Court File and Parties

OTTAWA COURT FILE NO.: FC-14-2868 DATE: 2018/10/10

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Patricia Gundersen, Applicant AND Leif Gundersen, Respondent

BEFORE: Madam Justice Tracey Nieckarz

COUNSEL: Diana Carr, for the Applicant Guy Le Madec for the Respondent

HEARD at Ottawa: September 20, 2018

Endorsement

[1] This matter was originally scheduled before the Court as a Garnishment Hearing, which arose out of the Respondent’s dispute to the garnishment of his bank accounts and income by the Applicant.

[2] On September 14, 2018 and subsequent to the filing of the dispute by the Respondent, the Applicant served a Notice to Stop Garnishment on the garnishees and the Respondent pursuant to Rule 29(31) of the Family Law Rules. The Notice to Stop Garnishment was filed with the Court on September 17, 2018. The Applicant’s counsel submitted that she had hoped that the Notice to Stop would avoid the need for attendance before the Court. Respondent’s counsel confirms it did not, and that he seeks the following relief:

1. Return forthwith of all monies either held with the Sheriff or paid to the Applicant on account of the Notices of Garnishment, which the Respondent submits total $6,981.94;
2. Payment by the Applicant to the Respondent of the sum of $158.62 on account of credit charges the Respondent claims to have incurred as a result of the Applicant’s allegedly improper garnishment activities;
3. A formal letter of apology from the Applicant to the Respondent apologizing for the allegedly improper garnishment activities; and
4. Costs in the amount of $11,139.65.

[3] Counsel for the Applicant submits that the garnished funds should be paid to the Family Responsibility Office (“FRO”) and credited towards the payment of support. The Applicant further disputes the appropriateness of the interest and costs claim. She takes the position that her actions in serving the notices of garnishment were appropriate at the time they were done. She states that the unresponsiveness of the Respondent to inquiries made necessitated the enforcement proceedings. She further states that it was only as a result of further communications between Counsel that she was able to determine it was appropriate to stop the garnishment process. She claims that in doing so she endeavored to minimize costs in the proceeding. She claims that it was the Respondent’s actions that have unnecessarily added to the costs of this matter given his insistence with respect to certain relief claimed.

The Facts and the Positions of the Parties

[4] After what appears to be an acrimonious family law proceeding, the parties resolved all issues by way of Partial Minutes of Settlement dated March 23, 2017 and Final Minutes of Settlement dated May 10, 2017. The terms of both Minutes of Settlement were incorporated into the Order of the Honourable Justice Shelston dated May 10, 2017 (the “Order”).

[5] At issue is paragraph 33 of said Order, which reads:

“Without limiting the generality of any other provision herein, the Tort claim herein is dismissed subject to the payment of costs, in relation to the Family Law and Tort claims, by the Respondent to the Applicant in the all-inclusive amount of sixteen Thousand, One Hundred dollars ($16,100.00) to be paid in full at the time the respondent receives his income tax refunds arising from the refiling of Tax Returns for tax years 2015 and 2016. No interest shall accrue up to the date of receipt of the last of the income tax refunds.” [emphasis added]

[6] The refiling of income tax returns was necessitated by, and in reference to paragraphs 23 and 25 of the Order, which provided for the tax inclusion and deduction of support payments made prior to the date of the Order.

[7] The Affidavit of the Respondent, sworn September 14, 2018 indicates that the wording of paragraph 33 was specifically crafted so as to permit him to use the tax refund arising out of the deduction of spousal support for the 2015 and 2016 taxation years in order to satisfy the payment owed by him. Despite this, he alleges he received “aggressive” demands for payment of the $16,100 from the Applicant, through her counsel. He claims he made best efforts to complete his refiling as quickly as possible, but the demands persisted. While he has received a tax refund on account of his 2017 income tax return filing, he has not yet received a refund on account of the 2015 and 2016 refiling. He states that the demands were then followed by the garnishment of his bank accounts and his employer. He claims that these actions have left him in a precarious financial position that resulted in his inability to satisfy his support obligations to the Applicant and jeopardized his ability to support the child that lives with him. He states that he has suffered financially by incurring credit charges arising out of the improper garnishment in addition to legal fees. He further states that he has suffered embarrassment by having a notice of garnishment served on his bank and his employer and has suffered from stress as a result of the financial position these actions have placed him in.

[8] The Applicant did not have materials before the Court. Counsel made certain representations, which I will state here for the purpose of the narrative, but given that they do not form part of the evidentiary record the use I am able to make of those representations is limited.

[9] The Applicant claims that she served the Notices of Garnishment with the honest, but mistaken belief that the Respondent had received his refund as contemplated by paragraph 33 of the Order. She claims that numerous demands were made for information from the Respondent’s counsel as to the status of the refiling that went unanswered. When they were eventually answered, the Applicant states that the information provided revealed that the Respondent had received an income tax refund, although he did not clarify that the refund was not on account of the 2015 and 2016 refiling. She proceeded on the assumption that the triggering event in paragraph 33 of the Order had occurred and that the funds were now due and owing to her. Once the dispute was filed to the garnishment and the situation clarified, she stopped the garnishment proceedings. Counsel for the Applicant states that her client has not seen any of the funds realized. If there are funds being held by the Court on account of the garnishment she asks that they be paid to FRO to satisfy support payments, and then FRO may simply credit the Respondent accordingly.

[10] With respect to costs, the Applicant’s position is that she did nothing improper. She submits that her actions were the direct result of a lack of communication from the Respondent. She further states that the Respondent chose to appear before Justice Audet on September 14, 2018 for a case conference when this appearance was entirely unnecessary. The relief the Respondent requested from Justice Audet with respect to an Order requiring the Applicant to file her 2015 and 2016 income tax return was also unnecessary as she had completed these tasks, or was in the process of doing so. She claims that the Respondent has unnecessarily increased the costs of this garnishment proceeding.

Discussion and Analysis

[11] The parties appear to agree, and it is clear on the face of the wording of paragraph 33 of the Order that the triggering event for the Respondent’s payment obligation was the receipt of his income tax refund arising out of the refiling of his 2015 and 2016 income tax returns. It is undisputed that he has not yet received this refund and therefore there is currently no amount due and owing. The $16,100 will not be due and owing until receipt by the Respondent of his refund arising out of the 2015 and 2016 refiling.

[12] As such, the garnishment was premature and the funds that were garnished still properly belong to the Respondent. I am therefore not inclined to order them to be paid to FRO. FRO also has its own enforcement mechanisms for enforcement of support payments and it would appear on the face of the limited evidentiary record before me that the arrears that have accumulated arise largely, if not exclusively, as a result of the Respondent’s funds having been garnished and unavailable for payment to FRO.

[13] Rule 29(19) of the Family Law Rules sets out the orders that may be made by a Court at a garnishment hearing. Rule 29(19) permits the return of the garnished funds to the payor either from the Sheriff, the Court or the recipient of the funds, as the case may be. It is not clear to me where the garnished funds are at this point. Regardless, whether they are held by the Sheriff or by the time this decision is released they have been paid to the Applicant, they shall be paid and returned to the Respondent and it is so ordered.

[14] As indicated to Counsel for the Respondent during his submissions, I question my authority to require the Applicant and/or her Counsel to issue an apology to the Respondent. Regardless, I would not be so inclined and this request for relief is dismissed.

[15] With respect to the claim for interest, again I question my authority to make this order given the powers afforded to me pursuant to Rule 29(19) of the Family Law Rules. Regardless, the evidentiary record does not state what those interest charges are. The Respondent’s Counsel made verbal representations as to this amount. However, there is nothing in evidence that proves these charges were incurred as a result of the garnishment. I also dismiss this request for relief.

[16] With respect to costs, it strikes me that there has been a number of miscommunications between Counsel. Having said this, the garnishment proceeding was premature as the payment obligation was not yet triggered. The Respondent has incurred costs as a result. Without evidence before the Court, it is difficult to assess the Applicant’s claims and the necessity for the appearance before Justice Audet. I must make my decision on the basis of the evidence before me. On the basis of that evidence, I find that the Respondent is entitled to costs of the garnishment proceedings. I am not inclined to grant him the amount requested, nor do I find that this is an appropriate case for costs payable by the Applicant’s lawyer personally.

[17] With respect to quantum, the sum of $5,000 inclusive of H.S.T. is ordered to be payable by the Applicant, to the Respondent on account of his costs associated with the garnishment. While on the face of it the materials filed by the Respondent appear to be lengthy, the length is simply due to the attachment of a significant exhibit. The affidavit of the Respondent itself is only three pages long. The combined time claimed for preparation and attendance at the case conference and this garnishment hearing (which was quite brief and for which no casebooks, factums or authorities were required or submitted) is 27 hours. While I do not doubt the time was spent, I do not find it proportionate to the issue in dispute.

[18] Specifically with respect to costs claimed against the Applicant’s Counsel personally, in Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.) at pp. 135-136 the court held that costs awarded personally against a lawyer were intended as compensation for the successful party and not as punishment of the lawyer. Examples of instances in which such costs will be ordered included proceedings that were cluttered by repetitive and irrelevant material, or excessive motions and applications or when the lawyer had acted in bad faith in encouraging abuse and delay.

[19] In Young, the Supreme Court of Canada cautioned that courts should be extremely cautious in making such costs orders.

[20] The principles governing when an award of costs should be paid by the solicitor personally are set out in Galganov v. Russell (Township), 2012 ONCA 410. The legal test in Galganov is set out at paras. 18-22. Costs consequences may be triggered by either professional negligence or by actions or omissions which fall short of negligence. Bad faith on the part of the lawyer is not a necessary factor triggering cost consequences. Rather, the court, looking at the lawyer’s conduct holistically, must determine whether the lawyer,

…pursues a goal which is clearly unattainable or is clearly derelict in his or her duties as an officer of the court…

[21] The court also be mindful to apply the “extreme caution” principle identified in the Young case and such awards should only be made in the clearest of cases. I do not find that this is such a case. As indicated above it strikes me that there were miscommunications and misunderstandings arising out of those communications between counsel that fall short of the test in both Young and Galganov for ordering costs to be payable by a lawyer personally.

Madam Justice Tracey Nieckarz Date: October 10, 2018