Court File and Parties
COURT FILE NO.: FS-19-10975
DATE: 20201022
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Michael John, Applicant
AND:
Mercedes John, Respondent
BEFORE: M. Kraft, J.
COUNSEL: Jaret Moldaver and Harvin David Pitch, for the Applicant
Harold Niman, Richard Niman and John Philpott, for the Respondent
HEARD: In writing
COSTS ENDORSEMENT
[1] This is the costs endorsement in respect of the motion of the respondent (“wife”) in which she sought interim costs and disbursements in the amount of $500,000, pursuant to Rule 24(13) of the Family Law Rules (“FLRs”), as well as pursuant to ss.248(3) and 249(4) of the Ontario Business Corporations Act (“the OBCA”); temporary spousal support in the sum of $30,000 a month, retroactive to January 1, 2020; and an order requiring the applicant (“husband”) to answer his outstanding undertakings and the improper refusals he gave during his Questioning. There were two related disputes in this proceeding: the family law proceeding arising from the breakdown of the marriage of the parties and an oppression remedy claim in which the wife claims the husband’s conduct as a majority shareholder has been oppressive toward her, as a minority shareholder, of two corporations the husband controls. Without an order for costs/interim disbursements, the wife maintained that she was unable to advance her meritorious claims in either the family law or oppression proceeding. The husband did not bring a cross-motion. He sought an order dismissing the wife’s motion, with costs.
[2] My Order, dated September 4th, 2020 (“September 4th Order) granted the wife the following relief:
a. the husband was to cause the John Corporations[^1] to pay the wife the sum of $250,000 as costs, pursuant to s.249(4) of the OBCA;
b. the husband was to guarantee a first mortgage to be registered on title to the wife’s condominium in the sum of $300,000, upon the wife’s request;
c. the husband was to cause the John Corporations to continue to pay the wife an annual salary of about $80,000 and to repay her monies from her Shareholder’s Loan account of $5,000 net a month;
d. the husband was to pay temporary spousal support to the wife in the sum of $3,000 a month, commencing September 1, 2020, and on the first day of each following month;
e. the husband was to provide full and complete answers to the undertakings he gave during his Questioning and to answer the questions he improperly refused to answer at his Questioning;
f. the husband was to produce a further and better Affidavit of Documents;
g. the husband was to provide all of the disclosure required of him under s.21 of the Child Support Guidelines for 2018, 2019 and to the date of trial, so the wife can determine his income for spousal support purposes; and
h. the husband was to serve and file an updated sworn financial statement
[3] To arrive at the interim costs award of $250,000, I found that the wife, as a complainant shareholder, had met the threshold required by the OBCA (s.248), by demonstrating that she had a meritorious oppression remedy claim against the husband and that her claim was far from frivolous or vexatious and had sufficient merit to warrant pursuit of relief due to the manner in which he controlled the John Corporations. I made an order that the husband pay the wife temporary spousal support in the sum of $3,000 a month, having found that she had a prima facie case for spousal support based on the length of the parties’ marriage (35 years) and on the economic disadvantage she suffered as a result of the role she played during the marriage. Further, I found that while the husband had been causing the parties to receive about equal amounts of monies from the John Corporations, this “holding” pattern did not detract from the wife’s entitlement to temporary spousal support. I ordered him to continue to cause 766 and 964 to pay these monies to the wife pending trial. Finally, in making an order that the husband file and serve an updated sworn financial statement; provide income disclosure for 2018, 2019 and up to the date of the trial; provide the answers to his undertakings and the answers to the refusals given by him at his Questioning; and produce a further and better Affidavit of Documents, I ensured that the wife would receive the financial disclosure she needs not only from the husband but also the John Corporations in order to pursue her claims at trial.
[4] Both parties are seeking costs.
[5] The three central issues on the motion were:
a. Whether the wife was entitled to receive an order for costs and/or interim disbursements in the amount of $500,000, which must be paid by the husband personally, the John Corporations, or both in particular amounts.
b. Whether the wife was entitled to an order for temporary spousal support; if so, whether an order should be made; and if so, what amount of spousal support the husband should pay; and
c. Whether the husband’s financial disclosure was complete, whether he had answered the Undertakings he gave during his Questioning, which took place on January 15th and 17th, 2020, and whether the husband was obliged to answer questions he was asked during the Questioning but refused to answer.
Was Either Party Successful on the Motions?
[6] Notwithstanding the fact that I did not award the wife interim costs pursuant to the OBCA in the amount she sought in her Notice of Motion and during the oral submissions, and I did not order the quantum of temporary spousal support she sought, when one considers the level and nature of the wife’s success on these and the other issues, and the nature of the husband’s lack of success, although success was divided, an order of costs can and should be made in the wife’s favour: r.24(6) of the Family Law Rules, O. Reg. 114/99 (“FLRs”).
[7] Of particular importance in the costs consideration relating to the motion is that the wife was successful in obtaining an order for interim costs under the OBCA in the face of the husband’s position that she did not have a meritorious oppression claim. I specifically found that, in matters of corporate governance, the husband did not treat the wife as an owner of 764 and/or 966; following the parties’ separation, the husband had continued to run the entire group of John Corporations[^2], with no appreciation of or an utter disregard for his accountability to the wife as a shareholder of 764 and 966; and the husband had been in control of all of the information and decisions that were made in relation to 764 and 966 and the documentary disclosure provided in connection with the personal benefits he extracted from 764 and 966, which were linked to the wife’s oppression-remedy claims. He had refused to provide the wife with disclosure of the documents she needs to advance her claims.
[8] Also, of real importance in the costs consideration relating to the motion is that the wife was successful in obtaining a temporary order for spousal support in the face of the husband’s position that the wife did not have a prima facie entitlement to spousal support and thus an order for temporary spousal support ought not to be made. The husband’s main position on the motion was that the wife’s motion should be entirely dismissed with costs. He wanted the wife to continue to receive the salary (approximately $80,000 a year) and draws against her Shareholder’s Loan account, in roughly the same amount that he had arranged to receive from 764 and 966 (approximately $5,000 net a month) and no temporary spousal support. He took the position that the wife’s requests for costs and/or interim disbursements under the FLRs, the CJA or the OBCA had no merit and that she had her own sufficient resources to fund the litigation. Finally, the husband’s position with respect to his undertakings and refusals was that his financial disclosure was complete and had been provided to the wife and her expert without delay; thus, her request for further disclosure was disproportionate and amounted to a fishing expedition.
[9] While the husband had not specifically proposed that he would pay the wife temporary spousal support, he did agree to continue the “holding pattern” that had been in place during the marriage and since separation, namely, that he cause 764 and 966 to ensure that both he and the wife receive $5,000 a month on account of repayment of a shareholder loan. Each party is also paid a salary of between $80,000 to $82,000 a year. I determined that the fact that the husband had decided how much money to pay out to the wife did not trump the wife’s right to receive a more appropriate of temporary support relief, particularly given the manner in which the husband had approached his disclosure obligations during the course of this case.
[10] In calculating the amount of temporary spousal support, I considered the reports that the parties’ respective experts had prepared in relation to the husband’s income for support purposes for the years 2015 – 2017. [He had neither provided reports for 2018 or 2019 nor produced a sworn financial statement for purposes of the motion, even though he had known that the wife was proceeding with a support motion for approximately six months.] According to the wife’s expert, the husband’s income for 2017 for support purposes should be imputed at $730,000 a year. According to the husband’s expert, it should be $471,000. According to the husband’s Divorcemate Spousal Support Advisory Guidelines (”SSAGs”) calculation, the current “holding pattern” resulted in the wife having a net disposable income (“NDI”) of about $10,866 a month, which, after being adjusted to take into account the wife’s actual rental income, turned out to more accurately be $10,268 a month.
[11] The husband’s failure to provide the Court with an up-to-date analysis of his income for support purposes in 2018 or 2019 made it impossible for the court to know what his true current income is. Accordingly, I relied on the best evidence available to the Court which was that put forward by the husband’s expert for 2017, an income of $471,000. The SSAGs demonstrate that the high range of the before-tax support would be $19,406 a month, which would result in the wife being left with $11,966 a month in NDI. However, the Divorcemate calculations did not include the wife’s net rental income. With the rental income, the wife’s NDI would have been $11,644 a month. Using the husband’s Divorcemate calculations and treating his income as being $471,000 a year, the temporary monthly spousal support amount that I ordered the husband to pay to the wife of $3,000 a month, in addition to the monthly amounts being paid to her on account of her Shareholder’s Loan and the salary from the John Corporations, would leave the wife with 50% of the parties’ NDIs. Thus, having found that the wife was entitled to spousal support, even if the financial “holding pattern” that was to continue to be maintained was not spousal support, the wife was successful in establishing an entitlement to and obtaining a temporary spousal support order.
[12] Although the wife had sought an order for interim costs/disbursements in the sum of $500,000, pursuant to either the FLRs or the OBCA, she received an order in the amount of $250,000, pursuant to the OBCA, as well as the ability to access capital from her condominium by the husband guaranteeing the mortgage at her request, for a further sum of $300,000, which would permit her to fund the litigation.
[13] It was clear during the hearing of the motion that the issue of most importance to both parties was the issue of the wife receiving an order for interim costs/disbursements. An order was made for interim costs of $250,000, pursuant to the OBCA. The husband opposed the granting of such an order against either himself or the John Corporations, essentially asserting that she did not have a prima facie oppression claim. I found that the wife had demonstrated that she had a prima facie oppression claim. Thus, the husband was unsuccessful on the most important issue to him. The next most important issue to the parties was the wife’s claim for temporary spousal support, particularly given the longstanding financial “holding pattern” that was still in place. The husband’s position was essentially that, given the wife’s significant wealth and the financial “holding pattern” that he had put into place, she was not entitled to spousal support either on a temporary or final basis. This Court found that the wife had a prima facie entitlement to spousal support and made a temporary spousal support order. Finally, the wife was successful in obtaining an order that the husband produce a further and better Affidavit of Documents and further income disclosure, answer the undertakings he had given during his Questioning; and answer most of the questions that he had improperly refused to answer. In addition, I ordered that the husband serve an updated financial statement.
[14] When one considers the positions taken by the husband and wife on the motion, I am satisfied that the wife’s success on the motion entitles her to an order for costs of the motion, despite the fact that she did not receive orders for costs and temporary spousal support in the amounts she had sought.
Legislative framework
[15] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[16] Pursuant to r. 24(10)(a) of the FLRs, the court is directed to decide the costs of a step in the case promptly after dealing with the step, in a summary manner.
[17] Modern family costs rules are designed to foster four fundamental purposes: to indemnify successful litigants for the cost of litigation, to encourage settlements, to discourage and sanction inappropriate behaviour by litigants: and to ensure that cases are dealt with justly: Mattina v. Mattina, 2018 ONCA 867, 299 A.C.W.S. (3d) 770, at para. 10. The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840, 17 R.F.L. (8th) 147, at para. 12.
[18] A party who is successful on a motion is presumptively entitled to an order for costs of the motion: r.24(1) of the FLRs. Where success on a motion is divided, the court may nonetheless make an order for costs: r.24(6).
[19] If the court determines that it would be appropriate to make an order for costs, then the factors to consider in setting the amount of costs are listed in r. 24(12). The court must consider the reasonableness and proportionality of the factors enumerated in the subrules as they relate to the importance and complexity of the issues. These factors include each party’s behaviour; the time spent by each party; any written offers to settle, including those that do not meet the requirements of r. 18; any legal fees; any other expenses; and any other relevant matter.
[20] In Sims-Howarth v Bilcliffe, 2000 CanLII 22584 (ON SC), [2000] O.J. No. 330 (S.C.J.), Aston J. held that the two traditional scales of costs are no longer an appropriate way to quantify costs under the FLRs. He stated that, having determined that one party is liable to pay costs, the court must fix the amount at some figure between a nominal sum and full recovery, having regard to the factors set out in Rule 24, without any assumptions about categories of costs. This characterization of costs under the FLRs was approved of by the Ontario Court of Appeal in C.A.M. v D.M., 2003 CanLII 18880 (ON CA), [2003] O.J. No. 3707 (C.A.), at para. 42.
[21] The FLRs do not explicitly provide for costs on either a partial or substantial indemnity scale. Rule 24(8) refers to “costs on a full recovery basis,” where a party has acted in bad faith. Absent bad faith, the court need not find “special circumstances” before ordering costs on a full recovery basis: Sordi v. Sordi, 2011 ONCA 665, 283 O.A.C. 287. The Court has a range of costs awards open to it, from nominal to full recovery.
[22] There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. Rather, full recovery is only warranted in certain circumstances, such as bad faith under r. 24(8), or beating an offer to settle under r. 18(14): Beaver, at para. 13.
[23] 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/she may face, if he/she is unsuccessful. In appropriate circumstances, unreasonable behavior will result in a higher award of costs.
Factors to be considered
[24] The wife seeks costs on a “substantial indemnity” basis, in the amount of $135,237.24, inclusive of HST and disbursements, which, according to her, is 10% less than full recovery. According to the wife, then, she incurred legal fees and disbursements on the motion in the total sum of $149,925.74. Alternatively, the wife seeks costs on a “partial indemnity” basis, in the amount of $108,152.76. The actual costs of the motion to the wife totaled $150,036.73, calculated as $45,848.22 (family law fees + disbursements) plus $104,188.52 (corporate counsel fees + disbursements).
[25] The husband seeks costs in an amount that is “reasonable and proportionate” to the issues and ongoing litigation. The husband submits that his costs on a “substantial indemnity basis” are $107,586.44, inclusive of HST and disbursements, which, according to him, is 80% of full recovery. He asserts that his costs on a “partial indemnity” basis are $82,606.69, representing 65% of full recovery. The husband’s actual costs were $127,087.20. Alternatively, the husband submits that the parties enjoyed divided success and that each party be responsible for his or her own costs.
[26] I have considered the factors set out in Rule 24 (12) of the FLRs, which reads as follows:
24(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.
Importance and complexity of the Issues
[27] In addressing the enumerated factors in the rule, I have kept the following considerations in mind. This motion was of significant importance to both parties. First, of it was of vital importance to the wife in that she was seeking interim costs to enable her to continue to fund her litigation. Obtaining an interim costs order under the OBCA provided the wife with the opportunity to continue with her claims under both the Family Law Act and OBCA. Further, the disclosure orders would enable her to obtain the disclosure she needs from the entire group of John Corporations in order to have her oppression claims and family law claims properly adjudicated. The wife’s claim for interim disbursements under the OBCA was an equally important matter for the husband. The husband clearly wanted to prevent an interim order for costs being made under the OBCA on the basis that she did not have a viable oppression claim. The husband’s position is that the wife’s motion was not complex, other than with respect to the requirement that she needed to make out a prima facie case for oppression. I do not agree.
[28] The motion was relatively complex in that it dealt with interrelated facts and legal issues in both the family law and oppression claims. Determining the temporary spousal support issue involved leading evidence as to the husband’s income, which involved a “trial ready” report prepared by the husband’s expert and a report prepared by the wife’s expert, which was at odds with the husband’s report. Further, the relevance of questions the husband was asked during his questioning but had refused to answer, and ensuring that an order was made that the husband provide the answers to the undertakings he gave in response to questions asked during the questioning was time consuming and required an in-depth analysis of aspects of the husband’s disclosure, which had been delivered to the wife in a piecemeal and disorganized fashion.
[29] Both parties filed extensive material on the motions. Each party was Questioned in relation to the motion only and incurred the costs of producing transcripts. The volume of material filed was indicative of both the importance of the issues on the motion to the parties and the complex nature of the issues. Each party saw fit to retain both family law and corporate counsel to represent him/her on the motion.
[30] The husband submits that significant costs were expended by both sides in respect of the motion but that the husband’s costs were driven largely by the unreasonable quantum of relief the wife sought. The husband further submits that the vast majority of the work by both parties on the oppression issue will be needed and used at trial. While it is possible that the work that was undertaken to address the motion will reduce the amount of work that will have to be done to prepare for trial (if a trial ultimately takes place), the work was performed in order to address the motion and it is fair and appropriate that the costs of that work be considered in in relation to the purpose for which it was carried out.
Each Party’s Behaviour
[31] Rule 24(4) of the FLRs explicitly authorizes the use of costs orders to express the court’s disapproval of a litigant’s unreasonable conduct. It provides as follows:
24(4) Despite sub-rule (1) [which provides that a successful party is presumed to be entitled to the costs of a motion], 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.
[32] Rule 24(5) provides criteria for determining the reasonableness of a party's behaviour. It provides as follows:
DECISION ON REASONABLENESS
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept.
[33] Rule 24(12)(a)(i) requires the court to consider each party’s behaviour in setting the amount of costs.
[34] The wife seeks costs on a “substantial indemnity” basis on the ground that the husband acted in bad faith in taking the positions he did on spousal support, interim costs and his outstanding disclosure obligations, undertakings and refusals. In particular, the wife relies on findings of fact I made in the Reasons I gave for making the September 4th Order, some of which included the following:
a. the husband’s position on interim costs was found to be disingenuous;
b. the husband was not forthcoming about the expenses he put through the other John Corporations;
c. the husband refused to provide the wife with disclosure about the other John Corporations;
d. The husband neither took steps to have his expert calculate his income for 2018 or 2019 nor filed an updated, sworn financial statement in response to the wife’s motion. Together, this conduct deprived the Court of a more meaningful starting point for determining the husband’s income than at the end of 2017;
e. The husband had continued to run the entire group of John Corporations with either no appreciation of or an utter disregard for his accountability to the wife as a shareholder; and
f. The husband refused to answer fair questions during his Questioning, which were “of serious concern to the Court”.
[35] The husband’s conduct as described above did undoubtedly cause the wife to incur additional costs on the motion.
[36] The husband submits that while the parties exchanged offers to settle, the wife did not meet or surpass her offer to settle and the fact that the wife’s offer to settle was served less than 24 hours prior to the commencement of the motion should be taken into account.
[37] The husband acknowledges that the wife did have some success on the motion but he submits that he was more successful on the significant issues of temporary spousal support and interim disbursements. He bases his position on the fact that the wife sought $33,000 a month in spousal support (although in oral argument, she sought $30,000 a month) and only received an order in the sum of $3,000 a month, which he calculates as being less than 1/10th of what she sought. This position ignores the portion of my Order that also requires the husband to maintain the financial “holding pattern” of the John Corporations.
[38] Moreover, the husband submits that he had already offered to assist the wife in obtaining a mortgage on her condominium, to help her fund her litigation, which offer she rejected. The wife submits that when she pursued this possibility with the husband, he did not then respond to her. In the end, she obtained an order that he not only guarantee a $300,000 mortgage, if she asked him to do so, but that he cause the John Corporations to pay $250,000 in interim costs to her under the OBCA. Thus, there would be able to fund her case to the extent of the further sum of $550,000, as opposed to $300,000 only.
[39] The husband concedes that he did not provide the court with an updated financial statement but claims that this was an unintentional oversight on his part. He concedes that with respect to the Answers to Undertakings and refusals to proper answers, the wife was successful, but submits that little time was spent on this issue during the hearing of the motion due to the time constraints. I do not agree. Counsel for both parties went through the different categories of undertakings and refusals. It took the Court significant time to analyze and compare the undertakings/refusal charts that had been prepared with the transcripts from the Questioning. It is clear that the time that the wife’s professionals spent reviewing the husband’s failure to provide the answers to outstanding undertakings and refusals to answer questions and then having to respond to the husband’s assertion that he had provided answers, when he had not provided an answer at all or sufficiently, was far from insignificant.
[40] The husband incorrectly frames the wife’s claim for interim disbursements when he submits that the wife sought an order that he personally pay her the $500,000 in interim costs she requested. That is simply not correct. In her Notice of Motion, she sought interim costs or disbursements, to either be by the husband personally, the John Corporations, or both in particular amounts. The husband submits that if the wife is entitled to costs that the John Corporations be ordered to pay the costs to the wife and that they not be offset from any costs award to which he may be entitled.
[41] The Court can order costs on a higher scale to express disapproval of unreasonable conduct: Mullin v. Sherlock 2018 ONSC 6933. Put another way, the amount of costs ordered may be higher where a party has had to incur unnecessary added expense due to the other party’s unreasonable conduct.
[42] The wife advised the husband as early as October 15, 2019, that she intended to seek $500,000 in interim costs under the OBCA and FLRs, if an appropriate accommodation could not be reached. The wife’s counsel made numerous demands for financial disclosure. The husband was given a number of opportunities to settle the issues that were the subject of her motion, or even some of these matters, reasonably. Instead, he put the wife to the significant cost of the motion that she brought for the purpose of being able to pursue her meritorious oppression remedy case alongside her family law case. While the husband purported to express shock at the amount of money the wife had spent thus far on the professionals she had retained to assist her in the case, the amount of costs he had spent were not far behind hers in circumstances where he is in control of the financial information that is relevant to the determination of the issues in this case and also her wealth, which he referred to in order to avoid orders for temporary support and interim costs being made in her favour.
[43] In considering each party’s behaviour, either the husband’s intentional obstruction of or cavalier or disingenuous approach toward the disclosure of his income for purposes of the litigation, including for support purposes on this motion, caused the wife to incur additional costs. While on the evidence before me, I am not able to conclude that the husband acted in bad faith in addressing the issues that gave rise to this motion, at best, his approach to the issues that resulted in the need for a motion was cavalier and unreasonable.
Offers to Settle
[44] Pursuant to Rule 24(12)(a)(iii), I turn to each party’s written offer to settle.
[45] Again, while the husband refers to a proposal that he guarantee a mortgage on the wife’s condominium, he did neither refers to the wife’s proposal, in a December 2019 letter, that the interim costs issue be resolved on the basis of the husband guaranteeing a mortgage on her condominium nor to her evidence that he did not respond to the proposal.
[46] The wife made a formal offer to settle on August 11, 2020, which was severable. In her offer, she proposed as follows:
a. That the husband pay the wife $300,000 for interim costs and disbursements either under the FLRs or the OBCA, to be credited as an advance against the wife’s entitlements;
b. That the husband pay the wife temporary spousal support in the sum of $20,000 a month, commencing July 1, 2020, “without prejudice” to either party’s position as to quantum and retroactivity;
c. That the husband produce a further and better Affidavit of Documents and answer his outstanding undertakings and improper refusals, within 30 days;
[47] The husband could have accepted part (a), (b), (c), a combination of two parts, or all parts of the wife’s offer. He did not so much as accept her offer that, within 30 days, he produce a further and better Affidavits and answer his outstanding undertakings and improper refusals. If he took objection providing answers to any of the questions that he had refused to answer during his questioning, he could easily have excluded those items from a counter-offer on the disclosure portion of her offer. More tellingly, in the offer that the husband made to resolve the motion, he effectively refused to provide any further disclosure or even provide his answers to his undertakings within any defined period of time.
[48] In his offer made to settle the motion, dated August 6, 2020, he proposed as follows:
a. That the wife’s motion be dismissed in its entirety, with prejudice;
b. That costs be reserved to the trial judge.
[49] I have considered the parties’ respective offers in the context of their relative success or lack of success on the motion. Neither the husband nor the companies he controls completely offered any amount of interim costs or offered to guarantee a mortgage on the wife’s condominium. The husband not only did not offer to pay any temporary spousal support, but he did not so much as offer that he would ensure that the financial “holding pattern” would continue on a temporary basis. Given the changes that he had alleged had taken place since the COVID-19 health crisis began and the steps he had had to take to respond to it, there was no guarantee in that he would even continue to maintain the financial “holding pattern” pending trial in his offer. I also note that the husband’s offer that the wife’s motion be dismissed was made “with prejudice”.
[50] `In her offer to settle the issue of interim costs, the wife proposed that the husband pay $300,000 under either the OBCA or the FLRs. This implied that he had a choice as to whether he or the John Corporations (764 or 966). The husband made no offer whatsoever with respect to interim costs. In the September 4th Order, the husband is to cause 764 and 966 to pay the wife interim costs of $250,000 under the OBCA and he was to guarantee a mortgage on the wife’s condominium in the sum of $300,000. The wife was successful in obtaining an order for interim costs and, most particularly, an order that they be paid under the OBCA, having found that she had a prima facie oppression claim. The husband submitted that significant time had been spent preparing a factum on the oppression issue. He was unsuccessful on his response to the oppression issue. While the amount ordered was $50,000 less than the amount she sought in her offer to settle, it was $250,000 more than the husband offered that either he and/or the corporations pay. Further, the husband was ordered to guarantee a $300,000 mortgage, should the wife request that he do so. The wife, as compared with the husband, was far more successful on this issue than was the husband.
[51] The wife’s offer to settle was far closer to the order that the wife obtained than was the husband’s. While she did not obtain an order for temporary spousal support in the amount of $30,000 a month, she received an order for temporary spousal support in addition to the amounts that the wife had been receiving under the financial “holding pattern”. The order that she obtained was the equivalent of a taxable spousal support order in the amount of about $19,406 a month. She offered to settle the motion on the basis that the husband pay $20,000 a month to her. The support order that this Court granted made it clear to the husband that, certainly in the absence of control over her property, the wife had a prima facie right to spousal support. To be clear, contrary to the husband’s costs submissions, this Court did not reject the approach that the wife’s own valuator had taken respecting the husband’s income for 2015 – 2017, but reflected the Court’s view that the differences in the approaches that the valuators had taken should not be addressed by this Court on the motion, particularly given that the wife’s expert had not yet finalized his report and income reports would have to be done for the years following 2017. The approaches of the valuators should be considered once both parties had produced all relevant income reports. Further, contrary to the husband’s submission that the wife received about 10% of the support that she had requested, if one considers the net effect of the payments she would also receive under the financial “holding pattern” in addition to the spousal support amount, she effectively obtained an order that netted her about 65% of the support she had sought on the motion. (The wife’s offer was based on her expert’s valuation of the husband’s income at $710,000; I based the support amount she was to receive on the husband’s conceded income of $471,000.) On this particular issue, the amount of temporary support that was ordered was certainly less than the wife had sought; however, it was particularly difficult to determine the husband’s income, given his disclosure, and her offer to settle the issue was virtually the same as the order she obtained in after-tax dollars.
[52] In her offer to settle, the wife offered to settle the issue of the outstanding undertakings and improper refusals on the basis that the husband answers them as per a Schedule attached to her offer. Again, the husband made no offer to settle this issue. The September 4th Order required the husband to answer almost all of the outstanding undertakings and improper refusals.
[53] The wife obtained an order that the husband provide a further and better Affidavit of Documents, which she had proposed that the husband provide in her offer to settle. Again, the husband made no offer to settle this specific issue. The foregoing summary suggests a mixture of success, favouring the wife on balance.
[54] In view of the above, the wife obtained an order “as favourable as or more favourable than the offer” she made in terms of the outstanding undertakings and improper refusals and in terms of the order for the husband to produce a further and better Affidavit of Documents. On the issue of interim costs, I find that the wife did not obtain an order as favourable as or more favourable than her offer in terms of the quantum of costs but she was successful in obtaining a significant order for costs under the OBCA, which meant that this Court found that she had a prima facie oppression claim under the OBCA. On the issue of spousal support, the relief the wife obtained was very close to the offer she sought in terms of after-tax dollars and meant that, certainly in the absence of any control over her significant wealth (referred to be the husband in his motion material), she had a prima facie claim for spousal support. Further, she obtained this relief in the context of a failure of the husband to provide further necessary disclosure, answers to questions he agreed to answers, answers to questions he refused to answer and an updated position respecting his income.
Time properly spent on the case and any legal fees, including the number of lawyers and their rates, etc.
[55] The wife’s family law team was comprised of Harold Niman, who was called to the Bar in 1976: Richard Niman, who was called to the Bar in 2011; Hayley Cairns, who was called to the Bar in 2016; and a law clerk. The wife’s corporate team retained to address her oppression claim was composed of John Philpott, who was called to the Bar in 2011; Madeleine Dusseault, who was called to the Bar in 2019; two articling students; and two law clerks.
[56] The hourly rate for Mr. Harold Niman was $1,090.00; for Mr. Richard Niman was $425.00; for Ms. Cairns was $385; and for the law clerk was $225.00. Harold Niman billed 16.8 hours; Richard Niman billed 44 hours; Ms. Cairns billed 1.6 hours; and the law clerk billed 5.2 hours.
[57] The hourly rate(s) for Mr. Philpott was $425.00; for Ms. Dusseault was $240.00; for the articling students were $185 (Ms. Lau) and $165 (Ms. Lay); and for each law clerk was $150.00. Mr. Philpott billed 70.9 hours; Ms. Dusseault billed 160.50 hours; Ms. Lau billed 14.10 hours; Ms. Lay billed 42.50; and the law clerk billed 0.6 hours.
[58] The wife claims $12,021.43 for disbursements, inclusive of H.S.T. I find the disbursements to be reasonable. The husband did not take issue with them.
[59] The husband did not take issue with the time spent, other than to say that the time spent by his professionals on the motion was necessary as a result of the wife’s motion. He did not challenge the hourly rates charged by the wife’s legal team; the need for corporate counsel on the motion; the time spent or the disbursements incurred by the wife on the motion. Again, the husband’s costs of the motion were not materially lower than the wife’s. The husband, himself, had both family and corporate counsel assist him on the motion.
[60] Both the wife and husband retained senior family law counsel and senior corporate counsel. Not only does the wife’s significant property form part of the John Corporations, which is part of a larger number of companies in which the family is involved, but she has to date not been able to access such property. Her property alone is worth approximately $10 million dollars. It was not unreasonable for the parties to retain senior counsel in connection with both the OBCA and FLA claims. Further, the motions involved the delivery of substantial material, preparation of Facta that dealt with substantive issues on which the wife had significant success, and Questioning. The motions involved an analysis of the wife’s oppression claim; the imputation of a party’s income in the absence of up-to-date disclosure; the wife’s entitlement to spousal support and a detailed review of undertakings and refusals given at Questioning.
[61] Accordingly, the costs that the wife incurred were reasonable in the circumstances of this case. They were also proportional to what was at stake and to the husband’s reasonable expectation as to what costs he might face, if he was unsuccessful. Particularly given that the husband did not challenge any of the fees charged for work performed, I accept the record of time set out in the wife Bill of Costs.
Responsibility for the Payment of the Costs Ordered below
[62] The wife sought an order that the husband alone be responsible for the costs she seeks. The husband submits that the John Corporations (764 and 966) should be required to pay any costs relating to the success the wife had on the OBCA interim costs issue. I note that on October 2, 2019, Diamond, J. added 764 and 966 as parties to the family law case. Having determined that the John Corporations should pay interim costs to the wife: and neither party having made any submissions respecting a director’s liability to pay costs in the context of a motion relating to an oppression remedy, in my view, the costs relating to the oppression remedy issue should be paid by the John Corporations and the costs relating to the balance of the issues should be paid by the husband personally.
CONCLUSION AND ORDER
[63] In light of the extent of the wife’s success on the motion, albeit divided in terms of the amounts sought and received; the reasonableness and proportionality of the work performed by the wife’s counsel; the fact that the husband should have expected to pay costs, if the wife succeeded in obtaining an interim order for costs under the OBCA or the FLRs and an order for temporary spousal support in the face of his resistance to such orders being made (which was emphasized to this Court by the terms of the husband’s offer to settle); her clear success on the issues of the prima facie merit of her oppression and spousal support claims; the difficulty that the wife had in putting forth a reasonable income figure for the husband, given that the wife had financial disclosure that was out of date; and the abject refusal of the husband to comply with his disclosure obligations in a timely way, an order that the husband pay 65% of the wife’s actual costs (corporate and family combined) incurred on the motion to her represents a reasonable and fair contribution to the costs she incurred on the motion, or $97,523.88 ($150,036.74 x 65%), inclusive of fees, disbursements and HST.
[64] Accordingly, this Court orders that Michael John shall pay costs of the long motion to Mercedes John in the sum of $48,761.94 personally and he shall cause the John Corporations (764 and 966) to pay costs of the long motion to Mercedes John in the amount of $48,761.94, inclusive of fees, disbursements and HST.
M. Kraft, J.
Date Released: October 22, 2020
[^1]: The John Corporations means 1446966 Ontario Limited (“966”); and 1591764 Ontario Incorporation (“764”).
[^2]: The entire group of John Corporations includes 764 and 966 (of which the wife is a minority shareholder), but also includes JBHL, John Bead, Fribe Holdings Inc.; and BBM Waterdown Inc. in which latter companies, the wife has no interest.