CITATION: Virc v. Blair, 2016 ONSC 5841

NEWMARKET COURT FILE NO.: FC-30449-01

DATE: 2016-10-18

ONTARIO

SUPERIOR COURT OF JUSTICE

FAMILY COURT

BETWEEN:

Patricia Virc, Applicant

– and –

Michael Blair, Respondent

COUNSEL:

Bryan Smith and Sarah Conlin for the Applicant

Respondent, Self-represented

HEARD: May 19, 20, 21, 22, 25, 26, 27, 28, 29, June 1, 2, 3, 4, 12, 15, 16, July 20, 21 and October 23, 2015

JARVIS J.

ruling on COSTS and pre-judgment interest

[1] This Ruling deals with costs and pre-Judgment interest (“PJI”) arising from a May 31, 2016 trial Judgment. The wife seeks $1,032,000 for costs and $225,332 for PJI, both amounts inclusive of disbursements and GST/HST. The husband submits that costs should be referred to an assessment officer or, failing that, they be fixed in the amount of $357,172 and HST. Although the husband’s position about PJI is somewhat unclear, it seems that he contends that either no interest should be awarded or, if it is, then the amount should be $133,477.80.

Costs

[2] Over the course of more than five and a half years of litigation the wife incurred total costs of $1,432,030.07 comprising $1,210,830.10 (fees) and $221,199.97 (disbursements) both inclusive of GST and HST. She is claiming an all-inclusive award of $1,032,342.13 comprising $824,451.71 (fees) and $207,880 (disbursements), rounded to $1,032,000. She also requests $11,300 for her costs submissions.

[3] The wife submits that, in light of an Offer to Settle which she made shortly before trial, she should be entitled to 80% of her legal fees and disbursements before, and 100% of her legal fees and disbursements after, the Offer’s date. In support of her pre-Offer position, the wife relies on Forrester v. Denis, 2016 ONCA 21 where the court reaffirmed its view that “[T]he preferable approach in family cases is to have costs recovery generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and results” (para. 22). For the period after her Offer the wife asserts that the husband acted in bad faith and that should be sanctioned by full recovery costs.

[4] The difference in the wife’s total costs incurred and the amount claimed relates mostly to pre-trial steps taken in these proceedings There were four Conferences, and a motion shortly before trial (heard by Nelson J.) for which no costs endorsements were made. Absent such endorsements, no costs are recoverable for those steps: Islam v. Rahman, 2007 ONCA 622. Costs incurred for the husband’s summary judgment motion and the appeal to the Court of Appeal were not included as they were separately determined and paid. Those costs were substantial. There were, in addition, some minor accounting adjustments.

[5] The husband argued that success was divided, pointing to five areas where he prevailed, those being the wife’s position about the matrimonial home (paras. [133] to [146] of the trial Judgment); the loan to John Pennie ([223]); the costs awarded by the Court of Appeal ([224] to [225]); the value of the Renegade shareholder loan ([242] to ([243]); and, occupation rent ([453] to ([457]). He maintained that this is an exceptional case and, in light of the amounts at stake, costs should be referred to an assessment officer pursuant to the Rules of Civil Procedure or, failing that, fixed in the amount of $403,604 comprising $357,172 (fees) and $46,432 (HST).

[6] Not argued by the husband but clear from the trial Judgment is that the wife was unsuccessful in having attributed to him a higher income than was ordered. This impacted both the support arrears and periodic support, although the amounts awarded for the arrears were still significant.

[7] Both parties served Offers to Settle.

[8] Section 18 (14) 2-5, (16) and the provisions of Rule 24 (1), (5), (6), (8) and (11) are relevant,

18. (14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:

19. If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.

20. The offer does not expire and is not withdrawn before the hearing starts.

21. The offer is not accepted.

22. The party who made the offer obtains an order that is as favourable as or more favourable than the offer.

(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.

24. (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.

(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,

(a) the party’s 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.

(6) If success in a step in a case is divided, the court may apportion costs as appropriate.

(8) 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.

(11) In setting the amount of costs, the court shall 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 lawyer’s 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.

[9] The wife made two Offers: September 8, 2014 and May 12, 2015. The former proposed a settlement of all issues except for child support accruing after January 1, 2011, which issue was to proceed to trial: the latter proposed a comprehensive settlement of all issues. This is the Offer referenced in paragraph [3] above dealing with the different ratio to be applied to the costs claimed. It is noteworthy that service of this Offer did not comply with the timing requirements of Family Law Rules 3 (1) and 18 (14) 2. Accordingly, it does not have the cost consequences associated with the latter Rule although the Offer may be appropriately considered under Rule 24, 18 (16): Pollitt v. Pollitt, 2011 ONSC 3162, 2011 CarswellOnt 5873, 3 R.F.L. (7th)151 (para. 11). The trial Judgment was less favourable to the wife than her last Offer.

[10] The husband made five Offers to Settle, three before trial and two after the trial began. There was an Offer contained in the husband’s Settlement Conference Brief but that does not qualify as an Offer under Rule 18 and will not be considered: Entwistle v. MacArthur (Ont. S.C.); Owen-Lytle v. Lytle, 2015 ONSC 7673. None of the five Offers was remotely close to the trial Judgment.

[11] In terms of outcome, the wife was the successful party and is presumptively entitled to costs. While she did not prevail on all issues, the $1,875,758 aggregated award dwarfed what the husband was prepared to pay.

Analysis

[12] As observed by the Court of Appeal in Serra v. Serra, 2009 ONCA 395, modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants.

[13] The overall objective in determining costs is fixing an amount that the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”; Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 201, [2004] O.J. No. 2634, 2004 CarswellOnt 521 (Ont.C.A.). Since the primary objective of the Family Law Rules is to enable the court to deal with cases justly, it is incumbent on parties who, by choice or necessity, litigate to act reasonably and in a cost effective manner. This means that family law litigants are responsible, and accountable, for the positions they take in their litigation: Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317, and Peers v. Poupore, 2008 ONCJ 615 (Ont. Ct.).

[14] The wife contends that the husband’s litigation conduct amounted to bad faith, in particular after her May 12, 2015 Offer, such that the full recovery costs sanction prescribed in Rule 24 (8) should apply. I disagree.

[15] In Scipione v. Del Sordo, 2015 CarswellOnt 14971 (Ont. S.C.) Pazaratz J. reviewed the law of bad faith,

96. Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children’s Aid Society of the Region of Peel v. F. (I.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (OCJ); Biddle v. Biddle, [2005] O.J. No. 1056 (SCJ); Leonardo v. Meloche, [2003] O.J. No. 1969 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ).

97. There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W., 2015 ONCJ 94 (OCJ).

98. To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison, 2015 ONSC 2002.

99. Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. S.(C.) v. S.(C.) (supra); Piskor v. Piskor, [2004] O.J. No. 796 (SCJ); Cozzi v. Smith, 2015 ONSC 3626 (SCJ).

[16] Despite my conclusions about the husband’s behaviour (as will be set out below), it did not reach the level of untruthfulness, dishonest purpose, moral obliquity or even deceit that would warrant greater censure from the court as found in Chin Pang v. Chin Pang, 2014 ONSC 585, 2014 CarswellOnt 12817 or C.S. v. M.S., (2007) 38 R.F.L. (6th) 315, [2007] O.J. No. 2164, 2007 CarswellOnt 3485 (Ont. S.J.). In Sooriyanarayana v. Sooriyanarayana, 2016 ONSC 298, a claim of bad faith was rejected in circumstances where both parties acted aggressively but there was no duplicitous behaviour or evidence of intent to harm.

[17] The wife is not entitled to full recovery costs after her May 12, 2015 Offer.

Costs Factors

[18] Rule 24 (11) mandates the factors to be considered when setting the amount of costs. Each factor will be reviewed as it applies to these proceedings.

(a) Importance, Complexity or Difficulty of the Issues

[19] This was a complex and difficult 19 day trial. The overarching issue of the validity and enforceability of the May 31, 2008 Separation Agreement had already been the subject of a summary judgment motion and a decision of the Court of Appeal. In addition to the evidence about the circumstances surrounding the financial disclosure that resulted in the agreement, its negotiation and signing, there were over 35 asset and debt valuations of varying degrees of complexity required for the marriage and valuation dates once it was determined that the agreement should be set aside. Expert evidence was heard dealing with the value of the husband’s business interests at the marriage and valuation dates and with respect to the value of the wife’s jewellery. The wife’s expert was cross-examined by the husband over three days. Voir dires were held to determine, and later not qualify as experts for different reasons, three witnesses tendered by the husband. The documentary child and spousal support evidence was voluminous. As noted in paragraph [365] of the trial decision, no expense was too insignificant to claim and document. Excepting parenting, there were few family law financial issues that were not in play.

(b) Reasonableness or Unreasonableness of Each Party’s Behaviour

[20] The wife claims that the husband’s litigation conduct was unreasonable and materially impacted the complexity and length of their case. Some of this conduct included:

(a) irrelevant, and repeated, Requests to Admit;

(b) the delivery of voluminous binders of documents, many shortly before trial, and many of which were uncatalogued, indexed or tabbed;

(c) the husband's failure to tender expert evidence about the value of his interest in Renegade and his unconvincing explanation that the business valuation expert (Bowman) whom he had originally retained in 2008 had a subsequent disqualifying conflict of interest;

(d) non-compliance by the husband with the Order of Nelson J. that the husband disclose computer records;

(e) a pre-emptive motion, withdrawn by the husband at the start of trial, accusing the wife and her lawyer of evidence tampering, and to which the wife was obliged to respond; and

(f) the additional costs and trial time incurred when the husband required the wife to call as trial witnesses Ms. Newman (jewelry) and Mr. Morochove (computer).

[21] In addition to the conduct just noted (and with which I agree with the wife) the husband called as witnesses an accountant to confirm certain mathematical calculations (whose evidence the court ruled was inadmissible as expert evidence) and a former employee (Cozza) of the company which the husband disingenuously represented had a conflict of interest that disqualified his calling Mr. Bowman, whose valuation was disadvantageous to the husband’s case. The witness tendered by the husband as an expert for the purpose of valuing his business interests on the marriage date (Cummings) was little more than the husband’s surrogate. There was considerable duplication of documents. Quite often the husband sought to file evidence binders that contained inadmissible evidence, or which duplicated evidence already contained, and catalogued, in the wife’s exhibits. This led to several interruptions in the trial while the documents were examined by the parties. The foregoing list is not exhaustive.

[22] Even though the husband represented himself, he was not unfamiliar with the litigation process, or the costs associated with complex litigation (see paragraphs [7], [46] and [70] of the trial Judgment). He did not act reasonably, and that did increase costs. This should invite consequences, and should impact the overall scale of costs. As Campbell J. observed in Parsons v. Parsons, (2002), 31 R.F.L. (5th) 373 (Ont. S.C.),

When the unsuccessful party has acted unreasonably the successful party should not have to financially “pick-up” or absorb the result of the unsuccessful party’s impulsive decisions. While the court recognizes that the costs order may “fan the fires”, I interpret the rules as recognizing that there must be consequences for unreasonableness. There is an element of behaviour modification to a costs order in that it encourages a change in attitude from a “litigate with impunity” mindset.

[23] This observation was echoed by Wildman J. in Paranavitana v. Nanayakkara, 2014 ONSC 2257 in commenting that “…an unsuccessful party who has acted unreasonably will likely find that the costs he is required to pay are closer to the higher end of the scale” (para. [49]).

(c) The Lawyer’s Rates and Time Properly Spent

[24] Excepting the appeal proceedings for which a third firm of solicitors was engaged, and for whose expenses the wife is not claiming, she was represented by two sets of counsel, one (Hirschberg) who acted for the wife from August 18, 2009 to December 13, 2011 and the second (Smith) from October 11, 2011 to date. Inclusive of HST, the wife claims $824,451.75 for fees.

[25] The fees claim is comprised of two parts: the first precedes the wife’s May 12, 2015 Offer and totals $330,658.80 which the wife reduced to 80%, slightly adjusted to $261,316.24 and the second, in the amount of $563,135.51, represents the following period from shortly before trial to closing submissions. The latter account is based on a full recovery premise. The wife does not request anything with respect to the costs associated with the summary judgment motion or her appeal from that decision. All of the wife’s costs are clearly identified and broken down in a summary of lawyers’ accounts.

[26] Ms. Hirschberg was called to the Bar in 1990 and recorded 176.60 hours in ten accounts totalling $57,887.90 inclusive of disbursements and GST/HST. Her hourly rate ranged between $250 and $300 an hour.

[27] Mr. Smith was called to the Bar in 1989 and is certified by the Law Society of Upper Canada as a Specialist in Family Law. He spent 822.3 hours representing the wife. His hourly rate ranged between $525 and $600 an hour. Mr. Smith was principally assisted by junior counsel, Ms. Conlin, who was called to the Bar in 2009. She recorded 930.7 hours working on the file: her hourly rate was $250 to $340. An articling student recorded 179.8 hours on the file at an hourly rate of $185.

[28] The rates charged by Ms. Hirschberg and Mr. Smith are reasonable despite the proximity of their years of call. Mr. Smith is a certified family law specialist and his rates reflect what senior counsel with that designation is entitled to charge. The rates charged for Ms. Conlin, a far more recent call than Ms. Hirschberg, are excessive in that they approximate what the latter was charging the client.

[29] In reviewing the accounts, a number of observations are pertinent:

(a) while Ms. Hirschberg’s accounts described in general the services performed they did not provide a more itemized breakdown for the time spent on those services;

(b) the accounts rendered by Mr. Smith also described in general terms the services performed and provided details of the time spent, itemizing the disbursements incurred;

(c) Mr. Smith made extensive use of Ms. Conlin’s assistance. Many entries record meetings between the lawyers with Ms. Conlin preparing in advance material for their meeting, and afterwards following directions given;

(d) it is clear from the accounts that most of the day-to-day management of the wife’s case including reviewing and summarizing the husband’s disclosure and transcripts from his questioning, research, drafting of amended pleadings, financial and net family property statement preparation and correspondence with the husband’s previous lawyer and witnesses was performed by Ms. Conlin. When the lawyers met, full rates were charged for their time;

(e) identified in the accounts but noted as being excluded from the aggregated fees claimed were those services relating to the summary judgment motion and appeal. Disbursements relating to those excluded services were also identified and not claimed;

(f) disbursements totalled $41,849.24 inclusive of GST/HST. Slightly less than one-third of these were incurred before May 12, 2015 shortly before the start of trial. Almost $15,000 in internal photocopying expenses were incurred afterwards. None of the other disbursements was otherwise remarkable either in terms of their description or amount; and

(g) the most significant account was, as could be expected, that from shortly before the trial started to closing submissions.

[30] Given the number of accounts rendered (49) and their detail, it is not my intention to parse each account to try to identify and assess the relative worth of each service rendered. In Delellis v. Dellis and Delillis, [2005] O.J. 4345 (Ont.S.C.) Aston J. observed,

[95] It is important to reiterate that when the court is fixing costs, it is not undertaking a simple mechanical exercise. Such an exercise would be inappropriate and in fact undesirable…

[31] In Boucher the Court of Appeal endorsed a broader and more flexible approach to be taken than simply calculating hours times dollars when it reaffirmed an earlier decision that “costs awards should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant” (para. 24).

[32] In this case, while the wife was successful, she did not entirely succeed in the amounts she claimed for the equalization payment and for periodic support and arrears. She was also unsuccessful on her occupation rent claim. But given the Offers made by the husband she had little choice other than to proceed as she did. The husband did not adopt a reasonable position, or act reasonably, after the Court of Appeal decision. Balancing the relative merits of each party’s positions and mindful of the relevant factors, it is fair and reasonable that the lawyers’ fees be fixed in the amount of $650,000 plus HST, or $734,500 and that the associated disbursements incurred (not those paid directly by the wife) be fixed in the amount of $34,000 inclusive of HST.

(d) Expenses Properly Paid or Payable

[33] The wife incurred $221,199.27 in disbursements inclusive of GST/HST. Most of these were paid directly by her ($179,350.73) and the balance through the lawyers’ accounts to her. She reduced the actual amounts paid by 20% for selected disbursements arising before her May 2015 Offer, and claimed 100% for those incurred afterwards. She did not claim for the appraisal costs of the matrimonial home with respect to her unsuccessful occupation rent claim. In total, she has requested an all-inclusive award of $213,476.05 for her disbursements.

[34] The husband submits that the wife is only entitled to $49,596.07.

[35] The principal dispute involves expert fees. There were seven experts retained by the wife for business, jewelry, occupation rent and pension valuation purposes. One business valuation expert was not called and one realty appraiser’s evidence dealt with the income benefit to be attributed to the husband with respect to the use of the Collingwood chalet which the husband corporately owned. Mr. Morochove testified with respect to computer issues. Only the costs of the experts challenged by the husband will be reviewed.

Peter Weinstein (Business Valuator and Income Analyst)

[36] Mr. Weinstein valued the husband’s business interests at the marriage and valuation dates. He also testified about the income to be attributed/imputed to the husband. Five accounts totalling $125,571.25 were rendered inclusive of GST/HST. In arriving at this, total courtesy discounts amounting to $9,495 were reflected in the last two accounts ($3,495 and $6,000 respectively).

[37] The husband argued that the first three accounts were captured by the costs disposition made by the Court of Appeal when it allowed the wife’s appeal from the husband’s summary judgment. The wife was awarded $50,000 for her costs of the appeal and the $118,581.70 costs Order made by the motions judge was reversed. Overlooked in the husband’s objection is that the appeal did not deal specifically with valuation issues: it dealt with whether the separation agreement should be set aside. While it is likely that the court had before it evidence from Mr. Weinstein about the overvaluing by the husband of his marriage date interest in Renegade (see para [46] of the court’s reasons), there is nothing in the reasons that deals directly with that issue or Mr. Weinstein’s costs. It is equally unlikely, in fact improbable, that the motions judge would have considered these costs when making her, later reversed, award to the husband.

[38] The husband challenged Mr. Weinstein’s fourth account on the basis that both parties should be obliged to share the valuation cost of Renegade. Some of Mr. Weinstein’s account dealt with responding to a 345 paragraph Request to Admit from the husband dated July 31, 2014, later followed by an August 28, 2014 further Request to Admit. Many of the requests were highly technical in nature. The account also dealt with the analysis of the husband’s income and matters related to Algonquin Mercantile and Dominion Citrus.

[39] The husband relies on MacKinnon v. MacKinnon, [2004] O.J. 2472 that “it would not be fair that the person owning an asset which must be valued bear the entire cost…except in unusual circumstances” (para. [9]). Those circumstances exist in this case with respect to this facet of the expert’s engagement. Even accepting the husband’s misdescription of impugned account, it was the husband’s statutory obligation to value Renegade, not the wife. It was the husband’s strategy to value a subsidiary of Renegade’s operating company which added to the expert’s task. It was also the husband’s litigation obligation to bring forward credible evidence other than mere reliance on his Income Tax Returns about his qualifying support income, especially where he was a majority owner of Renegade, and enjoyed benefits through that ownership; this was not the wife’s obligation either. The observations of McGee J. in Sharma v. Sunak, 2011 ONSC 7670 are pertinent that “[i]t will be the uncommon case that will not require some level of expert assistance to value income pursuant to section 18 of the Federal Child Support Guidelines and a party’s own interests in an incorporated…company. Inextricably intertwining corporate and personal finances makes the venture of valuation for family law purposes all the more difficult” (paras. [22 and [23]). I am not persuaded that the wife should be obliged to bear half on the costs of this account.

[40] The husband also objected to the fifth account for a variety of reasons, those including excessive time spent, trial attendance, time spent after trial dealing with proposed expert evidence of the husband and lack of independence. Only those objections having any merit will be discussed.

[41] Mr. Weinstein did, in my view, spend what seems to have been an excessive amount of preparation time and this should be reflected in a modest reduction to the account in addition to the $6,000 discount already given to this account (to which the husband points as demonstrating a lack of independence, and which I reject).

[42] Overall, I found Mr Weinstein’s rates reasonable. There were no non-HST disbursements. However, in assessing his accounts, I agree that the husband was successful in having Mr. Weinstein acknowledge a significant valuation error (in the husband’s favour-see paras. [242] and [243] of the trial Judgment). In addition, I did not accept the wife’s evidence about the income to be attributed to the husband for support purposes and for which she relied on Mr. Weinstein.

[43] Some reduction is warranted. There shall be allowed for Mr. Weinstein’s accounts the sum of $110,000 for services and $14,300 for HST for a total of $124,300.

Duff & Phelps (Business Valuator)

[44] The wife claims $28,866 (inclusive of HST) for a business valuation expert (S. Jaishankar) from a second valuation firm. The expert proposed was intended to be called in reply to rebut the business valuation theories and methodologies of the husband’s proposed expert (Cummings) who was ultimately not qualified as an expert and did not testify. It therefore became unnecessary to call this witness. The husband claims that nothing should be allowed for this expense as the witness did not testify.

[45] Whether it was desirable to engage a second expert instead of relying on Mr. Weinstein’s expertise, and the court’s assessment of the relevant evidence, is not possible to determine but given the importance of the marriage date value of Renegade to the issues in this case and the husband’s strategy to restrict Professor Cumming’s engagement to valuing a subsidiary of Renegade’s holding company, I cannot say that the wife’s caution was unreasonable. This conclusion may have been different had the husband commissioned a valuation of Renegade. The wife should not be penalized.

[46] The rates charged in the two accounts rendered are reasonable, and the disbursements ($1,446) seem modest, although not detailed. The first account was discounted by 25%; no discount was applied to the second account. The overall time spent appears excessive, however, but not significantly.

[47] There shall be allowed to the wife for these services $ $22,000 and $2,860 for HST for a total of $24,860.

Mr. Morochove (Computer Expert)

[48] The wife requests $6,435.54 for this witness. The relevance of Mr. Morochove’s evidence about the timing and content of a poem sent by the husband to the wife was apparently intended to show how that impacted the parties’ relationship in the latter years of their relationship. The distinct impression made was that each party was trying to justify or explain their behaviour for trial purposes. The court was unimpressed.

[49] However, Mr. Morochove’s evidence was relevant in dealing with the circumstances surrounding the wife’s efforts, and the husband’s roadblocks, to ensuring compliance by the husband with the Order made by Nelson J. shortly before trial about disclosure of computer records in the husband’s possession (see paras. [72] and [73] of the trial Judgment).

[50] There shall be allowed for this witness’ expense $3,500 for his services and $455 HST for a total of $3,955.

Pension Valuation

[51] The husband disputed the wife’s claim of $904 for the valuation of his pension. This amount represents 80% of the total $1,130 expense paid by the wife (it was incurred before her May 12, 2015 Offer). The court was advised during the trial that the parties had agreed on the value of this asset, nothing more. Even though it was the husband’s statutory obligation to value this asset, this is an appropriate disbursement for the parties to share (see MacKinnon above, para. [43]).

[52] The wife shall be allowed $500 for this disbursement and $65 HST for a total of $565.

Collingwood Chalet Appraisal

[53] The wife claimed $1,418.15 for an appraisal by HG Appraisers Inc. This expense was incurred to provide an evidentiary base for the possible income to be attributed to the husband for the value of the benefit of the chalet’s use by him (see para. [350] of the trial Judgment). This was not relevant to the wife’s unsuccessful occupation rent claim dealing with the matrimonial home but it was necessary. This disbursement is reasonable and shall be allowed in full (i.e. $1,255 for fees and $163.15 for HST).

Balance of Disbursements

[54] The balance of the disbursements incurred by the wife involved, for the most part, transcript expenses relating to the questioning of the husband and his former spouse in their family law proceedings (as permitted by the Order of Nelson J.) and arising from this trial. Both parties ordered copies of the daily evidence. As a general comment, caution should be exercised when considering whether daily transcript expenses should be uncritically taken into account when assessing costs. In this case the transcripts were useful since the trial extended over several months and reference was made to parties’ evidence during the course of the trial and as part of each party’s closing submissions. These cost $1,411.55 and did not attract HST.

[55] Expenses also included an audio transcription of a presentation by Professor Cummings and disbursements charged by, and paid to, Professors Cummings for compiling emails and notes. These totalled $3,026.14.

[56] Minor photocopying and business registration search costs totalling $524.62 were paid too. None of these was unreasonable.

[57] Other disbursements did not break out the HST component, if applicable. These totalled $174.99.

[58] The husband did not dispute the amount of these expenses in arguing for an overall reduction in the wife’s allowable disbursements.

Summary of Wife’s Disbursement Claim

[59] In summary the wife shall be allowed for the disbursements she paid directly the all- inclusive sum of $159,670.45.

(e) Any Other Relevant Matter

[60] In assessing the wife’s accounts, I have considered the issue of proportionality raised by the husband. He argues, for example, that it was unreasonable for the wife to incur more than $1,000,000 in costs to litigate a claim that was adjudicated as being worth $1,055,578 and that costs should reflect the reasonable expectations of the losing party. This argument is disingenuous.

[61] The husband claimed at trial that if the separation agreement was set aside then the wife owed him $1,009,699 (see para. [130] of the trial Judgment). In light of the trial award, the parties were more than $2,000,000 apart in their positions. In addition, the summary judgment motion costs awarded to him by the motions judge (later reversed) were $118,581.70. As the husband was legally represented, his actually costs were indisputably higher. Comment has already been made (see para. [22] above) about the husband’s familiarity with the financial demands of complex litigation. That he chose to represent himself had nothing to do with his means but more likely his belief that he was his own best advocate.

Costs Award

[62] The wife is entitled to all-inclusive costs of $927,670.45, rounded to $927,650. This amount does not include anything for costs submissions which shall be addressed below.

Pre–Judgment Interest

[63] The jurisdiction to award pre-Judgment interest is conferred by sections 128 and 30 of the Courts of Justice Act,

128. (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.

129. (1) The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129,

(a) disallow interest under either section;

(b) allow interest at a rate higher or lower than that provided in either section;

(c) allow interest for a period other than that provided in either section.

(2) For the purpose of subsection (1), the court shall take into account,

(a) changes in market interest rates;

(b) the circumstances of the case;

(c) the fact that an advance payment was made;

(d) the circumstances of medical disclosure by the plaintiff;

(e) the amount claimed and the amount recovered in the proceeding;

(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and

(g) any other relevant consideration.

[64] In Burgess v. Burgess (1995), 24 O.R. (3d) 547 the court held that as a general rule pre-Judgment interest should be paid on an equalization payment unless exceptions applied. These could include circumstances where,

(a) the payor spouse cannot monetize the asset giving rise to the equalization payment (in Burgess the asset was a party's future entitlement to a pension);

(b) the payor had no use of the asset before trial;

(c) the asset generated no income; and

(d) the payor spouse had not delayed the case being brought to trial.

[65] Burgess does not purport to restrict the circumstances in which an exception might apply. Nor is the general rule restricted to issues involving property - retroactive support awards may attract interest from the date that the support payment accrued: Debora v. Debora, affirmed in Debora v. Debora, 2006 O.J. No. 4826. Section 130 (2) (f) also allows a court to award PJI where a party has unreasonably lengthened the duration of the proceedings. Care must be taken, however, to avoid penalizing a party twice for unreasonable litigation conduct when dealing with costs.

[66] These are the particulars of each party's position about PJI, and their calculations:

(a) the wife’s calculations date from when the cause of action arose (May 31, 2008) whereas the husband's calculations date from when the wife started these proceedings (May 19, 2010);

(b) the prescribed PJI rate was 4.3% in May 2008 and .5% in May 2010, a significant fluctuation. The wife averaged the PJI rate from May 2008 to May 2016. That was 1.5% and is the rate that she urges the court to adopt. Alternatively, if the court accepts the husband’s starting date, she calculated the average interest rate over the May 2010 to May 2016 period as being 1.33%. The husband used the prescribed quarterly rate over that latter period (based on a total Judgment amount of $1,875,000);

(c) the wife’s $225,300 claim is based on the 1.5% average PJI rate. Alternatively, using her 1.33% PJI average rate for the May 2010 to May 2016 period, the amount would be $199,975. It was not clear from the parties’ submissions why that differed so significantly from the husband's figure of $133,477.80 (the average rate for his calculations would have been 1.18%); and

(d) the wife’s calculations broke down her interest claims into four categories:

1. Equalization payment.

2. The interest payable for the wife’s share of the matrimonial home between July 1, 2008 (when the wife left the residence) and June 30, 2010 (when she was paid her share).

3. Child support, and;

4. Spousal support. Her support calculations were made from the end of the year in which support was due, not as they fell due monthly. This resulted in less interest payable being claimed.

[67] The husband's slender reasons why no interest should be payable, or at least why they should be discounted, are no more than re-argument of the trial issues on which he was unsuccessful.

[68] The wife's approach, which averages the prescribed rate, is preferable to the husband's quarterly calculations because her calculations start when the cause of action arose and reasonably take into account (by averaging down) the dramatically higher rates which obtained in the last three quarters of 2008 and the first quarter of 2009, although both of her averages are skewered by an incorrect second-quarter figure for 2010 (i.e. 5%). For all but the first four quarters just noted, the average rate was about 1.3%.

[69] After the parties separated, and even after the wife was paid her interest in the matrimonial home in June 2010, the husband not only had the means to make an equalization payment but he also had the ability to pay the child and spousal support that it was later determined that he should have paid. He had the cash flow and liquidity to meet his obligations. From the date of separation to the May 2015 start of trial he had seven years’ use of funds which this court determined were owed to the wife. She is entitled to PJI.

[70] In my view, pre-Judgment interest should accrue as of the date that the cause of action arose at the rate of 1.3%. This represents a slight reduction of the alternate rate that the wife proposed to account for the second quarter 2010 rate error. Her alternate claim of $199,975 is reduced to $195,000. This is the amount that the husband shall pay to the wife for pre-Judgment interest.

Disposition

[71] As earlier noted, the wife has claimed costs of $11,300 for her costs and PJI submissions. The materials filed were detailed, clear and helpful. She is entitled to all-inclusive costs of $8,975 (i.e. $7,500 for fees and $1,475 for HST).

[72] Accordingly, the husband shall pay the wife the following:

(a) costs inclusive of disbursements and GST/HST in the amount of $936,625 (i.e. $927,650 and $8,975); and

(b) pre-Judgment interest in the amount of $195,000.

Justice D.A. Jarvis

Date: October 18, 2016