NEWMARKET COURT FILE NO.: FC-04-18706-02 DATE: 20200226 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Marc James Carter Applicant – AND – Deborah Elizabeth Carter Respondent
Self-Represented J. Cox, Counsel for the Respondent
HEARD: December 5, 2019
Ruling on Motion
JARVIS J.
[1] This Ruling involves the choice of appropriate sanction for contempt of court by the applicant (“the husband”) and costs. The husband [1] was found in contempt of six Orders of this court on April 3, 2019. All of the Orders dealt, in whole or in part, with financial disclosure. The full narrative of the procedural history and the extent of the husband’s non-disclosure is set out in my Ruling released on September 13, 2019 and will not be repeated here (2019 ONSC 5267).
[2] The husband maintains that he has done everything within his power to provide the fulsome financial disclosure ordered over the last five years, that he has been defrauded by a former business partner (Jeffrey Lipton, hereafter “Lipton”) and is being victimized by the respondent (“the wife”) in the more recent steps in this proceeding who only wishes his incarceration.
[3] The wife maintains that the husband has purposely disregarded his disclosure obligations, obstructed court Orders and misled this court and others about the true state of his financial affairs. She wants the husband imprisoned to compel his disclosure. The husband has no known exigible assets in Canada: when the disclosure Orders were made the husband had numerous off-shore bank and securities trading accounts for which there was either no or very little disclosure provided. As of June 1, 2019, he owed almost $134,000 in support arrears arising from an Order made by Nelson J. on January 26, 2011 that required payment of $3,000 monthly support, uncharacterized as child and/or spousal support and without tax considerations. This Order was made on consent. As of August 2019, the husband has been complying with the monthly payment term of the Order. The wife also claims full recovery costs of $200,214.37 for the period from January 15, 2019 to December 18, 2019 to compel the husband’s disclosure and for his contempt of court, these costs to be enforceable as a support Order.
Background
[4] The following facts and findings are relevant:
(a) On April 3, 2019 I found that the husband had breached six Orders of this court dealing with his financial disclosure and found him in contempt of court. That finding has not been appealed;
(b) On April 17, 2019 I ordered that the husband be briefly imprisoned, gave directions for him to provide disclosure with respect to certain off-shore banking accounts, and adjourned these proceedings to May 1, 2019;
(c) On April 25 and 26, 2019 Mr. Cox and this court were advised by the Cayman National Bank Isle of Man (“CNBIOM”) that it had significant financial disclosure relating to the husband and a Barbadian insurance and wealth management company with which he was associated (“ASEA”). The documentation forwarded by email was voluminous. When the matter was heard on May 1, Letters Rogatory were issued to a Swiss online bank located in Geneva, Switzerland (Dukascopy) and to authorities in Barbados for assistance. The husband was ordered to have no undisclosed contact with any of the many institutions identified to date in these proceedings, and referenced in the court Orders, except to facilitate their compliance with those Orders. He was provided copies of the material forwarded by CNBOIM. The matter was adjourned to June 5, 2019 to give the parties an opportunity to review the CNBOIM disclosure;
(d) On May 29, 2019 a representative of CNBOIM was examined in the High Court of Justice in the Isle of Man about the husband’s bank accounts with that institution and his relationship with ASEA. The information revealed that the husband had been associated with ASEA from February 2014 to October 2017 in a principal capacity. A deposition taken of the evidence from the CNBOIM representative was forwarded to this court together with hard copies of the information disclosed: this information was co-related to the deposition. Mr. Cox attended that examination;
(e) On June 5, 2019 the wife’s motion was argued and this court’s Ruling was reserved;
(f) On September 13, 2019 this court released its Ruling. Among other things, I found that the husband had deliberately instructed CNBOIM to disobey the disclosure Order made by Justice Sutherland on February 6, 2019 and that he had repeatedly misrepresented his financial affairs to this Court, his wife, his Trustee in Bankruptcy and to the Director of the Family Responsibility Office. The husband also misrepresented his financial affairs to CNBOIM. Between 2016 to 2018 the husband transferred over $260,000 or about $86,600 a year from accounts located outside of Canada to a local Canadian bank account owned by a numbered company (“699”) of which he was the principal. These funds were untaxed, were used by him to pay his living and related expenses and were never disclosed to the wife, the Trustee or this Court until recently. All the amounts transferred were less than $10,000 and so avoided FINTRAC reporting. [2] The husband was in receipt of social assistance in 2018, possibly earlier, until April 2019. He was directed to file with the court by October 31, 2019 an affidavit compliant with the Order made by Sutherland J. on February 6, 2019 and the parties were ordered to return before me to determine the husband’s compliance with the disclosure Order and to address what further period of imprisonment should be imposed. The husband was informed that there would be a period of imprisonment but a mitigating factor would be the court’s assessment of his bona fide disclosure efforts;
(g) The husband filed an affidavit sworn on November 6, 2019. That affidavit purported to explain and address all the outstanding disclosure as identified in paragraphs 5(a) to (c) and 5(f) to (l) of the Orders of Sutherland J. and Nicholson J. (“the disclosure Orders”), [3] some of which had been partly answered earlier in these proceedings; paragraphs 5(d) and (e) of those Orders dealt with disclosure of the husband’s Bank of Montreal personal, business (i.e.“699”) and CNBOIM accounts which were either produced or obtained, as already set out above and in previous 2019 Rulings. Attached to the husband’s affidavit were copies of emails to and from the institutions referenced in the disclosure Orders not all of whom had responded to the husband by the date of his affidavit, and some evidence of disclosure made to the wife’s earlier lawyer of record;
(h) The parties appeared before me on December 5, 2019. During the course of argument, the husband produced banking records for accounts he owned with Capital Security Bank Limited located in the Cook Islands (“the Cook Island accounts”) and stock trading records from one of the institutions (Capital International Group, hereafter (“CIG”)) which is located in the Isle of Man, disclosure of which was subject to the Sutherland J. Order. Despite the husband’s former partner in ASEA (Lipton) referencing these accounts in an affidavit sworn, so it appears, on January 23, 2019 (paragraph 9, Exhibit C) the husband did not acknowledge his ownership of this asset until he attended court on December 5th;
(i) The Cook Island accounts (marked as Exhibit 1 at the motion) recorded transactions from February 1, 2015 to September 27, 2017 for two accounts, a CDN Call and a USD Call account. The USD Call account was set up on February 19, 2015 and on February 27, 2015 there was a wire deposit to the account of $25,448.40 USD recorded from “DGM Bank & Trust Inc”. On March 10, 2015 the CDN Call account recorded a $184,663.33 wire deposit from “Comerica Bank for DGM”. In other words, approximately $213,000 CDN was deposited to these accounts by the husband shortly after they were opened: many of the entries reflect later transfers on a monthly basis to the husband’s 699 company which preceded monthly transfers starting in late 2017 from the husband’s CNBOIM accounts as noted in my September 2019 Ruling (paragraph 29 to (t)).
(j) The husband has said that funds from the sale of his former Ramona Blvd. residence in Markham Ontario (“the Markham property” or “the Markham residence”) on September 29, 2014 totalling $191,155.45 were transferred to Comerica Bank (“Comerica”) and used to fund the Cook Island deposits (although that reference was poorly blacked-out in the document he provided to the court). Comerica is an NYSE-listed financial services company headquartered in Texas, U.S.A. There has been no disclosure of the account records for Comerica bank between the funds transfer and the date of the opening of the Cook Island accounts, no explanation from the husband as to how the Comerica deposit grew by almost $23,000 as represented by the aggregate Cook Island deposits or even how or why DGM Bank & Trust Inc. was related to Comerica and the March 2015 Cook Island accounts deposit;
(k) A handwritten notation in Exhibit 1 suggests a significant wire transfer was made on March 16, 2017 ($33,750.63) from the Cook Island CDN Call account to the Dukascopy Bank in Geneva, to which bank the husband later wired $7,000 USD on January 12, 2018 from his CNBOIM USD account (see paragraph [16] of the September 13, 2019 Ruling). According to the husband, he had several accounts with Dukascopy none of which now has any balance and in respect to which he says that he lost all the funds deposited. He told this court that he could not obtain any records from Dukascopy; in mid-June 2019 the Judicial Branch (Civil Court) of the Republic and Canton of Geneva, Switzerland declined to assist this court’s Letters Rogatory request for disclosure of the husband’s accounts. However, attached to the husband’s November 2019 affidavit were a Consolidated Report statement from Dukascopy dated October 30, 2019 showing a total loss of a $32,000 USD deposit recorded as having been made at or around the time reflected in the Cook Island wire transfer and a copy of a letter from Dukascopy to Mr. Cox dated July 11, 2019 enclosing copies of two account statements in the husband’s name;
(l) The CIG trading record (marked as Exhibit 2) indicated that the account was opened on June 9, 2017 under an ASEA policy owned by the husband and funded by securities’ transfers from “W.H.Ireland” which appears to be a wealth management firm headquartered in London, U.K. On August 17, 2017 the husband instructed CIG to sell his portfolio. It was liquidated on or about August 21, 2017 and the proceeds apparently transferred to CNBOIM although that is not evident from the trading record. CIG is one of the institutions identified in the Order made by Sutherland J.
[5] The husband does not dispute that he originally invested in ASEA in 2006 before he and the wife separated. In two affidavits sworn in early 2019 Lipton said that the husband’s initial investment was $677,086 USD. This was allegedly followed in 2011 by a further investment of $1,345,766 CDN in a Portfolio Policy Bond, which the husband disputes making. Mr. Lipton said that the husband’s investment of over $2,000,000 had been depleted by a deterioration in ASEA business since 2006 and poor investment decisions made by the husband; the husband attributed the loss of his money to Lipton who, along with several others, was alleged to have been engaged for years in a $215,000,000 international Ponzi scheme of which the husband claims he is a victim.
The Parties' Positions
[6] The wife contends that full recovery costs is warranted because the husband has been found in contempt of at least six Orders dealing with his financial non-disclosure and has acted in bad faith in his deception of her and this court about his financial affairs. The husband maintains that he should not have to pay any costs for a broad array of reasons, the thrust of which is that he claims that he was victimized by Lipton in their off-shore business dealings and by his wife by her failure to acknowledge, and diligently pursue and try to understand and accept, his disclosure. He believes that the wife seeks to imprison him because he cannot afford legal representation and that much of her lawyer’s costs are related to Mr. Cox having to familiarize himself with what the husband acknowledges is a voluminous file and that the lawyer has either ignored or not bothered to review in any detail the earlier disclosure made.
[7] As noted in the Ruling released on September 13, 2019 this case began in 2004, spans over 18 volumes of the Continuing Record and (now) involves over 64 Orders (exclusive of enforcement proceedings). The parenting issues were resolved in September 2015. Before then, the outstanding issues also involved equalization of the spouses’ net family properties and child and spousal support: since then none of the financial issues has been concluded because the husband failed to comply with the court’s financial disclosure Orders.
[8] The husband attributes his current dilemma to Lipton’s “malfeasance”. While the scope of the husband’s financial affairs is clearer now than a year ago there remains no clear, credible narrative from the husband about his off-shore business activities in various global tax-havens in terms of tracing the flow of his money; there is certainly nothing from him that acknowledges that he made what this court views was a fraudulent assignment in bankruptcy in October 2016 or anything correcting the impression he left with this court in September 2017 when Kaufman J. was falsely led to believe that the husband was insolvent. Shortly after that court appearance the husband applied for a CNB Gold Mastercard on October 30, 2017 representing, among other things, that he had assets of $1,100,000 USD: [4] as disclosed by the 2019 Bank of Montreal and CNBOIM documents the husband had, in fact, a net cash flow in 2017 of at least $96,140, the characterization of which as either encroaching on capital or representing a return of capital and/or income from the 2014 sale of the husband’s Markham residence (which is what the husband contends) being irrelevant at this juncture because this information was never disclosed by the husband and never discovered until the wife’s recent efforts.
[9] The wife believes that imprisoning the husband, possibly the threat of serial imprisonment like that ordered in Blatherwick, [5] will lead to the husband coming “clean” with her and the court about his financial affairs so that the outstanding financial issues between the parties can be concluded.
Law and Analysis (Penalty)
[10] Family Law Rule (“FLR”) 31(5) sets out with the range of penalties that the court may impose for contempt of court.
CONTEMPT ORDERS (5) If the court finds a person in contempt of the court, it may order that the person, (a) be imprisoned for any period and on any conditions that are just; (b) pay a fine in any amount that is appropriate; (c) pay an amount to a party as a penalty; (d) do anything else that the court decides is appropriate; (e) not do what the court forbids; (f) pay costs in an amount decided by the court; and (g) obey any other order. O. Reg. 114/99, r. 31 (5).
[11] This sub-rule was referenced in the September 13, 2019 Ruling of the court in which the husband was given clear warning that there would be a period of imprisonment imposed, the terms of which would depend on his bona fide efforts to comply with the Order of Sutherland J. Certain excerpts of that Ruling dealing with the husband’s behaviour, his failure and/or refusal to accept responsibility for his non-disclosure and the challenges presented in fashioning a penalty reflective of the court’s displeasure in the context of bringing to an end the parties’ litigation merit repeating:
[23] It is impossible to reconcile the husband’s representations to his wife, his Trustee in Bankruptcy, the CNBIOM, the Director and this court about his financial affairs. It is clear to the court that the husband sought to suppress disclosure of his offshore income and banking affairs, has misled his Trustee in Bankruptcy and has deliberately, and repeatedly, misled this court. It is equally clear that the husband has failed to comply with paragraphs 5(a) to (c) and (f) to (l) of the Order of Sutherland J. There is no evidence of steps taken by the husband to comply with those terms of the Order. It was the wife who obtained the husband’s banking records from the Bank of Montreal (paragraph 5(d) of the Order) and it was CNBOIM that produced its records (paragraph 5(e) of the Order). Even though the husband is aware of the decision of the Swiss Civil Court declining its assistance with respect to disclosure of the husband’s Dukascopy Bank records, there is no evidence of any step taken by the husband to obtain that information himself…
[26] The husband has excused his conduct in these proceedings as being the fault, or responsibility, of others - his wife (for her relentless and unnecessary pursuit of disclosure, and his incarceration); his lawyers (to whom the husband says he gave the disclosure ordered but for whom he has no explanation why the disclosure was not provided); his former ASEA partner (upon whom the husband relied to provide false financial information to CNBOIM, and who the husband now claims defrauded him); and CNBOIM director Williams (who the husband says persuaded him to lie to this court about why CNB/CNBOIM could, or would, not, comply with the direction signed in court by the husband on February 20, 2019 before Nicholson J.). Undoubtedly there are others.
[27] The husband is no deer in the headlights. As noted in my endorsement made on April 17, 2019 he is a sophisticated businessman. He operated his own company before the parties separated and was clearly involved in ASEA handling international client insurance and investment needs. He is knowledgeable about forex and offshore banking jurisdictions…
[30] The court is presented with a Hobson’s choice: incarcerate the husband as the wife proposes with the likelihood that he will lose his new employment and, consequently, no support will be paid; or, defer a sentence of incarceration while support is being paid, with conditions. That is the risk that the wife is apparently prepared to take. She is convinced that the husband’s incarceration will result in compliance with his disclosure obligations and will facilitate a final resolution of the parties’ outstanding support and property affairs, notwithstanding the husband’s bankruptcy. While her submissions have considerable merit, I am not persuaded that the husband’s lengthy, possibly serial, incarceration as was done in Blatherwick will at this time result in the outcome that the wife seeks or that this court deems appropriate despite having given the husband a “last opportunity” once before to comply with the Order of Sutherland J. Incarcerating the husband for 180 days defers compliance with the Order in my view. It is preferable to obtain the disclosure ordered with the husband clearly knowing well in advance the consequences of non-compliance. His compliance will determine the scope of his penalty.
[12] The husband countermanded the Order of Nicholson J. right after he appeared in court and signed, as ordered by the judge, a disclosure Direction to CNB. He sought to suppress that misconduct: initially he told the court that the reason for CNB declining to comply with his Direction related to what he said a bank representative (Williams) told him was a defect in the document, then the husband blamed Williams for misleading him and complained to Williams and legal counsel for CNB (Tong) about the bank’s failure to keep his financial affairs immune from third party scrutiny. [6] While custodial sentences for contempt in family law proceedings are rare, the husband’s behaviour is inexcusable, clearly contumacious, and merits a period of imprisonment. Disclosure of the husband’s financial involvement with CNB and CNBOIM was achieved despite the husband’s concealment efforts and solely as a result of the wife’s initiative and the assistance of the High Court of Justice of the Isle of Man. The husband shall be imprisoned for a period of 30 days.
Law and Analysis (Costs)
[13] The wife claims costs ranging between $160,171.50 and $200,214.37 inclusive of disbursements and HST; she submits that her motion was complex, the issues difficult and of significant importance to her and other family law litigants in her position. The husband submits that no costs should be awarded for a number of reasons: the wife’s motion was tactically intended to pre-empt a motion he had scheduled to review the support Order; that the work spent by the wife’s legal team was excessive; that he had provided disclosure at earlier times in the case that the wife either ignored or that her lawyer overlooked. He re-emphasized his victimization by Lipton.
[14] The FLR set out a principled framework for determining costs. As is frequently noted, three fundamental purposes are served, all consistent with the primary objective to enable the court to deal with cases in a fair and timely manner, namely: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants. [7] Family law litigants are expected to act in a reasonable and cost-effective way: they should, and will, be held accountable for the positions they take in their litigation. [8] The amount to be awarded at any step in a proceeding is what the “court views as a fair and reasonable amount that should be paid by the unsuccessful [party]”: Boucher v. Public Accountants Council for the Province of Ontario. [9] Above all “proportionality and reasonableness are the touchstone considerations…”. [10]
[15] FLR 18 and 24 govern family law costs awards. As neither party delivered an Offer to Settle pursuant to FLR 18 its provisions are not engaged. The wife submitted that no Offer was possible or would be meaningful due to the relief requested and the husband’s history of Order, and disclosure, non-compliance anyway.
[16] The provisions of Family Law Rules 24(1), (5), (8) and (12)(a) and (b) are relevant in this matter:
24(1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal.
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine, (a) 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; (b) expenses properly paid or payable; and (c) any other relevant matter.
(8) 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.
(12) In setting the amount of costs, the court shall consider, (a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues: (i) each party’s behaviour, (ii) the time spent by each party, (iii) any written offers to settle, including offers that do not meet the requirements of rule 18, (iv) any legal fees, including the number of lawyers and their rates, (v) any expert witness fees, including the number of experts and their rates, (vi) any other expenses properly paid or payable; and (b) any other relevant matter. O. Reg. 298/18, s. 14.
[17] The wife succeeded in obtaining disclosure from the husband, much of which should have been disclosed years ago as required by the FLR and court Orders. She is presumptively entitled to her costs and claims that an award of full recovery costs is warranted because the husband has acted in bad faith. In S.(C.) v. S.(M.) [11] Perkins J. defined what “bad faith” meant:
- In order to come within the meaning of bad faith in rule 24 (8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent.
[18] In Scipione v. Del Sordo, [12] Pazaratz J. elaborated:
Bad faith is not synonymous with bad judgment or negligence; rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children’s Aid Society of the Region of Peel v. F. (I.J.), 2009 ONCJ 252, [2009] O.J. No. 2348 (OCJ); Biddle v. Biddle, [2005] O.J. No. 1056 (SCJ); Leonardo v. Meloche, [2003] O.J. No. 1969 (SCJ); Hendry v. Martins, [2001] O.J. No. 1098 (SCJ).
There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated. Stewart v. McKeown, 2012 ONCJ 644, 2012 ONCJ 644 (OCJ); F.D.M. v. K.O.W., 2015 ONCJ 94 (OCJ).
To establish bad faith the court must find some element of malice or intent to harm. Harrison v. Harrison, 2015 ONSC 2002.
Rule 24 (8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. S.(C.) v. S.(C.) (supra); Piskor v. Piskor, [2004] O.J. No. 796 (SCJ); Cozzi v. Smith, 2015 ONSC 3626 (SCJ).
[19] In S.(C.) Perkins J. dealt with full recovery costs relating to the issues affected by bad faith first and then “the whole picture should be looked at again in light of the considerations in rule 24(11) [now rule 24(12)] and the discretion in that provision should be used as necessary to produce the overall correct result”. [13] Full recovery costs were ordered in that case because the father had “acted in bad faith over a prolonged period of time, in relation to more than one issue” the effect of which was “a vastly prolonged and more expensive court case”. [14]
[20] Accordingly, even where the "full recovery" provisions of the Rules are triggered by a finding of bad faith, their quantification still requires an overall sense of reasonableness and fairness. [15] The successful party is not entitled to a blank cheque. [16]
[21] The wife’s costs must be viewed contextually; that is where or at what stage of the current proceedings they were incurred. Unlike S.(C.) or Scipione, whose costs awards were made after a trial, the wife’s claim relates to disclosure enforcement proceedings in a matter that has not yet been heard on its merits and where this court does not have the same kind of comprehensive evidentiary record. While there is no doubt that the husband acted in bad faith with respect to his compliance with the Order of Nicholson J., and the extent of his earlier duplicity involving, for example, his representations to Kaufman J. in 2017 (and others) was not fully revealed until after Mr. Cox was retained, the “full recovery” sanction must reflect the offending behaviour captured during the period for which costs are claimed, and it should be exercised cautiously at a temporary stage in proceedings. In my view, the wife is not entitled to her full recovery costs as claimed but instead she is entitled to full, and partial, recovery costs.
[22] The wife claims costs ranging between $160,171.50 and $200,214.37 inclusive of disbursements and HST. Her Bill of Costs details the date of service provided, a brief description of the work done and by whom it was done, time spent and the amount claimed depending on whether the award is based on a full or substantial indemnity basis, neither of which terms is applicable to family law cases except by analogy to Rule 1.03 of the Rules of Civil Procedure. No Statement of Professional Experience accompanied the Bill: Mr. Cox submitted that his $625 hourly rate is reasonable given the complexity of the case which complexity also justified the assistance of an associate lawyer at the rate of $250 per hour. I agree.
[23] The Bill can be divided into three time periods
(a) January 15, 2019 to February 20, 2019
[24] This period represents the time from Mr. Cox’s retainer and preparation of the wife’s contempt and disclosure motion to the appearance before Nicholson J. on February 20, 2019. Fees charged total $37,612.50. Most of the time recorded related to work done by Mr. Cox. This involved a review of the wife’s file and considerable amendment and revisions made to the wife’s motion and supporting affidavit evidence. The motion heard by Sutherland J. on February 6, 2019 was made without notice to the husband; he was present for the February 20, 2019 return of the wife’s motion before Nicholson J.
[25] In my view, the wife’s claim for this period is excessive. There are several reasons. For example, Mr. Cox’s full hourly rate was charged for travel to and from the Newmarket court as was a full day (7 hours) for the court attendance on February 6. There were (as noted) repeated revisions to the wife’s motion materials, time spent preparing support calculations (even though there was no support motion before the court) and several unattributed descriptions of work recorded. Balanced against these concerns was time spent co-ordinating with the Attorney General offices for the Cayman Islands and the Isle of Man.
[26] Given the status of the file, its history and having reviewed all the material before the court for the period under review, it is my view that a fair and reasonable fees award is $20,000.
(b) February 21, 2019 to June 5, 2019
[27] This period represents the time following the Order of Nicholson J. to the return of the wife’s motion, the Ruling on which was released on September 13, 2019. There were court appearances on April 3, April 17, May 1 and June 5, 2019. Fees recorded as being charged to the wife total $115,537.50. This sum includes a flat fee of $10,000 charged by Mr. Cox for all expenses incurred for his attending at, and assisting in, the proceedings before the High Court of Justice for the Isle of Man on May 29 and 29, 2019.
[28] The husband’s failure to comply with the Orders of Sutherland J. and Nicholson J. directly contributed to the legal expenses incurred by the wife. A significant part of those expenses could have been avoided but for the husband’s behaviour. It is clear from reviewing the Bill of Costs that Mr. Cox was “hands-on” with respect to most of the work done which, in my view, was related to steps reasonably needed, and taken. The time recorded was, for the most part, not excessive or, at least, not beyond an acceptable range for the work described; there was no pattern of double-billing of lawyer and associate or clerical time. The time and services charged for the court appearance on June 5, 2019 (in excess of $10,000) were excessive.
[29] The information obtained from CNBOIM fleshed out a more comprehensive (but still incomplete) picture of the husband’s off-shore financial dealings that he was disinclined to disclose and which revealed his duplicity - to the court, his wife and to his Trustee in Bankruptcy. The husband’s 2014 sale of his Markham residence can, finally and with some degree of certainty, be traced to Comerica Bank in the United States, then to the Cook Island accounts, from there to CNB and to a lesser degree Dukascopy, then to CNBOIM and finally circled back to the 699 accounts with the Bank of Montreal in Markham, Ontario.
[30] The husband acted in bad faith.
[31] The court reviewed the CNBOIM accounts. The wife’s Bill of Costs recorded ten hours for that review which, in my view, is excessive. The wife submitted that Mr. Cox’s attendance at the High Court of Justice for the Isle of Man was required by that jurisdiction’s Attorney General although no evidence of that was provided, nor was any itemized breakdown provided for the $10,000 flat fee charged by Mr. Cox which was submitted to be about one-third of what could otherwise have been charged. It is clear though that the examination of CNBOIM’s representative was well-organized and thorough. Viewed overall, a fair and reasonable award for this period is $75,000.
(c) June 6, 2019 to December 18, 2019
[32] The fees claimed for this period are $11,087.50. Most of these ($6,312.50) relate to Mr. Cox’s review of the transcript of the proceedings from the Isle of Man ($2,000) and preparation for, and attendance at, court on December 5, 2019. Some of the services recorded do not appear to be directly related to the wife’s motion such as research dealing with off-shore assets, preparing an action plan and reviewing an abstract of title, although the charges are modest. The time spent on research for a sealing Order was unnecessary as set out below.
[33] The wife submitted that the husband lied to the court about his Cook Island accounts. That is not strictly accurate because Lipton revealed the existence of at least one account in that jurisdiction in an early 2019 affidavit filed by the wife. The wife was able to obtain the Dukascopy records despite the refusal of the Swiss court to assist.
[34] In my view, a fair and reasonable award for this period is $7,000.
(d) Disbursements
[35] The wife claimed disbursements of $5,188.35 inclusive of HST. No solicitor’s affidavit evidencing third party invoices paid for services was provided but the amounts recorded for mileage, copying and transcript services, appear reasonable for the most part excepting licenced delivery services (almost $1,700) which are unexplained. The wife shall be allowed $4,000 for disbursements, inclusive of HST.
(e) Summary
[36] The fees awarded to the wife are $102,000 which, together with HST, totals $115,620. Disbursements of $4,000, inclusive of HST bring the sum payable by the husband for costs of the wife’s motion to $119,260. One-half of this award, or $59,630, shall be enforceable as a support Order pursuant to the Family Responsibility and Support Arrears Enforcement Act, 1996 [17] because the outstanding financial issues involve equalization of the parties’ net family properties (notwithstanding the husband’s undischarged bankruptcy status) and support; no more principled allocation between those issues is possible based on the evidence before the court.
Sealing Order
[37] When this matter returned to court on December 5, 2019 the wife requested an Order sealing the court file pursuant to s. 137(2) of the Courts of Justice Act. Specifically, she contended that, given the husband’s contempt relating to financial disclosure, if he (or anyone on his behalf) had access to the court file and notice about her current or next steps undertaken to ferret out a more truthful picture of his financial affairs then he would try to move his assets elsewhere, internationally or, as was the case with CNBOIM, direct the relevant institution to disregard a court Order. In this regard the wife relies on Foulidis v. Foulidis, [18] a decision of Harvison Young J. (as she then was) dealing with a sealing Order made in family law proceedings. Additionally, the wife seeks an Order that the husband not be given a copy of any Order made without notice until his contempt has been purged.
[38] In Foulidis a limited publication ban was ordered in a high conflict case where disclosure of certain allegations involving family members implicated, and would harm, the parties’ children. The court declined to extend the ban to disclosure of tax or other financial information. There is no evidence of harm to the parties’ children in this case.
[39] Without deciding the merits of the wife’s request, I am not prepared to deal with it for these reasons:
(a) No notice of this request was given to the husband before the parties attended court on December 5. It would be unfair to the husband, who is unrepresented, to be expected to deal with such a request without having a proper opportunity to respond;
(b) The wife has not complied with section F of Part V of the court’s Consolidated Provincial Practice Direction requiring a person seeking a publication ban to provide notice to media outlets.
[40] The wife’s request for a sealing Order is declined at this time.
Disposition
[41] The parties in this case need finality: too many years have passed since the 2011 support Order of Nelson J. in which the husband was ordered to pay support on an unallocated basis, and which continues to be monitored and enforced by the Director. The husband’s status in these proceedings remains unclear as it is uncertain whether his pleadings have been struck and, even if they were as suggested by the wife, he continued to participate in conference events as late as 2017 despite the parenting issues having been resolved in 2015.
[42] While, as already noted, there appears to be some clarity about the husband’s disposition of the 2014 sale proceeds of his Markham residence, there remains great uncertainty about the alleged loss of almost $2,000,000 that the husband invested in ASEA. [19] Mr. Lipton provided to the wife information that ultimately led to the success of her motion. He attributed the husband’s losses to poor investment decisions made by the husband but there has been no disclosure of what happened to the husband’s investment, information that the husband says is being denied him by Lipton whom he has accused of fraud. Although it is pure speculation, Lipton probably knows, or has access to, more information about the husband and ASEA than acknowledged. The husband has said that he is actively pursuing Lipton and ASEA information with the Financial Services Bureau of Barbados.
[43] Accordingly, the following is ordered:
(a) The husband shall be imprisoned for a period of 30 days to be served on weekends starting March 13, 2020 in accordance with a Warrant of Committal dated February 26, 2020, a copy of which will be sent to the husband along with this Ruling;
(b) The husband shall pay to the wife costs of $119,260 of which $59,630 shall be enforceable as a support Order. Enforcement of these costs, including that part enforceable as support, shall be stayed until the earlier of evidence of the husband’s non-compliance with any part of this Order or a final Order being made in these proceedings. In the event of non-compliance, the wife may move on 10 days’ notice to the husband by Form 14B to my attention to lift the stay;
(c) The husband shall advise the Director and the wife’s lawyer of the name and address of his employer by March 6, 2020 so that, if not already being done, the husband’s support can be collected at source. The wife shall not contact the husband’s employer without leave of the court;
(d) The husband shall provide to the wife a complete copy of any offer of employment made to him by his current employer (or any previous employer in 2019) by the date set out in (c) above;
(e) In the event that the support Order is not currently being enforced at source, the husband shall begin making the $3,100 payments required pursuant to an Order made on June 6, 2019 in Default proceedings to the Director (i.e. $3,000 on account of the support Order and $100 for arrears) as of April 1, 2020;
(f) The husband shall deliver to the wife any and all T3, T4 or T5 statements received by him relating to 2019 by March 15, 2020;
(g) The husband shall file his 2018 and 2019 Income Tax Returns by April 30, 2020 as required by law and provide to the wife a complete copy of those returns (i.e. with all enclosures) by May 8, 2020;
(h) The husband shall provide to the wife true copies of his 2018 and 2019 Notices of Assessment within 10 tens of his receipt of them;
(i) A Case Conference shall proceed before Kaufman J. on June 26, 2020 at 9:30 a.m. This conference will proceed with the husband’s full participation. The Judicial Assistant will forward to the husband a copy of the court’s Case Conference handout. Both parties will be expected to comply with all Case Conference rules. The conference judge will provide such directions, and make such Orders, as the conference judge considers necessary;
(j) The goal of the conference will be to consider the nature and extent of the husband’s future involvement in these proceedings, whether an Order has been made with respect to his pleadings and what further disclosure is required for the next step;
(k) A Support Deduction Order shall issue for $59,630;
(l) Approval of this Order by the husband is dispensed with.
[44] In my view the husband has made substantial (but incomplete) disclosure. What he invested in ASEA and what he earned when associated with that company remain in dispute. The terms of this Order are not so onerous that the husband cannot easily comply with them by the deadlines indicated. The terms of his imprisonment will permit him to retain his employment and ensure the payment of support until further Order.
[45] In the event that either party is unclear about any part of this Order they may contact my Judicial Assistant for directions, such communication to be copied to the other party. This is not an invitation to reargue any part of the wife’s motion or to make further submissions on the merits.
Justice David A. Jarvis
Date: February 26, 2020
[1] Although the parties are divorced, they shall be referenced and “the husband” and “the wife” for convenience and consistency purposes.
[2] FINTRAC is an acronym for The Financial Transactions and Reports Analysis Centre of Canada. It mandates reporting by recipient institutions of cash transactions of $10,000 or more.
[3] These Orders summarized the outstanding disclosure from the six earlier disclosure Orders noted in paragraph 3 of my April 3, 2019 endorsement.
[4] And an income of $150,000 USD. See paragraph 14 of 2019 ONSC 5267.
[5] Blatherwick, 2016 ONSC 11988 (Ont. S.C.).
[6] See paras. [7] to [10] of 2019 ONSC 5267.
[7] Serra v. Serra, 2009 ONCA 395.
[8] Heuss v. Sarkos, 2004 ONCJ 141, 2004 CarswellOnt 3317; Peers v. Poupore, 2004 ONCJ 615.
[9] (2004), , 71 O.R. (3d) 291, 48 C.P.C. (5th) 56, 188 O.A.C. 2001, [2001] O.J. No. 2634, 2004 CarswellOnt 521 (Ont. C.A.).
[10] Beaver v. Hill, 2018 ONCA 840 at para. 4.
[11] S.(C.) v. S.(M.), [2007] O.J. No. 2164 (Ont. S.C.J.).
[12] Scipione v. Del Sordo, 2015 ONSC 5982.
[13] Supra #9 at para. 24.
[14] Supra #9 at para. 26.
[15] Goryn v. Neisner, 2015 ONCJ 318 (O.C.J.).
[16] Slongo v. Slongo, 2015 ONSC 3327 (Ont. S.C.J.).
[17] Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31, as am.
[18] Foulidis v. Foulidis, 2016 ONSC 6732.
[19] This is an observation only at this time: no finding is made that the funds received by 699 were wholly, or partially, attributable to the Ramona Blvd. property.