Hashman v Silverberg, 2016 ABQB 502

Court of Queen’s Bench of Alberta Citation: Hashman v Silverberg, 2016 ABQB 502 Date: 20160909 Docket: 1101 17019 Registry: Calgary Between: Einat Hashman Plaintiff - and - Christine Silverberg, Robert V.T. Boyden Q.C., Arlin Pachet, Kerry Kundall and John or Jane Doe Defendants _______________________________________________________ Reasons for Judgment of J.T. Prowse , Master in Chambers _______________________________________________________ [ 1 ] The plaintiff Einat Hashman (“Ms.Hashman”) was involved in divorce and matrimonial property proceedings with her then husband Kenneth Hashman (Dr.

Hashman). [ 2 ] The defendant Christine Silverberg (“Ms. Silverberg”) acted as legal counsel for Ms. Hashman when the matrimonial property division and support aspects of the proceedings came to trial in December of 2009. A settlement of Ms. Hashman’s claims was arrived at during the trial. [ 3 ] Ms. Hashman now sues Ms.Silverberg on the basis that the settlement was improvident. Ms. Silverberg applies for

summary dismissal of the claim. [ 4 ] For the reasons which follow I am dismissing the

summary dismissal claim of Ms. Silverberg. The matter needs to be resolved at trial, and not summarily.

Background to the matrimonial litigation [ 5 ] Ms. Hashman and her ex-husband, Dr. Hashman, were married in August of 1990. [ 6 ] At the time of the marriage Ms. Hashman had two daughters from a previous marriage: S.B., born August 28, 1980, and M.B. born October 13, 1981. [ 7 ] Ms. Hashman and Dr. Hashman are the parents of I.H., a son born January 2, 1992, and G.H., a daughter, born December 22, 1993. [ 8 ] During the marriage the parties resided at the matrimonial home in Calgary. [ 9 ] The parties separated in September of 2005. [ 10 ] By virtue of an interim order given by Mr.

Justice LoVecchio on September 22, 2005, Dr. Hashman began paying Ms. Hashman uncharacterized payments in the amount of $5,000.00 per month commencing in September 2005, which payments continued through to the date of the eventual trial of the matrimonial property and corollary relief dispute in December 2009. The payments of $5,000 per month were based on an assertion of Dr. Hashman that his annual income was $215,000.

It was later established that his annual income was more than twice that amount. [ 11 ] On October 8, 2008, Madam Justice Erb severed the divorce action from the corollary relief and matrimonial property matters. The divorce was granted on October 29, 2008. [ 12 ] Justice Erb also ordered that a trial regarding the division of matrimonial property, spousal support, child support and corollary relief commence on March 9, 2009, peremptory on Ms. Hashman’s attendance at the trial. [ 13 ] In May of 2009 Ms. Hashman contacted Ms.

Silverberg, who was her fifth lawyer, to handle the outstanding matrimonial property division, spousal support, child support, and legal costs aspects of the divorce. [ 14 ] By the time Ms. Hashman contacted Ms. Silverberg the trial had been adjourned from March 9, 2009 peremptory to October 5, 2009, with the continued requirement that Ms. Hashman attend the trial. [ 15 ] Ms. Hashman retained Ms.

Silverberg on June 8, 2009, but detailed work did not commence until later due to difficulties arising from the disorganized state of Ms.Hashman’s records. [ 16 ] Although the trial was scheduled to begin on October 5, 2009, Ms. Hashman did not begin to provide Ms. Silverberg with the financial records and documents in her possession until after August 20, 2009. Ms. Hashman continued to provide documents in boxes and suitcases as late as October 6, 2009 and further sporadic production by Ms. Hashman continued up to and beyond the commencement of the trial. [ 17 ] On August 24, 2009, Ms.

Silverberg re-engaged Sharon Griffin of Grant Thornton LLP, an accounting firm, to assist Ms. Hashman in reviewing Dr. Hashman's financial records and in determining his income, assets and liabilities for the purpose of assessing spousal and child support and an appropriate division of matrimonial property. [ 18 ] Ms.Griffin, a forensic accountant, had also been retained by Ms. Hashman's previous counsel, and had previously reviewed the financial information that was initially available. Ms. Silverberg provided Ms. Griffin with all of the financial information that was provided to her by Ms. Hashman and by Dr.

Hashman and facilitated direct communications between Ms. Griffin and Dr. Hashman's accountant. [ 19 ] Throughout, Ms. Hashman alleged that Dr. Hashman earned in excess of $1 million per year through his practice as a psychiatrist. At no time was any documentation available or provided to Ms. Silverberg that would have proven this allegation. [ 20 ] Ms. Hashman also alleged that Dr. Hashman had not provided full financial disclosure regarding his assets. [ 21 ] On September 21, 2009, Ms.Silverberg sought an adjournment of the trial, an application that was contested by counsel for Dr.

Hashman. [ 22 ] Madam Justice Kent granted an adjournment, but only to December 2009, and stated that regardless of the fact that Ms. Hashman might be suffering from mental health issues there could not be an absolute break or a halt to the litigation process. [ 23 ] Ms. Silverberg was informed early in the retainer by Ms. Hashman that Ms.Hashman had mental health issues, and she raised those issues with the Court beginning on September 21, 2009. [ 24 ] Ms. Silverberg also made attempts to obtain a psychiatric assessment of Ms. Hashman in an attempt to prove she was unable to work, but that never occurred.

Responsibility for that not occurring is something which will have to be sorted out at trial. I say that because Ms. Hashman may have not been fully cooperative in that regard, but lack of full cooperation in part may reflect Ms. Hashman’s mental health issues. [ 25 ] Based on Ms. Hashman's belief that Dr. Hashman had not provided full financial disclosure, Ms. Silverberg demanded financial information from Dr. Hashman, both through his counsel and through the course of examinations for discovery that took place on October 27, 2009. All of the information collected through this process was provided to Ms.

Griffin, who also had access to information provided directly by Dr. Hashman's accountant.

[ 26 ] Ms. Silverberg attempted to obtain adjournments of the ordered peremptory trial to permit proper preparation. As described above, she achieved some success on September 21, 2009, when the trial was adjourned to December 9, 2009. On November 27, 2009, however, Ms. Silverberg’s second application for an adjournment was denied, with the Court noting that while Ms. Silverberg faced difficulties in preparing and the record would not be as organized or as complete as might be desirable, Ms.

Silverberg's work to that point had “sufficiently advanced the matter so that it [was] in a state that it is appropriate that the trial go forward.” On December 9, 2009, Ms. Silverberg's further and final request for an adjournment was also denied by the trial judge. [ 27 ] Further information regarding Dr. Hashman's assets and liabilities, as well as those of Ms. Hashman, was produced on November 26, 2009, when Dr. Hashman filed an affidavit in response to Ms. Silverberg's application for an advance payment of costs in which he attested to the known assets of both parties. [ 28 ] On December 1, 2009, Ms.

Silverberg met with Ms. Hashman and Hersh Wolch, Q.C., who had initially referred Ms. Hashman to Ms. Silverberg, to review Ms. Silverberg's advice that Ms. Hashman should consider a compromise to her position and settle instead of proceeding to trial. [ 29 ] In accordance with Ms. Hashman’s instructions, Ms. Silverberg continued to prepare for the trial, but she also continued settlement discussions with Dr. Hashman's counsel. On December 4, 2009, Ms. Silverberg received written instructions to prepare for trial but also received instructions to proceed concurrently with negotiations with counsel for Dr.

Hashman. [ 30 ] In November 2009, Ms. Griffin had provided an informal opinion regarding Dr. Hashman's likely Guideline Income. On December 2, 2009, after reviewing all of the available financial information, Ms. Griffin provided a final report that confirmed her opinion that Dr. Hashman's established Guideline Income for the purposes of determining corollary relief was in the range of $472,000 to $501,000. [ 31 ] As the trial date approached, Ms. Silverberg became concerned about Ms. Hashman's capacity to provide instructions. This concern arose from the fact that on December 3, 2009, Ms.

Hashman began communicating only by email. [ 32 ] Ms. Silverberg discussed her concern with the state of communication between her and Ms. Hashman with the practice advisor at the Law Society of Alberta. Following that, on December 9, 2009, the first day scheduled for the trial, Ms. Silverberg specifically raised the issue of her client's capacity with the trial judge and advised the Court that she had succeeded in retaining a psychologist to perform a capacity assessment that day. The trial was adjourned for a further day to allow the capacity assessment of Ms. Hashman to take place. [ 33 ] Ms.

Hashman was evaluated on a rush basis by Dr. Arlin Pachet, a neuropsychologist, on December 9, 2009. Based on his assessment, which included an interview of Ms. Hashman and discussions with M.B., Dr. Pachet formed the professional opinion that Ms. Hashman had the capacity to instruct counsel and to participate in the legal process. [ 34 ] The Court was provided with a copy of Dr. Pachet's opinion and, after reviewing Dr. Pachet's report, the trial judge directed that the trial proceed.

The trial began on the afternoon of December 10, 2009 and, although the case had commenced, settlement discussions between counsel continued with Ms. Hashman's knowledge and consent. [ 35 ] On December 15, 2009, after a brief adjournment of the trial and further consultations between the parties and their respective counsel, Ms. Hashman agreed to a settlement that addressed child and spousal support as well as the division of matrimonial property. [ 36 ] The terms of the settlement were set out in a consent order that was signed by Ms. Hashman and Ms. Silverberg and by Dr. Hashman and his counsel.

As part of the settlement, Ms.Hashman required that she be given the opportunity to address the Court under oath but free from cross-examination by counsel for Dr. Hashman, and she did so, providing a detailed recitation of her position in relation to both the divorce action and the trial. [ 37 ] After having heard Ms. Hashman’s detailed evidence which pertained primarily to her concerns about the justice system, her feelings towards Dr.

Hashman and her concerns about custody, the trial judge reviewed the Consent Order in detail and confirmed on the record that Ms.Hashman understood the binding nature of the settlement and the consent order. The merits of the

summary dismissal application by Ms. Silverberg [ 38 ] The two arguments for

summary dismissal of Ms. Hashman’s claim against Ms. Silverberg are: (

i) the settlement was not improvident; (ii) alternatively, even if the settlement was improvident, the situation presented to Ms. Silverberg was challenging, and her conduct met the standard of care one would expect of a family law lawyer practising in Alberta. [ 39 ] Both of these arguments would have been suitable for an expert opinion by a senior family law practitioner, but no opinion was forthcoming. [ 40 ] An expert opinion is likely necessary for argument (ii). See Tran v Kerr , 2014 ABCA 350 , 2014 CarswellAlta 1960 at para’s 21 to 23. [ 41 ] With respect to issue (i), Ms.

Silverberg’s counsel relies on the observation provided by the trial judge at the trial to the effect that the settlement was more favourable to Ms. Hashman than what the trial judge would have awarded.

[ 42 ] Counsel for Ms. Hashman responds, and I agree, that the observations of the trial judge were premature, in that the trial judge had heard only the evidence presented by Dr. Hashman, and the beginning of the cross-examination of him. [ 43 ] If the trial had proceeded, then the cross-examination of Dr. Hashman would have carried on, followed by Ms. Hashman presenting her evidence. Given that further evidence, we do not know what the outcome of the trial would have been. Was the settlement improvident? [ 44 ] Neither party submitted an expert opinion as to the overall settlement, but Ms.

Hashman did provide expert evidence with respect to spousal support pursuant to the Guideline Income attributed to Dr. Hashman. [ 45 ] That evidence, which was unchallenged, is that given Dr. Hashman’s Support Guideline Income, which was in the range of $472,000 to $501,000 per year, the Spousal Support Advisory would indicate spousal support of up to $16,666 per month, exclusive of child support, payable by Dr. Hashman. [ 46 ] Comparing this with the $5,000 per month which Dr. Hashman had paid in the four years leading up to the trial, which amount remained unchanged in the future, leads Ms.

Hashman’s counsel to argue that the settlement is improvident. [ 47 ] It is not for me to judge the appropriate amount for spousal support, rather, my role is to adjudicate on Ms. Silverberg’s

summary dismissal application. [ 48 ] Ms. Silverberg must show that it is highly likely that she will establish that the settlement Ms. Hashman made on Ms. Silverberg’s recommendation was reasonable. The overall settlement [ 49 ] It is true that spousal support was only part of the overall settlement, but it was a very large component of the settlement, and it is arguably grossly inadequate. [ 50 ] As mentioned, neither side provided expert evidence as to the adequacy of the overall settlement, which I will now review. [ 51 ] There were a number of components to the overall settlement, which are discussed below. (

i) spousal support [ 52 ] The settlement agreement provides that Ms. Hashman will receive retroactive spousal support payments of $5,000 per month for the 4 years leading up to the trial. She had been receiving this amount per month as undesignated payments. Now they would be characterized as spousal support payments. This makes these payments taxable in her hands but Dr. Hashman is to pay the tax for those four years. As well, he will pay for the accounting fees necessary for determining the retroactive tax payable. [ 53 ] Future spousal support payments will continue to 2023 at $5,000 per month, but now Ms.

Hashman will pay the tax. On an after tax basis her support payments have effectively been reduced. [ 54 ] Ms. Hashman had not worked in the 15 years of the marriage and she suffers from mental health issues. It is difficult to know what a trial judge might have done with respect to the duration of spousal support in the absence of psychiatric evidence as to whether she might ever be able to return to the workforce. [ 55 ] The settlement provided that the payments would continue regardless of whether Ms. Hashman’s circumstances improved in the future, such as by remarriage.

There is no statistical evidence of the probability of a (then 52) now 59 year old woman suffering from mental health issues remarrying, but my sense is that this concession is not particularly notable. [ 56 ] The duration of the payments under the settlement is favourable to Ms. Hashman, but their duration is not. [ 57 ] If Ms.

Hashman had received the maximum spousal support for 18 years from 2005 to 2023 at a monthly rate of $16,666, that would have resulted in her receiving $2,952,000 as opposed to the $1,080,000 she will receive under the settlement at $5,000 per month, for a shortfall of $1,872,000. [ 58 ] Even if her spousal support was limited to 10 years, using the same calculations, the shortfall would be approximately $1,400,000. [ 59 ] The financial significance of either shortfall arguably far outweighs any financial benefit gained by Ms. Hashman under the settlement. (ii) child support [ 60 ] Ms.

Hashman was supporting at least one child of the marriage during the 4 years of separation leading up to the trial. While she is awarded child support of their daughter G.H. on an ongoing basis in the amount of $3,500 per month, this support was not made retroactive. [ 61 ] Retroactive support for the four years would have amounted to $168,000. (iii)

section 7 expenses [ 62 ] Dr. Hashman agreed to pay all

section 7 benefits with respect to I.H. and G.H., but not with respect to the two older children

from Ms. Hashman’s previous marriage, who likely were not entitled to them in any event. This provision is what one would expect when one spouse, Dr. Hashman, is earning income and the other spouse, Ms. Hashman, has no source of income. (iv) counselling expenses [ 63 ] Dr. Hashman’s agreement to pay counselling expenses for the two younger children until age 18 is beneficial but, by the time the settlement was made, their ages were 16 and 17 years old so this would not be a high monetary promise. (

v) new car for daughter [ 64 ] Dr. Hashman agreed to purchase a new car for the daughter G.H. A new car can be obtained for as little as $10,000. There is no reason to evaluate this promise as being worth more than that as Dr. Hashman has apparently not honored this promise in the almost 7 years since the settlement occurred. (vi) contingent award against the estate [ 65 ] The settlement provided that Ms. Hashman will have a $1.0 million claim against Dr. Hashman’s estate if she survives him. She is 4 years older than him and it is difficult to evaluate the present value of this contingent future payment.

If she receives it at all it may be worth a lot less, as it is not protected from inflation, nor is it secured in any practical fashion. [ 66 ] Counsel for Ms. Siverberg makes the following comment with respect to this contingent award: Further, the Order required all parties to perform steps necessary to ensure the funds were irrevocably assigned to the estate that would net proceeds of $1 million to the benefit of Ms. Hashman upon the death of Dr. Hashman. Ms Hashman has provided no evidence that these steps have not been taken.

To the extent that any of the parties have failed to comply with the Order, that is in no way attributable to Ms. Silverberg. [ 67 ] With respect, it was up to Ms. Silverberg to protect Ms. Hashman’s interests in the settlement and this vague and impractical provision, calling for security from someone who had net assets of nil at the time, does not do so. [ 68 ] If Dr. Hashman did subsequently acquire assets there is nothing preventing him from giving them away, for example by using a device such as an estate freeze, and if he does so this promise will be worth nothing. What is not clear is what happened to Dr.

Hashman’s whole life insurance policy, which would have been an ideal way to secure this promise. (vii) matrimonial home [ 69 ] Here is the one area where Ms. Hashman clearly received a benefit. Dr. Hashman paid the outstanding municipal taxes on the matrimonial home and then transferred his 50% interest in it to Ms. Hashman. That equity was worth approximately $435,000 and the municipal taxes were approximately $17,000.

In addition, Ms.Hashman did not have to account for ½ of the arguable occupancy benefit of living in the home rent free for the 50 months between the date of separation and the trial, which amounted to approximately $87,500. [ 70 ] However, counsel for Ms. Hashman argues that these benefits should be set off against a prima facie entitlement of Ms. Hashman to an adjustment in matrimonial assets (ignoring the matrimonial home) in Ms. Hashman’s favour of $348,500, calculated as follows: Dr.

Hashman Wood Gundy in 2004 $600,000 RRSP $257,000 Money in trust for children $131,000 Insurance policy $200,000 Sub-total $1,188,000 Ms. Hashman RRSP $253,000 Bank account $238,000 Sub-total $491,000 Differential between spouses $697,000 50% of differential (due to Ms. Hashman) $348,500 (viii) payment of taxes [ 71 ] In addition to Dr. Hashman paying Ms. Hashman’s taxes arising from categorizing the last 4 years payments of $5,000 per

month as spousal support, making it taxable in her hands (as well as the accounting fees involved in that exercise), the most significant promise of Dr. Hashman was to pay back the $25,376.02 garnisheed by Revenue Canada from Ms. Hashman’s bank account as a result of Dr. Hashman organizing his tax affairs so that some of his income was attributed to Ms. Hashman. These are reasonable provisions but ones that Ms.Hashman should have been able to expect. (ix) payment of legal costs [ 72 ] Dr. Hashman paid $75,000 of Ms.Hashman’s legal bills, which is an obvious benefit to her.

She argues that more legal costs should have been awarded to her given the wasted time and effort necessitated by Dr. Hashman initially taking the position that his income was only $215,000 per year and given the additional and wasted legal fees incurred by Ms. Hashman due to Dr. Hashman conflicting out various lawyers she consulted by first speaking to those lawyers about their divorce. (

x) dissipation of matrimonial assets [ 73 ] One benefit cited by Ms. Silverman’s counsel is that the settlement agreement did not require Ms. Hashman to account for matrimonial assets dissipated between separation and the date of the trial. However, as the table set out in paragraph 70 of this decision shows, both parties had matrimonial assets when they separated in 2005. The evidence suggests that both parties largely dissipated these matrimonial assets. Consequently, it is far from clear that this lack of pursuit of dissipation is to be considered a benefit to Ms. Hashman.

Summary of Ms. Hashman’s position on the settlement [ 74 ] Here is Ms. Hashman’s position on the reasonableness of the settlement: “[Ms. Hashman] respectfully submits that a proper award to [Ms. Hashman] at trial would have been her receiving: a. the Pumphill Home free and clear; b. a net equalization of unpaid support to date of Trial being a payment to the Respondent of $505,583; c. a costs award of at least $250,000; d. future monthly support for ten years totaling $2,085,500; e. Insurance on the life of Dr. Hashman securing all payments. In comparison the Settlement provided that [Ms.

Hashman] receive the following: a. the Pumphill Home free and clear; b. No recovery of unpaid support; c. Costs of $75,000; d. $5,000 a month for 13 years totaling $780,000 e. An uncertain payment of $1,000,000, if and when Dr. Hashman dies, if Dr. Hashman dies before the Respondent, if there are assets in the Estate, all which has a zero perceived value; f. No insurance.” Conclusion regarding the reasonableness of the settlement agreement [ 75 ] The potential loss of larger spousal support payments appears to overwhelm any other benefits for Ms.

Hashman contained in the settlement agreement. [ 76 ] I am not concluding that the settlement is improvident, but simply that it is not clear that it is a reasonable settlement. [ 77 ] As stated at the outset, in order to obtain summarily dismissal of this action, Ms. Silverberg would have to satisfy the onus on her of showing that it is highly likely, on the evidence, that: (

i) the settlement was reasonable (not improvident); (ii) alternatively, even if the settlement was improvident, that Ms. Silverberg’s conduct met the standard of care one would expect of a family law lawyer practising in Alberta. [ 78 ] Ms. Silverberg has submitted no expert evidence with respect to issue (ii), and with respect to issue (i), she has not met the evidentiary onus which she faced. [ 79 ] Consequently, I am dismissing Ms. Silverberg’s application for

summary dismissal.

Costs [ 80 ] If the parties cannot agree on costs, they may approach me for a ruling in that regard. Heard on the 10 th day of August, 2016. Dated at the City of Calgary, Alberta this 9 th day of September, 2016. J.T. Prowse M.C.C.Q.B.A. Appearances: Clive O. Llewellyn Llewellyn Law for the Plaintiff Grant N. Stapon Q.C. Christine Viney Bennett Jones LLP for the Defendant Christine Silverberg