Court of Appeal for Ontario
Date: 2018-12-21 Docket: C64644
Judges: Pepall, Roberts and Miller JJ.A.
Parties
Between
Katherine Ann Mullin Applicant (Respondent)
and
John Sherlock Respondent (Appellant)
Counsel
Heather Hansen, for the appellant
Robert M. Halpern and Jessica Brown, for the respondent
Hearing and Appeal
Heard: April 11, 2018
On appeal from: the order of Justice David Price of the Superior Court of Justice, dated November 10, 2017, with reasons reported at 2017 ONSC 6762.
Decision
Pepall J.A.:
[1] Introduction
[1] This appeal addresses the recurring issue of striking out pleadings in family law proceedings in the face of incomplete disclosure. The appellant, John Sherlock, appeals from an order striking his pleadings and ordering him to pay the costs of the proceedings.
[2] For the reasons that follow, I would dismiss the appeal but would vary the order to augment the husband's trial participation rights.
Background
[3] The appellant, John Sherlock, and the respondent, Katherine Ann Mullin, cohabited for approximately 13 years commencing in November 2000. They married in September 2012 and separated less than one year later on June 28, 2013. There are no children of the marriage.
[4] The husband is the sole officer, director and shareholder of GS Medical Packaging Inc. ("GS Medical"), a company that sells medical supplies to doctors and dentists. He owned and operated the company before the parties met. The wife was employed by GS Medical during the parties' relationship and received a salary in an amount up to $78,000 per year. Her employment was terminated following the parties' separation.
[5] As of the date of their separation, the parties jointly owned real property consisting of a matrimonial home in Mississauga and a condominium in Florida. They also jointly owned a boat.
Wife's Application
[6] On September 13, 2013, the wife commenced an application against the husband. Amongst other things, she claimed spousal support and equalization of net family property, asserting a joint family venture and an entitlement to the value of 50% of GS Medical Packaging and other businesses that the husband had operated during their relationship. On October 11, 2013, the husband was ordered by Herold J. to pay spousal support of $3,000 per month.
[7] On October 29, 2013, the wife served a detailed Request for Information on the husband, seeking extensive personal and corporate disclosure.
November 25, 2013 Order
[8] On November 25, 2013, the parties agreed to the terms of a consent order which was granted by Sproat J. The order incorporated the requests made in the wife's Request for Information. The husband was to provide the disclosure requested by the wife on or before January 9, 2014, or explain why it was either unavailable or arguably not producible. The very extensive disclosure ordered is described in Schedule A, attached to these reasons.
[9] In addition, the parties were to list for sale both the matrimonial home and the Florida condominium "as soon as practicable with agents and on terms to be agreed". The wife continued to live in the matrimonial home in the meantime.
June 12 and August 11, 2014 Orders
[10] On March 14, 2014, the wife served another Request for Information based on information now sought by her forensic accountant, Jeffrey Feldman. On May 23, 2014, the wife brought a motion to strike the husband's pleadings for failure to provide that information. She subsequently amended the motion to seek additional disclosure. Further extensive corporate and personal disclosure was ordered by Trimble J. on June 12, 2014 and August 11, 2014, both on consent. The June 12, 2014 order required the husband to deliver responses to Mr. Feldman's March 2014 Request for Information by June 24, 2014. The August 11, 2014 order required additional disclosure to be provided within 60 days. The details of both Orders are described in Schedule B.
September 1, 2015 Order
[11] On September 1, 2015, Emery J. made another order on consent. The husband was to allow the wife's forensic accountant to re-attend at the offices of GS Medical at a date and time of his choosing and to provide him with certain disclosure by October 1, 2015. The details of this disclosure are described in Schedule C.
January 26, 2017 Questioning of Husband
[12] The husband attended for questioning by the wife's lawyer on January 26, 2017.
April 3, 2017 Order
[13] Both parties brought motions returnable April 3, 2017. The husband asked that the matrimonial home be sold pursuant to the November 25, 2013 order of Sproat J. The wife sought an order compelling the husband to provide answers to his undertakings given at his questioning of January 26, 2017 within 15 days, and directing him to return to questioning within 30 days to answer the questions that he had refused to answer at that questioning, including those that were taken under advisement.
[14] In his April 3, 2017 order, the motion judge ordered the husband to answer all questions asked at his questioning of January 26, 2017 by April 26, 2017, including undertakings and refusals. There were 32 outstanding undertakings and 12 refusals. The husband was also ordered to re-attend at his own expense on May 23, 2017 to answer questions arising from the answers that were to be provided by April 26, 2017. The April 3, 2017 order provided that if the husband did not fully comply with the answers to the undertakings and refusals, his pleadings would be struck.
[15] Given their significance to this appeal, paragraphs 5 and 7 of the motion judge's April 3, 2017 order are reproduced below:
[5] The Respondent shall answer all questions asked at his examination of January 26, 2017, by April 26, 2017, including undertakings and refusals. With regard to the request for journal entries and petty cash vouchers, he shall provide an explicit and detailed statement in an Affidavit by that date setting out the following:
a. whether the documents ever existed and whether they were in his possession, power or control;
b. if they were but no longer are in existence or in his possession, power or control, when they ceased to be and under what circumstances;
c. if they are in the possession of a non-party, who that is, including contact information.
[7] In the event the Respondent does not comply fully with item #5 above, his pleadings shall be struck.
July 5, 2017 Motion
[16] On May 15, 2017, the wife brought a motion returnable June 15, 2017 asking that the husband's pleadings be struck for non-compliance pursuant to para. 7 of the motion judge's order.
[17] Ultimately, the motion was heard by the motion judge on July 5, 2017. The motion judge characterized the outstanding issue on the return of the motion as whether the husband had failed to provide necessary disclosure and to answer the questions he undertook or refused to answer on January 26, 2017, and if so, what remedy the court should impose.
Motion Judge's Reasons
[18] In his reasons dated November 10, 2017, the motion judge itemized the documents that the husband had failed to provide, and noted that there continued to be certain refusals and undertakings that had not been answered.
[19] The two outstanding refusals asked the husband to: a) provide a list of all travel done for business and pleasure since the date of separation, and b) provide documents confirming the purchase or sale of the jointly owned boat.
[20] Regarding the first refusal, the husband's response was: "All business trips: Dubai, China, Taiwan, Korea, Germany, England, and numerous cities within the United States." In his reasons, the motion judge concluded that the husband had failed to respond to the refusal because he was obliged to provide particulars of the trips' dates and purposes. He also found that the husband had not responded to the second refusal.
[21] As for the undertakings, the motion judge noted that:
The husband undertook to provide copies of the requests he made to three law firms to obtain a copy of any wills prepared on his behalf and to also provide the firms' responses. He had provided a copy of a will and indicated that it was the "only will" but failed to provide copies of the requests made and the responses received.
The husband was to ask Ms. Fan, the accountant for the husband and GS Medical, about the source of the estimates for the balances of the loans from GS Medical in his first three financial statements as at the date of marriage and the date of separation, and to ask her how the loans to him from GS Medical were reflected in the company's financial statements. The motion judge found that the husband had failed to ask about the source of the estimates and had responded that there were no further loans. The husband was also to ask Ms. Fan about the purpose and her knowledge of a letter bearing her signature and on her letterhead, describing the husband's income from GS Medical in 2011 as being $454,500. The husband responded that Ms. Fan had not prepared or signed the letter. The husband was also to ask Mr. Peter Jarvis, another accountant, about the purpose and his knowledge of a comparable letter. The husband responded that Mr. Jarvis had no recollection of ever signing or preparing it. The motion judge found that the husband had failed to elicit either of the individuals' knowledge of the letter.
[22] Moreover, the motion judge noted the husband had undertaken to provide any documents within his possession, power, or control that supported the values contained in his Financial Statements. He had failed to produce:
bank statements supporting the value of his Capital Bank, U.S. chequing account as of the date of marriage and the date of separation;
bank statements showing the balances of two additional U.S. chequing accounts at Capital Bank on the date of separation, as identified in his November 4, 2014 Financial Statement;
bank statements supporting the value of his Scotiabank RRSP account as of the date of marriage;
proof of the personal loan of $200,000 that he claimed to owe third-parties as of the date of marriage; and
documentation showing the amounts he claimed GS Medical paid for the advance for the purchase of the boat and for the purchase of the parties' Florida condominium, and which the husband claimed he owed GS Medical as of the date of separation.
[23] The motion judge struck out the husband's pleadings on terms. He concluded that it would be highly unfair to require the wife to proceed to trial without information that served to reconcile the differing amounts shown for the loans from GS Medical as of the date of marriage and the date of separation found on the husband's various financial statements. In his view the wife required this information to quantify the husband's income and net family property and to establish her claims to spousal support and an equalization payment. Moreover, he found at para. 69 that the husband "sought to frustrate the court's process by providing deliberately ambiguous and misleading answers to the questions he was asked and by failing to produce documents that he was ordered to produce as long ago as November 25, 2013."
[24] The motion judge consequently gave the wife leave to proceed to an uncontested hearing. Although he did not elaborate, he gave the husband limited participation rights. The husband would have the right to:
attend at and participate in a settlement conference,
receive notice of any step in the proceeding taken by the wife,
attend any step in the proceeding (including the trial) as an observer; and
make closing submissions at the trial with leave of the trial judge.
[25] The motion judge ordered that in the remaining proceedings, the husband would not have the right to:
bring any motion or application;
question the wife or any other person;
seek disclosure from her or any other person;
participate in any step in the proceeding except as described.
[26] In addition, the husband was required to pay costs to the wife in the amount of $55,365.73 for the motions to and including April 3, 2017.
Positions of Parties
[27] The husband appeals from the motion judge's November 10, 2017 order.
[28] His position is that striking a pleading is an order of last resort that should occur only in the most exceptional and egregious of circumstances, and that this was not such a case. He relies on this court's analysis in Kovachis v. Kovachis, 2013 ONCA 663, at para. 34. He argues that, as in that case, before striking pleadings, "consideration ought to have been given to the importance or materiality of the items of disclosure…not produced", and to the principle of proportionality.
[29] The husband argues that the motion judge failed to consider appropriate alternative remedies to striking pleadings and failed to give effect to the objective of a sanction under subrule 1(8) of the Family Law Rules, O. Reg. 114/99. Moreover, the order made impedes the just determination of the case which requires a factual inquiry that necessarily involves the appellant's participation.
[30] Lastly, he submits that the motion judge either mischaracterized or misapprehended the evidence:
in characterizing the husband as "not answering" outstanding undertakings and refusals;
in failing to consider that the wife did not give the husband an opportunity to clarify his answers in advance of serving her motion to strike;
in failing to consider that of the 32 answers to undertakings provided, only 8 were claimed to be unsatisfactory by the wife, and of the 12 answers to refusals provided, only 2 were considered unsatisfactory; and
in finding that the husband had "repeatedly breached the orders of this court for disclosure" including that relating to the boat proceeds and that he had done so "willfully, in a deliberate attempt to frustrate [the wife's] efforts to establish her claims".
[31] It is the wife's position that the husband has breached every order made by the court in these proceedings. She argues that the motion judge properly considered other available alternatives and made an appropriate order in the circumstances.
Analysis
(a) Legal Framework
(i) Jurisprudence
[32] In Roberts v. Roberts, 2015 ONCA 450, at paras. 11 and 12, Benotto J.A. wrote:
The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.
Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.
[33] Traditionally, striking pleadings has been considered to be a remedy of last resort. In Purcaru v. Purcaru, 2010 ONCA 92, Lang J.A. stated at para. 47 that in family law cases, pleadings should only be struck and trial participation denied in exceptional circumstances and where no other remedy would suffice. The same principle was reiterated in Chiaramente v. Chiaramente, 2013 ONCA 641, at paras. 31-33. Laskin J.A. described the relevant considerations in Kovachis, at para. 34:
Before striking Kovachis' pleadings, consideration ought to have been given to the importance or materiality of the items of disclosure Kovachis has not produced. Although full and frank disclosure is a necessary component of family law litigation, exhaustive disclosure may not always be appropriate. The courts and parties should consider the burden that disclosure requests bring on the disclosing party, the relevance of the request of disclosure to the issues at hand, and the cost and time to obtain the disclosure compared to its importance. [Emphasis added]
[34] In a family law case, as the resulting judgment may provide for continuing obligations that can only be varied on proof of a change in circumstances, the striking of pleadings has added significance. If pleadings are struck, a "change in circumstances may be difficult to establish if the initial judgment is based on incorrect assumptions, thus perpetuating injustice." Purcaru, at para. 48.
[35] In Manchanda v. Thethi, 2016 ONCA 909, this court was satisfied that the motion judge had complied with the requirements of Kovachis in striking the appellant's pleadings, stating that he had properly assessed the willful non-compliance to be egregious and exceptional, and it was not a situation of overreaching by the wife. The motion judge had expressly considered proportionality by examining the disclosure made in comparison with the disclosure still outstanding. The motion judge scrutinized both the quantity of disclosure, which had been significant, and the quality, which was deficient in that it omitted basic documents such as income tax returns, financial statements, and credit card statements.
(ii) Family Law Rules
[36] Rule 1(8) of the Family Law Rules provides direction to the court on the types of orders that may be made when a person fails to obey an order:
If a person fails to obey an order in a case or a related case, the court may deal with the failure by making any order that it considers necessary for a just determination of the matter, including,
(a) an order for costs;
(b) an order dismissing a claim;
(c) an order striking out any application, answer, notice of motion, motion to change, response to motion to change, financial statement, affidavit, or any other document filed by a party;
(d) an order that all or part of a document that was required to be provided but was not, may not be used in a case;
(e) if the failure to obey was by a party, an order that the party is not entitled to any further order from the court unless the court orders otherwise;
(f) an order postponing the trial and any other step in the case; and
(g) on motion, a contempt order.
[37] Rule 1(8.1) provides that if a person fails to follow the rules, the court may make an order under Rule 1(8) other than a contempt order under clause (8)(g).
[38] Rule 1(8.4) provides that:
If an order is made striking out a party's application, answer, motion to change or response to motion to change in a case, the following consequences apply unless a court orders otherwise:
The party is not entitled to any further notice of steps in the case, except as provided by subrule 25 (13) (service of order).
The party is not entitled to participate in the case in any way.
The court may deal with the case in the party's absence.
A date may be set for an uncontested trial of the case.
[39] Rule 2(2) of the Family Law Rules provides that the primary objective of the rules is to enable the court to deal with cases justly. Rule 2(3) states that dealing with a case justly includes:
(a) ensuring that the procedure is fair to all parties;
(b) saving expense and time;
(c) dealing with the case in ways that are appropriate to its importance and complexity; and
(d) giving appropriate court resources to the case while taking account of the need to give resources to other cases.
[40] In 2015, Rule 13 of the Family Law Rules was amended to emphasize a party's financial disclosure requirements. So, for instance, specified disclosure is required for a claim for support (Rule 13 (3.1)) or a claim under Part 1 of the Family Law Act (Rule 13 (3.3)). Under Rule 13(11), if a party believes that the financial disclosure is insufficient, the party shall first ask for the additional information and, if it is not provided within seven days, the court may order its production. Rule 19(1) addresses the need to provide an affidavit of documents 10 days after being requested to do so by the other party.
[41] Judges presiding over family law disputes are frequently faced with mounds of material, a busy court docket and pressure to process files expeditiously. Repeated and frequent motions for disclosure are often necessary, though they should not be. As stated by Benotto J.A. in Roberts, at para. 12, delinquencies add significant expense to proceedings and consume substantial judicial time and resources. Counsel and their clients should not expect that repeated adjournments and indulgences will be given to instances of non-disclosure. Furthermore, an effective remedy for inadequate or non-disclosure should be available.
[42] At the same time, a litigation strategy that involves repetitive motions for disclosure untethered from the disclosure already made may give a false impression of the extent of the non-disclosure. It must be recognized that given the size and complexity of some estates, it may be easier to ask the question than to give the answer.
[43] Given the ongoing challenges presented by inadequate disclosure in family law proceedings and the need to provide a workable remedy while ensuring that the procedure is fair to all parties, a decision-making framework for the application of Rule 1(8) is required.
(iii) Decision-making Framework
[44] First, when faced with an allegation of failure to obey a disclosure order, before granting a remedy, the judge must be satisfied that there has been non-compliance with the court order.
[45] Second, once satisfied, a judge may have recourse to the alternatives described in Rule 1(8). In assessing the most appropriate remedy, a judge should consider the following factors:
the relevance of the non-disclosure, including its significance in hindering the resolution of issues in dispute;
the context and complexity of the issues in dispute, understanding that an uncomplicated case should have little tolerance for non-disclosure, whereas a case involving extensive valuation of assets may permit some reasonable delay in responsiveness;
the extensiveness of existing disclosure;
the seriousness of efforts made to disclose, and the explanations offered by a defaulting party for the inadequate or non-disclosure; and
any other relevant factors.
[46] Having considered these factors, the judge will then determine the best remedy. The orders identified in Rule 1(8) are not exclusive. Other approaches may be appropriate. For example, one option might be to invite the moving party to seek at trial an adverse inference from the failure to disclose and for the motion judge to memorialize this invitation in reasons for decision. Parties frequently rely on another option, namely a request for an adjournment to allow for more time to effect disclosure. Occasionally this may be appropriate especially in a complex case, but an adjournment should not be considered to be automatic. Fully compliant disclosure is the expectation, not the exception.
[47] If the judge decides to strike, as in the case under appeal, Rule 1(8.4) becomes applicable. As mentioned, this subsection provides that certain consequences apply unless a court orders otherwise. Accordingly, a party is not entitled to participate in a case in any way unless the court orders otherwise. This provision gives the judge the ability to frame the procedural consequences to a party in default. In making this determination, consideration should be given to whether the consequence is responsive to the breach and whether it achieves a just outcome.
[48] If the judge decides to strike, Rule 1(8)(c) does not refer to striking "pleadings". Instead, it specifically distinguishes amongst striking out an application, answer, notice of motion, motion to change, response to motion to change, financial statement, affidavit, or any other document filed by a party. Rule 1(8.4) addresses the consequences if an order is made striking an application, answer, motion to change or response to a motion to change. Ideally, when making an order under this subsection, the judge should specify what is being struck.
[49] The decisions to strike a document and to determine the parameters of trial participation are discretionary in nature, and as stated by Lang J.A. in Purcaru, at para. 50, are "entitled to deference on appeal when exercised on proper principles. The exercise of discretion will be upheld where the motion or trial judge fashions a remedy that is appropriate for the conduct at issue."
(b) Application of Legal Framework to this Appeal
[50] Turning to this case, the motion judge did not strike the pleadings based on paragraph 7 of the April 3, 2017 order. Rather, he identified the issues on the motion as being whether the husband had failed to provide necessary disclosure and had answered the questions he undertook or refused to answer on January 26, 2017, and if so, whether the court should strike his pleadings, order him to comply with his undertakings, order him to attend for further questioning, or adjourn the motion until he had complied and finished being questioned. Contrary to the husband's contention, the motion judge did consider other possible remedies. In addition, although he did not use the words 'exceptional' or 'egregious', he expressly stated that a remedy striking a pleading is a serious one that was available for unusual cases.
[51] In my view, the motion judge properly concluded that the husband had failed to comply with his April 3, 2017 order. Although the husband provided the affidavit required by paragraph five of that order, he did not answer all of the undertakings and refusals ordered to be answered and, although the opportunity for further questioning of the appellant was available, the wife was not required to resort to further questioning of the husband to obtain those answers. In having recourse to Rule 1(8), the motion judge assessed whether the non-disclosure was relevant and determined that it was. The information ordered was required to assist in establishing spousal support and the wife's equalization of net family property claim. The motion judge was familiar with the complexity of the case and the disclosure made, but found that the husband had repeatedly breached court orders for disclosure and had done so willfully in a deliberate attempt to frustrate the wife's efforts to establish her claims.
[52] The husband submits that the evidence did not support an inference of intentional breach. The motion judge was obviously not satisfied with the explanations offered by the husband for the failure to comply with his disclosure obligations. The repeated orders and the repeated non-compliance readily permitted such a conclusion. The motion judge did not err in resorting to the strike out provision found in Rule 1(8)(c).
[53] Having said that, in his reasons, the motion judge did not advert to what he was striking out. I would therefore vary the order to specify that the husband's Answer is struck out, pleadings not being a defined term in the Family Law Rules. In addition, all other documents filed by the husband are struck subject to the discretion of the trial judge as to whether any are relevant and ought to be admitted, for example possibly Form 13 and Form 13.1 financial statements.
[54] Secondly, the motion judge did decide that the husband would be entitled to participate in the case and thus invoked the "unless a court orders otherwise" language of Rule 1(8.4). However, the motion judge erred in his determination of the parameters of trial participation given the husband's breach. As stated in Purcaru at paras. 49 and 50, the exercise of discretion required the motion judge to fashion a remedy that was "appropriate for the conduct at issue". Here, there had been extensive disclosure and the outstanding undertakings and refusals were few. In the interests of achieving a proportionate and just outcome, I would vary the order to delete paragraph two which provides for an uncontested hearing. I would augment the husband's trial participation rights described in paragraph 3 to permit him to make an opening statement, cross-examine the wife and the wife's witnesses at trial and make closing submissions without the need for leave of the trial judge. Any additional participation would only be as permitted by the trial judge.
[55] The husband's Answer contains his claims against the wife. Striking out his Answer appropriately deprives him of the ability to pursue his claims. My proposed variation of the order permits the husband to test the wife's claims and also operates to provide the court with a richer record on which to base its decision. In the face of the extensive disclosure on the one hand, and the willful non-compliance on the other, such an order serves to discourage non-compliant behaviour but is also proportionate to the husband's actual non-disclosure and allows for a fair adjudication of the issues. Lastly, while the husband is at liberty to now comply with the provisions of the April 3, 2017 order, this would not operate to reinstate his Answer.
[56] In conclusion, I would dismiss the appeal but would vary the terms of the order as described in Schedule D attached hereto.
Costs
[57] The motion judge ordered the husband to pay costs to the wife in the amount of $55,365.73 on a substantial indemnity scale for the motions heard May 29, and September 1, 2015, December 22, 2016, and March 1 and April 3, 2017. The wife had claimed $90,763.41.
[58] The husband argues that the cost award was unreasonable given the divided success of the parties and his offers to settle. I disagree. An appellate court will only set aside a costs award if it is plainly wrong or there is an error in principle: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, 2004 1 S.C.R. 303 at para. 27. The motion judge considered the degree of success achieved by the parties and the offers to settle. I see no basis on which to interfere.
Disposition
[59] For these reasons, I would dismiss the appeal but vary the November 10, 2017 order as reflected in Schedule D attached hereto. I would order the husband to pay the wife $13,500 in costs of the appeal on a partial indemnity scale inclusive of disbursements and applicable tax.
Released: December 21, 2018
"S.E. Pepall J.A."
"I agree. L.B. Roberts J.A."
"I agree. B.W. Miller J.A."
Schedule A
Disclosure Required by Sproat J.'s Order Dated November 25, 2013
Personal Disclosure
Proof of the husband's current income;
Copies of personal income tax returns including all attachments to the returns, T4 slips, and any Notices of Assessment or Re-assessment for the past five tax years.
Copies of all personal credit card statements for any credit card held directly or indirectly by the husband for the past five years; and
Copies of all personal bank statements for any and all bank accounts held in the husband's name solely or jointly with anyone else, or held directly or indirectly for the past five years.
Corporate Disclosure
All requests below apply to any corporations/businesses in which the husband has an interest, either solely or jointly with others, in Ontario or elsewhere including but not limited to GS Medical Packaging Inc., Arkle Medical Group Inc., Beacon Supplies Limited; 950392 Ontario Limited, Colin Andrews Brokerage, and Andrews Yachts Sales ("the corporations"):
a. Complete copies of the federal and provincial corporate income tax returns including all related schedules and attachments to the returns for the five most recent taxation years;
b. Copies of corporate Notices of Assessment (or Re-assessment if any) issued by the Canada Revenue Agency for the five most recent taxation years.
c. Copies of the corporate Financial Statements (formal or informal) for the five most recent fiscal years including for 2013, interim financial statements (monthly or quarterly); balance sheets and income statements for every quarter until the conclusion of this action;
d. Copies of any projections prepared in the five years ended fiscal 2013;
e. Copies of the Minute books or other corporate documents including the Articles of Incorporation and Share Registers;
f. Confirmation of the husband's ownership in the corporations and if more than one shareholder, a copy of the Shareholder Agreement;
g. Detailed breakdown of owner-management remuneration, including but not limited to salaries, bonuses, expense allowances, car allowances, golf clubs, yacht clubs, and other club dues and expenses, entertainment including sports events and other emoluments provided to management, directly, indirectly, or in any manner whatsoever;
h. Copies of detailed general ledger accounts for the five fiscal years ended fiscal 2013 for the office, general, travel, and entertainment accounts;
i. Copies of any and all bank statements for any and all corporate bank accounts held in the name of any corporation in which the husband has an interest, in Ontario or anywhere else for the past five years;
j. Copies of any credit cards or lines of credit statements held in the name of the corporations or paid for by the corporations in which the husband or anyone not at arm's length to him including Luan Avram has signing authority whether in Canada, the United States, or anywhere else for the past five years;
k. Schedule of all related entities and non-arm's length entities;
l. Details of all significant third party and non-arm's length part loans, advances, payments, and transactions within the immediately preceding five years;
m. Details of all non-recurring and unusual expenses during the immediately preceding five fiscal years;
n. Copies of any business insurance policies, if any;
o. Copies of the rental agreements for the premises upon which the corporations operate;
p. A list of all cars leased by the husband or any corporations including but not limited to the 2006 Ferrari and 2012 BMW.
Other Disclosure
Copies of any loan applications made by the husband in the past five years;
A copy of the rental agreement and application for the husband's current residence;
A detailed accounting of all the funds withdrawn from the joint line of credit that is registered against the matrimonial home in favour of the National Bank of Canada, from inception to date;
A detailed accounting of all funds and benefits paid by the corporations to or on behalf of Luan Avram;
Supporting documentation regarding all items in the husband's Financial Statements sworn October 9, 2013, including assets on the date of marriage and date of separation;
A sworn Affidavit that the husband does not have any other accounts or assets aside from those set out in his sworn financial statements sworn October 9, 2013; and
Any other financial disclosure which may arise from the production of the above.
Schedule B
Disclosure Required by Trimble J.'s Consent Order Dated June 12, 2014, Based on the Information Request of the Wife's Forensic Accountant, Jeffrey Feldman
Beacon Supplies Limited
a. Financial Statements for Beacon Supplies Limited ("Beacon Supplies")
GS Medical Packaging Inc.
b. Details of payments (dates and amounts), which comprised the T4 issued from GS Medical Packaging Inc. ("GS Medical") to the wife for 2013;
c. Details of payments (dates and amounts), which comprised the management bonus paid to the husband in 2013 and 2009, if any;
d. Detailed general ledger accounts for the following for 2009 to 2013, which reconcile to the amounts per GS Medical's financial statements:
i. Due to related parties; and
ii. Advertising and promotion.
e. Reconciliation of the detailed general ledger accounts provided for office and general and travel and entertainment to GS Medical's financial statements for 2009 to 2013;
f. Confirmation as to the nature of records and support, if any, that was retained for transactions described as "petty cash" in the detailed general ledger for office and general and travel and entertainment for the past year;
g. Year-end adjusting journal entries for 2009 to 2013;
h. Details of the arrangement with Obstrukt Media and a copy of the related contract, if any;
i. Lease and/or purchase agreement for vehicles leased by GS Medical from 2009 to 2013 (not including the 2012 BMW 650i X Drive Coupe or the 2006 Ferrari F430 F1), to the extent not previously provided;
j. Deposits (cash or trade-in value) paid in connection with vehicles leased by GS Medical from 2009 to 2013 and confirmation of an accounting for the deposits;
k. Insurance premiums paid by GS Medical in connection with the vehicles identified above and a copy of the insurance policies for the period prior to 2013;
l. Journal entries, if any, which recorded the reimbursement of business related expenses charged on the personal CIBC visa credit cards of the wife and the husband from 2009 to 2013 for a breakdown of the reimbursement of the business expenses;
m. Details of payments from GS Medical set out in Tab B attached to the wife's Notice of Motion and confirmation about whether the highlighted payments were paid to the husband;
n. Details of any expenses related to the condominium at 403-A Emma Street, Key West, Florida, which were paid by GS Medical;
o. Details of the life insurance policies paid by GS Medical from 2009 to 2013, including the summary of insurance coverage and the related premium;
p. Missing statements for the following, if retrieved:
BMO Mosaik MasterCard
- 2010: January, March, April, June to December;
- 2011: January to April, June, July, September
- 2013: July & November
Personal Accounts
- CIBC Bank Account 82-30595: November 2013 & December 2013
- CIBC Aventura Visa statements (CAD): November 2013 & December 2013
The husband shall immediately provide the following additional disclosure to the wife to be provided no later than June 25, 2014:
a. Copy of purchase and/or lease agreement regarding the Porsche Cayenne;
b. Updated credit card and bank statements (both personal and corporate) from November 2013 to the present;
c. Summary of all business trips from the date of separation (June 28, 2013) to the present;
d. All missing credit card statements for his personal and business related credit cards and bank statements including but not limited to the following statements, if retrieved:
Bank of Montreal Mosaik MasterCard, account number 5560...6616, January, March-April, June-December 2010; January-April 2011; June-July 2011; September 2011; July and November 2013;
Any credit cards held in the name of Beacon Supplies Limited; and
CIBC account #82-30595 for December 2010 and January-February 2011.
e. Details regarding the rental of the jointly owned condominium municipally described as 403A Emma Street, Key West, Florida, 330140, since the date of separation (June 28, 2013) to the present, including the following:
Names of the renters;
Copies of any rental agreements;
Details regarding the rent received
Additional Disclosure and Steps Regarding Obtaining Such Disclosure Required by Trimble J.'s Consent Order Dated August 11, 2014
a. To use best efforts to make inquiries of Ann Fan and/or Peter Ryan Jarvis, to obtain a reconciliation of the detailed general ledger accounts provided for office and general and travel and entertainment to GS Medical Packaging Inc.'s ("GS Medical") financial statements for 2009 to 2013;
b. To make available whatever documentation is available from GS Medical that was retained for transactions described as "petty cash" in the detailed general ledger for office and general for the past year regarding GS Medical and to keep any further petty cash vouchers or other records, including those for travel, until this case is settled or tried. Should the wife's accountant wish to attend at the offices of GS Medical, he may review such documents for the four previous years;
c. Confirmation of the drivers of each of the vehicles leased and/or purchased by GS Medical from 2009 to 2013 if possible;
d. Written confirmation that GS Medical did not pay any deposits in connection with vehicles it leased from 2009 to November 1, 2013, except with regard to the Ferrari vehicle;
e. Written confirmation of the insurance breakdown per vehicles for all vehicles leased by GS Medical for 2009 to 2013;
f. Details of the life insurance policies paid by GS Medical from 2009 to present, including the summary of insurance coverage including but not limited to details related to the husband's life insurances policy with ARCA Financial Group, policy number 2795321 (Manulife) with coverage of 1 million dollars;
g. Best efforts to provide: details of dates of all business trips taken by the husband from the date of separation (June 28, 2013) to the present;
h. Make best efforts to obtain from rental agent, Kevin McGinty, copies of any rental agreements regarding the rental of the jointly owned condominium municipally described as 403A Emma Street, Key West, Florida, 33040, from the date of separation (June 28, 2013) to the present and any other documents available regarding such rentals. Such documents to include but not be limited to the names of the renters; details regarding the rent received; details of the payment of commission of the agent (which the husband represents is approximately 20%); accounting of the rent charged and collected (which the husband represents is approximately $7,200.00 net amount); and any documents regarding any repairs that the husband claims that he completed to the property and any expenses incurred for the property that have been paid for using the rental income.
The husband shall provide to the wife the following disclosure in accordance with the Supplementary Information Request of Jeffrey Feldman dated June 9, 2014 (as explained/expanded in his letter of June 20, 2014) and other additional disclosure requested by the wife as set out in the wife's Amended Notice of Motion returnable June 27, 2014, within sixty (60) days:
a. Copies of bank statements, if any, for P & J Gill Holdings Ltd. for 2012 and 2013. If the husband claims that he no longer possesses bank statements for the company for those years, he shall provide the last bank statements for the company in his possession power and control. If the husband claims that P & J Gill Holdings Ltd. never held any bank accounts, he shall provide written confirmation of that fact;
b. Written confirmation from the accountant for P & J Gill Holdings Ltd., Royal Peter Jarvis that there are no financial statements for the corporation for 2011-2013 and that no tax returns were filed with the Canada Revenue Agency for this corporation for these years;
c. Copies of bank statements, if any, for 950392 Ontario Limited for 2011 to 2013. If the husband claims that he no longer possesses bank statements for the company for those years, he shall provide the last bank statements for the company in his possession power and control. If the husband claims that the company never held any bank accounts, he shall provide written confirmation of that fact;
d. Written confirmation from the accountant for 950392 Ontario Limited that there are no financial statements for the corporation for 2011-2013 and no tax returns were filed with the Canada Revenue Agency for this corporation for these years;
e. Whether and the manner in which the long term investments set out in the balance sheets of P & J Gill Holdings Ltd. and 950392 Ontario Limited relating to the years in which the long term investments were reflected on the financial statements for these companies in 2010 and 2011 were the fixed assets of GS Medical and any reconciliation and or explanation that he may be able to provide;
f. Written confirmation in regard to any charge back by GS Medical to the husband regarding vehicle related expenses for 2011 to 2013 including details of the categories to which they are charged (e.g. lease or insurance) and a copy of any detailed general ledgers for the accounts in which the vehicle expenses were recorded, if available;
g. The manner in which the business related expenses charged on the personal CIBC Visa credit cards of the wife and the husband from 2012 and 2013 were recorded by GS Medical;
h. Copies of the husband's 2008 and 2009 Notices of Assessment (personal) and 2008 Income Tax Return with all attachments, and if the husband does not possess them, obtain notices of assessment and income tax return information statement if available from CRA;
i. Written confirmation from Ryan Peter Jarvis that no financial statements have been prepared and that no corporate tax returns have been prepared or filed for Beacon Supplies Limited (and no corporate Notices of Assessment received) after 2010 other than what has been produced to the wife;
j. A sworn updated Financial Statement of the husband confirming his property interest as of the date of separation and the date of the statement;
k. A copy of the Record of Employment for the wife from GS Medical Packaging Inc. regarding her employment, and if not available, a new Record of Employment for the wife; and
l. Details of the sale of the husband's Bob Seger boat (2009 Beneteau first 40 Yanmar 41.27 ft.) and a copy of all documents related to the sale.
Schedule C
Disclosure Required by Emery J.'s Order Dated September 1, 2015
The husband is to allow the forensic accountant, Jeffery Feldman (or an employee of SLF Valuations Ltd. to attend on his behalf), to reattend at the offices of GS Medical at a date and time of his choosing and that he be provided with the following by October 1, 2015:
a. A copy of the GS Medical detailed general ledger for John's draw account for 2012, 2013, 2014, and 2015, as well as;
b. Samples of the journal entries, which reduced the account to reflect the business expenses John charged on his personal credit cards;
c. If so requested by Jeffery Feldman, after a review of those samples copies of all the journal entries of that period.
d. The GS Medical petty cash sheets prepared for the years 2012-2015
Schedule D
Varied Order of Price J. Dated November 10, 2017, Paragraphs 1-4
The husband's Answer is struck out. All other documents filed by the husband are also struck out, subject to the discretion of the trial judge.
The wife shall have leave to proceed to an uncontested hearing.
The husband shall have the right to:
i. attend and participate in a settlement conference on the conditions set out below;
ii. receive notice of any step in the proceeding taken by the wife;
iii. attend any step in the proceeding (including the trial) as an observer;
iv. make an opening statement at the trial;
v. cross-examine the wife and witnesses called to testify at trial by the wife;
vi. make closing submissions at the trial; and
vii. any additional participation as permitted by the trial judge.
In the remaining proceedings, the husband shall not have the right to:
i. bring any motion or application;
ii. question the wife or any other person;
iii. seek disclosure from the wife or any other person;
iv. participate in any step in the proceeding except as described above.
[1] The costs order relating to the November 2017 order was not before this court.
