Court File and Parties

COURT FILE NO.: FC-13-709-0 DATE: 2017/03/29 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

FARHAD DERAKHSHAN Applicant – and – SEEMA NARULA Respondent THE ATTORNEY GENERAL OF CANADA Non-Party

Counsel: Farhad Derakhshan, Self-Represented Ian Vallance, Denyse Boulet, for the Respondent Mathew Johnson, for the Non-Party

HEARD: By Written Submissions

Cost Decision: Motions re Summonses to Witness

L. SHEARD J.

[1] This cost award is in respect of the two motions brought by the Attorney General of Canada (“AGC”) to set aside two Summonses to Witness served by the applicant, Farhad Derakhshan (“Derakhshan”) intended for Lynn Atkinson and Sonia Dion. These motions were brought in the course of a trial between Derakhshan and the respondent, Seema Narula (“Narula”). For that reason, both the AGC and Narula were invited to submit written costs submissions. Those submissions have been received as well as Derakhshan’s reply submissions.

[2] In his written submissions, counsel for the AGC consolidated his Bill of Costs into one, which includes all time and disbursements for both motions. The AGC seeks substantial indemnity costs in the amount of $11,547.00 for both motions calculated at the rate of 90% of costs as per the consolidated Bill of Costs.

[3] Narula seeks her costs of the motions for time spent at the beginning of trial, when this matter was briefly discussed (0.5 of an hour) in the presence of the parties, counsel and counsel for the AGC, and for the trial time spent on the motion during which Narula’s counsel was present. Narula seeks her costs on a full indemnity basis in the amount of $1,472.00 + HST for a total of $1,663.36. This figure is based entirely upon the trial time spent by Narula’s counsel while these matters were being addressed and argued; Narula did not prepare materials except to express support for the position taken by the AGC and made no submissions.

[4] Derakhshan has filed separate costs submissions responding to the costs claimed by Narula and the AGC. With respect to the costs sought by Narula, on the AGC motions, Derakhshan suggests that the fair amount would be full indemnity costs for Denyse Boulet, the more junior of the two lawyers representing Narula for 2.3 hours, the total trial time consumed by the two AGC motions. By his submissions, I understand Derakhshan to agree that full indemnity costs of the AGC’s motions should be paid for one of Narula’s lawyers. Derakhshan disagrees that Narula should be awarded costs for both of her lawyers, although, except for Narula’s motion for security for costs, which will be dealt with in separate reasons, both Narula’s lawyers have been in attendance throughout the matrimonial trial.

[5] Derakhshan strongly opposes the amount sought by the AGC. In his written submissions, he argues that the 22 hours spent for reviewing and correspondence is exaggerated and that it should not have taken an experienced lawyer more than 1 hour to review his two Summonses to Witness and related emails. He also argues that the court appearances did not take more than 2 hours and 15 minutes as counsel for the AGC was late for the second motion, which he asserts took 2 hours. He asserts that no more than 15 minutes was spent on these issues on the first day of trial. Therefore, counsel for the AGC is entitled to at most 2 hours and 15 minutes of court time.

[6] Derakhshan argues that the time spent to prepare for the motions should not have taken more than 5 hours because these motions are routine and preparation of these motions must be routine for an experienced lawyer. He argues that, at most, preparation time should total 10 hours for an experienced lawyer who does these motions on a regular basis. Derakhshan argues that, multiplying AGC counsel’s full hourly rate of $195.88 by 10 hours would result in a fee of $1,958.88. I assume that the 2.25 hours for the court appearance should be added to Derakhshan’s calculations for a total of $2,399.53 plus disbursements ($195.88 x 12.25 hours).

[7] Derakhshan takes issue with the disbursements charged and argues that the photocopy and costs should be charged at $0.10 per page rather than $0.25 per page and that, therefore, $95.00 is in a more appropriate amount for photocopying. In all, his submissions (which appear wrong on his own arithmetic) are that the total amount of fees to be awarded to the AGC should not exceed $2,053.80.

[8] On the issue of disbursements, I find $0.25 to be the usual rate charged for photocopying and reasonable in the circumstances.

Analysis

[9] The Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 359 has provided guidelines to the courts in identifying the three fundamental purposes of the costs rules:

1. to indemnify successful litigants for the costs of litigation;
2. to encourage settlement; and
3. to discourage and sanction inappropriate behaviour by litigants

Factors

[10] Rule 2(2) of the Family Law Rules (O. Reg 114/99) (the “FLR”) provides the starting point for this cost decision. It states that: “the primary objective of these rules is to enable the court to deal with cases justly.”

[11] The case law is clear that a successful party is presumed to be entitled to costs (Berta v. Berta, 2015 ONCA 918). Rule 24 of the FLR lists the factors that the court shall consider in setting the amount of costs. Those factors include the reasonableness of the behaviour of each party; any offer to settle; any acts of bad faith by any party; the importance, complexity, or difficulty of the matter; the scale of costs; the hourly rates and time spent; and the reasonable expectations of the losing party.

Success

[12] The AGC was entirely successful on its motions.

[13] Despite that Narula filed no materials on the motions, she supported the motions brought by the AGC to strike the Summonses to Witness. Therefore, she might also be viewed as a successful party on the motion.

[14] As set out in both sets of reasons on the motions, released on March 1, 2017, Derakhshan sought to summons federal employees for an improper purpose and/or to seek evidence from a federal employee who had no relevant or any information that had any bearing on the issues at trial. Stated bluntly, there was neither an evidentiary basis nor a legal basis for either Summons to Witness. Neither should have been served.

[15] Well before the motions were brought, the AGC had made its position very clear to Derakhshan. He had been told that the summonses were either improper because an employee of the Canada Revenue Agency (“CRA”) may not disclose taxpayer information and/or that the persons named in the summonses could not give any relevant evidence.

[16] In view of my decisions on both those motions, it is reasonable for Narula to also seek her costs of having her counsel sit through the motions, which had to be brought at trial. Narula is therefore also entitled to her costs of these motions.

Complexity and Importance

[17] In its submissions, the AGC submits that these motions were of moderate complexity. The AGC prepared excellent materials. They included comprehensive affidavit material, which documented the exchange of numerous emails between Derakhshan, the AGC and the individuals and/or federal departments which were the subject of the Summonses to Witness. The AGC also prepared two facta, summarizing the evidence and providing a clear statement of the law and how the law applied to the facts of each motion.

[18] It must be noted, that with respect to the Summons to Witness served upon a representative of the CRA, counsel for the AGC provided not only the applicable extracts from the Income Tax Act of Canada, but also the applicable case law that had considered the specific sections. While some of the law on the motions overlapped, much of it did not. It would not be fair to conclude that the materials prepared by the AGC were boilerplate or “routine for an experienced lawyer” such as Matthew Johnson (“Johnson”), who acted for the AGC.

[19] In his costs submissions, Johnson addresses the time spent on the case and acknowledges that “the time spent on research was somewhat high. However, civil litigation counsel, acting for the AGC, have little cause to appear in Family Court, do not deal with tax litigation matters or the provisions of the Income Tax Act, and do not often need to bring motions to quash summonses. All of these issues required additional research, which was reasonable in the circumstances.” As a footnote to his submissions, Johnson states that the Department of Justice has a separate Tax Litigation Office, which would normally have brought a motion to quash a subpoena to a CRA official but, as the AGC was already bringing a motion to quash the other summons, it would not of been efficient to assign a second counsel to prepare and argue the Income Tax Act motion.

[20] It is somewhat ironic for Derakhshan to assert that these motions must be routine to experienced lawyers in the face of his refusal to accept that Johnson, a lawyer experienced in these matters, was correct when he told Derakhshan that neither Summons to Witness was proper.

[21] The narrow and technical issues that were clearly set out and explained in Johnson’s facta dealt with issues that are not routine to this court. But for his comprehensive and most helpful materials, the motions would have been much more complicated for all involved and would have taken much longer to argue. It was by reason of the thorough and well-drafted materials that were prepared by the AGC that the court was able to determine these technical issues.

Reasonableness or Unreasonableness of Each Parties Behaviour

[22] In its submissions, the AGC submits that Derakhshan’s behaviour was unreasonable. As set out in my reasons on these motions, I agree. Derakhshan had been told that the Summonses to Witness ought not to have been served (and in fact were improperly served if at all, and named the wrong witness) but Derakhshan refused to withdraw them.

[23] Narula also argues in her submissions that Derakhshan was unreasonable and acting in bad faith.

[24] Derakhshan denies he was acting in bad faith and blames his inexperience and lack of sophistication in litigation rather than his bad faith.

[25] While there is some truth to the assertion by Derakhshan that he is lacking in sophistication and skill in conducting litigation, despite those admissions, he disregarded the clear and impartial information provided to him through counsel for the AGC. He persevered in trying to enforce his Summonses to Witness even after he had been clearly told that the evidence he sought to obtain from the CRA could not only not be provided but to do so could lead to a possible criminal charge against any person at the CRA who released private taxpayer information.

[26] I conclude that, in the face of the information he had received from Johnson, Derakhshan was acting in bad faith when he refused to abandon the Summonses to Witness. I further conclude that Derakhshan acted unreasonably in refusing to abandon the summonses and that he did so, knowing that the AGC it would bring motions to set them aside and that those motions would incur legal fees not only for the AGC, but also for Narula, given that these motions were given in the course of the trial.

[27] In its costs submissions, the AGC also argues that Derakhshan acted improperly in the conduct of the hearing when he suggested that the AGC was deliberately obstructing his ability to obtain information necessary for his trial or that the investigation conducted with respect to Turtle Island Staffing had not been proper. I accept those submissions and agree with them.

Scale of Costs and Hourly Rates

[28] The hourly rate charged by counsel of the AGC is $195.88 per hour for counsel with seven years of experience. The AGC argues that this hourly rate is lower than would be charged by a lawyer in private practice. I agree. One need only look at the hourly rate of $245.00 charged by Denyse Boulet, called to the Bar in 2010, later than Johnson.

[29] With respect to the time spent, as stated above, it was the AGC whose materials provided the full evidentiary record of communications between Derakhshan and the parties who were affected by the Summonses to Witness and with counsel for the AGC. Derakhshan provided no sworn evidence and incomplete evidentiary record. More importantly, it was the materials prepared by the counsel for the AGC that set out the law and the relevant legislation which was needed for this motion.

[30] While I accepted the submissions of Johnson, I conclude that the combined time of 65.5 hours spent by the AGC on both of these motions is still somewhat high. However, I note that it includes all the time spent by AGC and not just to prepare for the motions. I also take into consideration that Johnson had to communicate with a number of people in different government departments. In other words, although he represents the AGC he had to inform himself of the background information with respect to two separate and unrelated government departments. Accordingly, I have determined that it is fair and reasonable to reduce the time spent by Johnson by 15.5 hours. That results in a total time spent for both motions of 50 hours, including court attendances.

Offers to Settle

[31] By letter dated November 25, 2016, Johnson wrote to Derakhshan and told him that the Summonses to Witness served on Ms. Dion should be withdrawn. In the materials before me on the motion, there were ample emails sent to Derakhshan advising him that his Summons to Witness of a representative of the CRA was improper. Accordingly, while there was no formal offer to settle, I take the correspondence to Derakhshan both by letter and in email into account in determining the scale of costs to be awarded against him.

Proportionality

[32] In determining the amount to be awarded in costs, the court must consider what is fair and reasonable and proportionate to the proceedings. In this instance, the AGC was not a party to the proceedings and ought not to have been subjected to any costs related to this family law matter. Furthermore, the issue of the compellability of the CRA and in particular, the information regarding a taxpayer’s private information, is a very important one. It is important both to the taxpayer, in this case, Narula, but it is even more important from a public policy perspective.

[33] In addition, it was also important to the person who was the recipient of the Summons to Witness: had she had complied with the Summons to Witness and disclosed taxpayer information; she could have been the subject of criminal sanction.

[34] I conclude that costs to the AGC be based on 50 hours of time is proportionate to the importance of the issues that were before this court.

Amount the unsuccessful party would reasonably expect to pay

[35] In his submissions, Derakhshan has stated the amount he thought he should be expected to pay. He finishes his submissions by saying that he is more than happy to pay whatever amount this court deems just “as this is a payment to the government and the justice system, and will definitely benefit other members of our society in different ways.” Those submissions ignore the fact that there is a real cost associated to the time spent by Johnson in responding to Derakhshan’s Summonses to Witness and in preparing and arguing the AGC motions. Costs awarded to the AGC should not, and cannot be considered as a form of charity, that might benefit other members of society. In fact, the costs that will be awarded by this court will fall short of what it actually cost the AGC for Derakhshan’s actions.

[36] With respect to Narula’s claim for costs, the arguments put forth by Derakhshan support a conclusion that he understands that he has to pay the full indemnity cost of at least one of Narula’s two lawyers, who are acting for her on the family trial. He also takes no issue with the hourly rate charged by either counsel but argues that he should only pay for the more junior counsel.

[37] The task of this court is to determine what amount is fair and reasonable for the unsuccessful party to pay in the circumstances of this case (see Delellis v. Delellis).

Disposition

[38] I have considered the submissions that were filed by the parties and the applicable case law and the provisions of the Family Law Rules. I determine that it is fair and reasonable for Derakhshan to pay the costs of the AGC calculated at an hourly rate of $176.29 multiplied by 50 hours for a total of $8,814.50* together with disbursements for photocopying in the amount of $237.50* for a total of $9,052.00. (*Derakhshan has saved the cost of HST which is not payable by the AGC.)

[39] With respect to the costs claimed by Narula, I accept the position taken by Derakhshan that it was only necessary for one of Narula’s counsel to attend on the motions and that costs for that portion of the motion should be based on full indemnity basis of $563.50 +HST for a total of $636.75. However, I do not agree with him that Narula should not be entitled to the costs of both counsel for the time spent on the first day of trial. For that reason, I also award costs to Narula based on the hourly rates charged of $395.00 for Mr. Vallance and $245.00 per hour for Ms. Boulet for a total of $361.60 ($320.00+HST) for a total costs awarded to Narula of $998.35.

[40] Costs of these motion shall be payable forthwith.

L. Sheard J.

DATE: March 29, 2017

COURT FILE NO.: FC-13-709-0 DATE: 2017/03/29 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: FARHAD DERAKHSHAN Applicant – and – SEEMA NARULA Respondent THE ATTORNEY GENERAL OF CANADA Non-Party Cost Decision: motions re summonses to witness SHEARD, J.

RELEASED: March 29, 2017