Court File and Parties

COURT FILE NO.: FS-12-1813000 DATE: 20181012 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

SUZANNE MARGARET GEISHARDT Applicant

Lisa Kadoory and Jonathan Stankiewicz, For the Applicant

• and -

SHAFQAT MONWAT AHMED Respondent

Daryl Gelgoot and Jen-Yii Liew, For the Respondent

Second Supplementary Judgment and Costs Endorsement

D.L. Corbett J.:

[1] This is the second supplementary decision following the judgment dated September 25, 2017 (Geishardt v. Ahmed, 2017 ONSC 5513). The first supplementary judgment decided an issue relating to accounting for proceeds of sale of the matrimonial home and a residential condominium (Geishardt v. Ahmed, 2018 ONSC 1676). This second supplementary judgment decides the one remaining issue of substance – the applicant’s request for a spousal rollover of an RRSP – and the question of costs of the application.

1. The Spousal Rollover

[2] In the first supplementary judgment I dealt with this issue as follows:

I conclude that I cannot decide the spousal rollover issue without hearing further from the parties. It is not clear to me that this issue was addressed in the evidence or in argument, and I will need counsel to assist in refreshing my memory on (a) what evidence was led on this point at trial; (b) the testimony of the parties respecting how this was addressed between them from the time of the Separation Agreement until trial; and (c) the arguments that were made on this point during final argument.

The Separation Agreement provided for equalization of RRSP’s by way of rollover, and clearly this was never done. Dr Ahmed claims in his written submissions that he cashed in portions of his RRSP’s and paid the proceeds into the joint chequing account where they were used by the parties for their joint expenses. He claims that this was done at the request of and to the knowledge of Dr Geishradt.

I have no recollection of evidence about what was said or done over the years between the Separation Agreement and the trial about Dr Ahmed’s failure to equalize the RRSP’s. In contrast, I did hear about steps Dr Geishardt took about Dr Ahmed’s failure to comply with insurance provisions of the Separation Agreement, and I did hear about the parties identifying their disagreements over the equalization of net proceeds of sale of their real estate and agreeing to without prejudice interim arrangements, thus preserving their positions respecting their underlying dispute respecting that issue.

I decline to decide the spousal rollover issue on the strength of the written submissions now before me and direct that the parties may address this issue in oral submissions at the same time that they make oral costs submissions. (paras. 18-21)

[3] I conclude that the spousal rollover has been effected by payment of proceeds of Dr Ahmed’s RRSP into the joint account where those proceeds were used to fund ongoing living expenses of both parties. The precise accounting for these proceeds is difficult, for all of the reasons I give in the main judgment respecting the financial practices of the parties for many years following separation. However, I am satisfied that there was substantial compliance with the rollover obligation, to Dr Geishardt’s satisfaction, based on her failure to make any complaint or demand respecting the RRSPs until long after they had been cashed to pay the parties’ expenses. I also note that Dr Ahmed’s RRSPs were spent by the parties post-separation, and Dr Geishardt’s much smaller RRSPs have remained in her name and have not been equalized.

[4] In conclusion, I find that Dr Geishardt’s request to equalize Dr Ahmed’s RRSP should be dismissed because the RRSPs have already been equalized and spent already.

2. Costs

[5] Success has been divided on the basis of the issues argued at trial. However, Dr Ahmed made several offers to settle and beat his offers in the global result at trial. This leads to several questions respecting costs:

A. Dr Ahmed’s offers came before trial, but well along in the application process, after discoveries and expert reports. Dr Geishardt is the applicant. Should she receive costs to the date of the Dr Ahmed’s first offer?

B. Dr Ahmed alleged breach of fiduciary duty respecting Dr Geishardt’s management of family finances, and in particular, respecting her unlimited recourse to the joint account after separation. This issue consumed considerable trial time and was, in my view, misconceived. Dr Ahmed beat his offers to settle at trial, effectively valuing this issue at zero for the purpose of his offers. Should he recover his costs for litigating this issue? Should Dr Geishardt receive her costs for defending this issue? Should there be no costs respecting this issue? Or is some other disposition of this issue appropriate?

C. Dr Ahmed was required to provide an income report to establish his income for support purposes. This requirement was necessary because of the tax issues I reviewed at length in the judgment. I doubt that an expert report would have been required if the deductions claimed by Dr Ahmed on his tax returns had been reasonable – as a trial judge I could have adjusted car and other expenses for family law purposes without the parties incurring the substantial expense of an expert. Should Dr Ahmed bear the expense of an expert income report, as part of the cost of discharging his disclosure obligations? Should he recover these costs as part of his costs of the application? Or should there be some division of these costs in recognition of the participation of both parties in the circumstances that gave rise to the need for this expert report?

D. What are the fair and reasonable costs, once these preliminary issues are decided?

A. Who Prevailed?

[6] It is common in family law cases for there to be multiple issues. And it is common for success to be divided in the sense that each party wins some issues and loses others. But this does not mean that costs should not be awarded. The court assesses overall success on all issues and reasonableness of conduct throughout to decide who should get costs and on what scale. This does not turn on who happens to be the applicant and who happens to be the respondent. It is true that Dr Geishardt sued for support and received a judgment for support, but Dr Ahmed had been supporting Dr Geishardt for years before a temporary support order was made, on consent, which continued until trial. And, in this case, it was Dr Ahmed who took the initiative to assert a claim through a lawyer’s letter, and Dr Geishardt then commenced proceedings before Dr Ahmed did so, as he had indicated he would do. Costs do not turn on who wins the race to get to the court office first, and thereby becomes the applicant.

[7] In this case all the issues were financial. There were two big issues – support and the claim for damages for breach of fiduciary duty. There were subordinate issues relating to the enforceability of the Separation Agreement, and some minor questions concerning personal property. Success was divided on the support issue, but Dr Ahmed beat his offer on this issue. Dr Geishardt won the fiduciary duty issue, but she did not make a material offer to settle. Dr Geishardt won the issue of enforceability of the Separation Agreement, but this victory was somewhat Pyrrhic, given Dr Ahmed’s success on the issue of support. And overall, Dr Ahmed beat his global offer to settle all issues.

[8] In my view Dr Ahmed prevailed in this trial and should have his costs throughout, subject to the adjustments I make for the reasons given below. Dr Ahmed’s conduct was more reasonable throughout these proceedings. Dr Geishardt has already received a substantial windfall because of Dr Ahmed’s inattention to his own financial interests. Dr Ahmed, recognizing the responsibility he bore for his own inattention to his affairs, offered to continue support (at a reduced but generous rate of $25,000 per month) well beyond the period this court found to be appropriate. This is a case where there was more than enough in the way of assets and financial resources for both parties to emerge well from an orderly separation of their financial affairs, without the burdensome cost, delay and stress of extensive legal proceedings. I place the responsibility for this result primarily on Dr Geishardt.

[9] For these reasons, I start from the premise that Dr Ahmed should receive his reasonable partial indemnity costs throughout, and his substantial indemnity costs from the date of his offer to settle (August 23, 2016).

B. Costs for Litigating the Breach of Fiduciary Duty Issue

[10] Marital separation is not a general call for a forensic accounting of all financial events in family history. What’s done is done. Dr Geishardt managed family finances on behalf of the parties, but not on the basis that she was a financial professional paid for her services, bound to account for family money to Dr Ahmed. To try to go back over family finances to create such an accounting, years after the fact, is folly. Of course, where there are sudden departures from the normal course of family affairs leading up to separation, that could warrant investigation and found a claim for unequal division of assets. But that is not this case.

[11] The expense involved investigating and litigating this aspect of the case was substantial. It involved the parties exchanging bank records, credit card statements, and other financial information, going back a decade. Dr Ahmed spent untold hours scouring these records for questionable transactions, and Dr Geishardt was then called upon to try to explain specific transactions that had happened many years in the past. This must have been extremely stressful for both parties, and it substantially increased the costs prior to and during the trial.

[12] In my view this issue was doomed from the outset. After the extensive review that was conducted, what emerged is that both parties spent with little restraint – Dr Ahmed more than Dr Geishardt. By the time this issue reached trial, there being no basis to argue that there had been secret preservation of Dr Ahmed’s money in Dr Geishardt’s name, Dr Ahmed argued that Dr Geishardt’s spending ought to have been limited to some notional amount of reasonable support – something which had never been agreed between the parties and which has no support in the jurisprudence.

[13] This issue distorted the trial process. It diverted time and resources from the real issues and put the parties to considerable unnecessary expense. On first principles, I would award Dr Geishardt costs of this issue, to be offset against the costs to which Dr Ahmed is entitled as the successful party. This conclusion is, however, subject to considering the effects of the offers to settle made by Dr Ahmed. Those offers effectively valued the claim for breach of fiduciary duty at nil. The offers were not severable: it was not open to Geishardt to accept a settlement of dismissal without costs of the fiduciary duty issue without also accepting all the other terms of the offers to settle. However, since Dr Ahmed did beat his offers globally, I conclude that the offers should have some effect on the issue of breach of fiduciary duty.

[14] In the absence of the offers to settle, I would have ordered Dr Ahmed to pay partial indemnity costs for the fiduciary duty issue throughout. I would give effect to the offers by requiring Dr Ahmed to pay partial indemnity costs for the fiduciary duty issue to the time of the first offer to settle, and ordering that there be no costs of that issue from the date of that offer.

[15] I estimate that roughly 40% of trial time was spent on the fiduciary duty issue, and I would use this as a measure for applying my conclusions on this issue throughout the proceeding. Thus, in the result, Dr Geishardt is obliged to pay 60% of the partial indemnity costs of the application to the date of the first offer, netted against Dr Ahmed’s obligation to pay 40% of partial indemnity costs to the date of that offer. I would not undertake separate calculations of the quantum of the parties’ costs (both sides were represented by excellent senior counsel, and their legal expenses were comparable). Instead, I order that Dr Ahmed receive 20% of his partial indemnity costs to the date of the first offer. After the date of the offer, I would deprive Dr Geishardt of her costs for the fiduciary duty issue, but not order costs for Dr Ahmed for this issue, for his unreasonableness in pursuing this issue to trial. I would, however, order substantial indemnity costs for Dr Ahmed after the date of the offer for the portion of costs attributable to everything other than the fiduciary duty issue.

[16] I would not allow Dr Ahmed his costs for expert reports in connection with the breach of fiduciary duty issue.

C. Expert Income Report

[17] I would divide equally Dr Ahmed’s disbursement costs for obtaining reports respecting Dr Ahmed’s income for support purposes. Both parties were complicit in the circumstances that made these reports necessary. The reports were necessary for both parties in order to come to a fair and reasonable conclusion about Dr Ahmed’s income for support purposes. In my view the cost for this report ought to be shared equally between the parties, rather than being wholly recoverable as a disbursement expense by Dr Ahmed.

D. Fixing the Quantum of Costs

[18] I accept the bills of costs submitted by the parties. They are comparable and reflect the substantial effort made on both sides. I have made some minor adjustments to reflect the parties’ arguments about specific aspects of the calculations, rounded the numbers and averaged the costs claims on the basis of the principle in Boucher v. Public Accountants Council [1] but have otherwise relied upon the bills of costs to fix the amounts. [2]

[19] I do have one point on which I do not have enough information. Disbursements are claimed (for expenses other than expert reports) for which I do not have sufficient information. It may be that this issue was canvassed with me when the parties made oral costs submissions, but if it was, unfortunately I do not have a note of it. I would award Dr Ahmed 20% of his actually incurred and reasonable disbursements to August 23, 2016, and 60% of his actually incurred and reasonable disbursements after August 23, 2016. If the parties cannot agree on the quantum that results from this calculation, counsel may arrange a teleconference with me.

[20] On this basis, I find as follows:

a. Partial indemnity costs to the date of the offer are $19,000.

b. Partial indemnity costs from the date of the offer are $180,000.

c. Substantial indemnity costs from the date of the offer are $275,000.

d. Dr Ahmed’s disbursement expenses for experts on the issue of breach of fiduciary duty were $108,118.80 [3] and are disallowed.

e. Dr Ahmed’s disbursement expenses for experts on the issue of income for support purposes were $8,689.70 and will be split equally between the parties.

[21] In the result, Dr Ahmed is entitled to payment of costs by Dr Geishardt calculated as follows:

a. $3,800 to the date of the offer (partial indemnity costs of $19,000 x 20%), plus

b. $165,000 from the date of the offer (substantial indemnity costs of $275,000 x 60%), plus

c. HST on a. and b., plus

d. Disbursements to be agreed by counsel or fixed by this court, plus

e. $4,342.85 (50% of the expert costs for the income valuation issue).

[22] Therefore, order to go that Dr Geishardt pay Dr Ahmed costs of the application fixed at $173,142.85, plus applicable HST, plus disbursements calculated in accordance with para. 21 above, with post-judgment interest payable commencing the date of this endorsement. [4] This amount is in addition to the $3500 in costs ordered by Justice Perkins in his endorsement of October 23, 2015, which are now payable by Dr Geishardt to Dr Ahmed as well.

D.L. Corbett J.

Released: October 12, 2018

COURT FILE NO.: FS-12-1813000 DATE: 20181012 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Suzanne Margaret Geishardt Applicant - and - Shafqat Monwar Ahmed Respondent DECISION D.L. Corbett J. Released: October 12, 2018

Footnotes

[1] (2004), 71 OR (3d) 291 (CA).

[2] I rely on the claim for costs set out in paras. 57 and 58 of the written argument of Dr Ahmed. The amounts set out in written argument are discounted from the numbers set out in the attached bill of costs, and reflect that not all time spent on the case is properly recoverable in a costs award at the end of the case.

[3] This includes the costs of Marmer Penner Inc. and Paul N. Brown.

[4] This total is inclusive of costs reserved to the trial judge by Chiapetta J. in her endorsement of January 13, 2016.