Court of Appeal for Ontario

Date: 20240906 Docket: COA-23-CV-0615

Pepall, Miller and Wilson JJ.A.

BETWEEN

Nagaveni Manjunath Applicant (Respondent)

and

Manjunath C. Kuppa* Respondent (Appellant*)

and

Karanpaul Singh Randhawa Respondent

and

Danashankara Mallappa Respondent

and

Satish Kumar Subramani Respondent

Counsel: No one appearing for the appellant David K. Sherr, for the respondent Nagaveni Manjunath

Heard and released orally: September 5, 2024

On appeal from the order of Regional Senior Justice Leonard Ricchetti of the Superior Court of Justice, dated May 1, 2023, with reasons reported at 2023 ONSC 2660.

Reasons for Decision

[1] The appellant Manjunath Kuppa appeals from the May 1, 2023 order of Ricchetti R.S.J. striking out his pleadings.

[2] On August 23, 2024, the appellant’s counsel obtained an order that they be removed as solicitors of record. The appellant did not appear before us today. Under the circumstances of this appeal and at the request of the respondent, we dismissed the appeal with reasons to follow and also ordered the appellant to pay the respondent costs of $16,000 on a full indemnity basis. These are our reasons.

[3] A brief factual background provides the context for this appeal.

[4] The appellant and the respondent Navageni Manjunath were married on March 13, 1992. On August 9, 2011, the respondent signed an agreement which is stated to be a separation agreement. The respondent alleges that she was misled and coerced into signing the document which purports to waive all equalization and support claims. According to the respondent, the parties continued to live together as a married couple until 2018. The appellant says they separated in 2011. In 2015, the appellant asked the respondent to leave the jointly owned home, which she did. Later in 2018, because of alleged threats by the appellant, she transferred her interest in the home to the appellant for $1 but continued to remain liable on the indebtedness of $1,600,000 secured against the home. At the time of the application, she claimed that she had an annual income of $20,000, while the appellant owned at least three valuable properties, which, including the matrimonial home, were valued in excess of $4 million, and that he had other corporate interests, accounts, investments and valuable vehicles.

[5] The history of the appellant’s delay, disregard of court orders, and non-disclosure was described in considerable detail by the motion judge with hearings numbering at least 27. The motion judge stated at para. 16 of his reasons:

To suggest this is a typical family dispute, or even a high conflict dispute, is a serious understatement. The Applicant diligently sought to prosecute her financial claims but has been met with a serious, persistent, deliberate and flagrant response from the Respondent in this proceeding. The Respondent ignored his obligation to make full and accurate financial disclosure and disregarded numerous court orders. The Respondent’s conduct amounts to bad faith rising to the level of fraudulent misconduct. The Respondent engaged the assistance of Mallappa and Subramani, who then also engaged in misconduct and ignoring court orders. All of this was done by the Respondent, with the assistance of Mallappa and Subramani, for the sole purpose to avoid and defeat the Applicant’s financial claims to equalization and spousal support of family assets. By all accounts, the Respondent is a wealthy person who chose to engage in misconduct and ignored court orders, risking that his pleadings would be struck, rather than defending the Applicant’s financial claims on the merits. All to protect his financial wealth and not risk losing any of it to the Applicant in this proceeding.

[6] Apart from some very modest payments, the appellant failed to pay spousal support. He repeatedly ignored orders to make financial disclosure. On August 12, 2021, the respondent’s first motion to strike the appellant’s pleadings was heard. A different motion judge found his failure to comply with court orders to be wilful, but gave him one last chance to comply, warning him that he would likely see his pleadings struck if he failed to comply. At the encouragement of the appellant, the purported mortgagees on the matrimonial home, Mssrs. Mallappa and Subramani who were friends of the appellant, sold the matrimonial home under power of sale proceedings, unbeknownst to the respondent. The results of an order for disclosure obtained by the respondent revealed that the proceeds of sale were paid to the appellant. Despite court orders that the appellant and the purported mortgagees pay the proceeds into court and make disclosure, non-compliance persisted. The motion judge was satisfied that the appellant and the two purported mortgagees had breached the court order to pay the approximately $1.6 million in sale proceeds into court.

[7] The motion judge found that the breaches of court orders continued to the date of the application before him. At para. 221-6 of his reasons, he concluded that:

The Respondent’s participation in this proceeding has demonstrated a deliberate disregard of the court orders and the litigation process. Simply, he has acted in bad faith throughout. For example,

a) The Respondent throughout took calculated and deliberate actions to avoid this matter being dealt with on the merits such as the many adjournments he sought or caused by his non-attendances at scheduled court hearings which caused substantial delays in this proceeding to the very serious prejudice of the Applicant.

b) The Respondent’s actions were to delay, deny and when forced to, move his assets to another location or someone else like Mallappa and Subramani where they would not and could not be found or disclosed to the Applicant. For example, when his adjournment [was denied in October 2022], the Respondent essentially emptied his bank accounts. Similarly, when J. Dennison issued her October 1, 2021 reasons, the Respondent clandestinely set into motion the power of sale proceedings through Mallappa and Subramani.

Delay and obfuscation of his financial affairs was the Respondent’s “game plan” throughout. It remains his game plan.

The circumstances in this case are exceptional. They are one of the worst, if not the worst circumstances, in any of the authorities referred to by Counsel. Comparisons with other circumstances in the authorities is futile.

The Respondent’s Counsel submits that there are lesser remedies available to this court than striking the pleadings. However, Counsel does not suggest what such a remedy might be and why such a remedy, even if court ordered, would be complied with by the Respondent or could effectively undo the prejudice to the Applicant.

Another court order against any of the three respondents would [be] futile. There is a clear pattern that orders directing the three respondents to do something have and will continue to be ignored or circumvented if possible, and where not possible, the three respondents will profess explanations that make no sense and full documentation of the financial dealings, even if ordered, will not be made available to the Applicant. The Respondent, Mallappa and Subramani have continued to ignore the court orders for many months and have brazenly done so to date, even when faced with a motion to strike their pleadings.

In these circumstances, the only reasonable and available remedy is to strike the pleadings of the Respondent, Mallappa and Subramani and permit the Applicant to proceed with an uncontested trial.

[8] The motion judge accordingly ordered the pleadings struck and permitted the respondent to proceed to an uncontested trial without notice to the appellant or to Mallappa and Subramani.

[9] Before this court, the appellant submits that the motion judge failed to consider and apply the principle that striking pleadings is an instrument of last resort. He further submits that the order striking his pleadings contravenes the primary objective of the Family Law Rules, O. Reg. 114/99 to deal with cases justly. He relies on case law from this court establishing that pleadings should only be struck “in exceptional circumstances and where no other remedy would suffice”: Purcaru v. Purcaru, 2010 ONCA 92, 265 OAC 121, at para. 47. See also Marcoccia v. Marcoccia, 2008 ONCA 866, 60 RFL (6th) 1 and Kovachis v. Kovachis, 2013 ONCA 663, 367 D.L.R. (4th) 189, at para. 24.

[10] This argument has no traction in this case. The motion judge expressly recognized that striking a party’s pleadings is reserved for exceptional cases where no lesser remedy will redress the party’s failure to comply with court order(s). Rule 1(8) of the Family Law Rules explicitly provides direction to the court on the types of orders that may be made when a person fails to obey an order. Contrary to the appellant’s submissions, where appropriate, striking pleadings is entirely consistent with the primary objective of the Family Law Rules to “deal with cases justly” as set out at rr. 2(2) and (3):

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.

[11] In Mullin v. Sherlock, 2018 ONCA 1063, 19 R.F.L. (8th) 1, this court established a decision-making framework for assessing whether pleadings should be struck. This framework includes consideration of the relevance of the non-disclosure, the context and complexity of the issues in dispute, the extensiveness of existing disclosure, the seriousness of efforts made to disclose, and any other relevant factors. Here, the motion judge did just that.

[12] We would also add that, to defeat a motion to strike, the alternative remedy or remedies proposed must be reasonable and not ones that have already proven unsuccessful as was the case here. In addition, “exceptional” circumstances, while not usual or typical, need not rise to a standard of “extraordinary” circumstances. The challenges associated with non-compliance with court orders must be answered with responsive remedies. One such remedy is to strike pleadings.

[13] The appellant also submits that the motion judge erred in failing to decide that the respondent bore the onus of proving that the validity and enforceability of the separation agreement should have been determined before he struck out the appellant’s pleadings.

[14] Again, there is no basis for this argument. The motion judge expressly noted at para. 18 that the issue of the validity of the separation agreement was not before him and that he was making “no comment or determination of that issue”. Rule 1(8)(c) of the Family Law Rules, which provides that the court may deal with the failure to obey a prior order by striking any document(s) filed by the party, clearly makes the remedy available without any determination of the merits of the case. This is clear from the consequences of a strike motion which are described in r. 1(8.4). It establishes that if an order is made striking out a party’s document(s), that party is automatically not entitled to further notice of steps in the case or to participate in the case in any way. The court may deal with the case in the party’s absence and a date may be set for an uncontested trial of the case.

[15] For these reasons the appeal is dismissed. The appellant is to pay to the respondent, Nagaveni Manjunath, costs of the appeal in the amount of $16,000 on a full indemnity basis.

“S.E. Pepall J.A.”

“B.W. Miller J.A.”

“D.A. Wilson J.A.”