Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20230303 DOCKET: C70920

Roberts, Nordheimer and Favreau JJ.A.

BETWEEN

Janna Aslezova Applicant (Respondent)

and

Mikhail Khanine Respondent (Appellant)

Counsel: Eli Karp and Ian Literovich, for the appellant Andrew Feldstein and Anna Troitschanski, for the respondent

Heard: February 27, 2023

On appeal from the order of Justice George A MacPherson of the Superior Court of Justice, dated June 22, 2022, with reasons reported at 2022 ONSC 3632.

Reasons for Decision

[1] Mikhail Khanine, the husband, appeals from the order striking out his pleadings in this family law dispute. The motion judge found that the appellant wilfully failed to comply with at least three prior orders of the court, including a consent order for financial disclosure, and struck his pleadings.

[2] At the close of the appellant’s submissions, we dismissed the appeal with reasons to follow. These are our reasons.

[3] The parties were married for about 20 years before they finally separated in 2017. They have 4 children, ranging in age from 9 to 27. After the separation in 2017, the appellant left Canada and is now living in Israel. He has not returned to Canada since 2017.

[4] Following a multi-day case conference before Bennett J. culminating on September 10, 2021, the parties settled the issues of parenting time, decision-making and the residence of the children. They also agreed on a detailed order providing for the appellant’s financial disclosure relating to millions of dollars in corporate and other assets (“the disclosure order”). The appellant was required to produce the documents or directions for their production, if they existed, within 45 days of the disclosure order. If the appellant could not produce them, he had to provide an affidavit explaining his efforts to obtain them and why he could not obtain them within 60 days of the disclosure order. The respondent required the appellant’s financial disclosure in order to prepare for the trial of the remaining financial issues of child and spousal support, equalization of property and payment of the children’s s. 7 expenses.

[5] The appellant did not provide the necessary documents within the required time frame. After six months, the respondent brought a motion to strike the appellant’s pleadings based on his non-compliance with the disclosure order. After receiving the respondent’s Notice of Motion and affidavit, the appellant provided further disclosure. However, he still did not provide many of the requested documents, nor an affidavit explaining what efforts had been made to obtain the missing documents. Further many of the documents he provided were in Russian, without a translation. In the circumstances, based on the appellant’s ongoing refusal to comply with the clear provisions of the disclosure order and his noted history of non-compliance with other court orders, the motion judge struck the appellant’s pleadings.

[6] The appellant raises several issues. However, the main thrust of his submissions is that the motion judge erred by striking out his pleadings without making a less onerous order and giving him another chance to comply with the disclosure order. He argues that the striking of pleadings is a remedy of last resort that should only be ordered in the most exceptional of cases, and that his conduct does not meet this threshold, particularly in light of his efforts to comply with the disclosure obligations.

[7] We are not persuaded that the motion judge made any reversible error.

[8] Section 1(8) of the Family Law Rules, O. Reg. 114/99, provides that if a person fails to obey a court order, the court may deal with the failure by “making any order that it considers necessary for a just determination of the matter” including, under (c), an order striking out a party’s pleadings.

[9] It is well established that while discretionary, the remedy of striking pleadings is extraordinary and should only be used sparingly and in limited and exceptional circumstances, and when no other remedy would suffice: Martin v. Watts, 2020 ONCA 406, at para. 7; Mullin v. Sherlock, 2018 ONCA 1063, 19 R.F.L. (8th) 1, at para. 33; Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at para. 15; Purcaru v. Purcaru, 2010 ONCA 92, 75 R.F.L. (6th) 33, at para. 47. Such a decision is “driven by the particular facts of each case”, including the importance or materiality of the items of disclosure not produced, and the context of the proceedings: Martin, at para. 7; Kovachis v. Kovachis, 2013 ONCA 663, 367 D.L.R. (4th) 189, at para. 34; Ferguson v. Ferguson, 2022 ONCA 543, at para. 29.

[10] This court has found that wilful failure to comply with disclosure obligations “must be considered egregious and exceptional,” and those who “choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck”: Manchanda v. Thethi, 2016 ONCA 909, 84 R.F.L. (7th) 374, at para. 13, leave to appeal refused, [2017] S.C.C.A. No. 29.

[11] We reject the appellant’s submission that the court should have given him another opportunity to comply because this was the first time that a court had found him in breach of his disclosure obligations. The appellant’s submission not only ignores the plain reality that he was in ongoing breach of his disclosure obligations but also his failure to comply with other orders including support payments. Further, the respondent ought not to have been put to the expense and effort of bringing a motion to ensure his compliance.

[12] The obligation to provide financial disclosure in a case such as this does not simply flow from the disclosure order, but also more broadly from fundamental principles of family law. As this court reiterated in Roberts, at para. 11: “The most basic obligation in family law is the duty to disclose financial information”; and, at para. 13, that “[f]inancial disclosure is automatic. It should not require court orders…to obtain production.” Recent jurisprudence from this court is clear that non-compliance with disclosure orders – and particularly intentional, repeated, and ongoing non-compliance – will constitute exceptional circumstances in which an order to strike pleadings may reasonably be made: Manchanda, at para. 13; Lalande v. Lalande, 2023 ONCA 68, at para. 6; Martin, at paras. 23-25; Ferguson, at para. 30. Further, as this court recently held in Lalande, wilful, repeated non-compliance with disclosure orders may leave the motion judge with “no viable alternative remedy available” to balance both parties’ interests fairly: at para. 6.

[13] The appellant’s financial disclosure obligations arose at and were ongoing from the commencement of the proceedings in 2017. As a result, his conduct as found by the motion judge in ignoring court orders and failing to comply with his basic disclosure obligations “put him in the exceptional category of cases where the judge’s discretion to strike his pleadings was reasonably exercised”: Roberts, at para. 15.

[14] While the threshold for striking pleadings is high, a motion judge’s decision to strike pleadings is entitled to deference on appeal when exercised on proper principles. It will be upheld when the motion judge fashions a remedy that is appropriate for the conduct at issue: Mullins, at para. 49; Purcaru, at para. 50.

[15] That is exactly what occurred in this case. The motion judge recognized that the striking of the appellant’s pleadings was an extraordinary remedy that should only be exercised where no less onerous order would be appropriate. He carefully reviewed the disclosure order and the piecemeal production of documents and directions that the appellant had made over the course of several months and well past the deadline for production in the disclosure order. He also noted that, contrary to the disclosure order, the appellant had failed to provide an affidavit explaining why documents were not produced or unavailable. The motion judge was not obliged to accept untranslated documents in the Russian language that he could not understand, as evidence of compliance with the disclosure order. Accordingly, the motion judge found that unlike in Kovachis, where Mr. Kovachis had produced “everything of significance” (at para. 35), the appellant had not provided substantial disclosure. It was open to the motion judge on the record before him to conclude that substantial disclosure had not been made and that striking the pleadings was the only appropriate order in the circumstances.

[16] The appellant contends that in determining whether he should strike the pleadings or make a less onerous order, the motion judge improperly considered the appellant’s past failures to comply with other orders. We disagree. The appellant’s conduct in the litigation was relevant to the motion judge’s consideration of the seriousness and deliberateness of the appellant’s delinquency and the likelihood of his compliance if given another chance. See, for example, Peerenboom v. Peerenboom, 2020 ONCA 240, 446 D.L.R. 418, at para. 53, where this court noted that the striking of pleadings was a proportionate response in a situation where the appellant, as here, among other factors, “had a history of non-compliance with costs orders and disclosure obligations.”

[17] The motion judge determined, correctly in our view, that the appellant’s failure to comply was wilful and represented a continuing pattern of contumelious behaviour. The motion judge found that: “[t]he [appellant] understood his obligations and still chose not to comply with the Orders”; he “has had ample time to provide disclosure of his assets and he has chosen not to”; and “[he] has demonstrated no serious attempt to produce what is required and, rather, has engaged in various evasive tactics from the beginning of these proceedings.” He concluded that: “The [appellant’s] pattern of litigation behaviour appears tactical, strategic and obstructionist. He does not appear to be interested in moving this matter to conclusion. Rather, it appears, he is focused on delaying the matter and causing financial difficulty for the [respondent].”

[18] The appellant complains of unfairness. We see none here. The position that the appellant finds himself in is entirely of his own making. The appellant had ample opportunity to comply with the disclosure order and chose not to. His failure to comply is particularly egregious given that the order was on consent and in light of his basic disclosure obligations. It was open to the motion judge to decide that there was no point in giving him another opportunity to comply, given that his history of non-compliance suggested that he would not comply even if given another chance and that the respondent would be further delayed in getting a resolution of the financial issues.

[19] In Manchanda, at para. 13, the court repeated the caution that: “Those who choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck.” The appellant failed to heed that caution and his pleadings were properly struck. We see no basis to intervene.

Disposition

[20] Accordingly, the appeal is dismissed.

[21] The respondent seeks costs on a substantial indemnity basis in the amount of $34,000 on the basis that the appeal was ill-conceived from its inception and she ought not to have been put to the expense of responding to it.

[22] While the appeal was of so little merit that we did not call on the respondent, we cannot say that it was so devoid of merit that it reached the high threshold of a frivolous and vexatious appeal and justifies an extraordinary award of substantial indemnity costs.

[23] Accordingly, the appellant shall pay the respondent partial indemnity costs in the amount of $22,000, inclusive of all amounts. This amount shall be paid out of the appellant’s share of the proceeds being held in trust with Mr. Paul Mazzeo.

“L.B. Roberts J.A.”

“I.V.B. Nordheimer J.A.”

“L. Favreau J.A.”