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Summaries Sunday: OnPoint Legal Research

One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

Hansra v. Hansra, 2017 BCCA 199

AREAS OF LAW:   Family law; Special costs; Rehearing; Limits of discretion

~ A judge’s discretion to reopen a matter, while broad, is not unfettered. It is governed by established principles. ~

BACKGROUND:

This was a family law case that resulted in a special costs order against the Respondent, Jagtar Singh Hansra. The Appellant, Puran Jote Hansra, sought a reapportionment of assets in her favour on the basis that the Respondent had failed to make full disclosure with respect to his assets in India. The trial judge released his reasons for judgment on May 1, 2015, and put the issue of costs over to permit the parties to make additional submissions. The judge made an order for divorce and dealt with matters such as where the children would live, sale of the matrimonial home, and division of assets, but he expressly made no order with respect to spousal support. The judge found that two properties in India were not family assets but, due to a lack of disclosure, he was unable to make a finding with respect to what other assets and bank accounts the Respondent might have in India. The judge found the evidence “murky” and was unable to value the Respondent’s assets without more evidence or disclosure. On June 24, 2015, the parties argued the issue of costs before the judge. They also sought direction with respect to certain other matters. The judge released reasons for judgment on costs on August 7, 2015. He awarded special costs to the Appellant and noted conduct on the Respondent’s part that raised credibility concerns. The judge also found that the Respondent had been non-compliant with disclosure orders. He found the Respondent’s conduct deserving of rebuke, noting that it went beyond non-compliance to unilateral meddling with rents and credit cards, as well as business sabotage. On September 18, 2015, the Respondent sent an email to the Supreme Court registry asking for a hearing to ask the judge to “reconsider and rescind the order for special costs”. The hearing took place on November 10 and December 3, 2015. In written submissions, the Respondent asserted that he had been more successful than the Appellant at trial and with respect to the directions sought at the June 24, 2015 hearing. He said he had not acted in bad faith or attempted to hide assets. He further submitted that nine of the sixteen days at trial had been spent on the issue of his alleged Indian assets, and that the Appellant had been unsuccessful in that regard. On January 26, 2016, the trial judge released supplemental reasons for judgment in which he reduced the special costs by 25%. The judge found that roughly speaking the Indian asset issue was one-quarter of the trial and that the Respondent did succeed on that issue. The Appellant sought leave to appeal the costs order, which was granted on June 16, 2016. On June 30, 2016, the Respondent filed a notice of cross appeal. He sought “reconsideration and reduction/elimination of all special costs” charged against him.

APPELLATE DECISION:

The appeal was allowed and the cross-appeal dismissed. The Appellant argued that the trial judge erred in principle when he reconsidered his first costs order, by failing to identify a miscarriage of justice that would result without the reconsideration; by basing the reconsideration on arguments that had been made at the original hearing; and by failing to place the burden of identifying the miscarriage of justice on the Respondent. The Respondent claimed the trial judge erred by failing to allot 50% of the trial to the Indian asset issues; by relying on an affidavit of an employee of the Appellant’s counsel in finding that the Appellant had made proper disclosure, without allowing the Respondent an opportunity to contradict it; by failing to order the Appellant to pay child and spousal support; and by failing to properly allot the time taken up by each party on the issues raised at trial and their respective success on those issues. The Court of Appeal found that the trial judge had reopened the costs issue and varied his first order. Judges have the ability to reopen a matter before a formal order has been entered, and this discretion has often been called “unfettered”. However, as with any exercise of discretion, it must be exercised judicially, in a principled and consistent way. The Court held that it is time to do away with the word “unfettered”, as it incorrectly describes the discretion. In this case, the trial judge did not consider whether it was appropriate for him to revisit the first costs order. He failed to have regard to the principle that a party cannot seek to re-argue, re-cast, or re-state his case. The judge also never turned his mind to the question of whether the reconsideration was necessary to prevent a miscarriage of justice.

Comments provided by Graeme Hooper, OnPoint Law Corporation, Counsel for the Appellant

“The decision of Justice Frankel is a great example of the Court of Appeal taking the opportunity to clarify the law even if the appeal itself is relatively straightforward and can be dispensed with on the law as it stands.

At its heart, the appeal was about whether or not a party in family law litigation can be ordered to pay special costs due to non-disclosure, and then later obtain a reduction in special costs on account of certain “successes” achieved through that very non-disclosure. Specifically, the husband failed to provide proper disclosure about assets located in India. The trial judge held that, owing to the lack of evidence, the assets could not be valued, and would not be taken into account for property division. The trial judge ordered that the husband pay special costs for the entire trial on account of his misconduct, including the non-disclosure. However, after the husband refused to sign the costs order and sought a reconsider it, the trial judge granted a 25% reduction in costs. The trial judge reasoned that 25% of the time was spent on the assets in India, and the husband was successful on that issue (as the assets were not ultimately valued), so should obtain a reduction.

On appeal, as counsel for the wife, we contested the 25% reduction. We argued that there was a fundamental error in the trial judge’s decision to penalize the husband for the non-disclosure, and then effectively reward him for that non-disclosure through the reduction. This was, in our submission, a reconsideration, and one done in error.

We accepted that we were asking the Court to interfere with an exercise of discretion. It has long been accepted that a trial judge has an “unfettered discretion” to reconsider an order, or to re-open a trial, when the order in question has not been entered. While all discretionary decisions face a degree of deference from an appellate court, the added “unfettered” nature of the reconsideration power could be read to support additional deference on appeal. Indeed, the Respondent argued as much. In contrast, our approach was to emphasis that, unfettered or not, the discretion must be exercised in accordance with established legal principles. Chief among those principles is that an order may only be reconsidered in order to avoid a miscarriage of justice, and that none existed in this case.

Neither party suggested that the Court of Appeal should abandon the “unfettered discretion” framing for the reconsideration power. The Court had adopted the “unfettered” language 83 years earlier (in Clayton v. British American Securities Limited), and had consistently endorsed it since. However, during oral submissions, Justice Groberman asked us bluntly: if the discretion to reconsider is restrained, as we had argued, is it actually “unfettered”. Our position was that it was not. Justice Groberman, to our welcome surprise, appeared to agree, and noted it may be time for the Court to abandon the “unfettered discretion” description.

In the written reasons for the Court, Justice Frankel did just that. Justice Frankel carefully reviewed the history of that language, and held that despite the continued reference to “unfettered”, the law had actually evolved to clearly fetter the discretion. This fettering included requiring an applicant to identify a miscarriage of justice that would result from the order. As Justice Frankel succinctly put it: “the time has come to jettison the adjective ‘unfettered’ which, by definition incorrectly describes the discretion.”

Arguably, jettisoning “unfettered” did not really change the law; it brought the description of the discretion into line with the jurisprudence of the Court that had placed restraints on it. That was a clarification that played into our chief ground of appeal: that the reconsideration in this case was unnecessary to prevent a miscarriage of justice. Justice Frankel, having properly re-focused the discretion as one that is very much fettered, agreed, and allowed the appeal, reinstating the special costs order for the entire trial.

Going forward, the case should be referred to in any application to reconsider or re-open a trial, as it distinguishes the language from Clayton v. British American Securities Limited, the former leading case on unfettered discretion. It is also a reminder of the rarity that an un-entered order should be reconsidered, and the importance for any application to reconsider (or re-open) squarely addressing what miscarriage of justice will occur if the order is left as is.”

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