Court File and Parties

Ontario Court of Justice

Date: 2015-06-01

Court File No.: Toronto DFO 93 1537

Between:

Zahra Abdirizak Applicant

— And —

Yusuf Barre Said Respondent

Before: Justice E. B. Murray

Heard on: May 25, 2015

Reasons for decision released on: June 1, 2015

Counsel:

• Mr. Andrew Sudano, for the Applicant
• Mr. Joseph R. Forget, for the Respondent

Decision

MURRAY, E. B. J.:

[1] In this motion the Applicant Mother seeks to have the Respondent Father's pleadings struck, based on Father's non-compliance with the order for disclosure and his failure to comply with the temporary order for support. Father opposes the order sought.

[2] The case involves Mother's application, begun in December 2012, for support for the parties' 5 children on a prospective and retroactive basis, including s. 7 expenses.

[3] In determining this motion, I considered the affidavits filed by the parties, Father's brief containing his disclosure materials served September 17, 2014, Father's financial statement sworn March 13, 2014, and further tax documents filed by Father's counsel when this motion was argued on May 25, 2015. Father's only response to the motion is contained in his affidavit, also sworn September 17, 2014.

Father's Finances

[4] Some context is required to assess the significance of the disclosure provided or not provided by Father. His financial affairs have been complicated, and he has filed little evidence which can clarify his situation. However, the following facts are reasonably clear.

• Father is self-employed.
• Father conducted business during and after the marriage through at least two corporate entities—Cansom Holdings Inc. and Unique Auto Collision Network Solutions Corp.
• Father also conducted business under the name Quality Fix Auto Collision, Quick Fix Auto Collision and Executive Car Care, either as a sole proprietorship or through a corporation.
• Either personally or through the corporations, Father owned 2 Toronto properties at 42 and 44 Hyde Avenue in Toronto.
• Quick Fix has operated out of 57 Hyde Avenue; there is no evidence as to the ownership of that property.
• Father's business activities included car repair and collision repair services, taxi rental, and rental of the premises at 42 and 44 Hyde Avenue.
• In 2010 a Mr. and Mrs. Fernandez obtained significant monetary judgements against the two corporations. The basis for those judgements is not in evidence. After an unsuccessful appeal by Father, the judgement creditors were able to execute against and took possession of 42 and 44 Hyde Avenue in June 2014.

[5] After Father was served with the application, he provided none of the financial disclosure required by the Guidelines after he was served, except for personal 2012 and 2013 Notices of Assessment showing gross and net business annual income of $12,000 and $12,200 respectively. According to his financial statement of March 13, 2014, he earned 12,000 annually. Father swore that he had two TD accounts containing small amounts, owned 42 and 44 Hyde Avenue, and had debts exceeding the value of those properties. His statement did not disclose an interest in any corporation, business or other asset.

[6] On June 19, 2014 Father was ordered, on consent, to provide the following disclosure by July 31, 2014.

a) 2011 Personal Notice of Assessment.

b) A copy of income tax returns with all schedules, attachments and information slips, filed by the Respondent or by any corporation owned by the Respondent for 2011, 2012, and 2013.

c) Copies of all personal and business credit card and bank statements for 2011, 2013, and 2013.

d) A letter from the Respondent's lawyer regarding the results of negotiations with the Respondent's creditors regarding the Respondent's outstanding debt.

e) Proof of any current job searches and/or efforts to obtain income.

f) A copy of any application and/or agreement made by or for the Respondent, personally or under the name of any of his businesses, within the last three years for a loan, line of credit, credit card, or mortgage, including any statement of income or net worth provided by or for the Respondent, if any.

g) Copy of Agent Lease Agreement involving any Taxis and evidence of payments received during 2011, 2013, and 2013.

h) Proof of any rental income from the properties located at 42 Hyde Avenue, Toronto and 44 Hyde Avenue, Toronto.

[7] By the return date of August 14, 2014, Father had provided nothing further. I ordered that he pays costs of $500, and adjourned the matter to September 17, 2014, for Mother to bring a motion for temporary support and asking that Father's pleadings be struck.

[8] By September 17, 2015, Father had provided only the following additional disclosure:

1. P. 1 of Statements of Claim for Ana Maria Fernandez v. Cansom Holding Inc. and Frank Fernandez v. Unique Auto Collision Network Solutions Corp., a draft judgement in the first action, and an entered judgement in the second action.

2. Bank records for "Network Auto" from December 2011-September 2014 (bank not identified).

3. Bank records for personal account from December 2011-September 2014 (bank not identified).

4. A letter from Beck Taxi stating that Father was an independent contractor, and that the company had no records of income or hours worked.

[9] Father's affidavit of September 11, 2014 offered no explanation for the missing disclosure. He swore at that at that time his only income was $1500 monthly from driving a taxi, and asked that any support order made be based on this figure.

[10] The motion was put over to October 30, 2014 to give Mother an opportunity to review the disclosure and reply.

[11] On October 30, 2014, Mother's lawyer did not proceed with the motion to strike, and argued the temporary support motion only. I considered evidence produced by Mother with respect to Father's business activities and the evidence produced by Father, particularly the evidence from bank records he provided for the period June- September 2014 (after 42 and 44 Hyde Avenue were seized). On November 3, 2014, I ordered Father to pay temporary support for 5 children of $1,849 monthly, based on imputed annualized income of $70, 836. That order was not appealed.

[12] The motion to strike was put over to February 19, 2015 to give Father an opportunity to provide the missing disclosure. Nothing was provided, and on February 19, 2015, at Father's request, I adjourned the motion to May 25, 2015, peremptory to him, to give him a last opportunity to provide disclosure, ordering costs of $500. I directed that if disclosure was provided, the date was to be used for a settlement conference; if not, the motion to strike would be heard.

[13] By May 25, 2015, the only further disclosure Father provided was a 2011 personal tax return and Notice of Assessment showing gross and net business income of $13,000 and a 2014 personal tax return showing gross and net business income of $10,200. A statement of business activities attached to the 2014 return stated that Father's business was "taxi management", but provided no further information. Father provided no affidavit explaining the missing disclosure. He provided no updated financial statement, despite the provisions of R. 13(12) requiring one.

[14] As of May 25, 2015, Father had made no payment in any amount for the child support ordered on November 3, 2014. He offered no explanation for this failure, except to say through counsel that he could not afford to pay. Father had paid the costs orders of $1000 made prior to the return of the motion, apparently under the impression that this payment would allow a settlement conference rather than the motion to strike be heard.

[15] Mother proceeded with her motion to strike Father's pleadings.

The Law

[16] Rule 1(8) of the Family Law Rules, set out below, gives the court a broad discretion as to how to deal with a failure by a party to obey a court order or to follow the Rules.

1(8) 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 the 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 or any other step in the case; and
• (g) on motion, a contempt order.

FAILURE TO FOLLOW RULES

(8.1) If a person fails to follow these rules, the court may deal with the failure by making any order described in subrule (8), other than a contempt order under clause (8) (g).

[17] In addition, section 24 of the Child Support Guidelines provides that where a party has failed to comply with an order for disclosure of the documents required in the Guidelines, that the court may strike that party's pleadings.

[18] Rule 1 (8.4), shown below, sets out the consequences of striking a party's pleadings.

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:

• 1. The party is not entitled to any further notice of steps in the case, except as provided by subrule 25 (13) (service of order).
• 2. The party is not entitled to participate in the case in any way.
• 3. The court may deal with the case in the party's absence.
• 4. A date may be set for an uncontested trial of the case.

[19] The court's discretion to strike pleadings is structured by appellate caselaw. In Percaru v. Percaru, 2010 ONCA 92 the Court of Appeal cautioned that pleadings should be struck in a family law case "only in exceptional circumstances, where other remedy would suffice". The Court noted the drastic consequences when pleadings are struck--a party "is not entitled to participate in the case in any way", unless the court provides otherwise.

[20] In King v. Mongrain, 2009 ONCA 486, the Court of Appeal held that it is especially important to avoid the sanction of striking pleadings where children's interests on the issues of custody or access are involved. That issue is not a serious concern here. Father consented to an order of custody to Mother, and although he claimed access, he has shown no interest in pursuing that issue. I have not heard that there is any difficulty in the children contacting him or vice versa.

[21] In Kovachis v. Kovachis, 2013 ONCA 663, the Court of Appeal held that on a motion to strike a party's pleadings in a family case because of non-compliance with a court order, the court must consider whether the default is willful and whether an order striking pleadings is the only appropriate remedy. Justice John Laskin observed:

"The rationale for this principle is obvious. Without one side's participation in the trial, there is a risk the court will not have either enough information or accurate information to reach a just result. If the judgment provides for continuing obligations that can only be varied on changed circumstances, as many family law judgments do, the injustice may be perpetuated."

[22] The Court of Appeal has held that when considering the appropriate remedy for non-compliance with a disclosure order, the principle of proportionality must be applied. The court should consider "the importance or materiality" of the items not produced in relation to the issues in the case, and take into account the costs and time to obtain the disclosure, compared to its importance". If a party has made disclosure which is substantial in relation to the issues in the case, although not entirely complete, then a striking of pleadings is not the appropriate remedy.

[23] Failure to pay support ordered can also justify an order to strike pleadings, if the failure to pay is "willful". On such a motion, the court should keep in mind that there are other methods of enforcing arrears available to a recipient. Before making a final decision on a motion to strike, a court will often give a party an opportunity to pay arrears.

[24] If evidence of ability to pay arrears is doubtful, then an order to keep ongoing support payments current may be appropriate. For example, in Higgins v. Higgins, the Court of Appeal dealt with a case in which a temporary order had been made against a party increasing amounts of child and spousal support payable based on an imputed income of $100,000 annually. The payor failed to make the increased payments, although he maintained payments at the level of the original order. The motions judge ordered that his pleadings be struck unless he paid support arrears which amounted to approximately $80,000, and unless he paid the increased support ordered each month until a trial decision was made. The payor was an undischarged bankrupt with no property or savings. The Court of Appeal found that it was an error not to consider the payor's ability to pay a substantial retroactive amount, and set aside that portion of the order. The Court specifically rejected the argument that the motion judge erred in requiring the payor to comply with an order based on income imputed to him. The Court substituted an order that the recipient parent could move ex parte to strike if the payor failed to make the ongoing increased payment ordered in full each month, and suspended the payor's action pending his payment of support in the correct amount for at least 3 months.

Analysis

[25] Father's failure to produce the disclosure ordered is clearly deliberate. He consented to provide the documents set out in the order. He has failed to produce them, despite the passage of 10 months and two adjournments to allow him to do so.

[26] This is not a case where "substantial disclosure" has been provided. Father has refused to provide basic disclosure that is required for Mother and the court to properly assess his income as a self-employed person. The personal income tax documentation provided contains scant information, claiming gross and net business income in an amount far below minimum wage for four years. The one statement of business activities provided (for 2014) follows the same pattern. No corporate returns or notices of assessment are provided.

[27] The bank records provided shed some light on Father's situation, but that information is incomplete. Although Father in his financial statement identified two personal bank accounts, records of only one account were provided. Although it appears that he has provided bank records for one corporate account, no records were produced for the other corporation. Given the scant information in Father's tax documents provided to date, provision of these records and the credit card statements ordered is required to determine his income.

[28] With respect to Father's failure to pay child support, if he was acting in good faith and attempting to comply with his obligation, he would at least have paid the amount which he himself proposed to pay in September 2014 – support based on what he said his income was, $1500 per month, or $18,000 annually. That income would have resulted in a support order of $432 month. Father's failure to pay a penny of support speaks volumes about his disregard for orders of this court.

[29] What is the appropriate order to be made in the face of Father's failures to comply with the disclosure and child support orders?

[30] Given Father's disregard of the disclosure order and his defiance of the support order, I fear that giving him a further opportunity to comply is a waste of time. Having said that, I am mindful of the fact that, in providing some bank records, Father did provide some meaningful disclosure. Mother in this proceeding is claiming support and s. 7 expenses retroactive for three years based on income which she asserts was in excess of $100,000 annually. I would prefer, if possible, for Father to have the opportunity to participate in a trial and provide documentation for those years.

[31] With that in mind, I make the following order:

1. This motion is adjourned to August 25, 2015 at 10 a.m.

2. On or before July 15, 2015, Father shall serve and file with the court the essential outstanding disclosure which I have identified above namely,

   a) 2011, 2012, and 2013 and 2014 tax returns with all schedules and notices of assessment (for 2011-2013) and financial statements for Cansom Holdings, Unique Auto Collision and any other corporation controlled by him;

   b) Personal tax returns with all schedules for 2011-2013.

   c) All personal, business and corporate bank records and credit card statements from January 1, 2011 to April 30, 2015. (Records already provided need not be resent.)

3. Father shall pay the temporary support of $1,849 monthly due on June 1, 2015 by June 15, 2015 at the latest.

4. Father shall continue to pay the temporary support of $1,849 monthly on the first day of the month, commencing July 1, 2015.

5. If Father defaults on a support payment ordered above, Mother may move without notice to him to have his pleadings struck. Father shall be considered "in default" for this purpose if 10 days have elapsed since the due date of that payment and no payment has been received. Mother may prove any default in payment by filing an affidavit from herself or from staff in her lawyer's office, setting out the particulars of the default and confirming that payment in the correct amount has not been received by herself, her lawyer, or the Family Responsibility Office on her behalf. This affidavit may be sworn on information and belief, and may be filed by 14b motion directed to me.

6. In addition, if Father does not comply with all of the above-noted terms, then his answer shall be struck, except for his cross-claim for access. If he has complied, then the date of August 25, 2015 shall be a settlement/trial management conference, and briefs shall be filed two days prior.

7. Mother shall have her costs of this motion. Her lawyer shall provide brief written submissions as to quantum within 10 days, and Father's lawyer may provide responding submissions within a further 10 days.

Released: June 1, 2015

Signed: Justice E. B. Murray