COURT FILE NO.: FS-16-85927-00 DATE: 2018-11-09
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
SUKHWINDER S. DULKU Kavita V. Bhagat, for the Applicant Applicant
- and -
PARMINDER KAUR DULKU Mukesh Bhardwaj, for the Respondent Respondent
HEARD: September 28, 2016, at Brampton, Ontario
Costs Endorsement Price J.
OVERVIEW
[1] In April 2016, the applicant/husband, Sukhwinder S. Dulku (“Mr. Dulku”), wanted the parties’ matrimonial home sold so that he could use his share of the equity to move out of the basement apartment he shared with his parents to a home that would better accommodate his three children when they were in his care. The respondent/wife, Parminder Kaur Dulku, wanted to realize her entitlement to support and equalization of net property so that she could use them to buy out Mr. Dulku’s interest in the matrimonial home and continue living there with the children.
[2] On April 26, 2016, the parties consented to an order of Snowie J. that was intended to establish a framework that would enable Ms. Dulku to buy Mr. Dulku’s interest in the home or, if she was unable to do so, that would facilitate the parties’ listing of the property for sale. When a dispute later arose between the parties regarding the proposed buy-out, both parties moved for orders enforcing different elements of Justice Snowie’s order. Mr. Dulku moved for the immediate sale of the home; Ms. Dulku moved for a determination of her rights to equalization of net family property, and a determination of the value of the home, child support, and a variation of access by Shareen Dulku to Mr. Dulku. She also sought financial disclosure from Mr. Dulku.
[3] The Court heard the motions on September 28, 2016, after which it released a decision on October 13, 2016. The Court directed that if the parties were unable to agree on the costs of these motions, they should submit written arguments on that issue, and a Costs Outline. The parties were unable to agree on costs and filed their written submissions. The Court has reviewed their submissions and will now address that remaining issue.
THE DECISION ON THE SUBSTANTIVE ISSUES IN THE MOTIONS
[4] In its reasons dated October 13, 2016, the Court held that Mr. Dulku’s motion for the immediate sale of the home was premature until he amended his application and motion to plead the Partition Act, which was the sole basis for the court’s jurisdiction to order a sale of a matrimonial home, absent the narrow circumstances in which the court can make such an order under the Family Law Act, which did not exist in the present case. The Court further held that the consent that the parties signed on April 26, 2016, which was the basis for Justice Snowie’s order, was conditional on steps which the parties did not take, and could not later confer jurisdiction on the court to order a sale.
[5] The Court found that an order for the immediate sale of the home would defeat Ms. Dulku’s rights under the Family Law Act to possession of the home and to use her entitlement to an equalization payment, retroactive child support, and repayment of the $60,000.00 proceeds from the sale of her truck, which Mr. Dulku was holding, to buy out Mr. Dulku’s interest in the home. Having regard to the dispute as to the value of the home and, therefore, as to the amount of equalization payment that Ms. Dulku was entitled to, the Court held that it could not be said that her claim had no reasonable prospect of success.
[6] The Court held that while no final determination could be made at that point as to the value of the home, and as to the amount of Ms. Dulku’s entitlement to an equalization payment, a determination could be made, on a temporary basis, as to the child support she was entitled to receive, retroactive to March 2016, when Mr. Dulku was removed from the home.
[7] In order to avoid further delay and legal expense, the Court adjourned the motions to October 27, 2016, to give Mr. Dulku the time he needed to amend his pleadings and to give Ms. Dulku the time she needed to secure pre-approval for financing of a buy-out of Mr. Dulku’s interest in the home, and to make an offer to him. In the meantime, the Court:
(a) granted leave to Mr. Dulku to amend his pleadings and motion to plead the Partition Act;
(b) ordered Mr. Dulku to pay temporary child support, in the amount of $386.00 per month, and retroactive support, in the amount of $3,088.00, to Ms. Dulku, and to provide full financial disclosure to her;
(c) established a deadline for Mr. Dulku’s parents to assert a claim to an interest in the home, if they intended to do so;
(d) ordered Ms. Dulku to obtain approval for financing her buy-out of Mr. Dulku’s interest in the home and to deliver a proposal for either such a buy-out or the distribution of net proceeds of sale of the home to a third party;
(e) directed the parties to make efforts to agree on a draft listing agreement.
[8] On October 27, 2016, The parties attended with Mr. Dulku’s parents, who indicated that they intended to assert their own claim to an interest in the parties’ matrimonial home and required a further month to retain counsel and make their Application. Counsel advised that the parties had completed the disclosure required by this Court’s Order dated October 13, 2016, and had obtained a joint valuation of the home. Counsel indicated that they might need to conduct questioning and that a meeting with the Dispute Resolution Officer of a process of mediation or mediation/arbitration might be helpful. As it was appropriate that those processes include Mr. Dulku’s parents, if they intended to commence their own application, the Court established a timetable, including a Settlement Conference that was to take place on January 18, 2017.
[9] On October 3, 2017, the parties consented to an Order by Trimble J. for appraisal of the matrimonial home. On June 6, 2018, the parties consented to a further Order requiring Mr. Dulku and his parents to provide proof of the funds they used as a down payment/deposit for the purchase of the home. The proceeding is now awaiting a Settlement Conference on November 27, 2018.
ISSUES
[10] The court must determine whether one of the parties should be required to pay the other’s costs of the motions and, if so, in what amount.
PARTIES’ POSITIONS
Mr. Dulku’s position
[11] Mr. Dulku submits that there should be no costs paid as neither party was successful in respect to their claims for the matrimonial home. Mr. Dulku sought the sale of the home but was not opposed to Ms. Dulku buying out his interest if she were able to satisfy the court that she could refinance the property in her name. She was ultimately unable to do so.
[12] The parties were unable to come to an agreement on the price for a buy out and despite the appraisal obtained at that time, Ms. Dulku argued that the price should be lower. Mr. Dulku notes that the principal issue, and the most time consuming one, on the motion and cross-motion was the method of disposition of the home. He submits that his motion for sale of the home was necessary and not unreasonable, in order to implement the condition which Snowie J. had imposed in her Order dated April 26, 2016, for sale of the home if the parties were unable to agree on equalization and Ms. Dulku was unable to obtain pre-approval of financing for her proposed buy-out.
[13] Mr. Dulku acknowledges that Ms. Dulku was successful on the issue of child support but notes that this was not relief that she had sought in her motion.
[14] Mr. Dulku acknowledges that Ms. Dulku made an Offer to Settle, but notes that it based an equalization payment on the premise that Mr. Dulku owed her the $60,000.00 he had received from the sale of her truck, which he continues to contest, arguing that the money was paid to him in repayment of monies Ms. Dulku owed him. That issue has not yet been determined.
[15] In his Bill of Costs, Mr. Dulku says that he incurred costs in the amount of $12,825.00 in fees and $579.25 in disbursements.
Ms. Dulku’s position
[16] Ms. Dulku submits that she was largely successful by staying the sale of the home until at least June 2017, when Shareen graduated from grade 8. She notes that the Court “allowed the Respondent time to obtain a pre-approval for a mortgage in order to buy out the Applicant”. She argues that she was also successful in obtaining an order for temporary child support and retroactive support for the two children in her care. She was also successful, she says, in her claim “that the $60,000 loan given to the Applicant from the Respondent’s truck sale was to be returned to her upon either the buyout or sale of the matrimonial home.”
[17] Ms. Dulku submits that she incurred costs of $11,648.61 on the motions, consisting of fees of $11,477.41 (inclusive of HST), and disbursements of $171.20.
ANALYSIS AND EVIDENCE
1. General Principles
[18] A successful party is presumed to be entitled to his or her costs, pursuant to Rule 24(1) of the Family Law Rules. The preferable approach in family law cases is to allow costs on a full recovery basis, provided the successful party acted reasonably and the costs claimed are proportional to the issues and results and were within the range that the opposing party should have expected if unsuccessful in the motions. Sims-Howarth v. Bilcliffe, 2000 ONSC 22584, para. 11; Biant v. Sagoo 2001 ONSC 28137, para. 1.
[19] Costs Orders are designed to achieve three principal purposes, (a) to indemnify successful litigants; (b) to sanction unreasonable conduct of the litigation; and (c) to encourage settlement. Serra v. Serra 2009 ONCA 395; Docherty v. Catherwood, 2016 ONSC 2140; Chan Fong et al v. Chan et al.
[20] A litigant whose conduct was reasonable and who is successful in a proceeding should not be required to bear the costs of having his rights tested. Serra v Serra 2009 ONCA 395. However, an unsuccessful litigant should not be so heavily burdened with costs as to discourage other litigants from submitting issues to the court where the outcome is not a foregone conclusion that the parties should have anticipated.
[21] Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs he may face if he is unsuccessful. In appropriate circumstances, unreasonable behavior will result in a higher award of costs. In Perri v. Thind et al., (2010), 98 O.R. (3d) 74 (S.C.), Henderson J. granted leave to appeal to the Divisional Court from a costs award that was a marked departure from the normal or routine costs made in motions court. In doing so, he stated that costs orders are not designed mainly to be a punishment, but acknowledged that costs, when awarded on a higher scale, can serve to express the court’s disapproval of unreasonable conduct. Perri, at paras. 24-26, 32-33.
[22] A litigant who has achieved a successful outcome may also be deprived of costs in certain circumstances, including where he has behaved unreasonably. Rule 24(4) of The Family Law Rules provides, in this regard:
24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behavior in relation to the issues from the time they arose, including whether the party made an offer to settle …;
[Emphasis added]
2. Applying these principles to the facts of this case
[23] Mr. Dulku moved for sale of the matrimonial home. The Court held that his motion was premature, as he had not pleaded the Partition Act and his parents were asserting an interest in the home but had not commenced an Application to assert their claim.
[24] Ms. Dulku moved for a determination of her rights to equalization of net family property, and a determination of the value of the home, child support, and a variation of access by Shareen Dulku to Mr. Dulku. She also sought financial disclosure from Mr. Dulku. The Court held that it could not determine her right to an equalization of net family property until it made a determination of whether the $60,000.00 proceeds of the sale of her truck which were deposited to Mr. Dulku’s account were loaned to him, as Ms. Dulku asserted, or were a re-payment of monies he had loaned to her, as Mr. Dulku asserted. It stated:
[117] While no final determination can be made at this stage of the proceeding as to the value of the home, and as to the amount of Ms. Dulku’s entitlement to an equalization payment, a determination can and has been made, on a temporary basis, as to the child support she is entitled to be paid, retroactive to March 2016, when Mr. Dulku was removed from the home.
[25] Ms. Dulku asserted in her costs submission that this Court determined that the $60,000.00 was hers. I disagree. In the reasons it issued on October 13, 2016, the Court stated:
[98] As noted above, Ms. Dulku entitlement to retroactive child support from March 2016, to October 2016 is $3,088. She may also be entitled to the return of the $60,000 which Mr. Dulku acknowledges having received from the proceeds of sale of Ms. Dulku’s truck in November 2015, shortly before the parties separated.
[107] Based on the foregoing, I am unable to find that Ms. Dulku has no reasonable prospect of buying Mr. Dulku’s interest in the home once her entitlement to an equalization payment, child support, and the return of her $60,000 has been determined.
[26] The Court was also unable, on October 13, 2016, to determine the value of the matrimonial home. It was for that reason that the Court ordered established a deadline for Mr. Dulku’s parents to assert a claim to an interest in the home, if they intended to do so, ordered Ms. Dulku to obtain approval for financing her buy-out of Mr. Dulku’s interest in the home and to deliver a proposal for either such a buy-out or the distribution of net proceeds of sale of the home to a third party, and directed the parties to make efforts to agree on a draft listing agreement.
[27] As noted above, the Court, at page 117 of its reasons, stated, “a determination can and has been made, on a temporary basis, as to the child support she is entitled to be paid, retroactive to March 2016, when Mr. Dulku was removed from the home.” The Court ordered to pay Ms. Dulku child support in the amount of $386.00, and retroactive child support, in the amount of $3,088.00.
[28] Mr. Dulku states, in his costs submissions:
- The Applicant acknowledges the Respondent was successful on the issue of child support however this was not a relief sought as part of the motion. Also, the financial statement filed in compliance with the order 2 weeks after the order disclosed that the respondent income was $64,800.
[Emphasis added]
[29] I disagree. Ms. Dulku requested a determination of her entitlement to retroactive child support from the date of separation in her Notice of Motion. The Order made for child support, including retroactive support, was based on that claim.
[30] The starting point in any costs analysis is the presumption that a successful party is entitled to costs. Rule 24(1).
[31] Rule 24 of the Family Law Rules provides, in part:
24.(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(4) Despite subrule (1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs.
(6) If success in a step in a case is divided, the court may apportion costs as appropriate.
(10) Promptly after dealing with a step in a case, the court shall, in a summary manner,
(a) determine who, if anyone, is entitled to costs in relation to that step and set the amount of any costs; or
(b) expressly reserve the decision on costs for determination at a later stage in the case.
(11) The failure of the court to act under subrule (10 in relation to a step in a case does not prevent the court from awarding costs in relation to the step at a later stage in the case.
[32] In the present case, the Court’s hope was that by adjourning the motions to a later date and providing a timetable for the steps that appeared to be necessary to enable the parties to settle the issues, it would encourage the parties to settle those issues, as well as the costs of the motions. That hope was not realized, and it appears from subsequent developments that the parties are still providing the financial disclosure and obtaining the valuation of the property that may enable them, eventually, to settle the property issues.
[33] At the hearing on September 28, 2016, and in the reasons it issued on October 13, the court made a temporary Order for child support and retroactive child support, based on the income that Mr. Dulku acknowledged. This was a relatively minor issue in the motions, which focused primarily on the property issues.
[34] In Scipione v Scipione, 2015 ONSC 5982, Pazaratz J. stated:
- “Divided success” does not necessarily mean “equal success”. And “some success” may not be enough to impact on costs.
a. Rule 24(6) requires a contextual analysis.
b. Most family court cases involve multiple issues.
c. Not all issues are equally important, equally time-consuming or equally expensive to determine.
d. Comparative success can be assessed in relation to specific issues:
i. Did a mid-point number prevail on a financial issue?
ii. Did a compromise result on a parenting issue?
e. Comparative success can also be assessed globally in relation to the whole of the case:
i. How many issues were there?
ii. How did the issues compare in terms of importance, complexity and time expended?
iii. Was either party predominantly successful on more of the issues?
iv. Was either party more responsible for unnecessary legal costs being incurred?
[35] This is such a case. The Court’s Order did not determine child support in a final or even in a meaningful temporary manner. In its reasons dated October 13, 2016, the Court stated:
[108] As noted above, Mr. Dulku’s Line 150 income, as stated in his most recent Notices of Assessment, was $25,326 in 2012, $25,500 in 2013, and $25,950 in 2014. As there was little fluctuation in his income over those years, I find that his income is $25,950, based on his most recent Notice of Assessment, pursuant to s. 16 of the Child Support Guidelines. This amount is likely under-stated, having regard to the fact, as noted above, that he appears to have spent or otherwise disposed of $105,000 from January 15 to June 2016.
[109] Based on Mr. Dulku’s income of $25,950, his child support obligation for the support of Shareen and Gaurav is $386 per month. His retroactive child support obligation from March 2016, when the parties separated, to October 2016, is therefore $3,088. These amounts will be subject to re-calculation when better evidence is available regarding Mr. Dulku’s income.
[Emphasis added]
[36] While Ms. Dulku was successful in her claim for child support in the sense that the Court made an award of temporary child support on October 13, 2016, the amount of support that the Court awarded was based on Mr. Dulku’s reported income and not the income that Ms. Dulku sought to have imputed to him. In that sense, Mr. Dulku was successful.
[37] If it develops that Mr. Dulku was indeed under-stating his income, and was deliberately withholding relevant financial information in order to avoid paying a greater amount of child support, he may be liable for costs of that aspect of the motion, and possibly the balance of the motion, dealing with sale of the home and division of net family property and of the proceeds of sale of the home, on a full recovery basis. If, on the other hand, it develops that Mr. Dulku was not over-stating his income, was making full financial disclosure, and that Ms. Dulku was acting unreasonably by seeking to have a greater amount of income imputed to him in order to procure a greater amount of child support and a higher equalization payment, then she may face liability for the costs of the motion on a full recovery basis.
[38] Ms. Dulku’s claim for child support was one of several issues that the parties raised in their motions. The issue of whether the matrimonial home was to be sold before trial, whether Ms. Dulku would be permitted to buy out Mr. Dulku’s interest in the home, what equalization payment Ms. Dulku was entitled to and, if the home was sold, how the proceeds of sale would be divided, were greater issues in terms of importance, complexity, and time expended. Neither party was predominantly successful on more of the issues, as most of the determination of most of the issues was deferred until Mr. Dulku’s parents issued their Application, disclosure was provided, the home and the parties’ respective net family properties were properly valued, and Ms. Dulku ascertained whether she could obtain approval for financing a buy-out of Mr. Dulku’s interest in the home. While it could be said that Mr. Dulku was responsible for unnecessary legal costs by bringing his motion before pleading the Partition Act in his Application and motion, it could also be said that Ms. Dulku was unreasonably delaying the sale, subject to the proceeds of sale being held in trust pending a determination of the other issues.
[39] Based on the foregoing, I have concluded that the fairest determination of the costs of the motion can best be made by the judge who presides at trial or at a motion at which a final determination of Mr. Dulku’s income and the parties’ respective interests in the matrimonial home is made. Those determinations will inform both who bears responsibility for the costs of the motion, the proportion of the costs that should be awarded, having regard to the ultimate findings as to the reasonableness of the positions each party took, and the proportionality of the time spent in relation to the amounts that are ultimately found to have been at stake.
CONCLUSION AND ORDER
[40] For the foregoing reasons, it is ordered that the costs of the motions heard on September 28, 2016, are reserved to the trial judge, or the judge presiding at a motion in which a final determination is made as to child support and the disposition of the matrimonial home.
Price J. Released: November 9, 2018