Court File No.: FS-18-92660-00
Date: 2022-12-01
Superior Court of Justice - Ontario
Re: Rajvir Walia, Applicant
And: Monika Walia, Respondent
Before: Agarwal J.
Counsel: Steven Benmore, Lawyer for the Applicant Farrah Hudani, Lawyer for the Respondent Megan Melito, Lawyer for Subash Gandhi, Kavita Gandhi, and Vikas Gandhi
Heard: November 18, 2022, by Videoconference
Endorsement
[1] Subash Chander Gandhi, Kavita Gandhi, and Vikas Gandhi move for costs of this proceeding under rule 12(3) of the Family Law Rules. In March 2020, the applicant Rajvir Walia added the Gandhis as parties. Subash and Kavita are the respondent Monika Walia’s parents; Vikas is her brother. He has since withdrawn all of the application as against them. Monika also moves for her costs related to the steps taken by Rajvir against the Gandhis.
[2] The Gandhis seek $37,224.34 in costs on a full recovery basis. They also seek reimbursement of $2500 they paid in costs to Rajvir. Monika seeks $11,354.24 in costs on a full recovery basis. Rajvir says that only the trial judge should decide costs.
[3] I endorse an order that the Gandhis are entitled to costs in relation to the withdrawn proceeding and set the amount of costs as $11,500 inclusive of fees, disbursements, and taxes. I also endorse an order that the Gandhis are entitled to costs in relation to this motion and set the amount of costs as $2500, inclusive of fees, disbursements, and taxes. Rajvir shall pay the costs on or before December 14, 2022.
[4] I endorse an order that Monika is entitled to costs in relation to the withdrawn proceeding and set the amount of costs as $6800 inclusive of fees, disbursements, and taxes. I also endorse an order that Monika is entitled to costs in relation to this motion and set the amount of costs as $1000, inclusive of fees, disbursements, and taxes. Rajvir shall pay the costs on or before December 14, 2022.
Background Facts
[5] Rajvir and Monika were married in August 2010. They separated in April 2018. There is one child of the marriage, who is now four years old. This divorce proceeding has engaged both parties’ families.
[6] Monika added Rajvir’s father Harvinder Walia and two companies owned and operated by Rajvir and Mr. Walia, Richway Inc. and EZ Buy Furniture Inc., as parties to this proceeding. Monika alleges that Rajvir added the Gandhis as parties to this proceeding in retaliation.
[7] Rajvir claims that Monika stole money from Richway and transferred that money to the Gandhis to buy several properties in Ontario and Manitoba. He seeks an order that Monika has a beneficial interest in those properties. Monika and the Gandhis deny these allegations. Monika and the Gandhis say that they have made substantial disclosure to Rajvir, all of which they say shows that there was no theft.
[8] There have been two case conferences and a settlement conference in this proceeding. In addition, there have been several motions:
- Rajvir and Monika moved for financial disclosure from each other in early August 2021
- Monika moved for interim spousal support and to vary interim child support in August 2021 (adjourned from April 2021)
- the Gandhis moved for summary judgment dismissing the claim as against them (this motion was adjourned three times—first from August 2021 to September 2021, then to December 2021, and then again sine die to permit cross-examinations)
- Justice Doi awarded $2500 in costs to Rajvir for the contested adjournment of the summary judgment motion in December 2021
- Mr. Walia moved for leave to bring a summary judgment motion dismissing Monika’s claim as against him—Justice Dennison granted leave and, at the request of the parties, case managed the summary judgment motion and yet another disclosure motion scheduled for June 2022 (which was adjourned to November 2022)
- Justice Tzimas heard Monika’s and Rajvir’s disclosure motions on November 15th (the same week as this motion)—she ordered both of them to make disclosure and pay costs
[9] The endorsements in these matters make clear that all of the parties have misused court resources—they schedule motions only to be unprepared or seek an adjournment and they are not following the Central West Region: Notice to the Profession and Parties, effective April 19, 2022 (with respect to uploading documents, limitations on materials, or guidelines on the number of motions). Even the parties don’t have a good handle on the proceedings to date—Vikas’s affidavit discusses motions and hearings that either didn’t happen or happened on different days. As a preliminary matter, Rajvir, as the applicant, shall ensure that all previous orders and endorsements in the case have been uploaded into the Orders and Endorsements bundle and all pleadings have been uploaded into the Pleadings bundle in CaseLines on or before December 9, 2022.
[10] In March 2022, Rajvir withdrew his application against the Gandhis.
[11] In Justice Tzimas’s endorsement dated November 21, 2022, she stated: “Finally, there are to be no more motions for any further disclosure by any of the parties without leave of the trial judge. As already noted above, the parties shall have 30 days from the date of this order to complete their respective disclosure obligations. The only exception to that is if they reach mutual agreement to extend the time, for specific items for which they may require additional time. Thereafter, any failure to produce the required disclosure will amount to a refusal and may result in negative inferences by the trial judge.”
Preliminary Issue
[12] In August 2022, Justice Petersen granted leave to the Gandhis to move for their costs of the withdrawal. The Gandhis and Monika argue that Rajvir cannot now argue that their costs should be reserved to after the trial of this proceeding as Justice Petersen has already decided this issue:
Although this proceeding has already usurped a disproportionate amount of court resources, I am of the view that it is an appropriate use of court resources and is in the interests of justice to allow the costs motion to be heard now rather than delaying it to the trial.
Of particular relevance are the facts that the moving parties are no longer Respondents in the proceeding and will not be participating as parties in the trial; they appear to have incurred considerable costs defending the claims against them (in excess of $35,000); and the claims were withdrawn, giving rise to presumptive entitlement to costs under r.12(3), subject to a court order declaring otherwise.
I am not persuaded that there will be any prejudice to the Applicant or unfairness resulting from this procedure. The Applicant (and moving Respondents) will be able to present evidence and make submissions to the motions judge relevant to the issue of costs. The motions judge will be in as good a position as the trial judge to decide the issue because the claims against the moving parties have been withdrawn and will not be adjudicated by the trial judge.
There is no risk of duplicative proceedings, as asserted by the Applicant, because the withdrawn claims are different and separate from the claims that will be adjudicated at trial.
[13] The Court of Appeal recently discussed the doctrines governing re-litigation in 402 Mulock Investments Inc. v Wheelhouse Coatings Inc., 2022 ONCA 718.
[14] Res judicata prevents the re-litigation of previously adjudicated and finally decided matters. There are two branches of res judicata: cause of action estoppel and issue estoppel. See Toronto (City) v CUPE, Loc 79, 2003 SCC 63 at para 23. Cause of action estoppel precludes the parties from litigating claims that have been determined in a prior action. It applies when the basis of the cause of action was argued or could have been argued in the prior action through the exercise of reasonable diligence. The same parties must be part of the later litigation and that decision must be final. See The Catalyst Cap. Group Inc. v VimpelCom Ltd., 2019 ONCA 354 at paras 50-51. Issue estoppel precludes the re-litigation of issues that have been previously decided in another proceeding. Three preconditions are required. First, the same issue must have been decided. Second, the judicial decision giving rise to the estoppel must be final. Third, the parties to the judicial decision must be the same persons as those in the proceeding in which the estoppel is raised, or their privies. If the criteria are met, the court must determine whether, as a matter of discretion, issue estoppel ought to be applied. See Toronto (City), at para 23.
[15] Abuse of process engages the inherent and residual discretion of the court to prevent the misuse of its procedure. The doctrine of abuse of process is characterized by its flexibility as it is unencumbered by specific requirements. As a result, it may be relied on to prevent re-litigation in circumstances that violate judicial economy, consistency, finality, and the integrity of the administration of justice. The main focus of the doctrine is the integrity of the courts’ adjudicative functions, but it arises in an array of contexts. See Toronto (City), at paras 36-37, 43.
[16] This motion cannot be res judicata—Justice Petersen’s decision is not final. But I agree that it would be an abuse of process for Rajvir to relitigate whether, as a practical matter, the costs of his withdrawal should be heard at trial. He made that argument to Justice Petersen already and failed.
Legal Framework
[17] A party who withdraws all or part of an application shall pay the costs of every other party in relation to the withdrawn application, up to the date of the withdrawal, unless the court orders or the parties agree otherwise. See Family Law Rules, r 12(3).
[18] The withdrawal of a case can be done unilaterally at any stage of the proceedings, unlike under the comparable provision in civil cases when leave of the court is necessary once the pleadings are closed. But there are cost consequences. Thus, if the withdrawing party seeks to avoid the cost consequences flowing from the withdrawal, that party must persuade the court to make an order avoiding or minimizing the costs. See Serra v Serra, 2009 ONCA 105 at para 103.
[19] Though Rajvir cannot argue, as a practical matter, that the Gandhis’ costs should be decided by the trial judge because Justice Petersen already decided the issue, he raised the novel issue that this court, on a motion, has no jurisdiction under rule 12(3) to award costs to the Gandhis. Rajvir argues that the rule does not include circumstances where the case against only a co-party was withdrawn. He contends that this rule only applies in the limited circumstance where a case is ended by withdrawal before trial. To that end, he submits that only the trial judge can determine whether he should pay costs to the Gandhis because the trial judge will hear the Gandhis’ evidence.
[20] I disagree. Rule 12(3) states that a “party who withdraws all or part of an application….” [emphasis added]. The legislature expressly contemplated circumstances where, as here, the case continues after withdrawal. There is nothing in the “grammatical and ordinary sense” of the words in the rule that would limit the entitlement to costs under rule 12(3) to withdrawals against the main party.
[21] In Benson v Crawford, 2012 ONSC 5932, Justice Perkins held that rule 12(3) is only for costs thrown away in relation to the pleadings because, at that time, rule 24(10) required costs of each step to be dealt with by the presiding judge. But, since April 2018, that rule no longer exists (likely in response to Islam v Rahman, 2007 ONCA 622, and Bortnnikov v Rakitova, 2016 ONCA 427), which reinforces my view that a motion judge can decide whether a party is entitled to costs if the application is withdrawn against them before trial.
[22] Further, the Gandhis are not parties any more. The court has no jurisdiction over them. They may not be witnesses at the trial. The evidence at trial may not engage the issues relevant to the Gandhis’ costs. Now is the appropriate time to decide their costs.
[23] I was not provided a binding legal test for the exercise of the court’s discretion to deny costs under rule 12(3). The caselaw identifies some factors:
- whether the claim was frivolous or vexatious (Sgrignuoli v Sgrignuoli, 2015 ONSC 5537)
- whether the claim had merit (BL v ML, 2003 CanLII 1948 (Ont Sup Ct))
- whether the costs were “thrown away” (Benson v Crawford, 2012 ONSC 5932)
- the factors in rule 24(12) (see Bordynuik v Bordynuik, 2008 CanLII 39219 (Ont Sup Ct); Entwistle v MacArthur, 2007 CanLII 17375 (Ont Sup Ct); and Slezak v Pietrzyk, 2007 ONCJ 352)
- the withdrawing party’s financial means (Dixon v McGhann, 2021 ONCJ 72)
[24] These factors mirror the test used under rule 23.05(1) of the Rules of Civil Procedure, when a plaintiff discontinues an action against a defendant: “the plaintiff must satisfy the court that the material filed discloses a bona fide cause of action, that is not frivolous or vexatious and which the plaintiff had some justification to commence, having regard to the conduct of the defendant” (see Digiuseppe v Todd, 2012 ONSC 1028 at paras 22-24). Rule 23.05(1) was amended in 2009 to remove the plaintiff’s prima facie entitlement to costs. In contrast, rule 12(3) of the Family Law Rules maintains “every other party’s” prima facie right to costs.
[25] This caselaw explains how to assess the merits or good faith of a withdrawn case: “A consideration of what constitutes a bona fide claim should not involve speculation on the ultimate merits of the claim nor on what might have been the result had the claim been adjudicated. Similarly, it should not be part of the court’s analysis to weigh the merits of potential defences available to the defendant” (see Digiuseppe, at para 24; Bank of Nova Scotia v Pappas, 2019 ONSC 840 at para 15).
[26] Thus, in my view, the correct approach for deciding costs under rule 12(3), as disclosed by this caselaw, is as follows. First, the preliminary question is whether the applicant satisfied the court that the material filed discloses a bona fide cause of action (i.e., that is not frivolous or vexatious and that the applicant had some justification to start the proceeding, having regard to the respondents’ conduct).
[27] If the proceeding is not bona fide then it is necessarily started in bad faith and, under rule 24(8), the court shall decide costs on a full recovery basis and shall order the applicant to pay them immediately.
[28] If the proceeding is bona fide, the court’s discretion should be exercised by reference to the considerations in rule 24(12) of the Family Law Rules.
[29] This framework aligns with Justice Spence’s decision in Dixon, at para 20: “First, does the presumption of an entitlement to costs apply. And second, if it does apply, what is the amount of costs that the court ought to order.”
[30] Modern family cost rules are designed to foster these fundamental purposes: (a) partially indemnify successful litigants; (b) encourage settlement; (c) discourage and sanction inappropriate behaviour by litigants; and (d) ensure that cases are dealt with justly. Rule 24(12), which lays out the factors relevant in setting the amount of costs, “specifically emphasizes ‘reasonableness and proportionality’ in any costs award.” See Tintinalli v Tutolo, 2022 ONSC 6276 at para 5. Even when making an award of full recovery, the costs sought by the successful party must be reasonable. Tintinalli, at para 12.
[31] The costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. Tintinalli, at para 13.
[32] In Fearon v Fearon, 2021 ONSC 2305 at paras 65-70, Justice Trimble set aside a costs award under rule 59.06(2) of the Rules of Civil Procedure, which allows the court to vary or set aside an order on the ground of fraud or facts arising or discovered after it was made. In that case, the respondent admitted that her evidence to support the earlier costs award was incorrect.
Analysis and Disposition
[33] Applying this framework, the first issue is whether Rajvir’s claim against the Gandhis discloses a bona fide cause of action. In my view, it does.
[34] Rajvir’s claim against the Gandhis was that Monika took money from Rajvir’s business and transferred the funds to the Gandhis. Rajvir’s claim is supported by an affidavit from Prachi Khanna, sworn December 8, 2021—she deposes that she saw Monika remove “thousands of dollars in cash income received from our customers during the point-of-sale transactions.” Monika and the Gandhis respond that Monika’s financial disclosure proves that she did not steal any money.
[35] I cannot weigh the merits of Rajvir’s claim. Ms. Khanna has not been questioned. I don’t know if Monika, in fact, took money from the business. But, based on the material filed, Rajvir had a valid justification to start the action.
[36] Given that, I turn to the factors in rule 24(12). First, each party’s behaviour. Both parties have litigated this claim in the most aggressive and high-conflict manner possible. There have been multiple appearances before this motion. The Family Law Rules and the Central West Region: Notice to the Profession and Parties, effective April 19, 2022, provide for, generally, only one case conference, one settlement conference, and only one motion after the case conference. Even so, the parties have repeatedly used the court’s limited resources and time for their personal ends, taking away court time from other parties in the system who have equally important matters that need resolution.
[37] The materials filed for this motion disclose the parties’ approach. They seem to believe that if they tell their story to just one more judge (the story being how bad the other party is), they will get “justice”—the judge will, they hope, finally take their side and agree the other party is really the bad actor. Unfortunately, this tactic, applied here, has failed again—the parties’ evidence on this motion has, at best, shown that they have all acted unreasonably.
[38] In my view, the critical facts for this motion are:
- in February 2021, the Gandhis delivered an affidavit of documents—Rajvir never asked for production of the documents disclosed by the Gandhis
- in May 2021, the Gandhis partially responded to Rajvir’s request for information
- in August 2021, the Gandhis agreed that if the application against them was withdrawn, Rajvir could continue to seek disclosure from them as non-parties
- in November 2021, the Gandhis filed evidence for their summary judgment motion, which included all of the documents they had previously disclosed
- Rajvir’s affidavit for the Gandhis’ summary judgment motion states that he intended to adduce evidence of Monika’s theft at trial but, for inexplicable reasons, he did not do so for the summary judgment motion
- the summary judgment motion was adjourned so Rajvir could question the Gandhis on their affidavits but Rajvir withdrew his application against the Gandhis before doing so
[39] These facts are basically uncontested. Rajvir had or could have had all the information he needed to make an informed decision whether to continue his claim against the Gandhis well before he withdrew the case in March 2022. That he persisted for the better part of a year was unreasonable, and increased the Gandhis’ and Monika’s costs.
[40] Second, the time spent by each party. The Gandhis have spent around 50 timekeeper hours since the application was started against them. Monika says she has spent around 25 hours dealing with the claim against the Gandhis. Rajvir has not filed a costs outline showing how much time he spent dealing with the claim against the Gandhis. I believe 50 hours for the Gandhis and 25 hours for Monika is reasonable given the stage of the proceeding and the number of attendances. Though Monika was more of a bystander, she was still an interested party and it was reasonable for to attend motions and case conferences even she wasn’t the main party at the event.
[41] Third, any written offers to settle. I was not provided any offers to settle.
[42] Fourth, any legal fees. Both the Gandhis’ and Monika’s lawyers’ hourly rates appear reasonable. They are similar to Rajvir’s lawyer’s hourly rates, and all parties used timekeepers of varying experience.
[43] The other factors (expert witness fees and other expenses) are irrelevant or de minimis.
[44] Returning to the overall principle (fair and reasonable expectations), my view is that Rajvir should have expected that if he sued the Gandhis and failed, he would have to pay their costs. There is no suggestion that he would have waived his costs if he had proven his claim. Rajvir, presumably after taking a hard look at the evidence, decided not to pursue his claim against them. He made that unilateral decision—given the rule provides for a prima facie entitlement to costs, he should have expected that he would have to pay the Gandhis’ costs by taking that step. Though Rajvir says that withdrawing a case is not the same as being unsuccessful, I think that is a distinction without a difference. He sued the Gandhis. Rather than take the case to trial, he ended it. The Gandhis won.
[45] All that said, I don’t think this case justifies full indemnity costs. The parties have all conducted themselves poorly. Full recovery of costs is available where a changed order is set aside (rule 15(13)), failing to accept an offer (rule 18(14)), and for bad faith (rule 24(8)). In my view, $11,500 to the Gandhis and $6800 to Monika is a reasonable and proportionate amount for Rajvir to pay here.
[46] I decline to set aside Justice Doi’s costs award. First, there is no evidence of fraud or facts arising after the award was made, except that Rajvir has withdrawn the application against the Gandhis. Second, more generally, costs awards are intended to encourage resolution. The Gandhis unsuccessfully opposed Rajvir’s request for an adjournment. That Rajvir ended the litigation later doesn’t change the fact that they should have resolved that issue without need for a motion (indeed, most issues in this case should have been resolved without a motion).
Costs of the Motion
[47] For this motion, the Gandhis seek costs of $4145.97 and Monika seeks costs of $6577.45, both on a full recovery basis.
[48] The Gandhis and Monika are the successful parties. I don’t believe Monika and the Gandhis have acted so unreasonably in prosecuting this motion that they should be deprived of their own costs. That said, Monika largely duplicated the Gandhis’ work. Other than producing a costs outline for costs associated with the withdrawal, there was little or no need for her evidence or argument.
[49] On the other hand, Rajvir breached the Notice. Each party is restricted to one primary affidavit, which shall not be longer than 12 pages and 10 pages of exhibits. Rajvir’s affidavit is 15 pages long and he attaches almost 300 pages of exhibits. His irrelevant and unnecessary evidence prompted the Gandhis and Monika to file reply evidence, which was also irrelevant and unnecessary. Rajvir’s costs outline discloses costs of $6305.40 on a full recovery basis, meaning that he should have reasonably expected to pay around $6500 in costs if he failed.
[50] Under the factors discussed above, I endorse and order that the Gandhis are entitled to costs in relation to this motion and set the amount of costs as $2500, inclusive of fees, disbursements, and taxes. I endorse an order that Monika is entitled to costs in relation to this motion and set the amount of costs as $1000, inclusive of fees, disbursements, and taxes. Rajvir shall pay the costs on or before December 14, 2022. Given that the trial management conference is on December 15th, my view is that the parties should reconcile and pay any outstanding costs awards before that event.
[51] I am not seized.
Agarwal J.
Date: December 1, 2022
Court File No.: FS-18-92660-00
Date: 2022-12-01
Superior Court of Justice - Ontario
Re: Rajvir Walia, Applicant
And: Monika Walia, Respondent
Before: Agarwal J.
Counsel: Steven Benmore, Lawyer for the Applicant Farrah Hudani, Lawyer for the Respondent Megan Melito, Lawyer for Subash Gandhi, Kavita Gandhi, and Vikas Gandhi
Endorsement
AGARWAL J.
Date: December 1, 2022