Court File and Parties

Citation: Bortnikov v. Rakitova, 2015 ONSC 3898 Court File No.: FS-11-368230 Date: 2015-06-17 Superior Court of Justice - Ontario

Re: Aleh Bortnikov, Applicant And: Marina Rakitova, Respondent

Before: Penny J.

Counsel: Aleh Bortnikov on his own behalf E. Shapiro for the Respondent

Heard: March 30, 31 and April 1, 2, 7, 8 and 10, 2015

Supplementary reasons for judgment and costs ENDORSEMENT

[1] In May 4, 2015 correspondence to the court, counsel for the respondent sought the opportunity to address certain issues arising out of my April 29, 2015 Judgment in advance of a formal judgment being issued. I directed that the issues be raised in written submissions with a timetable for responding submissions from the applicant. Both parties filed written submissions. Three issues were raised by the respondent:

(1) whether a certificate of pending litigation registered on title to the motel property by the applicant should be discharged;

(2) whether the lump sum spousal support ordered to be paid to the applicant should be a “tax neutral” amount; and

(3) how a $500 cost order made by Herman J. against the applicant on January 26, 2012 should be accounted for.

CPL

[2] In order to register a CPL, one must assert an interest in land. In this case, the applicant did assert a beneficial interest in the motel property in his original pleading. Prior to the trial, however, the applicant abandoned his in rem remedies and sought only an equalization payment under the Family Law Act.

[3] In my judgment, I found that the applicant is entitled to an equalization payment of $659,833.64 and dismissed any claim based on an alleged trust. In order to pay this amount, the respondent needs to refinance the motel property. She cannot do so with the CPL in place.

[4] The applicant takes the position that the CPL “secures” his equalization payment and argues that the CPL should remain. This misconceives the nature and purpose of a CPL. The applicant is not entitled to security for a money judgment. If he is not paid, he may take enforcement proceedings, including enforcement proceedings against real property, but he advanced no evidence to support any entitlement to a security interest in the motel property.

[5] Further, the respondent, to pay the applicant his equalization, needs to refinance the motel property, which she cannot do with the CPL on title.

[6] The basis for the CPL fell by the wayside when the applicant abandoned his resulting trust claim to an interest in the motel property. It certainly came to an end upon the issue of my judgment fixing his entitlement to a money judgment for his equalization. The CPL is neither necessary nor warranted at this stage. It follows from my disposition of the issues in this case that the CPL be discharged. It is so ordered.

Tax Treatment of Lump Sum

[7] The respondent asks that my Judgment be clarified (or perhaps varied) to provide that the lump sum of $44,412 on account of spousal support be made “tax neutral.”

[8] In effect, the respondent seeks to “gross down” the award so that it approximates the economic effect on the parties had the amount been paid as periodic spousal support and, therefore, been taxable in the applicant’s hands and deductible to the respondent.

[9] She relies, in this regard, on the decision of Croll J. in Murray v. Murray, 2003 CanLII 64299 (Ont. S.C.), where a retroactive lump-sum spousal support order was made in an amount that was roughly tax neutral to the parties.

[10] The applicant asks me not to make the award tax neutral on account of alleged bad faith on the respondent’s part.

[11] I am unable to accept the applicant's submission. I ordered interest payable on the overdue spousal support amounts. If the award is being treated as overdue spousal support payments reaching back to the date of separation for interest purposes, consistency requires that it also be treated as spousal support for tax purposes. I therefore agree that the spousal support award should be tax neutral.

[12] Certain assumptions about marginal tax rates must be made to perform the calculation and I imputed income to the applicant for part of the time period covered by the spousal support award. There are various ways to do the relevant calculation. I find, in the exercise of my discretion, that the lump sum spousal support award shall be reduced, to reflect taxes that would have been paid or reduced if the amount had been paid as periodic support, to $35,000. I find that $35,000 is, therefore, the appropriate amount of the spousal support lump sum payment required to be paid to the applicant in this case.

Costs Awarded by Herman J.

[13] In a January 26, 2012 endorsement, Herman J. ordered costs of $500 payable by the applicant in any event of the cause, payable at the time of the resolution of the case. No appeal was taken from that order.

[14] The applicant once again says that this order was obtained through bad faith conduct on the respondent’s part.

[15] The applicant took no appeal from the endorsement of Herman J. His argument in this context represents an impermissible collateral attack on that order.

[16] I therefore order that the applicant’s equalization payment shall be reduced by $500 to account for his obligation to pay these costs.

Costs of the Proceeding

[17] The applicant seeks a remunerative cost order, which icludes his time, valued at $250 per hour, plus lost employment opportunities valued at an additional $30,000. His total requested cost award is $255,031.37.

[18] The respondent also claimed to be the substantially successful party. She seeks costs of $75,000.

[19] Both parties served offers to settle although, in result, neither party was more successful than the offers exchanged.

[20] There is no doubt that there was divided success as between the parties on the multitude of issues raised during the trial. In the end, however, I find the applicant was the substantially successful party and is entitled to an award of costs.

[21] With respect to his claim for the value of his time, however, I do not agree that the applicant has brought himself within the narrow category of cases where an unrepresented party may claim indemnity for the value of his or her time in purporting to represent themselves in civil litigation.

[22] Here, there is no evidence to support the proposition that the applicant lost income by virtue of having to represent himself. I found in the Judgment that it was not reasonable for the applicant to claim an inability to work because of his choice to self represent. There was no evidence that the applicant sought work until quite recently and no evidence at all that he lost remunerative opportunities because he was representing himself in this case. I would have found, in any event, that the amount of time the applicant claims to have devoted to his prosecution of this case was grossly excessive.

[23] I therefore dismiss the applicant’s requests for indemnity for his time at $250 an hour and for alleged lost remunerative opportunities.

[24] The applicant is entitled, for his costs, to two thirds of his out-of-pocket payments to lawyers, $16,318, full recovery of his appraisal expenses $6,576 and $9,000 on account of disbursements (reduced from the $12,000 claimed as photocopying charges were not justified and appeared excessive) for a total of $31,894.

Penny J.

Date: June 17, 2015