COURT FILE NO.: FC-17-1870
DATE: 2018/05/17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Karen Enid Elaine Martin, Applicant (Responding Party)
AND:
David Blair Watts, Respondent (Moving Party)
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: James D. S. Whyte, for the Applicant
Michael Rappaport, for the Respondent
HEARD: May 17, 2018
Reasons for decision
Introduction
[1] This was a hearing to fix the costs of the motion argued in April (2018 ONSC 2622). It was also scheduled as an opportunity for counsel for the Respondent to address the question whether or not an order should be made under Rule 24 (9) of the Family Law Rules.
[2] As set out below, the Respondent’s counsel sought to bring additional motions instead of addressing the costs issue. Notwithstanding short notice and procedural defects, I disposed of one part of the motion without calling upon the Applicant. I gave directions with respect to the remaining issues. I proceeded to fix the costs of the April motion and I deferred the question of a costs order against Mr. Rappaport to allow him to retain counsel.
Background
[3] On April 19, 2018, the Respondent brought a motion seeking an order for sale of the matrimonial home and related relief, a declaration that a prenuptial agreement was void at law, a declaration that a promissory note signed by the Applicant was invalid and an order dismissing the Applicant’s claim for spousal support.
[4] For reasons released on April 24, 2018 I dismissed the motion but I did rule on a point of law. I held that the motion was untenable and incapable of success in the way in which it was framed. In particular there was no justification for an interim order for sale of the matrimonial home at the instance of the non-titled spouse. I did rule on the assertion that the pre-nuptial agreement was unenforceable under s. 52 (2) of the Family Law Act. Because that section only deals with the rights under Part II of the Act, it is simply incorrect in law to assert that an agreement dealing with the treatment of the matrimonial home for equalization purposes is rendered unenforceable for that reason. The law is the reverse of that asserted by the Respondent.
[5] On the face of the motion, it was misguided, wrong in law and procedurally inappropriate. It appeared that the time and expense involved in the motion had unjustifiably run up costs and wasted costs to the detriment of the Applicant and the Respondent as well as the administration of justice.
[6] As a consequence of this conclusion I put counsel on notice that I was considering an order under Rule 24 (9). That is the rule under the Family Law Rules which permits the court to order that a lawyer who has needlessly or improperly incurred costs may be liable for those costs and may also be prohibited from billing his or her client. As I noted in my earlier reasons, this is not a step to be taken lightly as it is extraordinary relief to be used only in rare cases. Furthermore, it is not a step that should be taken without allowing the lawyer an opportunity to be heard.
[7] The question of costs was adjourned to be dealt with on my 2:00 p.m. list on May 17th.
[8] Rather than advising his client that he may have made an error, reporting the matter to his insurer and arranging his own representation, Mr. Rappaport compounded the problem. Knowing that the question of costs was scheduled to be spoken to today, Mr. Rappaport purported to bring a motion to admit fresh evidence and to re-argue the motion of April 19th as well as other relief.
New Motion Material
[9] The process for scheduling a family law motion in Ottawa is to obtain a date from the family law motions counter if the motion will be less than one hour. Motions of more than one hour or emergency motions require special appointments and can be obtained from the trial co-ordinator. If a matter is already scheduled before a judge or if a judge is seized of a matter then a party could request approval to add additional matters to the list. Except in an emergency or with permission of the judge, the material for the motion must still be properly served, filed with the Clerk and included in the continuing record.
[10] None of these things were done. Counsel for the Respondent did not schedule a motion and did not seek permission to add issues to the costs hearing. Instead he dropped off a letter addressed to me requesting that the hearing of April 19th be reopened because of “fresh evidence of mortgage fraud” and attaching a notice of motion and supporting affidavit.
[11] The notice of motion asked to abridge the time for service, to set aside the decision of April 24, 2018 and to set a second hearing to make supplemental submissions as a result of fresh evidence of mortgage fraud. The motion was also for disclosure of certain listed documents and for costs.
[12] Apparently Mr. Whyte was served with the material by fax after business hours on April 15th. It should be noted that the notice of motion purported to returnable at 10:00 a.m. this morning even though the previously scheduled hearing was for 2:00 p.m. this afternoon.
[13] Despite the fact that the motion was brought on short notice and was not scheduled through the proper channels, I did review the materials to determine if there was any merit to the motion to admit fresh evidence.
Fresh Evidence
[14] When a matter is brought before the court by way of motion or otherwise, it is the responsibility of the parties to marshal the evidence in support of or in opposition to the proposition being adjudicated. Ordinarily, decisions are final and parties are not permitted to develop additional evidence so that they can seek to reargue the matter. As the saying goes, there is “one kick at the can”.
[15] In exceptional circumstances a party may seek to re-open the matter and to have the court admit fresh evidence. The test for granting such a request was outlined by the Supreme Court of Canada in R. v. Palmer.[^1] Although the Palmer test addressed re-opening of a trial, the same principles apply to re-open a motion. The test is as follows: (1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at the original hearing although that may not be applied as strictly in a criminal case. (2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue at the hearing. (3) The evidence must be credible in the sense that it is reasonably capable of belief. (4) It must be such that if believed it would in all probability have changed the decision.
[16] The so called “fresh evidence of mortgage fraud” and other evidence is set out in a 43 paragraph affidavit sworn by the Respondent. It does not in any way satisfy the Palmer test. Firstly, there is no evidence in the affidavit that could not have been available at the time of the motion by the exercise of reasonable diligence. Secondly, none of the evidence which is now tendered would have altered the outcome of the motion as it was structured and argued. Thirdly, some of the evidence is opinion or argument and is internally inconsistent.
[17] To take the example of “mortgage fraud”, the Respondent deposes that he was not aware of the mortgage of $93,000.00 registered against the home in 2015. The implication that the mortgage was not disclosed is inaccurate. The mortgage was disclosed in the Applicant’s financial statement and a copy of the parcel register was attached to the affidavit responding to the April motion. Subsequent to the motion, counsel for the Respondent apparently conducted a title search and obtained a copy of the mortgage. The Respondent deposes that he is “shocked to discover” he signed a consent to the mortgage and states that “even if I read the acknowledgement and direction, which I didn’t, I would not understand it.” He states that the Applicant “betrayed my trust by duping me into signing the consent.” He then challenges the validity of “gifts” the Applicant claims to have received from her late mother and has listed as excluded property on her financial statement. Finally, he declares that the Applicant has “refused to provide any statements as evidence of her late mother’s intention” to gift her those funds and adds that “Mr. Rappaport strongly suspects these funds are proceeds from the $93,000.00 mortgage.”
[18] All of this evidence was available prior to the motion. It certainly does not prove “fraud”. More importantly, it has nothing to do with the reasons for dismissing the motion. None of the relief requested on the motion had anything to do with the mortgage. None of the reasons for dismissing the motion had anything to do with the validity or invalidity of the mortgage.
[19] To take a second example, the Respondent deposes that the Applicant’s appraisal of the matrimonial home is “misleading”. The competing valuations were before the court on the motion and there is nothing in the new affidavit that could not have been put before the court in April. Again, however, no part of the decision turned on the value of the home. It turned on the fact that the Respondent was not entitled to demand an interim sale of the home by means of the motion that was brought and argued.
[20] A third example of so called “fresh evidence” is simply to set out in the affidavit certain provisions of the pre-nuptial agreement. In particular there is a paragraph which reads that “the common residence may be sold at any time at the request of either party, and will be sold if the parties separate.” The agreement goes on to provide a right for each party to purchase the interest of the other at the “buy out price”. This is not fresh evidence. The entire agreement was part of the motion material before the court in April. The motion brought by the Respondent was a motion to declare the agreement to be unenforceable. There was no motion by the Respondent to enforce the agreement or to interpret the agreement. That is an entirely different motion.
[21] In summary, the motion to admit fresh evidence cannot succeed. I did not need to call upon the Applicant to respond. That portion of the motion is dismissed.
Disclosure Motion
[22] For the benefit of the Respondent, it is important to emphasise that the original April motion was dismissed because the issues as framed on the motion were not ripe for adjudication in that manner. The motion to reconsider that motion was dismissed for the reasons set out above.
[23] There are perfectly legitimate questions about the value of the home, the interpretation and application of the pre-nuptial agreement, the exclusions each party claims from net family property. The Applicant may well have to account for the proceeds of the mortgage. Each party will have to prove the value and nature of gifts and debts and other exclusions from net family property. These are live issues that will have to be resolved by agreement or adjudication.
[24] The question is whether that must be done through a trial or can be achieved based on affidavit evidence. In either case the court will only adjudicate the questions when they are properly before the court based on an appropriate evidentiary record.
[25] In order to have such a record, the parties are required to complete financial disclosure. In addition to the disclosure required by Rule 13 and the financial statements, the parties must produce all documents which are relevant to the issues to be adjudicated as defined by their pleadings.
[26] Some disclosure issues were addressed at the original case conference. To the extent that counsel had not agreed on disclosure requirements prior to the conference and did not address any disagreement before the master at the conference, they are required to make best efforts to resolve any disagreements about such disclosure by an exchange of correspondence or by direct discussion. The Rules provide other tools such as a demand under Rule 13 (11) (a) or a request for an affidavit of documents under Rule 19 (1). Questioning under Rule 20 has been authorized by the order made at the case conference and is also available. Rule 13 (13) permits questioning on financial statements.
[27] Of course the Respondent is at liberty to bring a disclosure motion should that be necessary. I would suggest that be done in an organized manner and not piecemeal. If there are large numbers of unresolved demands for disclosure that will require a motion on a regular motions list whereas a short focused motion could be brought at procedural motions court any Tuesday or Thursday morning.
[28] I am not prepared to deal with an unscheduled disclosure motion brought on short notice and out of context. I am therefore denying leave to add the disclosure motion to the matters to be adjudicated today.
Costs of the April Motion
[29] I proceeded to deal with the costs of the motion of April 19th, 2018. The Respondent was entirely unsuccessful on the motion he brought. It is true that the Applicant brought a last minute cross-motion that I declined to hear. That was a cross-motion for exclusive possession and sale of the matrimonial home. In my view it was premature but in any event the argument of the main motion occupied all of the allotted time and there was not time to deal with the cross-motion.
[30] I have reviewed the bill of costs prepared by Mr. Whyte. Notwithstanding Mr. Rappaport’s submission that he would only have sought costs of half that much had he been successful on the motion, I consider the time spent, the hourly rate charged and the disbursements associated with the motion to be reasonable. The total inclusive of HST was $5,277.67. Taking into account that some amount of time may have related to the cross motion, I fix the costs of the motion at $4,500.00 inclusive of disbursements and HST.
Costs of Today
[31] The Applicant is also entitled to costs of the motion to re-open the April motion. Given that Mr. Whyte attended at 10:00 which was the time shown on the notice of motion and again at 2:00, his need to review the materials and advise his client and the time spent in argument this afternoon, I consider his request for $1,000.00 in costs to be reasonable.
Solicitor’s Liability for Costs
[32] In order to be abundantly fair to Mr. Rappaport I have adjourned the question of whether there should be an order under Rule 24 (9). He did not appear to appreciate that he had a right to counsel, that evidence and argument might be required and that he is in a potential conflict of interest with his client over this issue. He advised me he would now be contacting his insurer.
[33] The terms of the adjournment are as follows:
a. The solicitor is to obtain advice concerning his right to legal representation immediately.
b. He is to provide a copy of my previous reasons and these reasons to his client and to discuss with the client whether the client is in need of independent legal advice.
c. A hearing to determine whether a Rule 29 (4) order is appropriate will be scheduled before me for two hours or such longer period as counsel may indicate is required. The date will be scheduled by the trial co-ordinator within the next six months.
Summary and Conclusion
[34] In summary, the motion to entertain fresh evidence and to re-open the April motion is dismissed. I decline to deal with the motion for disclosure. A motion for disclosure may be brought in the regular course but the parties are directed to use common sense and the Rules to narrow the issues. The Applicant is entitled to costs fixed at $5,500.00. The Respondent is responsible for those costs unless the court orders them paid by counsel.
[35] The question of counsel’s liability for those costs and whether he should be entitled to bill his client for these motions is adjourned on terms to a date to be fixed.
[36] A copy of these reasons and the reasons for dismissing the original motion shall be served upon the Respondent by his solicitor.
Mr. Justice Calum MacLeod
Released: May 18, 2018
COURT FILE NO.: FC-17-1870
DATE: 2018/05/17
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Karen Enid Elaine Martin, Applicant (Responding Party)
AND:
David Blair Watts, Respondent (Moving Party)
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: James D. S. Whyte, for the Applicant
Michael Rappaport, for the Respondent
HEARD: May 17, 2018
Reasons for decision
Mr. Justice Calum MacLeod
Released: May 18, 2018
[^1]: [1979] 8 (SCC), [1980] 1 SCR 759