Horowitz v. Nightingale, 2015 ONSC 1863

NEWMARKET COURT FILE NO.: FC-14-45343-00

DATE: 20150323

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LESLIE LYNN HOROWITZ

Applicant

– and –

MURRAY HOWARD NIGHTINGALE

Respondent

Brahm Siegel, for the Applicant

Lorne H. Wolfson, for the Respondent

HEARD: by written submissions

REASONS FOR DECISION RE COSTS

DOUGLAS J.

[1] On January 9, 2015 I released my Reasons for Decision on the motion by the Applicant for temporary child and spousal support. This is my decision on costs resulting from that motion.

[2] Both parties claim costs. Both argue substantial success. Therefore an analysis of the components of my ruling and the parties’ respective positions on those components is necessary.

[3] Also to be considered is the status of support payments at the time the motion was brought. At that time there was no order or agreement in place regarding support or responsibility for any of the parties’ liabilities. The Applicant deposed that the Respondent moved out of the home in July 2013 and thereafter irregularly deposited inconsistent amounts into the parties’ joint account for her use. Her evidence described a high net deposit of $25,615 in August 2013 to a low of $5,000 in October 2014 that was further eroded by the overdraft status of the account at that time. The majority of the payments from October 2013 to June 2014 were approximately $13,800 according to her evidence. The Respondent set out his payments in detail in paragraph 31 of his affidavit sworn November 19, 2014. The total of payments from July 2013 to September 2014 was $245,811.05 for a monthly average of $16,387. The payments were as high as $30,700 (August 2013) and as low as $2975 (August 2014, including tuition contribution).

[4] Thus, while the Respondent was clearly making significant payments virtually from the outset of separation, and the average was not unreasonable given the content of my order, there were occasional but dramatic fluctuations in the quantum being deposited in the parties’ account. This understandably gave rise to the Applicant’s anxiety regarding her ability to meet her financial obligations. It was therefore reasonable for the Applicant to pursue a clear definition of the parties’ rights and obligations in this regard.

[5] One of the issues before me was whether increases in value of the Respondent’s investments should be included in his income for support purposes. I concluded that they should not for the purposes of the motion. The Respondent was successful on this issue.

[6] Another issue was whether income should be imputed to the Respondent based on income from the Nightingale Family Trust. I concluded that the evidence was inconclusive on the issue as a result of which I did not include any income from this component. Again, the Respondent was successful.

[7] Another issue was whether the Respondent’s income from RRSPs should be included in his income for support purposes. The Applicant argued it should and the Respondent that it should not. I found that approximately $94,000 ought to be included in the Respondent’s income from this income source, representing an average of his RRSP withdrawals in the years 2011, 2012 and 2013. This was considerably less than sought by the Applicant but more than submitted by the Respondent. Therefore the parties enjoyed divided success on this issue.

[8] Regarding whether income ought to be imputed to the Respondent based on gifts received from his parents the Applicant was successful in having an additional $50,000 per annum imputed to him.

[9] Regarding whether income should be imputed to the Applicant, the Applicant’s position was that $5,000 ought to be imputed to her and the Respondent’s position was that $20,000 ought to be imputed to her. I found that $15,000 ought to be imputed to her. The Respondent was marginally more successful, but my finding on this issue had minimal influence on the result.

[10] Pursuant to Rule 24 of the Family Law Rules there is a presumption that a successful party is entitled to the costs of a motion. In determining costs the court is required to consider:

(a) the importance, complexity or difficulty of the issues;

(b) the reasonableness or unreasonableness of each party’s behaviour in the case;

(c) the lawyers’ rates;

(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument and preparation and signature of the order;

(e) expenses properly paid or payable; and

(f) any other relevant matter.

[11] Further, in deciding whether a party has behaved reasonably or unreasonably, the court shall examine:

(a) the parties’ behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;

(b) the reasonableness of any offer the party made; and

(c) any offer the party withdrew or failed to accept.

[12] If a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately (see rule 24(8)).

[13] The issues before me were of considerable importance to the parties but of moderate complexity.

[14] Regarding reasonableness or unreasonableness of each party’s behaviour in the case, the Applicant submitted extensive materials in support of her position that the Respondent had set up road blocks to resolution through his failure to provide timely and complete disclosure. She further submits that he “sought to inflict financial harm in numerous ways”; one example being his allegation in his Answer that $75,000 ought to be imputed to her by way of income and his claim for an order that she secure a professional business evaluation. She further submitted that the Respondent acted in bad faith by intentionally deceiving and misleading the court by signing untruthful affidavits. As indicated in my reasons on the substantive issues on this motion, I cannot make findings of credibility on the strength of affidavits where they contradict one another. The Applicant’s submissions would require that I do so. Also, I reject the Applicant’s submission that advancing an allegation in a pleading amounts to seeking to inflict financial harm. If I am incorrect, that is a component of costs that can be addressed at trial and not on this motion. The issues before me on the motion did not include disclosure. I am not inclined to come to any conclusions on the status of disclosure beyond what I have already indicated in my reasons on the motion to the effect that disclosure remains incomplete.

[15] The parties have exchanged offers. On the issue of child support, the Applicant offered $9,000, the Respondent $4,000 and I ordered $6,255 per month. On the issue of spousal support, the Applicant offered $12,000, the Respondent offered $2,000 and I ordered $6,696 per month. My order on the issue of mortgage and real property tax payments was above both parties’ offers. My order on the issue of private school and camp expenses was below both parties’ offers. Analyzed in the context of the parties’ respective offers to settle, my order was roughly equadistant from the parties’ respective settlement positions, although the Applicant came marginally closer in her proposed terms of settlement.

[16] In assessing reasonableness I also keep in mind the words of Wildman J. in Murphy v. Murphy, 2010 ONSC 6204, 2010 Carswell Ont. 8616 (SCJ) at para. 20:

Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the Rules use the term “full recovery costs”, there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost effective manner.

[17] The Applicant wife seeks costs of $77,256.33. I have reviewed the Bills of Costs as submitted by the Applicant wife in support of this claim. Some concerns are immediately apparent. For example, the claim for costs includes $37,089 in respect of the income analysis performed by Mr. Hames. This is an expense that is also relevant to issues to be addressed at trial. The costs of this report can be addressed later in that context if necessary. Also, the Applicant wife’s claim includes at least 13 hours of effort in respect of a case conference in September 2014 notwithstanding the requirement pursuant to rule 24(10) that the costs of each event be decided at each step of the case and there was no order of costs in respect of that case conference. Further, the Applicant wife’s claim for costs is supported in part by a Bill of Costs regarding the efforts of Mr. Syrtash dating back as far December 2013, well before this motion was contemplated.

[18] Therefore, I find the costs claimed by the Applicant wife to be excessive. They must be reduced to reflect the concerns noted above.

[19] The Respondent seeks costs of $10,000 and in support of that claim submits a Bill of Costs representing total fees and disbursements and HST of $48,915.10, excluding any expense associated with the income analysis relied upon by the Respondent (which was not claimed). The Respondent’s fees are calculated from September 19, 2014 to February 23, 2015 and represent a total of 97.2 hours of effort expended by lawyers and clerks. By comparison, the Applicant’s Bill of Costs is based upon approximately 57.9 hours of effort.

[20] The Applicant has submitted that the Respondent has conducted himself in bad faith. I agree with the Respondent’s submission that the threshold for finding of bad faith is extremely high. As Perkins J. noted:

Bad faith has been explained as "not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral ubiquity … it contemplates a state of mind affirmatively operating with furtive design or ill will”. (See C.S. v. M.S. (2007) 2007 20279 (ON SC), O.J. No. 2164 at para. 16)

[21] The Applicant’s submissions in this regard are dependent upon findings of fact that I cannot make on the conflicting affidavit evidence before me on the motion. Thus, her submission is rejected in this regard.

[22] This motion was argued over the span of approximately one hour. The time expended by both parties in relation to this motion has been extensive. In the case of the Respondent, he at least appears to appreciate the sentiment enunciated by Wildman J. outlined above. On the other hand, the Applicant’s expectations are advanced in apparent disregard to the same sentiment.

[23] Ultimately, costs are designed to indemnify successful litigants, encourage settlement and discourage and sanction inappropriate behaviour by litigants. The motion was reasonably necessary given the inconsistent payments by the Respondent before the motion was launched. The parties adopted more or less equally reasonable positions on settlement of the issues on which I made rulings. While the Respondent enjoyed marginally greater success on an issue by issue analysis of the components of my ruling on the motion, I am mindful that the income I have attributed to the Respondent is $187,044 more than the Respondent’s position of $216,000. At the same time, the Applicant’s position was $596,956 more than my finding.

[24] For all the foregoing reasons I find that the Applicant is entitled to costs fixed in the amount of $15,000 payable within 30 days, inclusive of HST and disbursements.

DOUGLAS J.

Released: March 23, 2015