Husband Ordered to Pay Wife $1 million in Costs

By Sydney B. W. Archibald

In a recent Ontario court decision, Lakhtakia v Mehra, 2023 ONSC 539, the husband’s egregious conduct resulted in a shocking costs award of $950,000.

The parties’ litigation lasted 6 years which culminated in a 12-day trial.  There were 23 motions, multiple family conferences and attendances, 40 endorsements and orders, and consistent findings that the husband failed to provide full disclosure.  The wife incurred over $315,000 on a financial expert to disentangle the husband’s interest in at least 25 corporate entities across the world. 

The wife sought an order for costs of approximately $1,050,000 on a full recovery basis. 

The husband agreed that the wife was entitled to costs as she was the successful party.  However, he argued that the amount should be set at $350,000.  He took the position that the wife’s request for costs was excessive and could not be justified as there was duplication of work by different sets of lawyers, the wife was seeking costs for prior attendances where costs were already decided or reserved, and because he had made a severable offer which included paying her $350,000 in costs.  Further, the husband argued that a cost award this high would set a negative precedent.

Justice Pinto cited the usual case law and principals regarding costs and referred to Justice Kurz’s commentary on “bad faith” in Cameron v Cameron, 2018 ONSC 6823, at paras. 45 and 46:

45 [d]eliberate disobedience of a court order can be bad faith if that disobedience is intended to achieve an ulterior motive (Fatahi-Ghandehari v. Wilson, [2018] O.J. No. 460 at par. 39) or inflict financial harm (S.(C) v. S.(C), 2007 CanLII 20279 (ON SC), [2007] O.J. No. 2164 (S.C.J.)); and

46 As Pazaratz J. of this court's Family Court wrote in Jackson v. Mayerle, 2016 ONSC 1556: ‘... Rule 24(8) requires a fairly high threshold of egregious behaviour, and as such a finding of bad faith is rarely made. … Bad faith requires some element of conscious wrongdoing.’ As Pazaratz J. put it at paras. 58-59: ‘Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation...’

Justice Pinto determined that this was one of those rare cases where full-indemnity costs were justified.  In making this finding, the court cited the following instances of the Respondent’s bad faith conduct:

• The husband refused to provide the bulk of his financial disclosure to assess his global income and he fraudulently transferred ownership of one of his companies to the wife
• The husband attempted to mislead his own expert, and by extension, the court
• The husband’s own expert resigned due to the husband’s failure to provide full disclosure and be truthful
• The husband engaged in fraud by relying on documents, that he knew or ought reasonably to have known were fraudulent
• The husband flagrantly breached at least 6 disclosure orders of the court

After reducing some of the fees for the wife’s lawyers and experts, the trial judge awarded the wife costs in the amount of $950,000.

The husband sought leave to appeal the costs award and was denied.  The Court of Appeal echoed the trial judge's comments that the husband had misled the court and engaged in fraudulent activity and bad faith and unreasonable conduct over a period of years.  The husband was ordered to pay the wife a further $80,000 for the appeal.

If you have any questions about costs, or any family law related issues, please contact me, Sydney Lloyd at sydney@sorbaralaw.com.