Goldman v. Kudelya & Kharkhurina, 2015 ONSC 7453

Citation: Goldman v. Kudelya & Kharkhurina, 2015 ONSC 7453

COURT FILE NO.: CV-12-00445622-0000

DATE: 20151130

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JESSE GOLDMAN

Plaintiff

– and –

LARISA KUDELYA and LUDMILA KHARKHURINA

Defendants

C. Spry and J. Webster, for Jesse Goldman

Ms. L. Kudelya, Self-Represented

Ms. L. Kharkurina, Self-Represented

s.a.Q. akhtar j.

[1]

Background

On 22 July 2015, after a trial lasting 8 days, I found that Larisa Kudelya had fraudulently conveyed a property, located at 295 John Deisman Boulevard in Toronto (“the Deisman Property”), to her mother, Ludmila Kharkhurina, contrary to the provisions of the Fraudulent Conveyancing Act, R.S.O. 1990, c. F.29. The transfer was made with the intent of shielding the property from any equalisation calculation that would take place in the event that she divorced her then husband, the plaintiff, Jesse Goldman. At the conclusion of my judgment, I invited the plaintiff to make submissions as to costs within 30 days. The defendants were to file their responding submissions 30 days thereafter. Mr. Goldman filed his submission on 21 August 2015. There has been no response from the defendants as of today’s date.

2Prior to this action, Mr. Goldman and Ms. Kudelya had engaged in a lengthy and acrimonious family proceeding which resulted in the Mr. Goldman being awarded costs in the amount of $360,000 by the presiding trial judge. Those costs were reduced to $239,331.81 after deducting money owed to Ms. Kudelya in relation to other family law proceedings. Despite this order, Ms. Kudelya failed to make the required payment to Mr. Goldman leaving him empty handed.

3Mr. Goldman, however, was not prepared to give up. Pursuit of the costs meant that Mr. Goldman turned his attention to the Deisman Property which, during his marriage, had been in his wife’s name. Shortly before they had separated, however, Ms. Kudelya had transferred the property to her mother thereby removing it from her list of assets. Mr. Goldman alleged that the transaction was a fraud, designed to avoid the financial consequences of a divorce and asked the court to find the transfer a nullity under the FCA. Ms. Kudelya and Ms. Kharkurina maintained that the transfer was legitimate and simply reflected the true state of affairs: that Ms. Kharkurina was the true owner of the property having purchased it with her money but in Ms. Kudelya’s name in order to obtain a mortgage. At trial, I found that version of events to be a fabrication.

4Prior to trial, Mr. Goldman offered a compromise in order to bring the dispute to an end. On 13 November 2014, he tendered a formal offer to settle the action for payment of the sum of $225,000, all inclusive, which, in his view, would be adequate settlement of the costs award from the family law litigation. Alternatively, he requested that Ms. Kudelya consent to an order permitting him to obtain status as a judgment creditor against Ms. Kudelya as if she was the legal and beneficial owner of the property. The offer was not accepted by the defendants.

[5]

Analysis

Mr. Goldman argues, in his costs submissions, that the result of the trial meant that he obtained judgment that put him in a position at least as favourable as his offer to settle. Moreover, he claims that the defendants attempted to perpetrated a “fraud on this court” by presenting a defence that was “frivolous and without merit”. As such he submits that he should obtain costs on a substantial indemnity basis for the entire action. In the alternative, he seeks partial indemnity costs up until the date of his offer to settle and substantial indemnity thereafter pursuant to Rule Rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

6Fixing costs is a matter of discretion for a trial judge under s. 131 of the Courts of Justice Act, R.S.O. 1990, C. C.43. I am cognisant of the fact that Rule 57.01 of the Rules provides guidance to the court in exercising that discretion at the conclusion of proceedings. I am also aware of those general principles and that costs should be fixed in an amount that is both fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

7That being said, there is considerable force in Mr. Goldman’s argument that substantial indemnity costs should be awarded from the commencement of the action.

8Ordinarily, substantial indemnity costs are awarded either through the operation of Rule 49.10 or situations where a party has acted vexatiously or by misconduct in the course of litigation. Mr. Goldman’s claim necessarily alleged that both defendants had acted in a fraudulent manner intended to defeat his legal rights under matrimonial law. Ms. Kudelya and Ms. Kharkurina’s defence involved the maintenance of that fraud in the courtroom by their continued false pretence that the Deisman Property had been transferred for legitimate reasons. My findings made clear that both defendants had very little credibility and continued to advance a position they both knew to be dishonest. There is clear authority that substantial indemnity costs should be awarded in cases where one party in the litigation has acted in an abusive manner and caused an expenditure of costs which was unnecessary from the outset: Standard Life Assurance Co. v. Elliott (2007), 2006 33544 (ON CA), 83 O.R. (3d) 302 (S.C.J.). This case falls squarely within that principle.

9I would add that Rule 57.01 also provides that the court may consider the amount of costs an unsuccessful party could reasonably expect to pay. I note the absence of any submissions on the part of the defendants on this point.

[10]

Disposition

Mr. Goldman seeks costs of $297,946.04 all-inclusive on a substantial indemnity basis. For the above reasons, his request is granted.

11Dividing this amount amongst the defendants, I order that:

(a) Ms. Kudelya pay Mr. Goldman the amount of $148,973.02;

(b) Ms. Kharkurina pay Mr. Goldman the amount $148,973.02.

12These costs are to be paid within 30 days of this judgment.

S.A.Q. Akhtar J.