Court File and Parties

COURT FILE NO.: FC-16-2293 DATE: 2017-06-19 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mashooda Syed, Applicant AND Ahmed Syed, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Michael S. Rankin, for the Applicant Gregory A. Ste. Marie, for the Respondent

HEARD: In writing

Endorsement on Costs

[1] On motions brought by both parties, the Court ordered the following:

• The husband may directly contact Mubashir and set up visits with him. The wife will encourage Mushabir to attend visits with his father.
• The parties are ordered not to discuss the litigation directly or indirectly with Mubashir. The parties are ordered to refrain from copying the children in any emails that discuss the litigation and/or the ongoing disputes between them.
• Commencing April 1, 2017, the husband will pay child support for two children the amount of $7,142 per month and spousal support in the amount of $12,300 per month based on annual income of $600,000 per year.
• Commencing May 1, 2017, the husband will pay child support for one child in the amount of $4,593 per month and spousal support in the amount of $14,898 per month based on an annual income of $600,000 per year.
• The parties will share the following s. 7 expenses (net of taxes and credits) in proportion to the parties’ incomes for Mubashir: Ashbury College fees, tuition, books and school related expenses and extraordinary extra-curricular activities in the approximate amount of $2,400 per month. (The wife will pay 29.8% and the husband will pay 70.2%).
• Justice Sheard’s non-dissipation Order will continue.
• Except for business related purposes, the parties are restrained from communicating with each other or attending at the other party’s residence.
• Within 45 days, the husband will provide the documents required by Steve Pittman.
• The husband’s undertakings from Questioning will be answered within 60 days.
• The issue of appointment of a receiver/manager is adjourned and may be brought back before me in the event of a material change of circumstances.
• The issues of striking of pleadings and adding the companies as parties to the action are adjourned.
• The matter will return before me for a case conference in September / October 2017 at a date to be set by the Trial Coordinator’s office.

[2] If the parties were unable to agree on the issue of costs, they could provide their written submissions.

[3] Having considered the parties’ respective submissions, the bill of costs and the Family Law Rules, O. Reg. 114/99 (the “FLRs”), the Court awards Mrs. Syed costs in the amount of $51,744.

Mrs. Syed’s Position

[4] Mrs. Syed claims costs on a full-recovery basis in the amount of $97,511.83 as she submits that she was substantially, if not entirely, successful on all issues on the motion.

[5] Secondly, full recovery costs should be awarded due to Mr. Syed’s unreasonable and bad faith behaviour in accordance with FLRs 24 (5) and (8). This would serve as a deterrent to Mr. Syed for his non-compliance with the FLRs including his failure to abide by court orders, failure to provide financial disclosure on a timely basis and failure to properly present his income for the determination of spousal and child support.

[6] She submits that this motion was highly complex with extensive heads of relief and numerous volumes. The issues were very important to the parties as Mrs. Syed was attempting to protect her substantial equalization payment and obtain a reasonable level of spousal and child support. She continued to pursue financial disclosure which had not been provided despite numerous court orders.

Mr. Syed’s Position

[7] Mr. Syed submits that full recovery costs are unwarranted and the amount claimed is excessive. Partial recovery costs are also excessive. He submits that the Court should award Mrs. Syed costs of $40,800 inclusive of fees, disbursements and HST, being costs on a partial recovery basis as there was divided success.

[8] Mr. Syed submits that Mrs. Syed has failed to meet the very high threshold of demonstrating bad faith to invoke the entitlement to full recovery.

[9] In addition, Mr. Syed has voluntarily paid support, provided as many documents as he could, consented to the motion before Justice Sheard, and explained that some of his documents were left in the matrimonial home.

[10] My endorsements indicated that he would provide disclosure “if possible” by certain dates. One Court endorsement indicated that “at this time, the Court is not finding fault on any party for this delay”.

General Legal Principles

[11] Rule 24 (1) of the FLRs states that:

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

[12] The cost rules are designed to the fundamental purposes:

(1) indemnifying successful litigants for the cost of litigation; (2) to promote and encourage settlement; and (3) to control behaviour by discouraging frivolous suits if the defences that lack merit. Fong v. Chan, [1999] O.J. No. 4600 and confirmed in Serra v. Serra, 2009 ONCA 395.

[13] Rule 24 of the FLRs states:

(10) Promptly after dealing with a step in the case, the court shall, (a) make a decision on costs in relation to that step; or (b) reserve the decision on costs for determination at a later stage in the case. O. Reg. 235/16, s. 4(2)

(10.1) In making a decision on costs in relation to a step in a case, the court shall decide in a summary manner whether anyone is entitled to costs and, if so, determine who is entitled and set the amount of the costs.

Analysis

Who was successful?

[14] For the reasons set out below, the Court finds that Mrs. Syed is the successful party.

[15] The parties did not exchange offers to settle. Mrs. Syed submits her reason is that she did not know his income for her to properly send an offer.

[16] Therefore, the Court can determine success based on the relief requested in the motions, positions taken on the motion and results obtained.

[17] Mrs. Syed was successful on the following issues:

• the Court imputed an income of $600,000 per annum to Mr. Syed;
• Mrs. Syed was successful in obtaining s.7 expenses, although Mr. Syed did not dispute them; and
• She also obtained an order that would continue Justice Sheard’s general non-dissipation order.

[18] However, she was not successful in striking Mr. Syed’s pleadings, adding the companies as parties, obtaining interim disbursements for Mr. Pittman’s services and an independent property appraisal and the appointment of a receiver-manager.

[19] Mr. Syed was successful on the following issues:

• the Court did not order a retroactive award to November 2016 as requested by Mrs. Syed; and
• the Court did not order a restraining order against him.

[20] Mr. Syed:

• Consented to exclusive possession of the matrimonial home to Mrs. Syed;
• Acknowledged her entitlement to spousal support, child support and s. 7 expenses; and
• Agreed to an advance to each party of $75,000 as interim disbursements.

[21] Mr. Syed did not achieve success as follows:

• He did not obtain an order that the parties prepare a joint video to distribute to family members and friends regarding the status of the litigation;
• He was not successful in imputing income to the mother; and
• He was not successful in obtaining an order lifting the non-dissipation order as he wished to solely operate the companies.

[22] A review of the above would indicate that there was divided success on some issues. However, the major issues were Mr. Syed’s income with a determination of child and spousal support and the management of the companies in order to safeguard Mrs. Syed’s substantial equalization payment.

[23] In this regard, Mrs. Syed was successful. Therefore, she is presumptively entitled to costs.

Determination of the Quantum of Costs

[24] In accordance with FLR 24 (11) in setting the amount of costs, the court shall consider,

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

[25] The issues on the motions were complex and important to the parties. There were a number of serious financial issues including the imputation of Mr. Syed’s income from his companies with no income report, the running and managing of the companies, determination of spousal and child support, interim disbursements.

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

Law

[26] In Sims-Howarth v. Bilcliffe, [2000] CarswellOnt 299, Justice Aston found that the mother’s behaviour was reasonable, conciliatory and child focused while the father’s behaviour was not. The court was dealing with a motion dealing with access transportation and support. The court found that the mother was more successful on the motion than the father, and there was divided success on the transportation issue. He found that although the mother did not make formal proposal or offer to settle, her proposals were spelled out in her affidavit material and were reasonable. The court awarded her $5000 being costs almost full indemnity even absent bad faith on the part of the father.

[27] In Biant v. Sagoo, 2001 CarswellOnt 3315, Justice Perkins found that even though there was divided success, the wife’s conduct had run up costs on the case and the trial as she had been unreasonable and acted in bad faith. The husband blamed the wife for breaches of the rules, failure to comply with court orders, failure to pay for half of the custody and access assessment, willful damage to the matrimonial home, failing to provide accurate information and failure to disclose documents. Justice Perkins reiterates that a successful party should generally approach full recovery, so long as the successful party has behaved reasonably and the costs claimed are proportional to the issues and the result.

[28] In Montreuil v. Montreuil, 2000 Carswell 3566, Justice Aitken ordered costs of $50,000 after a trial where the husband did not make timely and complete financial disclosure. At para 14 she stated:

When fixing costs on a solicitor and client scale, as long as the hourly rate being proposed by counsel falls within a range of reasonableness, it is not for the judge to second-guess the appropriateness of the rate.

[29] She stated at para. 26 “timely and complete financial disclosure must be made in matrimonial litigation. Failure to do so will generally result in serious costs consequences for the delinquent party”.

[30] In Apotex Inc. v. Egis Pharmaceuticals, 1991 Carswell Ont 3149, Justice Henry enunciates some important principals, namely, that a party is entitled to retain the legal services that can best submit its cause to the court. There is not an expectation that a party is to shop for cheaper services but is entitled to be represented by counsel of its choice.

At para 8, he stated:

It is the policy of the judicial system to encourage litigants to settle, which generally means that both parties make a sensible business decision to end the dispute and so cut their losses and avoid the risk of failure and further costs.

Discussion

[31] Mr. Syed’s behaviour during this litigation was unreasonable. He failed to comply with court orders regarding disclosure. His answer was that the documents were in the matrimonial home. She had offered to provide them early after the separation. On January 27, 2017, I ordered that Mr. Syed was authorized to arrange for someone to retrieve his financial records from the matrimonial home. Yet, at the time of the motion, he still had not provided the documents necessary for Steve Pittman, the certified business valuator, to complete his income report.

[32] The Court decision made a number of adverse findings regarding his lack of disclosure and how this impacted on the costs incurred by Mrs. Syed. Mr. Syed did not provide financial material repeatedly requested by Steve Pittman, and ordered by the court on three occasions. Mr. Syed provided an incorrect financial statement which did not state his income, nor properly state his assets.

[33] At para. 51 of the decision, the Court found that he failed to be forthcoming in financial disclosure when under a legal obligation to do so on multiple occasions, and his non-compliance resulted in the Court having to determine income without the benefit of an income report.

[34] At para. 52, the Court found that he had failed to follow the spirit and letter of the FLRs: by failing to provide the Court with an accurate financial statement and bringing his documents with him to questioning and answering undertakings from questioning.

Was there bad faith?

The Law

[35] The Court may consider full recovery costs if a party acted in bad faith in accordance with FLR 24(8) which states:

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. O. Reg. 114/99, r. 24 (8).

[36] In Bortnikov v. Rakitova, 2016 ONCA 427, the court found that neither party’s conduct met the very high threshold for bad faith under 24(8) of FLRs. The court found that the award of costs was reasonable, fair and proportionate in the circumstances of the case.

[37] In Leonardo et al. v. Meloche et al, the respondent argued that the applicants were acting in bad faith in breaching a previous court order for disclosure. At para. 7 Justice Blishen stated:

Conduct that is intended to deceive or mislead can establish bad faith. It can also be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive or, an intentional breach of a court order with a view to achieving another purpose. See Erickson v. Erickson, 122 A.C.W.S. (3d) 1075, [2000] O.J. No. 5789, 2000 CarswellOnt 5809 (Ont. Fam. Ct.), and Hunt v. Hunt, [2002] W.D.F.L. 90 [2001] O.J. No. 5111, 2001 CarswellOnt 4548 (Ont. Fam. Ct.).

[38] Justice Blishen then refers to a legal dictionary:

[8] Black’s Law Dictionary, 6th ed. (St. Paul Minnesota: West Publishing Co., 1990), notes that bad faith is not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity.

[9] Justice Roy’s order did not provide any time limits for disclosure. There is evidence of some attempts by the Leonardos to obtain the records of the children’s aid society. Records of the private investigator were provided late in the day. I was not provided with those records and therefore, am unable to determine whether they would have been important on the motion. I did allow the Leonardos until 31 December 2002 to comply with Justice Roy’s disclosure order.

[39] She found that there was not sufficient evidence to find that the parties had intended to deceive or mislead or intentionally breached the disclosure order in order to achieve an ulterior motive. She found that the delay for providing disclosure was significant but without a specific time limit, she could not find intentional non-compliance or breach.

As stated by Justice Benotto in Roberts v. Roberts, 2015 ONCA 450:

[11] The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.

[12] Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.

[13] Financial disclosure is automatic. It should not require court orders – let alone three - to obtain production.

[40] She dismissed the husband’s appeal of an order striking his pleadings for non-disclosure of financial information with costs.

Discussion

[41] I do not find that Mr. Syed’s behavior amounted to bad faith. His actions were not to a point that it crossed the high threshold as stated in Bortnikov v. Rakitova.

[42] There was no finding of intent to deceive or mislead. As stated in Leonard v. Meloche “A significant delay in fulfilling an order for disclosure, where no time limit was imposed is not presumed to constitute bad faith”.

[43] Rather, he did demonstrate some cooperation in that:

• after separation he paid support voluntarily;
• at the outset of the motion, he made a number of concessions which obviated the need for argument on these issues. He agreed to the following:
  • Mrs. Syed would have exclusive possession of the matrimonial home;
  • each party would receive an advance of $75,000 for legal fees;
  • Mrs. Syed’s claim for s. 7 expenses; and
  • Mrs. Syed was entitled to spousal support on a compensatory and non-compensatory basis and child support.

[44] He is motivated and genuinely concerned with the running of the business and brought forth his motion to run the companies. The Court agrees that it is financially important to this family that the companies continue to be a going concern.

[45] Therefore, Mrs. Syed is not entitled to costs on a full recovery basis but rather on a substantial indemnity basis.

(c) the lawyer’s rates

[46] Mrs. Syed’s lawyer is a senior family law practitioner with an expertise in high income family law cases. His rate is reasonable. His junior associate called in 2012 has a rate of $225 per hour which is also reasonable.

(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

[47] As stated in 25 (10), costs need to be determined at each step of the way. The Court appearances were as follows:

(i) October 25, 2016 before Justice Shelston: costs not determined nor reserved; (ii) October 28, 2016 before Justice Sheard: costs not determined nor reserved; (iii) November 25, 2016 before Justice Sheard: costs not determined nor reserved; (iv) January 11, 2017 before Justice Doyle – costs reserved to motion’s Judge; (v) January 27, 2017 before Justice Doyle – costs reserved to motion’s Judge; and (vi) February 27, 2017: before Justice Doyle – costs reserved to motion’s Judge.

[48] Therefore, the time spent after the second appearance before Justice Sheard was $68,067.75. Substantial indemnity basis of 65% is $44,244.04.

[49] Legal costs associated with the preparation of the costs submissions are permissible.

(e) expenses properly paid or payable

[50] The Court makes the following findings regarding the disbursements claimed by Mrs. Syed:

• The Court accepts the expense of $2,004.40 for court reporter fees for questioning. The relied on the transcript;
• The photocopies cost of $1,794.75 is high and is not supported by the number of copies used. Nevertheless, in a case of this magnitude of six volumes of the Continuing Record, case law and numerous court appearances before me, the Court finds that this is not an unreasonable claim;
• Regarding Steve Pittman’s account for services, no invoice or account was attached to the submissions. The Court notes that there were a number of letters written by Mr. Pittman and undoubtedly there would have been discussions with counsel in the process. The court finds that Mrs. Syed did require the expertise of a Certified Business Valuator and given the complexity of the matter, including the number of companies and the multi-million value of the family property, Mr. Pittman’s fee of just over $5,000 is reasonable.

[51] A fair amount would be $7,500 for disbursements on a substantial indemnity basis.

[52] Therefore, reasonable, fair and proportionate costs for the fees and disbursements and HST at $51,744 are ordered.

Justice A. Doyle Date: 2017/06/19 Released: 2017/06/19