (“Boris”) to pay the Applicant, Karen Echevarria (“Karen”) table child support of $2789 per month and spousal support of $2769 per month commencing September 1, 2021. I also ordered the sale of a jointly owned property located at 17 Teignmouth Avenue (the “Teignmouth Property”), with the proceeds of the sale to be held in trust pending further court order. Various ancillary forms of relief were also ordered.

2The co-Respondents, Mario and Marta Ascencio (respectively, “Mario” and “Marta”, and collectively “the Ascencios”), are Boris’s parents. They are parties to this proceeding due to the fact that Karen has asserted claims in relation to properties which they own, directly or indirectly. However, apart from an order that they attend questioning in June 2021, no relief was sought or ordered against the Ascencios on these particular motions.

3The parties were unable to resolve the issue of costs and accordingly have made costs submissions in writing. I note that the parties collectively spent a total of over $250,000 on what was primarily a motion for interim child and spousal support brought by Karen.

4Karen argues that she was the successful party on the motions and, further, that Boris acted in bad faith. She seeks recovery of her costs on a full indemnity basis, totaling $160,862 inclusive of HST and disbursements. She asks that these costs be apportioned between Boris and the Ascencios in such manner as is determined appropriate by the court.

5Boris argues that he was the more successful party on these motions and that Karen should be ordered to pay him partial indemnity costs in the amount of $41,419 (of his total costs incurred of $60,990.34.). In the alternative, Boris takes the position that success was divided and each party should bear their own costs.

6The Ascencios take the position that costs in respect of these motions should be reserved to the trial judge. Alternatively, in the event that costs are determined at this time, they argue that Karen is not entitled to any costs as against them. They have submitted a Bill Costs indicating that their total costs on these motions were $38,264.63.

Background

7The relevant background facts are set out in some detail in my August 27, 2021 Endorsement and will not be repeated here. By way of general summary, Karen and Boris were married in 1998 and separated in 2019. There are two children of the marriage, BOV, born October 13, 1999 and now 22 years old, and MJV, born July 9, 2014 and now seven years old.

8Karen and Boris agree that they lived a lavish lifestyle throughout their marriage, including international luxury travel, the purchase of designer clothes and luxury goods, and the acquisition of high-end automobiles. This lifestyle was largely funded by unreported cash income received from a tax-preparation business operated by the parties through Ascencio & Associates Inc. (“AAI”), a corporation owned by the Ascencios. (Although AAI’s business involved the preparation of tax returns, none of the parties reported any of the cash income received from AAI on their own personal tax returns.)

9Boris admitted that he used at least $100,000 annually out of the cash revenues of AAI to fund living expenses for himself, Karen and their children. Boris also acknowledges that he would routinely transfer money between AAI corporate accounts and his personal accounts as needed to fund expenses, credit card payments and lines of credit. Boris would freely use AAI credit cards as he saw fit to fund his and Karen’s personal expenses and use corporate funds to discharge these liabilities.

10Although the Ascencios initially denied that they were aware that Boris was using cash revenues from AAI to fund personal expenses, they later admitted that they were in fact aware that he was doing so. However, they maintained they were unaware of the amount of cash he was withdrawing from AAI for these purposes. At the same time, the Ascencios acknowledge that they themselves utilized approximately $50,000 annually from AAI’s cash revenues to fund their own living expenses without reporting same on their income tax returns.

11Following Boris and Karen’s separation in 2019,¹ Karen continued to reside at the matrimonial home on Goodwood Avenue with the two children, while Boris initially lived with his parents before moving into a property he owns on Manning Avenue. Although Boris continued to fund the carrying costs for the matrimonial home on Goodwood Avenue, until early 2021 he did not pay any child or spousal support.

12Boris continued to operate the AAI tax-preparation business after separation and appears to have continued to live a lifestyle comparable to that he enjoyed while he and Karen were living together. For example, Boris admitted that in the month of November 2019, he purchased a BMW X6 sports car for $156,549, as well as a Rolex watch for $18,800. In April 2020, Boris used AAI funds to pay off his personal credit card balance of $9,232 and transferred $20,425 from an AAI account into a personal bank account. He also admitted that in April 2021, he wrote cheques to himself from AAI totaling $23,000, characterizing such payments as rent payments from AAI for the use of the basement at his residence on Manning Avenue. Boris acknowledges that these rental payments were deliberately inflated so that he could use the funds to pay off his credit cards and other personal expenses.

13In late 2020, Karen indicated that she intended to bring a motion for child and spousal support. At a case conference before Nakonechny J. in February 2021, Boris agreed that, pending the return of Karen’s motion, he would make uncharacterized payments to Karen totaling $25,500, consisting of the following: (i) a lump-sum payment of $10,000 on February 10, 2021; (ii) a lump-sum payment of $5000 on February 24, 2021; and (iii) three payments of $3500 per month on March 15, April 15 and May 15, 2021.

Proceedings on These Motions

a. Hearing on May 20, 2021

14Karen’s support motion returnable on May 20, 2021 sought an order that Boris pay child support for the parties’ two children of $3157 per month and spousal support of $4348 per month, in both cases retroactive to June 17, 2019. This quantum of support was based on an imputed income to Boris of $240,000. Karen also sought the right to collect rental income from tenants occupying the Teignmouth Property and to assume responsibility for paying the associated expenses for the Property. Karen estimated that the net rental income after expenses from the Teignmouth Property (including income of $600-$700 per month from a coin laundry used by the tenants) was close to $5000 per month.

15In April 2021 Boris had pleaded guilty to charges that he had assaulted Karen in May 2017 and June 2019, and on May 20, 2021 he was serving a 90-day sentence under house arrest. He brought a cross-motion seeking to adjourn Karen’s support motion until after the completion of his house arrest. Alternatively, Boris claimed that his employment as President of AAI had been terminated (or that he had been “laid off”) on May 7, 2021, as a result of the Ascencios having recently discovered that Boris had been funding personal expenses using AAI funds. He therefore claimed that he had no income to pay child or spousal support; that his ongoing child support should be set at zero; that he had no obligation to pay spousal support; and that Karen’s claim for retroactive child and/or spousal support should be deferred until trial. Boris also sought an order that the Teignmouth Property be sold, that the proceeds of sale be held in trust pending further court order, and that Karen be required to assume responsibility for paying the carrying costs of the matrimonial home on Goodwood Avenue.

16The Ascencios took the position that Karen’s support motion should be adjourned to August 2021 in order to permit the parties to attend questioning in the week of June 14, 2021. Mario filed an affidavit in which he affirmed that he had only recently become aware of the fact that Boris and Karen had been “stealing from him for years”, using AAI funds to purchase properties and pay for their living expenses. He therefore argued that he needed a full day to question each of Boris and Karen about these matters. The Ascencios also sought leave to amend their pleadings so as to assert a trust claim over properties that had been purchased by Boris and Karen using funds from AAI.

17In my May 20, 2021 Endorsement, I adjourned Karen’s support motion to August 11, 2021 in order to permit each of the parties to question the others, with such questioning to be concluded by June 30, 2021. Pending the return of the motion, I ordered Boris to continue making the uncharacterized payments of $3,500 per month to Karen that had been ordered on consent by Nakonechny J. at the February 2021 case conference, and I also required Boris to continue paying the ongoing costs associated with the parties’ matrimonial home at 51 Goodwood Avenue in Toronto. I further ordered the Teignmouth Property to be sold and set out a process governing the listing and sale of the Property.

b. Disputes over Questioning

18The parties were unable to agree as to how the Questioning that I ordered on May 20, 2021 should occur. Two separate appearances before me were required to resolve the issues in dispute.

19The first issue related to the order of questioning, as both Karen and the Ascencios wanted to be able to question the other parties first. After hearing submissions on this issue on June 15, 2021, I agreed with Karen that her counsel should question the other parties first.

20A second issue arose on June 21, 2021, when Karen’s counsel refused to allow Boris to attend their questioning of the Ascencios. I agreed with Boris and the Ascencios that all parties were entitled to attend questioning of the others.

21Although questioning by counsel for Karen and Boris, respectively, took place on June 23 and 25, 2021 without further incident, counsel for the Ascencios, Ms. Mazinani, cancelled the questioning that had been scheduled for June 28, 2021. Ms. Mazinani was of the view that Karen had not been cooperative during her questioning by Boris’ counsel on June 25, 2021 and that any questioning she might conduct of Karen would be futile.

c. Ascencios’ Request for Further Adjournment of Karen’s Support Motion

22Just days before argument on the motions was scheduled to proceed on August 11, 2021, Ms. Mazinani requested an urgent appearance to seek a further adjournment in order to permit her to conduct the questioning of Karen that she had cancelled on June 28. Karen opposed the adjournment request while Boris took no position, although he indicated his willingness to proceed with the motions on August 11.

23On August 9, 2021 I dismissed the Ascencios’ request for a further adjournment. I noted that if a deponent in a proceeding refuses to answer questions and the counsel posing the questions regards the refusals as unjustified, the appropriate course of action is to seek a ruling from the court on the issue. Rather than proceed in that manner, Ms. Mazinani unilaterally cancelled her questioning before the questioning had even commenced. Moreover, Ms. Mazinani had no explanation as to why Karen’s claimed lack of cooperation caused her to cancel her questioning of Boris. I ordered argument on the motions to proceed on August 11 as scheduled.

d. Hearing on August 11, 2021

24At the return of her motion on August 11, 2021, Karen had significantly increased the quantum of child and spousal support she was seeking, as compared to that she had requested in May. In light of a report she had received from an independent income valuator, Karen now estimated Boris’s income for 2019 to be $688,635 and his income since January 1, 2020 to be $487,783. On this basis, for the period June to December 2019 Karen was seeking table child support of $8541 per month and spousal support of $14,909, while from January 2020 onward she was seeking table child support of $6130 per month and spousal support of $9,788 per month. Karen’s claim for retroactive child and spousal support from June 2019 to August 2021 was approximately $447,000. She sought payment of that sum forthwith or, alternatively, that it be paid from Boris’s share of the net proceeds from the sale of the Teignmouth Property.

25Boris advised that he had recently secured employment at an annual salary of approximately $33,000 per year. He was therefore willing to pay $288 per month in child support for the parties’ younger son, MJV. He remained unwilling to pay spousal support for Karen, and maintained that issues relating to retroactive child or spousal support should be deferred to trial. He also sought an order that Karen be responsible for paying all of the ongoing carrying costs of the matrimonial home on Goodwood Avenue.

26The Ascencios did not take a position on Karen’s support motion. However, it should be pointed out that in his questioning by Karen’s counsel in June 2021, Mario had admitted (contrary to his initial affidavit sworn on May 14, 2021) that he had in fact been aware of Boris’s use of AAI funds to purchase residential properties. However Mario maintained that he had not been aware of the fact that Boris had used AAI funds to pay for his and Karen’s living expenses. Then, at the hearing on August 11, 2021, Ms. Mazinani advised that the Ascencios were prepared to admit that they were in fact aware of Boris’s use of AAI funds to pay for personal expenses, but that they thought he was only using about $50,000 annually for this purpose rather than $100,000 or more.

27In my August 27, 2021 Endorsement, I found that there had been a complete and deliberate lack of transparency on the part of Boris and the Ascencios with respect to Boris’s alleged termination/ layoff from AAI. I therefore drew the adverse inference that, whether or not Boris had been working for AAI since May 7, 2021, he could return to his former position as President of the company at any time. I made the further finding that Boris was intentionally under-employed within the meaning of s. 19 (1) (a) of the Child Support Guidelines, and his income for interim support purposes should be imputed to be $209,355, which was the income he had been earning prior to May 7, 2021. I found that Karen’s income for interim support purposes to be $30,000.

28Given these income levels, on an interim without prejudice basis I ordered Boris to pay table child support for both of the parties’ children of $2789 per month commencing September 1, 2021. I also found that Karen has a prima facie entitlement to spousal support and ordered Boris to pay $2769 per month in interim spousal support commencing September 1, 2021. I ordered Karen to assume responsibility for the carrying costs of the residence on Goodwood Avenue, ordered the proceeds of sale of the Teignmouth Property to be held in trust pending further court order, and deferred the issue of retroactive child and spousal support until trial.

e. Further disputes over sale of Teignmouth Property

29Although my earlier Endorsements had set out a process governing the sale of the Teignmouth Property, the parties found themselves at odds on a number of issues that arose in the course of the sale process.

30The first such issue arose in late August over whether the parties should accept an offer that had been made to purchase the Teignmouth Property, with Boris wishing to accept the offer while Karen was opposed. By the time the parties appeared before me on an urgent basis on August 26, 2021 the offer had expired. I found that Karen should have accepted the offer and directed the parties to ascertain whether the prospective purchaser was willing to revive the offer.

31A further dispute arose in late September. By this time the parties had accepted an offer to purchase the property and the transaction was scheduled to close on September 29, 2021. However, in the course of undertaking due diligence, counsel for the purchaser had discovered that there were three open building permits with the City of Toronto on the property. The Purchaser was prepared to extend the closing date by 30 days in order to obtain further clarity regarding these open permits. Boris was prepared to extend the closing date as requested, but Karen was not.

32I found that it was in the joint interest of the parties to agree to an extension of the closing date, so as to permit proper due diligence to be undertaken regarding these open permits. I therefore agreed with Boris and ordered the parties to grant the purchaser an additional 30 days to close the transaction.

33A third dispute arose on October 14, 2021. Following an inspection by the City of Toronto, a work order has been placed on the property due to unauthorized renovations that had been undertaken in 2016. The purchaser was now unwilling to proceed with the transaction. The parties were at odds over how best to proceed, with Karen wishing to obtain a legal opinion as to whether the purchaser could be legally required to proceed with the sale on the basis of an “as is” clause in the contract. In contrast, Boris, on the advice of the real estate agent, wished to release the purchaser from the contract, determine the cost to resolve issues with the City, and re-list the property with a view to selling it “as is” (with full disclosure of the issues with the City.)

34I found that it would not be advisable to attempt to hold the purchaser to the contract on the basis of the “as is” clause. Regardless of the outcome of any such litigation (which could not be predicted with certainty at this stage), attempting to hold the purchaser to the contract would result in further litigation and delay any closing of the transaction. In the meantime, the parties would not have access to the proceeds of any sale. Given their financial circumstances, this would not be in either of their interests. I therefore agreed with the course of action proposed by Boris, in accordance with the advice of the real estate agent. Moreover, given that this was the third occasion on which Karen had sought an appearance regarding the sale of the Teignmouth Property and in each instance I had found in favour of Boris, I ordered her to pay costs of $1000 to Boris.

Principles Governing Costs Awards in Family Law Litigation

35It is well established that modern family cost rules are designed to foster four fundamental purposes: (i) to partially indemnify successful litigants; (ii) to encourage settlement; (iii) to discourage and sanction inappropriate behaviour by litigants; and (iv) to ensure that cases are dealt with justly.²

36Rule 24 creates a presumption of costs in favour of the successful party, while in cases where success is divided the court may apportion costs as appropriate.³ Although consideration of relative success is the starting point in determining costs, this presumption does not automatically require that the successful party be awarded his or her costs.⁴ Entitlement to costs is subject to a variety of factors, including each party’s behaviour, the time spent by each party, whether one or both parties have behaved unreasonably, whether there has been bad faith conduct, and the nature of any offers to settle made by either party.⁵

37While the Family Law Rules identify the relevant considerations, the key principles governing awards of costs in family law proceedings are proportionality and reasonableness. As Nordheimer J.A. stated in Beaver v. Hill,⁶ “[p]roportionality is a core principle that not only governs the conduct of proceedings generally, but is specifically applicable to fixing costs in family law matters.” This conclusion flows directly from the fundamental Boucher principle, applied by Ontario courts on innumerable occasions, that costs awards should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties.”⁷

38There is no presumption that a successful party in a family law matter should receive costs that “generally approach full recovery”.⁸ However, the Rules do provide for an entitlement to full recovery of costs in specific circumstances, such as bad faith under Rule 24 (8), or besting an offer to settle under Rule 18 (14). That said, “full recovery” of costs does not necessarily equate to the amount legal counsel has billed the successful client, since the quantum of costs must always meet the test of proportionality and reasonableness in light of the importance and complexity of the issues at stake in the litigation.

Analysis: Entitlement to Costs

a. Relative Success of the Parties

39As noted above, the starting point for an analysis of entitlement to costs is a consideration of the relative success of the parties. Unsurprisingly, both Karen and Boris maintain that they were each the more successful party on these motions and are therefore presumptively entitled to their costs pursuant to Rule 24 (1).

40In my view, however, success on these motions was divided. By far the most important issue on these motions was Karen’s request for child and spousal support. Karen obtained an order for ongoing child and spousal support that was significantly above what Boris was offering but much less than she had been seeking. I also deferred Karen’s claim for $447,000 in retroactive child and spousal support to trial. Although Boris was successful in his request for an order to sell the parties’ jointly owned Teignmouth Property, this was a subsidiary issue that received little attention in the course of the two appearances.

41As noted above, in cases where success is divided the court may apportion costs as appropriate. I turn to a consideration of the circumstances relevant to such apportionment in this case.

b. Offers to Settle

42Each of the parties made a variety of Offers to Settle. However the only Offer that would have settled Karen’s claims for interim child and spousal support was an Offer she made on November 26, 2020 (the “November 26, 2020 Offer”).

43In her November 26, 2020 Offer, Karen offered to settle her support motion on the following terms: (i) commencing December 1, 2020, Boris would pay monthly child support of $1777 per month for the parties’ two children and spousal support of $1570 per month; (ii) by November 27, 2020, Boris would make an uncharacterized payment of $30,000 which could be later credited to support arrears then owing; (iii) Karen would be entitled to collect all rent monies from tenants of the Teignmouth Property and pay the carrying costs for the Property; and (iv) Karen would assume responsibility for the carrying costs of the matrimonial home on Goodwood Avenue, provided that she would be entitled to collect rent monies from a tenant on the property.

44The November 26, 2020 Offer did not state whether the terms proposed were severable. This was obviously material, since Karen estimated that the net rental income from the Teignmouth Property was approximately $4900 per month, and the tenant at Goodwood was paying approximately $1350 per month. Thus, in addition to payment of ongoing child and spousal support of approximately $3350 per month, the November 26, 2020 Offer would have entitled Karen to net rental income of over $6000 per month.

45In her costs submissions, Karen claims that paragraph four of the Offer, which would have granted her the right to collect rental payments from the tenants at the Teignmouth Property, was severable from the other terms. Karen argues that this conclusion followed from the fact that no-where does the Offer state that the terms were not severable from each other. She therefore claims that the terms of the offer were severable and, on this basis, she obtained an order more favourable than her Offer. (I ordered Boris to commence paying a total of approximately $5550 in ongoing child and spousal support, whereas under the terms of the November 26, 2020 Offer he would have paid a total of $3350 in ongoing child and spousal support.)

46I do not accept Karen’s reading of her November 26, 2020 Offer. The Offer was silent on the issue of severability. The logical inference, therefore, was that the terms of the Offer were not severable from each other. In fact, this latter interpretation was confirmed by Karen’s counsel in an email exchange with Boris’s counsel in early May 2021 in which the parties were discussed a proposed adjournment of the May 20, 2021 motions. Boris’s counsel offered to commence paying the ongoing child and spousal support sought in the November 26, 2020 Offer if Karen would agree to adjourn her motion to November 2021. Karen’s counsel responded by advising that the November 26, 2020 Offer had been a “holistic offer” and that the elements of the Offer were not severable.

47I therefore find that the terms of the November 26, 2020 Offer were not severable, and that Karen did not obtain an order that was as favourable as that Offer.

48In May of 2021, the parties were discussing Boris’s request for an adjournment of Karen’s support motion. They exchanged a variety of proposals dealing with the terms upon which any such adjournment would be granted. On May 3, 2021, Karen’s counsel proposed that she would adjourn her motion to the fall of 2021in return for an uncharacterized payment by Boris of $4000 per month commencing June 15, 2021, while on May 4, 2021 Boris’s counsel proposed that he pay $3500 per month if the motion were adjourned. However, neither of these proposals was set out in a formal Rule 18 Offer.

49Subsequently, on May 11, 2021, Karen served a Rule 18 Offer proposing to adjourn her support motion to November 2021 if Boris would pay interim without prejudice uncharacterized support in the amount of $6000 per month commencing June 15, 2021. In response, on May 12, 2021, Boris served a Rule 18 offer seeking to adjourn Karen’s support motion to August 2021, and in the interim he would pay $459 per month in table child support, continue to pay all the carrying costs for the Goodwood Avenue property, but pay nothing in spousal support.

50There are two points of significance to note regarding these respective Offers. First, the Offers merely dealt with the terms of a proposed adjournment and would not have resolved the substantive issues raised in Karen’s motion for interim child and spousal support. Yet even on the narrow issue of an adjournment, the parties remained far apart in their respective proposals. Second, neither party obtained a result even remotely as favourable as the terms of their Offer. I therefore attach no particular significance to these Offers regarding the terms for an adjournment.

51The parties also exchanged Offers dealing with the terms upon which the Teignmouth Property would be sold. In these Offers, both parties were agreeable to the sale of the Property. The main difference between them was that Boris wanted all of the proceeds of the sale to be held in trust whereas Karen wanted an immediate distribution to her of $250,000 from the net proceeds. Although Boris obtained an order that was largely identical to the terms of his Offer, the issue of whether to retain the proceeds in trust or to distribute some amount to the parties was a narrow and subsidiary issue that was only touched on briefly in the course of the August 11, 2021 hearing. I do not consider the Offers on this narrow issue to be a material factor in determining entitlement to costs.

52In the result, I attach little significance to the Offers to Settle in determining entitlement to costs in this matter.

c. Behaviour of the parties

53As noted above, the behaviour of the parties is a relevant factor in determining entitlement to costs. In particular, if a party has behaved unreasonably and/or acted in such a manner as to frustrate the advancement of the primary objectives of the Rules as set out in Rule 2, this will be an important consideration in assessing whether costs should be ordered against that party.

54In my view, both Boris and the Ascencios have acted unreasonably in this litigation.

55Turning first to Boris, he has admitted that following the parties’ separation until at least May 2021, he continued to live the luxury lifestyle that he had enjoyed during the parties’ marriage. This included purchasing a BMW X6 sports car for $156,000, a Rolex watch for $18,800, and accessing tens of thousands of AAI revenues to fund his ongoing lavish spending. Yet while spending lavishly on himself, he made no provision for the ongoing welfare of Karen and the two children, apart from paying the carrying costs for the parties’ jointly owned property on Goodwood Avenue where Karen was residing.

56Boris did agree to commence making uncharacterized payments to Karen as of February 2021. But Boris only agreed to these payments as a sort of “stopgap” measure, until such time as Karen’s motion for child and spousal support was argued in May 2021. Then, at the argument of Karen’s motion on May 20, 2021, Boris took the position that the motion should be adjourned to August 2021 and, in the meantime, he should not pay any child or spousal support whatsoever because his income had then been reduced to zero (on account of his termination or layoff from AAI).

57Although I granted the request for an adjournment to permit questioning to occur, I ordered Boris to continue making the uncharacterized payments of $3500 per month that had been ordered on consent by Nakonechny J. in February 2021. Then, on the return of the motion in August 2021, Boris took the position that although he would pay child support of $288 per month for the parties’ younger son, he should not be ordered to pay any child support for their older son, nor should he be required to pay any spousal support for Karen.

58It would be one thing if Boris took these positions because, although he genuinely wished to financially support his spouse and children, he simply couldn’t afford to so following the separation. But that was not Boris’s situation. By his own admission, for at least 18 months after the parties’ separation he had continued to spend lavishly on himself while largely ignoring his legal obligations to his family. In short, Boris preferred his own interests and desires over the needs of his spouse and two children.

59All the while, his actual income for support purposes remained a mystery. Boris was withdrawing significant sums in cash from AAI to fund his ongoing lifestyle without disclosing the amounts in question to Karen or her counsel. Nor did he offer a credible, independent assessment of his income for support purposes. Instead, Boris left it to Karen to retain her own independent expert to try to sift through Boris’s voluminous bank account and credit card statements and, based on his spending patterns and lifestyle, come up with a reasonable estimate of his income.

60Ultimately, I accorded little weight to the estimate of Boris’s income provided by Karen’s expert. But Karen’s expert made a good faith attempt to calculate Boris’s income based on the materials he was given to work with. Moreover importantly, it was Boris’s responsibility, rather than Karen’s, to provide an estimate of his income for support purposes, a responsibility he ignored.

61Although Boris’s conduct does not rise to the level of bad faith, I do find that he has acted unreasonably and in a manner that ignores the duty of all parties in family law litigation to advance the primary objective of the Rules, which is to deal with cases justly.

62Turning to the conduct of the Ascencios, they have thus far played a less significant role in this litigation, and no relief was sought or ordered against them. But they too have behaved unreasonably, and their inconsistent and contradictory positions have needlessly complicated and delayed this matter.

63For example, at the hearing on May 20, 2021, the Ascencios took the position that they had only just recently discovered the misappropriation of funds by Boris and Karen. They therefore sought an adjournment in order to permit them to question Boris and Karen on these matters. But despite the fact that Boris was clearly the directing mind behind AAI, and had been the person primarily responsible for controlling AAI funds for many years, the Ascencios seemed to have little interest in questioning him about the alleged misappropriation of funds. Rather, the focus of the Ascencios’ attention was on Karen’s attempt to set up a competing tax-preparation business following her separation from Boris, a matter that was largely irrelevant to her claim for spousal and child support from Boris.

64Then, after obtaining an adjournment in order to permit questioning to take place, counsel for the Ascencios unilaterally cancelled the questioning of both Boris and Karen that was to have taken take place in late June 2021. The ostensible reason for the cancellation was that Karen had unreasonably refused to answer questions from Boris’s counsel. But no explanation was provided as to why the Ascencios no longer wanted to question Boris, who had supposedly been deceiving them for years with respect to his personal use of AAI funds. In any event, for reasons explained earlier if Karen had unreasonably refused to answer questions from Boris’s counsel, it was up to Boris and not the Ascencios to take the matter up with the court.

65The Ascencios’ unilateral cancellation of the questioning that had been ordered at their request was inappropriate and unreasonable. Yet counsel for the Ascencios then sought to rely on this unreasonable behaviour as the basis for seeking a further adjournment of Karen’s support motion. This further request was itself unreasonable and would have unnecessarily added costs and further delayed the proceeding for no discernible benefit.

66Apart from these concerns over questioning, the Ascencios offered inconsistent and contradictory explanations for the supposed termination of Boris’s employment with AAI in May 2021. In his May 14, 2021 affidavit, Mario claimed that he had only recently discovered that Boris had been misappropriating funds from AAI and that this was the reason why he had terminated Boris’s employment. Yet as they later admitted, both Mario and Marta were well aware for years of the fact that Boris was treating AAI funds as if they were his own. Moreover, Mario later attempted to describe Boris’s employment with AAI as a ‘layoff’ rather than a termination. On the basis of these shifting and implausible explanations, I drew the adverse inference that, whether or not Boris had been working for AAI since May 7, 2021, he could return to his former position of the company at any time.

67I find that the lack of transparency on the part of the Ascencios, complicated by their shifting and inconsistent positions on Boris’s role at AAI, has needlessly complicated this proceeding, resulting in increased costs and delay to the other parties.

68I should also point out that Karen has at times acted unreasonably in pursuing her claims in the litigation. For example, in August 2021, Karen was seeking orders that Boris pay a combined total of approximately $16,000 per month in child and spousal support, or nearly $200,000 per year. On top of that, she was seeking $447,000 in retroactive child and spousal support. These are well over double the amounts she had been seeking in May 2021. I appreciate Karen’s frustration at Boris’s lack of transparency regarding his income, and the unreasonableness of his refusal to provide ongoing child and spousal support following the parties’ separation. But on any reasonable assessment, the amounts she was seeking in August 2021 were obviously beyond Boris’s capacity to pay and were themselves manifestly unreasonable.

d. Conclusion on Entitlement to Costs

69Recognizing that none of the parties has behaved entirely reasonably, I find that the unreasonable behaviour of both Boris and the Ascencios has been far more consequential than any unreasonable actions taken by Karen. On balance, I find that their unreasonable behaviour is such that Karen is entitled to an award of costs against both Boris as well as the Ascenios.

70It remains to consider the quantum of costs award that would be appropriate in the circumstances.

Quantum of Costs

71As explained above, proportionality and reasonableness remain the core principles that are applicable to fixing costs in family law matters. Moreover, a costs award should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties.

72In light of these principles, the costs incurred by Karen’s counsel were in my view excessive and manifestly unreasonable. This was primarily a motion for interim child and spousal support. Although it took two days of oral argument, along with two days of questioning, the legal issues were relatively straightforward. Yet Karen’s counsel spent a total of 330 hours and incurred total costs, including HST and disbursements, of approximately $160,000.⁹ In contrast, Boris’s counsel spent a total of 134 hours and incurred total costs of approximately $60,000 for the same proceedings. In other words, the time spent and costs incurred by Karen’s counsel were approximately two and a half times those of Boris’s.

73I recognize that Karen’s counsel was required to spend a considerable amount of time reviewing the disclosure provided by Boris and assisting in the preparation of Karen’s affidavits. Yet on any reasonable assessment, her legal costs were manifestly excessive and out of all proportion to the issues in dispute or the outcome obtained.

74Having examined the respective Bills of Costs, I find that one of the main reasons for Karen’s excessive costs was that she employed two counsel from different firms at every step in the litigation, whereas Boris primarily employed one. Moreover, it is not apparent that there was any meaningful division of tasks or responsibility between Karen’s two counsel; rather, both counsel engaged in the same tasks and appeared on every court hearing. I see no justification for such duplication of effort.

75On this basis, I find that the costs incurred by Boris’s counsel, namely, $60,000, represents a much more reasonable reference point for determining the appropriate quantum of costs to be ordered against him in this matter.

76With that reference point in mind, and taking into account the fact that ultimate success on these motions was divided, I find that an award in respect of Karen’s counsel fees of approximately $30,000 against Boris would be reasonable in the circumstances. I also find that Boris should reimburse Karen for the $10,500 she spent on the McCabe income report, since it was Boris’s responsibility to provide an estimate of his income, not Karen’s. This results in a total cost award against Boris, inclusive of HST and disbursements, of $40,500. Karen may choose to set off against this award the $1,000 in costs I ordered her to pay Boris on October 14, 2021. In this event, the net costs payable from Boris to Karen would be $39,500.

77Turning to the Ascencios, for the reasons explained above I find that their behaviour was such as to justify a separate costs award against them. In particular, their request for an adjournment to permit questioning, their unilateral cancellation of the questioning, followed by an attempt to secure a second adjournment of Karen’s motion as a result of their unilateral cancellation of questioning, resulted in increased costs and delay. They also took inconsistent and contradictory positions in relation to Boris’s role at AAI.

78The Ascencios’ own costs were over $38,000, reflecting the significant and active role they played in the proceeding. On this basis, I find it appropriate to order the Ascencios to separately pay costs to Karen of $5,000 on an all-inclusive basis, over and above the costs awarded against Boris.

Disposition

79Order to go as follows:

a. Boris shall pay Karen costs of $40,500 on an all-inclusive basis, by January 3, 2022.

b. Karen may choose to set off against this award the $1,000 she was required to pay to Boris as a result of my October 14, 2021 endorsement. In that event, Boris shall pay a net amount of $39,500 in costs to Karen;

c. In the event that Boris fails to fully satisfy the costs awarded above by January 3, 2022, any outstanding costs shall be paid to Karen out of Boris’s share of the net proceeds from the sale of the Teignmouth Property, upon the closing of the sale of the Property; and

d. The Ascencios will separately pay Karen costs of $5,000 on an all-inclusive basis, by January 3, 2022.

P. J. Monahan J.

Footnotes

1. 1The parties disagree on the date of separation, with Karen claiming they separated on June 17, 2019, while Boris claims they did not separate until September 2019. Ultimately, I found that the date of separation was not material to the issues raised by these motions; this is an issue left for trial.
2. 2Serra v. Serra, 2009 ONCA 395 at para. 8; Mattina v Mattina, 2018 ONCA 867 at para. 10.
3. 3See Rule 24 (1) & (6). See generally, Berta v. Berta, 2015 ONCA 918 at paragraph 94.
4. 4Mattina at paragraph 13.
5. 5Rule 18 (14) & (16); Rule 24.
6. 62018 ONCA 840 at paragraphs 12 and 19.
7. 7Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O. R. (3rd) 291 (Ont. C.A.) at paragraph 24.
8. 8Beaver v. Hill, at paragraph 13.
9. 9Her counsel incurred costs of approximately $55,000 for the May 20, 2021 appearance alone, over $50,000 to prepare for and conduct two days of questioning, and a further $36,000 arguing the motion on August 11, 2021. Karen also incurred a disbursement of approximately $10,500 to obtain the expert report on Boris’s income prepared by Patrick McCabe.