CITATION: Woodruff v. Tishler, 2013 ONSC 3104

COURT FILE NO.: 07-FD-331948FIS

DATE: 20130529

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Andrea Woodruff, Applicant

AND:

Philip Tishler, Respondent

BEFORE: Justice B. L. Croll

COUNSEL: J. Moldaver, for the Applicant

S. Grant, for the Respondent

HEARD: April 22, 2013

ENDORSEMENT

Introduction

[1] The Applicant Andrea Woodruff and the Respondent Philip Tishler were married on November 18, 2000, and separated on April 20, 2007. They have one child, born October 27, 2002. The parties were married for six years and five months, but they spent approximately 21 months of their marriage living separate and apart. It is very troublesome that this marriage has spawned litigation lasting longer than their cohabitation.

[2] Ms. Woodruff brings a motion for the following relief:

• an order striking Mr. Tishler’s pleadings, on the basis that he is in breach of the support order made December 16, 2008;

• an order requiring Mr. Tishler to pay the sum of $100,000 to Ms. Woodruff on a without prejudice basis, the nature of the payment to be characterized at a later date;

• an order lifting the stay of the enforcement of the December 16, 2008 support order;

• a preservation order;

• an order setting the matter down for trial; and

• costs on a substantial indemnity basis.

In oral submissions, counsel for Ms. Woodruff indicated that he was not pursuing the relief that the pleadings be struck.

[3] Except for the setting of a trial date, Mr. Tishler opposes the motion sought by Ms. Woodruff. Mr. Tishler has brought a motion to vary the temporary child and spousal support obligations made under the December 2008 order, however, in oral submissions, counsel for Mr. Tishler took the position that the question of support should be left for trial and that the stay imposed on the December 2008 order should remain in force. Mr. Tishler seeks costs of this motion and earlier motions, and also seeks to question Ms. Woodruff’s business partner, John Dixon, regarding Ms. Woodruff’s share in a joint business venture with Mr. Dixon and the sale of property held jointly by Ms. Woodruff and Mr. Dixon. Ms. Woodruff does not oppose the questioning. Mr. Dixon was served with the notice of motion but did not appear.

Litigation History

[4] The parties separated on April 27, 2007 and entered into a consent order on December 16, 2008 that Mr. Tishler would pay to Ms. Woodruff, without prejudice, temporary child support of $2000 per month and temporary spousal support of $2000 per month.

[5] On March 9, 2009, the parties attended a settlement conference, at which time the court ordered, among other things, that Mr. Tishler was to produce an income report by April 15, 2009.

[6] In May 2009, Mr. Tishler reduced his support payments from $4000 to $2000 per month. It is his position that he did so because his business of buying, renovating and selling upscale properties suffered during the recession at that time.

[7] In May 2011, Ms. Woodruff retained current counsel, who began the process of obtaining better and updated disclosure than that which had been provided to date. It is Ms. Woodruff’s position that Mr. Tishler has gone to great lengths to conceal his assets, his work and virtually all details about his financial circumstances.

[8] Given her position that Mr. Tishler had failed to comply with disclosure, Ms. Woodruff brought a motion to strike Mr. Tishler’s pleadings and for other relief in November 2011. This November motion was adjourned to allow Mr. Tishler to prepare disclosure. Mr. Tishler submits that because he and Ms. Woodruff were attempting reconciliation during the period from October 2009 to April 2010, his disclosure obligation had been put on the back burner.

[9] When the motion returned on February 16, 2012, Ms. Woodruff claimed that Mr. Tishler owed $68,000 in arrears under the December 2008 support order. The parties entered into a consent order on February 16, 2012 whereby they agreed that Ms. Woodruff would receive $68,000, on a without prejudice basis, from joint funds being held in trust from the sale of the former matrimonial home. The consent order also required that Mr. Tishler provide disclosure within 30 days and to provide his income report, originally ordered in March 2009, within 45 days. The costs of this February motion were reserved to the judge hearing the motion, if returned, or to the trial judge.

[10] While Mr. Tishler did provide some disclosure within this time frame, it was not satisfactory to Ms. Woodruff or in accordance with the terms of the February consent order. Accordingly, Ms. Woodruff brought back her motion on April 12, 2012. At that time, Mr. Tishler brought a cross-motion to vary his support obligations.

[11] On April 19, 2012, Ms. Woodruff’s motion was heard. Mr. Tishler was ordered to complete the disclosure (which was required by the February consent order) within 30 days, failing which Ms. Woodruff could proceed with her motion to strike. The court adjourned Mr. Tishler’s motion to vary, as well as the other issues raised in Ms. Woodruff’s motion, namely interim disbursements, child support, spousal support, remedies for alleged breaches and costs. The costs of this April motion were awarded to Ms. Woodruff in the amount of $14,000, with $7000 payable within 30 days and the remaining $7000 payable to Ms. Woodruff in the case.

[12] In July 2012, there was a further motion to address camp and school fees. This motion was settled by a without prejudice agreement that the fees would be paid from the proceeds of the matrimonial home being held in trust. The costs of this motion were reserved to be heard by the motions judge or trial judge.

[13] In November 2012, Ms. Woodruff issued and filed the December 2008 temporary support order for enforcement with the Family Responsibly Office (F.R.O.). This was the first time that Ms. Woodruff filed the order with the F.R.O.

[14] On December 6, 2012, both parties sought directions from the court. The court ordered that the December 16, 2008 temporary support order, which Ms. Woodruff had filed for enforcement with the F.R.O., be stayed pending this long motion, which was scheduled at that time. The costs of this December motion were reserved to the judge hearing the long motion.

Without prejudice payment of $100,000

[15] Ms. Woodruff seeks a sum of $100,000 on a without prejudice basis, the nature of the payment to be characterized at a later date, which she states is necessary to allow her to continue to participate in the litigation. During oral submissions, counsel for Ms. Woodruff advised that the amount sought was in fact $175,000, including both the $100,000 referred to in the notice of motion for this long motion as well as the $75,000 sought in the motion originally returnable on April 19, 2012.

[16] It is Ms. Woodruff’s position that she has had to spend enormous resources, including the hiring of a private investigator, in order to obtain and evaluate disclosure from Mr. Tishler. Mr. Tishler submits that Ms. Woodruff has not demonstrated her need for funds, but even if she has, any payment to be made to her should come from the remaining proceeds of the sale of the matrimonial home that are being held in trust.

[17] A brief review of the valuations of Mr. Tishler’s income suggests that without Ms. Woodruff’s perseverance and significant expenditures, Mr. Tishler’s income would have been limited to that listed in the first report prepared by Vivian Alterman of AP Valuations. This April 3, 2012 report calculated his income for the years in question as follows:

First Alterman Report

2007

$64,000

2008

$162,000

2009

$85,000

2010

$122,000

2011

N/A

[18] It was Ms. Woodruff’s position that this income report was not reliable because, among other things, it did not consider or properly account for cash income. Ms. Woodruff also expressed concern that unless Mr. Tishler had provided Ms. Alterman with information that he had not yet disclosed, such as the value of a number of his building contracts, the report could not be correct.

[19] Ms. Woodruff retained Mr. Ken Froese of Froese Forensic Partners to critique the Alterman report.

[20] In February 2013, while Mr. Froese was reviewing the first income report, Ms. Alterman provided a revised report. In this second report, Ms. Alterman indicated that she had amended her calculations to include estimated annual cash payments, including the resulting gross up. The second income report calculated income as follows:

First Alterman Report

Second Alterman Report

2007

$64,000

$81,000

2008

$162,000

$182,000

2009

$85,000

$103,000

2010

$122,000

$140,000

2011

N/A

$224,000

[21] Mr. Froese critiqued both the first and second Alterman reports and attributed a significantly higher income to Mr. Tishler in the relevant years. The Froese income figures are as follows:

First Alterman Report

Second Alterman Report

Froese Report

2007

$64,000

$81,000

$174,731

2008

$162,000

$182,000

$347,974

2009

$85,000

$103,000

$274,232

2010

$122,000

$140,000

$328,417

2011

N/A

$224,000

$489,033

[22] While at this time I make no comment on the accuracy of either the Alterman report or the Froese critique, it is apparent that Mr. Tishler’s income over the relevant years is higher than that originally determined in Ms. Alterman’s first report.

[23] Ms. Woodruff’s April 17, 2012 affidavit also details that of the 53 items sought to be disclosed by that time, 42 items remained outstanding. Although Mr. Tishler was required, pursuant to the February 2012 consent order, to provide evidence if there was a dispute as to whether he had disclosed a particular item, Ms. Woodruff’s April 2012 affidavit states that no such evidence was forthcoming by the April 17th motion. In this regard, Perkins J. noted as follows in his endorsement of April 17, 2012:

Much of RF’s response was an argument that the requested disclosure had been provided, or that in any event enough disclosure had been provided, or that the requested disclosure was excessive and disproportionate to the issues at stake. However, the sufficiency or proportionality of the disclosure sought is no longer open to argument. It was ordered on consent of the parties. It is not sufficient in this case to say just that it has already been provided – the consent of February 16 requires RF to provide evidence, if he claims he has provided it, that he did in fact do so. Such evidence could be a cover letter, a fax transmission, an email, etc. The consent also requires RF to make disclosure “to the best of his abilities.” It is thus not sufficient to say that he simply cannot remember all the cash transactions – he must do his best to refresh his memory. Nor is it sufficient to say a valuation is not worth doing, if there is an obligation to do a valuation. Valuations can be proportionate to the assets involved.

[24] Further challenges encountered by Ms. Woodruff include, for example, Mr. Tishler’s original production of only two of his project contracts, his lack of information regarding cash transactions for his projects, and the inconsistency between his Equifax report, which disclosed a credit card in Mr. Tishler’s name, and his financial statement, which did not list this credit card.

[25] Ms. Woodruff seeks interim disbursements of $100,000 to continue in the litigation. Mr. Tishler replies that she has not provided evidence of her need for entitlement to the funds. Ms. Woodruff has incurred fees and disbursements of $37,245.95 from Mr. Froese and anticipates that there will be an additional $10,000 to $20,000 of expenses payable to the Froese firm for reviewing the income report updated to 2012. For the motion returnable on February 16, 2012, Ms. Woodruff incurred legal fees and disbursements of $31,638.15, and for the motion returnable on December 6, 2012, she incurred legal fees and disbursements of $17,177.13.

[26] Ms. Woodruff worked during the marriage as a hostess, bartender, waitress, and part-owner of a bar in downtown Toronto. Her most recent financial statement indicates that her bank accounts, savings, securities and pensions currently total just over $5,000. She has not been working since the bar in which she had an interest was sold at a loss. While Mr. Tishler may suggest that the sale of the bar was strategic, I note that Ms. Woodruff had an arm’s length partner in this business, Mr. Dixon, and he too suffered on the sale price.

[27] Mr. Tishler’s most recent financial statement, in contrast, indicates that he is owed almost $100,000. He also has a 100% interest in his home which he values at $1,250,000, and which is subject to a mortgage of approximately $457,000. According to the second Alterman report, his 2011 income was $224,000 and the Froese report calculates his income as over $489,000.

[28] Ms. Woodruff seeks interim disbursements pursuant to rule 24(12) of the Family Law Rules, O. Reg. 114/99, which provides as follows: “The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.”

[29] The case law establishes that rule 24(12) should be invoked to “level the playing field” between the parties, as the court described in Stuart v. Stuart, 2001 CanLII 28261 (ON SC), [2001] O.J. No. 5172, (S.C.J.), at para. 8:

The court interprets the new Family Law Rules to require the exercise of the discretion in rule 24(12) on a less stringent basis than the cases that call for such only in exceptional cases. The discretion should be exercised to ensure all parties can equally provide or test disclosure, make or consider offers or go to trial. Simply described, the award should be made to level the playing field.

See also: Lo Giacco v. Papadopoulos, [2006] O.J. No. 4855 (S.C.J.).

[30] Given the need to “level the playing field” stemming from Mr. Tishler’s earlier reticence to provide the necessary disclosure, I am satisfied that there should be a without prejudice payment to Ms. Woodruff at this time, the nature of which can be characterized at a later date. It is Mr. Tishler’s obligation to ensure that his income and assets are disclosed in a timely and accurate manner. On the material before me, I am satisfied that without Ms. Woodruff's perseverance and significant expenditures, Mr. Tishler’s income would have been limited to what was set out in the first Alterman report. However, it is not simply the income adjustments that flowed from Ms. Woodruff’s tenacity. Through questioning and detailed review of Mr. Tishler’s financial statements, Ms. Woodruff has raised questions about assets (for example, the size of the mortgage on the former matrimonial home) and about expenses shown on Mr. Tishler’s financial statements, including an alleged $400,000 loan from a third party and a debt owing to Mr. Tishler from his former lawyer for whom he apparently did some construction work.

[31] Mr. Tishler submits that if there is to be any payment to Ms. Woodruff, it should come from the remaining proceeds of sale of the matrimonial home that are being held in trust, and that the proceeds should be divided equally between him and Ms. Woodruff. The net family property statements of both parties, however, indicate that there is an equalization payment owing to Ms. Woodruff. While I note that there do not appear to be any current net family property statements from either party in the rather voluminous material filed, Mr. Tishler’s net family property statement of October 2008 shows a payment owing to Ms. Woodruff of $291,722.44. His affidavit material acknowledges an equalization payment owing by him of approximately $230,000, much of which, he claims, has been satisfied. Mr. Tishler’s position is that his overpayment of support will be set off against any equalization payment owing, such that any amount he may still owe to Ms. Woodruff will be cancelled. Ms. Woodruff does not accept Mr. Tishler’s calculation of the equalization payment, and I note that her net family property statement of November 19, 2008 shows a payment owing to her of $470,005.36.

[32] It is clear that the quantum of any equalization payment is a live issue which must be left for trial. Counsel have advised that there is approximately $150,000 remaining in trust from the sale of the former matrimonial home. In my view, to the extent possible, those funds should be preserved until the equalization and support issues are determined.

[33] While the nature of the payment will be characterized later, the quantum of the disbursement to be ordered must be proportionate and rational.

[34] To support her request for an advance of funds, Ms. Woodruff points to the amount she has paid Mr. Froese, as well as to the costs she has already incurred for the February 2012 motion and December 2012 motion. Both parties seek costs of the December 2012 motion, and ultimately, it was Mr. Tishler who achieved success on that stay motion. The quantum of costs to be awarded for that motion will be discussed below.

[35] For the motion returnable on February 16, 2012, Ms. Woodruff incurred legal fees and disbursements of $31,638.15. As indicated, however, Ms. Woodruff was awarded costs of $14,000 for the April 19, 2012 motion where she achieved success on the disclosure motion. At that time, Ms. Woodruff had sought costs of $19,325 on a full recovery basis, arising from 35 hours of lawyers’ time and 31 hours of law clerk time. The preparation for the April 2012 motion would, by necessity, have involved some repetition and reiteration of the work that was required for the February motion, and those costs have already been awarded. I do not propose to award costs of the motion of February 16, 2012; those costs continue to be reserved to the trial judge. I also highlight that in awarding the costs of the April motion, Perkins J. noted that disclosure motions should not give rise to costs of this level of magnitude. I too share his concern.

[36] I am satisfied that it was necessary for Ms. Woodruff to aggressively pursue Mr. Tishler in order that he satisfy his disclosure obligations. However, in my view, some of that pursuit has already been recognized by the $14,000 April 2012 cost award. I also appreciate that Ms. Woodruff will have to expend additional funds to review the 2012 income statement. That said, proportionality cannot be ignored – the funds of both parties and the likelihood of success must also be factored into a discretionary order of this nature. In this regard, I note that while Mr. Tishler’s income is obviously relevant to an award of both spousal and child support, the threshold issue of Ms. Woodruff’s entitlement to spousal support will be vigorously contested at trial.

[37] When considering the quantum, the guiding principles are found in Rule 2 of the Family Law Rules. Pursuant to rule 2(2) of the Rules, “The primary objective of these rules is to enable the court to deal with cases justly”, and rule 2(3) goes on to define dealing with a case justly as, “(a) ensuring that the procedure is fair to all parties; (b) saving expense and time; (c) dealing with the case in ways that are appropriate to its importance and complexity; and (d) giving appropriate court resources to the case while taking account of the need to give resources to other cases.” As Perell J. stated, at para. 12 of Boyd v. Fields, [2006] O.J. No. 5762,

Full and frank disclosure is a fundamental tenet of the Family Law Rules. However, there is also an element of proportionality, common sense, and fairness built into these rules. A party’s understandable aspiration for the outmost disclosure is not the standard. Fairness and some degree of genuine relevance, which is the ability of the evidence to contribute to the fact finding process are factors. I also observe that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead or distract the trier of fact’s attention from the main issues and unduly occupy the trier of fact’s time and ultimately impair a fair trial.

[38] As stated by Rogers J. in Chernyakhovsky v. Chernyakhovsky, 2005 CanLII 6048 (ON SC), [2005] O.J. No. 944 (S.C.J.), at para. 8, the court must balance a number of competing interests to weigh fairness in the disclosure process, including the question of whether the costs of obtaining disclosure outweigh the value of the issue in the case. In the present case, Ms. Woodruff claims that Mr. Tishler’s income is higher than he has revealed, but this does not appear to be a case where millions of dollars are at stake or it is alleged that Mr. Tishler makes millions of dollars more than he claims per year. In keeping with the thrust of Rule 2, the quantum of the interim disbursements awarded to Ms. Woodruff must be proportionate to the issues in the case.

[39] Having considered the money Ms. Woodruff has spent to date, the issues for trial, and the financial positions of both parties, I order Mr. Tishler to pay the sum of $60,000 to Ms. Woodruff on a without prejudice basis within 60 days, with the nature of the payment to be characterized at a later date.

Costs of December 6, 2012 motion

[40] Both parties seek costs of the December 2012 motion. Given the frustration that Ms. Woodruff experienced in obtaining financial information from Mr. Tishler and the lens of mistrust through which she sought this information, I am satisfied that her opposition to the motion to stay enforcement was not unreasonable. Nonetheless, Mr. Tishler was successful in obtaining the stay. His counsel submits a bill of costs in an amount of $12,236.74 on a partial indemnity basis and $23,095.04 on a full recovery basis.

[41] I award costs of the December 6, 2012 motion in the amount of $8,000 to Mr. Tishler, to be paid at the conclusion of the trial.

The Stay Order

[42] The parties do not agree on the effect of the December 2012 stay. Ms. Woodruff argues that the order stayed enforcement, but did not change Mr. Tishler’s obligation to pay support. Mr. Tishler submits that the order suspended the original December 2008 support order as well as any enforcement of it. In my view, Ms. Woodruff’s position is the correct interpretation, especially given that the relief sought in Mr. Tishler’s notice of motion dated November 22, 2012 was for “an Order staying F.R.O. enforcement of the 2008 Order of Justice Paisley pending the Respondent’s motion to vary support or alternatively, specifying the quantum the Respondent has paid in support since the 2008 Order.”

[43] At the time of the original support order made in 2008, Ms. Woodruff’s income was determined to be $60,000. In February 2012, she acknowledged that with gross ups for cash tips, her income should be increased to $100,000. It is Mr. Tishler’s position that her income should be imputed at $116,650, both retroactively and prospectively. It appears that Ms. Woodruff always worked during the marriage. There are, as noted, various computations of Mr. Tishler’s income. Mr. Tishler submits that he has overpaid both spousal and child support. Ms. Woodruff’s position is the direct opposite. These issues will be dealt with at trial, which has been set for early January 2014.

[44] The stay of enforcement order imposed on December 6, 2012 shall remain in place. However, if the advance of $60,000 is not paid within 60 days, Ms. Woodruff may return her motion on 5 days’ notice to have the stay lifted.

Preservation Order

[45] Ms. Woodruff also seeks an order requiring Mr. Tishler to preserve his assets pending further order of the court. Mr. Tishler responds that there is no need for a preservation order because over $150,000 continues to be held in trust from the sale of the matrimonial home.

[46] A court has the jurisdiction, pursuant to s. 12 of the Family Law Act, R.S.O. 1990, c. F.3, to make an interim or final order restraining the depletion of a spouse’s property, if it considers it necessary for the protection of the other spouse’s interests. The purpose of this section is to ensure that there are sufficient assets available to satisfy any equalization payment that the court may determine is owing.

[47] Mr. Tishler now appears to have largely satisfied his disclosure obligations. I note Perkins J.’s comments in the July 5, 2012 costs order, in which he noted that, given Mr. Tishler’s explanation of his conduct, Perkins J. could not find any bad faith on the part of Mr. Tishler. As has been repeated throughout these reasons, spousal support, child support and equalization continue to be highly contested and some $150,000 remains in trust to satisfy the ultimate resolution of these issues. There is no evidence from which to conclude that Mr. Tishler is intentionally depleting his assets such that this order is necessary. In contrast, it is also the case that a preservation order has the potential to have a negative impact on Mr. Tishler’s personal and professional obligations.

[48] I am not persuaded that Mr. Tishler must be restrained from further encumbering his property.

Conclusion

[49] The following orders are made:

i. Mr. Tishler is ordered to pay the sum of $60,000 to Ms. Woodruff on a without prejudice basis within 60 days, the nature of the payment to be characterized at a later date.

ii. The stay order of December 6, 2012 shall remain in place. However, if the payment of $60,000 is not paid within 60 days of the release of this endorsement, Ms. Woodruff may again bring a motion on five days’ notice to have the stay lifted.

iii. Mr. Tishler’s motion to vary child and spousal support are adjourned until trial.

iv. Costs of the February 16, 2012 motion and the July 5, 2012 motion are reserved to the January 2014 trial judge.

v. Costs of the December 6, 2012 motion in the amount of $8,000 are payable by Ms. Woodruff to Mr. Tishler at the conclusion of the trial.

vi. Mr. Tishler is granted leave to question John Dixon regarding Ms. Woodruff’s share in a joint business venture with Mr. Dixon and the sale of the residential and business property held jointly by Ms. Woodruff and Mr. Dixon.

vii. There will be a trial in this matter, estimated duration two weeks, commencing January 13, 2014. The parties shall attend on Wednesday, January 8, 2014 at 10 a.m. for the standard final trial management conference before trial. The parties shall also mutually agree on a date, no later than July 19, 2013, for a trial management conference for the purpose of enabling the court to complete the “Trial Scheduling Endorsement” form that will set the specific timetable of remaining steps leading to trial.

[50] If the parties are unable to agree on costs of this long motion, this shall be addressed by way of written submissions. Ms. Woodruff has until June 12, 2013 to make submissions; Mr. Tishler has until June 26, 2013 to respond. Ms. Woodruff has a further period until July 3, 2013 to reply to Mr. Tishler’s submissions. Submissions shall be no more than three pages in length, excluding Bills of Costs and any offers to settle..

[51] In closing, I return to the April 19, 2012 endorsement of Perkins J. where he described the costs to that date as “horrifyingly high”. It is highly regrettable that Perkins J.’s admonition that counsel explore alternatives to the motion/cross-motion approach has been largely ignored. It is now more than one year later and the costs continue to skyrocket. This upward trajectory of costs will continue until trial unless the parties inject some perspective and reasonable compromise into their respective positions.

Croll J.

Date: May 29, 2013