Court File and Parties

COURT FILE NO.: FS-19-009799 DATE: 20230526 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BALKIRAN KAUR KHAIRA, Applicant AND: AJEET SINGH GHUMMAN, Respondent

BEFORE: Justice A.A. Sanfilippo

COUNSEL: Poroshad Mahdi, for the Applicant James Herbert, for the Respondent

HEARD: May 2, 2023 and In Writing

Endorsement

1In the Reasons for Judgment issued in the trial of this Application, [1] I provided the parties with an opportunity to request a Case Conference in two defined circumstances: in paragraph 225, if the parties should consider that there was an arithmetic or computational error in the calculation of the Net Family Property (“NFP”); and, in paragraph 282, if the parties do not agree on the form of Judgment. Further to these provisions, the Respondent requested a Case Conference, which was conducted on February 10, 2023 and determined by Case Conference Endorsement issued February 24, 2023. [2]

2The Applicant requested a further Case Conference to address another alleged arithmetic or computational error in the calculation of the NFP. This further Case Conference was conducted on May 2, 2023. In this Endorsement, I set out my determination of the issue raised in this second post-trial Case Conference.

3The other issue that remained for determination was the issue of costs of this Application. Paragraph 283 of the Reasons set out a timetable for the parties to deliver their written submissions on costs, barring a negotiated resolution. [3] At a Case Conference conducted on February 10, 2023, I implemented an extended timetable for the parties to deliver their written submissions on costs, which entailed the completion of the delivery of written submissions on costs by March 17, 2023. [4]

4The parties delivered their written submissions on costs by March 17, 2023, but the Applicant, Balkiran Kaur Khaira, did not deliver a Bill of Costs, as required by paragraph 283 of the Reasons for Judgment and by paragraph 15(a) of the Case Conference Endorsement. By Endorsement issued on April 6, 2023, I implemented a further timetable to provide the Applicant with an opportunity to deliver a Bill of Costs, and provided the Respondent, Ajeet Singh Ghumman, time for response. These further written cost submissions were delivered by May 11, 2023, in accordance with the extended timetable. I have now considered the written submissions on costs delivered by the parties. [5]

5I will first address the issue raised by the Applicant at the second post-trial Case Conference regarding the NFP calculation, and I will then explain my determination on the issue of costs.

I. The Second Post-Trial Case Conference

6The Applicant submitted that there was an arithmetic or computational error in the calculation of the NFP equalization payment that resulted from a date of marriage debt not being included in the value of the Respondent’s date of marriage debts. This issue was shown to have a value of $3,000.00. The parties were not able to agree on its role in the NFP equalization.

7The Reasons provided that the parties could request a Case Conference to address any arithmetic or computational error in the NFP equalization “within 30 days of the dates of these Reasons.” [6] The Applicant did not provide any explanation why this alleged arithmetic or computational error was not raised earlier, including at the Case Conference of February 10, 2023, when another arithmetic or computational error raised by the Respondent was addressed. Notwithstanding being brought late, I heard the Applicant’s submission on this alleged computational error involving $3,000.00.

8The Applicant pointed to para. 139 of the Reasons for Judgment, wherein I found as follows:

On May 17, 2007, two days before his marriage to Ms. Khaira on May 19, 2007, Dr. Ghumman executed a loan agreement by which he confirmed that he owed his parents $60,000 as the estimated amount for anticipated wedding expenses, and promised to begin repayment “around August 2011”, with interest at 10% per year, compounded monthly (the “May 2007 Loan Agreement”).

9The Applicant contended that this loan constituted a debt owing on the date of marriage in the amount of $60,000.00. According to my determination that the loans would be reduced to 10% of their value, [7] the Applicant contended that $6,000.00 should have been applied to the Respondent’s date of marriage debts, which would increase the Applicant’s NFP equalization by $3,000.00.

10The Respondent disagreed. The Respondent submitted that para. 139 of the Reasons states that the May 2007 Loan Agreement involved an “estimated amount for anticipated wedding expenses” that, I found, were not advanced by the Respondent’s parents until after the date of marriage. This is set out in para. 141 of the Reasons for Judgment, wherein I accepted the evidence of the Respondent’s father, Mr. Harbhajan Ghumman, that the wedding expenses comprising the May 2007 Loan were not fully advanced and reconciled until after the date of marriage. Paragraph 142 of the Reasons for Judgment set out my finding that the May 2007 Loan Agreement was consolidated into the December 2007 Loan Agreement.

11I do not accept the Applicant’s submission that there was an arithmetical or computational error in regard to the treatment of the May 2007 Loan Agreement for the purpose of the NFP equalization calculation. The amount of $60,000.00, discounted for the purpose of the NFP equalization calculation to $6,000.00, is not included in the Respondent’s date of marriage debt because the loan was not fully advanced and reconciled until after the date of marriage.

12Last, the parties raised at the Case Conference a disagreement on the computation of pre-judgment interest. This issue was resolved during the Case Conference and thereby did not require a ruling.

II. The Issue of Costs

13I begin my assessment of the issue of costs by explaining the parties’ positions.

A. The Parties’ Positions

14The Applicant claimed success in the Application, and sought costs in the amount of $150,000.00, all inclusive. This constitutes about 91% of the Applicant’s full solicitor and client costs of $164,202.22, as detailed in the Applicant’s Bill of Costs. The Applicant contends that she is entitled to a practically full indemnity cost award because she successfully recovered at trial an amount in excess of the Offer to Settle that she delivered on October 29, 2021, more than 7 days before trial. The Applicant also relies on Offers to Settle that she alleges to have delivered less than 7 days before trial and, indeed, during trial. Last, the Applicant submitted that the Respondent’s conduct, in failing to make proper and timely pre-trial disclosure and in unreasonably refusing to provide concessions on uncontested evidence, unnecessarily prolonged the trial.

15The Respondent submitted that each party should pay their own costs or, alternatively, that the Applicant receive an award of no more than 20% of the costs that she incurred, approximately $32,000.00. The Respondent submitted that the Applicant did not recover at trial an amount in excess of the amount set out in her pre-trial Offer to Settle and contended that none of the Offers to Settle delivered by the Applicant support an escalated award of costs. The Respondent submitted that the Applicant was only partially successful at trial because several areas of relief pleaded in her Notice of Application were dismissed. Last, the Respondent maintained that the amount sought by the Applicant in her Bill of Costs was excessive.

B. Applicable Legal Principles

16Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides the Court with discretion in the determination of both entitlements to costs and quantification of costs. The exercise of discretion in family law cases is guided by the Family Law Rules, O. Reg. 114/99 (“FLR”), particularly rr. 18 and 24.

17In Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, the Court of Appeal confirmed that the law of costs in family law cases is designed to foster three important costs principles: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour by litigants. [8] In Mattina v. Mattina, 2018 ONCA 867, [2018] O.J. No. 5626, at para. 10, the Court of Appeal stated that r. 2(2) of the FLR adds a fourth factor: to ensure that cases are dealt with justly.

18Where costs are awarded, the overarching objective is to determine a cost quantification that is fair and reasonable, and not simply an arithmetic or mechanical measure of the actual costs incurred by the successful litigant. [9]

19As a final element of a cost assessment, I must ensure that the cost award is proportionate and reasonable. In Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, leave to appeal to the SCC refused, 38792 (16 January 2020), Nordheimer J.A. stated that “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.” This statement was made in direct reference to r. 24(12)(a) of the FLR, which emphasizes that each of the factors relevant to setting the amount of costs, as listed in r. 24(12), must be considered through the lenses of “reasonableness and proportionality”.

C. Analysis

20Consideration of success is the starting point in the determination of the issue of costs.

(a) The Applicant Was Successful

21Rule 24(1) of the FLR creates a presumption of costs in favour of the successful party in the Application. [10] The Applicant was successful in obtaining a judgment against the Respondent for NFP equalization and for spousal support, in circumstances where the Respondent contested, unsuccessfully, the Applicant’s entitlement to this relief. The Applicant is thereby presumptively entitled to an award of costs, on the basis of r. 24(1).

22The Respondent submitted, in my view correctly, that the Applicant failed to establish any entitlement to several areas of relief pleaded in her Notice of Application, including: (a) trust claim regarding the matrimonial home; (b) exclusive possession of the matrimonial home; (c) sale of the matrimonial home; (d) occupation rent; (e) unequal division of net family property. [11] In my view, the Applicant’s failure on these claims does not support an apportionment of costs on the basis of divided success, consonant with r. 24(6), because the Applicant was successful in the principal purposes of the Application. One of the paths pursued by the Applicant to obtain an equalization payment failed, specifically, the claim for a beneficial interest in the matrimonial home, but the Applicant was nonetheless successful in obtaining an award for NFP equalization. I will, however, take into consideration the Applicant’s failure on certain of her claims for relief in my consideration of whether the Applicant unnecessarily increased the length of this trial, which spanned 12 days to address economic issues upon the breakdown of a 9-year marriage.

(b) The Applicant did not Establish a Basis for Full Recovery of Costs

23The Applicant’s claim for full recovery of costs is founded on r. 18(14) of the FLR, which provides that a party who makes an offer to settle is, unless the Court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, where the following conditions are met:

(a) The offer is made at least seven days before trial and did not expire and was not withdrawn when the hearing started. (b) The offer was not accepted. (c) The party who made the offer obtains a judgment that is as favorable as or more favorable than the offer to settle.

24The Applicant’s Offer to Settle dated October 29, 2021 (the “2021 Offer to Settle”) was made more than seven days before the start of trial on May 24, 2022, was not withdrawn when the hearing began, and was not accepted by the Respondent. The question is whether the Applicant obtained a judgment that is as favorable as or more favorable than the 2021 Offer to Settle.

25The 2021 Offer to Settle stated that the Applicant agreed to settle all outstanding issues in the Application through acceptance of the following terms, which were severable:

(a) The Respondent pay spousal support in the amount of $215,000.00. (b) The Respondent pay an equalization payment of $113,383, plus pre-judgment interest, plus the following: “The matrimonial home shall be sold. The parties shall equally split the proceeds of sale of the matrimonial home.” (the “Proceeds of Sale Term”) (c) The divorce shall be severed from the corollary issues.

26The Applicant did not obtain a judgment that is as favorable as or more favorable than the amount offered in settlement of the spousal support claim. The divorce term was not in dispute. The activation of the cost consequences under r. 18(14) depended on whether the Applicant recovered at trial an award for NFP equalization that was higher than offered in the 2021 Offer to Settle. This in turn depended on the application of the Proceeds of Sale Term.

27The Applicant’s position that the amount that she recovered at trial in NFP equalization was more favorable than the amount set out in the 2021 Offer to Settle was based on her submission that her offer to settle the NFP equalization required, in the Proceeds of Sale Term, that the parties split (i.e., divide in equal shares) the net proceeds of sale of the matrimonial home. The Applicant submitted that the net proceeds of sale would be calculated by use of the parties’ agreed upon value of the matrimonial home, with deduction of the amount of the matrimonial home loan, an estimate of real estate commissions, legal fees and other closing costs, and then adding this net adjusted value of sale proceeds to $113,383. The Applicant submitted that this value is less than the amount of the Applicant’s recovery at trial for NFP equalization.

28The Respondent disagreed. The Respondent submitted that the 2021 Offer to Settle the NFP equalization issue proposed to “equally split the proceeds of sale of the matrimonial home”, not to “equally split the net proceeds of sale of the matrimonial home”.

29The parties’ debate on whether the 2021 Offer to Settle was engaged for the purposes of r. 18(14) turned on the treatment of the matrimonial home loan in the Applicant’s offer to “split the proceeds of sale of the matrimonial home”. The matrimonial home loan was in the principal amount of $700,000.00, rising to the amount of $717,402.60 on the date of separation. [12] The treatment of the matrimonial home loan in monetizing the “proceeds of sale of the matrimonial home” swung the value of a 50% interest in the “proceeds of the sale of the matrimonial home” from an NFP equalization payment that was more favourable than the amount recovered at trial (if the matrimonial home loan was deducted) to an amount that was less favourable than the amount recovered at trial (if the matrimonial home loan was not deducted).

30The Respondent submitted that if the 2021 Offer to Settle proposed that the matrimonial home loan be deducted from the “proceeds of sale of the matrimonial home”, then the 2021 Offer to Settle should have said net proceeds of sale.

31The Applicant submitted, correctly, that at trial she conceded that the matrimonial home loan was valid. [13] On this basis, the Applicant submitted that the 2021 Offer to Settle should be interpreted as allowing for the deduction of the matrimonial home loan. The Respondent submitted that at the time that the 2021 Offer to Settle was delivered, and indeed even at the time of the Applicant’s amendment of her Application on November 29, 2021, being one month after the delivery of the 2021 Offer to Settle on October 29, 2021, the Applicant denied the validity of the matrimonial home loan. [14] The Respondent thereby submitted that a plain and literal reading of the 2021 Offer to Settle, calling for equal division of the “proceeds of sale” of the matrimonial home without deduction for the matrimonial home loan, was consistent with the position taken by the Applicant prior to trial regarding the matrimonial home loan.

32Rule 18(15) of the FLR provides that the burden of proving that the offer to settle activates r. 18(14) is on the party who made the offer and claims the benefit: in this instance, the Applicant. The Applicant did not discharge this burden. I find that r. 18(14) is not engaged by the Applicant’s 2021 Offer to Settle.

33The 2021 Offer to Settle did not offer settlement through division of the net sale proceeds of the matrimonial home, but rather through division of the “proceeds of sale” of the matrimonial home. This plain and literal reading of the 2021 Offer to Settle, and specifically the Proceeds of Sale Term, is sufficient to determine this issue.

34This conclusion is supported by consideration of the 2021 Offer to Settle in the context of the parties’ dispute. The distinction between “proceeds of sale” and “net proceeds of sale” had a real and meaningful profile in the parties’ dispute at the time that the 2021 Offer to Settle was delivered. The Applicant delivered this offer to settle in the context of an ongoing disagreement whether the matrimonial home loan was a valid loan, or a gift by the Respondent’s parents. If the Applicant had intended that her offer was to “split the proceeds of sale of the matrimonial home” net of the matrimonial home loan, and thereby withdraw prior to trial her position that the matrimonial home loan was a gift and not a valid loan, she could have done so.

35Courts have held that for an offer to settle to engage the cost consequences of r. 18(14), or of the analogous provision in Rule 49.10 of the Rules of Civil Procedure, R.S.O. 1990, Reg. 194, the offer to settle must be “crystal clear”, and that uncertainty or lack of clarity regarding any aspect of the offer to settle may prevent a party from showing that the judgment obtained was “as favourable as or more favourable” than the offer to settle. [15] In application of these principles, the Applicant’s offer was to divide the “proceeds of sale” and not the net proceeds of sale. So interpreted, the Applicant did not recover an amount at trial that was “as favourable as or more favourable” than the NFP equalization offer in the October 2021 Offer to Settle, and r. 18(14) is not activated.

36Even had the 2021 Offer to Settle specified net sale proceeds, I would have questioned whether the 2021 Offer to Settle was sufficiently clear to activate r. 18(14). A determination of whether the amount offered for NFP equalization was “as favourable as or more favourable than” the NFP equalization awarded at trial would have required the attribution of estimated or notional closing costs to the sale proceeds to derive the amount of the net sale proceeds. Where estimations are required to determine value in offers to settle, such offers to settle may be insufficient to satisfy the requirements of r. 18(14). The exception is where even the broadest range of reasonable estimation would cause the offer to settle to activate, or not activate, r. 18(14).

37Apart from the 2021 Offer to Settle, the Applicant relied on Offers to Settle that were not compliant with r. 18(14) because they were not served “at least seven days before the trial”. The trial began on May 24, 2022, and the Applicant served an Offer to Settle on May 25, 2022 (the “May 2022 Offer to Settle”) and submitted that she served a further Offer to Settle on June 6, 2022 (the “June 2022 Offer to Settle”), although the Respondent denies receipt of this offer. I will return to these offers to settle as part of my assessment of whether the Applicant approached settlement reasonably, consonant with r. 18(16), which provides that in the exercise of my discretion, I “may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply.”

38By reason of my determination that the Applicant has not shown that r. 18(14) is activated, and as there is no basis for a finding that the Respondent acted in bad faith (r. 24(8)), the Applicant shall receive an award of costs of this Application on a partial indemnity basis.

(c) The Amount of Costs

39The Applicant’s Bill of Costs showed that her full indemnity costs of $164,020.22, all inclusive of fees, disbursements, and taxes, constituted $82,010.11 on a partial indemnity basis, all inclusive. The Respondent’s submission that this level of costs was unreasonable failed when the Applicant’s costs were compared with the Respondent’s Bill of Costs, which totaled a roughly equal amount, at $168,530.91. [16] The Respondent could reasonably expect that, if unsuccessful at trial, the Applicant’s costs could, like here, mirror those that he incurred.

40The amount of costs claimed by the Applicant was not only reasonable and fair when compared with the costs of the Respondent, but on scrutiny of its components. The “discounted’ hourly rate of Applicant’s counsel of $430.00 and the number of hours docketed (time spent) were reasonable. The Respondent’s submission that the Applicant had duplicated costs during the transition from her first-retained counsel and in preparation for questioning and trial management was not persuasive.

41I have analysed the factors set out in r. 24(12) as follows:

(a) Each Party’s Behaviour (rr. 24(5), 24(12)(a)(i)). As explained earlier, the Applicant pursued several grounds for relief that were not established. The Respondent insisted on presenting evidence in detailed charts of family expenses prepared mainly by the Respondent’s father that were incomplete. The Respondent spent considerable trial time in tracing and establishing details of loans that were not required by the position taken by the Applicant. I was not persuaded by the Applicant’s submission that deficiencies in the Respondent’s pre-trial disclosure unnecessarily lengthened the trial. I conclude that the conduct by both parties neutralizes this factor as both parties equally contributed to the trial requiring 12 days.

(b) The Time Spent by Each Party (r. 24(12)(a)(ii) and (iv)). As explained earlier, the amounts billed by each party were reasonable and within each party’s reasonable expectation.

(c) Written Offers to Settle That Did Not Activate r. 18(16) (r. 24(12)(iii)). Each party served written offers to settle during the trial. The Applicant served the May 2022 Offer to Settle. I do not have an evidentiary basis on which to determine whether the Applicant served her June 2022 Offer to Settle but I infer that the Applicant at least joined a further settlement dialogue after the Respondent’s delivery of his June 3, 2022 Offer to Settle. This Offer to Settle was the only written settlement position delivered by the Respondent and offered less than the amount recovered by the Applicant at trial. The Applicant’s conduct showed a reasonable effort to resolve the issues in this case. The Respondent served his only Offer to Settle on the seventh day of trial. My analysis of this factor favours the Applicant.

(d) Expert Fees (r. 24(12)(iii)). The expert fees of all experts were properly submitted except for the Applicant’s submission of the cost of the Kalex valuation of $1,299.50. This witness was not called at trial, and the report was not referred to. This expense will be disallowed.

42Rule 24(5) provides that the assessment of a party’s reasonableness involves consideration of the reasonableness of the parties’ behaviour in relation to the issues from the time they arose as well as the reasonableness of any offer the party made and of any offer that the party failed to accept. I find that the Applicant’s behaviour in relation to the issues in this dispute, and particularly in her initiative to settle, was more reasonable than the Respondent.

43Both parties claimed costs for the post-trial Case Conferences to address arithmetic or computational errors they each perceived in the calculation of the NFP. The Respondent prevailed on the NFP calculation issues, but the Applicant prevailed on the issue of whether pre-judgment interest was awarded, as needed to settle the form of judgment. In addition, the Respondent withdrew issues at the Case Conferences that that parties had contested. I decline to award either party costs of the post-trial Case Conferences.

D. Conclusion – Cost Determination

44The Court of Appeal stated that after consideration of the relevant factors to be applied to the costs claimed, the Court should then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable.” [17] Having considered all applicable principles, including those set out in rr.18 and 24, and in the exercise of my discretion, including as set out in section 131 of the Courts of Justice Act, I have concluded that it is reasonable, fair, just and proportionate to award the Applicant costs of this Application in the amount of $90,000.00, all-inclusive, payable by the Respondent.

III. Disposition

45On the basis of the reasons set out herein, I order:

(a) The arithmetic or computational error raised by the Applicant regarding the Respondent’s date of marriage debt was not established. (b) The Respondent, Ajeet Singh Ghumman, shall pay the Applicant, Balkiran Kaur Khaira, costs of this Application fixed in the amount of $90,000.00, all inclusive of fees, disbursements, and applicable taxes.

46The parties are encouraged to confer and agree on a form of judgment. They may deliver a form of judgment, with their approval as to form and content, for my consideration by email to the Family Trial Coordinator and to my judicial assistant. If the parties do not agree on the form of judgment, the parties may request a Case Conference.

Justice A.A. Sanfilippo Date: May 26, 2023

[1] Khaira v. Ghumman, 2022 ONSC 7165. [2] Khaira v. Ghumman, 2023 ONSC 1330. [3] Reasons for Judgment, at para. 283: “The parties are encouraged to agree on the issue of costs. If the parties cannot agree on the issue of costs, any party seeking costs may, by January 20, 2023, deliver by email to my judicial assistant after service and filing on CaseLines, written costs submission of no more than 8 pages, plus a Bill of Costs. Any party against whom costs is sought may, by February 10, 2023, deliver by email to my judicial assistant after service and filing on CaseLines, responding cost submissions of the same length. If no party delivers any written cost submissions by February 10, 2023, I will deem the issue of costs to have been settled.” [4] Case Conference Endorsement, at paras. 14-16. [5] Cost Submissions of the Applicant, dated February 27, 2023; Cost Submissions of the Respondent, dated March 13, 2023; Reply Cost Submissions of the Applicant, dated March 17, 2023; Applicant’s Bill of Costs, delivered April 20, 2023; Respondent’s Response to the Applicant’s Bill of Costs, dated May 4, 2023; Applicant’s Further Reply Cost Submissions, dated May 10, 2023. [6] Reasons for Judgment, at para. 225: “If the parties should consider that there is an arithmetic or computational error in the calculation of the NFP, as set out in Schedule “A”, they may confer and agree on an arithmetic or computational correction or they may request, within 30 days of the date of these Reasons for Judgment, the scheduling of a Case Conference to speak to any required correction.” [7] Reasons for Judgment, paras. 222-223 and 280(3)(B). [8] See also Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.). [9] Barbour v. Bailey, 2016 ONCA 334, [2016] CarswellOnt 6794, at para. 9; Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495 (C.A.), at para. 4. [10] Mattina, at para. 12, citing Berta v. Berta, 2015 ONCA 918, 128 O.R. (3d) 730, at para. 94. [11] Trial Record, Amended Application, at paras. 3, 6, 7, 8, 10, 11, 12. [12] Reasons for Judgment, at paras. 18 and 34. [13] Reasons for Judgment, at para. 34. [14] Trial Exhibit 26, Trial Record, Amended Application, at paras. 16-19. [15] Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, [2014] O.J. No. 1984, at para. 111, citing [Malik v. Sirois, 2003), at para. 2 (Ont. C.A.). See also, Bernstein v. Poon, 2015 ONSC 2125, at para. 47; Yepremian v. Weisz (1993), 16 O.R. (3d) 121, at paras. 7 and 14 (S.C.). [16] Respondent’s Bill of Costs totaling $160,257.94 (full indemnity) plus $8,272.97 in costs for the Respondent’s first-retained counsel. [17] Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at para. 60, applying Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356.