Court File and Parties

COURT FILE NO.: FC-18-FS-53508 DATE: 2020-04-15 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PETER MICHAEL PROBST, Applicant AND: TASMEEN SHAH, Respondent

BEFORE: Madam Justice J. Breithaupt Smith

COUNSEL: Harley E. Bernard, Counsel for the Applicant Husband Glenda D. McLeod, Counsel for the Respondent Wife

HEARD: In Writing

COSTS ENDORSEMENT

[1] This is the decision on costs following a long motion brought by the Respondent Wife seeking (on a without prejudice basis): a determination of the parties’ incomes to calculate spousal support; the payment of spousal support from the husband to the wife; an advance for interim disbursements payable by the husband to the wife; and financial disclosure. The Applicant Husband brought a cross-motion for similar relief. Argument was heard on February 24th and 28th. The details of the issues are set out in my Reasons for Decision released March 11, 2020.

[2] Modern costs rules are designed to foster four fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants and; (4) to ensure that cases are dealt with justly under Rule 2 (2) of the Family Law Rules. [1]

[3] Costs awards are discretionary and engage two important principles in the exercise of judicial discretion: reasonableness and proportionality. Costs are awarded in family litigation subject to: Rule 18(14) regarding Offers to Settle; Rule 24(4) regarding unreasonable conduct of a successful party; Rule 24(8) regarding bad faith; the factors listed in Rule 24(12); and the reasonableness of the costs sought by the successful party. There is no distinction between family cases having a financial component and family cases that focus exclusively on parenting issues; costs consequences and considerations apply equally to all family litigation. Consideration of success is the starting point. Whilst there is a presumption that the successful party is entitled to costs, judicial discretion prevails; a costs award is not automatic. [2]

Evaluating Success

[4] This motion was not complex. The first issue was a straightforward question of the payment of spousal support, which of necessity would be based upon a determination of incomes for both parties and the use of the Spousal Support Advisory Guidelines. The Wife maintained throughout that she was seeking an order on a temporary, without prejudice basis, meaning that any financial adjustments could be made subsequently on the consent of the parties or by a judge on further motion or at trial. The second issue was somewhat unusual in that orders compelling an advance for interim disbursements are made infrequently. The underlying theme of this matter, as discussed in greater detail in my Reasons for Decision released March 11, 2020, is the lack of full and frank financial disclosure by the Husband.

[5] The Husband’s financial affairs are sufficiently complicated as to require disclosure of voluminous material, and in particular financial statements and income tax returns prepared in connection with his various corporate holdings. Both parties agree that an “income-for-support” report from an accounting expert is necessary to ensure a fulsome understanding of the Husband’s income from all sources. In fact, one of the central disclosure issues revolved around the delay and eventual production of the Husband’s retained expert’s report literally on the eve of argument of this matter. It is trite to say that in the absence of full and frank disclosure, it is impossible for the Wife to obtain the advice she needed – both legal and expert – to consider her options for resolution. Agreeing upon a timeline for the production of financial disclosure at the hearing of argument does not insulate the Husband from the costs consequences of a motion arising from his failure to produce the items requested (many of which were the subject of undertakings given by him at Questioning). This further informs the request for interim disbursements, which become necessary so as to provide the Wife with sufficient liquidity to retain her own expert to evaluate the materials provided with a view to pressing forward to trial.

[6] By way of timeline, it is relevant to note that the original Notice of Motion was served on Friday, October 11, 2019 with the Husband’s expert’s income-for-support report being served on Friday, February 21, 2020 after the motion had been called for argument on Monday, February 25, 2020. The agreed-upon timeline for disclosure will see all requested materials in the Wife’s counsel’s hands by May 31, 2020.

[7] Without saying so explicitly, the Husband appears to concede that the Wife was successful on most aspects of the motion, as his costs submissions presume that some quantum of costs will be payable by him. I agree.

Offers to Settle

[8] Although the Husband notes in his costs submissions that the Wife’s Offer to Settle was silent on the figures to be attributed to the each of the parties as income, this does not negatively impact the analysis. The purpose of determining underlying income figures is to engage with the Spousal Support Advisory Guidelines as a tool for defining the quantum of spousal support. I would note further that in the Part of her Offer dealing with the spousal support issue [3] the Wife offered to adjourn income determination to the trial.

[9] With respect to spousal support, the Wife offered to accept $3,000 monthly commencing October 1, 2019. The offer was thus retroactive, but the quantum of spousal support anticipated the Court’s decision almost to the dollar, as the Temporary, Without Prejudice Order provides $3,011 monthly in spousal support commencing March 1, 2020. The Husband’s costs submissions do not raise any issue comparing the spousal support commencement dates in the Wife’s Offer and the Reasons for Decision, which is sensible having regard to the inherent without prejudice nature of the Order made. It bears repeating that the Wife’s request for spousal support has been consistently without prejudice to a final determination of the issue. A second interesting point is raised by the Wife’s Offer to Settle, namely the continued obligation of the Husband to cover all household expenses in addition to the payment of spousal support. While at first glance it would seem that the Wife’s Offer to Settle therefore contemplated the global monthly payment by the Husband of more than $3,000 toward her living expenses, the language in paragraph 6 of the Wife’s Offer to Settle specifically makes the payment of household expenses by the Husband “without prejudice to [his] ability to seek reimbursement of one-half of the subject expenses from [the Wife] at the trial of this matter.” In the context of this matter, where it is clear that the Husband is writing off an undefined amount of household expenses against his income, [4] it would be difficult to generate a better solution on an interim, without prejudice basis. Thus, both the start date and the issue of household expenses become moot for the purposes of this costs analysis and the Wife surpassed her Offer to Settle on the issue of spousal support.

[10] On the issue of the advance of disbursements to provide the Wife with resources to engage an expert, her Offer to Settle was far more favourable to the Husband than the Order made. The Wife offered to accept $15,000 payable directly to her retained expert, Mr. Timothy Rickert of BDO. In fact, I ordered that the sum of $40,000 be paid by the Husband to the Wife for the purposes of funding her expert fees on the two issues of the Husband’s income-for-support and the valuation of the Husband’s businesses. In this regard, the Wife again surpassed her Offer to Settle.

[11] Finally, on the question of outstanding disclosure, although the Husband brought a cross-motion seeking information and documentation from the Wife, by the time of argument the Husband’s counsel confirmed that all requests had been satisfied. The parties agreed to a timeline for the Husband’s outstanding productions, which timeline ends May 31, 2020. I am mindful, however, of the possibility that disclosure would not have been forthcoming without the Wife’s motion to compel its production and take that into account in my analysis.

Conduct and Bad Faith

[12] The Wife alleges that the Husband behaved unreasonably and demonstrated an attitude of bad faith. The essence of bad faith is the representation that one’s actions are directed toward a stated goal while one’s secret, actual goal is something else. [5] The Husband’s position that he should pay $360 monthly in spousal support was predicated upon the incorrect presumption that the Wife should be earning income commensurate with her full-time capacity of almost ten years ago. While his position was untenable in argument, that does not rise to the level of “bad faith.” Similarly, contesting the question of an advance for interim disbursements is not inherently unreasonable or in furtherance of a secret goal. The same cannot be said on the disclosure issue. As noted in my Reasons for Decision at paragraph 10, I have no difficulty concluding that Mr. Probst’s failure to make disclosure in a timely fashion was intended to prejudice Ms. Shah’s ability to address the substantive issues raised in this motion, and specifically spousal support.

Rule 24(12) Factors including Reasonableness and Proportionality of Costs Sought

[13] The Court of Appeal set out the following factors in assessing reasonableness and proportionality of costs: [6]

1. Ultimately, costs decisions should reflect what the court considers to be a fair and reasonable amount that the unsuccessful party should pay.
2. Costs need to be proportional to the issues and amounts in question and the outcome of the case.
3. Amounts actually incurred by the successful litigant are not determinative.
4. In assessing what is fair and reasonable, the expectation of the parties concerning the amount of a costs award is a relevant consideration.

[14] The court is not required to conduct a line-by-line analysis of the Bills of Costs provided. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. [7]

[15] Looking comparatively at the Bills of Costs produced, they show total costs (inclusive of all disbursements and HST) of $37,579.35 claimed by the Wife and $22,056.51 claimed by the Husband. [8] Those amounts include time by the instructing lawyers and by their juniors and staff in addition to disbursements. None of the hourly rates put forward are unreasonable. While the figures themselves are large, the voluminous material filed for use on this motion attests to the multiplicity of issues, however basic, to be addressed. The following chart compares the time expended on the file in generalized categories:

	Wife’s Counsel & Firm	Husband’s Counsel & Firm
Lead Counsel:	66.4 hours	61.6 hours
Junior Counsel:	2.5 hours	NIL hours
Students & Staff:	40.9 hours	0.2 hours
Disbursements:	$708.60	$1,189.06

[16] The expenditure of time by lead counsel and the disbursements are roughly consistent. The Husband’s counsel argues that the portion of such costs attributable to the argument regarding the admissibility of his expert’s report must be payable on no greater than a partial indemnity basis. Had the expert’s report been available in a timely fashion following the original timing of this motion, say perhaps in late Fall 2019, it may well have been a useful tool in allowing the Wife to evaluate her position on the spousal support issue. A resolution might well have been reached without the need for argument. As the report was not available until literally the eve of the hearing of argument, the tool became a weapon with a potentially prejudicial effect. I therefore find that there is no reason to separate the costs associated with the admissibility of the expert report from the overall costs incurred in this matter.

[17] The Wife seeks full indemnity costs at a full rate of recovery. The Husband points out that costs incurred by the Wife prior to the date of her Offer to Settle ought to be addressed on a partial indemnity scale. I find that the use of a 60% factor to represent partial indemnity costs is the correct approach. The Husband calculates the Wife’s pre-Offer costs at $8,977.85. Applying a 60% factor to that figure generates the amount of $5,386.71. Costs for the motion (including all disbursements, which are undated) incurred by the Wife between November 29, 2019 and February 28, 2020 are therefore $27,601.50. Costs of these submissions are proposed by the Wife’s counsel in the all-inclusive amount of $1,000.

[18] The analysis continues as the financial positions of the parties are properly considered as a “relevant matter” under Rule 24(12)(b). The Husband asks the Court to consider his strained financial circumstances, and it is reasonable to take judicial notice of the anticipated impact of Ontario’s provincially-declared State of Emergency upon small businesses such as the Husband’s. While the Husband’s business may see a reduced cash flow for the first and second quarters of 2020, his obligation to pay spousal support pursuant to my Order does not fluctuate with the economy but is mandatory until further Order of the Court. Thus, it is not unreasonable (assuming that spousal support is in fact being paid) to consider the possibility that the Wife’s cash flow in these difficult times is more certain than the Husband’s. Further, it must be remembered that the advance of interim disbursements is intended to assist the Wife with the funding of the litigation, thus reducing her upcoming challenges in moving this matter forward.

[19] Having considered the reasoned submissions of counsel and all of the factors in assessing costs, I order that the Applicant Husband shall pay to the Respondent Wife costs fixed in the amount of $27,000 inclusive of disbursements and taxes thereupon. This leaves the issue of the mechanism for payment. The Wife asks that costs be paid within thirty (30) days and that a failure to do so trigger enforcement by the Director of the Family Responsibility Office (the “FRO”). The FRO can only enforce costs attributable to support issues. Having regard to the materials filed and the time expended in argument on the issues of the parties’ incomes and the determination of spousal support, I find that approximately 60% of the costs awarded are attributable to support issues and thus would be enforceable by the FRO. The Husband does not seek specific payment terms.

[20] Based on the foregoing, Order to go as follows:

1. Peter Probst shall pay to Tasmeen Shah her costs of the Motion and Cross-Motion argued on February 24th and 28th, 2020, fixed in the amount of $27,000.
2. Costs as set out herein shall be paid in full by May 31, 2020.
3. In the event that Peter Probst should fail to pay the full amount of costs as set out herein by May 31, 2020, the sum of $16,200 in costs, being attributable to the issue of support, shall be enforceable as spousal support by the Director of the Family Responsibility Office. For greater clarity, this paragraph shall not impede or suspend the operation of any other collection mechanism available to Tasmeen Shah for the enforcement of this Order.

J. Breithaupt Smith J Date: April 15, 2020

AS A RESULT OF COVID-19 the regular operations of the Superior Court of Justice are suspended at this time, as set out in the Notice to the Profession dated March 15, 2020 available at https://www.ontariocourts.ca/scj/covid-19-suspension-fam/. Therefore, notwithstanding Rule 25 of the Family Law Rules, this endorsement is enforceable as an order of the court without the need for an order to be prepared or approved by the parties and then issued by the court. No formal order is necessary unless an appeal or a motion for leave is brought, or alternatively unless one is necessary for enforcement by a third party. A party who wishes to prepare a formal order for approval and issuance may do so in the usual course.

Footnotes

1. Family Law Rules, rule 2(2); Mattina v. Mattina, 2018 ONCA 867 at paragraph 10.
2. Mattina, supra, at paragraphs 12 & 13.
3. The Wife’s Offer to Settle was served November 29, 2019.
4. As the Husband’s evidence did not define what proportion of the household expenses were being run through one or more of his corporations, which information was unavailable to the Wife, an approach whereby the Husband continues his current practice and any adjustments are made after separated cohabitation ends was really the only manner by which the Wife could address this issue in an informational vacuum.
5. S.(C.) v. S. (M.), [2007] O.J. No. 2164, aff’d 2010 ONCA 196, [2010] O.J. No. 1064 (Ont. C.A.) at paragraph 16.
6. Snelgrove v. Kelly, 2017 ONSC 4625 at paragraph 31 citing Serra, Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (C.A.) and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 CarswellOnt 189 (C.A.).
7. Sommerard v. I.B.M. Canada Ltd. at paragraph 57.
8. Note that these figures include the costs attributable to the argument regarding the admissibility of the late-served expert report of Mr. Brad Lund, expert retained by the Husband. Following the reading of my Endorsement declining to admit Mr. Lund’s report, I indicated to counsel that the costs of that argument would be addressed as part of this motion in its entirety. The Wife’s counsel has further included a sum of $1,000 (inclusive of HST) for costs submissions; no corresponding amount is set out in the Husband’s costs submissions nor do dockets regarding the costs submissions appear on the Husband’s supporting documentation.