Sobini Tharmalingam v. Selvakumar Balasubramanian
COURT FILE NO.: FS-17-416551
DATE: 20210624
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sobini Tharmalingam, Applicant
AND:
Selvakumar Balasubramanian, Respondent
BEFORE: M. Kraft, J.
COUNSEL: Shawn M. Philbert, for the Applicant
David K. Sherr, for the Respondent
HEARD: June 22nd, 2021.
ENDORSEMENT
Nature of Motion
[1] This is a motion brought by the applicant, Sobini Tharmalingam, in which she seeks the following relief:
(1) An order for temporary and without prejudice ongoing child support for the parties’ two children, in the sum of $592 a month, based on an imputed income for the respondent of $39,500 a year, commencing May 1, 2021;
(2) An order that the respondent pay child support arrears for the period commencing July 1, 2016 to the present date, in the sum of $592 a month, based on an imputed income for the respondent of $39,500 a year;
(3) An order that the respondent provide the requested disclosure set out in Schedule “A” to the applicant’s amended notice of motion, including providing a response to the applicant’s Request for Information, dated January 12, 2021 and March 10, 2021; and
(4) An order for costs on a full recovery basis.
[2] The respondent, Selvakumar Balasubramanian, (“husband”) seeks an order dismissing the applicant’s motion.
[3] In support of her motion, the wife relies on the following material:
(a) An Amended notice of motion, dated April 16, 2021;
(b) Her affidavit, sworn on November 9, 2020;
(c) Her affidavit, sworn on November 16, 2020;
(d) Her affidavits, sworn on April 1, 2021;
(e) Her affidavit, sworn on May 11, 2021; and
(f) Her Factum, dated June 18th, 2021
[4] In support of the husband’s position that the wife’s motion ought to be dismissed, he relies on the following material:
(a) His affidavit, sworn on April 13, 2021; and
(b) His affidavit, sworn on April 27, 2021.
[5] I heard this motion on June 22, 2021 and took my decision under reserve. This is my Order and reasons for same.
Litigation History
[6] This case has a complicated, long, protracted history. Accordingly, some background information about the litigation history is needed to provide some context for both parties’ positions.
[7] On April 11, 2017, the wife commenced this proceeding and brought an emergency motion seeking to discharge a matrimonial home designation on title and to dispense with the husband’s consent to sell the home. The wife had unilaterally entered into an agreement of purchase and sale, dated March 8, 2017, to sell the parties’ matrimonial home to a friend, at a purchase price of $1,100,000. The husband refused to consent to the sale because the purchase price was, in his view, grossly under market value, and because he had discovered that the wife had increased the mortgage registered on title to the home in February 2015, to the extent of an additional approximately $600,000, to her sole benefit. In the wife’s motion material, she deposed that the parties were never married; the home was not a matrimonial home; they had separated in July 2006; the husband had no interest in the home; and that her friend would sue her for defaulting on the agreement of purchase and sale. The husband filed extensive material to dispute the wife’s affidavit and provided the court with proof of the parties’ marriage. Harvison-Young, J. dismissed the wife’s motion, holding that the wife had “serious credibility issues”. The wife was ordered to pay the husband costs in the sum of $9,000; and the parties were ordered to attend a case conference on May 29, 2017.
[8] The matrimonial home was listed for sale on the open market and sold for $1,401,000 on May 11, 2017. Regrettably, the purchasers defaulted. The wife then defaulted on the mortgage payments and Equitable Trust proceeded to sell the matrimonial home by way of power of sale. The matrimonial home ultimately sold for $1,250,000.
[9] On July 12, 2017, the parties had a case conference before Horkins, J., at which a consent was reached providing that a) the net sale proceeds from the matrimonial home would be held in trust by the real estate lawyer pending further order; b) the children were to reside primarily with the wife and on alternate weekends with the father and half of the holidays; c) each parent was to have equal access to information from third-parties relating to the children; d) decisions about the children were to be made o consent; e) the wife was to produce requested disclosure to the husband within 30 days; f) the husband was to produce requested disclosure to the wife within 30 days; and g) the divorce was to severed from the corollary relief proceedings.
[10] On June 26, 2018, the net proceeds of sale from the matrimonial home were paid into court. After per diem payments to Equitable Trust and legal fees to effect the power of sale, the net proceeds of sale totalled $331,890.94. There is also a phantom lien in the sum of $42,222, registered by the wife’s cousin, Rajaganapahty Subramaniam, for work that was allegedly completed during the listing period. The purported renovation work was done between November 25, 2016 and July 28, 2017, and according to the husband no construction work was ongoing during this time. No details about the work or alleged services provided have been provided.
[11] In late 2018 and early 2019, no further steps were taken by either party to advance the case.
[12] On April 1, 2019, Goodman, J. held a Settlement Conference. Her Endorsement, required: a) the wife to confirm whether she maintained that the valuation date (for property division purposes) is July 1, 2006 (her initial position), July 2, 2016 (the respondent’s position), or some other date; b) if the wife changes the valuation date from July 1, 2006 to a new date, she shall, within 21 days from the date she provides the information to the husband under (a) above, amend her Application to reflect her new valuation date and serve and file it and a new, sworn comprehensive financial statement, which includes valuation date values for her new alleged valuation date. The husband shall have 14 days from the date of service to file an Amended Answer. The wife’s Reply, if any, shall be served and field within 7 days of receipt of the Amended Answer. The wife shall be responsible for the costs that the respondent reasonably incurs to amend his Answer. If the parties cannot agree on these costs, then the husband can seek the costs on the next conference or motion date, whichever first occurs; and c) Each party was to ensure that he/she has delivered all of the disclosure he/she previously was ordered to provide within 30 days from today if he or she has not yet produced it.
[13] The wife never took steps to amend her Application or produce an updated, sworn financial statement as ordered by Goodman, J. Counsel for the husband made numerous requests to her then counsel, Marek Tuffman, that she did so and received no response.
[14] Accordingly, in mid October 2020, the husband served and filed motion material on the wife in support of a motion, in which he sought (a) an order to strike the wife’s pleadings regarding property issues only, due to her breach of the Order of Goodman, J., dated April 1, 2019; (b) leave to proceed by way of an uncontested trial; and (c) an order for the interim disbursement of the net sale proceeds from the sale of the parties’ matrimonial home which were paid into court in July 2018, solely to the respondent. The wife did not file a notice of cross-motion. Instead, in her responding affidavit material she set out relief that she was seeking, which included retroactive and prospective child support and financial disclosure.
[15] Between June 26, 2019, the last date on which the husband’s counsel sent Mr. Tuffman correspondence and November 3, 2020, the husband was unable to take steps to have this motion brought before the court for various reasons. In the intervening period, the Covid-19 health crisis occurred, and the suspension of regular Court operations was in place. Given that the husband’s motion would not have qualified as an “emergency” pursuant to the Notice to Profession, the hearing of the husband’s motion was delayed until November 3, 2020. The wife advised the court that she never received the husband’s counsel letters and that Mr. Tuffman did not provide them to her. At the November 3rd, 2020, court date, the wife was self-represented.
[16] On November 3, 2020, I made the following order:
(1) The husband’s motion to strike the wife’s pleadings and for the disbursement of the net proceeds of sale from the matrimonial home was to be adjourned to November 17, 2020, pre-emptory to the husband;
(2) The wife was to serve and file her Amended Application and comprehensive, updated sworn financial statement using January 13, 2015 as the valuation date, along with all of the supporting documentation to support each entry in the financial statement by November 12, 2020 at 5:00 p.m.;
(3) In accordance with the order of Goodman, J., dated April 1, 2019, the wife was to have 14 days from the date the applicant’s Amended Application is served upon him to file an Amended Answer. The applicant’s Reply, if any, shall be served and filed within 7 days of the receipt of Amended Answer;
(4) The wife was to serve and file a Notice of Motion (form 14) setting out the relief she will be seeking on her cross-motion by November 9, 2020, at 12:00 p.m. The applicant’s cross-motion was to be returnable before the court at the same time as the husband’s motion on November 17, 2020, at 10:00 a.m.; and
(5) The wife was to provide the husband with copies of correspondence between her and Mr. Tuffman between the date of the settlement conference on April 1, 2019 and to present.
[17] On November 17, 2020, Diamond, J. heard both parties’ motions and ordered as follows:
(1) The wife was to ensure compliance with the orders of Goodman, J. and my order, by addressing the deficiencies in her sworn financial statement, and deliver a further, updated, sworn financial statement, including all supporting documentation in her power or control, but no later than December 4, 2020. If she cannot obtain the missing documentation, the wife was to swear an affidavit that she used her best efforts to obtain the documentation from third-parties and to provide the husband with a signed authorization to enable him to secure and obtain the supporting documentation for third parties; and
(2) The wife’s motion for child support, both ongoing and retroactive, was stayed until she cured her breaches.
[18] On November 19, 2020, Diamond, J. ordered that the sum of $200,000 be released to the husband from the net sale proceeds from the matrimonial home currently paid into court. In addition, on consent of the parties, he ordered that the wife’s safety deposit box with CIBC be frozen and the wife was to produce the sign-in card confirming each visit to the safety deposit box, to be provided to the husband and his counsel.
[19] On December 23, 2020, Diamond, J. ordered the wife to pay the husband costs of the motions before him on November 17, 2020, fixed in the sum of $13,500 forthwith. This order was challenged by the wife in March of 2021 by way of a 14B motion and, at some point reduced to $12,000.
[20] On April 13, 2021, Nakonechny, J. heard the wife’s motion for retroactive and prospective child support and financial disclosure. This date was not agreeable to the husband’s counsel. Nakonechny, J. adjourned both parties’ motions to June 22, 2021; ordered the wife to amend her Notice of Motion; set out a timetable for the delivery of material; ordered the husband to make two uncharacterized payments of $500 to the wife on May 1, 2021 and June 1, 2021, on a without prejudice basis; and reserved the costs of the April 13th attendance to the judge hearing the motion.
[21] The wife’s motion was heard by me on June 22, 2021.
Background Facts
[22] The parties met in 1998, at Centennial College. The husband studied Electromechanical Engineering and the wife was taking courses in Business Administration.
[23] The parties were married on January 19, 2002. A religious ceremony was held on August 23, 2003.
[24] The parties have two children of their marriage, namely, Ro.S., born October 7, 2004 (currently, age 16); and Ri.S., born January 9, 2007 (currently, age 14).
[25] The parties disagree on the date of separation. According to the wife, the parties separated on January 13, 2015. According to the husband, the parties separated on July 2, 2016.
[26] During the marriage, the parties lived at 78 Lawson Road, Toronto, Ontario. Title to the home was registered in the wife’s sole name. As indicated above, the matrimonial home has been sold and the net proceeds of sale from the matrimonial home were paid into court.
[27] In February 2015, just weeks after the wife’s date of separation, the wife had increased the mortgage on the matrimonial home from $186,954 to $800,000 in favour of Equitable Trust. The wife, alone, received the benefit of these mortgage proceeds. The husband was unaware of the increase in the mortgage until September 2016.
[28] According to the husband, the parties separated on July 2, 2016, when he discovered the wife engaged physically with another man in the matrimonial home. On July 13, 2016, the husband was charged with breaking and entering, assault with a weapon (cell phone), uttering death threats and extortion. The criminal charges were resolved by way of a peace bond with conditions that the husband have no contact with the wife and stay away from the matrimonial home.
[29] Since July 2016, the children have resided with the wife primarily. At the end of September 2020, Ro. Began to live with the husband, following an altercation Ro. had had with the wife. Ro. has since returned to live with the wife.
Work History of the Parties
[30] The husband worked for a brief period as an electromechanical engineer. He then started a restaurant business with a friend which operated for about 10 years. In 2011, the husband began working at Pegasus Mortgage and Financial Solutions as a mortgage agent. In 2015, he began to work at Trio Development, a residential housing developer, as a project manager. However, after the parties separated, the husband deposes that he was unable to work, as a result of the stress of the separation and criminal charges. In 2018, the husband obtained a realtor licence and pursued a career in real estate. As a result of the criminal charges, however, the husband real estate licence was placed on hold, from January to August 2020, because RECO required proof that the charges were dismissed. Once the court provided the husband with the original documentation proving that the criminal charges against him were dismissed, the hold on his real estate licence was lifted.
[31] Currently, the husband is driving for Uber and Lyft and that is his main source of income. His most recent sworn financial statement, dated September 17, 2020, lists his income at $39,600 a year. The wife believes that the husband earns cash income that he does not declare. She is also concerned that he earns money through corporations that used to be operational which he claims are currently dormant.
[32] The wife had a real estate practice during the marriage and, according to the husband, earns more income than he does annually.
Temporary Child Support
Wife’s Position
[33] Again, the husband’s evidence is that his income is $39,600 a year. It is on this basis that the wife seeks temporary child support in accordance with the Child Support Guidelines (“Guidelines”) tables, which set out that the husband’s child support obligation would be $592 a month for two children.
[34] In the alternative, the wife seeks an order imputing a higher income to the husband, namely, in the sum of $50,000 a year, and asks the court to order child support under the Guidelines based on that level of income on a temporary, without prejudice basis. The wife submits that it is the responsibility of the husband to provide updated financial disclosure to the court pursuant to Rule 13 of the Family Law Rules, and his failure to do so should result in the court holding the husband accountable and in imputing the husband with a higher level of income.
[35] With respect to the child support arrears, the wife submits that the husband owes child support arears back to the date of separation, July 2016. However, for purposes of this motion, the wife seeks a commencement date of January 1, 2021, or the fall of 2020, for the husband’s child support obligation, since she submits that the husband knew, or ought to have known by then, that the wife was seeking child support from him.
[36] The wife also seeks an order requiring the husband to answer what she claims is outstanding financial disclosure, being the list attached as Schedule “A” to her amended notice of motion.
[37] Counsel for the wife acknowledged that he had received a package of financial disclosure from the husband’s counsel on Friday, June 18, 2021, but he had not yet had a chance to review the disclosure and, therefore, he could not for certain advise the court which of the items listed in Schedule “A” remain outstanding.
Husbands Position
[38] The husband asks the court to consider the context of this litigation in making a temporary child support order. He takes the position that the circumstances of this case are unique.
[39] The husband acknowledges his child support obligation but submits that it is unjust for him to make monthly payments to the wife, since she converted such a significant quantum of his share of the equity in the parties’ matrimonial home for her own personal benefit, which he claims ought to be treated as an advance on any and all payments to which she may be entitled.
[40] Specifically, it is his position that the wife’s motion for retroactive and prospective child support and for outstanding financial disclosure be dismissed for the following reasons:
(1) In 2015, the parties’ matrimonial home had a fair market value of about $1,000,000, with a mortgage in favour of Equitable Trust of $187,000. The wife unilaterally refinanced the home, increasing the mortgage to $800,000, thereby eroding the equity of the home and, she alone, received the entire benefit of the increased mortgage. She has not accounted for the whereabouts of these funds;
(2) In April 2017, the wife brought a motion to sell the matrimonial home and dispense with the husband’s consent. She provided the Court with sworn affidavit material that the parties were never married and the husband has no interest in the home. She did, however, acknowledge that the husband was unaware of the refinancing of the home and the increased mortgage;
(3) The wife brought the motion to try and force the sale of the matrimonial home to be sold to her friend for $1.1 million. The court did not permit that sale to go forward. The sale price was grossly under market, which is evidenced by the fact that once the parties put the matrimonial home for sale on the open market, , it sold for a purchase p[rice of $1.4 million. Even though, that sale fell through, t even by way of power of sale, the matrimonial home sold of $1.2 million;
(4) The wife ignored several court orders to amend her pleadings and file an updated, complete financial statement. This was first ordered by Goodman, J. on April 1, 2017; then by me on November 3, 2020; and finally, on November 17, 2020, Diamond, J. stayed the wife’s motion for child support until she was in compliance with the prior two court orders and she amended her pleadings and produced an updated, sworn financial statement;
(5) Finally, on December 3, 2020, the wife filed an amended Application and updated sworn financial statement. The financial statement was deficient and listed “TBD” for 8 bank accounts in her name. In her amended Application, the wife entirely changed her position on a multitude of things. She amended her pleadings acknowledging that the parties were married and pled that the increased mortgage registered on the matrimonial home of $800,000 was the husband’s idea and was for his benefit; and
(6) The wife failed to provide the husband with the authorizations ordered by Diamond, J. Her own sworn financial statement is woefully deficient.
[41] Counsel for the husband acknowledges that he did not produce an updated sworn financial statement for this motion and that the last updated statement from the husband was sworn on September 17, 2020. However, the husband has produced all of his bank records which show the income he has earned, along with his client’s income tax returns and notices of assessment and therefore, the wife has the updated information.
[42] The husband does not agree that income ought to be imputed to him in the range of $50,000 or $100,000 as proposed by the wife because there is no produced financial disclosure that would support such an imputation of income for the husband.
[43] It is the husband’s position that in receiving the entirety of the increased mortgage of the matrimonial home, which amounts to about $600,000, the wife received an advance of those funds months after separation. The husband did not receive any of these funds. The wife has not accounted for these funds. The equity in the matrimonial home was grossly eroded, leaving the net proceeds of sale, currently held in trust by the court, to be only $344,000. Given the amount of funds the wife has received, the husband asks the court not to make an order for retroactive or ongoing child support now until the court is in a position to reconcile the amount of child support being sought by the wife with the equalization payment owing by her to him, along with the adjustment to the EP that will be necessary given the mortgage funds taken by the wife.
[44] Further, the husband takes the position that the wife’s motion was unnecessary and duly expensive for both parties since it required the filing of multiple affidavits. He submits that a case conference ought to have taken place, since there had not been a case conference since the wife amended her pleadings in December 2020. It is the husband’s position that if the wife is granted the arrears of child support, she will have no motivation to advance her claims and the matter will continue to languish without resolution.
[45] With respect to the order the wife seeks for outstanding financial disclosure from the husband, the husband submits that there is no reason for such an order to be made because he has answered all of the disclosure requested of him. He believes the wife is trying to paint a picture to support her narrative that the husband is a non-discloser when, in fact, the non-compliant party in these proceedings has been the wife.
Analysis
Temporary Ongoing Child Support
[46] Pursuant to s. 15.1 of the Divorce Act, on the application of either spouse, a court can make an interim order for child support based on the applicable Guidelines. Specifically, the Act provides as follows:
Child Support Orders
Child support order
15.1 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.
Interim order
(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to pay for the support of any or all children of the marriage, pending the determination of the application under subsection (1).
Guidelines apply
(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines.
Terms and conditions
(4) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order or interim order as it thinks fit and just.
[47] In this case, there is no dispute that the parties have two children, ages 16 and 14, who are entitled to child support pursuant to the Child Support Guidelines.
[48] Based on the evidence before me, I am not prepared to impute income to the husband of $50,000 a year, as proposed by the wife. There is nothing in the husband’s sworn financial statement, or other affidavit evidence filed, that would support my making such an order. Section 19(1) of the Guidelines provides me with the discretion to do so if there are circumstances that would justify it. There is no evidence that the husband is intentionally underemployed. He is working for Uber and Lyft and doing his best to earn an income. He is not exempt from paying federal or provincial taxes and there is no evidence that he has diverted his income in any manner, which would affect the level of child support he ought to pay under the Guidelines. He has no known dividend, capital gains or investment income that has been disclosed and based on my review of the evidence, the husband has complied with his obligation to provide financial disclosure. The wife has not produced any information to demonstrate that the husband is living a lifestyle beyond his means. Accordingly, I find that the husband’s income for child support purposes currently is $39,600 a year and that he ought to be pay temporary child support for the parties’ two children in the sum of $592 a month commencing June 1, 2021.
[49] This is not a case where the husband’s financial disclosure has been inadequate, warranting that the court draw adverse inferences against the husband. In fact, an analysis of the litigation history in this matter, demonstrates that it is the wife, not the husband, who has delayed in providing financial disclosure and in following court orders.
[50] Whether a retroactive child support ought to be made and if so, at what commencement date is not capable of being known at this time in these proceedings. I agree with counsel for the husband that this is a unique case. The wife has had the benefit of at least $600,000 from her unilateral refinancing of the parties’ matrimonial home, which the husband did not have. Whether that sum is now gone is unclear on the record before me. Further, whether the wife has properly or fully accounted for these funds is unclear on the record before me. This refinancing seriously eroded the equity in the parties’ only significant asset, their matrimonial home, and since the net proceeds of sale are being held in trust by the court, neither party has been able to access any of this equity. The husband has an equalization claim. He has not been able to access his equity from the matrimonial home since it was sold. The wife, on the other hand, was able to purchase a new home.
[51] The court requires a full record before it, and the benefit of viva voce evidence, prior to making a retroactive child support order in the unusual circumstances of this case. A complete accounting of these funds is needed, along with an analysis of the parties’ net family properties. This case must move forward. It has been sitting idly for far too long.
Financial Disclosure
[52] In this case, the husband maintains that he has provided the disclosure set out in Schedule “A” to the wife’s Amended notice of motion. The difficulty, according to him, is that the wife asks him to produce documents that do not exist and when he explains that such documents do not exist, the wife continues to list these items as “outstanding” as opposed to answered.
[53] During the wife’s submissions, her counsel confirmed that he had received a package of financial disclosure from the husband on Friday June 18th, 2021, but that he did not have sufficient time to review the documents received to advise the court what, if any, remaining items of disclosure remained outstanding.
[54] On my request, counsel for the husband caused the Index of the Financial Disclosure Brief, which he had sent to the wife, to be uploaded onto Caselines so that I could review the list of documents sent to the wife and compare it with Schedule “A” attached to the wife’s Amended notice of motion.
[55] The Index indicates that 12 Tabs of documents were delivered to the wife, which items include the following:
a) The husband’s personal income tax returns and notices of assessment for 2017, 2018, 2019 and 2020;
b) Corporate Income Tax Returns and Notices of Assessment for Rori Developments Inc. for the year ending January 31, 2017, January 31, 2018, and January 31, 2019;
c) Corporate Income Tax Returns and Notices of Assessment for Young Asia Television Inc. for the year ending January 31, 2017, January 31, 2018, January 31, 2019 and January 31, 2020.; and
d) An executed Authorization and Direction to Uthaya Tax.
[56] During the husband’s submissions, his counsel referred to Exhibit “K” to the wife’s affidavit, sworn on May 11, 2021, which is a chart detailing the Request for Information made by the wife, dated January 12, 2021, and the husband’s response to same. Mr. Sherr went through a number of these items during his submissions, to demonstrate that his client had answered the question(s) asked but the wife continues to list the item(s) as outstanding. The husband submits that he has answered every inquiry and question asked of him but his answer has been deemed not sufficient by the wife. By way of example, there are a number of inquiries asking the husband for documentation to prove that certain items are not in his possession, such as 4x 1 ounce gold bars, a coin collection, a liquor collection, a Riding lawnmower, tools, snowblower, projector and a watch collection. The husband’s consistent answer has been that he was excluded from the matrimonial home suddenly and these items were left in the home. Despite having answered these questions, these items remain outstanding because the wife seeks “supporting documentation”. In circumstances such as these, there is no supporting documentation available to provide the wife.
[57] Similarly, when the wife has requested the production of corporation financial statements for dormant companies where no such financial statements were prepared, and where the husband has provided notices of assessment for the corporation confirming nil income, the wife continues to list these items as outstanding. Again, in circumstances such as these, there is no further financial documentation with which the wife can be provided to prove a company is dormant.
[58] Item #9 at Schedule “A” to the wife’s Amended notice of Motion asks the husband to produce a valuation report for any corporations or businesses in which he has or had an interest, directly or indirectly, at the valuation date for purposes of calculating his net family property. Item #10 asks the husband to produce an income report, prepared by an expert retained and paid for by him, calculating his income for purposes o child support and spousal support. In my view, where there are dormant companies, it is unreasonably disproportionate for the wife to expect the husband to retain an expert and obtain valuation reports for such companies. In addition, when the husband has produced copies of his bank statements to evidence his income and provided income tax returns and notices of assessment, an expectation that the husband will retain an expert to produce an income tax return is not necessarily the kind of “outstanding” financial disclosure that is standard disclosure expected under Rule 13 of Family Law Rules.
Costs
[59] Again, on April 13, 2021, Nakonechny, J. ordered that the costs of the attendance before her (which adjourned these motions to June 22, 2021) be determined by the judge hearing the motion.
[60] At the end of the motion, I asked counsel for both parties to submit their respective Bill of Costs and Offers to Settle, which were sealed until now.
[61] The wife seeks costs of this motion (which includes the April 13, 2021 attendance) on a full indemnity scale, in the sum of $12,667.30; alternatively, on a substantial indemnity scale, in the sum of $10,767.21; or, in the further alternative, on a partial indemnity basis, in the sum of $8,233.75.
[62] The respondent seeks costs on a full recovery rate in the sum of $4,559.55 or on a partial recovery rate, in the sum of $3,0096.20.
[63] The wife was successful in obtaining an order for temporary child support in the sum she sought, based on an imputed annual income for the husband of $39,600, and she was partially successful in obtaining an order for disclosure, but not in the manner in which she sought. She was not successful, however, in obtaining an order for child support arrears. Given the divided success, she is presumptively entitled to some costs: Rule 24(1) of the Family Law Rules, O. Reg. 114/99 (“FLRs”).
[64] The touchstone considerations of costs awards are proportionality and reasonableness: Beaver v. Hill, 2018 ONCA 840, at para. 12. In Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579, at paras. 28-29, 37, the court held that costs must be fair and reasonable, and consistent with the reasonable expectations of the parties.
[65] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, Courts of Justice Act, R.S.O. 1990, c. C.43., s.131. By r. 24(10)(a) of the FLRs, the court is to make a decision on the costs of a step in the case promptly after dealing with the step, in a summary manner.
[66] Again, as stated above, rule 24(1) of the FLRs creates a presumption of costs in favour of the successful party, subject to the factors set out in r. 24: Beaver, at para. 10.
[67] An award of costs is determined by reference to: the factors listed in Rule 24(12), Rule 24(4) (unreasonable conduct of a successful party), Rule 24(8)(bad faith), Rule 18(14) (offers to settle) and the reasonableness of the costs sought by the successful party: Berta v. Berta, 2015 ONCA 918 at para. 94. 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 a number of factors 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 and any other expenses, and any other relevant matter. In particular,
[68] 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: Mattina v. Mattina, 2018 ONCA 867.
[69] There is no general approach in family law of “close to full recovery costs”: Beaver, at para. 11. Rather, full recovery costs is only warranted in certain circumstances, such as bad faith under r. 24(8), or beating an offer to settle made under r. 18(14): Beaver, para. 13.
[70] Rule 24(5) provides criteria for deciding the reasonableness of a party's behaviour in a case (a factor in clause 24(12)(a) (1) above). It reads 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.
Factors to be considered
[71] I have considered the factors set out in Rule 24 (12) of the FLRs.
Importance and complexity of the issues
[72] The motion was of importance to both parties. The case is unique in its facts which causes the analysis to be somewhat complex.
Unreasonable Conduct or Bad Faith
[73] 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 trial], 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.
[74] Rule 24(8) of the FLRs explicitly authorizes the court to order costs on a full recovery basis if a party has acted in bad faith, and also requires a Court to order the party who has acted in bad faith to pay the costs immediately.
[75] With respect to this motion, I do not believe that either party behaved unreasonably. The husband took the position that the bringing of this motion was unreasonable, in that it caused excessive legal fees to the parties and, instead, a case conference ought to have been held particularly, since there had not been a case conference since the wife amended her pleadings in December 2020. However, there were earlier Endorsements that allowed the wife to bring the motion and, accordingly, it is understandable that she proceeded in the manner in which she did. Having said that, I agree with the husband’s counsel that it may have been more productive for the case, had a comprehensive case conference been held instead of a motion.
Offers to Settle
[76] The wife made an Offer to Settle, dated April 5, 2021, in which she offered to settle this motion. This Offer had 5 parts, which were severable and capable of being accepted individually, as follows:
(1) The husband pay child support in the sum of $952 a month, commencing May 1, 2021, based on an annual imputed income of $39,600. If the wife accepted this Part A prior to or at April 9, 2021 at noon, the costs of this issue would be fixed at $2,000. If accepted after April 9th, 2021, the costs were to be fixed at $3,000 and on a full recovery basis thereafter;
(2) The husband pay child support arrears in the sum of $592 a month as of July 2016 to the current date, based on an annual imputed income of $39,600. If the husband accepted this Part B, prior to or at April 9, 2021, the costs of this issue would be fixed at $2,000. If accepted after April 9th, 2021, the costs would be fixed at $3,000 on April 9th and on a full recovery basis thereafter;
(3) The husband produce the requested disclosure listed at Schedule “A” to the Offer (the same Schedule attached to the Amended notice of motion). If the husband accepted this Part C, prior to or at April 9, 2021, the costs of this issue would be fixed at $1,000. If accepted after April 9th, 2021, the costs would be fixed at $2,000 on April 9th and on a full recovery basis thereafter; and
(4) The husband produce his responses to the Request for Information dated January 12, 2021 and March 10, 2021. If the husband accepted this Part D , prior to or at April 9, 2021, the costs of this issue would be fixed at $1,000. If accepted after April 9th, 2021, the costs would be fixed at $2,000 on April 9th and on a full recovery basis thereafter.
[77] On April 9, 2021, the wife made a further Offer to Settle, in which she offered to settle the husband’s request for the adjournment of the April 13, 2021 motion on terms. This Offer had 2 Parts, which were severable and was open for acceptance until 1 minute after the start of the haring of the motion, as follows:
Part A
(1) The wife’s motion on April 13, 2021, was to be adjourned on consent to a later date to be determined in accordance with the court’s calendar;
(2) The husband was to pay child support in the sum of $592 a month based on an imputed annual income for the husband of $39,600 commencing May 1, 2021;
(3) If Part A was accepted at or prior to noon on April 12, 2021, there would be no costs. If Part A was accepted after noon on April 12, 2021, the costs would eb fixed at $1,000 as of April 12, 2021 at noon and on a full recovery basis, thereafter.
Part B
(4) The wife’s motion on April 13, 2021, was to be adjourned on consent to a later date to be determined in accordance with the court’s calendar;
(5) The husband was to produce the requested disclosure by April 30, 2021 by Affidavit, setting out in detail the circumstances that preclude him from producing the requested disclosures including his efforts to obtain the requested disclosures, requests he made to third parties, and the responses he received from third parties.
(6) If Part B was accepted at or prior to noon on April 12, 2021, there would be no costs. If Part B was accepted after noon on April 12, 2021, the costs would be fixed at $1,000 as of April 12, 2021 at noon and on a full recovery basis, thereafter.
[78] The husband made an Offer to Settle, dated June 21, 2021, to resolve the motion before me, which was to remain open for acceptance unless withdrawn, as follows:
(1) The husband was to pay interim and without prejudice child support in the sum of $500 a month;
(2) The support was to be payable and accruing, but not paid, pending further agreement or court order;
(3) The balance of the wife’s motion was to be dismissed; and
(4) No costs to be paid by either party.
[79] Given that the motion proceeded before me, neither party accepted the other party’s offer(s).
[80] In terms of temporary child support, the wife obtained a result from this order that is as favourable as the quantum of child support set out in her April 5th, 2021 offer. With respect to financial disclosure, I have ordered that the husband produce disclosure if, and only if, there remains outstanding disclosure once the wife compares her Schedule “A” with the disclosure that was delivered. The wife did not receive a more favourable result in this order with respect to child support arrears, as that which was set out in her April 5th, 2021.
[81] In terms of the April 13th date, the wife offered to adjourn her motion if the husband paid her child support in the sum of $592 a month starting May 1, 2021. Nakonechny, J. ordered the husband to make two uncharacterized payments to the wife of $500 each on May 1, 2021 and June 1, 2021 on a without prejudice basis. In this regard, the wife was mostly successful.
How is Success Measured Within the Context of Divided Success?
[82] When success is divided, the court has the explicit discretion under r. 24 (6) to determine the allocation of costs. One key issue under r. 24(6) is how to allocate success when neither party is the clear winner of a motion, trial or other proceeding.
[83] In Jackson v. Mayerle, 2016 ONSC 1556 (SCJ-FC), Pazaratz J. considered how to apportion divided success under r. 24(6). He stated that r. 24(6) requires a comparative analysis, as most family cases have multiple issues. However, those issues are not equally important, time-consuming or expensive to determine. Comparative success can also be assessed globally in relation to the whole of the case, asking:
How many issues were there?
How did the issues compare in terms of importance, complexity and time expended?
Was either party predominantly successful on more of the issues?
Was either party more responsible for unnecessary legal costs being incurred?
[84] In Thompson v. Drummond, 2018 ONSC 4762, Chappel J. added to Pazaratz J.’s analysis. She pointed out that the determination of success is not merely a mathematical exercise. Rather, the court must engage in a "contextual analysis" in which it looks first to the kinds of factors set out in Jackson v. Mayerle. If it finds that success is divided, the court will then exercise its discretion. It may simply determine costs globally. Or it may look first to success in the primary issue, but subject to "adjustments" that consider lack of success in any secondary issues, as well as any other appropriate factors. As Chappel J. wrote at para. 12:
The determination of whether success was truly "divided" does not simply involve adding up the number of issues and running a mathematical tally of which party won more of them ... Rather, it requires a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues which required adjudication ... Where the court concludes that success was in fact divided, it may award costs to the party who was more successful on an overall global basis or on the primary issue, subject to adjustments that it considers appropriate having regard for the lack of success on secondary issues and any other factors relating to the litigation history of the case ...
[85] There are two schools of thought regarding the role of offers to settle in the determination of success under r. 24. On the one hand, in Lawson v. Lawson, 2008 CanLII 23496 (ON SC), [2008] O.J. No. 1978 (S.C.J.), Justice J. Wilma Scott of this court’s family Court wrote that any determination of success "...must take into account how that order compares to any settlement offers made": at para. 7. In Osmar v. Osmar, 2000 CanLII 20380 (ON SC), [2000] O.J. No. 2504 (S.C.J.), at para. 7, Aston J. was even more direct, in stating that:
Offers to settle become the yardstick by which to measure "success" and are significant in considering both liability for costs and the amount of those costs.
[86] On the other hand, in Jackson v. Mayerle, Pazaratz J. considered offers to settle separately from the issue of relative success. His four factors do not include success in comparison to offers to settle. Similarly, Chappel J.'s analysis of divided success in Thompson v. Drummond did not consider offers to settle. Rather, elsewhere in her decision, she describes offers as "[a]nother important consideration in determining both entitlement to and the quantum of costs."
[87] In my view, offers to settle are imported into r. 24 only in regard to reasonableness and/or proportionality, not success. Further, while those offers need to be in writing, they do not have to meet the formal requirements of r. 18 in order to be considered under r. 24(12).
[88] In this case, the wife was successful on two issues (temporary child support and disclosure) and not successful on child support. She was also successful on receiving two uncharacterized payments as a term of the April 13, 2021 adjournment. In my view, however, she was responsible for causing unnecessary legal expenses in insisting that the April 13th motion proceed, knowing that the husband’s counsel was not available.
Any legal fees, including the number of lawyers and their rates; Any expert witness fess, including the number of experts and their raters; and Any other Expenses property paid or payable:
[89] Mr. Philbert spent 20.6 hours on this matter. He had two law clerks, a paralegal student and a firm manager also spend a further collective 17.7 hours on the matter. Given that he filed a total of three affidavits in support of this motion, these fees are not surprising. Mr. Philbert, was called to the Bar in 2002. His hourly rate is $400.00. The law clerk who spent 12 hours working on this matter, has an hourly rate of $200. The respondent’s lawyer, David Sherr, was called to the bar in 2012. His hourly rate is $300 and his associate’s hourly rate is $150.
[90] I find that the time spent by the applicant’s lawyer to be somewhat excessive given that this was a temporary motion for child support. Mr. Sherr, for example, on the same motion, filed two affidavits, and spent a total of 9.9 hours on the motion, between him and his law clerk.
[91] The FLRs do not explicitly refer to 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. I did not find bad faith in this case. The court has a range of costs awards open to it, from nominal to just short of full recovery.
[92] 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 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.
[93] Costs must always be proportional to what is at stake in the case, and to the unsuccessful party’s reasonable expectation as to what costs he may face if he is unsuccessful. In appropriate circumstances, unreasonable behavior will result in a higher award of costs.
[94] In light of the wife’s divided success on the motion; the somewhat excessive fees of the applicant’s counsel, but the overall reasonableness and proportionality of the work performed by the applicant’s counsel; the fact that the applicant’s counsel delegated a great deal of work to a law clerk, at a lower hourly rate; the respondent should have expected to pay costs, if the applicant succeeded in obtaining a temporary, without-prejudice, child support order, an order that the respondent pay the applicant costs fixed in the sum of $7,000, inclusive of HST, represents a reasonable and fair contribution by the respondent to the applicant’s costs.
ORDER TO GO AS FOLLOWS:
[95] I make the following temporary order:
(1) In accordance with section 15.1 of the Divorce Act and the Child Support Guidelines, on a temporary and without prejudice basis, commencing on June 1, 2021, and on the first day of each following month, the respondent, Selvakumar Balasubramaniam, shall pay to the applicant, Sobini Tharmalingam, child support for the parties’ two children in the sum of $592 a month, based on the respondent having an imputed income of $39,600 a year;
(2) The issue of retroactive child support shall be adjourned to be determined at trial, in terms of commencement date and quantum, if any;
(3) After reviewing the specific disclosure produced by the respondent on June 18, 2021, the applicant shall prepare an updated list of outstanding disclosure by the respondent, if any, and shall produce the updated list of outstanding disclosure within ten days of this order. If the respondent has answered a question or inquiry, that item shall not be listed as “outstanding” but, rather, as “answered”. If the applicant has additional questions as a result of an answer provided by the respondent, she shall so indicate in this updated chart. The respondent shall provide the further answers and outstanding disclosure to the applicant within 30 days of his receipt of the updated list;
(4) If the respondent has any further disclosure he requires of the applicant, he shall prepare an updated list of disclosure within ten days of this order. The applicant shall provide the answers to this list within 30 days of the receipt of the updated list;
(5) The parties shall take steps to immediately schedule a combined Settlement Conference/Trial Management Conference, which dates are currently being scheduled for mid-October 2020;
(6) If either party seeks to bring a further motion before the court he/she shall seek leave to do so;
(7) The parties shall have leave to conduct Questioning; and
(8) The respondent shall pay the applicant’s costs of this motion, which includes the April 13th, 2021, attendance, in the fixed sum of $7,000, which sum shall be payable and accrue until a further order or agreement of the parties is reached with respect to the release of the balance of the matrimonial home proceeds currently held in court.
June 24, 2021
M. Kraft, J.