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Judge sanctions husband's misbehaviour with $1.4-million costs award

A $1.4-million costs award shows the danger of engaging in bad behaviour during litigation, Toronto family lawyer Jennifer Samara Shuber tells AdvocateDaily.com.

In a recent endorsement on costs, Ontario Superior Court Justice Leonard Riccetti awarded a woman full indemnity costs to cover the expense of her entire seven-year fight with her former husband over spousal support and equalization.

Following the couple’s separation in November 2010, the woman made two offers to settle the litigation, both of which were exceeded at trial, where she was granted judgment for just under $10 million.   

But the judge found she was entitled to full recovery for the entire proceeding, even before the offers, because the husband’s actions “unnecessarily extended and complicated these legal proceedings.”

“Added to this, the flagrant disregard of the court process, the numerous findings of contempt by [the husband] and deliberate attempts to deceive this court, there is no doubt [he] acted in bad faith throughout this proceeding entitling [the wife] to a cost award of full indemnity for the entire proceeding,” the judge wrote.

“Costs rules generally provide broad discretion to judges,” explains Shuber, a lawyer with the Beard Winter LLP family law practice group.

“The amount has to be fair and reasonable in the circumstances, and full indemnity awards are rare. But the judge used his decision to mark his disapproval of the husband’s behaviour in this case,” adds Shuber, who not involved in the case and comments generally.

The couple in the case were married for 39 years before their 2010 split. In 1999, they had formed a lucrative Halloween costume and products company together, but the complicated structure of the business, which included corporations registered in a number of offshore jurisdictions, made it difficult to put a firm figure on the husband’s income or the value of his interest in it.

The wife made an offer to settle the case in December 2012 for $5.7 million but withdrew it in early 2015 ahead of the trial. A few weeks later, she made a fresh settlement offer for a one-time payment of $7.8 million. However, the trial proceeded, where the judge ultimately awarded her more than $9.5 million following 17 days of hearings.   

Her costs claim was made up of almost $1 million in legal fees, plus a further $400,000 that was used to pay for experts. The husband argued a more reasonable cost award would be in the range of $500,000 to $700,000.

In any case, he said he was unable to pay any cost award, according to Riccetti’s decision, and has since served six months in jail for contempt of court for failing to pay the $9.5 million awarded to his ex-wife at trial.

But Riccetti described his claims as without merit:

“The Reasons clearly set out that [the husband] is a wealthy man as the largest shareholder/owner of the successful [Halloween business].  No new evidence was filed by [him] to support any financial change to his ability to pay a cost award,” Riccetti wrote.

“In these circumstances, it is inconceivable that this court should penalize [the wife] by making an award of costs which otherwise meets the factors and criteria for a punitive award of costs because [the husband] makes bald assertions, through counsel, that he cannot pay any costs awarded against him.”

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