October 1, 2023

Right here’s one for the books:  In early 2023, an Ontario choose awarded the spouse a whopping $950,000 in authorized prices – payable by the husband – after presiding over their hotly-contested 12-day trial.  The award was justified, the choose stated, due to the husband’s dangerous religion conduct all through the events’ 6-year litigation.

What’s extra, his bid for permission to attraction that award has just lately been rejected by the Courtroom of Enchantment.

The previous couple began their divorce and custody litigation in 2015.  Within the time since, it burgeoned into 35 journeys to courtroom, 23 motions, 22 gives to settle, and 40 totally different endorsements and orders.  All of that culminated in a 12-day trial, adopted by a 70-page determination by the trial choose. The dispute centered primarily on pinning down the very rich husband’s true earnings for youngster and spousal help functions – a matter about which he had been actively misleading and evasive. 

On the trial’s finish, the spouse was the profitable social gathering.  She sought about $1,045,000 (plus HST) in prices from the husband, which was the complete quantity she had been charged by her personal legal professionals (often known as “full indemnity” prices).   In help of this request, she claimed the husband demonstrated dangerous religion and unreasonable conduct all through the litigation and trial, and due to this fact such an distinctive prices award was totally justified. 

The husband admitted he ought to pay some prices, however thought-about the spouse’s tally exorbitant. He recommended he ought to pay her about $350,000 as a substitute.  Amongst different issues, he argued that to grant the spouse over $1 million in authorized prices would set a really damaging precedent for Household regulation litigants. 

The trial choose disagreed, and ordered the husband ought to pay $950,000 inside 21 days.   

The Ontario regulation on prices in Household regulation was clear; it required a courtroom to contemplate a number of things.  Amongst them have been whether or not any cheap written gives to settlement have been made (and rejected), and likewise the behaviour of every of the events.  The reasonableness of every social gathering’s behaviour was additionally assessed towards the background of everything of the litigation. 

Right here, the spouse had repeatedly provided to settle at an quantity a lot lower than what she was finally awarded on the trial. However even taking a look at solely the final one – which the husband additionally rejected – she was entitled to her full prices from the date of that provide onward.  

After scrutinizing a few of the spouse’s numerous legal professionals’ and consultants’ charges, and adjusting the overall barely downward, the trial choose subsequent thought-about whether or not this was “a type of uncommon instances the place full-indemnity prices are justified due to the [husband’s] unreasonable conduct or dangerous religion”. 

The trial choose discovered that it was, writing: “I agree with the [wife] that the [husband] demonstrated bad-faith deserving of the very best prices sanction by the courtroom awarding full-indemnity prices.” 

Noting that in Household regulation the idea of “dangerous religion” requires a component of acutely aware wrongdoing, the choose catalogued a few of the husband’s misbehaviour as together with: 

  • Refusing to offer the majority of his monetary disclosure to evaluate his international earnings 
  • Fraudulently transferring possession of his firm to the spouse  
  • Breaching at the very least six prior courtroom orders
  • Making false representations to the courtroom and being typically misleading about his true conduct  
  • Deceptive the courtroom into granting an adjournment on the premise the husband’s knowledgeable had resigned from the case – when in actuality the husband had orchestrated his personal knowledgeable’s resignation by actively deceptive him, withholding data, and being uncooperative
  • Partaking in fraud by counting on paperwork he knew have been cast 
  • Mendacity about his appropriate e-mail deal with, merely to keep away from being linked by correspondence to having acquired tens of millions of {dollars} in earnings from an organization he claimed his brother owned 
  • Disavowing a slew of luxurious bills on his bank card, when all different indications have been that he was very rich 

The trial choose repeated one of many sentiments from a previous choose within the proceedings: “In brief, it is vitally troublesome to belief the [husband]”. 

Even at $950,000, the prices award was proportionate and cheap.  One measure of that, the choose stated, was to notice that earlier than trial the husband claimed his annual earnings – at most – was $430,000.  Nevertheless, the monetary knowledgeable provided convincing proof that the husband’s earnings was constantly $7 million per yr since 2015.  The spouse had additionally been pressured to endure lengthy, costly and hard-fought litigation spanning six years, and to untangle the husband’s earnings from 25 totally different firms, since he was not voluntarily forthcoming with the data. 

On the husband’s later bid to attraction, the Ontario Courtroom of Enchantment rejected the husband’s request for permission to go ahead.  It famous {that a} Prices award is discretionary, and until the trial choose made an error in precept, it was entitled to deference.   The Enchantment Courtroom defined: 

[10]       The prices awarded on this case are certainly excessive. Nevertheless, this was difficult litigation carried out over a number of years, involving 23 motions, a number of household conferences and attendances, and roughly 40 judicial endorsements and orders. The trial choose awarded the respondent prices on a full indemnity foundation due to the [husband’s] misconduct all through the litigation, the main points of that are totally documented in his determination. The [husband] misled the courtroom and engaged in fraudulent exercise and dangerous religion and unreasonable conduct over a interval of years. We don’t settle for that it might be applicable to parse the main points of the [husband’s] conduct on the premise that not all of it was motivated by dangerous religion. 

For Household regulation litigants in all places:  It is a good lesson that dangerous religion behaviour can price you! 

Full textual content of the Prices Order: Lakhtakia v. Mehra, 2023 ONSC 539 

Full textual content of the Enchantment determination: Lakhtakia v. Mehra, 2023 ONCA 88