COURT FILE AND PARTIES

COURT FILE NO.: FS-10-361340
DATE: 20120810
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Laurel Ann Archibald, Applicant

AND:
Charles Andrew Hall, Respondent

BEFORE: Penny J.

COUNSEL:
Annie Noa Kenet and Dani Frodis , for the Applicant

Joshua Glieberman , for the Respondent

James Riewald for the Toronto-Dominion Bank

HEARD: July 24, 2012

ENDORSEMENT

[ 1 ] The latest engagement in this long, drawn out campaign began with the discovery, by the Applicant Mother that the Respondent Father had forged her signature to obtain mortgages on the matrimonial homes (the Toronto home and the Muskoka cottage (the “property”)) from TD Canada Trust.

[ 2 ] As a result of the RF defaulting on these loans, TD threatened to take enforcement proceedings against the property.

[ 3 ] In response to these threats, the AM brought a motion for leave to amend her application to add TD as party to these proceedings, to add a claim that the mortgages are invalid and for an order suspending all enforcement proceedings by TD pending the determination of the validity of the mortgages.

[ 4 ] The RF then brought a motion dated July 12, 2012 seeking to review the interim support order of Paisley J. dated February 24, 2012 and for various other, collateral relief relating to the RF’s support obligations.

[ 5 ] This, in turn, prompted a further motion on July 19, 2012 by the AM seeking to strike out the RF’s Answer or, alternatively, for an order that the RF’s July 12, 2012 motion and supporting affidavit be struck and that the RF not be permitted to make any submissions on the return of these motions on July 24, 2012. The basis for this last motion was the alleged failure of the RF to comply with two orders of D. Wilson J. dated December 1, 2011 and certain other prior orders of the court.

[ 6 ] Argument proceeded before me on the issue of the TD mortgage amendments and related procedural issues and on the issue of whether the RF’s Answer should be struck and whether the RF was able to bring motions and to present argument. I agreed to hear counsel for the RF on the latter issue. The issues raised in the substance of the RF’s motion to review his support obligations under the order of Paisley J. were adjourned pending the outcome of the threshold issue and potentially other matters (since there appears to be contested issues of fact with respect to the support obligations, it seems unlikely that the RF’s motion to vary could, in any event, be dealt with on a written record).

The TD Amendments

[ 7 ] The issues related to the TD amendments have, to a limited extent, been resolved on consent. There are, in essence, four issues:

(1) Should TD be added as a party to the application?

(2) Should TD be entitled to carry on with any enforcement measures with respect to the properties?

(3) Should a mortgage enforcement proceeding be combined with this family law proceeding?

(4) If the mortgage enforcement proceeding and family law proceedings are combined, should the mortgage enforcement proceeding be subject to the family law rules?

[ 8 ] With respect to the first issue, TD does not object to being added as a party to this application with respect to the claim that the mortgages are void.

[ 9 ] With respect to the second issue, TD submits that it should be permitted, at the very least, to issue demand letters, commence an action by issuing a statement of claim and to issue notices of sale. TD concedes, as a matter of practicality, that in light of the AM’s arguments, it would not be able to sell the property until the issue of the AM’s consent to the mortgages and the RF’s forgeries is resolved. [1] TD also says that, in any event of its rights to enforce against the property, it has in personam claims against the RF which ought not to be delayed by unrelated matrimonial proceedings between the AM and the RF.

[ 10 ] With respect to the third issue, TD submits that because there is currently no mortgage enforcement proceeding outstanding, any claim to combine such a proceeding with this application is premature. TD takes the position that after any enforcement action is commenced, if the parties cannot agree on how the enforcement action is to proceed in relation to the family law proceeding, the appropriate motion should be brought.

[ 11 ] Finally, with respect to the fourth issue, TD submits that even if a mortgage enforcement action is combined with the matrimonial proceeding, the Rules of Civil Procedure should govern, not the Family Law Rules.

[ 12 ] The AM argues there is no need for TD to commence proceedings; it is clear TD has asserted rights under the mortgages and that the AM contests the validity of those mortgages. The validity of those mortgages, she argues, should be decided in the context of the matrimonial proceedings. Because TD has threatened enforcement, its enforcement rights ought to be stayed pending resolution of the mortgage validity issue. As I understand it, the AM has no objection to the proposition that, as between her and TD on the question of the validity of the mortgages, the Rules of Civil Procedure should apply.

[ 13 ] In my view, all four issues are related. If the AM is granted leave to amend her matrimonial application to name TD and put in issue the validity of the mortgages and TD issues a statement of claim on the mortgages, there will be an unnecessary multiplicity of proceedings and the issue of how those proceedings relate to one another will still remain.

[ 14 ] The validity of TD’s mortgages vis-à-vis the matrimonial homes is clearly an issue. That is a threshold issue that can and should be decided first. It may well be that, once the evidence is available, TD will agree it has no valid mortgages on the matrimonial homes. Or it may be that the issue could be argued on an agreed statement or by way of motion for summary judgment or hybrid hearing with the trial of limited issues. We simply do not know at this stage.

[ 15 ] In my view the most appropriate and practical approach to this problem is to permit TD to issue a statement of claim. The AM would raise her defences to TD’s claim by way of statement of defence and, perhaps, a counterclaim for a declaration that the mortgages are invalid. The issue of the validity of the mortgages vis-à-vis the AM and her interest in the matrimonial homes shall be dealt with as a preliminary issue in the Toronto Family Court before a judge of the Superior Court of Justice, conducted under the Rules of Civil Procedure rather than the Family Law Rules . [2] All other aspects of TD’s claim may proceed in the ordinary way.

[ 16 ] The AM is granted leave to amend her application to the extent necessary to join issue with the RF on the question of the mortgages, his alleged forgeries and the validity of the mortgages. However, given my disposition in the paragraph above, it is not necessary for TD to become a party to the matrimonial application proceedings.

[ 17 ] In this way, the crucial issue in the matrimonial proceedings - the RF’s alleged forgeries and dissipation of family property - will be dealt with by the family law court seized with the matrimonial proceedings. TD will, at the same time, not be drawn unnecessarily into other matrimonial disputes outstanding between the AM and the RF.

[ 18 ] Counsel shall agree upon and file a timetable for the completion of pleadings and documentary discovery in TD’s mortgage action. There shall be a case conference, if counsel cannot come to agreement, to determine the next steps in the resolution of the mortgage validity issue.

[ 19 ] Prima facie, enforcement action by TD against the matrimonial homes would be inconsistent with the AM’s asserted rights because she lives in the Toronto home and uses the Muskoka cottage. She has raised a triable issue regarding the invalidity of the mortgages. Similarly, enforcement action by way of sale would irreparably impair the AM’s proprietary interest in the property. TD has a mortgage registered which will remain in place until the validity issue is resolved. The balance of convenience, in my view, favours restraining TD from taking steps sell the property pending resolution of the validity of TD’s mortgages. Accordingly, in the absence of an undertaking from TD to refrain from taking steps to sell the property pending resolution of the mortgage validity issue, the AM is at liberty to move for an order granting that relief.

The RF’s Motion

[ 20 ] There are two issues I will deal with under this heading:

(1) whether the RF’s Answer should be struck; and

(2) whether the RF’s July 12, 2012 motion should be struck.

Background

[ 21 ] This application was commenced by the AM on July 30, 2010.

[ 22 ] The order that the RF seeks to review is dated February 24, 2011.

[ 23 ] Prior to that order, on November 15, 2010 Greer J. made an order on consent requiring the RF to produce certain documents.

[ 24 ] The AM says the RF has, contrary to that order, failed to provide all bank statements, credit card statements and line of credit statements “on an ongoing basis to the date of trial.”

[ 25 ] The order of Paisley J. required the RF to refrain from depleting property and required him to preserve property, including paying interest and principal on the line of credit registered against the matrimonial home. The order also required the RF to pay monthly life insurance premiums, spousal support in the amount of $9,378 per month, child support in the amount of $1,321 per month, section 7 expenses the amount of $14,606.60 and the AM’s costs of the motion in the amount of $12,000.

[ 26 ] The AM says that the RF has breached this order in that he has depleted and failed to preserve property by, among other things, failing to pay the interest and principal on the line of credit registered against the matrimonial home. The AM also says the RF has failed to pay the life insurance premiums and failed to pay spousal support, child support, section 7 expenses and costs.

[ 27 ] On November 18, 2011 Kiteley J. made an order on the consent of all parties requiring the RF to provide all pertinent documents relating to the operative terms and conditions of the sale of RecoverCorp. by Monday, November 21, 2011 and to provide proof that he had provided an irrevocable direction and authorization to the lawyers handling the purchase and sale of the shares of RecoverCorp. to the effect that any funds the RF was to receive from the sale of RecoverCorp.’s shares was to be paid directly to the trust account of the AM’s solicitors.

[ 28 ] The AM says that she has not been provided with the operative terms and conditions of the sale and has not been provided with proof of delivery of any irrevocable authorization regarding payment of the funds.

[ 29 ] On December 1, 2011, D. Wilson J. issued two further orders on consent. One dealt with document production.

[ 30 ] The AM says that the RF has failed to provide the ordered disclosure with respect to a long list of documents detailed in para. 27 of her July 19, 2012 affidavit. In addition, the RF has failed to pay costs in respect of that motion ordered to be paid to the AM in the amount of $5,000.

[ 31 ] D. Wilson J.’s second order dealt with the AM’s motion for contempt. That order, also made on the consent of all parties, found the RF in contempt in that he had:

(1) not produced a complete minute book for RecoverCorp.;

(2) not produced updated statements for his accounts since at least July 2011;

(3) not produced SBLR’s complete file;

(4) allowed the beneficiary status on his life insurance policies to lapse; and

(5) depleted funds held in trust by $16,811.33.

[ 32 ] That order went on to provide that should the RF not purge his contempt by February 6, 2012, his Answer “shall be struck” and the AM shall be permitted to proceed to trial on an uncontested basis and without notice to the RF.

[ 33 ] The order also went on to provide that the RF:

“shall not be permitted to take any further steps in the within proceeding, save and except bringing a third-party motion against RecoverCorp. Inc. for disclosure and/or against Willson Lewis LLP, until he purges his contempt and fully complies with the order of Justice Greer dated November 15, 2011, the Order of Justice Paisley dated February 24, 2011, the Order to be issued with regard to disclosure, the within Order and any future Order with regards to the Respondent's life insurance policies (if any).”

That order specified that the term “fully complies” as used in the order includes the requirement that the RF pay the full arrears and costs owing pursuant to the order of Paisley J.

[ 34 ] D. Wilson J. also awarded additional costs against the RF payable to the AM in the amount of $7,500.

[ 35 ] The RF has been represented by legal counsel throughout.

[ 36 ] The RF relies on the fact that the endorsement of Paisley J. from February 24, 2011 contains the proviso that child and spousal support issues “may be revisited after completion of disclosure and examination under oath of the parties.”

[ 37 ] The RF says he has substantially complied with the disclosure orders. He says the support orders are now “impossible of performance” because he is on disability of about $90,000 and simply cannot pay. Likewise, he says he cannot pay the outstanding cost orders because he has no money.

[ 38 ] It is not contested that the RF is in breach of the payment orders of Paisley J. as well as the cost orders of Greer J., Paisley J. and D. Wilson J.

[ 39 ] While the RF states in his affidavit that he has fulfilled his disclosure obligations, that bald statement is belied by the facts. Even if it were true that he has “substantially complied,” there has, for example, been non-compliance with the order to make “ongoing” disclosure of the various bank and credit card statements. In addition, there has not, on the evidence, been full compliance with the Kiteley J. order with respect to production of the detailed documents concerning the sale of RecoverCorp. shares. No explanation has been given for even this level of non-compliance.

[ 40 ] I do not think the proviso contained in the endorsement of Paisley J., to the effect that the support issues can be revisited after discovery, cannot possibly be taken to mean that the RF was entitled to abandon all of his obligations, comply with no court orders and return to court 18 months later to vary those obligations with impunity.

[ 41 ] The RF’s biggest problem, however, is that, knowing of his allegedly diminished circumstances, he agreed, with the benefit of legal advice, to the order of D. Wilson J.: a) finding him in contempt of court; b) providing that if he has not purged his contempt by February 6, 2012, his Answer shall be struck; and c) prohibiting him from taking any further steps in the proceeding until he purges his contempt and “fully complies” with the orders of Justice Greer, Justice Paisley and Justice D. Wilson.

Motion to Strike RF’s Answer

[ 42 ] The jurisdiction of this court to strike an answer in the face of non-compliance with an order of the court is not in doubt. Rules 13(17), 14(23) and 19(10) of the Family Law Rules all provide that failure to obey an order can be grounds for dismissal of a party’s case or striking out an answer.

[ 43 ] It is trite law that court orders are not made as a form of judicial exercise. An order is an order of the court, not a suggestion or a guideline. Non-compliance with orders of the court must have consequences, see Gordon v. Starr , 2007 35527 (ON SC) , [2007] O.J. No. 3264 at paras. 15 and 23 ; Taylor v. Taylor , 2005 63820 (ON SC) , [2005] O.J. No. 4593 at para. 3 .

[ 44 ] By virtue of the D. Wilson J. contempt order, the RF was given until February 6, 2012 to purge his contempt in four respects, failing which his Answer could be struck:

(1) provide a complete minute book for RecoverCorp. Inc.;

(2) provide updated statements for his accounts;

(3) provide SBLR’s complete file; and

(4) provide funds to replace the depleted funds in the amount of $16,811.33.

[ 45 ] In her affidavit, the AM deposes that the RF did not purge his contempt because he has not provided: 1) the complete minute book for RecoverCorp; and 2) updated statements for his accounts.

[ 46 ] There is no explanation for why the AM waited until July 19, 2012 to move to strike the RF’s answer. It appears to have been raised in response to the RF’s motion of July 12, 2012 to vary Justice Paisley’s order. Because of the timing and sequence of the AM’s motion, however, the RF did not file a response to the AM on this issue before the hearing.

[ 47 ] In these circumstances, I do not think the evidence is sufficient to make a clear determination on the question of whether the RF did, or did not, purge his contempt with respect to these four items. The RF shall have one final opportunity to comply with D. Wilson J.’s order. If he does not deliver evidence proving that he has provided the four items listed above, or sufficient explanation why it is impossible for him to provide these items, within 30 days of the release of these Reasons, the AM shall be at liberty to move for an order striking out the RF’s Answer.

The RF’s Status to Bring a Motion to Review

[ 48 ] The situation is different with respect to the RF’s motion to vary Paisley J.’s order. This is because the preconditions to the RF taking any further steps in these proceedings are different from the preconditions for purging his contempt.

[ 49 ] D. Wilson J.’s order specifically provides that the RF “shall not be permitted to take any further steps in the within proceeding [with two limited exception] until he purges his contempt and fully complies with” the orders of Justice Greer, Justice Paisley and Justice D. Wilson [emphasis added]. As noted, for the purposes of the order, “fully complies” is defined to include the RF paying the full arrears and costs owing pursuant to Justice Paisley’s order.

[ 50 ] The evidence is clear on this motion that the RF has not paid arrears or costs. Accordingly, it is clear that the RF has not met the preconditions for taking any further steps in this proceeding that were, with his consent, imposed by Justice D. Wilson’s order.

[ 51 ] In Hughes v. Hughes , 1991 7053 (ON CA) , [1991] O.J. No. 2025 at paras. 18 and 19 , Justice Quinn put it this way:

Where a party has failed “to obey an order in the case,” the court is entitled to make “any order that it considers necessary for just determination of the matter.” The words “just determination” are sufficiently wide to include protecting the integrity of the administration of justice, and that is what is at stake if a party willfully disobeys an order.

The husband cannot expect to come before this court and be given a voice in circumstances where he is thumbed his nose at the legal system by deliberately breaching an order.

[ 52 ] In the circumstances, the RF has not complied with the order of D. Wilson J. Accordingly, his motion of July 12, 2012 and his supporting affidavit of July 12, 2012 are struck out. The provisions of D. Wilson J.’s order remain in full force and effect.

Costs

[ 53 ] The parties shall seek to reach an agreement on the disposition and quantum of costs. Failing agreement, a party seeking costs shall do so by filing a Bill of Costs together with a written submission not to exceed two typed, double-spaced pages within 10 days of the release of these Reasons. A party wishing to respond to a request for costs shall do so by filing a written submission, subject to the same page limit, within a further 10 days.

PENNY J.

Date: August 10, 2012

[1] In his February 17, 2011 affidavit the RF admits that he signed the AM’s name to TD documents but claims that he had her authorization to do so.

[2] The exception to this is that there shall be case conferences to resolve procedural issues and a settlement conference prior to the hearing.