CITATION: Rea v. Rea, 2016 ONSC 2027

NEWMARKET COURT FILE NO.: FC-15-049190-00

DATE: 20160323

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TRACEY BERNADETTE REA Applicant

– and –

NATALE REA Defendant

L.H. Pawlitza and C. Ashbourne, for the Applicant

H. Niman and E. MacKenzie, for the Respondent

HEARD: By Written Submissions

RULING ON DISCLOSURE AND COSTS

DOUGLAS J.

[1] In my Ruling on Motion dated January 14, 2016 I invited the parties to provide written submissions on disclosure and costs.

[2] I have now received and reviewed the parties’ submissions on these issues.

Disclosure

[3] Schedule A to the Applicant’s Notice of Motion set out the disclosure being sought from the Respondent. All of the usual financial issues remain outstanding in this proceeding but the most pressing of those issues is support and thus the Respondent’s income is a central issue requiring determination.

[4] Significant disclosure has already been produced but the Applicant submits that the following remains outstanding:

(1) Copies of the Financial Statements and Corporate Income Tax Returns for the last three years for the Ohio Corporation including tracing, with backup documents, of the proceeds of sale of the Florida property of $1,500,000 US.

(2) Corporate organizational charts. It is submitted that although two charts have been provided, at least one of the charts produced is incomplete.

(3) Copies of the Husband’s personal and other business credit card and line of credit statements (apart from those line of credit statements produced for Rea Holdings Inc.) for the period January 1, 2012 to present.

(4) Copies of the general ledgers for all three of Rea Holdings Inc., Trason Holdings Inc. and Regis Farms Inc.

(5) Copies of all of the Respondent’s personal bank statements for all accounts and investment accounts.

(6) Proof of all of the expenditures, including for staff, utilities, repairs, maintenance and the operation of the matrimonial home (including the guest house, the hockey arena, the stable and all outbuildings) for each of the three corporations owning the three King City properties.

(7) Proof as to where the net sale proceeds of approximately $22,000,000 Canadian from sale of Hope Well Farm and race horses are currently held.

(8) The Husband’s Income Tax Returns and Notices of Assessment for the years 2001 through 2011.

[5] The Respondent submits that he has already provided to the Applicant the majority of the items requested in Schedule A prior to the January 12, 2016 appearance. It is submitted that the only outstanding items are 3 and 8 outlined above. The Respondent indicates that he will deliver item 3 above however he submits that he should not be required to produce Income Tax Returns and Notices of Assessment from 2001 to 2011 as this tax information is irrelevant and the request over-reaching. The Respondent has already provided his tax returns and Notices of Assessment for 2012 to 2014.

[6] As there are no issues regarding the relevance of items 1,2,3,4,5,6 and 7, the Respondent will produce those items of disclosure within 30 days unless he has already complied in this regard.

[7] As to item 8 and the Income Tax Returns and Notices of Assessment for the period 2001 to 2011, the parties separated in May 2015 and an historical analysis of the parties’ incomes is clearly relevant to income determination for support purposes. The respondent’s income circumstances are complex. He is not a T4’d employee whose income is readily apparent. It is reasonable for disclosure at this stage to be produced for five years prior to the date of separation and accordingly the Respondent will provide copies of his tax returns and Notice of Assessments for the period 2010 to 2014 except to the extent already provided.

Costs

[8] The applicant seeks substantial indemnity costs of her motion on the interim disbursements/advance issues and on a full indemnity basis on the remaining issues, due to the offers exchanged and conduct of the Respondent.

[9] In total the Applicant seeks $90,091.24 inclusive of disbursements and HST.

[10] Costs of the first return of this motion on December 9, 2015 were reserved and form a proper part of my consideration of costs of the motion.

[11] The Respondent submits that he should be entitled to $5,000 in costs for this motion payable at the end of the case as a result of the Applicant’s unreasonable conduct. Alternatively, the Respondent submits that each party should bear their own costs with respect to the motion.

[12] 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 although a successful party who has behaved unreasonably during a case may be deprived of all or part of the parties own costs or ordered to pay all or part of the unsuccessful parties’ costs.

[13] 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.

[14] If success in a step in a case is divided, the court may apportion costs as appropriate.

[15] In determining costs I am to consider:

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

(b) The reasonableness or unreasonableness of each parties’ behaviour in the case;

(c) The lawyer’s rates;

(d) The time properly spent on the case, including conversations between the lawyer and the party who are 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.

[16] The issues before me on the motion were important to the parties and of moderate complexity or difficulty.

[17] Each party submits that the other party has been unreasonable on the motion. The Applicant cites the Respondent’s delays in providing meaningful disclosure and his failure to earlier concede the issues addressed in paras. 4 and 6 of my Ruling on Motion dated January 14, 2016. The Respondent, in response, submits that the Applicant has been unreasonable by bringing an urgent motion seeking 12 heads of relief, short-serving her material, failing to confirm the issues she intended to argue until the evening before the motion, reducing significantly her claim for interim disbursements during argument and generally pursuing a strategy of “negotiation through litigation”.

[18] I note that there was a case conference conducted in November 2015 at which all issues were discussed and accordingly it was open to the parties to bring motions on issues in dispute, whether allegedly urgent or otherwise. I conclude therefore that it is not unreasonable for the Applicant to have proceeded with the motion; however, reduction of the claim for interim disbursements from $1,000,000 to $400,000 during argument significantly affected the complexion of the motion. Having said that, the Respondent’s apparent reluctance to earlier consent to the relief referred to in paras. 4 and 6 of my Ruling on Motion dated January 14, 2016 also suggests an element of unreasonableness. Ultimately I am of the view that both parties have demonstrated some unreasonable conduct in relation to their handling of the issues before me.

[19] In their submissions neither party took issue with the opposing lawyer’s rates. Both parties are represented by senior counsel and this will be considered in my determination of costs.

[20] The Applicant served an offer that did not comply with the Family Law Rules. The Respondent made two offers in compliance with the formal requirements of the Rules, those offers being dated December 3, 2015 and January 8, 2016. The December 3, 2015 does not trigger cost consequences. The January 8, 2016 offer was severable and addressed issues of interim costs and disbursements, issues related to the children, expenses, issues related to the matrimonial home, mediation and arbitration, questions and costs. It did not improve on my determination of the issue of interim disbursements. It also lacked detail regarding selection of the psycho-educational assessor and counsellor for the children Joshua and James respectively. It also did not address the issue of access to the matrimonial home through the gate. Although the offer represents a reasonable effort to settle the issues raised on the motion, I find that it does not trigger cost consequences.

[21] On this motion the Applicant claimed interim disbursements of at least $1,000,000 this request was reduced to $400,000 during argument. I ordered $250,000.

[22] The Applicant asked for an order for a psycho-educational assessment for the child Joshua, permitting the Wife to select the psycho-educational assessor and the Respondent to be solely responsible for the costs. I ordered a psycho-educational assessment for Joshua to be conducted by an assessor recommended by the Country Day School and agreed to by the parties, with the parties to share the cost of the assessment according to their incomes but the initial cost of the assessment to be paid by the Respondent.

[23] The Applicant sought an order dispensing with the Respondent’s consent to allow the child James to participate in counselling with a qualified professional. I ordered counselling for James to be conducted by a therapist recommended by the Country Day School and agreed to by the parties with the cost to be shared proportionally according to the parties’ incomes but the initial cost to be paid by the Respondent.

[24] The Applicant sought an order requiring the Husband to provide the access code to the gate leading up to the office property at 2000 16th Side Road, King City, Ontario. I ordered the relief requested in the absence of opposition by the Respondent.

[25] The Applicant sought disclosure as set out in Schedule A to the Notice of Motion. It appears that much of the disclosure referred to was provided after delivery of the Notice of Motion and before the appearance before me on January 12, 2016; however, some disclosure remained extant although relevant in my view.

[26] I think it fair to characterize the summary of the relief sought and granted above as representing, on balance, mixed success although on the main issue argued, being interim disbursements, the Applicant was successful in securing more than she had offered in her proposals and more than had been offered by the Respondent in his proposals.

[27] Ultimately costs must be reasonable and fair and represent a party’s reasonable expectation given the issues before the court and their resolution. Costs should also be proportional to the nature of the relief requested.

[28] In my view the costs of $90,000 claimed by the Applicant are not proportional to the relief argued before me, even including the initial attendance on December 9, 2015. As indicated above, while the success on the motion was somewhat mixed, on balance the Applicant was the more successful party, particularly with respect to the primary issue being argued, that of interim disbursements.

[29] Factoring all of the foregoing into my consideration of this issue, I award costs to the Applicant fixed in the amount of $15,000 inclusive of disbursements and HST.

Douglas, J.

Released: March 23, 2016